Due Process and Equal Protection Limitations

CONSTITUTIONAL LAW II: Due Process and Equal Protection as Limitations on Police Power, Eminent Domain and Taxation
TRILLANES IV, vs HON. OSCAR PIMENTEL, G.R. No. 179817 2008
June 27,
At the wee hours of July 27, 2003, a group of more than 300 heavily armed soldiers led by junior officers of the Armed Forces of the Philippines (AFP) stormed into the Oakwood Premier Apartments in Makati City and publicly demanded the resignation of the President and key national officials. Later in the day, President Gloria Macapagal Arroyo issued Proclamation No. 427 and General Order No. 4 declaring a state of rebellion and calling out the Armed Forces to suppress the rebellion.1 A series of negotiations quelled the teeming tension and eventually resolved the impasse with the surrender of the militant soldiers that evening. In the aftermath of this eventful episode dubbed as the "Oakwood Incident," petitioner Antonio F. Trillanes IV was charged, along with his comrades, with coup detat defined under Article 134-A of the Revised Penal Code before the Regional Trial Court (RTC) of Makati. The case was docketed as Criminal Case No. 032784, "People v. Capt. Milo D. Maestrecampo, et al." Close to four years later, petitioner, who has remained in detention,2 threw his hat in the political arena and won a seat in the Senate with a six-year term commencing at noon on June 30, 2007.3 Before the commencement of his term or on June 22, 2007, petitioner filed with the RTC, Makati City, Branch 148, an "Omnibus Motion for Leave of Court to be Allowed to Attend Senate Sessions and Related Requests"4(Omnibus Motion). Among his requests were: (a) To be allowed to go to the Senate to attend all official functions of the Senate (whether at the Senate or elsewhere) particularly when the Senate is in session, and to attend the regular and plenary sessions of the Senate, committee hearings, committee meetings, consultations, investigations and hearings in aid of legislation, caucuses, staff meetings, etc., which are normally held at the Senate of the Philippines located at the GSIS Financial Center, Pasay City (usually from Mondays to Thursdays from 8:00 a.m. to 7:00 p.m.); (b) To be allowed to set up a working area at his place of detention at the Marine Brig, Marine Barracks Manila, Fort Bonifacio, Taguig City, with a personal desktop computer and the appropriate communications equipment (i.e., a telephone line and internet access) in order that he may be able to work there when there are no sessions, meetings or hearings at the Senate or when the Senate is not in session. The costs of setting up the said working area and the related equipment and utility costs can be charged against the budget/allocation of the Office of the accused from the Senate;
(c) To be allowed to receive members of his staff at the said working area at his place of detention at the Marine Brig, Marine Barracks Manila, Fort Bonifacio, Taguig City, at reasonable times of the day particularly during working days for purposes of meetings, briefings, consultations and/or coordination, so that the latter may be able to assists (sic) him in the performance and discharge of his duties as a Senator of the Republic; (d) To be allowed to give interviews and to air his comments, reactions and/or opinions to the press or the media regarding the important issues affecting the country and the public while at the Senate or elsewhere in the performance of his duties as Senator to help shape public policy and in the light of the important role of the Senate in maintaining the system of checks and balance between the three (3) co-equal branches of Government; (e) With prior notice to the Honorable Court and to the accused and his custodians, to be allowed to receive, on Tuesdays and Fridays, reporters and other members of the media who may wish to interview him and/or to get his comments, reactions and/or opinion at his place of confinement at the Marine Brig, Marine Barracks Manila, Fort Bonifacio, Taguig City, particularly when there are no sessions, meetings or hearings at the Senate or when the Senate is not in session; and (f) To be allowed to attend the organizational meeting and election of officers of the Senate and related activities scheduled in the morning (9:00 or 10:00 a.m.) of 23 July 2007 at the Senate of the Philippines located at the GSIS Financial Center, Pasay City.5 By Order of July 25, 2007,6 the trial court denied all the requests in the Omnibus Motion. Petitioner moved for reconsideration in which he waived his requests in paragraphs (b), (c) and (f) to thus trim them down to three.7The trial court just the same denied the motion by Order of September 18, 2007.8 Hence, the present petition for certiorari to set aside the two Orders of the trial court, and for prohibition andmandamus to (i) enjoin respondents from banning the Senate staff, resource persons and guests from meeting with him or transacting business with him in his capacity as Senator; and (ii) direct respondents to allow him access to the Senate staff, resource persons and guests and permit him to attend all sessions and official functions of the Senate. Petitioner preliminarily prayed for the maintenance of the status quo ante of having been able hitherto to convene his staff, resource persons and guests9 at the Marine Brig. Impleaded as co-respondents of Judge Oscar Pimentel, Sr. are AFP Chief of Staff, Gen. Hermogenes Esperon (Esperon); Philippine Navys Flag Officer-in-Command, Vice Admiral Rogelio Calunsag; Philippine Marines Commandant, Major Gen. Benjamin Dolorfino; and Marine Barracks Manila Commanding Officer, Lt. Col. Luciardo Obea (Obea).
Petitioner later manifested, in his Reply of February 26, 2008, that he has, since November 30, 2007, been in the custody of the Philippine National Police (PNP) Custodial Center following the foiled take-over of the Manila Peninsula Hotel10 the day before or on November 29, 2007. Such change in circumstances thus dictates the discontinuation of the action as against the above-named military officers-respondents. The issues raised in relation to them had ceased to present a justiciable controversy, so that a determination thereof would be without practical value and use. Meanwhile, against those not made parties to the case, petitioner cannot ask for reliefs from this Court.11 Petitioner did not, by way of substitution, implead the police officers currently exercising custodial responsibility over him; and he did not satisfactorily show that they have adopted or continued the assailed actions of the former custodians.12 Petitioner reiterates the following grounds which mirror those previously raised in his Motion for Reconsideration filed with the trial court: I. THE JURISPRUDENCE CITED BY THE HONORABLE COURT A QUO IS CLEARLY INAPPLICABLE TO THE INSTANT CASE BECAUSE OF THE FOLLOWING REASONS: A. UNLIKE IN THIS CASE, THE ACCUSED IN THE JALOSJOS CASE WAS ALREADY CONVICTED AT THE TIME HE FILED HIS MOTION. IN THE INSTANT CASE, ACCUSED/PETITIONER HAS NOT BEEN CONVICTED AND, THEREFORE, STILL ENJOYS THE PRESUMPTION OF INNOCENCE; B. THE ACCUSED IN THE JALOJOS (SIC) CASE WAS CHARGED WITH TWO (2) COUNTS OF STATUTORY RAPE AND SIX (6) COUNTS OF ACTS OF LASCIVIOUSNESS, CRIMES INVOLVING MORAL TURPITUDE. HEREIN ACCUSED/PETITIONER IS CHARGED WITH THE OFFENSE OF "COUP DETAT", A CHARGE WHICH IS COMMONLY REGARDED AS A POLITICAL OFFENSE; C. THE ACCUSED IN THE JALOSJOS CASE ATTEMPTED TO FLEE PRIOR TO BEING ARRESTED. THE ACCUSED/ PETITIONER
VOLUNTARILY SURRENDERED TO THE AUTHORITIES AND AGREED TO TAKE RESPONSIBILITY FOR HIS ACTS AT OAKWOOD; II. GEN. ESPERON DID NOT OVERRULE THE RECOMMENDATION OF THE MARINE BRIGS COMMANDING OFFICER TO ALLOW PETITIONER TO ATTEND THE SENATE SESSIONS; III. ACCUSED/PETITIONER SUBMITS THAT THE FACT THAT THE PEOPLE, IN THEIR SOVEREIGN CAPACITY, ELECTED HIM TO THE POSITION OF SENATOR OF THE REPUBLIC PROVIDES THE PROPER LEGAL JUSTIFICATION TO ALLOW HIM TO WORK AND SERVE HIS MANDATE AS A SENATOR; - AND IV. MOREOVER, THERE ARE ENOUGH PRECEDENTS TO ALLOW LIBERAL TREATMENT OF DETENTION PRISONERS WHO ARE HELD WITHOUT BAIL AS IN THE CASE OF FORMER PRESIDENT JOSEPH "ERAP" ESTRADA AND FORMER ARMM GOV. NUR MISUARI.13 The petition is bereft of merit. In attempting to strike a distinction between his case and that of Jalosjos, petitioner chiefly points out that former Rep. Romeo Jalosjos (Jalosjos) was already convicted, albeit his conviction was pending appeal, when he filed a motion similar to petitioners Omnibus Motion, whereas he (petitioner) is a mere detention prisoner. He asserts that he continues to enjoy civil and political rights since the presumption of innocence is still in his favor. Further, petitioner illustrates that Jalosjos was charged with crimes involving moral turpitude, i.e., two counts of statutory rape and six counts of acts of lasciviousness, whereas he is indicted for coup detat which is regarded as a "political offense." Furthermore, petitioner justifies in his favor the presence of noble causes in expressing legitimate grievances against the rampant and institutionalized practice of graft and corruption in the AFP.
In sum, petitioners first ground posits that there is a world of difference between his case and that of Jalosjos respecting the type of offense involved, the stage of filing of the motion, and other circumstances which demonstrate the inapplicability of Jalosjos.14 A plain reading of. Jalosjos suggests otherwise, however. The distinctions cited by petitioner were not elemental in the pronouncement in Jalosjos that election to Congress is not a reasonable classification in criminal law enforcement as the functions and duties of the office are not substantial distinctions which lift one from the class of prisoners interrupted in their freedom and restricted in liberty of movement.15 It cannot be gainsaid that a person charged with a crime is taken into custody for purposes of the administration of justice. No less than the Constitution provides: All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable by sufficient sureties, or be released on recognizance as may be provided by law. The right to bail shall not be impaired even when the privilege of the writ of habeas corpusis suspended. Excessive bail shall not be required.16 (Underscoring supplied) The Rules also state that no person charged with a capital offense,17 or an offense punishable by reclusion perpetua or life imprisonment, shall be admitted to bail when evidence of guilt is strong, regardless of the stage of the criminal action.18 That the cited provisions apply equally to rape and coup detat cases, both being punishable by reclusion perpetua,19 is beyond cavil. Within the class of offenses covered by the stated range of imposable penalties, there is clearly no distinction as to the political complexion of or moral turpitude involved in the crime charged. In the present case, it is uncontroverted that petitioners application for bail and for release on recognizance was denied.20 The determination that the evidence of guilt is strong, whether ascertained in a hearing of an application for bail21 or imported from a trial courts judgment of conviction,22 justifies the detention of an accused as a valid curtailment of his right to provisional liberty. This accentuates the proviso that the denial of the right to bail in such cases is "regardless of the stage of the criminal action." Such justification for confinement with its underlying rationale of public self-defense23 applies equally to detention prisoners like petitioner or convicted prisoners-appellants like Jalosjos. As the Court observed in Alejano v. Cabuay,24 it is impractical to draw a line between convicted prisoners and pre-trial detainees for the purpose of maintaining jail security; and while pre-trial detainees do not forfeit their constitutional rights
upon confinement, the fact of their detention makes their rights more limited than those of the public. The Court was more emphatic in People v. Hon. Maceda:25 As a matter of law, when a person indicted for an offense is arrested, he is deemed placed under the custody of the law. He is placed in actual restraint of liberty in jail so that he may be bound to answer for the commission of the offense. He must be detained in jail during the pendency of the case against him, unless he is authorized by the court to be released on bail or on recognizance. Let it be stressed that all prisoners whether under preventive detention or serving final sentence can not practice their profession nor engage in any business or occupation, or hold office, elective or appointive, while in detention. This is a 26 necessary consequence of arrest and detention. (Underscoring supplied) These inherent limitations, however, must be taken into account only to the extent that confinement restrains the power of locomotion or actual physical movement. It bears noting that in Jalosjos, which was decided en banc one month after Maceda, the Court recognized that the accused could somehow accomplish legislative results.27 The trial court thus correctly concluded that the presumption of innocence does not carry with it the full enjoyment of civil and political rights. Petitioner is similarly situated with Jalosjos with respect to the application of the presumption of innocence during the period material to the resolution of their respective motions. The Court in Jalosjos did not mention that the presumption of innocence no longer operates in favor of the accused pending the review on appeal of the judgment of conviction. The rule stands that until a promulgation of final conviction is made, the constitutional mandate of presumption of innocence prevails.28 In addition to the inherent restraints, the Court notes that petitioner neither denied nor disputed his agreeing to a consensus with the prosecution that media access to him should cease after his proclamation by the Commission on Elections.29 Petitioner goes on to allege that unlike Jalosjos who attempted to evade trial, he is not a flight risk since he voluntarily surrendered to the proper authorities and such can be proven by the numerous times he was allowed to travel outside his place of detention. Subsequent events reveal the contrary, however. The assailed Orders augured well when on November 29, 2007 petitioner went past security detail for some reason and proceeded from the courtroom to a posh hotel to issue certain statements. The account, dubbed this time as the "Manila Pen Incident,"30 proves
that petitioners argument bites the dust. The risk that he would escape ceased to be neither remote nor nil as, in fact, the cause for foreboding became real. Moreover, circumstances indicating probability of flight find relevance as a factor in ascertaining the reasonable amount of bail and in canceling a discretionary grant of bail.31 In cases involving non-bailable offenses, what is controlling is the determination of whether the evidence of guilt is strong. Once it is established that it is so, bail shall be denied as it is neither a matter of right nor of discretion.32 Petitioner cannot find solace in Montano v. Ocampo33 to buttress his plea for leeway because unlike petitioner, the therein petitioner, then Senator Justiniano Montano, who was charged with multiple murder and multiple frustrated murder,34 was able to rebut the strong evidence for the prosecution. Notatu dignum is this Courts pronouncement therein that "if denial of bail is authorized in capital cases, it is only on the theory that the proof being strong, the defendant would flee, 35 if he has the opportunity, rather than face the verdict of the jury." At the time Montano was indicted, when only capital offenses were non-bailable where evidence of guilt is strong,36 the Court noted the obvious reason that "one who faces a probable death sentence has a particularly strong temptation to flee."37 Petitioners petition for bail having earlier been denied, he cannot rely on Montano to reiterate his requests which are akin to bailing him out. Second, petitioner posits that, contrary to the trial courts findings, Esperon did not overrule Obeas recommendation to allow him to attend Senate sessions. Petitioner cites the Comment38 of Obea that he interposed no objection to such request but recommended that he be transported by the Senate Sergeant-at-Arms with adequate Senate security. And petitioner faults the trial court for deeming that Esperon, despite professing non-obstruction to the performance of petitioners duties, flatly rejected all his requests, when what Esperon only disallowed was the setting up of a political office inside a military installation owing to AFPs apolitical nature.39 The effective management of the detention facility has been recognized as a valid objective that may justify the imposition of conditions and restrictions of pre-trial 40 detention. The officer with custodial responsibility over a detainee may undertake such reasonable measures as may be necessary to secure the safety and prevent the escape of the detainee.41 Nevertheless, while the comments of the detention officers provide guidance on security concerns, they are not binding on the trial court in the same manner that pleadings are not impositions upon a court. Third, petitioner posits that his election provides the legal justification to allow him to serve his mandate, after the people, in their sovereign capacity, elected him as Senator. He argues that denying his Omnibus Motion is tantamount to removing him from office, depriving the people of proper representation, denying the peoples will, repudiating the peoples choice, and overruling the mandate of the people.
Petitioners contention hinges on the doctrine in administrative law that "a public official can not be removed foradministrative misconduct committed during a prior term, since his re-election to office operates as a condonation of the officers previous misconduct to the extent of cutting off the right to remove him therefor."42 The assertion is unavailing. The case against petitioner is not administrative in nature. And there is no "prior term" to speak of. In a plethora of cases,43 the Court categorically held that the doctrine of condonation does not apply to criminal cases. Election, or more precisely, re-election to office, does not obliterate a criminal charge. Petitioners electoral victory only signifies pertinently that when the voters elected him to the Senate, "they did so with full awareness of the limitations on his freedom of action [and] x x x with the knowledge that he could achieve only such legislative results which he could accomplish within the confines of prison."44 In once more debunking the disenfranchisement argument, it is opportune to wipe out the lingering misimpression that the call of duty conferred by the voice of the people is louder than the litany of lawful restraints articulated in the Constitution and echoed by jurisprudence. The apparent discord may be harmonized by the overarching tenet that the mandate of the people yields to the Constitution which the people themselves ordained to govern all under the rule of law. The performance of legitimate and even essential duties by public officers has never been an excuse to free a person validly in prison. The duties imposed by the "mandate of the people" are multifarious. The accused-appellant asserts that the duty to legislate ranks highest in the hierarchy of government. The accused-appellant is only one of 250 members of the House of Representatives, not to mention the 24 members of the Senate, charged with the duties of legislation. Congress continues to function well in the physical absence of one or a few of its members. x x x Never has the call of a particular duty lifted a prisoner into a different classification from those others who are validly restrained by law.46 (Underscoring supplied) Lastly, petitioner pleads for the same liberal treatment accorded certain detention prisoners who have also been charged with non-bailable offenses, like former President Joseph Estrada and former Governor Nur Misuari who were allowed to attend "social functions." Finding no rhyme and reason in the denial of the more serious request to perform the duties of a Senator, petitioner harps on an alleged violation of the equal protection clause. In arguing against maintaining double standards in the treatment of detention prisoners, petitioner expressly admits that he intentionally did not seek preferential treatment in the form of being placed under Senate custody or house arrest,47 yet he at the same time, gripes about the granting of house arrest to others.
45
Emergency or compelling temporary leaves from imprisonment are allowed to all prisoners, at the discretion of the authorities or upon court orders.48 That this discretion was gravely abused, petitioner failed to establish. In fact, the trial court previously allowed petitioner to register as a voter in December 2006, file his certificate of candidacy in February 2007, cast his vote on May 14, 2007, be proclaimed as senator-elect, and take his oath of office49 on June 29, 2007. In a seeming attempt to bind or twist the hands of the trial court lest it be accused of taking a complete turn-around,50 petitioner largely banks on these prior grants to him and insists on unending concessions and blanket authorizations. Petitioners position fails. On the generality and permanence of his requests alone, petitioners case fails to compare with the species of allowable leaves. Jaloslos succinctly expounds: x x x Allowing accused-appellant to attend congressional sessions and committee meetings for five (5) days or more in a week will virtually make him a free man with all the privileges appurtenant to his position. Such an aberrant situation not only elevates accused-appellants status to that of a special class, it also would be a mockery of the purposes of the correction system.51 WHEREFORE, the petition is DISMISSED. SO ORDERED. BRITISH AMERICAN TOBACCO, vs. JOSE ISIDRO N. CAMACHO G.R. No. 163583 April 15, 2009 On August 20, 2008, the Court rendered a Decision partially granting the petition in this case, viz: WHEREFORE, the petition is PARTIALLY GRANTED and the decision of the Regional Trial Court of Makati, Branch 61, in Civil Case No. 03-1032, is AFFIRMED with MODIFICATION. As modified, this Court declares that: (1) Section 145 of the NIRC, as amended by Republic Act No. 9334, is CONSTITUTIONAL; and that (2) Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section 2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, insofar as pertinent to cigarettes packed by machine, are INVALID insofar as they grant the BIR the power to reclassify or update the classification of new brands every two years or earlier.
SO ORDERED. In its Motion for Reconsideration, petitioner insists that the assailed provisions (1) violate the equal protection and uniformity of taxation clauses of the Constitution, (2) contravene Section 19,1 Article XII of the Constitution on unfair competition, and (3) infringe the constitutional provisions on regressive and inequitable taxation. Petitioner further argues that assuming the assailed provisions are constitutional, petitioner is entitled to a downward reclassification of Lucky Strike from the premium-priced to the high-priced tax bracket. The Court is not persuaded. The assailed law does not violate the equal protection and uniformity of taxation clauses. Petitioner argues that the classification freeze provision violates the equal protection and uniformity of taxation clauses because Annex "D" brands are taxed based on their 1996 net retail prices while new brands are taxed based on their present day net retail prices. Citing Ormoc Sugar Co. v. Treasurer of Ormoc City,2 petitioner asserts that the assailed provisions accord a special or privileged status to Annex "D" brands while at the same time discriminate against other brands. These contentions are without merit and a rehash of petitioners previous arguments before this Court. As held in the assailed Decision, the instant case neither involves a suspect classification nor impinges on a fundamental right. Consequently, the rational basis test was properly applied to gauge the constitutionality of the assailed law in the face of an equal protection challenge. It has been held that "in the areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the 3 classification." Under the rational basis test, it is sufficient that the legislative classification is rationally related to achieving some legitimate State interest. As the Court ruled in the assailed Decision, viz: A legislative classification that is reasonable does not offend the constitutional guaranty of the equal protection of the laws. The classification is considered valid and reasonable provided that: (1) it rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it applies, all things being equal, to both present and future conditions; and (4) it applies equally to all those belonging to the same class. The first, third and fourth requisites are satisfied. The classification freeze provision was inserted in the law for reasons of practicality and expediency. That is, since a new brand was not yet in existence at the time of the passage of RA 8240, then Congress needed a uniform mechanism to fix the tax bracket of a new brand. The
current net retail price, similar to what was used to classify the brands under Annex "D" as of October 1, 1996, was thus the logical and practical choice. Further, with the amendments introduced by RA 9334, the freezing of the tax classifications now expressly applies not just to Annex "D" brands but to newer brands introduced after the effectivity of RA 8240 on January 1, 1997 and any new brand that will be introduced in the future. (However, as will be discussed later, the intent to apply the freezing mechanism to newer brands was already in place even prior to the amendments introduced by RA 9334 to RA 8240.) This does not explain, however, why the classification is "frozen" after its determination based on current net retail price and how this is germane to the purpose of the assailed law. An examination of the legislative history of RA 8240 provides interesting answers to this question. xxxx From the foregoing, it is quite evident that the classification freeze provision could hardly be considered arbitrary, or motivated by a hostile or oppressive attitude to unduly favor older brands over newer brands. Congress was unequivocal in its unwillingness to delegate the power to periodically adjust the excise tax rate and tax brackets as well as to periodically resurvey and reclassify the cigarette brands based on the increase in the consumer price index to the DOF and the BIR. Congress doubted the constitutionality of such delegation of power, and likewise, considered the ethical implications thereof. Curiously, the classification freeze provision was put in place of the periodic adjustment and reclassification provision because of the belief that the latter would foster an anti-competitive atmosphere in the market. Yet, as it is, this same criticism is being foisted by petitioner upon the classification freeze provision. To our mind, the classification freeze provision was in the main the result of Congresss earnest efforts to improve the efficiency and effectivity of the tax administration over sin products while trying to balance the same with other State interests. In particular, the questioned provision addressed Congresss administrative concerns regarding delegating too much authority to the DOF and BIR as this will open the tax system to potential areas for abuse and corruption. Congress may have reasonably conceived that a tax system which would give the least amount of discretion to the tax implementers would address the problems of tax avoidance and tax evasion. To elaborate a little, Congress could have reasonably foreseen that, under the DOF proposal and the Senate Version, the periodic reclassification of brands would tempt the cigarette manufacturers to manipulate their price levels or bribe the tax implementers in order to allow their brands to be classified at a lower tax bracket even if their net retail prices have already migrated to a higher tax bracket after the adjustment of the tax brackets to the increase in the consumer price index. Presumably, this could be done when a resurvey and reclassification is forthcoming. As briefly touched upon in the Congressional deliberations, the difference of the excise tax rate between the medium-priced and the high-priced tax brackets under RA 8240, prior to its amendment, was P3.36. For a moderately popular brand which sells around 100 million packs per year, this easily translates
to P336,000,000. The incentive for tax avoidance, if not outright tax evasion, would clearly be present. Then again, the tax implementers may use the power to periodically adjust the tax rate and reclassify the brands as a tool to unduly oppress the taxpayer in order for the government to achieve its revenue targets for a given year. Thus, Congress sought to, among others, simplify the whole tax system for sin products to remove these potential areas of abuse and corruption from both the side of the taxpayer and the government. Without doubt, the classification freeze provision was an integral part of this overall plan. This is in line with one of the avowed objectives of the assailed law "to simplify the tax administration and compliance with the tax laws that are about to unfold in order to minimize losses arising from inefficiencies and tax avoidance scheme, if not outright tax evasion." RA 9334 did not alter this classification freeze provision of RA 8240. On the contrary, Congress affirmed this freezing mechanism by clarifying the wording of the law. We can thus reasonably conclude, as the deliberations on RA 9334 readily show, that the administrative concerns in tax administration, which moved Congress to enact the classification freeze provision in RA 8240, were merely continued by RA 9334. Indeed, administrative concerns may provide a legitimate, rational basis for legislative classification. In the case at bar, these administrative concerns in the measurement and collection of excise taxes on sin products are readily apparent as afore-discussed. Aside from the major concern regarding the elimination of potential areas for abuse and corruption from the tax administration of sin products, the legislative deliberations also show that the classification freeze provision was intended to generate buoyant and stable revenues for government. With the frozen tax classifications, the revenue inflow would remain stable and the government would be able to predict with a greater degree of certainty the amount of taxes that a cigarette manufacturer would pay given the trend in its sales volume over time. The reason for this is that the previously classified cigarette brands would be prevented from moving either upward or downward their tax brackets despite the changes in their net retail prices in the future and, as a result, the amount of taxes due from them would remain predictable. The classification freeze provision would, thus, aid in the revenue planning of the government. All in all, the classification freeze provision addressed Congresss administrative concerns in the simplification of tax administration of sin products, elimination of potential areas for abuse and corruption in tax collection, buoyant and stable revenue generation, and ease of projection of revenues. Consequently, there can be no denial of the equal protection of the laws since the rational-basis test is amply satisfied. Moreover, petitioners contention that the assailed provisions violate the uniformity of taxation clause is similarly unavailing. In Churchill v. Concepcion,4 we explained that a tax "is uniform when it operates with the same force and effect in every place where the subject of it is found."5 It does not signify an intrinsic but simply a geographical uniformity.6 A levy of tax is not unconstitutional because it is not
intrinsically equal and uniform in its operation.7The uniformity rule does not prohibit classification for purposes of taxation.8 As ruled in Tan v. Del Rosario, Jr.:9 Uniformity of taxation, like the kindred concept of equal protection, merely requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities (citations omitted). Uniformity does not forfend classification as long as: (1) the standards that are used therefor are substantial and not arbitrary, (2) the categorization is germane to achieve the legislative purpose, (3) the law applies, all things being equal, to both present and future conditions, and (4) the classification applies equally well to all those belonging to the same class (citations omitted).10 In the instant case, there is no question that the classification freeze provision meets the geographical uniformity requirement because the assailed law applies to all cigarette brands in the Philippines. And, for reasons already adverted to in our August 20, 2008 Decision, the above four-fold test has been met in the present case. Petitioners reliance on Ormoc Sugar Co. is misplaced. In said case, the controverted municipal ordinance specifically named and taxed only the Ormoc Sugar Company, and excluded any subsequently established sugar central from its coverage. Thus, the ordinance was found unconstitutional on equal protection grounds because its terms do not apply to future conditions as well. This is not the case here. The classification freeze provision uniformly applies to all cigarette brands whether existing or to be introduced in the market at some future time. It does not purport to exempt any brand from its operation nor single out a brand for the purpose of imposition of excise taxes. At any rate, petitioners real disagreement lies with the legitimate State interests. Although it concedes that the Court utilized the rationality test and that the classification freeze provision was necessitated by several legitimate State interests, however, it refuses to accept the justifications given by Congress for the classification freeze provision. As we elucidated in our August 20, 2008 Decision, this line of argumentation revolves around the wisdom and expediency of the assailed law which we cannot inquire into, much less overrule. Equal protection is not a license for courts to judge the wisdom, fairness, or logic of legislative choices.11 We reiterate, therefore, that petitioners remedy is with Congress and not this Court. The assailed provisions do not violate the constitutional prohibition on unfair competition. Petitioner asserts that the Court erroneously applied the rational basis test allegedly because this test does not apply in a constitutional challenge based on a violation of Section 19, Article XII of the Constitution on unfair competition. Citing Tatad v. Secretary of the Department of Energy,12 it argues that the classification freeze provision gives the brands under Annex "D" a decisive edge because it
constitutes a substantial barrier to the entry of prospective players; that the Annex "D" provision is no different from the 4% tariff differential which we invalidated in Tatad; that some of the new brands, like Astro, Memphis, Capri, L&M, Bowling Green, Forbes, and Canon, which were introduced into the market after the effectivity of the assailed law on January 1, 1997, were "killed" by Annex "D" brands because the former brands were reclassified by the BIR to higher tax brackets; that the finding that price is not the only factor in the market as there are other factors like consumer preference, active ingredients, etc. is contrary to the evidence presented and the deliberations in Congress; that the classification freeze provision will encourage predatory pricing in contravention of the constitutional prohibition on unfair competition; and that the cumulative effect of the operation of the classification freeze provision is to perpetuate the oligopoly of intervenors Philip Morris and Fortune Tobacco in contravention of the constitutional edict for the State to regulate or prohibit monopolies, and to disallow combinations in restraint of trade and unfair competition. The argument lacks merit. While previously arguing that the rational basis test was not satisfied, petitioner now asserts that this test does not apply in this case and that the proper matrix to evaluate the constitutionality of the assailed law is the prohibition on unfair competition under Section 19, Article XII of the Constitution. It should be noted that during the trial below, petitioner did not invoke said constitutional provision as it relied solely on the alleged violation of the equal protection and uniformity of taxation clauses. Well-settled is the rule that points of law, theories, issues and arguments not adequately brought to the attention of the lower court will not be ordinarily considered by a reviewing court as they cannot be raised for the first time on appeal.13 At any rate, even if we were to relax this rule, as previously stated, the evidence presented before the trial court is insufficient to establish the alleged violation of the constitutional proscription against unfair competition. Indeed, in Tatad we ruled that a law which imposes substantial barriers to the entry and exit of new players in our downstream oil industry may be struck down for being violative of Section 19, Article XII of the Constitution.14However, we went on to say in that case that "if they are insignificant impediments, they need not be stricken down."15 As we stated in our August 20, 2008 Decision, petitioner failed to convincingly prove that there is a substantial barrier to the entry of new brands in the cigarette market due to the classification freeze provision. We further observed that several new brands were introduced in the market after the assailed law went into effect thus negating petitioners sweeping claim that the classification freeze provision is an insurmountable barrier to the entry of new brands. We also noted that price is not the only factor affecting competition in the market for there are other factors such as taste, brand loyalty, etc. We see no reason to depart from these findings for the following reasons: First, petitioner did not lay down the factual foundations, as supported by verifiable documentary proof, which would establish, among others, the cigarette brands in competition with each other; the current net retail prices of Annex "D" brands, as
determined through a market survey, to provide a sufficient point of comparison with those covered by the BIRs market survey of new brands; and the causal connection with as well as the extent of the impact on the competition in the cigarette market of the classification freeze provision. Other than petitioners selfserving allegations and testimonial evidence, no adequate documentary evidence was presented to substantiate its claims. Absent ample documentary proof, we cannot accept petitioners claim that the classification freeze provision is an insurmountable barrier to the entry of new players. Second, we cannot lend credence to petitioners claim that it cannot produce cigarettes that can compete with Marlboro and Philip Morris in the high-priced tax bracket. Except for its self-serving testimonial evidence, no sufficient documentary evidence was presented to substantiate this claim. The current net retail price, which is the basis for determining the tax bracket of a cigarette brand, more or less consists of the costs of raw materials, labor, advertising and profit margin. To a large extent, these factors are controllable by the manufacturer, as such, the decision to enter which tax bracket will depend on the pricing strategy adopted by the individual manufacturer. The same holds true for its claims that other new brands, like Astro, Memphis, Capri, L&M, Bowling Green, Forbes, and Canon, were "killed" by Annex "D" brands due to the effects of the operation of the classification freeze provision over time. The evidence that petitioner presented before the trial court failed to substantiate the basis for these claims. Essentially, petitioner would want us to accept its conclusions of law without first laying down the factual foundations of its arguments. This Court, which is not a trier of facts, cannot take judicial notice of the factual premises of these arguments as petitioner now seems to suggest. The evidence should have been presented before the trial court to allow it to examine and determine for itself whether such factual premises, as supported by sufficient documentary evidence, provide reasonable basis for petitioners conclusion that there arose an unconstitutional unfair competition due to the operation of the classification freeze provision. Petitioner should be reminded that it appealed this case from the adverse ruling of the trial court directly to this Court on pure questions of law instead of resorting to the Court of Appeals. Third, Tatad is not applicable to the instant case. In Tatad, we found that the 4% tariff differential between imported crude oil and imported refined petroleum products erects a high barrier to the entry of new players because (1) it imposes an undue burden on new players to spend billions of pesos to build refineries in order to compete with the old players, and (2) new players, who opt not to build refineries, suffer from the huge disadvantage of increasing their product cost by 4%.16 The tariff was imposed on the raw materials uniformly used by the players in the oil industry. Thus, the adverse effect on competition arising from this discriminatory treatment was readily apparent. In contrast, the excise tax under the assailed law is imposed based on the current net retail price of a cigarette brand. As previously explained, the current net retail price is determined by the pricing strategy of the manufacturer. This Court cannot simply speculate that the reason why a new brand cannot enter a specific tax bracket and compete with the brands therein was because of the classification freeze provision, rather than the
manufacturers own pricing decision or some other factor solely attributable to the manufacturer. Again, the burden of proof in this regard is on petitioner which it failed to muster. Fourth, the finding in our August 20, 2008 Decision that price is not the only factor which affects consumer behavior in the cigarette market is based on petitioners own evidence. On cross-examination, petitioners witness admitted that notwithstanding the change in price, a cigarette smoker may prefer the old brand because of its addictive formulation.17 As a result, even if we were to assume that the classification freeze provision distorts the pricing scheme of the market players, it is not clear whether a substantial barrier to the entry of new players would thereby be created because of these other factors affecting consumer behavior. Last, the claim that the assailed provisions encourage predatory pricing was never raised nor substantiated before the trial court. It is merely an afterthought and cannot be given weight. In sum, the totality of the evidence presented by petitioner before the trial court failed to convincingly establish the alleged violation of the constitutional prohibition on unfair competition. It is a basic postulate that the one who challenges the constitutionality of a law carries the heavy burden of proof for laws enjoy a strong presumption of constitutionality as it is an act of a co-equal branch of government. Petitioner failed to carry this burden. The assailed law does not transgress the constitutional provisions on regressive and inequitable taxation. Petitioner argues that the classification freeze provision is a form of regressive and inequitable tax system which is proscribed under Article VI, Section 28(1)18 of the Constitution. It claims that people in equal positions should be treated alike. The use of different tax bases for brands under Annex "D" vis--vis new brands is discriminatory, and thus, iniquitous. Petitioner further posits that the classification freeze provision is regressive in character. It asserts that the harmonization of revenue flow projections and ease of tax administration cannot override this constitutional command. We note that the points raised by petitioner with respect to alleged inequitable taxation perpetuated by the classification freeze provision are a mere reformulation of its equal protection challenge. As stated earlier, the assailed provisions do not infringe the equal protection clause because the four-fold test is satisfied. In particular, the classification freeze provision has been found to rationally further legitimate State interests consistent with rationality review. Petitioners repackaged argument has, therefore, no merit. Anent the issue of regressivity, it may be conceded that the assailed law imposes an excise tax on cigarettes which is a form of indirect tax, and thus, regressive in character. While there was an attempt to make the imposition of the excise tax
more equitable by creating a four-tiered taxation system where higher priced cigarettes are taxed at a higher rate, still, every consumer, whether rich or poor, of a cigarette brand within a specific tax bracket pays the same tax rate. To this extent, the tax does not take into account the persons ability to pay. Nevertheless, this does not mean that the assailed law may be declared unconstitutional for being regressive in character because the Constitution does not prohibit the imposition of indirect taxes but merely provides that Congress shall evolve a progressive system of taxation. As we explained in Tolentino v. Secretary of Finance:191avvphi1.zw+ [R]egressivity is not a negative standard for courts to enforce. What Congress is required by the Constitution to do is to "evolve a progressive system of taxation." This is a directive to Congress, just like the directive to it to give priority to the enactment of laws for the enhancement of human dignity and the reduction of social, economic and political inequalities [Art. XIII, Section 1] or for the promotion of the right to "quality education" [Art. XIV, Section 1]. These provisions are put in the Constitution as moral incentives to legislation, not as judicially enforceable 20 rights. Petitioner is not entitled to a downward reclassification of Lucky Strike. Petitioner alleges that assuming the assailed law is constitutional, its Lucky Strike brand should be reclassified from the premium-priced to the high-priced tax bracket. Relying on BIR Ruling No. 018-2001 dated May 10, 2001, it claims that it timely sought redress from the BIR to have the market survey conducted within three months from product launch, as provided for under Section 4(B)21 of Revenue Regulations No. 1-97, in order to determine the actual current net retail price of Lucky Strike, and thus, fix its tax classification. Further, the upward reclassification of Lucky Strike amounts to deprivation of property right without due process of law. The conduct of the market survey after two years from product launch constitutes gross neglect on the part of the BIR. Consequently, for failure of the BIR to conduct a timely market survey, Lucky Strikes classification based on its suggested gross retail price should be deemed its official tax classification. Finally, petitioner asserts that had the market survey been timely conducted sometime in 2001, the current net retail price of Lucky Strike would have been found to be under the high-priced tax bracket. These contentions are untenable and misleading. First, BIR Ruling No. 018-2001 was requested by petitioner for the purpose of fixing Lucky Strikes initial tax classification based on its suggested gross retail price relative to its planned introduction of Lucky Strike in the market sometime in 2001 and not for the conduct of the market survey within three months from product launch. In fact, the said Ruling contained an express reservation that the tax classification of Lucky Strike set therein "is without prejudice, however, to the subsequent conduct of a survey x x x in order to determine if the actual gross retail price thereof is consistent with [petitioners] suggested gross retail price."22 In short, petitioner acknowledged that the initial tax classification of Lucky Strike may be
modified depending on the outcome of the survey which will determine the actual current net retail price of Lucky Strike in the market. Second, there was no upward reclassification of Lucky Strike because it was taxed based on its suggested gross retail price from the time of its introduction in the market in 2001 until the BIR market survey in 2003. We reiterate that Lucky Strikes actual current net retail price was surveyed for the first time in 2003 and was found to be fromP10.34 to P11.53 per pack, which is within the premium-priced tax bracket. There was, thus, no prohibited upward reclassification of Lucky Strike by the BIR based on its current net retail price. Third, the failure of the BIR to conduct the market survey within the three-month period under the revenue regulations then in force can in no way make the initial tax classification of Lucky Strike based on its suggested gross retail price permanent. Otherwise, this would contravene the clear mandate of the law which provides that the basis for the tax classification of a new brand shall be the current net retail price and not the suggested gross retail price. It is a basic principle of law that the State cannot be estopped by the mistakes of its agents. Last, the issue of timeliness of the market survey was never raised before the trial court because petitioners theory of the case was wholly anchored on the alleged unconstitutionality of the classification freeze provision. As a consequence, no documentary evidence as to the actual net retail price of Lucky Strike in 2001, based on a market survey at least comparable to the one mandated by law, was presented before the trial court. Evidently, it cannot be assumed that had the BIR conducted the market survey within three months from its product launch sometime in 2001, Lucky Strike would have been found to fall under the high-priced tax bracket and not the premium-priced tax bracket. To so hold would run roughshod over the States right to due process. Verily, petitioner prosecuted its case before the trial court solely on the theory that the assailed law is unconstitutional instead of merely challenging the timeliness of the market survey. The rule is that a party is bound by the theory he adopts and by the cause of action he stands on. He cannot be permitted after having lost thereon to repudiate his theory and cause of action, and thereafter, adopt another and seek to re-litigate the matter anew either in the same forum or on appeal.23 Having pursued one theory and lost thereon, petitioner may no longer pursue another inconsistent theory without thereby trifling with court processes and burdening the courts with endless litigation. WHEREFORE, the motion for reconsideration is DENIED. SO ORDERED. G.R. No. 166715 August 14, 2008
ABAKADA GURO PARTY vs.HON. CESAR V. PURISIMA,
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This petition for prohibition1 seeks to prevent respondents from implementing and enforcing Republic Act (RA) 93352 (Attrition Act of 2005). RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and employees to exceed their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board (Board).3 It covers all officials and employees of the BIR and the BOC with at least six months of service, regardless of employment status.4 The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue targets for the year, as determined by the Development Budget and Coordinating Committee (DBCC). Any incentive or reward is taken from the fund and allocated to the BIR and the BOC in proportion to their contribution in the 5 excess collection of the targeted amount of tax revenue. The Boards in the BIR and the BOC are composed of the Secretary of the Department of Finance (DOF) or his/her Undersecretary, the Secretary of the Department of Budget and Management (DBM) or his/her Undersecretary, the Director General of the National Economic Development Authority (NEDA) or his/her Deputy Director General, the Commissioners of the BIR and the BOC or their Deputy Commissioners, two representatives from the rank-and-file employees and a representative from the officials nominated by their recognized organization.6 Each Board has the duty to (1) prescribe the rules and guidelines for the allocation, distribution and release of the Fund; (2) set criteria and procedures for removing from the service officials and employees whose revenue collection falls short of the target; (3) terminate personnel in accordance with the criteria adopted by the Board; (4) prescribe a system for performance evaluation; (5) perform other functions, including the issuance of rules and regulations and (6) submit an annual report to Congress.7 The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC) were tasked to promulgate and issue the implementing rules and regulations of RA 9335,8 to be approved by a Joint Congressional Oversight Committee created for such purpose.9 Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335, a tax reform legislation. They contend that, by establishing a system of rewards and incentives, the law "transform[s] the officials and employees of the BIR and the BOC into mercenaries and bounty hunters" as they will do their best only in consideration of such rewards. Thus, the system of rewards and incentives invites corruption and undermines the constitutionally mandated duty of these officials and employees to serve the people with utmost responsibility, integrity, loyalty and efficiency.
Petitioners also claim that limiting the scope of the system of rewards and incentives only to officials and employees of the BIR and the BOC violates the constitutional guarantee of equal protection. There is no valid basis for classification or distinction as to why such a system should not apply to officials and employees of all other government agencies. In addition, petitioners assert that the law unduly delegates the power to fix revenue targets to the President as it lacks a sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides that BIR and BOC officials may be dismissed from the service if their revenue collections fall short of the target by at least 7.5%, the law does not, however, fix the revenue targets to be achieved. Instead, the fixing of revenue targets has been delegated to the President without sufficient standards. It will therefore be easy for the President to fix an unrealistic and unattainable target in order to dismiss BIR or BOC personnel. Finally, petitioners assail the creation of a congressional oversight committee on the ground that it violates the doctrine of separation of powers. While the legislative function is deemed accomplished and completed upon the enactment and approval of the law, the creation of the congressional oversight committee permits legislative participation in the implementation and enforcement of the law. In their comment, respondents, through the Office of the Solicitor General, question the petition for being premature as there is no actual case or controversy yet. Petitioners have not asserted any right or claim that will necessitate the exercise of this Courts jurisdiction. Nevertheless, respondents acknowledge that public policy requires the resolution of the constitutional issues involved in this case. They assert that the allegation that the reward system will breed mercenaries is mere speculation and does not suffice to invalidate the law. Seen in conjunction with the declared objective of RA 9335, the law validly classifies the BIR and the BOC because the functions they perform are distinct from those of the other government agencies and instrumentalities. Moreover, the law provides a sufficient standard that will guide the executive in the implementation of its provisions. Lastly, the creation of the congressional oversight committee under the law enhances, rather than violates, separation of powers. It ensures the fulfillment of the legislative policy and serves as a check to any over-accumulation of power on the part of the executive and the implementing agencies. After a careful consideration of the conflicting contentions of the parties, the Court finds that petitioners have failed to overcome the presumption of constitutionality in favor of RA 9335, except as shall hereafter be discussed. Actual Case And Ripeness An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial adjudication.10 A closely related requirement is ripeness, that is, the question must be ripe for adjudication. And a constitutional question is ripe for adjudication when the governmental act being
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challenged has a direct adverse effect on the individual challenging it.11 Thus, to be ripe for judicial adjudication, the petitioner must show a personal stake in the outcome of the case or an injury to himself that can be redressed by a favorable decision of the Court.12 In this case, aside from the general claim that the dispute has ripened into a judicial controversy by the mere enactment of the law even without any further overt act,13 petitioners fail either to assert any specific and concrete legal claim or to demonstrate any direct adverse effect of the law on them. They are unable to show a personal stake in the outcome of this case or an injury to themselves. On this account, their petition is procedurally infirm. This notwithstanding, public interest requires the resolution of the constitutional issues raised by petitioners. The grave nature of their allegations tends to cast a cloud on the presumption of constitutionality in favor of the law. And where an action of the legislative branch is alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute.14 Accountability Public Officers Section 1, Article 11 of the Constitution states: Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism, and justice, and lead modest lives. Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the benefit of the public for whom he holds it in trust. By demanding accountability and service with responsibility, integrity, loyalty, efficiency, patriotism and justice, all government officials and employees have the duty to be responsive to the needs of the people they are called upon to serve. Public officers enjoy the presumption of regularity in the performance of their duties. This presumption necessarily obtains in favor of BIR and BOC officials and employees. RA 9335 operates on the basis thereof and reinforces it by providing a system of rewards and sanctions for the purpose of encouraging the officials and employees of the BIR and the BOC to exceed their revenue targets and optimize their revenue-generation capability and collection.15 The presumption is disputable but proof to the contrary is required to rebut it. It cannot be overturned by mere conjecture or denied in advance (as petitioners would have the Court do) specially in this case where it is an underlying principle to advance a declared public policy. of
Petitioners claim that the implementation of RA 9335 will turn BIR and BOC officials and employees into "bounty hunters and mercenaries" is not only without any factual and legal basis; it is also purely speculative. A law enacted by Congress enjoys the strong presumption of constitutionality. To justify its nullification, there must be a clear and unequivocal breach of the Constitution, not a doubtful and equivocal one.16 To invalidate RA 9335 based on petitioners baseless supposition is an affront to the wisdom not only of the legislature that passed it but also of the executive which approved it. Public service is its own reward. Nevertheless, public officers may by law be rewarded for exemplary and exceptional performance. A system of incentives for exceeding the set expectations of a public office is not anathema to the concept of public accountability. In fact, it recognizes and reinforces dedication to duty, industry, efficiency and loyalty to public service of deserving government personnel. In United States v. Matthews,17 the U.S. Supreme Court validated a law which awards to officers of the customs as well as other parties an amount not exceeding one-half of the net proceeds of forfeitures in violation of the laws against smuggling. Citing Dorsheimer v. United States,18 the U.S. Supreme Court said: The offer of a portion of such penalties to the collectors is to stimulate and reward their zeal and industry in detecting fraudulent attempts to evade payment of duties and taxes. In the same vein, employees of the BIR and the BOC may by law be entitled to a reward when, as a consequence of their zeal in the enforcement of tax and customs laws, they exceed their revenue targets. In addition, RA 9335 establishes safeguards to ensure that the reward will not be claimed if it will be either the fruit of "bounty hunting or mercenary activity" or the product of the irregular performance of official duties. One of these precautionary measures is embodied in Section 8 of the law: SEC. 8. Liability of Officials, Examiners and Employees of the BIR and the BOC. The officials, examiners, and employees of the [BIR] and the [BOC] who violate this Act or who are guilty of negligence, abuses or acts of malfeasance or misfeasance or fail to exercise extraordinary diligence in the performance of their duties shall be held liable for any loss or injury suffered by any business establishment or taxpayer as a result of such violation, negligence, abuse, malfeasance, misfeasance or failure to exercise extraordinary diligence. Equal Protection
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Equality guaranteed under the equal protection clause is equality under the same conditions and among persons similarly situated; it is equality among equals, not similarity of treatment of persons who are classified based on substantial differences in relation to the object to be accomplished.19 When things or persons are different in fact or circumstance, they may be treated in law differently. In Victoriano v. Elizalde Rope Workers Union,20 this Court declared: The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the [S]tate. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that the classification be made with mathematical nicety. Hence, legislative classification may in many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear.21 (emphasis supplied)
The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable foundation or rational basis and not arbitrary.22 With respect to RA 9335, its expressed public policy is the optimization of the revenuegeneration capability and collection of the BIR and the BOC.23 Since the subject of the law is the revenue- generation capability and collection of the BIR and the BOC, the incentives and/or sanctions provided in the law should logically pertain to the said agencies. Moreover, the law concerns only the BIR and the BOC because they have the common distinct primary function of generating revenues for the national government through the collection of taxes, customs duties, fees and charges. The BIR performs the following functions: Sec. 18. The Bureau of Internal Revenue. The Bureau of Internal Revenue, which shall be headed by and subject to the supervision and control of the Commissioner of Internal Revenue, who shall be appointed by the President upon the recommendation of the Secretary [of the DOF], shall have the following functions: (1) Assess and collect all taxes, fees and charges and account for all revenues collected; (2) Exercise duly delegated police powers for the proper performance of its functions and duties; (3) Prevent and prosecute tax evasions and all other illegal economic activities; (4) Exercise supervision and control over its constituent and subordinate units; and (5) Perform such other functions as may be provided by law.24 xxx xxx xxx (emphasis supplied)
On the other hand, the BOC has the following functions: Sec. 23. The Bureau of Customs. The Bureau of Customs which shall be headed and subject to the management and control of the Commissioner of Customs, who shall be appointed by the President upon the recommendation of the Secretary[of the DOF] and hereinafter referred to as Commissioner, shall have the following functions: (1) Collect custom duties, taxes and the corresponding fees, charges and penalties;
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(2) Account for all customs revenues collected; (3) Exercise police authority for the enforcement of tariff and customs laws; (4) Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of entry; (5) Supervise and control exports, imports, foreign mails and the clearance of vessels and aircrafts in all ports of entry; (6) Administer all legal requirements that are appropriate; (7) Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction; (8) Exercise supervision and control over its constituent units; (9) Perform such other functions as may be provided by law. xxx xxx xxx (emphasis supplied)
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SEC. 2. Declaration of Policy. It is the policy of the State to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing for a system of rewards and sanctions through the creation of a Rewards and Incentives Fund and a Revenue Performance Evaluation Board in the above agencies for the purpose of encouraging their officials and employees to exceed their revenue targets. Section 4 "canalized within banks that keep it from overflowing"29 the delegated power to the President to fix revenue targets: SEC. 4. Rewards and Incentives Fund. A Rewards and Incentives Fund, hereinafter referred to as the Fund, is hereby created, to be sourced from the collection of the BIR and the BOC in excess of their respective revenue targets of the year, as determined by the Development Budget and Coordinating Committee (DBCC), in the following percentages:
Excess of Collection of the Excess the Percent (%) of the Excess Collection to Accrue to t Revenue Targets Fund 30% or below 15% More than 30% 15% of the first 30% plus 20% of the remaining excess The Fund shall be deemed automatically appropriated the year immediately following the year when the revenue collection target was exceeded and shall be released on the same fiscal year. Revenue targets shall refer to the original estimated revenue collection expected of the BIR and the BOC for a given fiscal year as stated in the Budget of Expenditures and Sources of Financing (BESF) submitted by the President to Congress. The BIR and the BOC shall submit to the DBCC the distribution of the agencies revenue targets as allocated among its revenue districts in the case of the BIR, and the collection districts in the case of the BOC. xxx xxx xxx (emphasis supplied)
Both the BIR and the BOC are bureaus under the DOF. They principally perform the special function of being the instrumentalities through which the State exercises one of its great inherent functions taxation. Indubitably, such substantial distinction is germane and intimately related to the purpose of the law. Hence, the classification and treatment accorded to the BIR and the BOC under RA 9335 fully satisfy the demands of equal protection. Undue Delegation Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2) the sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried out or implemented by the delegate.26 It lays down a sufficient standard when it provides adequate guidelines or limitations in the law to map out the boundaries of the delegates authority and prevent the delegation from running riot.27 To be sufficient, the standard must specify the limits of the delegates authority, announce the legislative policy and identify the conditions under which it is to be implemented.28 RA 9335 adequately states the policy and standards to guide the President in fixing revenue targets and the implementing agencies in carrying out the provisions of the law. Section 2 spells out the policy of the law:
Revenue targets are based on the original estimated revenue collection expected respectively of the BIR and the BOC for a given fiscal year as approved by the DBCC and stated in the BESF submitted by the President to Congress.30 Thus, the determination of revenue targets does not rest solely on the President as it also undergoes the scrutiny of the DBCC. On the other hand, Section 7 specifies the limits of the Boards authority and identifies the conditions under which officials and employees whose revenue
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collection falls short of the target by at least 7.5% may be removed from the service: SEC. 7. Powers and Functions of the Board. The Board in the agency shall have the following powers and functions: xxx xxx xxx
(b) To set the criteria and procedures for removing from service officials and employees whose revenue collection falls short of the target by at least seven and a half percent (7.5%), with due consideration of all relevant factors affecting the level of collection as provided in the rules and regulations promulgated under this Act, subject to civil service laws, rules and regulations and compliance with substantive and procedural due process: Provided, That the following exemptions shall apply: 1. Where the district or area of responsibility is newly-created, not exceeding two years in operation, as has no historical record of collection performance that can be used as basis for evaluation; and 2. Where the revenue or customs official or employee is a recent transferee in the middle of the period under consideration unless the transfer was due to nonperformance of revenue targets or potential nonperformance of revenue targets: Provided, however, That when the district or area of responsibility covered by revenue or customs officials or employees has suffered from economic difficulties brought about by natural calamities or force majeure or economic causes as may be determined by the Board, termination shall be considered only after careful and proper review by the Board. (c) To terminate personnel in accordance with the criteria adopted in the preceding paragraph: Provided, That such decision shall be immediately executory: Provided, further, That the application of the criteria for the separation of an official or employee from service under this Act shall be without prejudice to the application of other relevant laws on accountability of public officers and employees, such as the Code of Conduct and Ethical Standards of Public Officers and Employees and the Anti-Graft and Corrupt Practices Act; xxx xxx xxx (emphasis supplied)
Clearly, RA 9335 in no way violates the security of tenure of officials and employees of the BIR and the BOC. The guarantee of security of tenure only means that an employee cannot be dismissed from the service for causes other than those provided by law and only after due process is accorded the employee.31 In the case of RA 9335, it lays down a reasonable yardstick for removal (when the revenue collection falls short of the target by at least 7.5%) with due consideration of all relevant factors affecting the level of collection. This standard is analogous to inefficiency and incompetence in the performance of official duties, a ground for disciplinary action under civil service laws.32 The action for removal is also subject to civil service laws, rules and regulations and compliance with substantive and procedural due process. At any rate, this Court has recognized the following as sufficient standards: "public interest," "justice and equity," "public convenience and welfare" and "simplicity, economy and welfare."33 In this case, the declared policy of optimization of the revenue-generation capability and collection of the BIR and the BOC is infused with public interest. Separation Of Powers Section 12 of RA 9335 provides: SEC. 12. Joint Congressional Oversight Committee. There is hereby created a Joint Congressional Oversight Committee composed of seven Members from the Senate and seven Members from the House of Representatives. The Members from the Senate shall be appointed by the Senate President, with at least two senators representing the minority. The Members from the House of Representatives shall be appointed by the Speaker with at least two members representing the minority. After the Oversight Committee will have approved the implementing rules and regulations (IRR) it shall thereafter become functus officio and therefore cease to exist. The Joint Congressional Oversight Committee in RA 9335 was created for the purpose of approving the implementing rules and regulations (IRR) formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it approved the said IRR. From then on, it became functus officio and ceased to exist. Hence, the issue of its alleged encroachment on the executive function of implementing and enforcing the law may be considered moot and academic. This notwithstanding, this might be as good a time as any for the Court to confront the issue of the constitutionality of the Joint Congressional Oversight Committee created under RA 9335 (or other similar laws for that matter). The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the concept of congressional oversight in Macalintal v. Commission on Elections34 is illuminating:
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Concept and bases of congressional oversight Broadly defined, the power of oversight embraces all activities undertaken by Congress to enhance its understanding of and influence over the implementation of legislation it has enacted. Clearly, oversight concerns post-enactment measures undertaken by Congress: (a) to monitor bureaucratic compliance with program objectives, (b) to determine whether agencies are properly administered, (c) to eliminate executive waste and dishonesty, (d) to prevent executive usurpation of legislative authority, and (d) to assess executive conformity with the congressional perception of public interest. The power of oversight has been held to be intrinsic in the grant of legislative power itself and integral to the checks and balances inherent in a democratic system of government. x x x x x x x x x Over the years, Congress has invoked its oversight power with increased frequency to check the perceived "exponential accumulation of power" by the executive branch. By the beginning of the 20th century, Congress has delegated an enormous amount of legislative authority to the executive branch and the administrative agencies. Congress, thus, uses its oversight power to make sure that the administrative agencies perform their functions within the authority delegated to them. x x x x x x x x x Categories of congressional oversight functions The acts done by Congress purportedly in the exercise of its oversight powers may be divided intothree categories, namely: scrutiny, investigation and supervision. a. Scrutiny Congressional scrutiny implies a lesser intensity and continuity of attention to administrative operations. Its primary purpose is to determine economy and efficiency of the operation of government activities. In the exercise of legislative scrutiny, Congress may request information and report from the other branches of government. It can give recommendations or pass resolutions for consideration of the agency involved. xxx xxx xxx
involves a more intense digging of facts. The power of Congress to conduct investigation is recognized by the 1987 Constitution under section 21, Article VI, xxx xxx xxx c. Legislative supervision The third and most encompassing form by which Congress exercises its oversight power is thru legislative supervision. "Supervision" connotes a continuing and informed awareness on the part of a congressional committee regarding executive operations in a given administrative area. While both congressional scrutiny and investigation involve inquiry into past executive branch actions in order to influence future executive branch performance, congressional supervision allows Congress to scrutinize the exercise of delegated law-making authority, and permits Congress to retain part of that delegated authority. Congress exercises supervision over the executive agencies through its veto power. It typically utilizes veto provisions when granting the President or an executive agency the power to promulgate regulations with the force of law. These provisions require the President or an agency to present the proposed regulations to Congress, which retains a "right" to approve or disapprove any regulation before it takes effect. Such legislative veto provisions usually provide that a proposed regulation will become a law after the expiration of a certain period of time, only if Congress does not affirmatively disapprove of the regulation in the meantime. Less frequently, the statute provides that a proposed regulation will become law if Congress affirmatively approves it. Supporters of legislative veto stress that it is necessary to maintain the balance of power between the legislative and the executive branches of government as it offers lawmakers a way to delegate vast power to the executive branch or to independent agencies while retaining the option to cancel particular exercise of such power without having to pass new legislation or to repeal existing law. They contend that this arrangement promotes democratic accountability as it provides legislative check on the activities of unelected administrative agencies. One proponent thus explains: It is too late to debate the merits of this delegation policy: the policy is too deeply embedded in our law and practice. It suffices to say that the complexities of modern government have often led Congress-whether by actual or perceived necessity- to legislate by declaring broad policy goals and general statutory standards, leaving the choice of policy options to the discretion of an executive officer. Congress articulates legislative aims, but leaves their implementation to the judgment of parties who may or may not have participated in or agreed with the development of those aims. Consequently, absent safeguards, in many instances the reverse of our constitutional scheme could be effected: Congress proposes, the Executive disposes. One safeguard, of course, is the legislative power to enact new legislation or to change existing law. But without some means of overseeing post enactment activities of the executive branch,
b. Congressional investigation While congressional scrutiny is regarded as a passive process of looking at the facts that are readily available, congressional investigation
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Congress would be unable to determine whether its policies have been implemented in accordance with legislative intent and thus whether legislative intervention is appropriate. Its opponents, however, criticize the legislative veto as undue encroachment upon the executive prerogatives. They urge that any post-enactment measures undertaken by the legislative branch should be limited to scrutiny and investigation; any measure beyond that would undermine the separation of powers guaranteed by the Constitution. They contend that legislative veto constitutes an impermissible evasion of the Presidents veto authority and intrusion into the powers vested in the executive or judicial branches of government. Proponents counter that legislative veto enhances separation of powers as it prevents the executive branch and independent agencies from accumulating too much power. They submit that reporting requirements and congressional committee investigations allow Congress to scrutinize only the exercise of delegated law-making authority. They do not allow Congress to review executive proposals before they take effect and they do not afford the opportunity for ongoing and binding expressions of congressional intent. In contrast, legislative veto permits Congress to participate prospectively in the approval or disapproval of "subordinate law" or those enacted by the executive branch pursuant to a delegation of authority by Congress. They further argue that legislative veto "is a necessary response by Congress to the accretion of policy control by forces outside its chambers." In an era of delegated authority, they point out that legislative veto "is the most efficient means Congress has yet devised to retain control over the evolution and implementation of its policy as declared by statute." In Immigration and Naturalization Service v. Chadha, the U.S. Supreme Court resolved the validity of legislative veto provisions. The case arose from the order of the immigration judge suspending the deportation of Chadha pursuant to 244(c)(1) of the Immigration and Nationality Act. The United States House of Representatives passed a resolution vetoing the suspension pursuant to 244(c)(2) authorizing either House of Congress, by resolution, to invalidate the decision of the executive branch to allow a particular deportable alien to remain in the United States. The immigration judge reopened the deportation proceedings to implement the House order and the alien was ordered deported. The Board of Immigration Appeals dismissed the aliens appeal, holding that it had no power to declare unconstitutional an act of Congress. The United States Court of Appeals for Ninth Circuit held that the House was without constitutional authority to order the aliens deportation and that 244(c)(2) violated the constitutional doctrine on separation of powers. On appeal, the U.S. Supreme Court declared 244(c)(2) unconstitutional. But the Court shied away from the issue of separation of powers and instead held that the provision violates the presentment clause and bicameralism. It held that the one-house veto was essentially legislative in purpose and effect. As such, it is subject to the procedures set out in Article I of the Constitution requiring the passage by a majority of both Houses and presentment to the President. x x x x x x xxx
Two weeks after the Chadha decision, the Court upheld, in memorandum decision, two lower court decisions invalidating the legislative veto provisions in the Natural Gas Policy Act of 1978 and the Federal Trade Commission Improvement Act of 1980. Following this precedence, lower courts invalidated statutes containing legislative veto provisions although some of these provisions required the approval of both Houses of Congress and thus met the bicameralism requirement of Article I. Indeed, some of these veto provisions were not even exercised.35 (emphasis supplied) In Macalintal, given the concept and configuration of the power of congressional oversight and considering the nature and powers of a constitutional body like the Commission on Elections, the Court struck down the provision in RA 9189 (The Overseas Absentee Voting Act of 2003) creating a Joint Congressional Committee. The committee was tasked not only to monitor and evaluate the implementation of the said law but also to review, revise, amend and approve the IRR promulgated by the Commission on Elections. The Court held that these functions infringed on the 36 constitutional independence of the Commission on Elections. With this backdrop, it is clear that congressional oversight is not unconstitutional per se, meaning, it neither necessarily constitutes an encroachment on the executive power to implement laws nor undermines the constitutional separation of powers. Rather, it is integral to the checks and balances inherent in a democratic system of government. It may in fact even enhance the separation of powers as it prevents the over-accumulation of power in the executive branch. However, to forestall the danger of congressional encroachment "beyond the legislative sphere," the Constitution imposes two basic and related constraints on Congress.37 It may not vest itself, any of its committees or its members with either executive or judicial power.38 And, when it exercises its legislative power, it must follow the "single, finely wrought and exhaustively considered, procedures" specified under the Constitution,39 including the procedure for enactment of laws and presentment. Thus, any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In particular, congressional oversight must be confined to the following: (1) scrutiny based primarily on Congress power of appropriation and the budget hearings conducted in connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses on any matter pertaining to their departments and its power of confirmation40 and (2) investigation and monitoring41 of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation.42
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Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. Legislative vetoes fall in this class. Legislative veto is a statutory provision requiring the President or an administrative agency to present the proposed implementing rules and regulations of a law to Congress which, by itself or through a committee formed by it, retains a "right" or "power" to approve or disapprove such regulations before they take effect. As such, a legislative veto in the form of a congressional oversight committee is in the form of an inward-turning delegation designed to attach a congressional leash (other than through scrutiny and investigation) to an agency to which Congress has by law initially delegated broad powers.43It radically changes the design or structure of the Constitutions diagram of power as it entrusts to Congress a direct role in enforcing, applying or implementing its own laws.44 Congress has two options when enacting legislation to define national policy within 45 the broad horizons of its legislative competence. It can itself formulate the details or it can assign to the executive branch the responsibility for making necessary managerial decisions in conformity with those standards.46 In the latter case, the law must be complete in all its essential terms and conditions when it leaves the hands of the legislature.47 Thus, what is left for the executive branch or the concerned administrative agency when it formulates rules and regulations implementing the law is to fill up details (supplementary rule-making) or ascertain facts necessary to bring the law into actual operation (contingent rule-making).48 Administrative regulations enacted by administrative agencies to implement and interpret the law which they are entrusted to enforce have the force of law and are entitled to respect.49 Such rules and regulations partake of the nature of a statute50 and are just as binding as if they have been written in the statute itself. As such, they have the force and effect of law and enjoy the presumption of constitutionality and legality until they are set aside with finality in an appropriate case by a competent court.51 Congress, in the guise of assuming the role of an overseer, may not pass upon their legality by subjecting them to its stamp of approval without disturbing the calculated balance of powers established by the Constitution. In exercising discretion to approve or disapprove the IRR based on a determination of whether or not they conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power exclusively vested in this Court by the Constitution. Considered Mr. Justice Dante O. Tinga Opinion of
Section 1. The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives, except to the extent reserved to the people by the provision on initiative and referendum. (emphasis supplied) Legislative power (or the power to propose, enact, amend and repeal laws)53 is vested in Congress which consists of two chambers, the Senate and the House of Representatives. A valid exercise of legislative power requires the act of both chambers. Corrollarily, it can be exercised neither solely by one of the two chambers nor by a committee of either or both chambers. Thus, assuming the validity of a legislative veto, both a single-chamber legislative veto and a congressional committee legislative veto are invalid. Additionally, Section 27(1), Article VI of the Constitution provides: Section 27. (1) Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he approves the same, he shall sign it, otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it. (emphasis supplied) Every bill passed by Congress must be presented to the President for approval or veto. In the absence of presentment to the President, no bill passed by Congress can become a law. In this sense, law-making under the Constitution is a joint act of the Legislature and of the Executive. Assuming that legislative veto is a valid legislative act with the force of law, it cannot take effect without such presentment even if approved by both chambers of Congress. In sum, two steps are required before a bill becomes a law. First, it must be approved by both Houses of Congress.54 Second, it must be presented to and approved by the President.55 As summarized by Justice Isagani Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is the procedure for the approval of bills: A bill is introduced by any member of the House of Representatives or the Senate except for some measures that must originate only in the former chamber.
Moreover, the requirement that the implementing rules of a law be subjected to approval by Congress as a condition for their effectivity violates the cardinal constitutional principles of bicameralism and the rule on presentment.52 Section 1, Article VI of the Constitution states:
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The first reading involves only a reading of the number and title of the measure and its referral by the Senate President or the Speaker to the proper committee for study. The bill may be "killed" in the committee or it may be recommended for approval, with or without amendments, sometimes after public hearings are first held thereon. If there are other bills of the same nature or purpose, they may all be consolidated into one bill under common authorship or as a committee bill. Once reported out, the bill shall be calendared for second reading. It is at this stage that the bill is read in its entirety, scrutinized, debated upon and amended when desired. The second reading is the most important stage in the passage of a bill. The bill as approved on second reading is printed in its final form and copies thereof are distributed at least three days before the third reading. On the third reading, the members merely register their votes and explain them if they are allowed by the rules. No further debate is allowed. Once the bill passes third reading, it is sent to the other chamber, where it will also undergo the three readings. If there are differences between the versions approved by the two chambers, a conference committee58 representing both Houses will draft a compromise measure that if ratified by the Senate and the House of Representatives will then be submitted to the President for his consideration. The bill is enrolled when printed as finally approved by the Congress, thereafter authenticated with the signatures of the Senate President, the Speaker, and the Secretaries of their respective chambers59 The Presidents role in law-making. The final step is submission to the President for approval. Once approved, it takes effect as law after the required publication.60 Where Congress delegates the formulation of rules to implement the law it has enacted pursuant to sufficient standards established in the said law, the law must be complete in all its essential terms and conditions when it leaves the hands of the legislature. And it may be deemed to have left the hands of the legislature when it becomes effective because it is only upon effectivity of the statute that legal rights and obligations become available to those entitled by the language of the statute. Subject to the indispensable requisite of publication under the due process clause,61 the determination as to when a law takes effect is wholly the prerogative of Congress.62 As such, it is only upon its effectivity that a law may be executed and the executive branch acquires the duties and powers to execute the said law. Before that point, the role of the executive branch, particularly of the President, is limited to approving or vetoing the law.63
From the moment the law becomes effective, any provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus unconstitutional. Under this principle, a provision that requires Congress or its members to approve the implementing rules of a law after it has already taken effect shall be unconstitutional, as is a provision that allows Congress or its members to overturn any directive or ruling made by the members of the executive branch charged with the implementation of the law. Following this rationale, Section 12 of RA 9335 should be struck down as unconstitutional. While there may be similar provisions of other laws that may be invalidated for failure to pass this standard, the Court refrains from invalidating them wholesale but will do so at the proper time when an appropriate case assailing those provisions is brought before us.64 The next question to be resolved is: what is the effect of the unconstitutionality of Section 12 of RA 9335 on the other provisions of the law? Will it render the entire law unconstitutional? No. Section 13 of RA 9335 provides: SEC. 13. Separability Clause. If any provision of this Act is declared invalid by a competent court, the remainder of this Act or any provision not affected by such declaration of invalidity shall remain in force and effect. In Tatad v. Secretary of the Department of Energy,65 the Court laid down the following rules: The general rule is that where part of a statute is void as repugnant to the Constitution, while another part is valid, the valid portion, if separable from the invalid, may stand and be enforced. The presence of a separability clause in a statute creates the presumption that the legislature intended separability, rather than complete nullity of the statute. To justify this result, the valid portion must be so far independent of the invalid portion that it is fair to presume that the legislature would have enacted it by itself if it had supposed that it could not constitutionally enact the other. Enough must remain to make a complete, intelligible and valid statute, which carries out the legislative intent. x x x The exception to the general rule is that when the parts of a statute are so mutually dependent and connected, as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a whole, the nullity of one part will vitiate the rest. In making the parts of the statute dependent, conditional, or connected with one another, the legislature intended the statute to be
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carried out as a whole and would not have enacted it if one part is void, in which case if some parts are unconstitutional, all the other provisions thus dependent, conditional, or connected must fall with them. The separability clause of RA 9335 reveals the intention of the legislature to isolate and detach any invalid provision from the other provisions so that the latter may continue in force and effect. The valid portions can stand independently of the invalid section. Without Section 12, the remaining provisions still constitute a complete, intelligible and valid law which carries out the legislative intent to optimize the revenue-generation capability and collection of the BIR and the BOC by providing for a system of rewards and sanctions through the Rewards and Incentives Fund and a Revenue Performance Evaluation Board. To be effective, administrative rules and regulations must be published in full if their purpose is to enforce or implement existing law pursuant to a valid delegation. The IRR of RA 9335 were published on May 30, 2006 in two newspapers of general circulation66 and became effective 15 days thereafter.67 Until and unless the contrary is shown, the IRR are presumed valid and effective even without the approval of the Joint Congressional Oversight Committee. WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335 creating a Joint Congressional Oversight Committee to approve the implementing rules and regulations of the law is declared UNCONSTITUTIONAL and therefore NULL and VOID. The constitutionality of the remaining provisions of RA 9335 is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain in force and effect. SO ORDERED. LEAGUE OF CITIES OF THE, vs. COMMISSION ON ELECTIONS G.R. No. 176951 November 18, 2008 The Case These are consolidated petitions for prohibition1 with prayer for the issuance of a writ of preliminary injunction or temporary restraining order filed by the League of Cities of the Philippines, City of Iloilo, City of Calbayog, and Jerry P. Treas2 assailing the constitutionality of the subject Cityhood Laws and enjoining the Commission on Elections (COMELEC) and respondent municipalities from conducting plebiscites pursuant to the Cityhood Laws. The Facts
During the 11th Congress,3 Congress enacted into law 33 bills converting 33 municipalities into cities. However, Congress did not act on bills converting 24 other municipalities into cities. During the 12th Congress,4 Congress enacted into law Republic Act No. 9009 (RA 9009),5 which took effect on 30 June 2001. RA 9009 amended Section 450 of the Local Government Code by increasing the annual income requirement for conversion of a municipality into a city from P20 million to P100 million. The rationale for the amendment was to restrain, in the words of Senator Aquilino Pimentel, "the mad rush" of municipalities to convert into cities solely to secure a larger share in the Internal Revenue Allotment despite the fact that they are incapable of fiscal independence.6 After the effectivity of RA 9009, the House of Representatives of the th 7 8 12 Congress adopted Joint Resolution No. 29, which sought to exempt from the P100 million income requirement in RA 9009 the 24 municipalities whose cityhood bills were not approved in the 11th Congress. However, the 12th Congress ended without the Senate approving Joint Resolution No. 29. During the 13th Congress,9 the House of Representatives re-adopted Joint Resolution No. 29 as Joint Resolution No. 1 and forwarded it to the Senate for approval. However, the Senate again failed to approve the Joint Resolution. Following the advice of Senator Aquilino Pimentel, 16 municipalities filed, through their respective sponsors, individual cityhood bills. The 16 cityhood bills contained a common provision exempting all the 16 municipalities from the P100 million income requirement in RA 9009. On 22 December 2006, the House of Representatives approved the cityhood bills. The Senate also approved the cityhood bills in February 2007, except that of Naga, Cebu which was passed on 7 June 2007. The cityhood bills lapsed into law (Cityhood Laws10) on various dates from March to July 2007 without the President's signature.11 The Cityhood Laws direct the COMELEC to hold plebiscites to determine whether the voters in each respondent municipality approve of the conversion of their municipality into a city. Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional for violation of Section 10, Article X of the Constitution, as well as for violation of the equal protection clause.12Petitioners also lament that the wholesale conversion of municipalities into cities will reduce the share of existing cities in the Internal Revenue Allotment because more cities will share the same amount of internal revenue set aside for all cities under Section 285 of the Local Government Code.13 The Issues
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The petitions raise the following fundamental issues: 1. Whether the Cityhood Laws violate Section 10, Article X of the Constitution; and 2. Whether the Cityhood Laws violate the equal protection clause. The Ruling of the Court We grant the petitions. The Cityhood Laws violate Sections 6 and 10, Article X of the Constitution, and are thus unconstitutional. First, applying the P100 million income requirement in RA 9009 to the present case is a prospective, not a retroactive application, because RA 9009 took effect in 2001 while the cityhood bills became law more than five years later. Second, the Constitution requires that Congress shall prescribe all the criteria for the creation of a city in the Local Government Code and not in any other law, including the Cityhood Laws. Third, the Cityhood Laws violate Section 6, Article X of the Constitution because they prevent a fair and just distribution of the national taxes to local government units. Fourth, the criteria prescribed in Section 450 of the Local Government Code, as amended by RA 9009, for converting a municipality into a city are clear, plain and unambiguous, needing no resort to any statutory construction. Fifth, the intent of members of the 11th Congress to exempt certain municipalities from the coverage of RA 9009 remained an intent and was never written into Section 450 of the Local Government Code. Sixth, the deliberations of the 11th or 12th Congress on unapproved bills or resolutions are not extrinsic aids in interpreting a law passed in the 13th Congress. Seventh, even if the exemption in the Cityhood Laws were written in Section 450 of the Local Government Code, the exemption would still be unconstitutional for violation of the equal protection clause. Preliminary Matters
Prohibition is the proper action for testing the constitutionality of laws administered by the COMELEC,14like the Cityhood Laws, which direct the COMELEC to hold plebiscites in implementation of the Cityhood Laws. Petitioner League of Cities of the Philippines has legal standing because Section 499 of the Local Government Code tasks the League with the "primary purpose of ventilating, articulating and crystallizing issues affecting city government administration and securing, through proper and legal means, solutions thereto."15 Petitioners-in-intervention,16 which are existing cities, have legal standing because their Internal Revenue Allotment will be reduced if the Cityhood Laws are declared constitutional. Mayor Jerry P. Treas has legal standing because as Mayor of Iloilo City and as a taxpayer he has sufficient interest to prevent the unlawful expenditure of public funds, like the release of more Internal Revenue Allotment to political units than what the law allows. Applying RA 9009 is a Prospective Application of the Law RA 9009 became effective on 30 June 2001 during the 11th Congress. This law specifically amended Section 450 of the Local Government Code, which now provides: Section 450. Requisites for Creation. (a) A municipality or a cluster of barangays may be converted into a component city if it has a locally generated average annual income, as certified by the Department of Finance, of at least One hundred million pesos (P100,000,000.00) for the last two (2) consecutive years based on 2000 constant prices, and if it has either of the following requisites: (i) a contiguous territory of at least one hundred (100) square kilometers, as certified by the Land Management Bureau; or (ii) a population of not less than one hundred fifty thousand (150,000) inhabitants, as certified by the National Statistics Office. The creation thereof shall not reduce the land area, population and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein. (b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and bounds. The requirement on land area shall not apply where the city proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands.
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(c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. (Emphasis supplied) Thus, RA 9009 increased the income requirement for conversion of a municipality into a city from P20 million to P100 million. Section 450 of the Local Government Code, as amended by RA 9009, does not provide any exemption from the increased income requirement. Prior to the enactment of RA 9009, a total of 57 municipalities had cityhood bills pending in Congress. Thirty-three cityhood bills became law before the enactment of RA 9009. Congress did not act on 24 cityhood bills during the 11th Congress. During the 12 Congress, the House of Representatives adopted Joint Resolution No. 29, exempting from the income requirement of P100 million in RA 9009 the 24 municipalities whose cityhood bills were not acted upon during the 11th Congress. This Resolution reached the Senate. However, the 12thCongress adjourned without the Senate approving Joint Resolution No. 29. During the 13th Congress, 16 of the 24 municipalities mentioned in the unapproved Joint Resolution No. 29 filed between November and December of 2006, through their respective sponsors in Congress, individual cityhood bills containing a common provision, as follows: Exemption from Republic Act No. 9009. - The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009. This common provision exempted each of the 16 municipalities from the income requirement ofP100 million prescribed in Section 450 of the Local Government Code, as amended by RA 9009. These cityhood bills lapsed into law on various dates from March to July 2007 after President Gloria Macapagal-Arroyo failed to sign them. Indisputably, Congress passed the Cityhood Laws long after the effectivity of RA 9009. RA 9009 became effective on 30 June 2001 or during the 11th Congress. The 13th Congress passed in December 2006 the cityhood bills which became law only in 2007. Thus, respondent municipalities cannot invoke the principle of non-retroactivity of laws.17 This basic rule has no application because RA 9009, an earlier law to the Cityhood Laws, is not being applied retroactively but prospectively. Congress Must Prescribe in the Local Government Code All Criteria Section 10, Article X of the 1987 Constitution provides:
th
No province, city, municipality, or barangay shall be created, divided, merged, abolished or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. (Emphasis supplied) The Constitution is clear. The creation of local government units must follow the criteria established in the Local Government Code and not in any other law. There is only one Local Government Code.18The Constitution requires Congress to stipulate in the Local Government Code all the criteria necessary for the creation of a city, including the conversion of a municipality into a city. Congress cannot write such criteria in any other law, like the Cityhood Laws. The criteria prescribed in the Local Government Code govern exclusively the creation of a city. No other law, not even the charter of the city, can govern such creation. The clear intent of the Constitution is to insure that the creation of cities and other political units must follow the same uniform, non-discriminatory criteria found solely in the Local Government Code. Any derogation or deviation from the criteria prescribed in the Local Government Code violates Section 10, Article X of the Constitution. RA 9009 amended Section 450 of the Local Government Code to increase the income requirement fromP20 million to P100 million for the creation of a city. This took effect on 30 June 2001. Hence, from that moment the Local Government Code required that any municipality desiring to become a city must satisfy the P100 million income requirement. Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption from this income requirement. In enacting RA 9009, Congress did not grant any exemption to respondent municipalities, even though their cityhood bills were pending in Congress when Congress passed RA 9009. The Cityhood Laws, all enacted after the effectivity of RA 9009, explicitly exempt respondent municipalities from the increased income requirement in Section 450 of the Local Government Code, as amended by RA 9009. Such exemption clearly violates Section 10, Article X of the Constitution and is thus patently unconstitutional. To be valid, such exemption must be written in the Local Government Code and not in any other law, including the Cityhood Laws. Cityhood Laws Violate Section 6, Article X of the Constitution Uniform and non-discriminatory criteria as prescribed in the Local Government Code are essential to implement a fair and equitable distribution of national taxes to all local government units. Section 6, Article X of the Constitution provides:
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Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. (Emphasis supplied) If the criteria in creating local government units are not uniform and discriminatory, there can be no fair and just distribution of the national taxes to local government units. A city with an annual income of only P20 million, all other criteria being equal, should not receive the same share in national taxes as a city with an annual income of P100 million or more. The criteria of land area, population and income, as prescribed in Section 450 of the Local Government Code, must be strictly followed because such criteria, prescribed by law, are material in determining the "just share" of local government units in national taxes. Since the Cityhood Laws do not follow the income criterion in Section 450 of the Local Government Code, they prevent the fair and just distribution of the Internal Revenue Allotment in violation of Section 6, Article X of the Constitution. Section 450 of the Plain and Unambiguous Local Government Code is Clear,
Government Code. The Constitution requires that the criteria for the conversion of a municipality into a city, including any exemption from such criteria, must all be written in the Local Government Code. Congress cannot prescribe such criteria or exemption from such criteria in any other law. In short, Congress cannot create a city through a law that does not comply with the criteria or exemption found in the Local Government Code. Section 10 of Article X is similar to Section 16, Article XII of the Constitution prohibiting Congress from creating private corporations except by a general law. Section 16 of Article XII provides: The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability. (Emphasis supplied) Thus, Congress must prescribe all the criteria for the "formation, organization, or regulation" of private corporations in a general law applicable to all without discrimination.21 Congress cannot create a private corporation through a special law or charter. Deliberations of the 11th Congress on Unapproved Bills Inapplicable Congress is not a continuing body.22 The unapproved cityhood bills filed during the 11th Congress became mere scraps of paper upon the adjournment of the 11th Congress. All the hearings and deliberations conducted during the 11th Congress on unapproved bills also became worthless upon the adjournment of the 11th Congress. These hearings and deliberations cannot be used to interpret bills enacted into law in the 13th or subsequent Congresses. The members and officers of each Congress are different. All unapproved bills filed in one Congress become functus officio upon adjournment of that Congress and must be re-filed anew in order to be taken up in the next Congress. When their respective authors re-filed the cityhood bills in 2006 during the 13th Congress, the bills had to start from square one again, going through the legislative mill just like bills taken up for the first time, from the filing to the approval. Section 123, Rule XLIV of the Rules of the Senate, on Unfinished Business, provides: Sec. 123. x x x All pending matters and proceedings shall terminate upon the expiration of one (1) Congress, but may be taken by the succeeding Congress as if presented for the first time. (Emphasis supplied)
There can be no resort to extrinsic aids like deliberations of Congress if the language of the law is plain, clear and unambiguous. Courts determine the intent of the law from the literal language of the law, within the law's four corners.19 If the language of the law is plain, clear and unambiguous, courts simply apply the law according to its express terms. If a literal application of the law results in absurdity, impossibility or injustice, then courts may resort to extrinsic aids of statutory construction like the legislative history of the law.20 Congress, in enacting RA 9009 to amend Section 450 of the Local Government Code, did not provide any exemption from the increased income requirement, not even to respondent municipalities whose cityhood bills were then pending when Congress passed RA 9009. Section 450 of the Local Government Code, as amended by RA 9009, contains no exemption whatsoever. Since the law is clear, plain and unambiguous that any municipality desiring to convert into a city must meet the increased income requirement, there is no reason to go beyond the letter of the law in applying Section 450 of the Local Government Code, as amended by RA 9009. The 11th Congress' Intent was not Written into the Local Government Code True, members of Congress discussed exempting respondent municipalities from RA 9009, as shown by the various deliberations on the matter during the 11th Congress. However, Congress did not write this intended exemption into law. Congress could have easily included such exemption in RA 9009 but Congress did not. This is fatal to the cause of respondent municipalities because such exemption must appear in RA 9009 as an amendment to Section 450 of the Local
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Similarly, Section 78 of the Rules of the House of Representatives, on Unfinished Business, states: Section 78. Calendar of Business. The Calendar of Business shall consist of the following: a. Unfinished Business. This is business being considered by the House at the time of its last adjournment. Its consideration shall be resumed until it is disposed of. The Unfinished Business at the end of a session shall be resumed at the commencement of the next session as if no adjournment has taken place. At the end of the term of a Congress, all Unfinished Business are deemed terminated. (Emphasis supplied) Thus, the deliberations during the 11th Congress on the unapproved cityhood bills, as well as the deliberations during the 12th and 13th Congresses on the unapproved resolution exempting from RA 9009 certain municipalities, have no legal significance. They do not qualify as extrinsic aids in construing laws passed by subsequent Congresses. Applicability of Equal Protection Clause If Section 450 of the Local Government Code, as amended by RA 9009, contained an exemption to theP100 million annual income requirement, the criteria for such exemption could be scrutinized for possible violation of the equal protection clause. Thus, the criteria for the exemption, if found in the Local Government Code, could be assailed on the ground of absence of a valid classification. However, Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption. The exemption is contained in the Cityhood Laws, which are unconstitutional because such exemption must be prescribed in the Local Government Code as mandated in Section 10, Article X of the Constitution. Even if the exemption provision in the Cityhood Laws were written in Section 450 of the Local Government Code, as amended by RA 9009, such exemption would still be unconstitutional for violation of the equal protection clause. The exemption provision merely states, "Exemption from Republic Act No. 9009 The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009." This one sentence exemption provision contains no classification standards or guidelines differentiating the exempted municipalities from those that are not exempted. Even if we take into account the deliberations in the 11th Congress that municipalities with pending cityhood bills should be exempt from the P100 million income requirement, there is still no valid classification to satisfy the equal protection clause. The exemption will be based solely on the fact that the 16 municipalities had cityhood bills pending in the 11th Congress when RA 9009
was enacted. This is not a valid classification between those entitled and those not entitled to exemption from the P100 million income requirement. To be valid, the classification in the present case must be based on substantial distinctions, rationally related to a legitimate government objective which is the purpose of the law,23 not limited to existing conditions only, and applicable to all similarly situated. Thus, this Court has ruled: The equal protection clause of the 1987 Constitution permits a valid classification under the following conditions: 1. The classification must rest on substantial distinctions; 2. The classification must be germane to the purpose of the law; 3. The classification must not be limited to existing conditions only; and 4. The classification must apply equally to all members of the same class.24 There is no substantial distinction between municipalities with pending cityhood bills in the 11thCongress and municipalities that did not have pending bills. The mere pendency of a cityhood bill in the 11th Congress is not a material difference to distinguish one municipality from another for the purpose of the income requirement. The pendency of a cityhood bill in the 11th Congress does not affect or determine the level of income of a municipality. Municipalities with pending cityhood bills in the 11thCongress might even have lower annual income than municipalities that did not have pending cityhood bills. In short, the classification th criterion mere pendency of a cityhood bill in the 11 Congress is not rationally related to the purpose of the law which is to prevent fiscally non-viable municipalities from converting into cities. Municipalities that did not have pending cityhood bills were not informed that a pending cityhood bill in the 11th Congress would be a condition for exemption from the increased P100 million income requirement. Had they been informed, many municipalities would have caused the filing of their own cityhood bills. These municipalities, even if they have bigger annual income than the 16 respondent municipalities, cannot now convert into cities if their income is less than P100 million. The fact of pendency of a cityhood bill in the 11th Congress limits the exemption to a specific condition existing at the time of passage of RA 9009. That specific condition will never happen again. This violates the requirement that a valid classification must not be limited to existing conditions only. This requirement is illustrated in Mayflower Farms, Inc. v. Ten Eyck,25 where the challenged law allowed milk dealers engaged in business prior to a fixed date to sell at a price
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lower than that allowed to newcomers in the same business. In Mayflower, the U.S. Supreme Court held: We are referred to a host of decisions to the effect that a regulatory law may be prospective in operation and may except from its sweep those presently engaged in the calling or activity to which it is directed. Examples are statutes licensing physicians and dentists, which apply only to those entering the profession subsequent to the passage of the act and exempt those then in practice, or zoning laws which exempt existing buildings, or laws forbidding slaughterhouses within certain areas, but excepting existing establishments. The challenged provision is unlike such laws, since, on its face, it is not a regulation of a business or an activity in the interest of, or for the protection of, the public, but an attempt to give an economic advantage to those engaged in a given business at an arbitrary date as against all those who enter the industry after that date. The appellees do not intimate that the classification bears any relation to the public health or welfare generally; that the provision will discourage monopoly; or that it was aimed at any abuse, cognizable by law, in the milk business. In the absence of any such showing, we have no right to conjure up possible situations which might justify the discrimination. The classification is arbitrary and unreasonable and denies the appellant the equal protection of the law. (Emphasis supplied) In the same vein, the exemption provision in the Cityhood Laws gives the 16 municipalities a unique advantage based on an arbitrary date the filing of their cityhood bills before the end of the 11thCongress - as against all other municipalities that want to convert into cities after the effectivity of RA 9009. Furthermore, limiting the exemption only to the 16 municipalities violates the requirement that the classification must apply to all similarly situated. Municipalities with the same income as the 16 respondent municipalities cannot convert into cities, while the 16 respondent municipalities can. Clearly, as worded the exemption provision found in the Cityhood Laws, even if it were written in Section 450 of the Local Government Code, would still be unconstitutional for violation of the equal protection clause. WHEREFORE, we GRANT the petitions and declare UNCONSTITUTIONAL the Cityhood Laws, namely: Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491. SO ORDERED. G.R. No. 176951 February 15, 2011
LEAGUE OF CITIES OF THE PHILIPPINES (LCP), Represented by LCP National President Jerry P. Treas; City of Calbayog, represented by Mayor Mel Senen S. Sarmiento; and Jerry P. Treas, in his personal capacity as Taxpayer, Petitioners, vs. COMMISSION ON ELECTIONS; Municipality of Baybay, Province of Leyte; Municipality of Bogo, Province of Cebu; Municipality of Catbalogan, Province of Western Samar; Municipality of Tandag, Province of Surigao del Sur; Municipality of Borongan, Province of Eastern Samar; and Municipality of Tayabas, Province of Quezon, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 177499 LEAGUE OF CITIES OF THE PHILIPPINES (LCPvs. COMMISSION ON ELECTIONS For consideration of this Court are the following pleadings: 1. Motion for Reconsideration of the "Resolution" dated August 24, 2010 dated and filed on September 14, 2010 by respondents Municipality of Baybay, et al.; and 2. Opposition [To the "Motion for Reconsideration of the Resolution dated August 24, 2010"]. Meanwhile, respondents also filed on September 20, 2010 a Motion to Set "Motion for Reconsideration of the Resolution dated August 24, 2010" for Hearing. This motion was, however, already denied by the Court En Banc. A brief background These cases were initiated by the consolidated petitions for prohibition filed by the League of Cities of the Philippines (LCP), City of Iloilo, City of Calbayog, and Jerry P. Treas, assailing the constitutionality of the sixteen (16) laws,1 each converting the municipality covered thereby into a component city (Cityhood Laws), and seeking to enjoin the Commission on Elections (COMELEC) from conducting plebiscites pursuant to the subject laws. In the Decision dated November 18, 2008, the Court En Banc, by a 6-5 vote,2 granted the petitions and struck down the Cityhood Laws as unconstitutional for violating Sections 10 and 6, Article X, and the equal protection clause. In the Resolution dated March 31, 2009, the Court En Banc, by a 7-5 vote,3 denied the first motion for reconsideration.
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On April 28, 2009, the Court En Banc issued a Resolution, with a vote of 66,4 which denied the second motion for reconsideration for being a prohibited pleading. In its June 2, 2009 Resolution, the Court En Banc clarified its April 28, 2009 Resolution in this wise As a rule, a second motion for reconsideration is a prohibited pleading pursuant to Section 2, Rule 52 of the Rules of Civil Procedure which provides that: "No second motion for reconsideration of a judgment or final resolution by the same party shall be entertained." Thus, a decision becomes final and executory after 15 days from receipt of the denial of the first motion for reconsideration. However, when a motion for leave to file and admit a second motion for reconsideration is granted by the Court, the Court therefore allows the filing of the second motion for reconsideration. In such a case, the second motion for reconsideration is no longer a prohibited pleading. In the present case, the Court voted on the second motion for reconsideration filed by respondent cities. In effect, the Court allowed the filing of the second motion for reconsideration. Thus, the second motion for reconsideration was no longer a prohibited pleading. However, for lack of the required number of votes to overturn the 18 November 2008 Decision and 31 March 2009 Resolution, the Court denied the second motion for reconsideration in its 28 April 2009 Resolution.5 Then, in another Decision dated December 21, 2009, the Court En Banc, by a vote of 6-4,6 declared the Cityhood Laws as constitutional. On August 24, 2010, the Court En Banc, through a Resolution, by a vote of 76,7 resolved the Ad Cautelam Motion for Reconsideration and Motion to Annul the Decision of December 21, 2009, both filed by petitioners, and the Ad Cautelam Motion for Reconsideration filed by petitioners-in-intervention Batangas City, Santiago City, Legazpi City, Iriga City, Cadiz City, and Oroquieta City, reinstating the November 18, 2008 Decision. Hence, the aforementioned pleadings. Considering these circumstances where the Court En Banc has twice changed its position on the constitutionality of the 16 Cityhood Laws, and especially taking note of the novelty of the issues involved in these cases, the Motion for Reconsideration of the "Resolution" dated August 24, 2010 deserves favorable action by this Court on the basis of the following cogent points: 1. The 16 Cityhood Bills do not violate Article X, Section 10 of the Constitution.
Article X, Section 10 provides Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. The tenor of the ponencias of the November 18, 2008 Decision and the August 24, 2010 Resolution is that the exemption clauses in the 16 Cityhood Laws are unconstitutional because they are not written in the Local Government Code of 1991 (LGC), particularly Section 450 thereof, as amended by Republic Act (R.A.) No. 9009, which took effect on June 30, 2001, viz. Section 450. Requisites for Creation. a) A municipality or a cluster of barangays may be converted into a component city if it has a locally generated annual income, as certified by the Department of Finance, of at least One Hundred Million Pesos (P100,000,000.00) for at least two (2) consecutive years based on 2000 constant prices, and if it has either of the following requisites: xxxx (c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. (Emphasis supplied) Prior to the amendment, Section 450 of the LGC required only an average annual income, as certified by the Department of Finance, of at least P20,000,000.00 for the last two (2) consecutive years, based on 1991 constant prices. Before Senate Bill No. 2157, now R.A. No. 9009, was introduced by Senator Aquilino Pimentel, there were 57 bills filed for conversion of 57 municipalities into component cities. During the 11th Congress (June 1998-June 2001), 33 of these bills were enacted into law, while 24 remained as pending bills. Among these 24 were the 16 municipalities that were converted into component cities through the Cityhood Laws. The rationale for the enactment of R.A. No. 9009 can be gleaned from the sponsorship speech of Senator Pimentel on Senate Bill No. 2157, to wit Senator Pimentel. Mr. President, I would have wanted this bill to be included in the whole set of proposed amendments that we have introduced to precisely amend the Local Government Code. However, it is a fact that there is a mad rush of municipalities wanting to be converted into cities. Whereas in 1991, when the Local Government was approved, there were only 60 cities, today the number has increased to 85 cities, with 41 more municipalities applying for conversion to the
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same status. At the rate we are going, I am apprehensive that before long this nation will be a nation of all cities and no municipalities. It is for that reason, Mr. President, that we are proposing among other things, that the financial requirement, which, under the Local Government Code, is fixed at P20 million, be raised to P100 million to enable a municipality to have the right to be converted into a city, and the P100 million should be sourced from locally generated funds. What has been happening, Mr. President, is, the municipalities aspiring to become cities say that they qualify in terms of financial requirements by incorporating the Internal Revenue share of the taxes of the nation on to their regularly generated revenue. Under that requirement, it looks clear to me that practically all municipalities in this country would qualify to become cities. It is precisely for that reason, therefore, that we are seeking the approval of this Chamber to amend, particularly Section 450 of Republic Act No. 7160, the requisite for the average annual income of a municipality to be converted into a city or cluster of barangays which seek to be converted into a city, raising that revenue requirement from P20 million to P100 million for the last two consecutive years based on 2000 constant prices.8 While R.A. No. 9009 was being deliberated upon, Congress was well aware of the pendency of conversion bills of several municipalities, including those covered by the Cityhood Laws, desiring to become component cities which qualified under the P20 million income requirement of the old Section 450 of the LGC. The interpellation of Senate President Franklin Drilon of Senator Pimentel is revealing, thus THE PRESIDENT. The Chair would like to ask for some clarificatory point. SENATOR PIMENTEL. Yes, Mr. President. THE PRESIDENT. This is just on the point of the pending bills in the Senate which propose the conversion of a number of municipalities into cities and which qualify under the present standard. We would like to know the view of the sponsor: Assuming that this bill becomes a law, will the Chamber apply the standard as proposed in this bill to those bills which are pending for consideration? SENATOR PIMENTEL. Mr. President, it might not be fair to make this bill, on the assumption that it is approved, retroact to the bills that are pending in the Senate conversion from municipalities to cities.
THE PRESIDENT. Will there be an appropriate language crafted to reflect that view? Or does it not become a policy of the Chamber, assuming that this bill becomes a law tomorrow, that it will apply to those bills which are already approved by the House under the old version of the Local Government Code and are now pending in the Senate? The Chair does not know if we can craft a language which will limit the application to those which are not yet in the Senate. Or is that a policy that the Chamber will adopt? SENATOR PIMENTEL. Mr. President, personally, I do not think it is necessary to put that provision because what we are saying here will form part of the interpretation of this bill. Besides, if there is no retroactivity clause, I do not think that the bill would have any retroactive effect. THE PRESIDENT. So the understanding is that those bills which are already pending in the Chamber will not be affected. SENATOR PIMENTEL. These will not be affected, Mr. President. THE PRESIDENT. Thank you Mr. Chairman.9 Clearly, based on the above exchange, Congress intended that those with pending cityhood bills during the 11th Congress would not be covered by the new and higher income requirement of P100 million imposed by R.A. No. 9009. When the LGC was amended by R.A. No. 9009, the amendment carried with it both the letter and the intent of the law, and such were incorporated in the LGC by which the compliance of the Cityhood Laws was gauged. Notwithstanding that both the 11th and 12th Congress failed to act upon the pending cityhood bills, both the letter and intent of Section 450 of the LGC, as amended by R.A. No. 9009, were carried on until the 13th Congress, when the Cityhood Laws were enacted. The exemption clauses found in the individual Cityhood Laws are the express articulation of that intent to exempt respondent municipalities from the coverage of R.A. No. 9009. Even if we were to ignore the above quoted exchange between then Senate President Drilon and Senator Pimentel, it cannot be denied that Congress saw the wisdom of exempting respondent municipalities from complying with the higher income requirement imposed by the amendatory R.A. No. 9009. Indeed, these municipalities have proven themselves viable and capable to become component cities of their respective provinces. It is also acknowledged that they were centers of trade and commerce, points of convergence of transportation, rich havens of agricultural, mineral, and other natural resources, and flourishing tourism spots. In this regard, it is worthy to mention the distinctive traits of each respondent municipality, viz
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Batac, Ilocos Norte It is the biggest municipality of the 2nd District of Ilocos Norte, 2nd largest and most progressive town in the province of Ilocos Norte and the natural convergence point for the neighboring towns to transact their commercial ventures and other daily activities. A growing metropolis, Batac is equipped with amenities of modern living like banking institutions, satellite cable systems, telecommunications systems. Adequate roads, markets, hospitals, public transport systems, sports, and entertainment facilities. [Explanatory Note of House Bill No. 5941, introduced by Rep. Imee R. Marcos.] El Salvador, Misamis Oriental It is located at the center of the Cagayan-Iligan Industrial Corridor and home to a number of industrial companies and corporations. Investment and financial affluence of El Salvador is aptly credited to its industrious and preserving people. Thus, it has become the growing investment choice even besting nearby cities and municipalities. It is home to Asia Brewery as distribution port of their product in Mindanao. The Gokongwei Group of Companies is also doing business in the area. So, the conversion is primarily envisioned to spur economic and financial prosperity to this coastal place in North-Western Misamis Oriental. [Explanatory Note of House Bill No. 6003, introduced by Rep. Augusto H. Bacullo.] Cabadbaran, Agusan del Norte It is the largest of the eleven (11) municipalities in the province of Agusan del Norte. It plays strategic importance to the administrative and socio-economic life and development of Agusan del Norte. It is the foremost in terms of trade, commerce, and industry. Hence, the municipality was declared as the new seat and capital of the provincial government of Agusan del Norte pursuant to Republic Act No. 8811 enacted into law on August 16, 2000. Its conversion will certainly promote, invigorate, and reinforce the economic potential of the province in establishing itself as an agro-industrial center in the Caraga region and accelerate the development of the area. [Explanatory Note of House Bill No. 3094, introduced by Rep. Ma. Angelica Rosedell M. Amante.] Borongan, Eastern Samar It is the capital town of Eastern Samar and the development of Eastern Samar will depend to a certain degree of its urbanization. It will serve as a catalyst for the modernization and progress of adjacent towns considering the frequent interactions between the populace. [Explanatory Note of House Bill No. 2640, introduced by Rep. Marcelino C. Libanan.] Lamitan, Basilan Before Basilan City was converted into a separate province, Lamitan was the most progressive part of the city. It has been for centuries the center of commerce and the seat of the Sultanate of the Yakan people of Basilan. The source of its income is agro-industrial and others notably copra, rubber, coffee and host of income generating ventures. As the most progressive town in Basilan, Lamitan continues to be the center of commerce catering to the municipalities of Tuburan, Tipo-Tipo and Sumisip. [Explanatory Note of House Bill No. 5786, introduced by Rep. Gerry A. Salapuddin.] Catbalogan, Samar It has always been the socio-economic-political capital of the Island of Samar even during the Spanish era. It is the seat of government of the
two congressional districts of Samar. Ideally located at the crossroad between Northern and Eastern Samar, Catbalogan also hosts trade and commerce activates among the more prosperous cities of the Visayas like Tacloban City, Cebu City and the cities of Bicol region. The numerous banks and telecommunication facilities showcases the healthy economic environment of the municipality. The preeminent and sustainable economic situation of Catbalogan has further boosted the call of residents for a more vigorous involvement of governance of the municipal government that is inherent in a city government. [Explanatory Note of House Bill No. 2088, introduced by Rep. Catalino V. Figueroa.] Bogo, Cebu Bogo is very qualified for a city in terms of income, population and area among others. It has been elevated to the Hall of Fame being a five-time winner nationwide in the clean and green program. [Explanatory Note of House Bill No. 3042, introduced by Rep. Clavel A. Martinez.] Tandag, Surigao del Sur This over 350 year old capital town the province has long sought its conversion into a city that will pave the way not only for its own growth and advancement but also help in the development of its neighboring municipalities and the province as a whole. Furthermore, it can enhance its role as the provinces trade, financial and government center. [Explanatory Note of House Bill No. 5940, introduced by Rep. Prospero A. Pichay, Jr.] Bayugan, Agusan del Sur It is a first class municipality and the biggest in terms of population in the entire province. It has the most progressive and thickly populated area among the 14 municipalities that comprise the province. Thus, it has become the center for trade and commerce in Agusan del Sur. It has a more developed infrastructure and facilities than other municipalities in the province. [Explanatory Note of House Bill No. 1899, introduced by Rep. Rodolfo "Ompong" G. Plaza.] Carcar, Cebu Through the years, Carcar metamorphosed from rural to urban and now boast of its manufacturing industry, agricultural farming, fishing and prawn industry and its thousands of large and small commercial establishments contributing to the bulk of economic activities in the municipality. Based on consultation with multi-sectoral groups, political and non-government agencies, residents and common folk in Carcar, they expressed their desire for the conversion of the municipality into a component city. [Explanatory Note of House Bill No. 3990, introduced by Rep. Eduardo R. Gullas.] Guihulngan, Negros Oriental Its population is second highest in the province, next only to the provincial capital and higher than Canlaon City and Bais City. Agriculture contributes heavily to its economy. There are very good prospects in agricultural production brought about by its favorable climate. It has also the Tanon Strait that provides a good fishing ground for its numerous fishermen. Its potential to grow commercially is certain. Its strategic location brought about by its existing linkage networks and the major transportation corridors traversing the municipality has established Guihulngan as the center of commerce and trade in this part of Negros Oriental with the first congressional district as its immediate area of influence. Moreover, it has beautiful tourist spots that are being availed of by local
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and foreign tourists. [Explanatory Note of House Bill No. 3628, introduced by Rep. Jacinto V. Paras.] Tayabas, Quezon It flourished and expanded into an important politico-cultural center in [the] Tagalog region. For 131 years (1179-1910), it served as the cabecera of the province which originally carried the cabeceras own name, Tayabas. The locality is rich in culture, heritage and trade. It was at the outset one of the more active centers of coordination and delivery of basic, regular and diverse goods and services within the first district of Quezon Province. [Explanatory Note of House Bill No. 3348, introduced by Rep. Rafael P. Nantes.] Tabuk, Kalinga It not only serves as the main hub of commerce and trade, but also the cultural center of the rich customs and traditions of the different municipalities in the province. For the past several years, the income of Tabuk has been steadily increasing, which is an indication that its economy is likewise progressively growing. [Explanatory Note of House Bill No. 3068, introduced by Rep. Laurence P. Wacnang.] Available information on Baybay, Leyte; Mati, Davao Oriental; and Naga, Cebu shows their economic viability, thus: Covering an area of 46,050 hectares, Baybay [Leyte] is composed of 92 barangays, 23 of which are in the poblacion. The remaining 69 are rural barangays. Baybay City is classified as a first class city. It is situated on the western coast of the province of Leyte. It has a Type 4 climate, which is generally wet. Its topography is generally mountainous in the eastern portion as it slopes down west towards the shore line. Generally an agricultural city, the common means of livelihood are farming and fishing. Some are engaged in hunting and in forestall activities. The most common crops grown are rice, corn, root crops, fruits, and vegetables. Industries operating include the Specialty Products Manufacturing, Inc. and the Visayan Oil Mill. Various cottage industries can also be found in the city such as bamboo and rattan craft, ceramics, dress-making, fiber craft, food preservation, mat weaving, metal craft, fine Philippine furniture manufacturing and other related activities. Baybay has great potential as a tourist destination, especially for tennis players. It is not only rich in biodiversity and history, but it also houses the campus of the Visayas State University (formerly the Leyte State University/Visayas State College of Agriculture/Visayas Agricultural College/Baybay National Agricultural School/Baybay Agricultural High School and the Jungle Valley Park.) Likewise, it has river systems fit for river cruising, numerous caves for spelunking, forests, beaches, and marine treasures. This richness, coupled with the friendly Baybayanos, will be an element of a successful tourism program. Considering the role of tourism in development, Baybay City intends to harness its tourism potential. (<http://en.wikipedia.org/wiki/Baybay City> visited September 19, 2008) Mati [Davao Oriental] is located on the eastern part of the island of Mindanao. It is one hundred sixty-five (165) kilometers away from Davao City, a one and a halfhour drive from Tagum City. Visitors can travel from Davao City through the
Madaum diversion road, which is shorter than taking the Davao-Tagum highway. Travels by air and sea are possible, with the existence of an airport and seaport. Mati boasts of being the coconut capital of Mindanao if not the whole country. A large portion of its fertile land is planted to coconuts, and a significant number of its population is largely dependent on it. Other agricultural crops such as mango, banana, corn, coffee and cacao are also being cultivated, as well as the famous Menzi pomelo and Valencia oranges. Mati has a long stretch of shoreline and one can find beaches of pure, powder-like white sand. A number of resorts have been developed and are now open to serve both local and international tourists. Some of these resorts are situated along the coast of Pujada Bay and the Pacific Ocean. Along the western coast of the bay lies Mt. Hamiguitan, the home of the pygmy forest, where bonsai plants and trees grow, some of which are believed to be a hundred years old or more. On its peak is a lake, called "Tinagong Dagat," or hidden sea, so covered by dense vegetation a climber has to hike trails for hours to reach it. The mountain is also host to rare species of flora and fauna, thus becoming a wildlife sanctuary for these life forms. (<http://mati.wetpain.com/?t=anon> accessed on September 19, 2008.) Mati is abundant with nickel, chromite, and copper. Louie Rabat, Chamber President of the Davao Oriental Eastern Chamber of Commerce and Industry, emphasized the big potential of the mining industry in the province of Davao Oriental. As such, he strongly recommends Mati as the mining hub in the Region. (<http://www.pia.gov.ph/default.asp?m=12&sec=reader&rp=1&fi=p080115.htm&no. =9&date, accessed on September 19, 2008) Naga [Cebu]: Historical BackgroundIn the early times, the place now known as Naga was full of huge trees locally called as "Narra." The first settlers referred to this place as Narra, derived from the huge trees, which later simply became Naga. Considered as one of the oldest settlements in the Province of Cebu, Naga became a municipality on June 12, 1829. The municipality has gone through a series of classifications as its economic development has undergone changes and growth. The tranquil farming and fishing villages of the natives were agitated as the Spaniards came and discovered coal in the uplands. Coal was the first export of the municipality, as the Spaniards mined and sent it to Spain. The mining industry triggered the industrial development of Naga. As the years progressed, manufacturing and other industries followed, making Naga one of the industrialized municipalities in the Province of Cebu. Class of Municipality 1st class Province Cebu Distance from Cebu City 22 kms. Number of Barangays 28
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No. of Registered Voters 44,643 as of May 14, 2007 Total No. of Precincts 237 (as of May 14, 2007)
that the Cityhood Laws, particularly their exemption clauses, are not found in the LGC. 2.
Ann. Income (as of Dec. 31, 2006) Php112,219,718.35 Agricultural, Industrial, Agro-Industrial, Mining Product (<http://www.nagacebu.com/index.php?option=com.content&view=article id=53:naga-facts-and-figures&catid=51:naga-facts-andfigures&Itemid=75> visited September 19, 2008) The enactment of the Cityhood Laws is an exercise by Congress of its legislative power. Legislative power is the authority, under the Constitution, to make laws, and to alter and repeal them.10 The Constitution, as the expression of the will of the people in their original, sovereign, and unlimited capacity, has vested this power in the Congress of the Philippines. The grant of legislative power to Congress is broad, general, and comprehensive. The legislative body possesses plenary powers for all purposes of civil government. Any power, deemed to be legislative by usage and tradition, is necessarily possessed by Congress, unless the Constitution has lodged it elsewhere. In fine, except as limited by the Constitution, either expressly or impliedly, legislative power embraces all subjects, and extends to matters of general concern or common interest.11 Without doubt, the LGC is a creation of Congress through its law-making powers. Congress has the power to alter or modify it as it did when it enacted R.A. No. 9009. Such power of amendment of laws was again exercised when Congress enacted the Cityhood Laws. When Congress enacted the LGC in 1991, it provided for quantifiable indicators of economic viability for the creation of local government unitsincome, population, and land area. Congress deemed it fit to modify the income requirement with respect to the conversion of municipalities into component cities when it enacted R.A. No. 9009, imposing an amount of P100 million, computed only from locally-generated sources. However, Congress deemed it wiser to exempt respondent municipalities from such a belatedly imposed modified income requirement in order to uphold its higher calling of putting flesh and blood to the very intent and thrust of the LGC, which is countryside development and autonomy, especially accounting for these municipalities as engines for economic growth in their respective provinces. Undeniably, R.A. No. 9009 amended the LGC. But it is also true that, in effect, the Cityhood Laws amended R.A. No. 9009 through the exemption clauses found therein. Since the Cityhood Laws explicitly exempted the concerned municipalities from the amendatory R.A. No. 9009, such Cityhood Laws are, therefore, also amendments to the LGC itself. For this reason, we reverse the November 18, 2008 Decision and the August 24, 2010 Resolution on their strained and stringent view
The Cityhood Laws do not violate Section 6, Article X and the equal protection clause of the Constitution. Both the November 18, 2008 Decision and the August 24, 2010 Resolution impress that the Cityhood Laws violate the equal protection clause enshrined in the Constitution. Further, it was also ruled that Section 6, Article X was violated because the Cityhood Laws infringed on the "just share" that petitioner and petitioners-in-intervention shall receive from the national taxes (IRA) to be automatically released to them. Upon more profound reflection and deliberation, we declare that there was valid classification, and the Cityhood Laws do not violate the equal protection clause. As this Court has ruled, the equal protection clause of the 1987 Constitution permits a valid classification, provided that it: (1) rests on substantial distinctions; (2) is germane to the purpose of the law; (3) is not limited to existing conditions only; and (4) applies equally to all members of the same class.12 The petitioners argue that there is no substantial distinction between municipalities with pending cityhood bills in the 11th Congress and municipalities that did not have pending bills, such that the mere pendency of a cityhood bill in the 11th Congress is not a material difference to distinguish one municipality from another for the purpose of the income requirement. This contention misses the point. It should be recalled from the above quoted portions of the interpellation by Senate President Drilon of Senator Pimentel that the purpose of the enactment of R.A. No 9009 was merely to stop the "mad rush of municipalities wanting to be converted into cities" and the apprehension that before long the country will be a country of cities and without municipalities. It should be pointed out that the imposition of the P100 million average annual income requirement for the creation of component cities was arbitrarily made. To be sure, there was no evidence or empirical data, such as inflation rates, to support the choice of this amount. The imposition of a very high income requirement of P100 million, increased from P20 million, was simply to make it extremely difficult for municipalities to become component cities. And to highlight such arbitrariness and the absurdity of the situation created thereby, R.A. No. 9009 has, in effect, placed component cities at a higher standing than highly urbanized cities under Section 452 of the LGC, to wit Section 452. Highly Urbanized Cities. (a) Cities with a minimum population of two hundred thousand (200,000) inhabitants, as certified by the National Statistics Office, and with the latest annual income of at least Fifty Million Pesos
30
(P50,000,000.00) based on 1991 constant prices, as certified by the city treasurer, shall be classified as highly urbanized cities. (b) Cities which do not meet above requirements shall be considered component cities of the province in which they are geographically located. (Emphasis supplied) The P100 million income requirement imposed by R.A. No. 9009, being an arbitrary amount, cannot be conclusively said to be the only amount "sufficient, based on acceptable standards, to provide for all essential government facilities and services and special functions commensurate with the size of its population," per Section 713 of the LGC. It was imposed merely because it is difficult to comply with. While it could be argued that P100 million, being more than P20 million, could, of course, provide the essential government facilities, services, and special functions vis--vis the population of a municipality wanting to become a component city, it cannot be said that the minimum amount of P20 million would be insufficient. This is evident from the existing cities whose income, up to now, do not comply with the P100 million income requirement, some of which have lower than the P20 million average annual income. Consider the list14below CITY 1. Marawi City 2. Palayan City 3. Sipalay City 4. Canlaon City 5. Himamaylan City 6. Isabela City 7. Munoz City 8. Dapitan City AVERAGE ANNUAL INCOME 5,291,522.10 6,714,651.77 9,713,120.00 13,552,493.79 15,808,530.00 16,811,246.79 19,693,358.61 20,529,181.08
9. Tangub City 10. Bayawan City 11. Island Garden City of Samal 12. Tanjay City 13. Tabaco City 14. Oroquieta City 15. Ligao City 16. Sorsogon City 17. Maasin City 18. Escalante City 19. Iriga City 20. Gapan City 21. Candon City 22. Gingoog City 23. Masbate City 24. Passi City 25. Calbayog City
20,943,810.04 22,943,810.04 23,034,731.83 23,723,612.44 24,152,853.71 24,279,966.51 28,326,745.86 30,403,324.59 30,572,113.65 32,113,970.00 32,757,871.44 34,254,986.47 36,327,705.86 37,327,705.86 39,454,508.28 40,314,620.00 40,943,128.73
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26. Calapan City 27. Cadiz City 28. Alaminos City 29. Bais City 30. San Carlos City 31. Silay City 32. Bislig City 33. Tacurong City
41,870,239.21 43,827,060.00 44,352,501.00 44, 646,826.48 46,306,129.13 47,351,730.00 47,360,716.24 49,026,281.56
43. Cotabato City 44. Toledo City 45. San Jose City 46. Danao City 47. Bago City 48. Valencia City 49. Victorias City 50. Cauayan City 51. Santiago City 52. Roxas City 53. Dipolog City 54. Trece Martires City 55. Talisay City (Cebu) 56. Ozamis city 57. Surigao City 58. Panabo City 59. Digos City
66,302,114.52 70,157,331.12 70,309,233.43 72,621,955.30 74,305,000.00 74,557,298.92 75,757,298.92 82,949,135.46 83,816,025.89 85,397,830.00 85,503,262.85 87,413,786.64 87,964,972.97 89,054,056.12 89,960,971.33 91,425,301.39 92,647,699.13
34. Talisay City (Negros Occidental) 52,609,790.00 35. Kabankalan City 36. Malaybalay City 37. La Carlota City 38. Vigan City 39. Balanga City 40. Sagay City 41. Cavite City 42. Koronadal City 53,560,580.00 54,423,408.55 54,760,290.00 56,831,797.19 61,556,700.49 64,266,350.00 64,566,079.05 66,231,717.19
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The undeniable fact that these cities remain viable as component cities of their respective provinces emphasizes the arbitrariness of the amount of P100 million as the new income requirement for the conversion of municipalities into component cities. This arbitrariness can also be clearly gleaned from the respective distinctive traits and level of economic development of the individual respondent municipalities as above submitted. Verily, the determination of the existence of substantial distinction with respect to respondent municipalities does not simply lie on the mere pendency of their cityhood bills during the 11th Congress. This Court sees the bigger picture. The existence of substantial distinction with respect to respondent municipalities covered by the Cityhood Laws is measured by the purpose of the law, not by R.A. No. 9009, but by the very purpose of the LGC, as provided in its Section 2 (a), thus SECTION 2. Declaration of Policy.(a) It is hereby declared the policy of the State that the territorial and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals. Toward this end, the State shall provide for a more responsive and accountable local government structure instituted through a system of decentralization whereby local government units shall be given more powers, authority, responsibilities and resources. The process of decentralization shall proceed from the National Government to the local government units. Indeed, substantial distinction lies in the capacity and viability of respondent municipalities to become component cities of their respective provinces. Congress, by enacting the Cityhood Laws, recognized this capacity and viability of respondent municipalities to become the States partners in accelerating economic growth and development in the provincial regions, which is the very thrust of the LGC, manifested by the pendency of their cityhood bills during the 11th Congress and their relentless pursuit for cityhood up to the present. Truly, the urgent need to become a component city arose way back in the 11th Congress, and such condition continues to exist. Petitioners in these cases complain about the purported reduction of their "just share" in the IRA. To be sure, petitioners are entitled to a "just share," not a specific amount. But the feared reduction proved to be false when, after the implementation of the Cityhood Laws, their respective shares increased, not decreased. Consider the table15 below 1avvphi1
Bais Batangas Bayawan Cadiz Calapan Calbayog Cauayan Gen. Santos Gingoog Himamaylan Iloilo Iriga Legaspi Ligao Oroquieta Pagadian
219,338,056.00 334,371,984.00 353,150,158.00 329,491,285.00 227,772,199.00 438,603,378.00 250,477,157.00 518,388,557.00 314,425,637.00 248,154,381.00 358,394,268.00 183,132,036.00 235,314,016.00 215,608,112.00 191,803,213.00 292,788,255.00
242,193,156.00 388,871,770.00 388,840,062.00 361,019,211.00 252,587,779.00 485,653,769.00 277,120,828.00 631,864,977.00 347,207,725.00 277,532,458.00 412,506,278.00 203,072,932.00 266,537,785.00 239,696,441.00 211,449,720.00 327,401,672.00 260,515,711.00
CITY
CY 2006 IRA CY 2008 IRA San Carlos 239,524,249.00 (Before Implementation of Sixteen [16] Cityhood (Actual Release After Implementation of Sixteen [16] Cityhood Laws) Laws)
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San Fernando Santiago Silay Surigao Tacurong Tagaytay Tarlac Tangub Urdaneta Victorias
182,320,356.00
SENATOR PIMENTEL. There are three requisites for a municipality to become a 204,140,940.00 us start with the finance. city. Let SENATOR SOTTO. Will the distinguished sponsor please refresh us? I used to be 563,679,572.00 the chairman of the Committee on Local Government, but the new job that was given to me by the Senate has erased completely my memory as far as the Local Government Code is concerned. 241,363,845.00 SENATOR PIMENTEL. Yes, Mr. President, with pleasure. There are three requirements. One is financial. 260,708,071.00 SENATOR SOTTO. All right. It used to be P20 million. 197,880,665.00 SENATOR PIMENTEL. It is P20 million. Now we are raising it to P100 million of 152,445,295.00 generated funds. locally SENATOR SOTTO. In other words, the P20 million before includes the IRA. 405,611,581.00 SENATOR PIMENTEL. No, Mr. President. 180,640,621.00 SENATOR SOTTO. It should not have been included? 207,129,386.00
508,326,072.00 216,372,314.00 233,968,119.00 179,795,271.00 130,159,136.00 348,186,756.00 162,248,610.00 187,721,031.00 176,367,959.00
SENATOR PIMENTEL. The internal revenue share should never have been included. 194,162,687.00 That was not the intention when we first crafted the Local Government Code. The financial capacity was supposed to be demonstrated by the municipality wishing to become a city by its own effort, meaning to say, it should not rely on the internal revenue share that comes from the government. Unfortunately, I think what Zamboanga 918,013,016.00 1,009,972,704.00 happened in past conversions of municipalities into cities was, the Department of Budget and Management, along with the Department of Finance, had included the internal revenue share as a part of the municipality, demonstration that they are now financially capable and can measure up to the requirement of the Local What these petitioner cities were stating as a reduction of their respective IRA Government Code of having a revenue of at least P20 million. shares was based on a computation of what they would receive if respondent municipalities were not to become component cities at all. Of course, that would mean a bigger amount to which they have staked their claim. After considering SENATOR SOTTO. I am glad that the sponsor, Mr. President, has spread that into these, it all boils down to money and how much more they would receive if the Record because otherwise, if he did not mention the Department of Finance respondent municipalities remain as municipalities and not share in the 23% fixed and the Department of Budget and Management, then I would have been blamed IRA from the national government for cities. for the misinterpretation. But anyway, the gentleman is correct. That was the interpretation given to us during the hearings. Moreover, the debates in the Senate on R.A. No. 9009, should prove enlightening: So now, from P20 million, we make it P100 million from locally generated income as far as population is concerned. SENATOR SOTTO. Mr. President, we just want to be enlightened again on the previous qualification and the present one being proposed. Before there were three SENATOR PIMENTEL. As far as population is concerned, there will be no change, Mr. President. Still 150,000.
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SENATOR SOTTO. Still 150,000? SENATOR PIMENTEL. Yes. SENATOR SOTTO. And then the land area? SENATOR PIMENTEL. As to the land area, there is no change; it is still 100 square kilometers. SENATOR SOTTO. But before it was "either/or"? SENATOR PIMENTEL. That is correct. As long as it has one of the three requirements, basically, as long as it meets the financial requirement, then it may meet the territorial requirement or the population requirement. SENATOR SOTTO. So, it remains "or"? SENATOR PIMENTEL. We are now changing it into AND. SENATOR SOTTO. AND? SENATOR PIMENTEL. Yes. SENATOR SOTTO. I see. SENATOR PIMENTEL. That is the proposal, Mr. President. In other words SENATOR SOTTO. Does the gentleman not think there will no longer be any municipality that will qualify, Mr. President? SENATOR PIMENTEL. There may still be municipalities which can qualify, but it will take a little time. They will have to produce more babies. I do not know expand their territories, whatever, by reclamation or otherwise. But the whole proposal is geared towards making it difficult for municipalities to convert into cities. On the other hand, I would like to advert to the fact that in the amendments that we are proposing for the entire Local Government Code, we are also raising the internal revenue share of the municipalities. SENATOR SOTTO. I see.
SENATOR PIMENTEL. So that, more or less, hindi naman sila dehado in this particular instance. SENATOR SOTTO. Well, then, because of that information, Mr. President, I throw my full support behind the measure. Thank you, Mr. President. SENATOR PIMENTEL. Thank you very much, Mr. President. (Emphasis supplied)16 From the foregoing, the justness in the act of Congress in enacting the Cityhood Laws becomes obvious, especially considering that 33 municipalities were converted into component cities almost immediately prior to the enactment of R.A. No. 9009. In the enactment of the Cityhood Laws, Congress merely took the 16 municipalities covered thereby from the disadvantaged position brought about by the abrupt increase in the income requirement of R.A. No. 9009, acknowledging the "privilege" that they have already given to those newly-converted component cities, which prior to the enactment of R.A. No. 9009, were undeniably in the same footing or "class" as the respondent municipalities. Congress merely recognized the capacity and readiness of respondent municipalities to become component cities of their respective provinces. Petitioners complain of the projects that they would not be able to pursue and the expenditures that they would not be able to meet, but totally ignored the respondent municipalities obligations arising from the contracts they have already entered into, the employees that they have already hired, and the projects that they have already initiated and completed as component cities. Petitioners have completely overlooked the need of respondent municipalities to become effective vehicles intending to accelerate economic growth in the countryside. It is like the elder siblings wanting to kill the newly-borns so that their inheritance would not be diminished. Apropos is the following parable: There was a landowner who went out at dawn to hire workmen for his vineyard. After reaching an agreement with them for the usual daily wage, he sent them out to his vineyard. He came out about midmorning and saw other men standing around the marketplace without work, so he said to them, "You too go along to my vineyard and I will pay you whatever is fair." They went. He came out again around noon and mid-afternoon and did the same. Finally, going out in late afternoon he found still others standing around. To these he said, "Why have you been standing here idle all day?" "No one has hired us," they told him. He said, "You go to the vineyard too." When evening came, the owner of the vineyard said to his foreman, "Call the workmen and give them their pay, but begin with the last group and end with the first." When those hired late in the afternoon came up they received a full days pay, and when the first group appeared they thought they would get more,
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yet they received the same daily wage. Thereupon they complained to the owner, "This last group did only an hours work, but you have paid them on the same basis as us who have worked a full day in the scorching heat." "My friend," he said to one in reply, "I do you no injustice. You agreed on the usual wage, did you not? Take your pay and go home. I intend to give this man who was hired last the same pay as you. I am free to do as I please with my money, am I not? Or are you envious because I am generous?"17 Congress, who holds the power of the purse, in enacting the Cityhood Laws, only sought the well-being of respondent municipalities, having seen their respective capacities to become component cities of their provinces, temporarily stunted by the enactment of R.A. No. 9009. By allowing respondent municipalities to convert into component cities, Congress desired only to uphold the very purpose of the LGC, i.e., to make the local government units "enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them more effective partners in the attainment of national goals," which is the very mandate of the Constitution. Finally, we should not be restricted by technical rules of procedure at the expense of the transcendental interest of justice and equity. While it is true that litigation must end, even at the expense of errors in judgment, it is nobler rather for this Court of last resort, as vanguard of truth, to toil in order to dispel apprehensions and doubt, as the following pronouncement of this Court instructs: The right and power of judicial tribunals to declare whether enactments of the legislature exceed the constitutional limitations and are invalid has always been considered a grave responsibility, as well as a solemn duty. The courts invariably give the most careful consideration to questions involving the interpretation and application of the Constitution, and approach constitutional questions with great deliberation, exercising their power in this respect with the greatest possible caution and even reluctance; and they should never declare a statute void, unless its invalidity is, in their judgment, beyond reasonable doubt. To justify a court in pronouncing a legislative act unconstitutional, or a provision of a state constitution to be in contravention of the Constitution x x x, the case must be so clear to be free from doubt, and the conflict of the statute with the constitution must be irreconcilable, because it is but a decent respect to the wisdom, the integrity, and the patriotism of the legislative body by which any law is passed to presume in favor of its validity until the contrary is shown beyond reasonable doubt. Therefore, in no doubtful case will the judiciary pronounce a legislative act to be contrary to the constitution. To doubt the constitutionality of a law is to resolve the doubt in favor of its validity.18 WHEREFORE, the Motion for Reconsideration of the "Resolution" dated August 24, 2010, dated and filed on September 14, 2010 by respondents Municipality of Baybay, et al. is GRANTED. The Resolution dated August 24, 2010 is REVERSED and SET ASIDE. The Cityhood LawsRepublic Acts Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491 are declared CONSTITUTIONAL.
SO ORDERED. BUREAU OF CUSTOMS EMPLOYEES ASSOCIATION (BOCEA), vs. TEVES, G.R. 181704 Before this Court is a petition1 for certiorari and prohibition with prayer for injunctive relief/s under Rule 65 of the1997 Rules of Civil Procedure, as amended, to declare Republic Act (R.A.) No. 9335,2 otherwise known as theAttrition Act of 2005, and its Implementing Rules and Regulations3 (IRR) unconstitutional, and the implementation thereof be enjoined permanently. The Facts On January 25, 2005, former President Gloria Macapagal-Arroyo signed into law R.A. No. 9335 which took effect on February 11, 2005. In Abakada Guro Party List v. Purisima4 (Abakada), we said of R.A. No. 9335: RA [No.] 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and employees to exceed their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board (Board). It covers all officials and employees of the BIR and the BOC with at least six months of service, regardless of employment status. The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue targets for the year, as determined by the Development Budget and Coordinating Committee (DBCC). Any incentive or reward is taken from the fund and allocated to the BIR and the BOC in proportion to their contribution in the excess collection of the targeted amount of tax revenue. The Boards in the BIR and the BOC are composed of the Secretary of the Department of Finance (DOF) or his/her Undersecretary, the Secretary of the Department of Budget and Management (DBM) or his/her Undersecretary, the Director General of the National Economic Development Authority (NEDA) or his/her Deputy Director General, the Commissioners of the BIR and the BOC or their Deputy Commissioners, two representatives from the rank-and-file employees and a representative from the officials nominated by their recognized organization. Each Board has the duty to (1) prescribe the rules and guidelines for the allocation, distribution and release of the Fund; (2) set criteria and procedures for removing from the service officials and employees whose revenue collection falls short of the target; (3) terminate personnel in accordance with the criteria adopted by the
36
Board; (4) prescribe a system for performance evaluation; (5) perform other functions, including the issuance of rules and regulations and (6) submit an annual report to Congress. The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC) were tasked to promulgate and issue the implementing rules and regulations of RA [No.] 9335, to be approved by a Joint Congressional Oversight Committee created for such purpose.5 The Joint Congressional Oversight Committee approved the assailed IRR on May 22, 2006. Subsequently, the IRR was published on May 30, 2006 in two newspapers of general circulation, the Philippine Star and the Manila Standard, and became effective fifteen (15) days later.6 Contending that the enactment and implementation of R.A. No. 9335 are tainted with constitutional infirmities in violation of the fundamental rights of its members, petitioner Bureau of Customs Employees Association (BOCEA), an association of rank-and-file employees of the Bureau of Customs (BOC), duly registered with the Department of Labor and Employment (DOLE) and the Civil Service Commission (CSC), and represented by its National President, Mr. Romulo A. Pagulayan (Pagulayan), directly filed the present petition before this Court against respondents Margarito B. Teves, in his capacity as Secretary of the Department of Finance (DOF), Commissioner Napoleon L. Morales (Commissioner Morales), in his capacity as BOC Commissioner, and Lilian B. Hefti, in her capacity as Commissioner of the Bureau of Internal Revenue (BIR). In its petition, BOCEA made the following averments: Sometime in 2008, high-ranking officials of the BOC pursuant to the mandate of R.A. No. 9335 and its IRR, and in order to comply with the stringent deadlines thereof, started to disseminate Collection District Performance Contracts7 (Performance Contracts) for the lower ranking officials and rank-and-file employees to sign. The Performance Contract pertinently provided: xxxx WHEREAS, pursuant to the provisions of Sec. 25 (b) of the Implementing Rules and Regulations (IRR) of the Attrition Act of 2005, that provides for the setting of criteria and procedures for removing from the service Officials and Employees whose revenue collection fall short of the target in accordance with Section 7 of Republic Act 9335. xxxx NOW, THEREFORE, for and in consideration of the foregoing premises, parties unto this Agreement hereby agree and so agreed to perform the following:
xxxx 2. The "Section 2, PA/PE" hereby accepts the allocated Revenue Collection Target and further accepts/commits to meet the said target under the following conditions: a.) That he/she will meet the allocated Revenue Collection Target and thereby undertakes and binds himself/herself that in the event the revenue collection falls short of the target with due consideration of all relevant factors affecting the level of collection as provided in the rules and regulations promulgated under the Act and its IRR, he/she will voluntarily submit to the provisions of Sec. 25 (b) of the IRR and Sec. 7 of the Act; and b.) That he/she will cascade and/or allocate to respective Appraisers/Examiners or Employees under his/her section the said Revenue Collection Target and require them to execute a Performance Contract, and direct them to accept their individual target. The Performance Contract executed by the respective Examiners/Appraisers/Employees shall be submitted to the Office of the Commissioner through the LAIC on or before March 31, 2008. x x x x8 BOCEA opined that the revenue target was impossible to meet due to the Governments own policies on reduced tariff rates and tax breaks to big businesses, the occurrence of natural calamities and because of other economic factors. BOCEA claimed that some BOC employees were coerced and forced to sign the Performance Contract. The majority of them, however, did not sign. In particular, officers of BOCEA were summoned and required to sign the Performance Contracts but they also refused. To ease the brewing tension, BOCEA claimed that its officers sent letters, and sought several dialogues with BOC officials but the latter refused to heed them. In addition, BOCEA alleged that Commissioner Morales exerted heavy pressure on the District Collectors, Chiefs of Formal Entry Divisions, Principal Customs Appraisers and Principal Customs Examiners of the BOC during command conferences to make them sign their Performance Contracts. Likewise, BOC Deputy Commissioner Reynaldo Umali (Deputy Commissioner Umali) individually spoke to said personnel to convince them to sign said contracts. Said personnel were threatened that if they do not sign their respective Performance Contracts, they would face possible reassignment, reshuffling, or worse, be placed on floating status. Thus, all the District Collectors, except a certain Atty. Carlos So of the Collection District III of the Ninoy Aquino International Airport (NAIA), signed the Performance Contracts. BOCEA further claimed that Pagulayan was constantly harassed and threatened with lawsuits. Pagulayan approached Deputy Commissioner Umali to ask the BOC
37
officials to stop all forms of harassment, but the latter merely said that he would look into the matter. On February 5, 2008, BOCEA through counsel wrote the Revenue Performance Evaluation Board (Board) to desist from implementing R.A. No. 9335 and its IRR and from requiring rank-and-file employees of the BOC and BIR to sign Performance Contracts.9 In his letter-reply10 dated February 12, 2008, Deputy Commissioner Umali denied having coerced any BOC employee to sign a Performance Contract. He also defended the BOC, invoking its mandate of merely implementing the law. Finally, Pagulayan and BOCEAs counsel, on separate occasions, requested for a certified true copy of the Performance Contract from Deputy Commissioner Umali but the latter failed to furnish them a copy.11 This petition was filed directly with this Court on March 3, 2008. BOCEA asserted that in view of the unconstitutionality of R.A. No. 9335 and its IRR, and their adverse effects on the constitutional rights of BOC officials and employees, direct resort to this Court is justified. BOCEA argued, among others, that its members and other BOC employees are in great danger of losing their jobs should they fail to meet the required quota provided under the law, in clear violation of their constitutional right to security of tenure, and at their and their respective families prejudice. In their Comment, respondents, through the Office of the Solicitor General (OSG), countered that R.A. No. 9335 and its IRR do not violate the right to due process and right to security of tenure of BIR and BOC employees. The OSG stressed that the guarantee of security of tenure under the 1987 Constitution is not a guarantee of perpetual employment. R.A. No. 9335 and its IRR provided a reasonable and valid ground for the dismissal of an employee which is germane to the purpose of the law. Likewise, R.A. No. 9335 and its IRR provided that an employee may only be separated from the service upon compliance with substantive and procedural due process. The OSG added that R.A. No. 9335 and its IRR must enjoy the presumption of constitutionality. In its Reply,13 BOCEA claimed that R.A. No. 9335 employs means that are unreasonable to achieve its stated objectives; that the law is unduly oppressive of BIR and BOC employees as it shifts the extreme burden upon their shoulders when the Government itself has adopted measures that make collection difficult such as reduced tariff rates to almost zero percent and tax exemption of big businesses; and that the law is discriminatory of BIR and BOC employees. BOCEA manifested that only the high-ranking officials of the BOC benefited largely from the reward system under R.A. No. 9335 despite the fact that they were not the ones directly toiling to collect revenue. Moreover, despite the BOCEAs numerous requests,14 BOC continually refused to provide BOCEA the Expenditure Plan on how such reward was distributed. Since BOCEA was seeking similar reliefs as that of the petitioners in Abakada Guro Party List v. Purisima, BOCEA filed a Motion to Consolidate15 the present case with Abakada on April 16, 2008. However, pending action on said motion, the Court rendered its decision in Abakada on August 14, 2008. Thus, the consolidation of this case with Abakada was rendered no longer possible.16
12
In Abakada, this Court, through then Associate Justice, now Chief Justice Renato C. Corona, declared Section 1217 of R.A. No. 9335 creating a Joint Congressional Oversight Committee to approve the IRR as unconstitutional and violative of the principle of separation of powers. However, the constitutionality of the remaining provisions of R.A. No. 9335 was upheld pursuant to Section 1318 of R.A. No. 9335. The Court also held that until the contrary is shown, the IRR of R.A. No. 9335 is presumed valid and effective even without the approval of the Joint Congressional Oversight Committee.19 Notwithstanding our ruling in Abakada, both parties complied with our Resolution20 dated February 10, 2009, requiring them to submit their respective Memoranda. The Issues BOCEA raises the following issues: I. WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT [NO.] 9335, AND ITS IMPLEMENTING RULES AND REGULATIONS ARE UNCONSTITUTIONAL AS THESE VIOLATE THE RIGHT TO DUE PROCESS OF THE COVERED BIR AND BOC OFFICIALS AND EMPLOYEES[;] II. WHETHER OR NOT THE ATTRITION LAW, REPUBLIC ACT [NO.] 9335, AND ITS IMPLEMENTING RULES AND REGULATIONS ARE UNCONSTITUTIONAL AS THESE VIOLATE THE RIGHT OF BIR AND BOC OFFICIALS AND EMPLOYEES TO THE EQUAL PROTECTION OF THE LAWS[;] III. WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS IMPLEMENTING RULES AND REGULATIONS VIOLATE THE RIGHT TO SECURITY OF TENURE OF BIR AND BOC OFFICIALS AND EMPLOYEES AS ENSHRINED UNDER SECTION 2 (3), ARTICLE IX (B) OF THE CONSTITUTION[;] IV. WHETHER OR NOT REPUBLIC ACT [NO.] 9335 AND ITS IMPLEMENTING RULES AND REGULATIONS ARE UNCONSTITUTIONAL AS THEY CONSTITUTE UNDUE DELEGATION OF LEGISLATIVE POWERS TO THE REVENUE PERFORMANCE EVALUATION BOARD IN VIOLATION OF THE
38
PRINCIPLE OF SEPARATION CONSTITUTION[; AND] V.
OF
POWERS
ENSHRINED
IN
THE
WHETHER OR NOT REPUBLIC ACT [NO.] 9335 IS A BILL OF ATTAINDER AND HENCE[,] UNCONSTITUTIONAL BECAUSE IT INFLICTS PUNISHMENT THROUGH LEGISLATIVE FIAT UPON A PARTICULAR GROUP OR CLASS OF OFFICIALS AND EMPLOYEES WITHOUT TRIAL.21 BOCEA manifested that while waiting for the Court to give due course to its petition, events unfolded showing the patent unconstitutionality of R.A. No. 9335. It narrated that during the first year of the implementation of R.A. No. 9335, BOC employees exerted commendable efforts to attain their revenue target of P196 billion which they surpassed by as much as P2 billion for that year alone. However, this was attained only because oil companies made advance tax payments to BOC. Moreover, BOC employees were given their "reward" for surpassing said target only in 2008, the distribution of which they described as unjust, unfair, dubious and fraudulent because only top officials of BOC got the huge sum of reward while the employees, who did the hard task of collecting, received a mere pittance of around P8,500.00. In the same manner, the Bonds Division of BOC-NAIA collected 400+% of its designated target but the higher management gave out to the employees a measly sum of P8,500.00 while the top level officials partook of millions of the excess collections. BOCEA relies on a piece of information revealed by a newspaper showing the list of BOC officials who apparently earned huge amounts of money by way of reward.22 It claims that the recipients thereof included lawyers, support personnel and other employees, including a dentist, who performed no collection functions at all. These alleged anomalous selection, distribution and allocation of rewards was due to the failure of R.A. No. 9335 to set out clear guidelines.23 In addition, BOCEA avers that the Board initiated the first few cases of attrition for the Fiscal Year 2007 by subjecting five BOC officials from the Port of Manila to attrition despite the fact that the Port of Manila substantially complied with the provisions of R.A. No. 9335. It is thus submitted that the selection of these officials for attrition without proper investigation was nothing less than arbitrary. Further, the legislative and executive departments promulgation of issuances and the Governments accession to regional trade agreements have caused a significant diminution of the tariff rates, thus, decreasing over-all collection. These unrealistic settings of revenue targets seriously affect BIR and BOC employees tasked with the burden of collection, and worse, subjected them to attrition.24 BOCEA assails the constitutionality of R.A. No. 9335 and its IRR on the following grounds: 1. R.A. No. 9335 and its IRR violate the BIR and BOC employees right to due process because the termination of employees who had not
attained their revenue targets for the year is peremptory and done without any form of hearing to allow said employees to ventilate their side. Moreover, R.A. No. 9335 and its IRR do not comply with the requirements under CSC rules and regulations as the dismissal in this case is immediately executory. Such immediately executory nature of the Boards decision negates the remedies available to an employee as provided under the CSC rules. 2. R.A. No. 9335 and its IRR violate the BIR and BOC employees right to equal protection of the law because R.A. No. 9335 and its IRR unduly discriminates against BIR and BOC employees as compared to employees of other revenue generating government agencies like the Philippine Amusement and Gaming Corporation, Department of Transportation and Communication, the Air Transportation Office, the Land Transportation Office, and the Philippine Charity Sweepstakes Office, among others, which are not subject to attrition. 3. R.A. No. 9335 and its IRR violate the BIR and BOC employees right to security of tenure because R.A. No. 9335 and its IRR effectively removed remedies provided in the ordinary course of administrative procedure afforded to government employees. The law likewise created another ground for dismissal, i.e., non-attainment of revenue collection target, which is not provided under CSC rules and which is, by its nature, unpredictable and therefore arbitrary and unreasonable. 4. R.A. No. 9335 and its IRR violate the 1987 Constitution because Congress granted to the Revenue Performance Evaluation Board (Board) the unbridled discretion of formulating the criteria for termination, the manner of allocating targets, the distribution of rewards and the determination of relevant factors affecting the targets of collection, which is tantamount to undue delegation of legislative power. 5. R.A. No. 9335 is a bill of attainder because it inflicts punishment upon a particular group or class of officials and employees without trial. This is evident from the fact that the law confers upon the Board the power to impose the penalty of removal upon employees who do not meet their revenue targets; that the same is without the benefit of hearing; and that the removal from service is immediately executory. Lastly, it disregards the presumption of regularity in the performance of the official functions of a public officer.25 On the other hand, respondents through the OSG stress that except for Section 12 of R.A. No. 9335, R.A. No. 9335 and its IRR are constitutional, as per our ruling in Abakada. Nevertheless, the OSG argues that the classification of BIR and BOC employees as public officers under R.A. No. 9335 is based on a valid and substantial distinction since the revenue generated by the BIR and BOC is essentially in the form of taxes, which is the lifeblood of the State, while the revenue produced by other agencies is merely incidental or secondary to their
39
governmental functions; that in view of their mandate, and for purposes of tax collection, the BIR and BOC are sui generis; that R.A. No. 9335 complies with the "completeness" and "sufficient standard" tests for the permissive delegation of legislative power to the Board; that the Board exercises its delegated power consistent with the policy laid down in the law, that is, to optimize the revenue generation capability and collection of the BIR and the BOC; that parameters were set in order that the Board may identify the officials and employees subject to attrition, and the proper procedure for their removal in case they fail to meet the targets set in the Performance Contract were provided; and that the rights of BIR and BOC employees to due process of law and security of tenure are duly accorded by R.A. No. 9335. The OSG likewise maintains that there was no encroachment of judicial power in the enactment of R.A. No. 9335 amounting to a bill of attainder since R.A. No. 9335 and its IRR merely defined the offense and provided for the penalty that may be imposed. Finally, the OSG reiterates that the separation from the service of any BIR or BOC employee under R.A. No. 9335 and its IRR shall be done only upon due consideration of all relevant factors affecting the level of collection, subject to Civil Service laws, rules and regulations, and in compliance with substantive and procedural due process. The OSG opines that the Performance Contract, far from violating the BIR and BOC employees right to due process, actually serves as a notice of the revenue target they have to meet and the possible consequences of failing to meet the same. More, there is nothing in the law which prevents the aggrieved party from appealing the unfavorable decision of dismissal.26 In essence, the issues for our resolution are: 1. Whether there is undue delegation of legislative power to the Board; 2. Whether R.A. No. 9335 and its IRR violate the rights of BOCEAs members to: (a) equal protection of laws, (b) security of tenure and (c) due process; and 3. Whether R.A. No. 9335 is a bill of attainder. Our Ruling Prefatorily, we note that it is clear, and in fact uncontroverted, that BOCEA has locus standi. BOCEA impugns the constitutionality of R.A. No. 9335 and its IRR because its members, who are rank-and-file employees of the BOC, are actually covered by the law and its IRR. BOCEAs members have a personal and substantial interest in the case, such that they have sustained or will sustain, direct injury as a result of the enforcement of R.A. No. 9335 and its IRR.27 However, we find no merit in the petition and perforce dismiss the same.
It must be noted that this is not the first time the constitutionality of R.A. No. 9335 and its IRR are being challenged. The Court already settled the majority of the same issues raised by BOCEA in our decision in Abakada, which attained finality on September 17, 2008. As such, our ruling therein is worthy of reiteration in this case. We resolve the first issue in the negative. The principle of separation of powers ordains that each of the three great branches of government has exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated sphere.28 Necessarily imbedded in this doctrine is the principle of non-delegation of powers, as expressed in the Latin maxim potestas delegata non delegari potest, which means "what has been delegated, cannot be delegated." This doctrine is based on the ethical principle that such delegated power constitutes not only a right but a duty to be performed by the delegate through the instrumentality of his own judgment and not through the intervening mind of another.29However, this principle of non-delegation of powers admits of numerous exceptions,30 one of which is the delegation of legislative power to various specialized administrative agencies like the Board in this case. The rationale for the aforementioned exception was clearly explained in our ruling in Gerochi v. Department of Energy,31 to wit: In the face of the increasing complexity of modern life, delegation of legislative power to various specialized administrative agencies is allowed as an exception to this principle. Given the volume and variety of interactions in todays society, it is doubtful if the legislature can promulgate laws that will deal adequately with and respond promptly to the minutiae of everyday life. Hence, the need to delegate to administrative bodies the principal agencies tasked to execute laws in their specialized fields the authority to promulgate rules and regulations to implement a given statute and effectuate its policies. All that is required for the valid exercise of this power of subordinate legislation is that the regulation be germane to the objects and purposes of the law and that the regulation be not in contradiction to, but in conformity with, the standards prescribed by the law. These requirements are 32 denominated as the completeness test and the sufficient standard test. Thus, in Abakada, we held, Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2) the sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried out or implemented by the delegate. It lays down a sufficient standard when it provides adequate guidelines or limitations in the law to map out the boundaries of the delegates authority and prevent the delegation from running riot. To be sufficient, the standard must specify the limits of the delegates authority, announce the legislative policy and identify the conditions under which it is to be implemented.
40
RA [No.] 9335 adequately states the policy and standards to guide the President in fixing revenue targets and the implementing agencies in carrying out the provisions of the law. Section 2 spells out the policy of the law: "SEC. 2. Declaration of Policy. It is the policy of the State to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing for a system of rewards and sanctions through the creation of a Rewards and Incentives Fund and a Revenue Performance Evaluation Board in the above agencies for the purpose of encouraging their officials and employees to exceed their revenue targets." Section 4 "canalized within banks that keep it from overflowing" the delegated power to the President to fix revenue targets: "SEC. 4. Rewards and Incentives Fund. A Rewards and Incentives Fund, hereinafter referred to as the Fund, is hereby created, to be sourced from the collection of the BIR and the BOC in excess of their respective revenue targets of the year, as determined by the Development Budget and Coordinating Committee (DBCC), in the following percentages: Excess of Collection [Over] the Revenue Targets 30% or below More than 30%
determination of revenue targets does not rest solely on the President as it also undergoes the scrutiny of the DBCC. On the other hand, Section 7 specifies the limits of the Boards authority and identifies the conditions under which officials and employees whose revenue collection falls short of the target by at least 7.5% may be removed from the service: "SEC. 7. Powers and Functions of the Board. The Board in the agency shall have the following powers and functions: xxx xxx xxx
(b) To set the criteria and procedures for removing from service officials and employees whose revenue collection falls short of the target by at least seven and a half percent (7.5%), with due consideration of all relevant factors affecting the level of collection as provided in the rules and regulations promulgated under this Act, subject to civil service laws, rules and regulations and compliance with substantive and procedural due process: Provided, That the following exemptions shall apply: Percent (%) of the Excess Collection to Accrue to the Fund 1. Where the district or area of responsibility is newly-created, not exceeding two years in operation, and has no historical record of collection performance that can be used as basis for evaluation; and 15%
15% of the first 30% plus 20% of the revenue or customs official or employee is a recent transferee in the 2. Where the middle of the period under consideration unless the transfer was due to remaining excess nonperformance of revenue targets or potential nonperformance of revenue targets: Provided, however, That when the district or area of responsibility covered by revenue or customs officials or employees has suffered from economic The Fund shall be deemed automatically appropriated the year immediately difficulties brought about by natural calamities or force majeure or economic following the year when the revenue collection target was exceeded and shall be causes as may be determined by the Board, termination shall be considered only released on the same fiscal year. after careful and proper review by the Board. Revenue targets shall refer to the original estimated revenue collection expected of the BIR and the BOC for a given fiscal year as stated in the Budget of Expenditures and Sources of Financing (BESF) submitted by the President to Congress. The BIR and the BOC shall submit to the DBCC the distribution of the agencies revenue targets as allocated among its revenue districts in the case of the BIR, and the collection districts in the case of the BOC. xxx xxx x x x" xxx Revenue targets are based on the original estimated revenue collection expected respectively of the BIR and the BOC for a given fiscal year as approved by the DBCC and stated in the BESF submitted by the President to Congress. Thus, the xxx x x x" (c) To terminate personnel in accordance with the criteria adopted in the preceding paragraph: Provided, That such decision shall be immediately executory: Provided, further, That the application of the criteria for the separation of an official or employee from service under this Act shall be without prejudice to the application of other relevant laws on accountability of public officers and employees, such as the Code of Conduct and Ethical Standards of Public Officers and Employees and the Anti-Graft and Corrupt Practices Act;
At any rate, this Court has recognized the following as sufficient standards: "public interest", "justice and equity", "public convenience and welfare" and "simplicity,
41
economy and welfare". In this case, the declared policy of optimization of the revenue-generation capability and collection of the BIR and the BOC is infused with public interest.33 We could not but deduce that the completeness test and the sufficient standard test were fully satisfied by R.A. No. 9335, as evident from the aforementioned Sections 2, 4 and 7 thereof. Moreover, Section 534 of R.A. No. 9335 also provides for the incentives due to District Collection Offices. While it is apparent that the last paragraph of Section 5 provides that "[t]he allocation, distribution and release of the district reward shall likewise be prescribed by the rules and regulations of the Revenue Performance and Evaluation Board," Section 7 (a)35 of R.A. No. 9335 clearly mandates and sets the parameters for the Board by providing that such rules and guidelines for the allocation, distribution and release of the fund shall be in accordance with Sections 4 and 5 of R.A. No. 9335. In sum, the Court finds that R.A. No. 9335, read and appreciated in its entirety, is complete in all its essential terms and conditions, and that it contains sufficient standards as to negate BOCEAs supposition of undue delegation of legislative power to the Board. Similarly, we resolve the second issue in the negative. Equal protection simply provides that all persons or things similarly situated should be treated in a similar manner, both as to rights conferred and responsibilities imposed. The purpose of the equal protection clause is to secure every person within a states jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statute or by its improper execution through the states duly constituted authorities. In other words, the concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.361awphil Thus, on the issue on equal protection of the laws, we held in Abakada: The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable foundation or rational basis and not arbitrary. With respect to RA [No.] 9335, its expressed public policy is the optimization of the revenuegeneration capability and collection of the BIR and the BOC. Since the subject of the law is the revenue-generation capability and collection of the BIR and the BOC, the incentives and/or sanctions provided in the law should logically pertain to the said agencies. Moreover, the law concerns only the BIR and the BOC because they have the common distinct primary function of generating revenues for the national government through the collection of taxes, customs duties, fees and charges. The BIR performs the following functions: "Sec. 18. The Bureau of Internal Revenue. The Bureau of Internal Revenue, which shall be headed by and subject to the supervision and control of the
Commissioner of Internal Revenue, who shall be appointed by the President upon the recommendation of the Secretary [of the DOF], shall have the following functions: (1) Assess and collect all taxes, fees and charges and account for all revenues collected; (2) Exercise duly delegated police powers for the proper performance of its functions and duties; (3) Prevent and prosecute tax evasions and all other illegal economic activities; (4) Exercise supervision and control over its constituent and subordinate units; and (5) Perform such other functions as may be provided by law. xxx xxx x x x"
On the other hand, the BOC has the following functions: "Sec. 23. The Bureau of Customs. The Bureau of Customs which shall be headed and subject to the management and control of the Commissioner of Customs, who shall be appointed by the President upon the recommendation of the Secretary [of the DOF] and hereinafter referred to as Commissioner, shall have the following functions: (1) Collect custom duties, taxes and the corresponding fees, charges and penalties; (2) Account for all customs revenues collected; (3) Exercise police authority for the enforcement of tariff and customs laws; (4) Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of entry; (5) Supervise and control exports, imports, foreign mails and the clearance of vessels and aircrafts in all ports of entry; (6) Administer all legal requirements that are appropriate; (7) Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction;
42
(8) Exercise supervision and control over its constituent units; (9) Perform such other functions as may be provided by law. xxx xxx x x x"
No. 9335 is a bill of attainder proscribed under Section 22,44 Article III of the 1987 Constitution. On this score, we hold that R.A. No. 9335 is not a bill of attainder. A bill of attainder is a legislative act which inflicts punishment on individuals or members of a particular group without a judicial trial. Essential to a bill of attainder are a specification of certain individuals or a group of individuals, the imposition of a punishment, penal or otherwise, and the lack of judicial trial.451avvphi1 In his Concurring Opinion in Tuason v. Register of Deeds, Caloocan City,46 Justice Florentino P. Feliciano traces the roots of a Bill of Attainder, to wit: Bills of attainder are an ancient instrument of tyranny. In England a few centuries back, Parliament would at times enact bills or statutes which declared certain persons attainted and their blood corrupted so that it lost all heritable quality (Ex Parte Garland, 4 Wall. 333, 18 L.Ed. 366 [1867]). In more modern terms, a bill of attainder is essentially a usurpation of judicial power by a legislative body. It envisages and effects the imposition of a penalty the deprivation of life or liberty or property not by the ordinary processes of judicial trial, but by legislative fiat. While cast in the form of special legislation, a bill of attainder (or bill of pains and penalties, if it prescribed a penalty other than death) is in intent and effect a penal judgment visited upon an identified person or group of persons (and not upon the general community) without a prior charge or demand, without notice and hearing, without an opportunity to defend, without any of the civilized forms and safeguards of the judicial process as we know it (People v. Ferrer, 48 SCRA 382 [1972]; Cummings and Missouri, 4 Wall. 277, 18 L. Ed. 356 [1867]; U.S. v. Lovett, 328, U.S. 303, 90 L.Ed. 1252 [1945]; U.S. v. Brown, 381 U.S. 437, 14 L.Ed. 2d. 484 [1965]. Such is the archetypal bill of attainder wielded as a means of legislative oppression. x x x47 R.A. No. 9335 does not possess the elements of a bill of attainder. It does not seek to inflict punishment without a judicial trial. R.A. No. 9335 merely lays down the grounds for the termination of a BIR or BOC official or employee and provides for the consequences thereof. The democratic processes are still followed and the constitutional rights of the concerned employee are amply protected. A final note. We find that BOCEAs petition is replete with allegations of defects and anomalies in allocation, distribution and receipt of rewards. While BOCEA intimates that it intends to curb graft and corruption in the BOC in particular and in the government in general which is nothing but noble, these intentions do not actually pertain to the constitutionality of R.A. No. 9335 and its IRR, but rather in the faithful implementation thereof. R.A. No. 9335 itself does not tolerate these pernicious acts of graft and corruption.48 As the Court is not a trier of facts, the investigation on the veracity of, and the proper action on these anomalies are in the hands of the Executive branch. Correlatively, the wisdom for the enactment of this law remains
Both the BIR and the BOC are bureaus under the DOF. They principally perform the special function of being the instrumentalities through which the State exercises one of its great inherent functions taxation. Indubitably, such substantial distinction is germane and intimately related to the purpose of the law. Hence, the classification and treatment accorded to the BIR and the BOC under RA [No.] 9335 fully satisfy the demands of equal protection.37 As it was imperatively correlated to the issue on equal protection, the issues on the security of tenure of affected BIR and BOC officials and employees and their entitlement to due process were also settled in Abakada: Clearly, RA [No.] 9335 in no way violates the security of tenure of officials and employees of the BIR and the BOC.The guarantee of security of tenure only means that an employee cannot be dismissed from the service for causes other than those provided by law and only after due process is accorded the employee. In the case of RA [No.] 9335, it lays down a reasonable yardstick for removal (when the revenue collection falls short of the target by at least 7.5%) with due consideration of all relevant factors affecting the level of collection. This standard is analogous to inefficiency and incompetence in the performance of official duties, a ground for disciplinary action under civil service laws. The action for removal is also subject to civil service laws, rules and regulations and compliance with substantive and procedural due process.38 In addition, the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, a fair and reasonable opportunity to explain 39 ones side. BOCEAs apprehension of deprivation of due process finds its answer 40 in Section 7 (b) and (c) of R.A. No. 9335. The concerned BIR or BOC official or employee is not simply given a target revenue collection and capriciously left without any quarter. R.A. No. 9335 and its IRR clearly give due consideration to all relevant factors41 that may affect the level of collection. In the same manner, exemptions42 were set, contravening BOCEAs claim that its members may be removed for unattained target collection even due to causes which are beyond their control. Moreover, an employees right to be heard is not at all prevented and his right to appeal is not deprived of him.43 In fine, a BIR or BOC official or employee in this case cannot be arbitrarily removed from the service without according him his constitutional right to due process. No less than R.A. No. 9335 in accordance with the 1987 Constitution guarantees this. We have spoken, and these issues were finally laid to rest. Now, the Court proceeds to resolve the last, but new issue raised by BOCEA, that is, whether R.A.
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within the domain of the Legislative branch. We merely interpret the law as it is. The Court has no discretion to give statutes a meaning detached from the manifest intendment and language thereof.49 Just like any other law, R.A. No. 9335 has in its favor the presumption of constitutionality, and to justify its nullification, there must be a clear and unequivocal breach of the Constitution and not one that is doubtful, speculative, or argumentative.50 We have so declared in Abakada, and we now reiterate that R.A. No. 9335 and its IRR are constitutional. WHEREFORE, the present petition for certiorari and prohibition with prayer for injunctive relief/s is DISMISSED. No costs. SO ORDERED.
They all went back to the residence of the petitioner and closely guarded the place where the subject ran for cover. SPO3 Masnayon requested his men to get a barangay tanod and a few minutes thereafter, his men returned with two barangay tanods. In the presence of the barangay tanod, Nelson Gonzalado, and the elder sister of petitioner named Dolly del Castillo, searched the house of petitioner including the nipa hut where the petitioner allegedly ran for cover. His men who searched the residence of the petitioner found nothing, but one of the barangay tanods was able to confiscate from the nipa hut several articles, including four (4) plastic packs containing white crystalline substance. Consequently, the articles that were confiscated were sent to the PNP Crime Laboratory for examination. The contents of the four (4) heat- sealed transparent plastic packs were subjected to laboratory examination, the result of which proved positive for the presence of methamphetamine hydrochloride, or shabu. Thus, an Information was filed before the RTC against petitioner, charging him with violation of Section 16, Article III of R.A. 6425, as amended. The Information5 reads: That on or about the 13th day of September 1997, at about 3:00 p.m. in the City of Cebu, Philippines and within the jurisdiction of this Honorable Court, the said accused, with deliberate intent, did then and there have in his possession and control four (4) packs of white crystalline powder, having a total weight of 0.31 gram, locally known as "shabu," all containing methamphetamine hydrochloride, a regulated drug, without license or prescription from any competent authority. CONTRARY TO LAW.6 During arraignment, petitioner, with the assistance of his counsel, pleaded not guilty.7 Subsequently, trial on the merits ensued. To prove the earlier mentioned incident, the prosecution presented the testimonies of SPO3 Bienvenido Masnayon, PO2 Milo Arriola, and Forensic Analyst, Police Inspector Mutchit Salinas. The defense, on the other hand, presented the testimonies of petitioner, Jesusa del Castillo, Dalisay del Castillo and Herbert Aclan, which can be summarized as follows: On September 13, 1997, around 3 o'clock in the afternoon, petitioner was installing the electrical wirings and airconditioning units of the Four Seasons Canteen and Beauty Parlor at Wacky Bldg., Cabancalan, Cebu. He was able to finish his job around 6 o'clock in the evening, but he was engaged by the owner of the establishment in a conversation. He was able to go home around 8:30-9 o'clock in the evening. It was then that he learned from his wife that police operatives
DEL CASTILLO vs. PEOPLE, G.R. No. 185128 For this Court's consideration is the Petition for Review1 on Certiorari under Rule 45 of Ruben del Castillo assailing the Decision2 dated July 31, 2006 and Resolution3 dated December 13, 2007 of the Court of Appeals (CA) in CA-G.R. CR No. 27819, which affirmed the Decision4 dated March 14, 2003 of the Regional Trial Court (RTC), Branch 12, Cebu, in Criminal Case No. CBU-46291, finding petitioner guilty beyond reasonable doubt of violation of Section 16, Article III of Republic Act (R.A.) 6425. The facts, as culled from the records, are the following: Pursuant to a confidential information that petitioner was engaged in selling shabu, police officers headed by SPO3 Bienvenido Masnayon, after conducting surveillance and test-buy operation at the house of petitioner, secured a search warrant from the RTC and around 3 o'clock in the afternoon of September 13, 1997, the same police operatives went to Gil Tudtud St., Mabolo, Cebu City to serve the search warrant to petitioner. Upon arrival, somebody shouted "raid," which prompted them to immediately disembark from the jeep they were riding and went directly to petitioner's house and cordoned it. The structure of the petitioner's residence is a two-storey house and the petitioner was staying in the second floor. When they went upstairs, they met petitioner's wife and informed her that they will implement the search warrant. But before they can search the area, SPO3 Masnayon claimed that he saw petitioner run towards a small structure, a nipa hut, in front of his house. Masnayon chased him but to no avail, because he and his men were not familiar with the entrances and exits of the place.
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searched his house and found nothing. According to him, the small structure, 20 meters away from his house where they found the confiscated items, was owned by his older brother and was used as a storage place by his father. After trial, the RTC found petitioner guilty beyond reasonable of the charge against him in the Information. The dispositive portion of the Decision reads: WHEREFORE, premises considered, this Court finds the accused Ruben del Castillo "alyas Boy Castillo," GUILTY of violating Section 16, Article III, Republic Act No. 6425, as amended. There being no mitigating nor aggravating circumstances proven before this Court, and applying the Indeterminate Sentence Law, he is sentenced to suffer the penalty of Six (6) Months and One (1) Day as Minimum and Four (4) Years and Two (2) Months as Maximum ofPrision Correccional. The four (4) small plastic packets of white crystalline substance having a total weight of 0.31 gram, positive for the presence of methamphetamine hydrochloride, are ordered confiscated and shall be destroyed in accordance with the law. SO ORDERED.8 Aggrieved, petitioner appealed his case with the CA, but the latter affirmed the decision of the RTC, thus: WHEREFORE, the challenged Decision is AFFIRMED in toto and the appeal is DISMISSED, with costs against accused-appellant. SO ORDERED.9 After the motion for reconsideration of petitioner was denied by the CA, petitioner filed with this Court the present petition for certiorari under Rule 45 of the Rules of Court with the following arguments raised: 1. THE COURT OF APPEALS ERRED IN ITS APPLICATION OF THE PROVISIONS OF THE CONSTITUTION, THE RULES OF COURT AND ESTABLISHED JURISPRUDENCE VIS-A-VIS VALIDITY OF SEARCH WARRANT NO. 570-9-1197-24; 2. THE COURT OF APPEALS ERRED IN RULING THAT THE FOUR (4) PACKS OF WHITE CRYSTALLINE POWDER ALLEGEDLY FOUND ON THE FLOOR OF THE NIPA HUT OR STRUCTURE ARE ADMISSIBLE IN EVIDENCE AGAINST THE PETITIONER, NOT ONLY BECAUSE THE SAID COURT SIMPLY PRESUMED THAT IT WAS USED BY THE PETITIONER OR THAT THE PETITIONER RAN TO IT FOR COVER WHEN THE SEARCHING TEAM ARRIVED AT HIS RESIDENCE, BUT ALSO, PRESUMING THAT THE SAID NIPA
HUT OR STRUCTURE WAS INDEED USED BY THE PETITIONER AND THE FOUR (4) PACKS OF WHITE CRYSTALLINE POWDER WERE FOUND THEREAT. THE SUBJECT FOUR (4) PACKS OF WHITE CRYSTALLINE POWDER ARE FRUITS OF THE POISONOUS TREE; and 3. THE COURT OF APPEALS ERRED IN ITS APPLICATION OF THE ELEMENT OF "POSSESSION" AS AGAINST THE PETITIONER, AS IT WAS IN VIOLATION OF THE ESTABLISHED JURISPRUDENCE ON THE MATTER. HAD THE SAID COURT PROPERLY APPLIED THE ELEMENT IN QUESTION, IT COULD HAVE BEEN ASSAYED THAT THE SAME HAD NOT BEEN PROVEN.10 The Office of the Solicitor General (OSG), in its Comment dated February 10, 2009, enumerated the following counter-arguments: I SEARCH WARRANT No. 570-9-11-97-24 issued by Executive Judge Priscilla S. Agana of Branch 24, Regional Trial Court of Cebu City is valid. II The four (4) packs of shabu seized inside the shop of petitioner are admissible in evidence against him. III The Court of Appeals did not err in finding him guilty of illegal possession of 11 prohibited drugs. Petitioner insists that there was no probable cause to issue the search warrant, considering that SPO1 Reynaldo Matillano, the police officer who applied for it, had no personal knowledge of the alleged illegal sale of drugs during a test-buy operation conducted prior to the application of the same search warrant. The OSG, however, maintains that the petitioner, aside from failing to file the necessary motion to quash the search warrant pursuant to Section 14, Rule 127 of the Revised Rules on Criminal Procedure, did not introduce clear and convincing evidence to show that Masnayon was conscious of the falsity of his assertion or representation. Anent the second argument, petitioner asserts that the nipa hut located about 20 meters away from his house is no longer within the "permissible area" that may be searched by the police officers due to the distance and that the search warrant did not include the same nipa hut as one of the places to be searched. The OSG, on the other hand, argues that the constitutional guaranty against unreasonable searches and seizure is applicable only against government authorities and not to
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private individuals such as the barangay tanod who found the folded paper containing packs of shabu inside the nipa hut. As to the third argument raised, petitioner claims that the CA erred in finding him guilty beyond reasonable doubt of illegal possession of prohibited drugs, because he could not be presumed to be in possession of the same just because they were found inside the nipa hut. Nevertheless, the OSG dismissed the argument of the petitioner, stating that, when prohibited and regulated drugs are found in a house or other building belonging to and occupied by a particular person, the presumption arises that such person is in possession of such drugs in violation of law, and the fact of finding the same is sufficient to convict. This Court finds no merit on the first argument of petitioner. The requisites for the issuance of a search warrant are: (1) probable cause is present; (2) such probable cause must be determined personally by the judge; (3) the judge must examine, in writing and under oath or affirmation, the complainant and the witnesses he or she may produce; (4) the applicant and the witnesses testify on the facts personally known to them; and (5) the warrant specifically describes the place to be searched and the things to be seized.12 According to petitioner, there was no probable cause. Probable cause for a search warrant is defined as such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought in connection with the offense are in the place sought to be searched.13 A finding of probable cause needs only to rest on evidence showing that, more likely than not, a crime has been committed and that it was committed by the accused. Probable cause demands more than bare suspicion; it requires less than evidence which would justify conviction.14 The judge, in determining probable cause, is to consider the totality of the circumstances made known to him and not by a fixed and rigid formula,15and must employ a flexible, totality of the circumstances standard.16 The existence depends to a large degree upon the finding or opinion of the judge conducting the examination. This Court, therefore, is in no position to disturb the factual findings of the judge which led to the issuance of the search warrant. A magistrate's determination of probable cause for the issuance of a search warrant is paid great deference by a reviewing court, as long 17 as there was substantial basis for that determination. Substantial basis means that the questions of the examining judge brought out such facts and circumstances as would lead a reasonably discreet and prudent man to believe that an offense has been committed, and the objects in connection with the offense sought to be seized are in the place sought to be searched.18 A review of the records shows that in the present case, a substantial basis exists. With regard to the second argument of petitioner, it must be remembered that the warrant issued must particularly describe the place to be searched and persons or things to be seized in order for it to be valid. A designation or description that points out the place to be searched to the exclusion of all others, and on inquiry unerringly leads the peace officers to it, satisfies the constitutional requirement of definiteness.19 In the present case, Search Warrant No. 570-9-1197-
2420 specifically designates or describes the residence of the petitioner as the place to be searched. Incidentally, the items were seized by a barangay tanod in a nipa hut, 20 meters away from the residence of the petitioner. The confiscated items, having been found in a place other than the one described in the search warrant, can be considered as fruits of an invalid warrantless search, the presentation of which as an evidence is a violation of petitioner's constitutional guaranty against unreasonable searches and seizure. The OSG argues that, assuming that the items seized were found in another place not designated in the search warrant, the same items should still be admissible as evidence because the one who discovered them was abarangay tanod who is a private individual, the constitutional guaranty against unreasonable searches and seizure being applicable only against government authorities. The contention is devoid of merit. It was testified to during trial by the police officers who effected the search warrant that they asked the assistance of the barangay tanods, thus, in the testimony of SPO3 Masnayon: Fiscal Centino: Q For how long did the chase take place? A Just a very few moments. Q After that, what did you [do] when you were not able to reach him? A I watched his shop and then I requested my men to get a barangay tanod. Q Were you able to get a barangay tanod? A Yes. Q Can you tell us what is the name of the barangay tanod? A Nelson Gonzalado. Q For point of clarification, how many barangay tanod [did] your driver get? A Two. Q What happened after that? A We searched the house, but we found negative. Q Who proceeded to the second floor of the house? A SPO1 Cirilo Pogoso and Milo Areola went upstairs and found nothing. Q What about you, where were you? A I [was] watching his shop and I was with Matillano. Q What about the barangay tanod? A Together with Milo and Pogoso. Q When the search at the second floor of the house yielded negative what did you do? A They went downstairs because I was suspicious of his shop because he ran from his shop, so we searched his shop.
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Q Who were with you when you searched the shop? A The barangay tanod Nilo Gonzalado, the elder sister of Ruben del Castillo named Dolly del Castillo. Q You mean to say, that when (sic) SPO1 Reynaldo Matillano, Barangay Tanod Nilo Gonzalado and the elder sister of Ruben del Castillo were together in the shop? A Yes. Q What happened at the shop? A One of the barangay tanods was able to pick up white folded paper. Q What [were] the contents of that white folded paper? A A plastic pack containing white crystalline. Q Was that the only item? A There are others like the foil, scissor. Q Were you present when those persons found those tin foil and others inside the electric shop? A Yes.21 The fact that no items were seized in the residence of petitioner and that the items that were actually seized were found in another structure by a barangay tanod, was corroborated by PO2 Arriola, thus: FISCAL: Q So, upon arriving at the house of Ruben del Castillo alias Boy, can you still recall what took place? A We cordoned the area. Q And after you cordoned the area, did anything happen? A We waited for the barangay tanod. Q And did the barangay tanod eventually appear? A Yes. And then we started our search in the presence of Ruben del Castillo's wife. Q What is the name of the wife of Ruben del Castillo? A I cannot recall her name, but if I see her I can recall [her] face. Q What about Ruben del Castillo, was she around when [you] conducted the search? A No. Ruben was not in the house. But our team leader, team mate Bienvenido Masnayon saw that Ruben ran away from his adjacent electronic shop near his house, in front of his house. Q Did you find anything during the search in the house of Ruben del Castillo? A After our search in the house, we did not see anything. The house was clean.
Q What did you do afterwards, if any? A We left (sic) out of the house and proceeded to his electronic shop. Q Do you know the reason why you proceeded to his electronic shop? A Yes. Because our team leader Bienvenido Masnayon saw that (sic) Ruben run from that store and furthermore the door was open. Q How far is the electronic shop from the house of Ruben del Castillo? A More or less, 5 to 6 meters in front of his house. xxxx Q So, who entered inside the electronic shop? A The one who first entered the electronic shop is our team leader Bienvenido Masnayon. Q You mentioned that Masnayon entered first. Do you mean to say that there were other persons or other person that followed after Masnayon? A Then we followed suit. Q All of your police officers and the barangay tanod followed suit? A I led Otadoy and the barangay tanod. Q What about you? A I also followed suit. Q And did anything happen inside the shop of Ruben del Castillo? A It was the barangay tanod who saw the folded paper and I saw him open the folded paper which contained four shabu deck. Q How far were you when you saw the folded paper and the tanod open the folded paper? A We were side by side because the shop was very small.22 SPO1 Pogoso also testified on the same matter, thus: FISCAL CENTINO: Q And where did you conduct the search, Mr. Witness? A At his residence, the two-storey house. Q Among the three policemen, who were with you in conducting the search at the residence of the accused? A I, Bienvenido Masnayon. Q And what transpired after you searched the house of Ruben del Castillo? A Negative, no shabu. Q And what happened afterwards, if any? A We went downstairs and proceeded to the small house.
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Q Can you please describe to this Honorable Court, what was that small house which you proceeded to? A It is a nipa hut. Q And more or less, how far or near was it from the house of Ruben del Castillo? A 5 to 10 meters. Q And could you tell Mr. Witness, what was that nipa hut supposed to be? A That was the electronic shop of Ruben del Castillo. Q And what happened when your team proceeded to the nipa hut? A I was just outside the nipa hut. Q And who among the team went inside? A PO2 Milo Areola and the Barangay Tanod.23 Having been established that the assistance of the barangay tanods was sought by the police authorities who effected the searched warrant, the same barangay tanods therefore acted as agents of persons in authority. Article 152 of the Revised Penal Code defines persons in authority and agents of persons in authority as: x x x any person directly vested with jurisdiction, whether as an individual or as a member of some court or governmental corporation, board or commission, shall be deemed a person in authority. A barangay captain and a barangay chairman shall also be deemed a person in authority. A person who, by direct provision of law or by election or by appointment by competent authority, is charged with the maintenance of public order and the protection and security of life and property, such as barrio councilman, barrio policeman and barangay leader, and any person who comes to the aid of persons in authority, shall be deemed an agent of a person in authority. The Local Government Code also contains a provision which describes the function of a barangay tanod as an agent of persons in authority. Section 388 of the Local Government Code reads: SEC. 388. Persons in Authority. - For purposes of the Revised Penal Code, the punong barangay, sangguniang barangay members, and members of the lupong tagapamayapa in each barangay shall be deemed as persons in authority in their jurisdictions, while other barangay officials and members who may be designated by law or ordinance and charged with the maintenance of public order, protection and security of life and property, or the maintenance of a desirable and balanced environment, and any barangay member who comes to the aid of persons in authority, shall be deemed agents of persons in authority.
By virtue of the above provisions, the police officers, as well as the barangay tanods were acting as agents of a person in authority during the conduct of the search. Thus, the search conducted was unreasonable and the confiscated items are inadmissible in evidence. Assuming ex gratia argumenti that the barangay tanod who found the confiscated items is considered a private individual, thus, making the same items admissible in evidence, petitioner's third argument that the prosecution failed to establish constructive possession of the regulated drugs seized, would still be meritorious. Appellate courts will generally not disturb the factual findings of the trial court since the latter has the unique opportunity to weigh conflicting testimonies, having heard the witnesses themselves and observed their deportment and manner of testifying,24 unless attended with arbitrariness or plain disregard of pertinent facts or circumstances, the factual findings are accorded the highest degree of respect on appeal25 as in the present case. It must be put into emphasis that this present case is about the violation of Section 16 of R.A. 6425. In every prosecution for the illegal possession of shabu, the following essential elements must be established: (a) the accused is found in possession of a regulated drug; (b) the person is not authorized by law or by duly constituted authorities; and (c) the accused has knowledge that the said drug is a regulated drug.26 In People v. Tira,27 this Court explained the concept of possession of regulated drugs, to wit: This crime is mala prohibita, and, as such, criminal intent is not an essential element. However, the prosecution must prove that the accused had the intent to possess (animus posidendi) the drugs. Possession, under the law, includes not only actual possession, but also constructive possession. Actual possession exists when the drug is in the immediate physical possession or control of the accused. On the other hand, constructive possession exists when the drug is under the dominion and control of the accused or when he has the right to exercise dominion and control over the place where it is found. Exclusive possession or control is not necessary. The accused cannot avoid conviction if his right to exercise control and 28 dominion over the place where the contraband is located, is shared with another. While it is not necessary that the property to be searched or seized should be owned by the person against whom the search warrant is issued, there must be sufficient showing that the property is under appellants control or possession.29 The CA, in its Decision, referred to the possession of regulated drugs by the petitioner as a constructive one. Constructive possession exists when the drug is under the dominion and control of the accused or when he has the right to exercise dominion and control over the place where it is found.30 The records are void of any evidence to show that petitioner owns the nipa hut in question nor was it established that he used the said structure as a shop. The RTC, as well as the CA, merely presumed that petitioner used the said structure due to the presence of
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electrical materials, the petitioner being an electrician by profession. The CA, in its Decision, noted a resolution by the investigating prosecutor, thus: x x x As admitted by respondent's wife, her husband is an electrician by occupation. As such, conclusion could be arrived at that the structure, which housed the electrical equipments is actually used by the respondent. Being the case, he has control of the things found in said structure.31 In addition, the testimonies of the witnesses for the prosecution do not also provide proof as to the ownership of the structure where the seized articles were found. During their direct testimonies, they just said, without stating their basis, that the same structure was the shop of petitioner.32 During the direct testimony of SPO1 Pogoso, he even outrightly concluded that the electrical shop/nipa hut was owned by petitioner, thus: FISCAL CENTINO: Q Can you please describe to this Honorable Court, what was that small house which you proceeded to? A It is a nipa hut. Q And more or less, how far or near was it from the house of Ruben del Castillo? A 5 to 10 meters. Q And could you tell Mr. Witness, what was that nipa hut supposed to be? A That was the electronic shop of Ruben del Castillo. Q And what happened when your team proceeded to the nipa hut? A I was just outside the nipa hut.33 However, during cross-examination, SPO3 Masnayon admitted that there was an electrical shop but denied what he said in his earlier testimony that it was owned by petitioner, thus: ATTY. DAYANDAYAN: Q You testified that Ruben del Castillo has an electrical shop, is that correct? A He came out of an electrical shop. I did not say that he owns the shop.
Q Now, this shop is within a structure? A Yes. Q How big is the structure? A It is quite a big structure, because at the other side is a mahjong den and at the other side is a structure rented by a couple.34 The prosecution must prove that the petitioner had knowledge of the existence and presence of the drugs in the place under his control and dominion and the 35 character of the drugs. With the prosecution's failure to prove that the nipa hut was under petitioner's control and dominion, there casts a reasonable doubt as to his guilt. In considering a criminal case, it is critical to start with the law's own starting perspective on the status of the accused - in all criminal prosecutions, he is presumed innocent of the charge laid unless the contrary is proven beyond reasonable doubt.36 Proof beyond reasonable doubt, or that quantum of proof sufficient to produce a moral certainty that would convince and satisfy the conscience of those who act in judgment, is indispensable to overcome the constitutional presumption of innocence.371wphi1 WHEREFORE, the Decision dated July 31, 2006 of the Court of Appeals in CA-G. R. No. 27819, which affirmed the Decision dated March 14, 2003 of the Regional Trial Court, Branch 12, Cebu, in Criminal Case No. CBU-46291 is hereby REVERSED and SET ASIDE. Petitioner Ruben del Castillo is ACQUITTED on reasonable doubt. SO ORDERED. COMMISSIONER OF CUSTOMS vs.HYPERMIX FEEDS CORPORATION, G.R. No. 179579
Before us is a Petition for Review under Rule 45,1 assailing the Decision2 and the Resolution3 of the Court of Appeals (CA), which nullified the Customs Memorandum Order (CMO) No. 27-20034 on the tariff classification of wheat issued by petitioner Commissioner of Customs. The antecedent facts are as follows: On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the Memorandum, for tariff purposes, wheat was classified according to the following: (1) importer or consignee; (2) country of origin; and (3) port of discharge.5 The regulation provided an exclusive list of corporations, ports of
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discharge, commodity descriptions and countries of origin. Depending on these factors, wheat would be classified either as food grade or feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade, 7%. CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification Review Committee (VCRC) cases. Under this procedure, the release of the articles that were the subject of protest required the importer to post a cash bond to cover the tariff differential.6 A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a Petition for Declaratory Relief7 with the Regional Trial Court (RTC) of Las Pias City. It anticipated the implementation of the regulation on its imported and perishable Chinese milling wheat in transit from China.8 Respondent contended that CMO 27-2003 was issued without following the mandate of the Revised Administrative Code on public participation, prior notice, and publication or registration with the University of the Philippines Law Center. Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without the benefit of prior assessment and examination; thus, despite having imported food grade wheat, it would be subjected to the 7% tariff upon the arrival of the shipment, forcing them to pay 133% more than was proper. Furthermore, respondent claimed that the equal protection clause of the Constitution was violated when the regulation treated non-flour millers differently from flour millers for no reason at all. Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature. On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) 9 effective for twenty (20) days from notice. Petitioners thereafter filed a Motion to Dismiss.10 They alleged that: (1) the RTC did not have jurisdiction over the subject matter of the case, because respondent was asking for a judicial determination of the classification of wheat; (2) an action for declaratory relief was improper; (3) CMO 27-2003 was an internal administrative rule and not legislative in nature; and (4) the claims of respondent were speculative and premature, because the Bureau of Customs (BOC) had yet to examine respondents products. They likewise opposed the application for a writ of preliminary injunction on the ground that they had not inflicted any injury through the issuance of the regulation; and that the action would be contrary to the rule that administrative issuances are assumed valid until declared otherwise. On 28 February 2005, the parties agreed that the matters raised in the application for preliminary injunction and the Motion to Dismiss would just be resolved together in the main case. Thus, on 10 March 2005, the RTC rendered its Decision11 without
having to resolve the application for preliminary injunction and the Motion to Dismiss. The trial court ruled in favor of respondent, to wit: WHEREFORE, in view of the foregoing, the Petition is GRANTED and the subject Customs Memorandum Order 27-2003 is declared INVALID and OF NO FORCE AND EFFECT. Respondents Commissioner of Customs, the District Collector of Subic or anyone acting in their behalf are to immediately cease and desist from enforcing the said Customs Memorandum Order 27-2003. SO ORDERED.12 The RTC held that it had jurisdiction over the subject matter, given that the issue raised by respondent concerned the quasi-legislative powers of petitioners. It likewise stated that a petition for declaratory relief was the proper remedy, and that respondent was the proper party to file it. The court considered that respondent was a regular importer, and that the latter would be subjected to the application of the regulation in future transactions. With regard to the validity of the regulation, the trial court found that petitioners had not followed the basic requirements of hearing and publication in the issuance of CMO 27-2003. It likewise held that petitioners had "substituted the quasi-judicial determination of the commodity by a quasi-legislative predetermination."13 The lower court pointed out that a classification based on importers and ports of discharge were violative of the due process rights of respondent. Dissatisfied with the Decision of the lower court, petitioners appealed to the CA, raising the same allegations in defense of CMO 27-2003.14 The appellate court, however, dismissed the appeal. It held that, since the regulation affected substantial rights of petitioners and other importers, petitioners should have observed the requirements of notice, hearing and publication. Hence, this Petition. Petitioners raise the following issues for the consideration of this Court: I. THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN ACCORD WITH THE LAW AND PREVAILING JURISPRUDENCE. II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE TRIAL COURT HAS JURISDICTION OVER THE CASE. The Petition has no merit.
50
We shall first discuss the propriety of an action for declaratory relief. Rule 63, Section 1 provides: Who may file petition. Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination.15We find that the Petition filed by respondent before the lower court meets these requirements. First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner Commissioner of Customs. In Smart Communications v. NTC,16 we held: The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. (Emphasis supplied) Meanwhile, in Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary,17 we said: xxx [A] legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. xxx In addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing.
Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued pursuant to proper procedure. But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to administrative judgments and not to judicial judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule. As a matter of power a court, when confronted with an interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule. (Emphasis supplied) Second, the controversy is between two parties that have adverse interests. Petitioners are summarily imposing a tariff rate that respondent is refusing to pay. Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-2003. Respondent has adequately shown that, as a regular importer of wheat, on 14 August 2003, it has actually made shipments of wheat from China to Subic. The shipment was set to arrive in December 2003. Upon its arrival, it would be subjected to the conditions of CMO 27-2003. The regulation calls for the imposition of different tariff rates, depending on the factors enumerated therein. Thus, respondent alleged that it would be made to pay the 7% tariff applied to feed grade wheat, instead of the 3% tariff on food grade wheat. In addition, respondent would have to go through the procedure under CMO 27-2003, which would undoubtedly toll its time and resources. The lower court correctly pointed out as follows: xxx As noted above, the fact that petitioner is precisely into the business of importing wheat, each and every importation will be subjected to constant disputes which will result into (sic) delays in the delivery, setting aside of funds as cash bond required in the CMO as well as the resulting expenses thereof. It is easy to see that business uncertainty will be a constant occurrence for petitioner. That the sums involved are not minimal is shown by the discussions during the hearings conducted as well as in the pleadings filed. It may be that the petitioner can later on get a refund but such has been foreclosed because the Collector of Customs and the Commissioner of Customs are bound by their own CMO. Petitioner cannot get its refund with the said agency. We believe and so find that Petitioner has presented such a stake in the outcome of this controversy as to vest it with standing to file this petition.18 (Emphasis supplied) Finally, the issue raised by respondent is ripe for judicial determination, because litigation is inevitable19 for the simple and uncontroverted reason that respondent is not included in the enumeration of flour millers classified as food grade wheat importers. Thus, as the trial court stated, it would have to file a protest case each time it imports food grade wheat and be subjected to the 7% tariff.
51
It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the case. Considering that the questioned regulation would affect the substantive rights of respondent as explained above, it therefore follows that petitioners should have applied the pertinent provisions of Book VII, Chapter 2 of the Revised Administrative Code, to wit: Section 3. Filing. (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the bases of any sanction against any party of persons. xxx xxx xxx
Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the Batasan Pambansa and for the diligent ones, ready access to the legislative records no such publicity accompanies the law-making process of the President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of informing themselves of the specific contents and texts of such decrees. (Emphasis supplied) Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code, the assailed regulation must be struck down. Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for being violative of the equal protection clause of the Constitution. The equal protection clause means that no person or class of persons shall be deprived of the same protection of laws enjoyed by other persons or other classes in the same place in like circumstances. Thus, the guarantee of the equal protection of laws is not violated if there is a reasonable classification. For a classification to be reasonable, it must be shown that (1) it rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it is not limited to existing conditions only; and (4) it applies equally to all members of the same class.22 Unfortunately, CMO 27-2003 does not meet these requirements. We do not see how the quality of wheat is affected by who imports it, where it is discharged, or which country it came from. Thus, on the one hand, even if other millers excluded from CMO 27-2003 have imported food grade wheat, the product would still be declared as feed grade wheat, a classification subjecting them to 7% tariff. On the other hand, even if the importers listed under CMO 27-2003 have imported feed grade wheat, they would only be made to pay 3% tariff, thus depriving the state of the taxes due. The regulation, therefore, does not become disadvantageous to respondent only, but even to the state. It is also not clear how the regulation intends to "monitor more closely wheat importations and thus prevent their misclassification." A careful study of CMO 272003 shows that it not only fails to achieve this end, but results in the opposite. The application of the regulation forecloses the possibility that other corporations that are excluded from the list import food grade wheat; at the same time, it creates an assumption that those who meet the criteria do not import feed grade wheat. In the first case, importers are unnecessarily burdened to prove the classification of their wheat imports; while in the second, the state carries that burden.
Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule. (2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon. (3) In case of opposition, the rules on contested cases shall be observed. When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance, for it gives no real consequence more than what the law itself has already prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law.20 Likewise, in Taada v. Tuvera,21 we held: The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.
52
Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the customs officers duties mandated by Section 1403 of the Tariff and Customs Law, as amended. The law provides: Section 1403. Duties of Customs Officer Tasked to Examine, Classify, and Appraise Imported Articles. The customs officer tasked to examine, classify, and appraise imported articles shall determine whether the packages designated for examination and their contents are in accordance with the declaration in the entry, invoice and other pertinent documents and shall make return in such a manner as to indicate whether the articles have been truly and correctly declared in the entry as regard their quantity, measurement, weight, and tariff classification and not imported contrary to law. He shall submit samples to the laboratory for analysis when feasible to do so and when such analysis is necessary for the proper classification, appraisal, and/or admission into the Philippines of imported articles. Likewise, the customs officer shall determine the unit of quantity in which they are usually bought and sold, and appraise the imported articles in accordance with Section 201 of this Code. Failure on the part of the customs officer to comply with his duties shall subject him to the penalties prescribed under Section 3604 of this Code.1wphi1 The provision mandates that the customs officer must first assess and determine the classification of the imported article before tariff may be imposed. Unfortunately, CMO 23-2007 has already classified the article even before the customs officer had the chance to examine it. In effect, petitioner Commissioner of Customs diminished the powers granted by the Tariff and Customs Code with regard to wheat importation when it no longer required the customs officers prior examination and assessment of the proper classification of the wheat. It is well-settled that rules and regulations, which are the product of a delegated power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law; and that it be not in contradiction to, but in conformity with, the standards prescribed by law.23 In summary, petitioners violated respondents right to due process in the issuance of CMO 27-2003 when they failed to observe the requirements under the Revised Administrative Code. Petitioners likewise violated respondents right to equal protection of laws when they provided for an unreasonable classification in the application of the regulation. Finally, petitioner Commissioner of Customs went beyond his powers of delegated authority when the regulation limited the powers of the customs officer to examine and assess imported articles. WHEREFORE, in view of the foregoing, the Petition is DENIED.
SO ORDERED.

Due Process and Equal Protection Limitations

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Due Process and Equal Protection Limitations

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CONSTITUTIONAL LAW II: Due Process and Equal Protection as Limitations on Police Power, Eminent Domain and Taxation

TRILLANES IV, vs HON. OSCAR PIMENTEL, G.R. No. 179817 2008

ABAKADA GURO PARTY vs.HON. CESAR V. PURISIMA,

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PRINCIPLE OF SEPARATION CONSTITUTION[; AND] V.

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