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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6791

March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
QUE PO LAY, defendant-appellant.
Prudencio de Guzman for appellant.
First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee.
MONTEMAYOR, J.:
Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty
of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and
sentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiary
imprisonment in case of insolvency, and to pay the costs.
The charge was that the appellant who was in possession of foreign exchange consisting of U.S.
dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to the
Central Bank through its agents within one day following the receipt of such foreign exchange as
required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not
published in the Official Gazette prior to the act or omission imputed to the appellant, and that
consequently, said circular had no force and effect. It is contended that Commonwealth Act. No.,
638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order
or notice of general applicability. The Solicitor General answering this contention says that
Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of said
circular issued for the implementation of a law in order to have force and effect.
We agree with the Solicitor General that the laws in question do not require the publication of the
circulars, regulations and notices therein mentioned in order to become binding and effective. All that
said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of
Appeals, notices and documents required by law to be of no force and effect. In other words, said
two Acts merely enumerate and make a list of what should be published in the Official Gazette,
presumably, for the guidance of the different branches of the Government issuing same, and of the
Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that statutes passed by Congress
shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the
completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code
(Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that
Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of
the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence.
(See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule,
circulars and regulations especially like the Circular No. 20 of the Central Bank in question which
prescribes a penalty for its violation should be published before becoming effective, this, on the
general principle and theory that before the public is bound by its contents, especially its penal

provisions, a law, regulation or circular must first be published and the people officially and
specifically informed of said contents and its penalties.
Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws,
(Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and that
their promulgation shall be understood as made on the day of the termination of the publication of
the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws"
include regulations and circulars issued in accordance with the same. He says:
El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de
Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden
tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes
dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el
poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de
sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su
publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion
al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p. 52).
In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was
not published until November 1951, that is, about 3 months after appellant's conviction of its
violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and
bound no one until its publication in the Official Gazzette or after November 1951. In other words,
appellant could not be held liable for its violation, for it was not binding at the time he was found to
have failed to sell the foreign exchange in his possession thereof.
But the Solicitor General also contends that this question of non-publication of the Circular is being
raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one
may raise on appeal any question of law or fact that has been raised in the court below and which is
within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court).
But the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20
had not been published as required by law before its violation, then in the eyes of the law there was
no such circular to be violated and consequently appellant committed no violation of the circular or
committed any offense, and the trial court may be said to have had no jurisdiction. This question
may be raised at any stage of the proceeding whether or not raised in the court below.
In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with
costs de oficio.
Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno,
JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-63915 April 24, 1985
LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and
FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right recognized in Section
6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and
enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners
seek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication in
the Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations,
executive orders, letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200,
234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404,
406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574,
594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961,
1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278,
1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 18421847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153,
155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224,
226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358,
362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498,
501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642,
665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,11491178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529,
1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 16061609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 17371742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800,

1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836,


1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870,
1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984,
1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507,
509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712786, 788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81,
92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on the
ground that petitioners have no legal personality or standing to bring the instant petition. The view is
submitted that in the absence of any showing that petitioners are personally and directly affected or
prejudiced by the alleged non-publication of the presidential issuances in question 2 said petitioners
are without the requisite legal personality to institute this mandamus proceeding, they are not being
"aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person
unlawfully neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully excludes another from the
use a rd enjoyment of a right or office to which such other is entitled, and there is no
other plain, speedy and adequate remedy in the ordinary course of law, the person
aggrieved thereby may file a verified petition in the proper court alleging the facts
with certainty and praying that judgment be rendered commanding the defendant,
immediately or at some other specified time, to do the act required to be done to
Protect the rights of the petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a public
right and its object is to compel the performance of a public duty, they need not show any specific
interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor
General, 3 this Court held that while the general rule is that "a writ of mandamus would be granted to a
private individual only in those cases where he has some private or particular interest to be subserved, or
some particular right to be protected, independent of that which he holds with the public at large," and "it
is for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchell
vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the
mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in
interest and the relator at whose instigation the proceedings are instituted need not show that he has any
legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested
in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper
party to the mandamus proceedings brought to compel the Governor General to call a special
election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for
this Court, Mr. Justice Grant T. Trent said:

We are therefore of the opinion that the weight of authority supports the proposition
that the relator is a proper party to proceedings of this character when a public right
is sought to be enforced. If the general rule in America were otherwise, we think that
it would not be applicable to the case at bar for the reason 'that it is always
dangerous to apply a general rule to a particular case without keeping in mind the
reason for the rule, because, if under the particular circumstances the reason for the
rule does not exist, the rule itself is not applicable and reliance upon the rule may
well lead to error'
No reason exists in the case at bar for applying the general rule insisted upon by
counsel for the respondent. The circumstances which surround this case are different
from those in the United States, inasmuch as if the relator is not a proper party to
these proceedings no other person could be, as we have seen that it is not the duty
of the law officer of the Government to appear and represent the people in cases of
this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced
by petitioners herein is a public right recognized by no less than the fundamental law of the land. If
petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of
any other person to initiate the same, considering that the Solicitor General, the government officer
generally empowered to represent the people, has entered his appearance for respondents in this
case.
Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own effectivity
dates. It is thus submitted that since the presidential issuances in question contain special provisions
as to the date they are to take effect, publication in the Official Gazette is not indispensable for their
effectivity. The point stressed is anchored on Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said article. In a
long line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those
cases where the legislation itself does not provide for its effectivity date-for then the date of publication is
material for determining its date of effectivity, which is the fifteenth day following its publication-but not
when the law itself provides for the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws
with the fact of publication. Considered in the light of other statutes applicable to the issue at hand,
the conclusion is easily reached that said Article 2 does not preclude the requirement of publication
in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of
Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative
acts and resolutions of a public nature of the, Congress of the Philippines; [2] all
executive and administrative orders and proclamations, except such as have no
general applicability; [3] decisions or abstracts of decisions of the Supreme Court
and the Court of Appeals as may be deemed by said courts of sufficient importance
to be so published; [4] such documents or classes of documents as may be required
so to be published by law; and [5] such documents or classes of documents as the

President of the Philippines shall determine from time to time to have general
applicability and legal effect, or which he may authorize so to be published. ...
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.
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 Pambansaand for the diligent ones, ready
access to the legislative recordsno 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. As the Supreme Court of Spain ruled: "Bajo la
denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos,
Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno
en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the
Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative
duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of
public concern is to be given substance and reality. The law itself makes a list of what should be
published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion
whatsoever as to what must be included or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general applicability" is
mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for
their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall
within this category. Other presidential issuances which apply only to particular persons or class of
persons such as administrative and executive orders need not be published on the assumption that
they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general
applicability" is a requirement of due process. It is a rule of law that before a person may be bound
by law, he must first be officially and specifically informed of its contents. As Justice Claudio
Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which all form part
of the law of the land, the requirement of due process and the Rule of Law demand
that the Official Gazette as the official government repository promulgate and publish
the texts of all such decrees, orders and instructions so that the people may know
where to obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have not been
published, shall have no force and effect. Some members of the Court, quite apprehensive about the
possible unsettling effect this decision might have on acts done in reliance of the validity of those
presidential decrees which were published only during the pendency of this petition, have put the
question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced
or implemented prior to their publication. The answer is all too familiar. In similar situations in the

past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage
District vs. Baxter Bank 8 to wit:
The courts below have proceeded on the theory that the Act of Congress, having
been found to be unconstitutional, was not a law; that it was inoperative, conferring
no rights and imposing no duties, and hence affording no basis for the challenged
decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v.
Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as
to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects-with respect to
particular conduct, private and official. Questions of rights claimed to have become
vested, of status, of prior determinations deemed to have finality and acted upon
accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most
difficult of those which have engaged the attention of courts, state and federal and it
is manifest from numerous decisions that an all-inclusive statement of a principle of
absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party
under the Moratorium Law, albeit said right had accrued in his favor before said law was declared
unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication in the
Official Gazette is "an operative fact which may have consequences which cannot be justly ignored.
The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the presidential
decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos.
1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither
the subject matters nor the texts of these PDs can be ascertained since no copies thereof are available.
But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has ever
been implemented or enforced by the government. In Pesigan vs. Angeles, 11 the Court, through Justice
Ramon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal]
regulations and make the said penalties binding on the persons affected thereby. " The cogency of this
holding is apparently recognized by respondent officials considering the manifestation in their comment
that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the
same shall have been published in the Official Gazette or in some other publication, even though some
criminal laws provide that they shall take effect immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so published, they
shall have no binding force and effect.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 127882

January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONG


MIGUEL M. LUMAYONG, WIGBERTO E. TAADA, PONCIANO BENNAGEN, JAIME TADEO,
RENATO R. CONSTANTINO, JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM
L. DABIE, SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L.
GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P. TACUAYAN, minors
JOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M. DADING,
represented by his father ANTONIO L. DADING, ROMY M. LAGARO, represented by his father
TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by his father MIGUEL M.
LUMAYONG, RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L.
SAL, represented by his father DANNY M. SAL, DAISY RECARSE, represented by her mother
LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDEN
S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA
CULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIO
CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE VILLAMOR and
ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO JOSE
B. TALJA, SHARMAINE R. CUNANAN, represented by her father ALFREDO M. CUNANAN,
ANTONIO JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN D.
NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG
LINGATING, represented by her father RIO OLIMPIO A. LINGATING, MARIO JOSE B. TALJA,
DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO, OND, LOLITA
G. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S.
VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his father
ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GFWV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO
SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN
(KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG
PANSAKAHAN (KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURAL
DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA),
WOMEN'S LEGAL BUREAU (WLB), CENTER FOR ALTERNATIVE DEVELOPMENT
INITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN
FOUNDATION, INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL
RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES BUREAU
(MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY, and WMC (PHILIPPINES),
INC.4 respondents.
DECISION
CARPIO-MORALES, J.:

The present petition for mandamus and prohibition assails the constitutionality of Republic Act No.
7942,5otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing
Rules and Regulations issued pursuant thereto, Department of Environment and Natural Resources
(DENR) Administrative Order 96-40, and of the Financial and Technical Assistance Agreement
(FTAA) entered into on March 30, 1995 by the Republic of the Philippines and WMC (Philippines),
Inc. (WMCP), a corporation organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No.
2796 authorizing the DENR Secretary to accept, consider and evaluate proposals from foreignowned corporations or foreign investors for contracts or agreements involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, which, upon
appropriate recommendation of the Secretary, the President may execute with the foreign
proponent. In entering into such proposals, the President shall consider the real contributions to the
economic growth and general welfare of the country that will be realized, as well as the development
and use of local scientific and technical resources that will be promoted by the proposed contract or
agreement. Until Congress shall determine otherwise, large-scale mining, for purpose of this
Section, shall mean those proposals for contracts or agreements for mineral resources exploration,
development, and utilization involving a committed capital investment in a single mining unit project
of at least Fifty Million Dollars in United States Currency (US $50,000,000.00).7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the
exploration, development, utilization and processing of all mineral resources." 8 R.A. No. 7942
defines the modes of mineral agreements for mining operations, 9 outlines the procedure for their
filing and approval,10 assignment/transfer11and withdrawal,12 and fixes their terms.13 Similar
provisions govern financial or technical assistance agreements. 14
The law prescribes the qualifications of contractors15 and grants them certain rights, including
timber,16 water17and easement18 rights, and the right to possess explosives.19 Surface owners,
occupants, or concessionaires are forbidden from preventing holders of mining rights from entering
private lands and concession areas.20 A procedure for the settlement of conflicts is likewise provided
for.21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the
transport, sale and processing of minerals,25 and promotes the development of mining communities,
science and mining technology,26 and safety and environmental protection.27
The government's share in the agreements is spelled out and allocated, 28 taxes and fees are
imposed,29incentives granted.30 Aside from penalizing certain acts,31 the law likewise specifies
grounds for the cancellation, revocation and termination of agreements and permits. 32
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times,
two newspapers of general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity of
R.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP
covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North
Cotabato.34
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order
(DAO) No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No.
7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20,
1996.

On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that
the DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40,35 giving the DENR fifteen
days from receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners'
letter.37
Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a
temporary restraining order. They allege that at the time of the filing of the petition, 100 FTAA
applications had already been filed, covering an area of 8.4 million hectares, 38 64 of which
applications are by fully foreign-owned corporations covering a total of 5.8 million hectares, and at
least one by a fully foreign-owned mining company over offshore areas.39
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows fully foreign owned corporations to
explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph
4, Article XII of the Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows the taking of private property without the
determination of public use and for just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well as
fully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of
Article XII of the Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned
corporations in the exploration, development and utilization of mineral resources contrary to Article
XII of the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows the inequitable sharing of wealth contrary
to Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;

VII
x x x in recommending approval of and implementing the Financial and Technical Assistance
Agreement between the President of the Republic of the Philippines and Western Mining
Corporation Philippines Inc. because the same is illegal and unconstitutional. 40
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for Financial or
Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional
and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained
in DENR Administrative Order No. 96-40 and all other similar administrative issuances as
unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining
Philippines, Inc. as unconstitutional, illegal and null and void. 41
Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos,
the then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of
the DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA with
the Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "a
wholly owned subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major
Australian mining and exploration company." 42 By WMCP's information, "it is a 100% owned
subsidiary of WMC LIMITED."43
Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial
inquiry have not been met and that the petition does not comply with the criteria for prohibition and
mandamus. Additionally, respondent WMCP argues that there has been a violation of the rule on
hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the petition. The parties have since
filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23,
2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation
organized under Philippine laws.44 WMCP was subsequently renamed "Tampakan Mineral
Resources Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is owned by
Filipinos and/or Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an
Australian company.46 It further claims that by such sale and transfer of shares, "WMCP has ceased
to be connected in any way with WMC." 47
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18,
2001,48 approved the transfer and registration of the subject FTAA from WMCP to Sagittarius. Said
Order, however, was appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the
President which upheld it by Decision of July 23, 2002. 49 Its motion for reconsideration having been
denied by the Office of the President by Resolution of November 12, 2002,50 Lepanto filed a petition
for review 51 before the Court of Appeals. Incidentally, two other petitions for review related to the

approval of the transfer and registration of the FTAA to Sagittarius were recently resolved by this
Court.52
It bears stressing that this case has not been rendered moot either by the transfer and registration of
the FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order or
a preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the
President.53 The validity of the transfer remains in dispute and awaits final judicial determination.
This assumes, of course, that such transfer cures the FTAA's alleged unconstitutionality, on which
question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas included in the
WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation,
are all Filipino-owned corporations,54 each of which was a holder of an approved Mineral Production
Sharing Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the
WMCP FTAA;55 and that these three companies are the same companies that consolidated their
interests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP concludes that in the
event that the FTAA is invalidated, the MPSAs of the three corporations would be revived and the
mineral claims would revert to their original claimants.57
These circumstances, while informative, are hardly significant in the resolution of this case, it
involving the validity of the FTAA, not the possible consequences of its invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first
and the last need be delved into; in the latter, the discussion shall dwell only insofar as it questions
the effectivity of E. O. No. 279 by virtue of which order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by respondents shall first
be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if
the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. 58
Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally demandable and enforceable."
The power of judicial review, therefore, is limited to the determination of actual cases and
controversies.59

An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory,60 lest the decision of the court would amount to an
advisory opinion.61 The power does not extend to hypothetical questions62 since any attempt at
abstraction could only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities.63
"Legal standing" or locus standi has been defined as a personal and substantial interest in the case
such that the party has sustained or will sustain direct injury as a result of the governmental act that
is being challenged,64alleging more than a generalized grievance.65 The gist of the question of
standing is whether a party alleges "such personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions." 66Unless a person is injuriously affected
in any of his constitutional rights by the operation of statute or ordinance, he has no standing. 67
Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association,
Inc., a farmers and indigenous people's cooperative organized under Philippine laws representing a
community actually affected by the mining activities of WMCP, members of said cooperative,68 as
well as other residents of areas also affected by the mining activities of WMCP. 69 These petitioners
have standing to raise the constitutionality of the questioned FTAA as they allege a personal and
substantial injury. They claim that they would suffer "irremediable displacement" 70 as a result of the
implementation of the FTAA allowing WMCP to conduct mining activities in their area of residence.
They thus meet the appropriate case requirement as they assert an interest adverse to that of
respondents who, on the other hand, insist on the FTAA's validity.
In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O.
No. 279, by authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both
contracting parties to annul it.71 In other words, they contend that petitioners are not real parties in
interest in an action for the annulment of contract.
Public respondents' contention fails. The present action is not merely one for annulment of contract
but for prohibition and mandamus. Petitioners allege that public respondents acted without or in
excess of jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case
involves constitutional questions, this Court is not concerned with whether petitioners are real parties
in interest, but with whether they have legal standing. As held in Kilosbayan v. Morato: 72
x x x. "It is important to note . . . that standing because of its constitutional and public policy
underpinnings, is very different from questions relating to whether a particular plaintiff is the real
party in interest or has capacity to sue. Although all three requirements are directed towards
ensuring that only certain parties can maintain an action, standing restrictions require a partial
consideration of the merits, as well as broader policy concerns relating to the proper role of the
judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])
Standing is a special concern in constitutional law because in some cases suits are brought not by
parties who have been personally injured by the operation of a law or by official action taken, but by
concerned citizens, taxpayers or voters who actually sue in the public interest. Hence, the question
in standing is whether such parties have "alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional questions." (Baker v.
Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)

As earlier stated, petitioners meet this requirement.


The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the
requisites of justiciability. Although these laws were not in force when the subject FTAA was entered
into, the question as to their validity is ripe for adjudication.
The WMCP FTAA provides:
14.3 Future Legislation
Any term and condition more favourable to Financial &Technical Assistance Agreement contractors
resulting from repeal or amendment of any existing law or regulation or from the enactment of a law,
regulation or administrative order shall be considered a part of this Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to
WMCP, hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the provisions of
Chapter XIV on government share in mineral production-sharing agreement and of Chapter XVI on
incentives of this Act shall immediately govern and apply to a mining lessee or contractor unless the
mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said
provisions x x x Provided, finally, That such leases, production-sharing agreements, financial or
technical assistance agreements shall comply with the applicable provisions of this Act and its
implementing rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of
Chapter XVI of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review that the exercise of the review
is pleaded at the earliest opportunity WMCP points out that the petition was filed only almost two
years after the execution of the FTAA, hence, not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of constitutionality must be raised
immediately after the execution of the state action complained of. That the question of
constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised
later.73 A contrary rule would mean that a law, otherwise unconstitutional, would lapse into
constitutionality by the mere failure of the proper party to promptly file a case to challenge the same.
PROPRIETY OF PROHIBITION AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, or
person, whether exercising functions judicial or ministerial, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court alleging the facts with certainty and praying that judgment be rendered
commanding the defendant to desist from further proceeding in the action or matter specified
therein.

Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from
continuing with the commission of an act perceived to be illegal.75
The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract
itself may be fait accompli, its implementation is not. Public respondents, in behalf of the
Government, have obligations to fulfill under said contract. Petitioners seek to prevent them from
fulfilling such obligations on the theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus
aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise
lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass
upon the issues of a case. That way, as a particular case goes through the hierarchy of courts, it is
shorn of all but the important legal issues or those of first impression, which are the proper subject of
attention of the appellate court. This is a procedural rule borne of experience and adopted to
improve the administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court
has concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of
certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence
does not give a party unrestricted freedom of choice of court forum. The resort to this Court's primary
jurisdiction to issue said writs shall be allowed only where the redress desired cannot be obtained in
the appropriate courts or where exceptional and compelling circumstances justify such invocation.
We held in People v. Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's
original jurisdiction to issue these writs should be allowed only where there are special and important
reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a
policy necessary to prevent inordinate demands upon the Court's time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Court's docket x x x.76 [Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if not the national
economy, as well as the novelty thereof, constitute exceptional and compelling circumstances to
justify resort to this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the
requirements of an actual case or legal standing when paramount public interest is involved. 77 When
the issues raised are of paramount importance to the public, this Court may brush aside
technicalities of procedure.78
II

Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity
came after President Aquino had already lost her legislative powers under the Provisional
Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279,
violates Section 2, Article XII of the Constitution because, among other reasons:
(1) It allows foreign-owned companies to extend more than mere financial or technical
assistance to the State in the exploitation, development, and utilization of minerals,
petroleum, and other mineral oils, and even permits foreign owned companies to "operate
and manage mining activities."
(2) It allows foreign-owned companies to extend both technical and financial assistance,
instead of "either technical or financial assistance."
To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision,
the concepts contained therein, and the laws enacted pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State may directly undertake such
activities or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned
by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,
lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution.

THE SPANISH REGIME AND THE REGALIAN DOCTRINE


The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain
into these Islands, this feudal concept is based on the State's power of dominium, which is the
capacity of the State to own or acquire property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by
virtue of his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in
which a subject has a right of property or propriedad. These were rights enjoyed during feudal times
by the king as the sovereign.
The theory of the feudal system was that title to all lands was originally held by the King, and while
the use of lands was granted out to others who were permitted to hold them under certain
conditions, the King theoretically retained the title. By fiction of law, the King was regarded as the
original proprietor of all lands, and the true and only source of title, and from him all lands were held.
The theory of jura regalia was therefore nothing more than a natural fruit of conquest.80
The Philippines having passed to Spain by virtue of discovery and conquest, 81 earlier Spanish
decrees declared that "all lands were held from the Crown." 82
The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in
the bowels of the earth."83 Spain, in particular, recognized the unique value of natural resources,
viewing them, especially minerals, as an abundant source of revenue to finance its wars against
other nations.84 Mining laws during the Spanish regime reflected this perspective. 85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine
Islands" to the United States. The Philippines was hence governed by means of organic acts that
were in the nature of charters serving as a Constitution of the occupied territory from 1900 to
1935.86 Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902,
more commonly known as the Philippine Bill of 1902, through which the United States Congress
assumed the administration of the Philippine Islands.87 Section 20 of said Bill reserved the
disposition of mineral lands of the public domain from sale. Section 21 thereof allowed the free and
open exploration, occupation and purchase of mineral deposits not only to citizens of the Philippine
Islands but to those of the United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed
and unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase,
and the land in which they are found, to occupation and purchase, by citizens of the United States or
of said Islands: Provided, That when on any lands in said Islands entered and occupied as
agricultural lands under the provisions of this Act, but not patented, mineral deposits have been
found, the working of such mineral deposits is forbidden until the person, association, or corporation
who or which has entered and is occupying such lands shall have paid to the Government of said
Islands such additional sum or sums as will make the total amount paid for the mineral claim or
claims in which said deposits are located equal to the amount charged by the Government for the
same as mineral claims.
Unlike Spain, the United States considered natural resources as a source of wealth for its nationals
and saw fit to allow both Filipino and American citizens to explore and exploit minerals in public
lands, and to grant patents to private mineral lands.88 A person who acquired ownership over a

parcel of private mineral land pursuant to the laws then prevailing could exclude other persons, even
the State, from exploiting minerals within his property. 89Thus, earlier jurisprudence90 held that:
A valid and subsisting location of mineral land, made and kept up in accordance with the provisions
of the statutes of the United States, has the effect of a grant by the United States of the present and
exclusive possession of the lands located, and this exclusive right of possession and enjoyment
continues during the entire life of the location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location perfects his claim
and his location not only against third persons, but also against the Government. x x x. [Italics in the
original.]
The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the
Regalian theory, mineral rights are not included in a grant of land by the state; under the American
doctrine, mineral rights are included in a grant of land by the government. 91
Section 21 also made possible the concession (frequently styled "permit", license" or
"lease")92 system.93 This was the traditional regime imposed by the colonial administrators for the
exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.). 94
Under the concession system, the concessionaire makes a direct equity investment for the purpose
of exploiting a particular natural resource within a given area. 95 Thus, the concession amounts to
complete control by the concessionaire over the country's natural resource, for it is given exclusive
and plenary rights to exploit a particular resource at the point of extraction.96 In consideration for the
right to exploit a natural resource, the concessionaire either pays rent or royalty, which is a fixed
percentage of the gross proceeds.97
Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual
framework of the concession.98 For instance, Act No. 2932,99 approved on August 31, 1920, which
provided for the exploration, location, and lease of lands containing petroleum and other mineral oils
and gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the
leasing and development of coal lands in the Philippines, both utilized the concession system. 101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie
Law, the People of the Philippine Islands were authorized to adopt a constitution. 102 On July 30,
1934, the Constitutional Convention met for the purpose of drafting a constitution, and the
Constitution subsequently drafted was approved by the Convention on February 8, 1935. 103 The
Constitution was submitted to the President of the United States on March 18, 1935. 104 On March 23,
1935, the President of the United States certified that the Constitution conformed substantially with
the provisions of the Act of Congress approved on March 24, 1934. 105On May 14, 1935, the
Constitution was ratified by the Filipino people.106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the
Philippines, including mineral lands and minerals, to be property belonging to the State. 107 As
adopted in a republican system, the medieval concept of jura regalia is stripped of royal overtones
and ownership of the land is vested in the State.108

Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution
provided:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and other
natural resources of the Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for the
exploitation, development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant.
The nationalization and conservation of the natural resources of the country was one of the fixed and
dominating objectives of the 1935 Constitutional Convention. 109 One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of state ownership
of natural resources and the adoption of the Regalian doctrine. State ownership of natural resources
was seen as a necessary starting point to secure recognition of the state's power to control their
disposition, exploitation, development, or utilization. The delegates of the Constitutional Convention
very well knew that the concept of State ownership of land and natural resources was introduced by
the Spaniards, however, they were not certain whether it was continued and applied by the
Americans. To remove all doubts, the Convention approved the provision in the Constitution
affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the Regalian
doctrine was considered to be a necessary starting point for the plan of nationalizing and conserving
the natural resources of the country. For with the establishment of the principle of state ownership of
the natural resources, it would not be hard to secure the recognition of the power of the State to
control their disposition, exploitation, development or utilization.110
The nationalization of the natural resources was intended (1) to insure their conservation for Filipino
posterity; (2) to serve as an instrument of national defense, helping prevent the extension to the
country of foreign control through peaceful economic penetration; and (3) to avoid making the
Philippines a source of international conflicts with the consequent danger to its internal security and
independence.111
The same Section 1, Article XIII also adopted the concession system, expressly permitting the State
to grant licenses, concessions, or leases for the exploitation, development, or utilization of any of the
natural resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of
which is owned by Filipinos.
lawph!l.n e+

The swell of nationalism that suffused the 1935 Constitution was radically diluted when on
November 1946, the Parity Amendment, which came in the form of an "Ordinance Appended to the
Constitution," was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3,
1974, the right to utilize and exploit our natural resources to citizens of the United States and
business enterprises owned or controlled, directly or indirectly, by citizens of the United States:113

Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of
the foregoing Constitution, during the effectivity of the Executive Agreement entered into by the
President of the Philippines with the President of the United States on the fourth of July, nineteen
hundred and forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven hundred
and thirty-three, but in no case to extend beyond the third of July, nineteen hundred and seventyfour, the disposition, exploitation, development, and utilization of all agricultural, timber, and mineral
lands of the public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces and
sources of potential energy, and other natural resources of the Philippines, and the operation of
public utilities, shall, if open to any person, be open to citizens of the United States and to all forms
of business enterprise owned or controlled, directly or indirectly, by citizens of the United States in
the same manner as to, and under the same conditions imposed upon, citizens of the Philippines or
corporations or associations owned or controlled by citizens of the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also
known as the Laurel-Langley Agreement, embodied in Republic Act No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved
on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's
petroleum resources. Among the kinds of concessions it sanctioned were exploration and
exploitation concessions, which respectively granted to the concessionaire the exclusive right to
explore for116 or develop117 petroleum within specified areas.
Concessions may be granted only to duly qualified persons 118 who have sufficient finances,
organization, resources, technical competence, and skills necessary to conduct the operations to be
undertaken.119
Nevertheless, the Government reserved the right to undertake such work itself. 120 This proceeded
from the theory that all natural deposits or occurrences of petroleum or natural gas in public and/or
private lands in the Philippines belong to the State.121 Exploration and exploitation concessions did
not confer upon the concessionaire ownership over the petroleum lands and petroleum
deposits.122 However, they did grant concessionaires the right to explore, develop, exploit, and utilize
them for the period and under the conditions determined by the law. 123
Concessions were granted at the complete risk of the concessionaire; the Government did not
guarantee the existence of petroleum or undertake, in any case, title warranty.124
Concessionaires were required to submit information as maybe required by the Secretary of
Agriculture and Natural Resources, including reports of geological and geophysical examinations, as
well as production reports.125 Exploration126 and exploitation127 concessionaires were also required to
submit work programs.
lavvphi1.ne t

Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax, 128 the
object of which is to induce the concessionaire to actually produce petroleum, and not simply to sit
on the concession without developing or exploiting it.129 These concessionaires were also bound to
pay the Government royalty, which was not less than 12% of the petroleum produced and saved,
less that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No. 387, the
exploitation tax may be credited against the royalties so that if the concessionaire shall be actually
producing enough oil, it would not actually be paying the exploitation tax. 131

Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to the
Government within one year from the date it becomes due,133 constituted grounds for the
cancellation of the concession. In case of delay in the payment of the taxes or royalty imposed by
the law or by the concession, a surcharge of 1% per month is exacted until the same are paid. 134
As a rule, title rights to all equipment and structures that the concessionaire placed on the land
belong to the exploration or exploitation concessionaire.135 Upon termination of such concession, the
concessionaire had a right to remove the same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of
the law, through the Director of Mines, who acted under the Secretary's immediate supervision and
control.137 The Act granted the Secretary the authority to inspect any operation of the concessionaire
and to examine all the books and accounts pertaining to operations or conditions related to payment
of taxes and royalties.138
The same law authorized the Secretary to create an Administration Unit and a Technical
Board.139 The Administration Unit was charged, inter alia, with the enforcement of the provisions of
the law.140 The Technical Board had, among other functions, the duty to check on the performance of
concessionaires and to determine whether the obligations imposed by the Act and its implementing
regulations were being complied with.141
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the
benefits and drawbacks of the concession system insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of
the concession system is that the State's financial involvement is virtually risk free and administration
is simple and comparatively low in cost. Furthermore, if there is a competitive allocation of the
resource leading to substantial bonuses and/or greater royalty coupled with a relatively high level of
taxation, revenue accruing to the State under the concession system may compare favorably with
other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this system. Because
the Government's role in the traditional concession is passive, it is at a distinct disadvantage in
managing and developing policy for the nation's petroleum resource. This is true for several reasons.
First, even though most concession agreements contain covenants requiring diligence in operations
and production, this establishes only an indirect and passive control of the host country in resource
development. Second, and more importantly, the fact that the host country does not directly
participate in resource management decisions inhibits its ability to train and employ its nationals in
petroleum development. This factor could delay or prevent the country from effectively engaging in
the development of its resources. Lastly, a direct role in management is usually necessary in order
to obtain a knowledge of the international petroleum industry which is important to an appreciation of
the host country's resources in relation to those of other countries. 142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic power arising
from its exclusive equity holding. This includes, first, appropriation of the returns of the undertaking,
subject to a modest royalty; second, exclusive management of the project; third, control of
production of the natural resource, such as volume of production, expansion, research and
development; and fourth, exclusive responsibility for downstream operations, like processing,
marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the
natural resource being exploited, it has been shorn of all elements of control over such natural

resource because of the exclusive nature of the contractual regime of the concession. The
concession system, investing as it does ownership of natural resources, constitutes a consistent
inconsistency with the principle embodied in our Constitution that natural resources belong to the
state and shall not be alienated, not to mention the fact that the concession was the bedrock of the
colonial system in the exploitation of natural resources. 143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not
have properly spurred sustained oil exploration activities in the country, since it assumed that such a
capital-intensive, high risk venture could be successfully undertaken by a single individual or a small
company. In effect, concessionaires' funds were easily exhausted. Moreover, since the concession
system practically closed its doors to interested foreign investors, local capital was stretched to the
limits. The old system also failed to consider the highly sophisticated technology and expertise
required, which would be available only to multinational companies. 144
A shift to a new regime for the development of natural resources thus seemed imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT
SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87, 145 otherwise known as The
Oil Exploration and Development Act of 1972 signaled such a transformation. P.D. No. 87 permitted
the government to explore for and produce indigenous petroleum through "service contracts."146
"Service contracts" is a term that assumes varying meanings to different people, and it has carried
many names in different countries, like "work contracts" in Indonesia, "concession agreements" in
Africa, "production-sharing agreements" in the Middle East, and "participation agreements" in Latin
America.147 A functional definition of "service contracts" in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and development of
petroleum, mineral, energy, land and other natural resources by which a government or its agency,
or a private person granted a right or privilege by the government authorizes the other party (service
contractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, in
that the latter provides financial or technical resources, undertakes the exploitation or production of a
given resource, or directly manages the productive enterprise, operations of the exploration and
exploitation of the resources or the disposition of marketing or resources. 148
In a service contract under P.D. No. 87, service and technology are furnished by the service
contractor for which it shall be entitled to the stipulated service fee. 149 The contractor must be
technically competent and financially capable to undertake the operations required in the contract. 150
Financing is supposed to be provided by the Government to which all petroleum produced
belongs.151 In case the Government is unable to finance petroleum exploration operations, the
contractor may furnish services, technology and financing, and the proceeds of sale of the petroleum
produced under the contract shall be the source of funds for payment of the service fee and the
operating expenses due the contractor.152 The contractor shall undertake, manage and execute
petroleum operations, subject to the government overseeing the management of the
operations.153 The contractor provides all necessary services and technology and the requisite
financing, performs the exploration work obligations, and assumes all exploration risks such that if
no petroleum is produced, it will not be entitled to reimbursement. 154 Once petroleum in commercial
quantity is discovered, the contractor shall operate the field on behalf of the government.155

P.D. No. 87 prescribed minimum terms and conditions for every service contract. 156 It also granted
the contractor certain privileges, including exemption from taxes and payment of tariff duties, 157 and
permitted the repatriation of capital and retention of profits abroad. 158
Ostensibly, the service contract system had certain advantages over the concession regime. 159 It has
been opined, though, that, in the Philippines, our concept of a service contract, at least in the
petroleum industry, was basically a concession regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new
Constitution.161Article XIV on the National Economy and Patrimony contained provisions similar to
the 1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8,
Article XIV thereof provides:
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to
the State. With the exception of agricultural, industrial or commercial, residential and resettlement
lands of the public domain, natural resources shall not be alienated, and no license, concession, or
lease for the exploration, development, exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and the limit of the
grant.
While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural
resources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service
contracts with any person or entity for the exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural
resources of the Philippines shall be limited to citizens, or to corporations or associations at least
sixty per centum of which is owned by such citizens. The Batasang Pambansa, in the national
interest, may allow such citizens, corporations or associations to enter into service contracts for
financial, technical, management, or other forms of assistance with any person or entity for the
exploration, or utilization of any of the natural resources. Existing valid and binding service contracts
for financial, technical, management, or other forms of assistance are hereby recognized as such.
[Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the methods
followed by India, Pakistan and especially Indonesia in the exploration of petroleum and mineral
oils.162 The provision allowing such contracts, according to another, was intended to "enhance the
proper development of our natural resources since Filipino citizens lack the needed capital and
technical know-how which are essential in the proper exploration, development and exploitation of
the natural resources of the country."163
The original idea was to authorize the government, not private entities, to enter into service contracts
with foreign entities.164 As finally approved, however, a citizen or private entity could be allowed by
the National Assembly to enter into such service contract.165 The prior approval of the National
Assembly was deemed sufficient to protect the national interest. 166 Notably, none of the laws
allowing service contracts were passed by the Batasang Pambansa. Indeed, all of them were
enacted by presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated
Presidential Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired

lands of the public domain or which own, hold or control such lands to enter into service contracts for
financial, technical, management or other forms of assistance with any foreign persons or entity for
the exploration, development, exploitation or utilization of said lands. 168
Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974,
was enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a
mining claim may enter into a service contract with a qualified domestic or foreign contractor for the
exploration, development and exploitation of his claims and the processing and marketing of the
product thereof.
Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed
Filipinos engaged in commercial fishing to enter into contracts for financial, technical or other forms
of assistance with any foreign person, corporation or entity for the production, storage, marketing
and processing of fish and fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19,
1975, allowed "forest products licensees, lessees, or permitees to enter into service contracts for
financial, technical, management, or other forms of assistance . . . with any foreign person or entity
for the exploration, development, exploitation or utilization of the forest resources." 173
Yet another law allowing service contracts, this time for geothermal resources, was Presidential
Decree No. 1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized the
Government to enter into service contracts for the exploration, exploitation and development of
geothermal resources with a foreign contractor who must be technically and financially capable of
undertaking the operations required in the service contract.
Thus, virtually the entire range of the country's natural resources from petroleum and minerals to
geothermal energy, from public lands and forest resources to fishery products was well covered by
apparent legal authority to engage in the direct participation or involvement of foreign persons or
corporations (otherwise disqualified) in the exploration and utilization of natural resources through
service contracts.175
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a
revolutionary government. On March 25, 1986, President Aquino issued Proclamation No.
3,176 promulgating the Provisional Constitution, more popularly referred to as the Freedom
Constitution. By authority of the same Proclamation, the President created a Constitutional
Commission (CONCOM) to draft a new constitution, which took effect on the date of its ratification
on February 2, 1987.177
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII
states: "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the
same provision, prohibits the alienation of natural resources, except agricultural lands.
The third sentence of the same paragraph is new: "The exploration, development and utilization of
natural resources shall be under the full control and supervision of the State." The constitutional
policy of the State's "full control and supervision" over natural resources proceeds from the concept

of jura regalia, as well as the recognition of the importance of the country's natural resources, not
only for national economic development, but also for its security and national defense. 178 Under this
provision, the State assumes "a more dynamic role" in the exploration, development and utilization of
natural resources.179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing
the State to grant licenses, concessions, or leases for the exploration, exploitation, development, or
utilization of natural resources. By such omission, the utilization of inalienable lands of public domain
through "license, concession or lease" is no longer allowed under the 1987 Constitution. 180
Having omitted the provision on the concession system, Section 2 proceeded to introduce
"unfamiliar language":181
The State may directly undertake such activities or it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations at least sixty
per centum of whose capital is owned by such citizens.
Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the
State two "options."182 One, the State may directly undertake these activities itself; or two, it may
enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
entities at least 60% of whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,
lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the case of the former, to
corporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth
allows the participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2
provide:
The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in the exploration,
development, and utilization of natural resources, it imposes certain limitations or conditions to
agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these
agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino
citizen, corporation or association may enter into a service contract with a "foreign person or
entity."

Second, the size of the activities: only large-scale exploration, development, and utilization is
allowed. The term "large-scale usually refers to very capital-intensive activities."183
Third, the natural resources subject of the activities is restricted to minerals, petroleum and
other mineral oils, the intent being to limit service contracts to those areas where Filipino
capital may not be sufficient.184
Fourth, consistency with the provisions of statute. The agreements must be in accordance
with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such agreements. The
agreements must be based on real contributions to economic growth and general welfare of
the country.
Sixth, the agreements must contain rudimentary stipulations for the promotion of the
development and use of local scientific and technical resources.
Seventh, the notification requirement. The President shall notify Congress of every financial
or technical assistance agreement entered into within thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred to "service
contracts for financial, technical, management, or other forms of assistance" the 1987
Constitution provides for "agreements. . . involving either financial or technical assistance." It
bears noting that the phrases "service contracts" and "management or other forms of
assistance" in the earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution, 185 President Aquino, on July
10, 1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing and
approval of applications for the exploration, development and utilization of minerals. The omission in
the 1987 Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to
them in Section 2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral resources, including
renewal applications and applications for approval of operating agreements and mining service
contracts, shall be accepted and processed and may be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the "processing, evaluation and approval of all mining
applications . . . operating agreements and service contracts . . . shall be governed by Presidential
Decree No. 463, as amended, other existing mining laws, and their implementing rules and
regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of
which the subject WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that
the Act "shall govern the exploration, development, utilization, and processing of all mineral
resources." Such declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes
through which the State may undertake the exploration, development, and utilization of natural
resources.

The State, being the owner of the natural resources, is accorded the primary power and
responsibility in the exploration, development and utilization thereof. As such, it may undertake these
activities through four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-sharing agreements
with Filipino citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens.
(4) For the large-scale exploration, development and utilization of minerals, petroleum and
other mineral oils, the President may enter into agreements with foreign-owned corporations
involving technical or financial assistance.186
Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and
surveys,187and a passing mention of government-owned or controlled corporations,188 R.A. No. 7942
does not specify how the State should go about the first mode. The third mode, on the other hand, is
governed by Republic Act No. 7076189 (the People's Small-Scale Mining Act of 1991) and other
pertinent laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are collectively classified by
R.A. No. 7942 as "mineral agreements."191 The Government participates the least in a mineral
production sharing agreement (MPSA). In an MPSA, the Government grants the contractor 192 the
exclusive right to conduct mining operations within a contract area193 and shares in the gross
output.194 The MPSA contractor provides the financing, technology, management and personnel
necessary for the agreement's implementation.195 The total government share in an MPSA is the
excise tax on mineral products under Republic Act No. 7729,196 amending Section 151(a) of the
National Internal Revenue Code, as amended.197
In a co-production agreement (CA),198 the Government provides inputs to the mining operations
other than the mineral resource,199 while in a joint venture agreement (JVA), where the Government
enjoys the greatest participation, the Government and the JVA contractor organize a company with
both parties having equity shares.200 Aside from earnings in equity, the Government in a JVA is also
entitled to a share in the gross output.201 The Government may enter into a CA202 or JVA203 with one
or more contractors. The Government's share in a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be negotiated by
the Government and the contractor taking into consideration the: (a) capital investment of the
project, (b) the risks involved, (c) contribution of the project to the economy, and (d) other factors
that will provide for a fair and equitable sharing between the Government and the contractor. The
Government shall also be entitled to compensations for its other contributions which shall be agreed
upon by the parties, and shall consist, among other things, the contractor's income tax, excise tax,
special allowance, withholding tax due from the contractor's foreign stockholders arising from
dividend or interest payments to the said foreign stockholders, in case of a foreign national and all
such other taxes, duties and fees as provided for under existing laws.
All mineral agreements grant the respective contractors the exclusive right to conduct mining
operations and to extract all mineral resources found in the contract area. 204 A "qualified person" may
enter into any of the mineral agreements with the Government.205 A "qualified person" is

any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or
cooperative organized or authorized for the purpose of engaging in mining, with technical and
financial capability to undertake mineral resources development and duly registered in accordance
with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines
x x x.206
The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a
contract involving financial or technical assistance for large-scale exploration, development, and
utilization of natural resources." 207 Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of natural resources in the
Philippines may enter into such agreement directly with the Government through the DENR. 208 For
the purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation,
partnership, association, or cooperative duly registered in accordance with law in which less than
50% of the capital is owned by Filipino citizens) 209 is deemed a "qualified person."210
Other than the difference in contractors' qualifications, the principal distinction between mineral
agreements and FTAAs is the maximum contract area to which a qualified person may hold or be
granted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, as
opposed to the amount invested (US $50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's contributions, in the
form of taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that in
an FTAA:
The collection of Government share in financial or technical assistance agreement shall commence
after the financial or technical assistance agreement contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures, inclusive.213
III
Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a
consideration of the substantive issues presented by the petition is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not
come into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the
opening of Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effect
immediately." This provision, according to petitioners, runs counter to Section 1 of E.O. No.
200,215 which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their publication
either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is
otherwise provided.216[Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after
its publication at which time Congress had already convened and the President's power to legislate
had ceased.

Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners
Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners
Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued
pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date
other than even before the 15-day period after its publication. Where a law provides for its own
date of effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the very
essence of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200,
therefore, applies only when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Taada
v. Tuvera,217 is the publication of the law for without such notice and publication, there would be no
basis for the application of the maxim "ignorantia legis n[eminem] 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.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its
invalidation since the Constitution, being "the fundamental, paramount and supreme law of the
nation," is deemed written in the law.218 Hence, the due process clause,219 which, so Taada held,
mandates the publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1
of E.O. No. 200 which provides for publication "either in the Official Gazette or in a newspaper of
general circulation in the Philippines," finds suppletory application. It is significant to note that E.O.
No. 279 was actually published in the Official Gazette220 on August 3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Taada v. Tuvera,
this Court holds that E.O. No. 279 became effective immediately upon its publication in the Official
Gazette on August 3, 1987.
That such effectivity took place after the convening of the first Congress is irrelevant. At the time
President Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative
powers under the Provisional Constitution.221 Article XVIII (Transitory Provisions) of the 1987
Constitution explicitly states:
Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress
is convened.
The convening of the first Congress merely precluded the exercise of legislative powers by President
Aquino; it did not prevent the effectivity of laws she had previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution,
FTAAs should be limited to "technical or financial assistance" only. They observe, however, that,
contrary to the language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned
mining corporation, to extend more than mere financial or technical assistance to the State, for it
permits WMCP to manage and operate every aspect of the mining activity. 222

Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the
instrument must be so construed as to give effect to the intention of the people who adopted
it.223 This intention is to be sought in the constitution itself, and the apparent meaning of the words is
to be taken as expressing it, except in cases where that assumption would lead to absurdity,
ambiguity, or contradiction.224 What the Constitution says according to the text of the provision,
therefore, compels acceptance and negates the power of the courts to alter it, based on the
postulate that the framers and the people mean what they say.225 Accordingly, following the literal
text of the Constitution, assistance accorded by foreign-owned corporations in the large-scale
exploration, development, and utilization of petroleum, minerals and mineral oils should be limited to
"technical" or "financial" assistance only.
WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O.
No. 279 encompasses a "broad number of possible services," perhaps, "scientific and/or
technological in basis."226 It thus posits that it may also well include "the area of management or
operations . . . so long as such assistance requires specialized knowledge or skills, and are related
to the exploration, development and utilization of mineral resources." 227
This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of
assistance" in the 1973 Constitution was deleted in the 1987 Constitution, which allows only
"technical or financial assistance." Casus omisus pro omisso habendus est. A person, object or thing
omitted from an enumeration must be held to have been omitted intentionally. 228 As will be shown
later, the management or operation of mining activities by foreign contractors, which is the primary
feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to
eradicate.
Respondents insist that "agreements involving technical or financial assistance" is just another term
for service contracts. They contend that the proceedings of the CONCOM indicate "that although the
terminology 'service contract' was avoided [by the Constitution], the concept it represented was not."
They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technical
assistance.'"229 And point out how members of the CONCOM referred to these agreements as
"service contracts." For instance:
SR. TAN. Am I correct in thinking that the only difference between these future service
contracts and the past service contracts under Mr. Marcos is the general law to be enacted
by the legislature and the notification of Congress by the President? That is the only
difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and
Tadeo who alluded to service contracts as they explained their respective votes in the
approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the
provision on service contracts. I felt that if we would constitutionalize any provision on

service contracts, this should always be with the concurrence of Congress and not guided
only by a general law to be promulgated by Congress. x x x.231 [Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even when they have
been proven to be inimical to the interests of the nation, providing as they do the legal
loophole for the exploitation of our natural resources for the benefit of foreign interests. They
constitute a serious negation of Filipino control on the use and disposition of the nation's
natural resources, especially with regard to those which are nonrenewable. 232 [Emphasis
supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy
and Patrimony, going over said provisions meticulously, setting aside prejudice and
personalities will reveal that the article contains a balanced set of provisions. I hope the
forthcoming Congress will implement such provisions taking into account that Filipinos
should have real control over our economy and patrimony, and if foreign equity is permitted,
the same must be subordinated to the imperative demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign corporations or entities
are resorted to only when no Filipino enterprise or Filipino-controlled enterprise could
possibly undertake the exploration or exploitation of our natural resources and that
compensation under such contracts cannot and should not equal what should pertain to
ownership of capital. In other words, the service contract should not be an instrument to
circumvent the basic provision, that the exploration and exploitation of natural resources
should be truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang
"imperyalismo." Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang
monopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa National
Economy and Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on,"
naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas ng hilaw na
sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang parity rights, ang
service contract, ang 60-40 equity sa natural resources. Habang naghihirap ang
sambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman.
Kailan man ang Article on National Economy and Patrimony ay hindi nagpaalis sa
pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng

bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang national
industrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mga
landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na
ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa
Kanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote
no.234 [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article
on National Economy and Patrimony. If the CONCOM intended to retain the concept of service
contracts under the 1973 Constitution, it could have simply adopted the old terminology ("service
contracts") instead of employing new and unfamiliar terms ("agreements . . . involving either
technical or financial assistance"). Such a difference between the language of a provision in a
revised constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose.235 If, as respondents suggest, the concept of "technical or
financial assistance" agreements is identical to that of "service contracts," the CONCOM would not
have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the
first to a mere euphemism for the second and render the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or financial assistance
agreements are not synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by
its adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be
examined in light of the history of the times, and the condition and circumstances under which the
Constitution was framed. The object is to ascertain the reason which induced the framers of the
Constitution to enact the particular provision and the purpose sought to be accomplished thereby, in
order to construe the whole as to make the words consonant to that reason and calculated to effect
that purpose.236
As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the
drafters intended to do away with service contracts which were used to circumvent the capitalization
(60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular
Section 3, is there a safeguard against the possible control of foreign interests if the Filipinos
go into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first
attempt to avoid some of the abuses in the past regime in the use of service contracts to go
around the 60-40 arrangement. The safeguard that has been introduced and this, of course
can be refined is found in Section 3, lines 25 to 30, where Congress will have to concur
with the President on any agreement entered into between a foreign-owned corporation and
the government involving technical or financial assistance for large-scale exploration,
development and utilization of natural resources.237 [Emphasis supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner
Quesada regarding the participation of foreign interests in Philippine natural resources,
which was supposed to be restricted to Filipinos.

MS. QUESADA. Another point of clarification is the phrase "and utilization of natural
resources shall be under the full control and supervision of the State." In the 1973
Constitution, this was limited to citizens of the Philippines; but it was removed and
substituted by "shall be under the full control and supervision of the State." Was the concept
changed so that these particular resources would be limited to citizens of the Philippines? Or
would these resources only be under the full control and supervision of the State; meaning,
noncitizens would have access to these natural resources? Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it
states:
Such activities may be directly undertaken by the State, or it may enter into co-production, joint
venture, production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources may be directly undertaken by
the State, or it may enter into co-production, joint venture or production-sharing agreement with . . .
corporations or associations at least sixty per cent of whose voting stock or controlling interest is
owned by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and
utilization of natural resources, the President with the concurrence of Congress may enter into
agreements with foreign-owned corporations even for technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that
foreign investors will use their enormous capital resources to facilitate the actual exploitation or
exploration, development and effective disposition of our natural resources to the detriment of
Filipino investors. I am not saying that we should not consider borrowing money from foreign
sources. What I refer to is that foreign interest should be allowed to participate only to the extent that
they lend us money and give us technical assistance with the appropriate government permit. In this
way, we can insure the enjoyment of our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors
to participate. It is only technical or financial assistance they do not own anything but on
conditions that have to be determined by law with the concurrence of Congress. So, it is very
restrictive.
If the Commissioner will remember, this removes the possibility for service contracts which we said
yesterday were avenues used in the previous regime to go around the 60-40
requirement.238 [Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope
in proposing an amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?

MR. MAAMBONG. Subject to the three-minute rule, Madam President.


MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino
people are sovereign and that one of the objectives for the creation or establishment of a
government is to conserve and develop the national patrimony. The implication is that the national
patrimony or our natural resources are exclusively reserved for the Filipino people. No alien must be
allowed to enjoy, exploit and develop our natural resources. As a matter of fact, that principle
proceeds from the fact that our natural resources are gifts from God to the Filipino people and it
would be a breach of that special blessing from God if we will allow aliens to exploit our natural
resources.
I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien
corporations but only for them to render financial or technical assistance. It is not for them to enjoy
our natural resources. Madam President, our natural resources are depleting; our population is
increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our
natural resources, there will be no more natural resources for the next generations of Filipinos. It
may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a certain
extent the exploitation of our natural resources, and we became victims of foreign dominance and
control. The aliens are interested in coming to the Philippines because they would like to enjoy the
bounty of nature exclusively intended for Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble
"to preserve and develop the national patrimony for the sovereign Filipino people and for the
generations to come," we must at this time decide once and for all that our natural resources must
be reserved only to Filipino citizens.
Thank you.239 [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to the
intention of the framers to eliminate service contracts altogether. He writes:
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings
for which the President may enter into contracts with foreign-owned corporations, and enunciates
strict conditions that should govern such contracts. x x x.
This provision balances the need for foreign capital and technology with the need to maintain the
national sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in
their own territory, there is no danger of relinquishing sovereignty to foreign interests.
Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign
investors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1)
Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale
enterprises.
The intent of this provision, as well as other provisions on foreign investments, is to prevent the
practice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover of
service contracts.241[Emphasis supplied.]

Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National
Economy and Patrimony, adopted the concept of "agreements . . . involving either technical or
financial assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law
draft) which was taken into consideration during the deliberation of the CONCOM. 243 The former, as
well as Article XII, as adopted, employed the same terminology, as the comparative table below
shows:

DRAFT OF THE UP LAW


CONSTITUTION
PROJECT

PROPOSED
RESOLUTION NO. 496
OF THE
CONSTITUTIONAL
COMMISSION

ARTICLE XII OF THE


1987 CONSTITUTION

Sec. 1. All lands of the


public domain, waters,
minerals, coal, petroleum
and other mineral oils, all
forces of potential energy,
fisheries, flora and fauna
and other natural
resources of the
Philippines are owned by
the State. With the
exception of agricultural
lands, all other natural
resources shall not be
alienated. The exploration,
development and
utilization of natural
resources shall be under
the full control and
supervision of the State.
Such activities may be
directly undertaken by the
state, or it may enter into
co-production, joint
venture, production
sharing agreements with
Filipino citizens or
corporations or
associations sixty per cent
of whose voting stock or
controlling interest is
owned by such citizens for
a period of not more than
twenty-five years,
renewable for not more
than twenty-five years and
under such terms and

Sec. 3. All lands of the


public domain, waters,
minerals, coal, petroleum
and other mineral oils, all
forces of potential energy,
fisheries, forests, flora and
fauna, and other natural
resources are owned by
the State. With the
exception of agricultural
lands, all other natural
resources shall not be
alienated. The exploration,
development, and
utilization of natural
resources shall be under
the full control and
supervision of the State.
Such activities may be
directly undertaken by the
State, or it may enter into
co-production, joint
venture, productionsharing agreements with
Filipino citizens or
corporations or
associations at least sixty
per cent of whose voting
stock or controlling interest
is owned by such citizens.
Such agreements shall be
for a period of twenty-five
years, renewable for not
more than twenty-five
years, and under such
term and conditions as

Sec. 2. All lands of the


public domain, waters,
minerals, coal, petroleum,
and other mineral oils, all
forces of potential energy,
fisheries, forests or timber,
wildlife, flora and fauna,
and other natural
resources are owned by
the State. With the
exception of agricultural
lands, all other natural
resources shall not be
alienated. The exploration,
development, and
utilization of natural
resources shall be under
the full control and
supervision of the State.
The State may directly
undertake such activities
or it may enter into coproduction, joint venture,
or production-sharing
agreements with Filipino
citizens, or corporations or
associations at least sixty
per centum of whose
capital is owned by such
citizens. Such agreements
may be for a period not
exceeding twenty-five
years, renewable for not
more than twenty-five
years, and under such
terms and conditions as

conditions as may be
provided by law. In case
as to water rights for
irrigation, water supply,
fisheries, or industrial uses
other than the
development of water
power, beneficial use may
be the measure and limit
of the grant.
The National Assembly
may by law allow small
scale utilization of natural
resources by Filipino
citizens.
The National Assembly,
may, by two-thirds vote of
all its members by special
law provide the terms and
conditions under which a
foreign-owned corporation
may enter into agreements
with the government
involving either technical
or financial
assistance for large-scale
exploration, development,
or utilization of natural
resources. [Emphasis
supplied.]

may be provided by law. In


cases of water rights for
irrigation, water supply,
fisheries or industrial uses
other than the
development for water
power, beneficial use may
be the measure and limit
of the grant.

may be provided by law. In


case of water rights for
irrigation, water supply,
fisheries, or industrial uses
other than the
development of water
power, beneficial use may
be the measure and limit
of the grant.

The Congress may by law


allow small-scale
utilization of natural
resources by Filipino
citizens, as well as
cooperative fish farming in
rivers, lakes, bays, and
lagoons.

The State shall protect the


nation's marine wealth in
its archipelagic waters,
territorial sea, and
exclusive economic zone,
and reserve its use and
enjoyment exclusively to
Filipino citizens.

The President with the


concurrence of Congress,
by special law, shall
provide the terms and
conditions under which a
foreign-owned corporation
may enter into agreements
with the government
involving either technical
or financial
assistance for large-scale
exploration, development,
and utilization of natural
resources. [Emphasis
supplied.]

The Congress may, by


law, allow small-scale
utilization of natural
resources by Filipino
citizens, as well as
cooperative fish farming,
with priority to subsistence
fishermen and fishworkers in rivers, lakes,
bays, and lagoons.
The President may enter
into agreements with
foreign-owned
corporations
involving either technical
or financial
assistance for large-scale
exploration, development,
and utilization of minerals,
petroleum, and other
mineral oils according to
the general terms and
conditions provided by
law, based on real
contributions to the
economic growth and
general welfare of the
country. In such
agreements, the State
shall promote the

development and use of


local scientific and
technical resources.
[Emphasis supplied.]
The President shall notify
the Congress of every
contract entered into in
accordance with this
provision, within thirty days
from its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the
phrase "technical or financial assistance."
In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A.
Agabin, who was a member of the working group that prepared the U.P. Law draft, criticized service
contracts for they "lodge exclusive management and control of the enterprise to the service
contractor, which is reminiscent of the old concession regime. Thus, notwithstanding the provision of
the Constitution that natural resources belong to the State, and that these shall not be alienated, the
service contract system renders nugatory the constitutional provisions cited." 244 He elaborates:
Looking at the Philippine model, we can discern the following vestiges of the concession regime,
thus:
1. Bidding of a selected area, or leasing the choice of the area to the interested party and
then negotiating the terms and conditions of the contract; (Sec. 5, P.D. 87)
2. Management of the enterprise vested on the contractor, including operation of the field if
petroleum is discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and development; (Sec. 8)
4. Responsibility for downstream operations marketing, distribution, and processing may
be with the contractor (Sec. 8);
5. Ownership of equipment, machinery, fixed assets, and other properties remain with
contractor (Sec. 12, P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec.
13, P.D. 87); and
7. While title to the petroleum discovered may nominally be in the name of the government,
the contractor has almost unfettered control over its disposition and sale, and even the
domestic requirements of the country is relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old concession regime x x x. Some
people have pulled an old rabbit out of a magician's hat, and foisted it upon us as a new and
different animal.

The service contract as we know it here is antithetical to the principle of sovereignty over our natural
resources restated in the same article of the [1973] Constitution containing the provision for service
contracts. If the service contractor happens to be a foreign corporation, the contract would also run
counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our
natural resources.245 [Emphasis supplied. Underscoring in the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of
the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but
the essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the
exploitation or development of the country's natural resources be limited to Filipino citizens or
corporations owned or controlled by them. However, the martial-law Constitution allowed them, once
these resources are in their name, to enter into service contracts with foreign investors for financial,
technical, management, or other forms of assistance. Since foreign investors have the capital
resources, the actual exploitation and development, as well as the effective disposition, of the
country's natural resources, would be under their direction, and control, relegating the Filipino
investors to the role of second-rate partners in joint ventures.
Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the
highest level of state policy that which was prohibited under the 1973 Constitution, namely: the
exploitation of the country's natural resources by foreign nationals. The drastic impact of [this]
constitutional change becomes more pronounced when it is considered that the active party to any
service contract may be a corporation wholly owned by foreign interests. In such a case, the
citizenship requirement is completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the country's natural resources. 246[Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the Constitution and
reaffirm ownership over our natural resources. That is the only way we can exercise effective control
over our natural resources.
This should not mean complete isolation of the country's natural resources from foreign investment.
Other contract forms which are less derogatory to our sovereignty and control over natural resources
like technical assistance agreements, financial assistance [agreements], co-production
agreements, joint ventures, production-sharing could still be utilized and adopted without violating
constitutional provisions. In other words, we can adopt contract forms which recognize and assert
our sovereignty and ownership over natural resources, and where the foreign entity is just a pure
contractor instead of the beneficial owner of our economic resources. 247[Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed that:
2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the
government may be allowed, subject to authorization by special law passed by an extraordinary
majority to enter into either technical or financial assistance. This is justified by the fact that as
presently worded in the 1973 Constitution, a service contract gives full control over the contract area
to the service contractor, for him to work, manage and dispose of the proceeds or production. It was
a subterfuge to get around the nationality requirement of the constitution. 248 [Emphasis supplied.]
In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft
summarized the rationale therefor, thus:

5. The last paragraph is a modification of the service contract provision found in Section 9, Article
XIV of the 1973 Constitution as amended. This 1973 provision shattered the framework of
nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the
Constitution"). Through the service contract, the 1973 Constitution had legitimized that which was
prohibited under the 1935 constitutionthe exploitation of the country's natural resources by foreign
nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were recognized as
legitimate arrangements. Service contracts lodge exclusive management and control of the
enterprise to the service contractor, not unlike the old concession regime where the concessionaire
had complete control over the country's natural resources, having been given exclusive and plenary
rights to exploit a particular resource and, in effect, having been assured of ownership of that
resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles").
Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources,
as well as the constitutional provision on nationalization or Filipinization of the exploitation of our
natural resources.
Under the proposed provision, only technical assistance or financial assistance agreements may be
entered into, and only for large-scale activities. These are contract forms which recognize and assert
our sovereignty and ownership over natural resources since the foreign entity is just a pure
contractor and not a beneficial owner of our economic resources. The proposal recognizes the need
for capital and technology to develop our natural resources without sacrificing our sovereignty and
control over such resources by the safeguard of a special law which requires two-thirds vote of all
the members of the Legislature. This will ensure that such agreements will be debated upon
exhaustively and thoroughly in the National Assembly to avert prejudice to the nation. 249[Emphasis
supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of
beneficial ownership of the country's natural resources to foreign owned corporations. While, in
theory, the State owns these natural resources and Filipino citizens, their beneficiaries service
contracts actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilize
the same. Foreigners, not Filipinos, became the beneficiaries of Philippine natural resources. This
arrangement is clearly incompatible with the constitutional ideal of nationalization of natural
resources, with the Regalian doctrine, and on a broader perspective, with Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical know-how in the
large-scale exploitation, development and utilization of natural resources the second paragraph of
the proposed draft itself being an admission of such scarcity. Hence, they recommended a
compromise to reconcile the nationalistic provisions dating back to the 1935 Constitution, which
reserved all natural resources exclusively to Filipinos, and the more liberal 1973 Constitution, which
allowed foreigners to participate in these resources through service contracts. Such a compromise
called for the adoption of a new system in the exploration, development, and utilization of natural
resources in the form of technical agreements or financial agreements which, necessarily, are
distinct concepts from service contracts.
The replacement of "service contracts" with "agreements involving either technical or financial
assistance," as well as the deletion of the phrase "management or other forms of assistance,"
assumes greater significance when note is taken that the U.P. Law draft proposed other equally
crucial changes that were obviously heeded by the CONCOM. These include the abrogation of the
concession system and the adoption of new "options" for the State in the exploration, development,
and utilization of natural resources. The proponents deemed these changes to be more consistent
with the State's ownership of, and its "full control and supervision" (a phrase also employed by the
framers) over, such resources. The Project explained:

3. In line with the State ownership of natural resources, the State should take a more active role in
the exploration, development, and utilization of natural resources, than the present practice of
granting licenses, concessions, or leases hence the provision that said activities shall be under the
full control and supervision of the State. There are three major schemes by which the State could
undertake these activities: first, directly by itself; second, by virtue of co-production, joint venture,
production sharing agreements with Filipino citizens or corporations or associations sixty per cent
(60%) of the voting stock or controlling interests of which are owned by such citizens; or third, with a
foreign-owned corporation, in cases of large-scale exploration, development, or utilization of natural
resources through agreements involving either technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government benefits from such
benefits only through fees, charges, ad valorem taxes and income taxes of the exploiters of our
natural resources. Such benefits are very minimal compared with the enormous profits reaped by
theses licensees, grantees, concessionaires. Moreover, some of them disregard the conservation of
natural resources and do not protect the environment from degradation. The proposed role of the
State will enable it to a greater share in the profits it can also actively husband its natural
resources and engage in developmental programs that will be beneficial to them.
4. Aside from the three major schemes for the exploration, development, and utilization of our
natural resources, the State may, by law, allow Filipino citizens to explore, develop, utilize natural
resources in small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers,
gold panners, and others similarly situated who exploit our natural resources for their daily
sustenance and survival.250
Professor Agabin, in particular, after taking pains to illustrate the similarities between the two
systems, concluded that the service contract regime was but a "rehash" of the concession system.
"Old wine in new bottles," as he put it. The rejection of the service contract regime, therefore, is in
consonance with the abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other
proposed changes, there is no doubt that the framers considered and shared the intent of the U.P.
Law proponents in employing the phrase "agreements . . . involving either technical or financial
assistance."
While certain commissioners may have mentioned the term "service contracts" during the CONCOM
deliberations, they may not have been necessarily referring to the concept of service contracts under
the 1973 Constitution. As noted earlier, "service contracts" is a term that assumes different
meanings to different people.251 The commissioners may have been using the term loosely, and not
in its technical and legal sense, to refer, in general, to agreements concerning natural resources
entered into by the Government with foreign corporations. These loose statements do not
necessarily translate to the adoption of the 1973 Constitution provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to
Sr. Tan's question, Commissioner Villegas commented that, other than congressional notification,
the only difference between "future" and "past" "service contracts" is the requirement of a general
law as there were no laws previously authorizing the same. 252 However, such remark is far
outweighed by his more categorical statement in his exchange with Commissioner Quesada that the
draft article "does not permit foreign investors to participate" in the nation's natural resources which
was exactly what service contracts did except to provide "technical or financial assistance." 253
In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the
present charter prohibits service contracts.254 Commissioner Gascon was not totally averse to foreign

participation, but favored stricter restrictions in the form of majority congressional concurrence. 255 On
the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the
spectrum and their objections may be interpreted as votes against any foreign participation in our
natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice,
expressing the view that a financial or technical assistance agreement "is no different in concept"
from the service contract allowed under the 1973 Constitution. This Court is not, however, bound by
this interpretation. When an administrative or executive agency renders an opinion or issues a
statement of policy, it merely interprets a pre-existing law; and the administrative interpretation of the
law is at best advisory, for it is the courts that finally determine what the law means. 258
In any case, the constitutional provision allowing the President to enter into FTAAs with foreignowned corporations is an exception to the rule that participation in the nation's natural resources is
reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very
restrictive."259 Commissioner Nolledo also remarked that "entering into service contracts is an
exception to the rule on protection of natural resources for the interest of the nation and, therefore,
being an exception, it should be subject, whenever possible, to stringent rules." 260Indeed, exceptions
should be strictly but reasonably construed; they extend only so far as their language fairly warrants
and all doubts should be resolved in favor of the general provision rather than the exception. 261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said
Act authorizes service contracts. Although the statute employs the phrase "financial and technical
agreements" in accordance with the 1987 Constitution, it actually treats these agreements as service
contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A.
No. 7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to undertake largescale exploration, development, and utilization of mineral resources in the Philippines may enter into
a financial or technical assistance agreement directly with the Government through the Department.
[Emphasis supplied.]
"Exploration," as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological, geochemical or
geophysical surveys, remote sensing, test pitting, trending, drilling, shaft sinking, tunneling or any
other means for the purpose of determining the existence, extent, quantity and quality thereof and
the feasibility of mining them for profit.262
A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests
it with the right to conduct exploration for all minerals in specified areas, 264 i.e., to enter, occupy and
explore the same.265Eventually, the foreign-owned corporation, as such permittee, may apply for a
financial and technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for
mining, including the construction of necessary infrastructure and related facilities. 267
"Utilization" "means the extraction or disposition of minerals." 268 A stipulation that the proponent shall
dispose of the minerals and byproducts produced at the highest price and more advantageous terms

and conditions as provided for under the implementing rules and regulations is required to be
incorporated in every FTAA.269
A foreign-owned/-controlled corporation may likewise be granted a mineral processing
permit.270 "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocks
or by similar means to convert the same into marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance
with the provisions of R.A. No. 7942 and its implementing rules 272 and for work programs and
minimum expenditures and commitments.273 And it obliges itself to furnish the Government records
of geologic, accounting, and other relevant data for its mining operation.274
"Mining operation," as the law defines it, means mining activities involving exploration, feasibility,
development, utilization, and processing.275
The underlying assumption in all these provisions is that the foreign contractor manages the mineral
resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining
rights that it grants contractors in mineral agreements (MPSA, CA and JV). 276 Parenthetically,
Sections 72 to 75 use the term "contractor," without distinguishing between FTAA and mineral
agreement contractors. And so does "holders of mining rights" in Section 76. A foreign contractor
may even convert its FTAA into a mineral agreement if the economic viability of the contract area is
found to be inadequate to justify large-scale mining operations,277provided that it reduces its equity in
the corporation, partnership, association or cooperative to forty percent (40%). 278
Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing,
managerial, and technical expertise. . . ." 279 This suggests that an FTAA contractor is bound to
provide some management assistance a form of assistance that has been eliminated and,
therefore, proscribed by the present Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining operation, the
above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the
nation's mineral resources to these contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60%-40% capitalization requirement for corporations or associations
engaged in the exploitation, development and utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article
XII of the Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a qualified
person for purposes of granting an exploration permit, financial or technical assistance
agreement or mineral processing permit.
(2) Section 23,280 which specifies the rights and obligations of an exploration permittee,
insofar as said section applies to a financial or technical assistance agreement,

(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical
assistance agreement;
(4) Section 35,281 which enumerates the terms and conditions for every financial or technical
assistance agreement;
(5) Section 39,282 which allows the contractor in a financial and technical assistance
agreement to convert the same into a mineral production-sharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral processing permit to a
contractor in a financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on the foregoing
provisions and cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or
technical assistance agreement.
Section 34,285 which prescribes the maximum contract area in a financial or technical
assistance agreements;
Section 36,286 which allows negotiations for financial or technical assistance agreements;
Section 37,287 which prescribes the procedure for filing and evaluation of financial or
technical assistance agreement proposals;
Section 38,288 which limits the term of financial or technical assistance agreements;
Section 40,289 which allows the assignment or transfer of financial or technical assistance
agreements;
Section 41,290 which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81,291 which provide for the Government's share
in a financial and technical assistance agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to
said contractors;
When the parts of the 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, and that if all could not be carried into effect, the legislature
would not pass the residue independently, then, if some parts are unconstitutional, all the provisions
which are thus dependent, conditional, or connected, must fall with them.293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,]
process and dispose of all Minerals products and by-products thereof that may be produced from the
Contract Area."294 The FTAA also imbues WMCP with the following rights:

(b) to extract and carry away any Mineral samples from the Contract area for the purpose of
conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during the
Development/Operating Period and the project facilities to be constructed during the
Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of ingress and egress and
the right to occupy the same, subject to the provisions of Presidential Decree No. 512 (if
applicable) and not be prevented from entry into private ands by surface owners and/or
occupants thereof when prospecting, exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and transmission facilities and
all other types of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery and other
equipment relating to the Mining Operations and to use, sell or otherwise dispose of, modify,
remove or diminish any and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties,
easement rights and the use of timber, sand, clay, stone, water and other natural resources
in the Contract Area without cost for the purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its interest and obligations
under this Agreement, the plant, equipment and infrastructure and the Minerals produced
from the Mining Operations;
x x x. 295
All materials, equipment, plant and other installations erected or placed on the Contract Area remain
the property of WMCP, which has the right to deal with and remove such items within twelve months
from the termination of the FTAA.296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management
and personnel necessary for the Mining Operations." The mining company binds itself to "perform all
Mining Operations . . . providing all necessary services, technology and financing in connection
therewith,"297 and to "furnish all materials, labour, equipment and other installations that may be
required for carrying on all Mining Operations." 298> WMCP may make expansions, improvements
and replacements of the mining facilities and may add such new facilities as it considers necessary
for the mining operations.299
These contractual stipulations, taken together, grant WMCP beneficial ownership over natural
resources that properly belong to the State and are intended for the benefit of its citizens. These
stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental
law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they
spring must be struck down.

In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and
Protection of Investments between the Philippine and Australian Governments, which was signed in
Manila on January 25, 1995 and which entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the
fact that [WMCP's] FTAA was entered into prior to the entry into force of the treaty does not preclude
the Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3
(1) of the treaty provides that "Each Party shall encourage and promote investments in its area by
investors of the other Party and shall [admit] such investments in accordance with its Constitution,
Laws, regulations and investment policies" and in Article 3 (2), it states that "Each Party shall ensure
that investments are accorded fair and equitable treatment." The latter stipulation indicates that it
was intended to impose an obligation upon a Party to afford fair and equitable treatment to the
investments of the other Party and that a failure to provide such treatment by or under the laws of
the Party may constitute a breach of the treaty. Simply stated, the Philippines could not, under said
treaty, rely upon the inadequacies of its own laws to deprive an Australian investor (like [WMCP]) of
fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service
contracts entered into before the enactment of RA 7942 such as those mentioned in PD 87 or EO
279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a
mere Filipino citizen, but by the Philippine Government itself, through its President no less, which, in
entering into said treaty is assumed to be aware of the existing Philippine laws on service contracts
over the exploration, development and utilization of natural resources. The execution of the FTAA by
the Philippine Government assures the Australian Government that the FTAA is in accordance with
existing Philippine laws.300 [Emphasis and italics by private respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in
turn, would amount to a violation of Section 3, Article II of the Constitution adopting the generally
accepted principles of international law as part of the law of the land. One of these generally
accepted principles is pacta sunt servanda, which requires the performance in good faith of treaty
obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion
that "the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable
treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered
into before the enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breach
of the treaty invoked. For this decision herein invalidating the subject FTAA forms part of the legal
system of the Philippines.301 The equal protection clause302 guarantees that such decision shall apply
to all contracts belonging to the same class, hence, upholding rather than violating, the "fair and
equitable treatment" stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with the provisions of
Section 2, Article XII of the Constitution, the President may enter into agreements involving "either
technical or financial assistance" only. The agreement in question, however, is a technical and
financial assistance agreement.
Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead
to absurd consequences.303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the President) to enter into
contract with two (2) foreign-owned corporations, one for financial assistance agreement and with
the other, for technical assistance over one and the same mining area or land; or to execute two (2)

contracts with only one foreign-owned corporation which has the capability to provide both financial
and technical assistance, one for financial assistance and another for technical assistance, over the
same mining area. Such an absurd result is definitely not sanctioned under the canons of
constitutional construction.304 [Underscoring in the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of
"either/or." A constitution is not to be interpreted as demanding the impossible or the impracticable;
and unreasonable or absurd consequences, if possible, should be avoided. 305 Courts are not to give
words a meaning that would lead to absurd or unreasonable consequences and a literal
interpretation is to be rejected if it would be unjust or lead to absurd results. 306 That is a strong
argument against its adoption.307 Accordingly, petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the
petition.
WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:
(1) The following provisions of Republic Act No. 7942:
(a) The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
(f) Section 90.
(2) All provisions of Department of Environment and Natural Resources Administrative Order
96-40, s. 1996 which are not in conformity with this Decision, and
(3) The Financial and Technical Assistance Agreement between the Government of the
Republic of the Philippines and WMC Philippines, Inc.
SO ORDERED.
Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur.
Vitug, J., see Separate Opinion.
Panganiban, J., see Separate Opinion.
Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separate
opinion.
Azcuna, no part, one of the parties was a client.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
REYNALDO V. UMALI,
Petitioner,

G. R. No. 104037
May 29, 1992

-versusHON. JESUS P. ESTANISLAO, SECRETARY OF FINANCE,


and HON. JOSE U. ONG, COMMISSIONER OF INTERNAL
REVENUE,
Respondents.
______________________________________________
RENE B. GOROSPE, LEIGHTON R. SIAZON, MANUEL M. SUNGA,
PAUL D. UNGOS, BIENVENIDO T. JAMORALIN, JR., JOSE D.chanrobles virtual law library
FLORES, JR., EVELYN G. VILLEGAS, DOMINGO T. LIGOT,
HENRY E. LARON, PASTOR M. DALMACION, JR.,
and JULIUS NORMAN C. CERRADA,
Petitioners,
G. R. No. 104069

May 29, 1992

-versusCOMMISSIONER OF INTERNAL REVENUE,


Respondent.

DECISION

PADILLA, J.:

These consolidated cases are Petitions for Mandamus and Prohibition premised upon the following
undisputed facts:

Congress enacted Rep. Act 7167, entitled "AN ACT ADJUSTING THE BASIC PERSONAL AND ADDITIONAL
EXEMPTIONS ALLOWABLE TO INDIVIDUALS FOR INCOME TAX PURPOSES TO THE POVERTY THRESHOLD
LEVEL, AMENDING FOR THE PURPOSE SECTION 29, PARAGRAPH [L], ITEMS (1) AND (2) [A] OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES." It provides as
follows:
Sec. 1. The first paragraph of item [1], paragraph [1] of Section 29 of the National Internal Revenue
Code, as amended, is hereby further amended to read as follows:
[1] Personal exemptions allowable to individuals:
(1) Basic personal exemption as follows:
For single individual or married individual judicially decreed as legally separated with no qualified
dependents P9,000
For head of a family P12,000
For married individual P18,000
Provided, That husband and wife electing to compute their income tax separately shall be entitled to a
personal exemption of P9,000 each.
Sec. 2. The first paragraph of item [2] (A), paragraph (1) of Section 29 of the same Code, as amended, is
hereby further amended to read as follows:
(2) Additional exemption.

(a) Taxpayers with dependents. A married individual or a head of family shall be allowed an additional
exemption of Five Thousand Pesos (P5,000) for each dependent: Provided, That the total number of
dependents for which additional exemptions may be claimed shall not exceed four
dependents: Provided, further, That an additional exemption of One Thousand Pesos [1,000] shall be
allowed for each child who otherwise qualified as dependent prior to January 1, 1980: Provided,
finally, That the additional exemption for dependents shall be claimed by only one of the spouses in case
of married individuals electing to compute their income tax liabilities separately.
Sec. 3. This act shall take effect upon its approval.
Approved. [1]
The said Act was signed and approved by the President on 19 December 1991 and published on 14
January 1992 in "Malaya" a newspaper of general circulation.
On 26 December 1991, respondents promulgated Revenue Regulations No. 1-92, the pertinent portions
of which read as follows:

Sec. 1. Scope.- Pursuant to Sections 245 and 72 of the National Internal Revenue Code in relation to
Republic Act No. 7167, these Regulations are hereby promulgated prescribing the collection at source of
income tax on compensation income paid on or after January 1, 1992 under the Revised Withholding
Tax Tables [Annex "A"] which take into account the increase of personal and additional exemptions.
xxx xxx xxx
Sec. 3. Section 8 of Revenue Regulations No. 6-82 is amended by Revenue Regulations No. 1-86 is
hereby further amended to read as follows:
Section 8. Right to claim the following exemptions. -Each employee shall be allowed to claim the
following amount of exemption with respect to compensation paid on or after January 1, 1992.
xxx xxx xxx
Sec. 5. Effectivity.- These regulations shall take effect on compensation income from January 1, 1992.
On 27 February 1992, the petitioner in G. R. No. 104037, a taxpayer and a resident of Gitnang Bayan
Bongabong, Oriental Mindoro, filed a Petition for Mandamus for himself and in behalf all individual
Filipino taxpayers, to compel the respondents to implement Rep. Act No. 7167 with respect to taxable
income of individual taxpayers earned or received on or after 1 January 1991 or as of taxable year
ending 31 December 1991.
On 28 February 1992, the petitioners in G. R. No. 104069 likewise filed a Petition for Mandamus and
Prohibition on their behalf as well as for those other individual taxpayers who might be similarly
situated, to compel the Commissioner of Internal Revenue to implement the mandate of Rep. Act 7167
adjusting the personal and additional exemptions allowable to individuals for income tax purposes in
regard to income earned or received in 1991, and to enjoin the respondents from implementing
Revenue Regulations No. 1-92.cralaw
In the Court's Resolution of 10 March 1992, these two [2] cases were consolidated. Respondents were
required to comment on the petitions, which they did within the prescribed period.cralaw
The principal issues to be resolved in these cases are: [1] whether or not Rep. Act 7167 took effect upon
its approval by the President on 19 December 1991, or on 30 January 1992, i.e., after fifteen [15] days
following its publication on 14 January 1992 in the "Malaya" a newspaper of general circulation; and [2]
assuming that Rep. Act 7167 took effect on 30 January 1992, whether or not the said law nonetheless
covers or applies to compensation income earned or received during calendar year 1991.cralaw
In resolving the first issue, it will be recalled that the Court in its resolution in Caltex [Phils.],, Inc. vs. The
Commissioner of Internal Revenue, G. R. No. 97282, 26 June 1991, which is on all fours with this case as
to the first issue, held:
The central issue presented in the instant petition is the effectivity of R. A. 6965 entitled "An Act
Revising The Form of Taxation on Petroleum Products from Ad Valorem to Specific, Amending For the
Purpose Section 145 of the National Internal Revenue Code, As amended by Republic Act Numbered Sixty
Seven Hundred Sixty Seven."
Sec. 3 of R.A. 6965 contains the effectivity clause which provides. "This Act shall take effect upon its
approval."

R. A. 6965 was approved on September 19, 1990. It was published in the Philippine Journal, a newspaper
of general circulation in the Philippines, on September 20, 1990. Pursuant to the Act, an implementing
regulation was issued by the Commissioner of Internal Revenue, Revenue Memorandum Circular 85-90,
stating that R. A. 6965 took effect on October 5, 1990. Petitioner took exception thereof and argued that
the law took effect on September 20, 1990 instead.
Pertinent is Article 2 of the Civil Code [as amended by Executive Order No. 200] which provides:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication either in the
official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise
provided.
In the case of Tanada vs. Tuvera [L-63915, December 29, 1986, 146 SCRA 446, 452], We construed
Article 2 of the Civil Code and laid down the rule:
The clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement
of publication itself, which cannot in any event be omitted. This clause does not mean that the legislator
may make the law effective immediately upon approval, or on any other date without its previous
publication.
Publication is indispensable in every case, but the legislature may in its discretion provide that the usual
fifteen-day period shall be shortened or extended.
Inasmuch as R.A. 6965 has no specific date for its effectivity and neither can it become effective upon its
approval notwithstanding its express statement, following Article 2 of the Civil Code and the doctrine
enunciated in Tanada,supra, R.A. 6965 took effect fifteen days after September 20, 1990, or specifically,
on October 5, 1990.
Accordingly, the Court rules that Rep. Act 7167 took effect on 30 January 1992, which is after fifteen [15]
days following its publication on 14 January 1992 in the "Malaya."
Coming now to the second issue, the Court is of the considered view that Rep. Act 7167 should cover or
extend to compensation income earned or received during calendar year 1991. Sec. 29, par. [L], Item
No. 4 of the National Internal Revenue Code, as amended, provides:
Upon the recommendation of the Secretary of Finance, the President shall automatically adjust not
more often than once every three years, the personal and additional exemptions taking into account,
among others, the movement in consumer price indices, levels of minimum wages, and bare subsistence
levels.
As the personal and additional exemptions of individual taxpayers were last adjusted in 1986, the
President, upon the recommendation of the Secretary of Finance, could have adjusted the personal and
additional exemptions in 1989 by increasing the same even without any legislation providing for such
adjustment. But the President did not.
However, House Bill 28970, which was subsequently enacted by Congress as Rep. Act 7167, was
introduced in the House of Representatives in 1989 although its passage was delayed and it did not

become effective law until 30 January 1992. A perusal, however, of the sponsorship remarks of
Congressman Hernando B. Perez, Chairman of the House Committee on Ways and Means, on House Bill
28970, provides an indication of the intent of Congress in enacting Rep. Act 7167. The pertinent
legislative journal contains the following:
At the outset, Mr. Perez explained that the Bill provides for increased personal additional exemptions to
individuals in view of the higher standard of living.
The Bill, he stated, limits the amount of income of individuals subject to income tax to enable them to
spend for basic necessities and have more disposable income.
xxx xxx xxx
Mr. Perez added that inflation has raised the basic necessities and that it had been three years since the
last exemption adjustment in 1986.
xxx xxx xxx
Subsequently, Mr. Perez stressed the necessity of passing the measure to mitigate the effects of the
current inflation and of the implementation of the salary standardization law. Stating that it is
imperative for the government to take measures to ease the burden of the individual income tax filers,
Mr. Perez then cited specific examples of how the measure can help assuage the burden to the
taxpayers.
He then reiterated that the increase in the prices of commodities has eroded the purchasing power of
the peso despite the recent salary increases and emphasized that the Bill will serve to compensate the
adverse effects of inflation on the taxpayers. [Journal of the House of Representatives, May 23, 1990,
pp. 32-33].
It will also be observed that Rep. Act 7167, speaks of the adjustments that it provides for, as
adjustments "to the poverty threshold level." Certainly, "the poverty threshold level" is the poverty
threshold level at the time Rep. Act 7167 was enacted by Congress, not poverty threshold levels in
futuro, at which time there may be need of further adjustments in personal exemptions. Moreover, the
Court can not lose sight of the fact that these personal and additional exemptions are fixed amounts to
which an individual taxpayer is entitled, as a means to cushion the devastating effects of high prices and
a depreciated purchasing power of the currency. In the end, it is the lower-income and the middleincome groups of taxpayers [not the high-income taxpayers] who stand to benefit most from the
increase of personal and additional exemptions provided for by Rep. Act 7167. To that extent, the Act is
a social legislation intended to alleviate in part the present economic plight of the lower income
taxpayers. It is intended to remedy the inadequacy of the heretofore existing personal and additional
exemptions for individual taxpayers.
And then, Rep. Act 7167 says that the increased personal exemptions that it provides for shall be
available thenceforth, that is, after Rep. Act 7167 shall have become effective. In other words, these
exemptions are available upon the filing of personal income tax returns which is, under the National
Internal Revenue Code, done not later than the 15th day of April after the end of a calendar year. Thus,
under Rep. Act 7167, which became effective, as aforestated, on 30 January 1992, the increased

exemptions are literally available on or before 15 April 1992 [though not before 30 January 1992]. But
these increased exemptions can be available on 15 April 1992 only in respect of compensation income
earned or received during the calendar year 1991.cralaw
The personal exemptions as increased by Rep. Act 7167 cannot be regarded as available in respect of
compensation income received during the 1990 calendar year; the tax due in respect of said income had
already accrued, and been presumably paid, by 15 April 1991 and by 15 July 1991, at which time Rep.
Act 7167 had not been enacted. To make Rep. Act 7167 refer back to income received during 1990
would require language explicitly retroactive in purport and effect, language that would have to
authorize the payment of refunds of taxes paid on 15 April 1991 and 15 July 1991: such language is
simply not found in Rep. Act 7167.cralaw
The personal exemptions as increased by Rep. Act 7167 cannot be regarded as available only in respect
of compensation income received during 1992, as the implementing Revenue Regulations No. 1-92
purport to provide. Revenue Regulations No. 1-92 would, in effect, postpone the availability of the
increased exemptions to 1 January-15 April 1993, and thus, literally defer the effectivity of Rep. Act 7167
to 1 January 1993. Thus, the implementing regulations collide frontally with Section 3 of Rep. Act 7167
which states that the statute "shall take effect upon its approval." The objective of the Secretary of
Finance and the Commissioner of Internal Revenue in postponing through Revenue Regulations No. 1-92
the legal effectivity of Rep. Act 7167 is, of course, entirely understandable, To defer to 1993 the
reduction of governmental tax revenues which irresistibly follows from the application of Rep. Act 7167.
But the law-making authority has spoken and the Court cannot refuse to apply the lawmaker's words.
Whether or not the government can afford the drop in tax revenues resulting from such increased
exemptions was for Congress [not this Court] to decide.cralaw
WHEREFORE, Sections 1, 3 and 5 of Revenue Regulations No. 1-92 which provide that the regulations
shall take effect on compensation income earned or received from 1 January 1992 are hereby set aside.
They should take effect on compensation income earned or received from 1 January 1991.cralaw
Since this decision is promulgated after 15 April 1992, the individual taxpayers entitled to the increased
exemptions on compensation income earned during calendar year 1991 who may have filed their
income tax returns on or before 15 April 1992 [later extended to 24 April 1992] without the benefit of
such increased exemptions, are entitled to the corresponding tax refunds and/or credits and
respondents are ordered to effect such refunds and/or credits. No costs.cralaw
SO ORDERED.
Narvasa, C.J. , Gutierrez, Jr., Feliciano, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr., Romero,
Nocon and Bellosillo, JJ ., concur.

[G.R. No. 115068. November 28, 1996]

FORTUNE MOTORS (PHILS.) INC., petitioner, vs. METROPOLITAN


BANK AND TRUST COMPANY, and THE COURT OF
APPEALS, respondents.
DECISION
HERMOSISIMA, JR., J.:

Before us is a petition for review of the decision of the Court of Appeals in CA-G.R.
CV No. 38340 entitled Fortune Motors (Phils.) Inc., v. Metropolitan Bank and Trust
Company et al.[1] The appellate courts decision reversed the decision in Civil Case No.
89-5637 of Branch 150 of the Regional trial Court of Makati City.
It appears that Fortune Motors (Phils.) Inc. obtained the following loans from the
Metropolitan Bank and Trust company: (1) P20 Million, on March 31, 1982; (2) P8 Million,
on April 30, 1983; (3) P2,500,000.00, on June 8, 1983 and; (4) P3 Million, on August 16,
1983.
On January 6, 1984, respondent bank consolidated the loans of P8 Million and P3
Million into one promissory note, which amounted toP12,650,000.00. This included the
interest that had accrued thereon in the amount of P1,650,000.00.
To secure the obligation in the total amount of P34,150,000.00, petitioner mortgaged
certain real estate in favor of respondent bank.
Due to financial constraints, petitioner failed to pay the loan upon
maturity. Consequently on May 25, 1984, respondent bank initiated extrajudicial
foreclosure proceedings and in effect, foreclosed the real estate mortgage.
The extrajudicial foreclosure was actually conducted by Senior Deputy Sheriff Pablo
Y. Sy who had sent copies of the Notice of Extrajudicial Sale to the opposing parties by
registered mail. In accordance with law, he posted copies of the Notice of Sheriffs Sale at
three conspicuous public places in Makati -- the office of the Sheriff, the Assessors office
and the Register of Deeds in Makati. He thereafter executed the Certificates of Posting
onMay 20, 1984. The said notice was in fact published on June 2, 9 and 16, 1984 in three
issues of The New Record. An affidavit of publication, datedJune 19, 1984, [2] was
executed by Teddy F. Borres, publisher of the said newspaper.
Subsequently, the mortgaged property was sold at public auction for P47,899,264.91
to the mortgagee bank, the highest bidder.
Petitioner failed to redeem the mortgaged property within the one-year redemption
period and so, the titles thereto were consolidated in the name of respondent bank by
which token the latter was entitled to the possession of the property mortgaged and, in
fact possessed the same.
Petitioner then filed a complaint for the annulment of the extrajudicial foreclosure,
which covered TCT Nos. 461087, 432685, 457590, 432684, S-54185, S-54186, S-54187,
and S-54188.

On December 27, 1991, the trial court rendered judgment annulling the extrajudicial
foreclosure of the mortgage.
On May 14, 1992, an appeal was interposed by the respondent to the Court of
Appeals. Acting thereon, the Court of Appeals reversed the decision rendered by the
lower court. Subsequently, the motion for Reconsideration filed by petitioner was denied
on April 26, 1994.
Aggrieved by the decision rendered by the Court of appeals, petitioner appealed
before this Court. On May 30, 1994, however, we issued a Resolution denying said
petition. Hence, this motion for reconsideration.
Petitioner raises the following issues before us, to wit:
I

THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE


PUBLICATION OF THE NOTICE OF EXTRAJUDICIAL FORECLOSURE WAS
VALID.[3]
II

THAT THE RESPONDENT COURT OF APPEALS ERRED IN DECLARING THAT


THE NOTICES OF EXTRAJUDICIAL FORECLOSURE, ANDSALE WERE DULY
RECEIVED BY THE PETITIONER.[4]
III

THAT THE COURT OF APPEALS ERRED IN FAILING TO ADJUDGE THE


IRREGULARITIES IN THE BIDDING, POSTING, PUBLICATION, AND
THE SALE OF FORTUNE BUILDING.[5]
IV

THAT THE RESPONDENT COURT OF APPEALS ERRED IN RENDERING A


JUDGMENT BASED ON PRESUMPTION.[6]
Petitioner contends that the newspaper Daily Record [7] where the notice of
extrajudicial foreclosure was published does not qualify as a newspaper of general
circulation.
It further contends that the population that can be reached by the Daily Record is only
.004% as its circulation in Makati in 1984, was 1000 to 1500 per week. Hence, it
concludes that only 1648 out of a population of 412,069 were probable readers of the
Daily Record, and that this is not the standard contemplated by law when it refers to a
newspaper of general circulation.
In the case of Bonnevie v. Court of Appeals,[8] we had already made a ruling on this
point:

The argument that the publication of the notice in the Luzon Weekly Courier
was not in accordance with law as said newspaper is not of general circulation
must likewise be disregarded. The affidavit of publication, executed by the
publisher, business/advertising manager of the Luzon Weekly Courier, states

that it is a newspaper of general circulation in x x x Rizal; and that the notice


of Sheriffs sale was published in said paper on June 30, July 7 and July 14,
1968.This constitutes prima facie evidence of compliance with the requisite
publication. (Sadang v. GSIS, 18 SCRA 491).
To be a newspaper of general circulation, it is enough that it is published for
the dissemination of local news and general information; that it has a bona
fide subscription list of paying subscribers; that it is published at regular
intervals. (Basa v. Mercado, 61 Phil. 632). The newspaper need not have the
largest circulation so long as it is of general circulation. (Banta v. Pacheco, 74
Phil. 67).
In the case at bench, there was sufficient compliance with the requirements of the
law regarding publication of the notice in a newspaper of general circulation. This is
evidenced by the affidavit of publication executed by the New Records publisher, Teddy
F. Borres, which stated that it is a newspaper edited in Manila and Quezon City and of
general circulation in the cities of Manila, Quezon City et al., and in the Provinces of Rizal
xxx, published every Saturday by the Daily Record, Inc. This was affirmed by Pedro
Deyto, who was the executive editor of the said newspaper and who was a witness for
petitioner. Deyto testified: a) that the New Record contains news; b) that it has subscribers
from Metro Manila and from all over the Philippines; c) that it is published once a week or
four times a month ; and d) that he had been connected with the said paper since 1958,
an indication that the said newspaper had been in existence even before that year. [9]
Another contention posited by petitioner is that the New Record is published and
edited in Quezon City and not in Makati where the foreclosed property is situated, and
that, when New Records publisher enumerated the places where said newspaper is being
circulated, Makati was not mentioned.
This contention of petitioner is untenable. In 1984, when the publishers affidavit relied
upon by petitioner was executed, Makati, Mandaluyong,San Juan, Paraaque et. al., were
still part of the province of Rizal. Apparently, this is the reason why in the New Records
affidavit of publication executed by its publisher, the enumeration of the places where it
was being circulated, only the cities of Manila, Quezon, Caloocan, Pasay, Tagaytay,et.
al., were named. Furthermore, as aptly ratiocinated by the Court of Appeals:

The application given by the trial court to the provisions of P.D. No. 1079 is,
to our mind, too narrow and restricted and could not have been the intention
of the said law. Were the interpretation of the trial court (sic) to be followed,
even the leading dailies in the country like the Manila Bulletin, the Philippine
Daily Inquirer, or The Philippine Star which all enjoy a wide circulation
throughout the country, cannot publish legal notices that would be honored
outside the place of their publication. But this is not the interpretation given
by the courts. For what is important is that a paper should be in general
circulation in the place where the properties to be foreclosed are located in
order that publication may serve the purpose for which it was intended. [10]

Petitioner also claims that the New Record is not a daily newspaper because it is
published only once a week.
A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that the said
laws do not require that the newspaper which publishes judicial notices should be a daily
newspaper. Under P.D. 1079, for a newspaper to qualify, it is enough that it be a
newspaper or periodical which is authorized by law to publish and which is regularly
published for at least one (1) year before the date of publication which requirement was
satisfied by New Record. Nor is there a requirement, as stated in the said law, that the
newspaper should have the largest circulation in the place of publication.
Petitioner claims that, when its representative went to a newspaper stand to look for
a copy of the new Record, he could not find any. This allegation can not be made a basis
to conclude that the newspaper New Record is not of general circulation. By its own
admission, petitioners representative was looking for a newspaper named Daily
Record. Naturally, he could not find a newspaper by that name as the newspapers name
is New Record and not Daily Record. Although it is the Daily Record Inc. which publishes
the New Record, it does not mean that the name of the newspaper is Daily Record.
Petitioner contends that, since it was the Executive Judge who caused the publication
of the notice of the sale and not the Sheriff, the extrajudicial foreclosure of the mortgage
should be deemed annulled.
Petitioners contention in this regard is bereft of merit, because Sec. 2 of P.D. No.
1079 clearly provides that:

The executive judge of the court of first instance shall designate a regular
working day and a definite time each week during which the said judicial
notices or advertisements shall be distributed personally by him[11] for
publication to qualified newspapers or periodicals xxx, which distribution
shall be done by raffle.
The said provision of the law is clear as to who should personally distribute the judicial
notices or advertisements to qualified newspapers for publication. There was a
substantial compliance with the requirements when it was the Executive Judge of the
Regional Trial Court of Makati who caused the publication of the said notice by the
newspaper selected by means of raffle.
With regard to the second assigned error wherein petitioner claims that it did not
personally receive the notices of extrajudicial foreclosure and sale supposedly sent to it
by Metrobank, we find the same unmeritorious.
Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary. Section 3 of Act No. 3135 governing extrajudicial
foreclosure of real estate mortgages, as amended by Act No. 4118, requires only the
posting of the notice of sale in three public places and the publication of that notice in a
newspaper of general circulation. It is pristine clear from the above provision that the lack
of personal notice to the mortgagor, herein petitioner, is not a ground to set aside the
foreclosure sale.[12]

Petitioners expostulation that it did not receive the mailed notice to it of the sale of
the mortgaged property should be brushed aside. The fact that respondent was able to
receive the registry return card from the mail in regular course shows that the postal item
presented by the return card had been received by the addressee. Otherwise, as correctly
contended by respondent, the mailed item should have been stamped Returned to
Sender, still sealed with all the postal markings, and the return card still attached to it.
As to the contention that the signature appearing on the registry return card receipt
appears to be only a dot and that the photostat copy does not contain a signature at all
we find, after a close scrutiny of the registry return card, that there are strokes before and
after the dot. These strokes appear to be a signature which signifies: a) that the registry
claim card was received at the given address; b) that the addressee had authorized a
person to present the claim card at the post office and receive the registered mail matter;
and c) that the authorized person signed the return card to acknowledge his receipt of the
mail matter. Even the trial court in its decision ruled that:

x x x the Court finds no cogent reason to overcome the presumption that


Sheriff Pablo Sy performed his task regularly and in accordance with the
rules. A closer look at the assailed xerox copy of the registry receipt and the
original form which said xerox was admittedly copied would indeed show that
the xerox is not a faithful reproduction of the original since it does not bear
the complete signature of the addressee as appearing on the original. It does
not, however, follow that the xerox is a forgery. The same bears slight traces
of the signature appearing on the original but, there is no indication that the
one was altered to conform to the other. Rather, there must have been only a
misprint of the xerox but not amounting to any attempt to falsify the same. [13]
Petitioner also claims that it had transferred to a different location but the notice was
sent to its old address. Petitioner failed to notify respondent of its supposed change of
address. Needless to say, it can be surmised that respondent had sent the notice to
petitioners official address.
Anent its third assigned error, petitioner assails the posting of the notices of sale by
the Sheriff in the Office of the Sheriff, Office of the Assessor and the Register of Deeds
as these are not the conspicuous public places required by law. Furthermore, it also
questions the non-posting of the notice of sale on the property itself which was to be sold.
Apparently, this assigned error of petitioner is tantamount to a last ditch effort to
extricate itself from the quagmire it is in. Act 3135 does not require posting of the notice
of sale on the mortgaged property. Section 3 of the said law merely requires that the
notice of the sale be posted for not less than twenty days in at least three public places
of the municipality or city where the property is situated. The aforementioned places, to
wit: the Sheriffs Office, the Assessors Office and the Register of Deeds are certainly the
public places contemplated by law, as these are places where people interested in
purchasing real estate congregate.
With regard to the fourth assigned error of petitioner, we do not subscribe to the latters
view that the decision of the Court of Appeals was mainly based on the presumption of

the regularity of the performance of official function of the officers involved. A perusal of
the records indubitably shows that the requirement of Act No. 3135 on the extrajudicial
foreclosure of real estate mortgage had been duly complied with by Senior Deputy Sheriff
Sy.
WHEREFORE, the petition is DENIED and the decision rendered in CA-G.R. CV No.
38340 is hereby AFFIRMED.
SO ORDERED.
Padilla, (Chairman), Bellosillo, Vitug, and Kapunan, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

G.R. No. 100776 October 28, 1993


ALBINO S. CO, petitioner,
vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
Antonio P. Barredo for petitioner.
The Solicitor General for the people.

NARVASA, C.J.:
In connection with an agreement to salvage and refloat asunken vessel and in payment of his
share of the expenses of the salvage operations therein stipulated petitioner Albino Co delivered
to the salvaging firm on September 1, 1983 a check drawn against the Associated Citizens' Bank,
postdated November 30, 1983 in the sum of P361,528.00. 1 The check was deposited on January 3,
1984. It was dishonored two days later, the tersely-stated reason given by the bank being: "CLOSED
ACCOUNT."
A criminal complaint for violation of Batas Pambansa Bilang 22 2 was filed by the salvage company
against Albino Co with the Regional Trial Court of Pasay City. The case eventuated in Co's conviction of
the crime charged, and his being sentenced to suffer a term of imprisonment of sixty (60) days and to
indemnify the salvage company in the sum of P361,528.00.
Co appealed to the Court of Appeals. There he sought exoneration upon the theory that it was
reversible error for the Regional Trial Court to have relied, as basis for its verdict of conviction, on
the ruling rendered on September 21, 1987 by this Court in Que v. People, 154 SCRA 160
(1987) 3 i.e., that a check issued merely to guarantee the performance of an obligation is nevertheless
covered by B.P. Blg. 22. This was because at the time of the issuance of the check on September 1,
1983, some four (4) years prior to the promulgation of the judgment in Que v. People on September 21,
1987, the delivery of a "rubber" or "bouncing" check as guarantee for an obligation was not considered a
punishable offense, an official pronouncement made in a Circular of the Ministry of Justice. That Circular
(No. 4), dated December 15, 1981, pertinently provided as follows:
2.3.4. Where issuance of bouncing check is neither estafa nor violation of B.P. Blg.
22.
Where the check is issued as part of an arrangement to guarantee or secure the
payment of an obligation, whether pre-existing or not, the drawer is not criminally
liable for either estafa or violation of B.P. Blg. 22 (Res. No. 438, s. 1981, Virginia
Montano vs. Josefino Galvez, June 19, 1981; Res. No. 707, s. 1989; Alice Quizon vs.
Lydia Calingo, October 23, 1981, Res. No. 769, s. 1981, Alfredo Guido vs. Miguel A.

Mateo, et. al., November 17, 1981; Res. No. 589, s. 1981, Zenaida Lazaro vs. Maria
Aquino, August 7, 1981).
This administrative circular was subsequently reversed by another issued on August 8, 1984
(Ministry Circular No. 12) almost one (1) year after Albino Co had delivered the "bouncing" check
to the complainant on September 1, 1983. Said Circular No. 12, after observing inter alia that
Circular No. 4 of December 15, 1981 appeared to have been based on "a misapplication of the
deliberation in the Batasang Pambansa, . . . (or) the explanatory note on the original bill, i.e. that the
intention was not to penalize the issuance of a check to secure or guarantee the payment of an
obligation," as follows: 4
Henceforth, conforming with the rule that an administrative agency having
interpreting authority may reverse its administration interpretation of a statute, but
that its review interpretation applies only prospectively (Waterbury Savings Bank vs.
Danaher, 128 Conn., 476; 20 a2d 455 (1941), in all cases involving violation of Batas
Pambansa Blg. 22 where the check in question is issued after this date, the claim
that the check is issued as a guarantee or part of an arrangement to secure an
obligation collection will no longer be considered a valid defense.
Co's theory was rejected by the Court of Appeals which affirmed his conviction. Citing Senarillos
v. Hermosisima, 101 Phil. 561, the Appellate Court opined that the Que doctrine did not amount to
the passage of new law but was merely a construction or interpretation of a pre-existing one, i.e., BP
22, enacted on April 3, 1979.
From this adverse judgment of the Court of Appeals, Albino Co appealed to this Court
on certiorari under Rule 45 of the Rules of Court. By Resolution dated September 9, 1991, the Court
dismissed his appeal. Co moved for reconsideration under date of October 2, 1991. The Court
required comment thereon by the Office of the Solicitor General. The latter complied and, in its
comment dated December 13, 1991, extensively argued against the merits of Albino Co's theory on
appeal, which was substantially that proffered by him in the Court of Appeals. To this comment,
Albino Co filed a reply dated February 14, 1992. After deliberating on the parties' arguments and
contentions, the Court resolved, in the interests of justice, to reinstate Albino Co's appeal and
adjudicate the same on its merits.
Judicial decisions applying or interpreting the laws or the Constitution shall form a
part of the legal system of the Philippines," according to Article 8 of the Civil Code.
"Laws shall have no retroactive effect, unless the contrary is provided," declares
Article 4 of the same Code, a declaration that is echoed by Article 22 of the Revised
Penal Code: "Penal laws shall have, a retroactive effect insofar as they favor the
person guilty of a felony, who is not a habitual criminal . . . 5
The principle of prospectivity of statutes, original or amendatory, has been applied in many cases.
These include: Buyco v. PNB, 961 2 SCRA 682 (June 30, 1961), holding that Republic Act No. 1576
which divested the Philippine National Bank of authority to accept back pay certificates in payment of
loans, does not apply to an offer of payment made before effectivity of the act; Largado
v. Masaganda, et al., 5 SCRA 522 (June 30, 1962), ruling that RA 2613, s amended by RA 3090 on
June, 1961, granting to inferior courts jurisdiction over guardianship cases, could not be given
retroactive effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64 SCRA 18, to the effect
that Sections 9 and 10 of Executive Order No. 90, amending Section 4 of PD 1752, could have no
retroactive application; People v. Que Po Lay, 94 Phil. 640, holding that a person cannot be
convicted of violating Circular No. 20 of the Central, when the alleged violation occurred before
publication of the Circular in the Official Gazette; Baltazar v. C.A., 104 SCRA 619, denying

retroactive application to P.D. No. 27 decreeing the emancipation of tenants from the bondage of the
soil, and P.D. No. 316 prohibiting ejectment of tenants from rice and corn farmholdings, pending the
promulgation of rules and regulations implementing P.D. No. 27; Nilo v. Court of Appeals, 128 SCRA
519, adjudging that RA 6389 whichremoved "personal cultivation" as a ground for the ejectment of a
tenant cannot be given retroactive effect in the absence of a statutory statement for retroactivity;TacAn v. CA, 129 SCRA 319, ruling that the repeal of the old Administrative Code by RA 4252 could not
be accorded retroactive effect; Ballardo v. Borromeo, 161 SCRA 500, holding that RA 6389 should
have only prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA,
205 SCRA 419).
The prospectivity principle has also been made to apply to administrative rulings and circulars, to
wit: ABS-CBN Broadcasting Corporation v. CTA, Oct. 12, 1981, 108 SCRA 142, holding that a
circular or ruling of the Commissioner of Internal Revenue may not be given retroactive effect
adversely to a taxpayer: Sanchez v.COMELEC, 193 SCRA 317, ruling that Resolution No. 90-0590
of the Commission on Elections, which directed the holding of recall proceedings, had no retroactive
application; Romualdez v. CSC, 197 SCRA 168, where it was ruled that CSC Memorandum Circular
No. 29, s. 1989 cannot be given retrospective effect so as to entitle to permanent appointment an
employee whose temporary appointment had expired before the Circular was issued.
The principle of prospectivity has also been applied to judicial decisions which, "although in
themselves not laws, are nevertheless evidence of what the laws mean, . . . (this being) the reason
whyunder Article 8 of the New Civil Code, 'Judicial decisions applying or interpreting the laws or the
Constitution shall form a part of the legal system . . .'"
So did this Court hold, for example, in Peo. v. Jabinal, 55 SCRA 607, 611:
It will be noted that when appellant was appointed Secret Agent by the Provincial
Government in 1962, and Confidential Agent by the Provincial commander in 1964,
the prevailing doctrine on the matter was that laid down by Us in People
v. Macarandang (1959) and People v. Lucero (1958). 6Our decision in People
v. Mapa, 7 reversing the aforesaid doctrine, came only in 1967. The sole question in this
appeal is: should appellant be acquitted on the basis of Our rulings
in Macarandang and Lucero, or should his conviction stand in view of the complete
reverse of the Macarandang and Lucero doctrine in Mapa? . . .
Decisions of this Court, although in themselves not laws, are nevertheless evidence
of what the laws mean, and this is the reason why under Article 8 of the New Civil
Code, "Judicial decisions applying or interpreting the laws or the Constitution shall
form a part of the legal system . . ."The interpretation upon a law by this Court
constitutes, in a way, a part of the law as of the date that law was originally passed,
since this Court's construction merely establishes the contemporaneous legislative
intent that the law thus construed intends to effectuate. The settled rule supported by
numerous authorities is a restatement of the legal maxim "legis interpretation legis
vim obtinet" the interpretation placed upon the written law by a competent court
has the force of law. The doctrine laid down in Lucero andMacarandang was part of
the jurisprudence, hence, of the law, of the land, at the time appellant was found in
possession of the firearm in question and where he was arraigned by the trial court. It
is true that the doctrine was overruled in the Mapa case in 1967, but when a doctrine
of this Court is overruled and a different view is adopted, the new doctrine should be
applied prospectively, and should not apply to parties who had relied on, the old
doctrine and acted on the faith thereof. This is especially true in the construction and
application of criminal laws, where it is necessary that the punishment of an act be
reasonably foreseen for the guidance of society.

So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v. Court of Appeals, et al.
(G.R. No. 97973) and Development Bank of the Philippines v. Court of Appeals, et al (G.R. No
97998), Jan. 27, 1992, 205 SCRA 515, 527-528: 8
We sustain the petitioners' position, It is undisputed that the subject lot was
mortgaged to DBP on February 24, 1970. It was acquired by DBP as the highest
bidder at a foreclosure sale on June 18, 1977, and then sold to the petitioners on
September 29, 1979.
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as
amended was that enunciated in Monge and Tupas cited above. The petitioners
Benzonan and respondent Pe and the DBP are bound by these decisions for
pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the
laws or the Constitution shall form a part of the legal system of the Philippines." But
while our decisions form part of the law of the land, they are also subject to Article 4
of the Civil Code which provides that "laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests rights that have
already become vested or impairs the obligations of contract and hence, is
unconstitutional (Francisco vs. Certeza, 3 SCRA 565 [1061]).
The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55
SCRA 607 [1974]" . . . when a doctrine of this Court is overruled and a different view
is adopted, the new doctrine should be applied prospectively and should not apply to
parties who had relied on the old doctrine and acted on the faith thereof.
A compelling rationalization of the prospectivity principle of judicial decisions is well set forth in the
oft-cited case of Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]. The
Chicot doctrine advocates the imperative necessity to take account of the actual existence of a
statute prior to its nullification, as an operative fact negating acceptance of "a principle of absolute
retroactive invalidity.
Thus, in this Court's decision in Taada v. Tuvera, 9 promulgated on April 24, 1985 which declared
"that presidential issuances of general application, which have not been published,shall have no force
and effect," and as regards which declaration some members of the Court appeared "quite apprehensive
about the possible unsettling effect . . . (the) decision might have on acts done in reliance on the validity
of these presidential decrees . . ." the Court said:
. . . . The answer is all too familiar. In similar situation is in the past this Court, had
taken the pragmatic and realistic course set forth in Chicot County Drainage District
vs. Baxter Bank (308 U.S. 371, 374) to wit:
The courts below have proceeded on the theory that the Act of Congress, having
found to be unconstitutional, was not a law; that it was inoperative, conferring no
rights and imposing no duties, and hence affording no basis for the challenged
decree. Norton vs. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v.
Hackett, 228 U. S. 559, 566. It is quite clear, however, that such broad statements as
to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be ignored. The past

cannot always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects with respect to
particular conduct, private and official. Questions of rights claimed to have become
vested, of status, of prior determinations deemed to have finality and acted upon
accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most
difficult of those who have engaged the attention of courts, state and federal, and it is
manifest from numerous decisions that an all-inclusive statement of a principle of
absolute retroactive invalidity cannot be justified.
Much earlier, in De Agbayani v. PNB, 38 SCRA 429 concerning the effects of the invalidation of
"Republic Act No. 342, the moratorium legislation, which continued Executive Order No. 32, issued
by the then President Osmea, suspending the enforcement of payment of all debts and other
monetary obligations payable by war sufferers," and which had been "explicitly held in Rutter v.
Esteban (93 Phil. 68 [1953] 10 . . . (to be) in 1953 'unreasonable and oppressive, and should not be
prolonged a minute longer . . ." the Court made substantially the same observations, to wit: 11
. . . . The decision now on appeal reflects the orthodox view that an unconstitutional
act, for that matter an executive order or a municipal ordinance likewise suffering
from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify
any official act taken under it. Its repugnancy to the fundamental law once judicially
declared results in its being to all intents and purposes amere scrap of paper. . . . It is
understandable why it should be so, the Constitution being supreme and paramount.
Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. lt may not
however be sufficiently realistic. It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or executive act must have been in
force and had to be compiled with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity,, it is entitled to obedience and respect.
Parties may have acted under it and may have changed theirpositions, what could be
more fitting than that in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and presumed to be valid in
all respects. It is now accepted as a doctrine that prior to its being nullified, its
existence is a fact must be reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the governmental organ which has the final say on
whether or not a legislative or executive measure is valid, a, period of time may have
elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: 'The actual existence of a
statute, prior to such a determination [of unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with respect to particular
relations, individual and corporate, and particular conduct, private and official (Chicot
County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This
language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil.
1002 [1953]) and the decision in Manila Motor Co. Inc. v. Flores (99 Phil. 738 [1956]).
An even more recent instance is the opinion of Justice Zaldivar speaking for the
Court in Fernandez v. Cuerva and Co. (L-21114, Nov. 28, 1967, 21 SCRA 1095).

Again, treating of the effect that should be given to its decision in Olaguer v. Military Commission No
34, 12 declaring invalid criminal proceedings conducted during the martial law regime against civilians,
which had resulted in the conviction and incarceration of numerous persons this Court, in Tan
vs. Barrios, 190 SCRA 686, at p. 700, ruled as follows:
In the interest of justice and consistently, we hold that Olaguer should, in principle,
be applied prospectively only to future cases and cases still ongoing or not yet final
when that decision was promulgated. Hence, there should be no retroactive
nullification of final judgments, whether of conviction or acquittal, rendered by military
courts against civilians before the promulgation of the Olaguer decision. Such final
sentences should not be disturbed by the State. Only in particular cases where the
convicted person or the State shows that there was serious denial of constitutional
rights of the accused, should the nullity of the sentence be declared and a retrial be
ordered based on the violation of the constitutional rights of the accused and not on
the Olaguer doctrine. If a retrial is no longer possible, the accused should be
released since judgment against him is null on account of the violation of his
constitutional rights and denial of due process.
xxx xxx xxx
The trial of thousands of civilians for common crimes before the military tribunals and
commissions during the ten-year period of martial rule (1971-1981) which were
created under general orders issued by President Marcos in the exercise of his
legislative powers is an operative fact that may not just be ignored. The belated
declaration in 1987 of the unconstitutionality and invalidity of those proceedings did
not erase the reality of their consequences which occurred long before our decision
in Olaguer was promulgated and which now prevent us from carrying Olaguer to the
limit of its logic. Thus did this Court rule in Municipality of Malabang v. Benito, 27
SCRA 533, where the question arose as to whether the nullity of creation of a
municipality by executive order wiped out all the acts of the local government
abolished. 13
It would seem then, that the weight of authority is decidedly in favor of the proposition that the
Court's decision of September 21, 1987 in Que v. People, 154 SCRA 160 (1987) 14 that a check
issued merely to guarantee the performance of an obligation is nevertheless covered by B.P. Blg. 22
should not be given retrospective effect to the prejudice of the petitioner and other persons situated, who
relied on the official opinion of the Minister of Justice that such a check did not fall within the scope of
B.P. Blg. 22.
Inveighing against this proposition, the Solicitor General invokes U.S. v. Go Chico, 14 Phil. 128,
applying the familiar doctrine that in crimes mala prohibita, the intent or motive of the offender is
inconsequential, the only relevant inquiry being, "has the law been violated?" The facts in Go
Chico are substantially different from those in the case at bar. In the former, there was no official
issuance by the Secretary of Justice or other government officer construing the special law
violated; 15 and it was there observed, among others, that "the defense . . . (of) an honest misconstruction
of the law under legal advice" 16 could not be appreciated as a valid defense. In the present case on the
other hand, the defense is that reliance was placed, not on the opinion of a private lawyer but upon an
official pronouncement of no less than the attorney of the Government, the Secretary of Justice, whose
opinions, though not law, are entitled to great weight and on which reliance may be placed by private
individuals is reflective of the correct interpretation of a constitutional or statutory provision; this,
particularly in the case of penal statutes, by the very nature and scope of the authority that resides in as
regards prosecutions for their violation. 17 Senarillos vs. Hermosisima, supra, relied upon by the

respondent Court of Appeals, is crucially different in that in said case, as in U.S. v. Go Chico, supra, no
administrative interpretation antedated the contrary construction placed by the Court on the law invoked.

This is after all a criminal action all doubts in which, pursuant to familiar, fundamental doctrine, must
be resolved in favor of the accused. Everything considered, the Court sees no compelling reason
why the doctrine of mala prohibita should override the principle of prospectivity, and its clear
implications as herein above set out and discussed, negating criminal liability.
WHEREFORE, the assailed decisions of the Court of Appeals and of the Regional Trial Court are
reversed and set aside, and the criminal prosecution against the accused-petitioner is DISMISSED,
with costs de oficio.
SO ORDERED.
Padilla, Regalado, Nocon and Puno, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 192074

June 10, 2014

LIGHT RAIL TRANSIT AUTHORITY, represented by its Administrator MELQUIADES A.


ROBLES, Petitioner,
vs.
AURORA A. SALVAA, Respondent.
DECISION
LEONEN, J.:
An administrative agency has standing to appeal the Civil Service Commission's repeal or
modification of its original decision. In such instances, it is included in the concept of a "party
adversely affected" by a decision of the Civil Service Commission granted the statutory right to
appeal:
We are asked in this petition for review 1 filed by the Light Rail Transit Authority (LRTA), a
government-owned and -controlled corporation, to modify the Civil Service Commissions finding that
respondent was guilty only of simple dishonesty.
This case developed as follows:
On May 12, 2006, then Administrator of the Light Rail Transit Authority, Melquiades Robles, issued
Office Order No. 119, series of 2006.2 The order revoked Atty. Aurora A. Salvaas designation as
Officer-in-Charge (OIC) of the LRTA Administrative Department. It "direct[ed] her instead to handle
special projects and perform such other duties and functions as may be assigned to her"3 by the
Administrator.
Atty. Salvaa was directed to comply with this office order through a memorandum issued on May
22, 2006 by Atty. Elmo Stephen P. Triste, the newly designated OIC of the administrative
department. Instead of complying, Salvaa questioned the order with the Office of the President. 4
In the interim, Salvaa applied for sick leave of absence on May 12, 2006 and from May 15 to May
31, 2006.5 In support of her application, she submitted a medical certificate6 issued by Dr. Grace
Marie Blanco of the Veterans Memorial Medical Center (VMMC).
LRTA discovered that Dr. Blanco did not issue this medical certificate. Dr. Blanco also denied having
seen or treated Salvaa on May 15, 2006, the date stated on her medical certificate. 7 On June 23,
2006, Administrator Robles issued a notice of preliminary investigation. The notice directed Salvaa
to explain in writing within 72 hours from her receipt of the notice "why no disciplinary action should
be taken against [her]"8 for not complying with Office Order No. 119 and for submitting a falsified
medical certificate.9
Salvaa filed her explanation on June 30, 2006.10 She alleged that as a member of the Bids and
Awards Committee, she "refused to sign a resolution" 11 favoring a particular bidder. She alleged that

Office Order No. 119 was issued by Administrator Robles to express his "ire and
vindictiveness"12 over her refusal to sign.
The LRTAs Fact-finding Committee found her explanation unsatisfactory. On July 26, 2006, it
issued a formal charge against her for Dishonesty, Falsification of Official Document, Grave
Misconduct, Gross Insubordination, and Conduct Prejudicial to the Best Interest of the Service. 13
On August 5, 2006, "Salvaa tendered her irrevocable resignation."14 None of the pleadings alleged
that this irrevocable resignation was accepted, although the resolution of the Fact-finding Committee
alluded to Administrator Robles acceptance of the resignation letter.
In the meantime, the investigation against Salvaa continued, and the prosecution presented its
witnesses.15Salvaa "submitted a manifestation dated September 6, 2006, stating that the
Committee was biased and that [Administrator] Robles was both the accuser and the hearing
officer."16
On October 31, 2006, the Fact-finding Committee issued a resolution "finding Salvaa guilty of all
the charges against her and imposed [on] her the penalty of dismissal from . . . service with all the
accessory penalties."17 The LRTA Board of Directors approved the findings of the Fact-finding
Committee18
Salvaa appealed with the Civil Service Commission. "In her appeal, [she] claimed that she was
denied due process and that there [was] no substantial evidence to support the charges against
her."19
On July 18, 2007, the Civil Service Commission modified the decision and issued Resolution No.
071364.The Civil Service Commission found that Salvaa was guilty only of simple dishonesty. She
was meted a penalty of suspension for three months.20
LRTA moved for reconsideration21 of the resolution. This was denied in a resolution dated May 26,
2008.22 LRTA then filed a petition for review with the Court of Appeals.23
On November 11, 2009, the Court of Appeals24 dismissed the petition and affirmed the Civil Service
Commissions finding that Salvaa was only guilty of simple dishonesty. The appellate court also
ruled that Administrator Robles had no standing to file a motion for reconsideration before the Civil
Service Commission because that right only belonged to respondent in an administrative
case.25 LRTA moved for reconsideration26 of this decision but was denied.27
Hence, LRTA filed this present petition.
Petitioner argues that it has the legal personality to appeal the decision of the Civil Service
Commission before the Court of Appeals.28 It cites Philippine National Bank v. Garcia29 as basis for its
argument that it can be considered a "person adversely affected" under the pertinent rules and
regulations on the appeal of administrative cases.30 It also argues that respondents falsification of
the medical certificate accompanying her application for sick leave was not merely simple but
serious dishonesty.31
Respondent agrees with the ruling of the Court of Appeals that petitioner had no legal personality to
file the appeal since it was not the "person adversely affected" by the decision. She counters that
Administrator Robles had no authority to file the appeal since he was unable to present a resolution

from the Board of Directors authorizing him to do so. 32 She also agrees with the Civil Service
Commissions finding that she was merely guilty of simple dishonesty. 33
In its reply,34 petitioner points out that it presented a secretarys certificate35 dated July 17, 2008 and
which it attached to the petitions before the Civil Service Commission, Court of Appeals, and this
court. It argues that the certificate authorizes the LRTA and its Administrator to file the necessary
motion for reconsideration or appeal regarding this case, and this authorization has yet to be
revoked.36
Both parties filed their respective memoranda before this court on May 23, 2012 37 and December 6,
2012.38
The legal issues that will determine the results of this case are:
1. Whether the LRTA, as represented by its Administrator, has the standing to appeal the
modification by the Civil Service Commission of its decision
2. Whether Salvaa was correctly found guilty of simple dishonesty only
We grant the petition.
The parties may appeal in administrative cases involving members of the civil service
It is settled that "[t]he right to appeal is not a natural right [or] a part of due process; it is merely a
statutory privilege, and may be exercised only in the manner and in accordance with the provisions
of the law."39 If it is not granted by the Constitution, it can only be availed of when a statute provides
for it.40 When made available by law or regulation, however, a person cannot be deprived of that right
to appeal. Otherwise, there will be a violation of the constitutional requirement of due process of law.
Article IX (B), Section 3 of the Constitution mandates that the Civil Service Commission shall be "the
central personnel agency of the Government." 41 In line with the constitutionally enshrined policy that
a public office is a public trust, the Commission was tasked with the duty "to set standards and to
enforce the laws and rules governing the selection, utilization, training, and discipline of civil
servants."42
Civil servants enjoy security of tenure, and "[n]o officer or employee in the Civil Service shall be
suspended or dismissed except for cause as provided by law and after due process." 43 Under
Section 12, Chapter 3, Book V of the Administrative Code, it is the Civil Service Commission that
has the power to "[h]ear and decide administrative cases instituted by or brought before it directly or
on appeal."
The grant of the right to appeal in administrative cases is not new. In Republic Act No. 2260 or the
Civil Service Law of 1959, appeals "by the respondent"44 were allowed on "[t]he decision of the
Commissioner of Civil Service rendered in an administrative case involving discipline of subordinate
officers and employees."45
Presidential Decree No. 807, while retaining the right to appeal in administrative cases, amended the
phrasing of the party allowed to appeal. Section 37, paragraph (a), and Section 39, paragraph (a),of
Presidential Decree No. 807 provide:

Sec. 37. Disciplinary Jurisdiction. - (a) The Commission shall decide upon appeal all administrative
cases involving the imposition of a penalty of suspension for more than thirty days, or fine in an
amount exceeding thirty days' salary, demotion in rank or salary or transfer, removal or dismissal
from office.
Sec. 39. Appeals. - (a) Appeals, where allowable, shall be made by the party adversely affected by
the decision within fifteen days from receipt of the decision unless a petition shall be decided within
fifteen days. (Emphasis supplied)
Additionally, Section 47, paragraph (1), and Section 49, paragraph (1), of the Administrative Code
provide:
SECTION 47. Disciplinary Jurisdiction.(1) The Commission shall decide upon appeal all
administrative disciplinary cases involving the imposition of a penalty of suspension for more than
thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary or transfer,
removal or dismissal from office.
SECTION 49. Appeals.(1) Appeals, where allowable, shall be made by the party adversely
affected by the decision within fifteen days from receipt of the decision unless a petition for
reconsideration is seasonably filed, which petition shall be decided within fifteen days.(Emphasis
supplied)
The phrase, "person adversely affected," was not defined in either Presidential Decree No. 807 or
the Administrative Code. This prompted a series of cases46 providing the interpretation of this phrase.
The first of these cases, Paredes v. Civil Service Commission,47 declared:
Based on [Sections 37 (a) and 39 (a) of Presidential Decree No. 807], appeal to the Civil Service
Commission in an administrative case is extended to the party adversely affected by the decision,
that is, the person or the respondent employee who has been meted out the penalty of suspension
for more than thirty days; or fine in an amount exceeding thirty days salary demotion in rank or
salary or transfer, removal or dismissal from office. The decision of the disciplining authority is even
final and not appealable to the Civil Service Commission in cases where the penalty imposed is
suspension for not more than thirty days or fine in an amount not exceeding thirty days
salary.48 (Emphasis supplied)
This ruling was repeated in Mendez v. Civil Service Commission49 where this court stated that:
A cursory reading of P.D. 807, otherwise known as "The Philippine Civil Service Law" shows that
said law does not contemplate a review of decisions exonerating officers or employees from
administrative charges.
....
By inference or implication, the remedy of appeal may be availed of only in a case where the
respondent is found guilty of the charges filed against him. But when the respondent is exonerated
of said charges, as in this case, there is no occasion for appeal. 50 (Emphasis supplied)
The same ratio would be reiterated and become the prevailing doctrine on the matter in Magpale, Jr.
v. Civil Service Commission,51 Navarro v. Civil Service Commission and Export Processing

Zone,52 University of the Philippines v. Civil Service Commission,53 and Del Castillo v. Civil Service
Commission.54
In these cases, this court explained that the right to appeal being merely a statutory privilege can
only be availed of by the party specified in the law. Since the law presumes that appeals will only be
made in decisions prescribing a penalty, this court concluded that the only parties that will be
adversely affected are the respondents that are charged with administrative offenses. Since the right
to appeal is a remedial right that may only be granted by statute, a government party cannot by
implication assert that right as incidental to its power, since the right to appeal does not form part of
due process.55
In effect, this court equated exonerations in administrative cases to acquittals in criminal cases
wherein the State or the complainant would have no right to appeal. 56 When the Civil Service
Commission enacted the Uniform Rules on Administrative Cases in the Civil Service, or the
URACCS, on September 27, 1999, it applied this courts definition. Thus, Section 2, paragraph
(l),Rule I, and Section 38,Rule III of the URACCS defined "party adversely affected" as follows:
Section 2. Coverage and Definition of Terms.
....
(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in a
disciplinary case has been rendered.
For some time, government parties were, thus, barred from appealing exonerations of civil servants
they had previously sanctioned. It was not until the promulgation by this court of Civil Service
Commission v. Dacoycoy57 on April 29, 1999 that the issue would be revisited.
Civil Service Commission v. Dacoycoyand Philippine National Bank v. Garcia
In Civil Service Commission v. Dacoycoy,58 an administrative complaint for habitual drunkenness,
misconduct, and nepotism was filed against the Vocational School Administrator of Balicuatro
College of Arts and Trade in Allen, Northern Samar. The Civil Service Commission found Dacoycoy
guilty, but the Court of Appeals overturned this finding and exonerated Dacoycoy of all charges. The
Civil Service Commission then appealed the ruling of the appellate court. This court, in addressing
the issue of the Commissions standing, stated that:
Subsequently, the Court of Appeals reversed the decision of the Civil Service Commission and held
respondent not guilty of nepotism. Who now may appeal the decision of the Court of Appeals to the
Supreme Court? Certainly not the respondent, who was declared not guilty of the charge. Nor the
complainant George P. Suan, who was merely a witness for the government. Consequently, the Civil
Service Commission has become the party adversely affected by such ruling, which seriously
prejudices the civil service system. Hence, as an aggrieved party, it may appeal the decision of the
Court of Appeals to the Supreme Court. By this ruling, we now expressly abandon and overrule
extant jurisprudence that "the phrase party adversely affected by the decision refers to the
government employee against whom the administrative case is filed for the purpose of disciplinary
action which may take the form of suspension, demotion in rank or salary, transfer, removal or
dismissal from office" and not included are "cases where the penalty imposed is suspension for not
more than thirty (30) days or fine in an amount not exceeding thirty days salary" or "when the
respondent is exonerated of the charges, there is no occasion for appeal." In other words, we
overrule prior decisions holding that the Civil Service Law "does not contemplate a review of
decisions exonerating officers or employees from administrative charges" enunciated in Paredes v.

Civil Service Commission; Mendez v. Civil Service Commission; Magpale v. Civil Service
Commission; Navarro v. Civil Service Commission and Export Processing Zone Authority and more
recently Del Castillo v. Civil Service Commission.59 (Emphasis supplied; citations omitted)
In his concurring opinion, then Chief Justice Puno summed up the rationale for allowing government
parties to appeal, thus:
In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For what
the law declares as "final" are decisions of heads of agencies involving suspension for not more than
thirty (30) days or fine in an amount not exceeding thirty (30) days salary.
But there is a clear policy reason for declaring these decisions final. These decisions involve minor
offenses. They are numerous for they are the usual offenses committed by government officials and
employees. To allow their multiple level appeal will doubtless overburden the quasi-judicial
machinery of our administrative system and defeat the expectation of fast and efficient action from
these administrative agencies. Nepotism, however, is not a petty offense. Its deleterious effect on
government cannot be over-emphasized. And it is a stubborn evil. The objective should be to
eliminate nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from
review, especially judicial review. It is thus non sequitur to contend that since some decisions
exonerating public officials from minor offenses cannot be appealed, ergo, even a decision acquitting
a government official from a major offense like nepotism cannot also be appealed. 60 (Emphasis
supplied)
The decision in Dacoycoy would be reiterated in 2002 when this court promulgated Philippine
National Bank v. Garcia.61 Philippine National Bank categorically allowed the disciplining authority to
appeal the decision exonerating the disciplined employee.
In that case, the bank charged Ricardo V. Garcia, Jr., one of its check processors and cash
representatives, with gross neglect of duty when he lost P7 million in connection with his duties. Both
the Civil Service Commission and the Court of Appeals reversed the bank and exonerated Garcia
from all liability.
This court, however, upheld Philippine National Banks right to appeal the case. Citing Dacoycoy,
this court ruled:
Indeed, the battles against corruption, malfeasance and misfeasance will be seriously undermined if
we bar appeals of exoneration. After all, administrative cases do not partake of the nature of criminal
actions, in which acquittals are final and unappealable based on the constitutional proscription of
double jeopardy.
Furthermore, our new Constitution expressly expanded the range and scope of judicial review. Thus,
to prevent appeals of administrative decisions except those initiated by employees will effectively
and pervertedly erode this constitutional grant.
Finally, the Court in Dacoycoy ruled that the CSC had acted well within its rights in appealing the
CAs exoneration of the respondent public official therein, because it has been mandated by the
Constitution to preserve and safeguard the integrity of our civil service system. In the same light,
herein Petitioner PNB has the standing to appeal to the CA the exoneration of Respondent Garcia.
After all, it is the aggrieved party which has complained of his acts of dishonesty. Besides, this Court
has not lost sight of the fact that PNB was already privatized on May 27, 1996. Should respondent
be finally exonerated indeed, it might then be incumbent upon petitioner to take him back into its
fold. It should therefore be allowed to appeal a decision that in its view hampers its right to select

honest and trustworthy employees, so that it can protect and preserve its name as a premier
banking institution in our country.62 (Emphasis supplied) Thus, the Civil Service Commission issued
Resolution No. 021600 published on December 29, 2002, which amended the URACCS, to allow the
disciplining authority to appeal the decision exonerating the employee:
Section 2. Coverage and Definition of Terms.
....
(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in a
disciplinary case has been rendered or to the disciplining authority in an appeal from a decision
exonerating the said employee.
Subsequent decisions continued to reiterate the rulings in Dacoycoy and Philippine National Bank.
In Constantino-David v. Pangandaman-Gania,63 this court explained the rationale of allowing the Civil
Service Commission to appeal decisions of exonerations as follows:
That the CSC may appeal from an adverse decision of the Court of Appeals reversing or modifying
its resolutions which may seriously prejudice the civil service system is beyond doubt. In Civil
Service Commission v. Dacoycoy[,] this Court held that the CSC may become the party adversely
affected by such ruling and the aggrieved party who may appeal the decision to this Court.
The situation where the CSCs participation is beneficial and indispensable often involves complaints
for administrative offenses, such as neglect of duty, being notoriously undesirable, inefficiency and
incompetence in the performance of official duties, and the like, where the complainant is more often
than not acting merely as a witness for the government which is the real party injured by the illicit
act. In cases of this nature, a ruling of the Court of Appeals favorable to the respondent employee is
understandably adverse to the government, and unavoidably the CSC as representative of the
government may appeal the decision to this Court to protect the integrity of the civil service system.
The CSC may also seek a review of the decisions of the Court of Appeals that are detrimental to its
constitutional mandate as the central personnel agency of the government tasked to establish a
career service, adopt measures to promote morale, efficiency, integrity, responsiveness,
progressiveness and courtesy in the civil service, strengthen the merit and rewards system, integrate
all human resources development programs for all levels and ranks, and institutionalize a
management climate conducive to public accountability. Nonetheless, the right of the CSC to appeal
the adverse decision does not preclude the private complainant in appropriate cases from similarly
elevating the decision for review.64
Then in Civil Service Commission v. Gentallan,65 this court declared:
At the outset, it should be noted that the Civil Service Commission, under the Constitution, is the
central personnel agency of the government charged with the duty of determining questions of
qualifications of merit and fitness of those appointed to the civil service. Thus, the CSC, as an
institution whose primary concern is the effectiveness of the civil service system, has the standing to
appeal a decision which adversely affects the civil service. We hold, at this juncture, that CSC has
the standing to appeal and/or to file its motion for reconsideration. 66
The right to appeal by government parties was not limited to the Civil Service Commission.

In Pastor v. City of Pasig,67 this court ruled that the City of Pasig had standing to appeal the decision
of the Civil Service Commission reinstating a city employee to her former position, despite the city
government having reassigned her to another unit.
In Geronga v. Varela,68 this court ruled that the Mayor of Cadiz City had the right to file a motion for
reconsideration of a decision by the Civil Service Commission exonerating a city employee on the
ground that "as the appointing and disciplining authority, [he] is a real party in interest." 69
In Department of Education v. Cuanan,70 this court ruled that the Department of Education "qualifie[d]
as a party adversely affected by the judgment, who can file an appeal of a judgment of exoneration
in an administrative case."71
There are, however, cases, which sought to qualify this right to appeal.
In National Appellate Board v. Mamauag,72 an administrative complaint for grave misconduct was
filed by Quezon City Judge Adoracion G. Angeles against several members of the Philippine
National Police (PNP). The Central Police District Command (CPDC) of Quezon City, upon
investigation, dismissed the complaint. Dissatisfied, Judge Angeles moved for a reinvestigation by
then PNP Chief Recaredo Sarmiento II.
PNP Chief Sarmiento issued a decision finding the accused police officers guilty of the offenses
charged. Some were meted the penalty of suspension while others were dismissed from service.
Upon motion for reconsideration by Judge Angeles, Chief Sarmiento modified his ruling and ordered
the dismissal of the suspended police officers.
One of the officers, Police Inspector John Mamauag, appealed the decision with the National
Appellate Board of the National Police Commission. The National Appellate Board, however, denied
the appeal. Mamauag appealed the denial with the Court of Appeals. The Court of Appeals reversed
the decision of the National Appellate Board and ruled that it was the Philippine National Police, not
Judge Angeles, which had the right to appeal the decision of PNP Chief Sarmiento, as it was the
party adversely affected. The National Appellate Board then appealed this decision with this court.
This court, while citing Dacoycoy, declared that Judge Angeles, as complainant, had no right to
appeal the dismissal by CPDC of the complaint against Mamauag. It qualified the right of
government agencies to appeal by specifying the circumstances by which the right may be given,
thus:
However, the government party that can appeal is not the disciplining authority or tribunal which
previously heard the case and imposed the penalty of demotion or dismissal from the service. The
government party appealing must be one that is prosecuting the administrative case against the
respondent. Otherwise, an anomalous situation will result where the disciplining authority or tribunal
hearing the case, instead of being impartial and detached, becomes an active participant in
prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after Dacoycoy, the
Court declared:
To be sure, when the resolutions of the Civil Service Commission were brought before the Court of
Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicial
body, the Civil Service Commission can be likened to a judge who should "detach himself from
cases where his decision is appealed to a higher court for review."
In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role as
adjudicator and became an advocate. Its mandated function is to "hear and decide administrative

cases instituted by or brought before it directly or on appeal, including contested appointments and
to review decisions and actions of its offices and agencies," not to litigate. 73 (Emphasis supplied)
The ruling in National Appellate Boardwas applied in Montoya v. Varilla, 74 Pleyto v. PNP-CIDG,75 and
Ombudsman v. Liggayu.76
The present rule is that a government party is a "party adversely affected" for purposes of appeal
provided that the government party that has a right to appeal must be the office or agency
prosecuting the case.
Despite the limitation on the government partys right to appeal, this court has consistently upheld
that right in Dacoycoy. In Civil Service Commission v. Almojuela, 77 we stated that:
More than ten years have passed since the Court first recognized in Dacoycoy the CSCs standing
to appeal the CAs decisions reversing or modifying its resolutions seriously prejudicial to the civil
service system. Since then, the ruling in Dacoycoy has been subjected to clarifications and
qualifications but the doctrine has remained the same: the CSC has standing as a real party in
interest and can appeal the CAs decisions modifying or reversing the CSCs rulings, when the CA
action would have an adverse impact on the integrity of the civil service. As the governments central
personnel agency, the CSC is tasked to establish a career service and promote morale, efficiency,
integrity, responsiveness, progressiveness, and courtesy in the civil service; it has a stake in
ensuring that the proper disciplinary action is imposed on an erring public employee, and this stake
would be adversely affected by a ruling absolving or lightening the CSC-imposed penalty. Further, a
decision that declares a public employee not guilty of the charge against him would have no other
appellant than the CSC. To be sure, it would not be appealed by the public employee who has been
absolved of the charge against him; neither would the complainant appeal the decision, as he acted
merely as a witness for the government. We thus find no reason to disturb the settled Dacoycoy
doctrine.78 (Citations omitted)
Indeed, recent decisions showed that this court has allowed appeals by government parties.
Notably, the government parties right to appeal in these cases was not brought up as an issue by
either of the parties.
In Civil Service Commission v. Yu,79 this court allowed the Civil Service Commission to appeal the
Court of Appeals decision granting the reinstatement of a government employee whose
appointment had been revoked by the Commission.
In National Power Corporation v. Civil Service Commission and Tanfelix, 80 the National Power
Corporation had previously filed an administrative complaint against one of its employees, Rodrigo
Tanfelix, resulting in his dismissal from service. When the Civil Service Commission exonerated
Tanfelix and the Court of Appeals affirmed the exoneration, the National Power Corporation was
allowed to appeal.
These cases, however, allowed the disciplining authority to appeal only from a decision exonerating
the said employee. In this case, respondent was not exonerated; she was found guilty, but the
finding was modified. This court previously stated that:
If the administrative offense found to have been actually committed is of lesser gravity than the
offense charged, the employee cannot be considered exonerated if the factual premise for the
imposition of the lesser penalty remains the same.81

Dacoycoy, Philippine National Bank, and the URACCS failed to contemplate a situation where the
Civil Service Commission modified the penalty from dismissal to suspension. The erring civil servant
was not exonerated, and the finding of guilt still stood. In these situations, the disciplinary authority
should be allowed to appeal the modification of the decision.
The LRTA had standing to appeal the modification by the Civil Service Commission of its decision
The employer has the right "to select honest and trustworthy employees." 82 When the government
office disciplines an employee based on causes and procedures allowed by law, it exercises its
discretion. This discretion is inherent in the constitutional principle that "[p]ublic 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." 83 This is a
principle that can be invoked by the public as well as the government office employing the public
officer.
Here, petitioner already decided to dismiss respondent for dishonesty. Dishonesty is a serious
offense that challenges the integrity of the public servant charged. To bar a government office from
appealing a decision that lowers the penalty of the disciplined employee prevents it from ensuring its
mandate that the civil service employs only those with the utmost sense of responsibility, integrity,
loyalty, and efficiency.
Honesty and integrity are important traits required of those in public service. If all decisions by quasijudicial bodies modifying the penalty of dismissal were allowed to become final and unappealable, it
would, in effect, show tolerance to conduct unbecoming of a public servant. The quality of civil
service would erode, and the citizens would end up suffering for it.
During the pendency of this decision, or on November 18, 2011, the Revised Rules on
Administrative Cases in the Civil Service or RACCS was promulgated. The Civil Service Commission
modified the definition of a "party adversely affected" for purposes of appeal.
Section 4. Definition of Terms.
....
k. PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in an
administrative case has been rendered or to the disciplining authority in an appeal from a decision
reversing or modifying the original decision. (Emphasis supplied)
Procedural laws have retroactive application. In Zulueta v. Asia Brewery: 84
As a general rule, laws have no retroactive effect. But there are certain recognized exceptions, such
as when they are remedial or procedural in nature. This Court explained this exception in the
following language:
It is true that under the Civil Code of the Philippines, "(l)aws shall have no retroactive effect, unless
the contrary is provided. But there are settled exceptions to this general rule, such as when the
statute is CURATIVE or REMEDIAL in nature or when it CREATES NEW RIGHTS.
....

On the other hand, remedial or procedural laws, i.e., those statutes relating to remedies or modes of
procedure, which do not create new or take away vested rights, but only operate in furtherance of
the remedy or confirmation of such rights, ordinarily do not come within the legal meaning of a
retrospective law, nor within the general rule against the retrospective operation of statutes.
Thus, procedural laws may operate retroactively as to pending proceedings even without express
provision to that effect. Accordingly, rules of procedure can apply to cases pending at the time of
their enactment. In fact, statutes regulating the procedure of the courts will be applied on actions
undetermined at the time of their effectivity. Procedural laws are retrospective in that sense and to
that extent.85 (Emphasis supplied)
Remedial rights are those rights granted by remedial or procedural laws. These are rights that only
operate to further the rules of procedure or to confirm vested rights. As such, the retroactive
application of remedial rights will not adversely affect the vested rights of any person. Considering
that the right to appeal is a right remedial in nature, we find that Section 4, paragraph (k), Rule I of
the RACCS applies in this case. Petitioner, therefore, had the right to appeal the decision of the Civil
Service Commission that modified its original decision of dismissal.
Recent decisions implied the retroactive application of this rule. While the right of government parties
to appeal was not an issue, this court gave due course to the appeals filed by government agencies
before the promulgation of the Revised Rules on Administrative Cases in the Civil Service.
In Civil Service Commission v. Clave,86 the Government Service and Insurance System (GSIS) found
one of its employees, Aurora M. Clave, guilty of simple neglect of duty. The Civil Service
Commission affirmed the GSISs findings. The Court of Appeals, however, while affirming the Civil
Service Commission, reduced the penalty. Both the GSIS and the Civil Service Commission were
given standing to appeal the decision of the Court of Appeals.
In GSIS v. Chua,87 the GSIS dismissed Heidi R. Chua for grave misconduct, dishonesty, and conduct
prejudicial to the best interest of service. The Civil Service Commission affirmed the GSIS, but the
Court of Appeals, while affirming the findings of the Commission, modified the penalty to simple
misconduct. The GSIS was then allowed to bring an appeal of the modification of the penalty with
this court.
Thus, we now hold that the parties adversely affected by a decision in an administrative case who
may appeal shall include the disciplining authority whose decision dismissing the employee was
either overturned or modified by the Civil Service Commission.
The offense committed was less serious dishonesty, not simple dishonesty
Dishonesty has been defined "as the disposition to lie, cheat, deceive, or defraud;
untrustworthiness, lack of integrity . . . ."88 Since the utmost integrity is expected of public servants,
its absence is not only frowned upon but punished severely.
Section 52, Rule IV of the URACCS provides:
Section 52. Classification of Offenses. Administrative offenses with corresponding penalties are
classified into grave, less grave or light, depending on their gravity or depravity and effects on the
government service.
A. The following are grave offenses with their corresponding penalties:

1. Dishonesty - 1st Offense Dismissal


....
In Remolona v. Civil Service Commission,89 this court explained the rationale for the severity of the
penalty:
It cannot be denied that dishonesty is considered a grave offense punishable by dismissal for the
first offense under Section 23, Rule XIV of the Rules Implementing Book V of Executive Order No.
292. And the rule is that dishonesty, in order to warrant dismissal, need not be committed in the
course of the performance of duty by the person charged. The rationale for the rule is that if a
government officer or employee is dishonest or is guilty of oppression or grave misconduct, even if
said defects of character are not connected with his office, they affect his right to continue in office.
The Government cannot tolerate in its service a dishonest official, even if he performs his duties
correctly and well, because by reason of his government position, he is given more and ample
opportunity to commit acts of dishonesty against his fellow men, even against offices and entities of
the government other than the office where he is employed; and by reason of his office, he enjoys
and possesses a certain influence and power which renders the victims of his grave misconduct,
oppression and dishonesty less disposed and prepared to resist and to counteract his evil acts and
actuations. The private life of an employee cannot be segregated from his public life. Dishonesty
inevitably reflects on the fitness of the officer or employee to continue in office and the discipline and
morale of the service.90 (Emphasis supplied)
However, on April 4, 2006, the Civil Service Commission issued Resolution No. 06-0538 or the
Rules on the Administrative Offense of Dishonesty.
Resolution No. 06-0538 recognizes that dishonesty is a grave offense punishable by dismissal from
service.91 It, however, also recognizes that "some acts of Dishonesty are not constitutive of an
offense so grave as to warrant the imposition of the penalty of dismissal from the service." 92
Recognizing the attendant circumstances in the offense of dishonesty, the Civil Service Commission
issued parameters "in order to guide the disciplining authority in charging the proper offense" 93 and to
impose the proper penalty.
The resolution classifies dishonesty in three gradations: (1) serious; (2) less serious; and (3) simple.
Serious dishonesty is punishable by dismissal.94 Less serious dishonesty is punishable by
suspension for six months and one day to one year for the first offense and dismissal for the second
offense.95 Simple dishonesty is punishable by suspension of one month and one day to six months
for the first offense, six months and one day to one year for the second offense, and dismissal for
the third offense.96
The medical certificate respondent submitted to support her application for sick leave was falsified.
The question remains as to whether this act could be considered serious dishonesty, less serious
dishonesty, or simple dishonesty.
According to the Civil Service Commissions finding in its resolution:
In the instant case, the prosecution was able to establish that the medical certificate submitted by
Salvaa was spurious or not genuine as the physician-signatory therein, Dr. Blanco[,] testified that
she did not examine/treat the appellant nor did she issue a medical certificate on May 15, 2006 since
she was on sick leave of absence on that particular day. Worthy [of] mention is that the appellant
never bothered to submit any evidence, documentary or otherwise, to rebut the testimony of Blanco.

Thus, the Commission rules and so holds that the appellant is liable for Dishonesty but applying the
aforementioned CSC Resolution No. 06-0538, her dishonest act would be classified only as Simple
Dishonesty as the same did not cause damage or prejudice to the government and had no direct
relation to or did not involve the duties and responsibilities of the appellant. The same is true with the
falsification she committed, where the information falsified was not related to her
employment.97 (Emphasis supplied)
In Cuerdo v. Commission on Audit,98 this court previously ruled that "it is the general policy of this
Court to sustain the decisions of administrative authorities not only on the basis of the doctrine of
separation of powers but also for their presumed knowledge ability and even expertise in the laws
they are entrusted to enforce."99 The same case also stated that:
. . . . we reaffirmed the oft-repeated rule that findings of administrative agencies are generally
accorded not only respect but also finality when the decision and order . . . are not tainted with
unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. The
findings off acts must be respected, so long as they are supported by substantial evidence even if
not overwhelming or preponderant.100
Petitioner insists that respondent committed serious dishonesty when she submitted the falsified
medical certificate. Under Section 3 of Resolution No. 06-0538, serious dishonesty comprises the
following acts:
Section 3. Serious Dishonesty. The presence of any one of the following attendant circumstances
in the commission of the dishonest act would constitute the offense of Serious Dishonesty:
a. The dishonest act causes serious damage and grave prejudice to the government.
b. The respondent gravely abused his authority in order to commit the dishonest act.
c. Where the respondent is an accountable officer, the dishonest act directly involves
property, accountable forms or money for which he is directly accountable and the
respondent shows an intent to commit material gain, graft and corruption.
d. The dishonest act exhibits moral depravity on the part of the respondent.
e. The respondent employed fraud and/or falsification of official documents in the
commission of the dishonest act related to his/her employment.
f. The dishonest act was committed several times or in various occasions.
g. The dishonest act involves a Civil Service examination, irregularity or fake Civil Service
eligibility such as, but not limited to, impersonation, cheating and use of crib sheets.
h. Other analogous circumstances. (Emphasis supplied)
Simple dishonesty, on the other hand, comprises the following offenses:
Section 5. The presence of any of the following attendant circumstances in the commission of the
dishonest act would constitute the offense of Simple Dishonesty:
a. The dishonest act did not cause damage or prejudice to the government.

b. The dishonest act had no direct relation to or does not involve the duties and
responsibilities of the respondent.
c. In falsification of any official document, where the information falsified is not related to
his/her employment.
d. That the dishonest act did not result in any gain or benefit to the offender.
e. Other analogous circumstances. (Emphasis supplied)
This court previously ruled that "[f]alsification of an official document, as an administrative offense, is
knowingly making false statements in official or public documents." 101 Respondent, in her defense,
states that she merely relied on her Health Maintenance Organizations (HMO) advice that it was
going to issue her a medical certificate after she had gone to the hospital complaining of
hypertension.102 She maintains that she did not know that her medical certificate was falsified. We do
not find this defense credible.
Respondent knew that she was not examined by Dr. Blanco, the medical certificates signatory. She
knew that she would not be able to fully attest to the truthfulness of the information in the certificate.
Despite this, she still submitted the certificate in support of her application for leave.
The Civil Service Commission, however, found that the medical certificate was falsified. Dr. Blanco
repudiated the certificate. Respondent did not present any evidence to defend its validity. Her
application for sick leave, therefore, should not have been granted since it was unaccompanied by
the proper documents. The Commission correctly found respondent guilty of dishonesty.
However, it would be wrong to classify this offense as simple dishonesty.
By law, all employees in the civil service are entitled to leave of absence for a certain number of
days, with or without pay.103 Under Section 1, Rule XVI of the Omnibus Rules Implementing Book V
of the Administrative Code, government employees are entitled to 15 days of sick leave annually
with full pay.
The grant of sick leave with pay is an exception to the principle of "no work, no pay," i.e., entitlement
to compensation only upon actual service rendered. As such, applications for leave must be properly
filled out and filed accordingly. Section 16, Rule XVI of the Omnibus Rules Implementing Book V of
the Administrative Code provides the rules for an application for sick leave:
SECTION 16. All applications for sick leaves of absence for one full day or more shall be on the
prescribed form and shall be filed immediately upon the employee's return from such leave. Notice of
absence, however, should be sent to the immediate supervisor and/or to the office head. Application
for sick leave in excess of five days shall be accompanied by a proper medical certificate.
Respondents application for sick leave, if approved, would allow her to be absent from work without
any deductions from her salary. Being a government employee, respondent would have received her
salaries coming from government funds.
Since her application for sick leave was supported by a false medical certificate, it would have been
improperly filed, which made all of her absences during this period unauthorized. The receipt,
therefore, of her salaries during this period would be tantamount to causing damage or prejudice to
the government since she would have received compensation she was not entitled to receive.

This act of causing damage or prejudice, however, cannot be classified as serious since the
information falsified had no direct relation to her employment. Whether or not she was suffering from
hypertension is a matter that has no relation to the functions of her office.
Given these circumstances, the offense committed can be properly identified as less serious
dishonesty. Under Section 4 of Resolution No. 06-0538, less serious dishonesty is classified by the
following acts:
Section 4. The presence of any one of the following attendant circumstances in the commission of
the dishonest act would constitute the offense of Less Serious Dishonesty:
a. The dishonest act caused damage and prejudice to the government which is not so
serious as to qualify under the immediately preceding classification.
b. The respondent did not take advantage of his/her position in committing the dishonest act.
c. Other analogous circumstances. (Emphasis supplied)
We hold, therefore, that respondent Atty. Aurora A. Salvaa is guilty of less serious dishonesty.
A final note
The records showed that respondent tendered her irrevocable resignation on August 5, 2006.
Petitioners acceptance of respondents resignation was not mentioned in any of the pleadings.
However, the resolution by the Fact-finding Committee stated that "[o]n 16 August 2006, the Office
of the Administrator received the resignation." 104 On the issue of whether respondents resignation
mooted its proceedings, it concluded that:
[I]n the response of the Administrator to the letter of resignation filed by Respondent there was no
unconditional acceptance of the same. In fact it was specified therein that her resignation is "without
prejudice to any appropriate action on any malfeasance or misfeasance committed during her
tenure[."]There can [sic] be no other conclusion from the above that her resignation does not prevent
the administration from proceeding with any charge/s appropriate under the
circumstances.105 (Emphasis in the original)
Resignation from public office, to be effective, requires the acceptance of the proper government
authority. In Republic v. Singun,106 this court stated:
Resignation implies an expression of the incumbent in some form, express or implied, of the
intention to surrender, renounce, and relinquish the office and the acceptance by competent and
lawful authority. To constitute a complete and operative resignation from public office, there must be:
(a) an intention to relinquish a part of the term; (b) an act of relinquishment; and (c) an acceptance
by the proper authority.
....
In our jurisdiction, acceptance is necessary for resignation of a public officer to be operative and
effective. Without acceptance, resignation is nothing and the officer remains in office. Resignation to
be effective must be accepted by competent authority, either in terms or by something tantamount to
an acceptance, such as the appointment of the successor. A public officer cannot abandon his office
before his resignation is accepted, otherwise the officer is subject to the penal provisions of Article

238 of the Revised Penal Code. The final or conclusive act of a resignations acceptance is the
notice of acceptance. The incumbent official would not be in a position to determine the acceptance
of his resignation unless he had been duly notified therefor. 107 (Emphasis supplied)
If there was evidence to show that petitioner did not, in fact, accept respondents resignation, her
resignation would have been ineffective. Respondents continued absence from her post would have
been deemed abandonment from her office, of which she could be criminally charged.
Although the response of Administrator Robles was not attached to the record, it can be concluded
from the resolution of the Fact-finding Committee that he accepted the resignation, albeit with the
qualification that it be "without prejudice to any appropriate action on any malfeasance or
misfeasance committed during her tenure." 108
The qualified acceptance of Administrator Robles, however, did not affect the validity of respondents
resignation. Section 1, Rule XII of the Civil Service Commission Memorandum Circular No. 40,
series of 1998, as amended by Civil Service Commission Memorandum Circular No. 15, series of
1999, requires:
1wphi 1

Sec. 1. Resignation. The following documents shall be submitted to the Commission for record
purposes:
a. The voluntary written notice of the employee informing the appointing authority that he is
relinquishing his position and the efffectivity date of said resignation; and,
b. The acceptance of resignation in writing by the agency head or appointing authority which
shall indicate the date of effectivity of the resignation.
An officer or employee under investigation may be allowed to resign pending decision of his case
without prejudice to the continuation of the proceedings until finally terminated.
The qualification placed by Administrator Robles on his acceptance does not make respondents
resignation any less valid. The rules and regulations allow the acceptance of resignations while the
administrative case is pending provided that the proceedings will still continue.
We also note that the unauthorized absences were incurred after the issuance of Office Order No.
119. Atrespondents refusal to comply, she was administratively charged, which prompted her
resignation from office. If there were irregularities in the issuance of Office Order No. 119, what
respondent should have done would be to occupy the new position and then file the proper
remedies. She should not have defied the orders of her superiors.
Because of her resignation on August 5, 2006, any modification as to the service of her suspension
became moot. Her permanent employment record, however, must reflect the modified penalty.
Considering that she is also a member of the Bar, this court furnishes the Office of the Bar Confidant
with a copy of this decision to initiate the proper disciplinary action against respondent.
WHEREFORE, the petition is GRANTED. The decision dated November 11, 2009 of the Court of
Appeals in CA-G.R. SP. No. 104225 and Resolution No. 071364 dated July 18, 2007 of the Civil
Service Commission is AFFIRMED with the MODIFICATION that respondent, Atty. Aurora A.
Salvaa, is found guilty of Less Serious Dishonesty. The Civil Service Commission is DIRECTED to
attach a copy of this decision to respondent's permanent employment record.

Let a copy of this decision be given to the Office of the Bar Confidant to initiate the proper
disciplinary action against respondent Atty. Aurora A. Salvaa.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-15127

May 30, 1961

EMETERIO CUI, plaintiff-appellant,


vs.
ARELLANO UNIVERSITY, defendant-appellee.
G.A.S. Sipin, Jr., for plaintiff-appellant.
E. Voltaire Garcia for defendant-appellee.
CONCEPCION, J.:
Appeal by plaintiff Emeterio Cui from a decision of the Court of First Instance of Manila, absolving
defendant Arellano University from plaintiff's complaint, with costs against the plaintiff, and
dismissing defendant's counter claim, for insufficiency of proof thereon.
In the language of the decision appealed from:
The essential facts of this case are short and undisputed. As established by the agreement
of facts Exhibits X and by the respective oral and documentary evidence introduced by the
parties, it appears conclusive that plaintiff, before the school year 1948-1949 took up
preparatory law course in the defendant University. After finishing his preparatory law course
plaintiff enrolled in the College of Law of the defendant from the school year 1948-1949.
Plaintiff finished his law studies in the defendant university up to and including the first
semester of the fourth year. During all the school years in which plaintiff was studying law in
defendant law college, Francisco R. Capistrano, brother of the mother of plaintiff, was the
dean of the College of Law and legal counsel of the defendant university. Plaintiff enrolled for
the last semester of his law studies in the defendant university but failed to pay his tuition
fees because his uncle Dean Francisco R. Capistrano having severed his connection with
defendant and having accepted the deanship and chancellorship of the College of Law of
Abad Santos University, plaintiff left the defendant's law college and enrolled for the last
semester of his fourth year law in the college of law of the Abad Santos University graduating
from the college of law of the latter university. Plaintiff, during all the time he was studying
law in defendant university was awarded scholarship grants, for scholastic merit, so that his
semestral tuition fees were returned to him after the ends of semester and when his
scholarship grants were awarded to him. The whole amount of tuition fees paid by plaintiff to
defendant and refunded to him by the latter from the first semester up to and including the
first semester of his last year in the college of law or the fourth year, is in total P1,033.87.
After graduating in law from Abad Santos University he applied to take the bar examination.
To secure permission to take the bar he needed the transcripts of his records in defendant
Arellano University. Plaintiff petitioned the latter to issue to him the needed transcripts. The
defendant refused until after he had paid back the P1,033 87 which defendant refunded to
him as above stated. As he could not take the bar examination without those transcripts,
plaintiff paid to defendant the said sum under protest. This is the sum which plaintiff seeks to
recover from defendant in this case.

Before defendant awarded to plaintiff the scholarship grants as above stated, he was made
to sign the following contract covenant and agreement:
"In consideration of the scholarship granted to me by the University, I hereby waive my right
to transfer to another school without having refunded to the University (defendant) the
equivalent of my scholarship cash.
(Sgd.) Emeterio Cui".
It is admitted that, on August 16, 1949, the Director of Private Schools issued Memorandum No. 38,
series of 1949, on the subject of "Scholarship," addressed to "All heads of private schools, colleges
and universities," reading:
1. School catalogs and prospectuses submitted to this, Bureau show that some schools offer
full or partial scholarships to deserving students for excellence in scholarship or for
leadership in extra-curricular activities. Such inducements to poor but gifted students should
be encouraged. But to stipulate the condition that such scholarships are good only if the
students concerned continue in the same school nullifies the principle of merit in the award of
these scholarships.
2. When students are given full or partial scholarships, it is understood that such
scholarships are merited and earned. The amount in tuition and other fees corresponding to
these scholarships should not be subsequently charged to the recipient students when they
decide to quit school or to transfer to another institution. Scholarships should not be offered
merely to attract and keep students in a school.
3. Several complaints have actually been received from students who have enjoyed
scholarships, full or partial, to the effect that they could not transfer to other schools since
their credentials would not be released unless they would pay the fees corresponding to the
period of the scholarships. Where the Bureau believes that the right of the student to transfer
is being denied on this ground, it reserves the right to authorize such transfer.
that defendant herein received a copy of this memorandum; that plaintiff asked the Bureau of Private
Schools to pass upon the issue on his right to secure the transcript of his record in defendant
University, without being required to refund the sum of P1,033.87; that the Bureau of Private Schools
upheld the position taken by the plaintiff and so advised the defendant; and that, this
notwithstanding, the latter refused to issue said transcript of records, unless said refund were made,
and even recommended to said Bureau that it issue a written order directing the defendant to
release said transcript of record, "so that the case may be presented to the court for judicial action."
As above stated, plaintiff was, accordingly, constrained to pay, and did pay under protest, said sum
of P1,033.87, in order that he could take the bar examination in 1953. Subsequently, he brought this
action for the recovery of said amount, aside from P2,000 as moral damages, P500 as exemplary
damages, P2,000 as attorney's fees, and P500 as expenses of litigation.
In its answer, defendant reiterated the stand it took, vis-a-vis the Bureau of Private Schools, namely,
that the provisions of its contract with plaintiff are valid and binding and that the memorandum
above-referred to is null and void. It, likewise, set up a counterclaim for P10,000.00 as damages,
and P3,000 as attorney's fees.
The issue in this case is whether the above quoted provision of the contract between plaintiff and the
defendant, whereby the former waived his right to transfer to another school without refunding to the

latter the equivalent of his scholarships in cash, is valid or not. The lower court resolved this question
in the affirmative, upon the ground that the aforementioned memorandum of the Director of Private
Schools is not a law; that the provisions thereof are advisory, not mandatory in nature; and that,
although the contractual provision "may be unethical, yet it was more unethical for plaintiff to quit
studying with the defendant without good reasons and simply because he wanted to follow the
example of his uncle." Moreover, defendant maintains in its brief that the aforementioned
memorandum of the Director of Private Schools is null and void because said officer had no
authority to issue it, and because it had been neither approved by the corresponding department
head nor published in the official gazette.
We do not deem it necessary or advisable to consider as the lower court did, the question whether
plaintiff had sufficient reasons or not to transfer from defendant University to the Abad Santos
University. The nature of the issue before us, and its far reaching effects, transcend personal
equations and demand a determination of the case from a high impersonal plane. Neither do we
deem it essential to pass upon the validity of said Memorandum No. 38, for, regardless of the same,
we are of the opinion that the stipulation in question is contrary to public policy and, hence, null and
void. The aforesaid memorandum merely incorporates a sound principle of public policy. As the
Director of Private Schools correctly pointed, out in his letter, Exhibit B, to the defendant,
There is one more point that merits refutation and that is whether or not the contract entered
into between Cui and Arellano University on September 10, 1951 was void as against public
policy. In the case of Zeigel vs. Illinois Trust and Savings Bank, 245 Ill. 180, 19 Ann. Case
127, the court said: 'In determining a public policy of the state, courts are limited to a
consideration of the Constitution, the judicial decisions, the statutes, and the practice of
government officers.' It might take more than a government bureau or office to lay down or
establish a public policy, as alleged in your communication, but courts consider the practices
of government officials as one of the four factors in determining a public policy of the state. It
has been consistently held in America that under the principles relating to the doctrine of
public policy, as applied to the law of contracts, courts of justice will not recognize or uphold
a transaction which its object, operation, or tendency is calculated to be prejudicial to the
public welfare, to sound morality or to civic honesty (Ritter vs. Mutual Life Ins. Co., 169 U.S.
139; Heding vs. Gallaghere 64 L.R.A. 811; Veazy vs. Allen, 173 N.Y. 359). If Arellano
University understood clearly the real essence of scholarships and the motives which
prompted this office to issue Memorandum No. 38, s. 1949, it should have not entered into a
contract of waiver with Cui on September 10, 1951, which is a direct violation of our
Memorandum and an open challenge to the authority of the Director of Private Schools
because the contract was repugnant to sound morality and civic honesty. And finally, in
Gabriel vs. Monte de Piedad, Off. Gazette Supp. Dec. 6, 1941, p. 67 we read: 'In order to
declare a contract void as against public policy, a court must find that the contract as to
consideration or the thing to be done, contravenes some established interest of society, or
is inconsistent with sound policy and good morals or tends clearly to undermine the security
of individual rights. The policy enunciated in Memorandum No. 38, s. 1949 is sound
policy. Scholarship are awarded in recognition of merit not to keep outstanding students in
school to bolster its prestige. In the understanding of that university scholarships award is a
business scheme designed to increase the business potential of an education institution.
Thus conceived it is not only inconsistent with sound policy but also good morals. But what is
morals? Manresa has this definition. It is good customs; those generally accepted principles
of morality which have received some kind of social and practical confirmation. The practice
of awarding scholarships to attract students and keep them in school is not good customs
nor has it received some kind of social and practical confirmation except in some private
institutions as in Arellano University. The University of the Philippines which implements
Section 5 of Article XIV of the Constitution with reference to the giving of free scholarships to
gifted children, does not require scholars to reimburse the corresponding value of the

scholarships if they transfer to other schools. So also with the leading colleges and
universities of the United States after which our educational practices or policies are
patterned. In these institutions scholarships are granted not to attract and to keep brilliant
students in school for their propaganda mine but to reward merit or help gifted students in
whom society has an established interest or a first lien. (Emphasis supplied.)
WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered
sentencing the defendant to pay to the plaintiff the sum of P1,033.87, with interest thereon at the
legal rate from September 1, 1954, date of the institution of this case, as well as the costs, and
dismissing defendant's counterclaim. It is so ordered.
Bengzon, C.J., Padilla, Labrador, Reyes, J.B.L., Barrera, Parades, Dizon, De Leon and Natividad,
JJ., concur.
Bautista Angelo, J., reserves his vote.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 79269

June 5, 1991

PEOPLE OF THE PHILIPPINES, petitioner,


vs.
HON. PROCORO J. DONATO, in his official capacity as Presiding Judge, Regional Trial Court,
Branch XII, Manila; RODOLFO C. SALAS, alias Commander Bilog, respondents.
The Solicitor General for petitioner.
Jose Suarez, Romeo Capulong, Efren Mercado and Movement of Attorneys for Brotherhood,
Integrity, Nationalism, Inc. (MABINI) for Rodolfo Salas.

DAVIDE, JR., J.:


The People of the Philippines, through the Chief State Prosecutor of the Department of Justice, the
City Fiscal of Manila and the Judge Advocate General, filed the instant petition for certiorari and
prohibition, with a prayer for restraining order/preliminary injunction, to set aside the order of
respondent Judge dated July 7, 1987 granting bail to the accused Rodolfo Salas alias "Commander
Bilog" in Criminal Case No. 86-48926 for Rebellion,1 and the subsequent Order dated July 30, 1987
granting the motion for reconsideration of 16 July 1987 by increasing the bail bond from P30,000.00
to P50,000.00 but denying petitioner's supplemental motion for reconsideration of July 17, 1987
which asked the court to allow petitioner to present evidence in support of its prayer for a
reconsideration of the order of 7 July 1987.
The pivotal issues presented before Us are whether the right to bail may, under certain
circumstances, be denied to a person who is charged with an otherwise bailable offense, and
whether such right may be waived.
The following are the antecedents of this petition:
In the original Information2 filed on 2 October 1986 in Criminal Case No. 86-48926 of the Regional
Trial Court of Manila, later amended in an Amended Information3 which was filed on 24 October
1986, private respondent Rodolfo Salas, alias "Commander Bilog", and his co-accused were
charged for the crime of rebellion under Article 134, in relation to Article 135, of the Revised Penal
Code allegedly committed as follows:
That in or about 1968 and for some time before said year and continuously thereafter until
the present time, in the City of Manila and elsewhere in the Philippines, the Communist Party
of the Philippines, its military arm, the New People's Army, its mass infiltration network, the
National Democratic Front with its other subordinate organizations and fronts, have, under
the direction and control of said organizations' leaders, among whom are the aforenamed
accused, and with the aid, participation or support of members and followers whose
whereabouts and identities are still unknown, risen publicly and taken arms throughout the

country against the Government of the Republic of the Philippines for the purpose of
overthrowing the present Government, the seat of which is in the City of Manila, or of
removing from the allegiance to that government and its laws, the country's territory or part of
it;
That from 1970 to the present, the above-named accused in their capacities as leaders of
the aforenamed organizations, in conspiracy with, and in support of the cause of, the
organizations aforementioned, engaged themselves in war against the forces of the
government, destroying property or committing serious violence, and other acts in the pursuit
of their unlawful purpose, such as . . .
(then follows the enumeration of specific acts committed before and after February 1986).
At the time the Information was filed the private respondent and his co-accused were in military
custody following their arrest on 29 September 1986 at the Philippine General Hospital, Taft Ave.,
Manila; he had earlier escaped from military detention and a cash reward of P250,000.00 was
offered for his
capture.4
A day after the filing of the original information, or on 3 October 1986, a petition for habeas
corpus for private respondent and his co-accused was filed with this Court5 which, as shall hereafter
be discussed in detail, was dismissed in Our resolution of 16 October 1986 on the basis of the
agreement of the parties under which herein private respondent "will remain in legal custody and will
face trial before the court having custody over his person" and the warrants for the arrest of his coaccused are deemed recalled and they shall be immediately released but shall submit themselves to
the court having jurisdiction over their person.
On November 7, 1986 , private respondent filed with the court below a Motion to Quash the
Information alleging that: (a) the facts alleged do not constitute an offense; (b) the Court has no
jurisdiction over the offense charged; (c) the Court has no jurisdiction over the persons of the
defendants; and (d) the criminal action or liability has been extinguished, 6 to which petitioner filed an
Opposition7 citing, among other grounds, the fact that in the Joint Manifestation and Motion dated
October 14, 1986, in G.R. No. 76009, private respondent categorically conceded that:
xxx

xxx

xxx

Par. 2 (B) Petitioner Rodolfo Salas will remain in legal custody and face trial before the
court having custody over his person.
In his Order of March 6, 1987,8 respondent Judge denied the motion to quash.
Instead of asking for a reconsideration of said Order, private respondent filed on 9 May 1987 a
petition for bail,9which herein petitioner opposed in an Opposition filed on 27 May 1987 10 on the
ground that since rebellion became a capital offense under the provisions of P.D. Nos. 1996, 942
and 1834, which amended Article 135 of the Revised Penal Code, by imposing the penalty
of reclusion perpetua to death on those who promote, maintain, or head a rebellion the accused is
no longer entitled to bail as evidence of his guilt is strong.
On 5 June 1987 the President issued Executive Order No. 187 repealing, among others, P.D. Nos.
1996, 942 and 1834 and restoring to full force and effect Article 135 of the Revised Penal Code as it
existed before the amendatory decrees. Thus, the original penalty for rebellion, prision mayor and a
fine not to exceed P20,000.00, was restored.

Executive Order No. 187 was published in the Official Gazette in its June 15, 1987 issue (Vol. 83,
No. 24) which was officially released for circulation on June 26, 1987.
In his Order of 7 July 198711 respondent Judge, taking into consideration Executive Order No. 187,
granted private respondent's petition for bail, fixed the bail bond at P30,000.00 and imposed upon
private respondent the additional condition that he shall report to the court once every two (2)
months within the first ten (10) days of every period thereof. In granting the petition respondent
Judge stated:
. . . There is no more debate that with the effectivity of Executive Order No. 187, the offense
of rebellion, for which accused Rodolfo Salas is herein charged, is now punishable with the
penalty of prision mayor and a fine not exceeding P20,000.00, which makes it now bailable
pursuant to Section 13, Article III, 1986 Constitution and Section 3, Rule 114, 1985 Rules of
Criminal Procedure. Unlike the old rule, bail is now a matter of right in non-capital offenses
before final judgment. This is very evident upon a reading of Section 3, Rule 114,
aforementioned, in relation to Section 21, same rule. In view, therefore, of the present
circumstances in this case, said accused-applicant is now entitled to bail as a matter of right
inasmuch as the crime of rebellion ceased to be a capital offense.
As to the contention of herein petitioner that it would be dangerous to grant bail to private
respondent considering his stature in the CPP-NPA hierarchy, whose ultimate and overriding goal is
to wipe out all vestiges of our democracy and to replace it with their ideology, and that his release
would allow his return to his organization to direct its armed struggle to topple the government before
whose courts he invokes his constitutional right to bail, respondent Judge replied:
True, there now appears a clash between the accused's constitutional right to bail in a noncapital offense, which right is guaranteed in the Bill of Rights and, to quote again the
prosecution, "the existence of the government that bestows the right, the paramount interest
of the state." Suffice to state that the Bill of Rights, one of which is the right to bail, is a
"declaration of the rights of the individual, civil, political and social and economic, guaranteed
by the Constitution against impairment or intrusion by any form of governmental action.
Emphasis is placed on the dignity of man and the worth of individual. There is recognition of
certain inherent and inalienable rights of the individual, which the government is prohibited
from violating" (Quisumbing-Fernando, Philippine Constitutional Law, 1984 Edition, p. 77).
To this Court, in case of such conflict as now pictured by the prosecution, the same should
be resolved in favor of the individual who, in the eyes of the law, is alone in the assertion of
his rights under the Bill of Rights as against the State. Anyway, the government is that
powerful and strong, having the resources, manpower and the wherewithals to fight those
"who oppose, threathen (sic) and destroy a just and orderly society and its existing civil and
political institutions." The prosecution's fear may or may not be founded that the accused
may later on jump bail and rejoin his comrades in the field to sow further disorders and
anarchy against the duly constituted authorities. But, then, such a fear can not be a reason to
deny him bail. For the law is very explicit that when it comes to bailable offenses an accused
is entitled as a matter of light to bail.Dura est lex sed lex.
In a motion to reconsider12 the above order filed on 16 July 1987, petitioner asked the court to
increase the bail from P30,000.00 to P100,000.00 alleging therein that per Department of Justice
Circular No. 10 dated 3 July 1987, the bail for the, provisional release of an accused should be in an
amount computed at P10,000.00 per year of imprisonment based on the medium penalty imposable
for the offense and explaining that it is recommending P100,000.00 because the private respondent
"had in the past escaped from the custody of the military authorities and the offense for which he is
charged is not an ordinary crime, like murder, homicide or robbery, where after the commission, the

perpetrator has achieved his end" and that "the rebellious acts are not consummated until the wellorganized plan to overthrow the government through armed struggle and replace it with an alien
system based on a foreign ideology is attained."
On 17 July 1987, petitioner filed a supplemental motion for reconsideration 13 indirectly asking the
court to deny bail to the private respondent and to allow it to present evidence in support thereof
considering the "inevitable probability that the accused will not comply with this main condition of his
bail to appear in court for trial," a conclusion it claims to be buttressed "by the following facts
which are widely known by the People of the Philippines and which this Honorable Court may have
judicial notice of:
1. The accused has evaded the authorities for thirteen years and was an escapee from
detention when arrested;
2. He was not arrested at his residence as he had no known address;
3. He was using the false name "Manuel Mercado Castro" at the time of his arrest and
presented a Driver's License to substantiate his false identity;
4. The address he gave "Panamitan, Kawit, Cavite," turned out to be also a false address;
5. He and his companions were on board a private vehicle with a declared owner whose
identity and address were also found to be false;
6. Pursuant to Ministry Order No. 1-A dated 11 January 1982 , a reward of P250,000.00 was
offered and paid for his arrest,
which "clearly indicate that the accused does not entertain the slightest intention to appear in court
for trial, if released." Petitioner further argues that the accused, who is the Chairman of the
Communist Party of the Philippines and head of its military arm, the NPA, together with his followers,
are now engaged in an open warfare and rebellion against this government and threatens the
existence of this very Court from which he now seeks provisional release," and that while he is
entitled to bail as a matter of right in view of Executive Order No. 187 which restored the original
penalty for rebellion under Article 135 of the Revised Penal Code, yet, when the interest of the State
conflicts with that of an individual, that of the former prevails for "the right of the State of selfpreservation is paramount to any of the rights of an individual enshrined in the Bill of Rights of the
Constitution." Petitioner further invokes precedents in the United States of America holding "that
there is no absolute constitutional barrier to detention of potentially dangerous resident aliens
pending deportation proceedings,14 and that an arrestee may be incarcerated until trial as he
presents a risk of flight;15 and sustaining a detention prior to trial of arrestee charged with serious
felonies who are found after an adversary hearing to pose threat to the safety of individuals and to
the community which no condition of release can dispel.16
On 30 July 1987 respondent Judge handed down the Order 17 adverted to in the introductory portion
of this decision the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing considerations, the Court finds the
"supplemental" motion for reconsideration to be without merit and hereby denies it but finds
the first motion for reconsideration to be meritorious only insofar as the amount of bail is
concerned and hereby reconsiders its Order of July 7, 1987 only to increase the amount of
bail from P30,000.00 to P50,000.00, subject to the approval of this Court, and with the
additional condition that accused Rodolfo Salas shall report to the court once every two (2)

months within the first ten (10) days of every period thereof (Almendras vs. Villaluz, et al., L31665, August 6, 1975, 66 SCRA 58).
In denying the supplemental motion for reconsideration the respondent Judge took into account the
"sudden turn-about" on the part of the petitioner in that a day earlier it filed a motion for
reconsideration wherein it conceded the right of the private respondent to bail but merely asked to
increase the amount of bail; observed that it is only a reiteration of arguments in its opposition to the
petition for bail of 25 May 1987; asserted that the American precedents are not applicable since the
cases involved deportation of aliens and, moreover, the U.S. Federal Constitution does not contain a
proviso on the right of an accused to bail in bailable offenses, but only an injunction against
excessive bail; and quoted the concurring opinion of the late Justice Pedro Tuason in the cases of
Nava, et al. vs. Gatmaitan, L-4853, Hernandez vs. Montesa, L-4964 and Angeles vs. Abaya, L-5108,
October 11, 1951, 90 Phil, 172.
Unable to agree with said Order, petitioner commenced this petition submitting therein the following
issues:
THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED WITH GRAVE
ABUSE OF DISCRETION AND IN EXCESS OF HIS JURISDICTION, AND IN TOTAL
DISREGARD OF THE PREVAILING REALITIES, WHEN HE DENIED PETITIONER'S
SUPPLEMENTAL MOTION FOR RECONSIDERATION WITH PRAYER TO BE GIVEN THE
OPPORTUNITY TO ADDUCE EVIDENCE IN SUPPORT OF ITS OPPOSITION TO THE
GRANT OF BAIL TO THE RESPONDENT RODOLFO SALAS.
THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED WITH GRAVE
ABUSE OF DISCRETION AND IN EXCESS OF HIS JURISDICTION WHEN HE GRANTED
BAIL TO THE RESPONDENT RODOLFO SALAS.
in support of which petitioner argues that private respondent is estopped from invoking his right to
bail, having expressly waived it in G.R. No. 76009 when he agreed to "remain in legal custody and
face trial before the court having custody of his person" in consideration of the recall of the warrant
of arrest for his co-petitioners Josefina Cruz and Jose Concepcion; and the right to bail, even in noncapital offenses, is not absolute when there is prima facie evidence that the accused is a serious
threat to the very existence of the State, in which case the prosecution must be allowed to present
evidence for the denial of bail. Consequently, respondent Judge acted with grave abuse of discretion
when he did not allow petitioner to present all the evidence it may desire to support its prayer for the
denial of bail and when he declared that the State has forfeited its right to do so since during all the
time that the petition for bail was pending, it never manifested, much less hinted, its intention to
adduce such evidence. And that even if release on bail may be allowed, respondent judge, in fixing
the amount of bail at P50,000.00 (originally P30,000.00 only), failed to take into account the lengthy
record of private respondents' criminal background, the gravity of the pending charge, and the
likelihood of flight.18
In Our resolution of 11 August 198719 We required the respondents to comment on the petition and
issued a Temporary Restraining Order ordering respondent Judge to cease and desist from
implementing his order of 30 July 1987 granting bail to private respondent in the amount of
P50,000.00.
In his Comment filed on 27 August 1987,20 private respondent asks for the outright dismissal of the
petition and immediate lifting of the temporary restraining order on the following grounds:
I

RESPONDENT SALAS NEVER WAIVED HIS RIGHT TO BAIL; NEITHER IS HE


ESTOPPED FROM ASSERTING SAID RIGHT. ON THE CONTRARY IT IS PETITIONER
WHO IS ESTOPPED FROM RAISING THE SAID ISSUE FOR THE FIRST TIME ON
APPEAL.
II
RESPONDENT SALAS ENJOYS NOT ONLY THE CONSTITUTIONAL RIGHT TO BE
PRESUMED INNOCENT BUT ALSO THE RIGHT TO BAIL.
III
RESPONDENT SALAS IS NOT CHARGED WITH A CAPITAL OFFENSE (RECLUSION
PERPETUA), HENCE HE HAS THE RIGHT TO BAIL AS MANDATED BY THE
CONSTITUTION.
IV
THE ORDER OF JULY 30, 1987 DENYING PETITIONER OPPORTUNITY TO PRESENT
EVIDENCE IS CORRECT. PETITIONER'S ALLEGED RIGHT TO PRESENT EVIDENCE IS
NON-EXISTENT AND/OR HAD BEEN WAIVED.
V
THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER IN THIS CASE VIOLATES
NOT ONLY RESPONDENT SALAS' RIGHT TO BAIL BUT ALSO HIS OTHER
CONSTITUTIONAL RIGHT TO DUE PROCESS.
We required the petitioner to reply to the comment of private respondent. 21 The reply was filed on 18
September 1987.22
In Our resolution of 15 October 198723 We gave due course to the petition and required the parties to
file simultaneously their memoranda within twenty days from notice.
In their respective manifestations and motions dated 5 November 24 and 23 November
198725 petitioner and private respondents asked to be excused from filing their Memoranda and that
the petition and reply be considered as the Memorandum for petitioner and the Comment as the
Memorandum for private respondent, which We granted in Our resolution of 19 November
198726 and 1 December 1987,27 respectively.
In Our resolution of 14 September 1989 We required the Solicitor General to express his stand on
the issues raised in this petitions,28 which he complied with by filing his Manifestation on 30 May
199029 wherein he manifests that he supports the petition and submits that the Order of respondent
Judge of July 7, July 17 and July 30, 1987 should be annulled and set aside asserting that private
respondent had waived the light to bail in view of the agreement in G.R. No. 76009; that granting bail
to him is accepting wide-eyed his undertaking which he is sure to break; in determining bail, the
primary consideration is to insure the attendance of the accused at the trial of the case against him
which would be frustrated by the "almost certainty that respondent Salas will lump bail of whatever
amount"; and application of the guidelines provided for in Section 10 of Rule 114, 1985 Rules on
Criminal Procedure on the amount of bail dictates denial of bail to private respondent. The Solicitor

General likewise maintains that the right of the petitioner to hearing on the application of private
respondent for bail cannot be denied by respondent Judge.
And now on the issues presented in this case.
I.
Unquestionably, at the time the original and the amended Informations for rebellion and the
application for bail were filed before the court below the penalty imposable for the offense for which
the private respondent was charged was reclusion perpetua to death. During the pendency of the
application for bail Executive Order No. 187 was issued by the President, by virtue of which the
penalty for rebellion as originally provided for in Article 135 of the Revised Penal Code was restored.
The restored law was the governing law at the time the respondent court resolved the petition for
bail.
We agree with the respondent court that bail cannot be denied to the private respondent for he is
charged with the crime of rebellion as defined in Article 134 of the Revised Penal Code to which is
attached the penalty ofprision mayor and a fine not exceeding P20,000.00.30 It is, therefore,
a bailable offense under Section 13 of Article III of the 1987 Constitution which provides thus:
Sec. 13. 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 prescribed by law. The right to bail shall
not be impaired even when the privilege of the writ ofhabeas corpus is suspended.
Excessive bail shall not be required.
Section 3, Rule 114 of the Rules of Court, as amended, also provides:
Bail, a matter of right: exception. All persons in custody shall, before final conviction, be
entitled to bail as a matter of right, except those charged with a capital offense or an offense
which, under the law at the time of its commission and at the time of the application for bail,
is punishable by reclusion perpetua, when evidence of guilt is strong.
Therefore, before conviction bail is either a matter of right or of discretion. It is a matter of right when
the offense charged is punishable by any penalty lower than reclusion perpetua.31 To that extent the
right is absolute.32
And so, in a similar case for rebellion, People vs. Hernandez, et al., 99 Phil. 515, despite the fact
that the accused was already convicted, although erroneously, by the trial court for the complex
crime of rebellion with multiple murders, arsons and robberies, and sentenced to life imprisonment,
We granted bail in the amount of P30,000.00 during the pendency of his appeal from such
conviction. To the vigorous stand of the People that We must deny bail to the accused because the
security of the State so requires, and because the judgment of conviction appealed from indicates
that the evidence of guilt of Hernandez is strong, We held:
. . . Furthermore, individual freedom is too basic, too transcendental and vital in a republican
state, like ours, to be derived upon mere general principles and abstract consideration of
public safety. Indeed, the preservation of liberty is such a major preoccupation of our political
system that, not satisfied with guaranteeing its enjoyment in the very first paragraph of
section (1) of the Bill of Rights, the framers of our Constitution devoted paragraphs (3), (4),
(5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (17), (18), and (21) of said section (1) to the
protection of several aspects of freedom.

The 1987 Constitution strengthens further the right to bail by explicitly providing that it shall not be
impaired even when the privilege of the writ of habeas corpus is suspended. This overturns the
Court's ruling in Garcia-Padilla vs. Enrile, et al., supra., to wit:
The suspension of the privilege of the writ of habeas corpus must, indeed, carry with it the
suspension of the right to bail, if the government's campaign to suppress the rebellion is to
be enhanced and rendered effective. If the right to bail may be demanded during the
continuance of the rebellion, and those arrested, captured and detained in the course thereof
will be released, they would, without the least doubt, rejoin their comrades in the field thereby
jeopardizing the success of government efforts to bring to an end the invasion, rebellion or
insurrection.
Upon the other hand, if the offense charged is punishable by reclusion perpetua bail becomes a
matter of discretion. It shall be denied if the evidence of guilt is strong. The court's discretion is
limited to determining whether or not evidence of guilt is strong. 33 But once it is determined that the
evidence of guilt is not strong, bail also becomes a matter of right. In Teehankee vs. Director of
Prisons, supra., We held:
The provision on bail in our Constitution is patterned after similar provisions contained in the
Constitution of the United States and that of many states of the Union. And it is said that:
The Constitution of the United States and the constitution of the many states provide
that all persons shall be bailable by sufficient sureties, except for capital offenses,
where the proof is evident or the presumption of guilt is great, and, under such
provisions, bail is a matter of right which no court or judge can properly refuse, in all
cases not embraced in the exceptions. Under such provisions bail is a matter of right
even in cases of capital offenses, unless the proof of guilt is evident or the
presumption thereof is great!34
Accordingly, the prosecution does not have the right to present evidence for the denial of bail
in the instances where bail is a matter of right. However, in the cases where the grant of bail
is discretionary, due process requires that the prosecution must be given an opportunity to
present, within a reasonable time, all the evidence that it may desire to introduce before the
court should resolve the motion for bail.35
We agree, however, with petitioner that it was error for the respondent court to fix the bond at
P30,000.00, then later at P50,000.00 without hearing the prosecution. The guidelines for the
fixing of the amount of bail provided for in Section 10 of Rule 114 of the Rules of Court are
not matters left entirely to the discretion of the court. As We stated in People vs. Dacudao, et
al., 170 SCRA, 489, 495:
Certain guidelines in the fixing of a bailbond call for the presentation of evidence and
reasonable opportunity for the prosecution to refute it. Among them are the nature
and circumstances of the crime, character and reputation of the accused, the weight
of the evidence against him, the probability of the accused appearing at the trial,
whether or not the accused is a fugitive from justice, and whether or not the accused
is under bond in other case. . . .
In the instant case petitioner has sufficiently made out allegations which necessitate a grant
of an opportunity to be heard for the purpose of determining the amount of bail, but not for
the denial thereof because aforesaid Section 10 of Rule 114 does not authorize any court to
deny bail.

II.
It must, however, be stressed that under the present state of the law, rebellion is no longer
punishable byprision mayor and fine not exceeding P20,000.00. Republic Act No. 6968
approved on 24 October 1990 and which took effect after publication in at least two
newspapers of general circulation, amended, among others, Article 135 of the Revised Penal
Code by increasing the penalty for rebellion such that, as amended, it now reads:
Article 135. Penalty for rebellion, insurrection or coup d'etat. Any person who
promotes, maintains, or heads a rebellion or insurrection shall suffer the penalty
of reclusion perpetua.
Any person merely participating or executing the commands of others in a rebellion
or insurrection shall suffer the penalty of reclusion perpetua.
xxx

xxx

xxx

This amendatory law cannot apply to the private respondent for acts allegedly committed
prior to its effectivity. It is not favorable to him. "Penal laws shall have a retroactive effect
insofar as they favor the person guilty of a felony, who is not a habitual criminal, as this term
is defined in Rule 5 of Article 62 of this Code, although at the time of the publication of such
laws a final sentence has been pronounced and the convict is serving the same. 36
III.
We agree with Petitioner that private respondent has, however, waived his right to bail in
G.R. No. 76009.
On 3 October 1986, or the day following the filing of the original information in Criminal Case
No. 86-48926 with the trial court, a petition for habeas corpus for herein private respondent,
and his co-accused Josefina Cruz and Jose Concepcion, was filed with this Court by Lucia
Cruz, Aida Concepcion Paniza and Beatriz Salas against Juan Ponce Enrile, Gen. Fidel
Ramos, Brig. Gen. Renato de Villa, Brig. Gen. Ramon Montao, and Col. Saldajeno praying,
among others, that the petition be given due course and a writ ofhabeas corpus be issued
requiring respondents to produce the bodies of herein private respondent and his coaccused before the Court and explain by what authority they arrested and detained them.
The following proceedings took place thereafter in said case:
1. In a resolution of 7 October 1986 We issued a writ of habeas corpus, required
respondents to make a return of the writ on or before the close of office hours on 13 October
and set the petition for hearing on 14 October 1986 at 10:00 o'clock in the morning.
2. On 13 October 1986 respondents, through the Office of the Solicitor General, filed a
Return To The Writ of Habeas Corpus alleging therein that private respondent and Josefina
Cruz alias "Mrs. Mercado", and Jose Milo Concepcion alias "Eugene Zamora" were
apprehended by the military on September 29, 1986 in the evening at the Philippine General
Hospital Compound at Taft Ave., Mangga being leaders or members of the Communist Party
of the Philippines, New People's Army and National Democratic Front, organizations
dedicated to the overthrow of the Government through violent means, and having actually
committed acts of rebellion under Article 134 of the Revised Penal Code, as amended. After
their arrest they were forthwith charged with rebellion before Branch XII of the Regional Trial
Court, National Capital Region in Criminal Case No. 86-48926 and on 3 October warrants for

their arrest were issued and respondents continue to detain them because of the warrants of
arrest and the pendency of the criminal cases against them. Respondents further allege that,
contrary to the allegation in the petition, herein private respondent was not a member of the
NDF panel involved in peace negotiations with the Government; neither is he and his
companions Cruz and Concepcion covered by any, safe conduct pass issued by competent
authorities.
3. At the hearing on 14 October 1986 the parties informed the Court of certain agreements
reached between them. We issued a resolution reading as follows:
When this case was called for hearing this morning, Attorneys Romeo Capulong,
Arno V. Sanidad, Efren H. Mercado, Edgardo Pamin-tuan, Casiano Sabile, Ramon
Cura, and William Chua appeared for the petitioners with Atty. Capulong arguing for
the petitioners. Solicitor General Sedfrey Ordonez, Assistant Solicitor General
Romeo C. de la Cruz and Trial Attorney Josue E. Villanueva appeared for the
respondents, with Solicitor General Ordoez arguing for the respondents.
Petitioners' counsel, Atty. Romeo Capulong, manifested in open Court that in
conformity with the agreement reached with the government, the petition for habeas
corpus will be withdrawn with detainee Rodolfo Salas to remain under custody,
whereas his co-detainees Josefina Cruz and Jose Milo Concepcion will be released
immediately.
Solicitor General Sedfrey Ordoez, also in open Court, confirmed the foregoing
statement made by petitioners' counsel regarding the withdrawal of the petition
for habeas corpus, declaring that no objection will be interposed to the immediate
release of detainees Josefina Cruz and Jose Milo Concepcion, and that no bond will
be required of them, but they will continue to face trial with their co-accused, Rodolfo
Salas; further, that they will not be rearrested on the basis of the warrants issued by
the trial court provided that they manifest in open Court their willingness to subject
themselves to the jurisdiction of the Court and to appear in court when their presence
is required.
In addition, he stated that he is willing to confer with petitioners' counsel today
relative to the compromise agreement that they have previously undertaken to
submit.
Upon manifestation of petitioners' counsel, Atty. Romeo Capulong, that on his oath
as member of the Bar, the detainees Josefina Cruz and Jose Milo Concepcion have
agreed to subject themselves to the jurisdiction of the trial court, the Court ordered
their immediate release.
Thereafter, the Court approved the foregoing manifestations and statements and
required both parties to SUBMIT to the Court their compromise agreement by 4:00
o'clock this afternoon. Teehankee, C.J., is on official leave.
4. At 3:49 o'clock in the afternoon of 14 October 1986 the parties submitted a Joint
Manifestation and Motion duly signed by Atty. Romeo Capulong, counsel for petitioners, and
Solicitor General Sedfrey Ordoez, Assistant Solicitor General Romeo C. de la Cruz and
Trial Attorney Josue S. Villanueva, counsel for respondents, which reads as follows:

COME NOW petitioners and the respondents, assisted by their respective counsel,
and to this Honorable Tribunal respectfully manifest:
1. That in the discussion between Romeo Capulong, petitioners' counsel, and
Solicitor General Sedfrey A. Ordoez on October 13, 1986 exploratory talks were
conducted to find out how the majesty of the law may be preserved and human
considerations may be called into play.
2. That in the conference both counsel agreed to the following terms of agreement:
a. The petition for habeas corpus will be withdrawn by petitioners and
Josefina Cruz and Jose Milo Concepcion will be immediately released but
shall appear at the trial of the criminal case for rebellion (People v. Rodolfo
Salas, et al., Criminal Case No. 4886 [should be 86-48926], Regional Trial
Court, National Capital Judicial Region) filed against them under their
personal recognizance.
b. Petitioner Rodolfo Salas will remain in legal custody and face trial before
the court having custody over his person.
c. The warrant of arrest for the persons of Josefina Cruz and Jose Milo
Concepcion is hereby deemed recalled in view of formal manifestation before
the Supreme Court that they will submit themselves to the court having
jurisdiction over their person.
3. That on October 14, the Solicitor General was able to obtain the conformity of the
Government to the foregoing terms which were likewise accepted by petitioner (sic)
and their counsel of record.
4. That the two counsel submitted their oral manifestation during the hearing on
October 14 and the present manifestation in compliance with the resolution
announced in court this morning.
WHEREFORE, it is prayed that the petition for habeas corpus be dismissed.
5. On 16 October 1986 We issued the following resolution:
G.R. No. 76009 [In the Matter of the Petition for Habeas Corpus of Rodolfo Salas,
Josefina Cruz and Jose Milo Concepcion, et al. v. Hon. Juan Ponce Enrile, Gen.
Fidel V. Ramos, Brig. Gen. Renato de Villa, Brig. Gen. Ramon Montao and Col.
Virgilio Saldajeno] considering the Joint Manifestation and Motion dated October 14,
1986 filed by Attorneys Romeo Capulong, Arno V. Sanidad, Efren H. Mercado and
Ricardo Fernandez, Jr. as counsel for petitioners and Solicitor General Sedfrey A.
Ordonez and Assistant Solicitor General Romeo C. de la Cruz and Trial Attorney
Josue S. Villanueva as counsel for respondents which states that they have entered
into an agreement whereby: [a] the petition for habeas corpus will be withdrawn by
petitioners, and Josefina Cruz and Jose Milo Concepcion will be immediately
released but shall appear at the trial of the criminal case for rebellion [People vs.
Rodolfo Salas, et al., Criminal Case No. 4886, Regional Trial Court, National Capital
Judicial Region, Branch XII, Manila], filed against them, on their personal
recognizance; [b] petitioner Rodolfo Salas will remain in legal custody and face trial
before the court having custody over his person; and [c] the warrant of arrest for the

person of Josefina Cruz and Jose Milo Concepcion is hereby deemed recalled in
view of the formal manifestation before this Court that they will submit themselves to
the court having jurisdiction over their person and in view of the said agreement, the
petition for habeas corpus be dismissed, the Court Resolved to DISMISS the petition
for habeas corpus but subject to the condition that petitioners' lead counsel, Atty.
Capulong, upon his oath as member of the Bar, shall abide by his commitment to
ensure the appearance of Josefina Cruz and Jose Milo Concepcion at the trial of the
criminal case for rebellion filed against them. Teehankee,C.J., is on official leave.
It is the stand of the petitioner that private respondent, "in agreeing to remain in legal custody even
during the pendency of the trial of his criminal case, [he] has expressly waived his right to
bail."37 Upon the other hand, private respondent asserts that this claim is totally devoid of factual and
legal basis, for in their petition for habeas corpus they precisely questioned the legality of the arrest
and the continued detention of Rodolfo Salas, Josefina Cruz and Jose Milo Concepcion, which was
not resolved by this Court or by the compromise agreement of the parties but left open for further
determination in another proceeding. Moreover, the matter of the right to bail was neither raised by
either party nor resolved by this Court, and the legal steps promptly taken by private respondent
after the agreement was reached, like the filing of the motion to quash on 7 November 1986 and the
petition for bail on 14 May 1987, were clear and positive assertions of his statutory and constitutional
rights to be granted not only provisional but final and permanent liberty. Finally, private respondent
maintains that the term "legal custody" as used in the Joint Manifestation and Motion simply means
that private respondent agreed to continue to be in the custody of the law or in custodia legis and
nothing else; it is not to be interpreted as waiver.
Interestingly, private respondent admits that:
"Custody" has been held to mean nothing less than actual imprisonment. It is also defined as
the detainer of a person by virtue of a lawful authority, or the "care and possession of a thing
or person." (Bouviers Law Dictionary, Third Ed, Vol. I, pp. 741-742 citing Smith v. Com. 59
Pa. 320 and Rolland v. Com. 82 Pa. 306)
He further admits that, in the light of Section 1 of Rule 114 of the Rules of Court and settled
jurisprudence, the "constitutional right to bail is subject to the limitation that the person applying for
admission to bail should be in the custody of the law or otherwise deprived of his liberty." 38
When the parties in G.R. No. 76009 stipulated that:
b. Petitioner Rodolfo Salas will remain in legal custody and face trial before the court having
custody over his person.
they simply meant that Rodolfo Salas, herein respondent, will remain in actual physical custody of
the court, or in actual confinement or detention, as distinguished from the stipulation concerning his
co-petitioners, who were to be released in view of the recall of the warrants of arrest against them;
they agreed, however, "to submit themselves to the court having jurisdiction over their persons."
Note should be made of the deliberate care of the parties in making a fine distinction between legal
custody and court having custody over the person in respect to Rodolfo Salas and court having
jurisdiction over the persons of his co-accused. Such a fine distinction was precisely intended to
emphasize the agreement that Rodolfo Salas will not be released, but should remain in custody. Had
the parties intended otherwise, or had this been unclear to private respondent and his counsel, they
should have insisted on the use of a clearer language. It must be remembered that at the time the
parties orally manifested before this Court on 14 October 1986 the terms and conditions of their
agreement and prepared and signed the Joint Manifestation and Motion, a warrant of arrest had

already been issued by the trial court against private respondent and his co-accused. The stipulation
that only the warrants of arrest for Josefina Cruz and Jose Milo Concepcion shall be recalled and
that only they shall be released, further confirmed the agreement that herein petitioner shall remain
in custody of the law, or detention or confinement.
In defining bail as:
. . . the security given for the release of a person in custody of the law, . . .
Section 1 of Rule 114 of the Revised Rules of Court admits no other meaning or interpretation for
the term "in custody of the law" than that as above indicated. The purpose of bail is to relieve an
accused from imprisonment until his conviction and yet secure his appearance at the trial.39 It
presupposes that the person applying for it should be in the custody of the law or otherwise deprived
of liberty.40
Consequently, having agreed in G.R. No. 76009 to remain in legal custody, private respondent had
unequivocably waived his right to bail.
But, is such waiver valid?
Article 6 of the Civil Code expressly provides:
Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a third person with a right recognized by law.
Waiver is defined as "a voluntary and intentional relinquishment or abandonment of a known existing
legal right, advantage, benefit, claim or privilege, which except for such waiver the party would have
enjoyed; the voluntary abandonment or surrender, by a capable person, of a right known by him to
exist, with the intent that such right shall be surrendered and such person forever deprived of its
benefit; or such conduct as warrants an inference of the relinquishment of such right; or the
intentional doing of an act inconsistent with claiming it." 41
As to what rights and privileges may be waived, the authority is settled:
. . . the doctrine of waiver extends to rights and privileges of any character, and, since the
word "waiver" covers every conceivable right, it is the general rule that a person may waive
any matter which affects his property, and any alienable right or privilege of which he is the
owner or which belongs to him or to which he is legally entitled, whether secured by contract,
conferred with statute, or guaranteed by constitution,provided such rights and privileges rest
in the individual, are intended for his sole benefit, do not infringe on the rights of others, and
further provided the waiver of the right or privilege is not forbidden by law, and does not
contravene public policy; and the principle is recognized that everyone has a right to waive,
and agree to waive, the advantage of a law or rule made solely for the benefit and protection
of the individual in his private capacity, if it can be dispensed with and relinquished without
infringing on any public right, and without detriment to the community at large. . . .
Although the general rule is that any right or privilege conferred by statute or guaranteed by
constitutionmay be waived, a waiver in derogation of a statutory right is not favored, and a
waiver will be inoperative and void if it infringes on the rights of others, or would be against
public policy or morals and the public interest may be waived.

While it has been stated generally that all personal rights conferred by statute
and guaranteed by constitution may be waived, it has also been said that constitutional
provisions intended to protect property may be waived, and even some of the constitutional
rights created to secure personal liberty are subjects of waiver. 42
In Commonwealth vs. Petrillo,43 it was held:
Rights guaranteed to one accused of a crime fall naturally into two classes: (a) those in
which the state, as well as the accused, is interested; and (b) those which are personal to the
accused, which are in the nature of personal privileges. Those of the first class cannot be
waived; those of the second may be.
It is "competent for a person to waive a right guaranteed by the Constitution, and to consent to action
which would be invalid if taken against his will."44
This Court has recognized waivers of constitutional rights such as, for example, the right against
unreasonable searches and seizures;45 the right to counsel and to remain silent;46 and the right to be
heard.47
Even the 1987 Constitution expressly recognizes a waiver of rights guaranteed by its Bill of
Rights. Section 12(l) of Article III thereof on the right to remain silent and to have a competent and
independent counsel, preferably of his own choice states:
1wphi1

. . . These rights cannot be waived except in writing and in the presence of counsel.
This provision merely particularizes the form and manner of the waiver; it, nevertheless, clearly
suggests that the other rights may be waived in some other form or manner provided such waiver
will not offend Article 6 of the Civil Code.
We hereby rule that the right to bail is another of the constitutional rights which can be waived. It is a
right which is personal to the accused and whose waiver would not be contrary to law, public order,
public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.
The respondent Judge then clearly acted with grave abuse of discretion in granting bail to the private
respondent.
WHEREFORE, the Orders of respondent Judge of July 7, 1987 and July 30, 1987 in Criminal Case
No. 86-48926 entitled People of the Philippines vs. Rodolfo C. Salas alias Commander Bilog/Henry,
Josefina Cruz alias Mrs. Mercado, and Jose Milo Concepcion alias Eugene Zamora, for Rebellion,
are hereby NULLIFIED and SET ASIDE.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Sarmiento, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-24022

March 3, 1965

ILOILO PALAY AND CORN PLANTERS ASSOCIATION, INC., ET AL., petitioners,


vs.
HON. JOSE, Y. FELICIANO, ET AL., respondents.
Jose C. Zulueta and Ramon A. Gonzales for petitioners.
Office of the Solicitor General for respondents.
BAUTISTA ANGELO, J.:
On December 26, 1964, Jose Y. Feliciano, Chairman and General Manager of the Rice and Corn
Administration, wrote the President of the Philippines urging the immediate importation of 595,400
metric tons of rice, thru a government agency which the President may designate, pursuant to the
recommendation of the National Economic Council as embodied in its Resolution No. 70, series of
1964.
On December 27, 1964, the President submitted said letter to his cabinet for consideration and on
December 28, 1964, the cabinet approved the needed importation. On January 4, 1965, the
President designated the Rice and Corn Administration as the government agency authorized to
undertake the importation pursuant to which Chairman Jose Y. Feliciano announced an invitation to
bid for said importation and set the bidding for February 1, 1965.
Considering that said importation is contrary to Republic Act 3452 which prohibits the government
from importing rice and that there is no law appropriating funds to finance the same, the Iloilo Palay
and Corn Planters Association, Inc., together with Ramon A. Gonzales, in his capacity as taxpayer,
filed the instant petition before this Court seeking to restrain Jose Y. Feliciano, in his capacity as
Chairman and General Manager of the Rice and Corn Administration, from conducting the bid
scheduled on the date abovementioned, and from doing any other act that may result in the
contemplated importation until further orders of this Court. For reasons that do not clearly appear,
the Secretary of Foreign Affairs and the Auditor General were made co-respondents.
Pending decision on the merits, petitioners prayed for the issuance of a writ of preliminary injunction,
which, in due course, this Court granted upon petitioners' filing a bond in the amount of P50,000.00.
This bond having been filed, the writ was issued on February 10, 1965.
Respondents, in their answer do not dispute the essential allegations of the petition though they
adduced reasons which justify the importation sought to be made. They anchor the validity of the
importation on the provisions of Republic Act 2207 which, in their opinion, still stand.
It is petitioners' contention that the importation in question being undertaken by the government even
if there is a certification by the National Economic Council that there is a shortage in the local supply
of rice of such gravity as to constitute a national emergency, is illegal because the same is prohibited
by Republic Act 3452 which, in its Section 10, provides that the importation of rice and corn is only

left to private parties upon payment of the corresponding taxes. They claim that the Rice and Corn
Administration, or any other government agency, is prohibited from doing so.
It is true that the section above adverted to leaves the importation of rice and corn exclusively to
private parties thereby prohibiting from doing so the Rice and Corn Administration or any other
government agency, but from this it does not follow that at present there is no law which permits the
government to undertake the importation of rice into the Philippines. And this we say because, in our
opinion, the provision of Republic Act 2207 on the matter still stands. We refer to Section 2 of said
Act wherein, among other things, it provides that should there be an existing or imminent shortage in
the local supply of rice of such gravity as to constitute a national emergency, and this is certified by
the National Economic Council, the President of the Philippines may authorize such importation thru
any government agency that he may designate. Here there is no dispute that the National Economic
Council has certified that there is such shortage present which, because of its gravity, constitutes a
national emergency, and acting in pursuance thereof the President lost no time in authorizing, after
consulting his cabinet, the General Manager of the Rice and Corn Administration to immediately
undertake the needed importation in order to stave off the impending emergency. We find, therefore,
no plausible reason why the disputed importation should be prevented as petitioners now desire.
The contention that Republic Act 2207 has already been repealed by Republic Act 3452 is untenable
in the light of the divergent provisions obtaining in said two laws. Admittedly, Section 16 of Republic
Act 3452 contains a repealing clause which provides: "All laws or parts thereof inconsistent with the
provisions of this Act are hereby repealed or modified accordingly." The question may now be asked:
what is the nature of this repealing clause ? It is certainly not an express repealing clause because it
fails to identify or designate the Act or Acts that are intended to be repealed [ Sutherland, Statutory
Construction, (1943) Vol. 1, p. 467]. Rather, it is a clause which predicates the intended repeal upon
the condition that a substantial conflict must be found in existing and prior Acts. Such being the
case, the presumption against implied repeals and the rule against strict construction regarding
implied repeals apply ex proprio vigore. Indeed, the legislature is presumed to know the existing
laws so that, if a repeal is intended, the proper step is to so express it [Continental Insurance Co. v.
Simpson, 8 F (2d) 439; Weber v. Bailey, 151 Ore. 2188, 51 P (2d) 832; State v. Jackson, 120 W. Va.
521, 199 S.E. 876]. The failure to add a specific repealing clause indicates that the intent was not to
repeal any existing law (Crawford, Construction of Statute, 1940 ed., p. 631), unless an
irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. Here there is
no such inconsistency.
To begin with, the two laws, although with a common objective, refer to different methods applicable
to different circumstances. Thus, the total banning of importation under normal conditions as
provided for in Republic Act 2207 is one step to achieve the rice and corn sufficiency program of the
Administration. The philosophy behind the banning is that any importation of rice during a period of
sufficiency or even of a minor shortage will unduly compete with the local producers and depress the
local price which may discourage them from raising said crop. On the other hand, a price support
program and a partial ban of rice importation as embodied in Republic Act 3452 is another step
adopted to attend the sufficiency program. While the two laws are geared towards the same ultimate
objective, their methods of approach are different; one is by a total ban of rice importation and the
other by a partial ban, the same being applicable only to the government during normal period.
There is another area where the two laws find a common point of reconciliation: the normalcy of the
time underlying both laws. Thus, with respect to the matter of importation Republic Act 2207 covers
three different situations: (1) when the local produce of rice is sufficient to supply local consumption;
(2) when the local produce falls short of the supply but the shortage is not enough to constitute a
national emergency; and (3) when the shortage, on the local supply of rice is of such gravity as to
constitute a national emergency. Under the first two situations, no importation is allowed whether by

the government or by the private sector. However, in the case of the third situation, the law
authorizes importation, by the government.
Republic Act 3452, on the other hand, deals only with situations 1 and 2, but not with. Nowhere in
said law can we discern that it covers importation where the shortage in the local supply is of such
gravity as to constitute a national emergency. In short, Republic Act 3452 only authorizes
importation during normal times, but when there is a shortage in the local supply of such gravity as
to constitute a national emergency, we have to turn to Republic Act 2207. These two laws therefore,
are not inconsistent and so implied repeal does not ensue.
Our view that Republic Act 3452 merely contemplates importation during normal times is bolstered
by a consideration of the discussion that took place in Congress of House Bill No. 11511 which was
presented in answer to the request of the Chief Executive that he be given a standby power to
import rice in the Philippines. On this matter, we quote the following views of Senators Padilla and
Almendras:
SENATOR PADILLA: But under Republic Act No. 3452 them is a proviso in Sec. 10 thereof
"that the Rice and Corn Administration or any government agency is hereby prohibited from
importing rice and corn."
SENATOR ALMENDRAS: That is under normal conditions.
SENATOR PADILLA: "Provided further", it says, "that the importation of rice, and corn is left
to private parties upon payment of the corresponding tax." So therefore, the position of the
Committee as expressed by the distinguished sponsor, is that Sec. 10 of Republic Act No.
3452 is applicable under normal conditions.
SENATOR ALMENDRAS: "Yes". (Senate Debate, June 16, 1964).
Much stress is laid on the content of Section 12 of Republic Act 3452 which gives to the President
authority to declare a rice and corn emergency any time he deems necessary in the public interest
and, during the emergency, to conduct raids, seizure and confiscation of rice and corn hoarded in
any private warehouse or bodega subject to constitutional limitations, to support the claim that said
Act also bans importation on the part of the government even in case of an emergency. The
contention is predicated on a misinterpretation of the import and meaning of said provision. Note that
the section refers to an emergency where there is an artificial shortagebecause of the apparent
hoarding undertaken by certain unscrupulous dealers or businessmen, and not to an actual serious
shortage of the commodity because, if the latter exists, there is really nothing to raid, seize or
confiscate, because the situation creates a real national emergency. Congress by no means could
have intended under such a situation to deprive the government of its right to import to stave off
hunger and starvation. Congress knows that such remedy is worthless as there is no rice to be found
in the Philippines. Seizure of rice is only of value in fighting hoarding and profiteering, but such
remedy cannot produce the rice needed to solve the emergency. If there is really insufficient rice
stocked in the private warehouses and bodegas such confiscatory step cannot remedy an actual
emergency, in which case we have to turn to Republic Act 2207.
The two laws can therefore be construed as harmonious parts of the legislative expression of its
policy to promote a rice and corn program. And if this can be done, as we have shown, it is the duty
of this Court to adopt such interpretation that would give effect to both laws. Conversely, in order to
effect a repeal by implication, the litter statute must be irreconcilably inconsistent and repugnant to
the prior existing law [United States v. Greathouse,. 166 U.S. 601, 41 L. Ed., 1130; In re Phoenix
Hotel Co., 13 F. Supp. 229; Hammond v. McDonald, 32 Cal. App. 187, 89 P (2d) 407; Sutherland,

Statutory Construction, supra, p. 462]. The old and the new laws must be absolutely incompatible
(Compaia General de Tabacos v. Collector of Customs, 46 Phil. 8). A mere difference in the terms
and provisions of the statutes is not sufficient to create a repugnancy between them. There must be
such a positive repugnancy between the provisions of the old and the new statutes that they cannot
be made to reconcile and stand together (Crawford, Construction of Statute, supra, p. 631). The
clearest case possible must first be made before the inference of implied repeal may be drawn
[Nagano v. McGrath, 187 F (2d) 759]. Inconsistency is never presumed.
Republic Act 3848 entitled "An Act Providing for the Importation of Rice During the Calendar Year
Nineteen Hundred Sixty-Four in the Event of Shortage in Local Supply" cannot be given any
nullifying value, as it is pretended, simply because Section 6 thereof provides that "except as
provided in this Act, no other agency or instrumentality of the Government shall be allowed to
purchase rice from abroad." The reason is that it is a mere temporary law effective only for a specific
year. As its title reads, it is merely an authority to import rice during the year 1964. The same,
therefore, is now functus officio at least on the matter of importation.
Neither can petitioners successfully pretend that as Section 4 thereof provides that pending
prosecutions for any violation of Republic Acts 2207 and 3452 shall in no way be affected by said
Act 3848 the implication is that the aforesaid Acts have already been repealed. That provision is
merely a safeguard placed therein in order that the prosecutions already undertaken may not be
defeated with the enactment of Republic Act 3848 because the latter provides for penal provisions
which call for lesser penalty. The intention is to except them from the rule that penal statutes can be
given retroactive effect if favorable to the accused.
To further bolster our view that Republic Act 2207 has not been impliedly repealed by Republic Act
3452, we wish to briefly quote hereunder the views expressed by some senators during the
discussion of House Bill 11511 already mentioned above. It should be here repeated that said bill
was presented to accede to the request of the President for a stand-by power to import in case of
emergency in view of the uncertainty of the law, but that during the discussion thereof it was strongly
asserted and apparently upheld that such request for authority was not necessary because Republic
Act 2207 was still in force. It is probably for this reason that said bill, after having been approved by
the Senate, was killed in the conference committee that considered it. These views, while not
binding, are of persuasive authority and throw light on the issue relative to the effectivity of Republic
Act 2207.
SENATOR LIWAG: ... Now Mr. Chairman, is it the sense of the Committee that in the case of
emergency, in case of an impending shortage, we can import rice under the provisions of
R.A. No. 2207?
SENATOR ALMENDRAS: Yes, that is what we mean, your Honor, in this paragraph (c),
Section 2, page 2, that when we say "under the provisions of existing law," we are referring
to R.A. No. 2207.
xxx

xxx

xxx

SENATOR PADILLA: I notice, Mr. Senator, that Section 2 paragraph (c) of the amendment
by substitution reads:
Importation of rice and/or corn should be resorted to only in cases of extreme and under the
provisions of existing law.

I suppose that the existing laws referred to are Republic Act No. 2207 and Republic Act No.
3452. Does this section in the proposed bill by substitution recognize the continued existence
of the pertinent provisions of Republic Act No. 2207 and Republic Act No. 3452 on rice
importation ?
SENATOR ALMENDRAS: Yes, that is the reason, Your Honor, why we struck out the standby power on the part of the President to import rice.
xxx

xxx

xxx

SENATOR ALMENDRAS: The position of your Committee, Your Honor, because of the
existing law that is, Republic Act No. 3452 and Republic Act No. 2207 that is the
reason your Committee eliminated that stand-by power of the President to import rice.
Because you know, Your Honor, what is the use of that stand-by power, inasmuch as under
Republic Act No. 3452 and Republic Act No. 2207 the President can designate any
government agency to import rice?
SENATOR PADILLA: Well, it is good to make that clear because in the decision of the
Supreme Court, as I said, there was no clear-cut holding as to the possible co-existence or
implied repeal between these two Acts.
SENATOR ALMENDRAS: Yes, Your Honor, but the gentleman from Nueva Ecija, Senator
Liwag, informed me that Republic Act No. 2207 has never been repealed.
SENATOR PADILLA: Well, I also concur with that view, but we want to make that clear ... .
SENATOR PADILLA: "Provided, further," it says, "That the importation of rice and corn is left
to private parties upon payment of the corresponding taxes." So, therefore, the position of
the Committee, as expressed by the distinguished sponsor is that Sec. 10 of Republic Act
No. 3452 is applicable under normal conditions.
SENATOR ALMENDRAS: Yes.
SENATOR PADILLA: So, both provisions of law are in existence.
SENATOR ALMENDRAS: Yes.
SENATOR PADILLA: One is not repealed by the other.
xxx

xxx

xxx

SENATOR TOLENTINO: Mr. President, there are two views already expressed on whether
Republic Act No. 2207 has been repealed by Republic Act No. 3452. One view sustains the
theory that there has been a repeal of Republic Act No. 2207 by Republic Act No. 3452
insofar as rice importation is concerned. The other view is that there is no repeal. The
Supreme Court does not state clearly which side prevails. I take the view that the two laws
can be reconciled ... .
Now, Mr. President, reading those two provisions together, I maintain that they are not totally
repugnant to each other, that it is possible for them to stand together except on certain
points: First, is importation in case of a national emergency certified by the National

Economic Council permissible? By reading the two provisos together I would say yes
because there is nothing in the proviso contained in Republic Act No. 3452 which would be
inconsistent with importation during a shortage amounting to a national emergency.
Another circumstance that strengthens our view is that when said House Bill No. 11511 was finally
approved by the Senate, it carried a clause which expressly repeals, among others, Republic Act
No. 2207 (Section 14), but which bill, as already said, was later killed in the conference committee.
This attitude clearly reveals that Congress preferred to fall back on Republic Act 2207 with regard to
future importations.
Anent the point raised relative to the lack of necessary appropriation to finance the importation in
question, suffice it to state that under Republic Act 663 the National Rice and Corn Corporation is
authorized to borrow, raise and secure the money that may be necessary to carry out its objectives.
We refer to Section 3 (e) of said Act which empowers said corporation to secure money and to
encumber any property it has as a guaranty, and Republic Act No. 3452, which creates the Rice and
Corn Administration, transferred its functions and powers to the latter, including the power to borrow
money under Section 3(e). This provision gives the RCA enough power with which to finance the
importation in question.
WHEREFORE, petition is dismissed. The writ of preliminary injunction issued by this Court is hereby
dissolved. Costs against petitioners.
Paredes, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

THIRD DIVISION
BENJAMIN G. TING,
Petitioner,

G.R. No. 166562


Present:
YNARES-SANTIAGO, J.,
Chairperson,
CARPIO MORALES,*
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

- versus -

Promulgated:
CARMEN M. VELEZ-TING,
March 31, 2009
Respondent.
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before us is a petition for review on certiorari seeking to set aside the
November 17, 2003 Amended Decision[1] of the Court of Appeals (CA), and its
December 13, 2004 Resolution[2] in CA-G.R. CV No. 59903. The appellate court, in
its assailed decision and resolution, affirmed the January 9, 1998 Decision [3] of the
Regional Trial Court (RTC), Branch 23, Cebu City, declaring the marriage between
petitioner and respondent null and void ab initio pursuant to Article 36 of the Family
Code.[4]
The facts follow.
Petitioner Benjamin Ting (Benjamin) and respondent Carmen Velez-Ting
(Carmen) first met in 1972 while they were classmates in medical school. [5] They
fell in love, and they were wed on July 26, 1975 in Cebu City when respondent was
already pregnant with their first child.

At
first,
they
resided
at
Benjamins
family
home
in
[6]
Maguikay, Mandaue City. When their second child was born, the couple decided
to move to Carmens family home in Cebu City.[7] In September 1975, Benjamin
passed the medical board examinations [8] and thereafter proceeded to take a
residency program to become a surgeon but shifted to anesthesiology after two years.
By 1979, Benjamin completed the preceptorship program for the said field [9] and, in
1980, he began working for Velez Hospital, owned by Carmens family, as member
of its active staff,[10] while Carmen worked as the hospitals Treasurer. [11]
The couple begot six (6) children, namely Dennis, born on December 9, 1975;
James Louis, born on August 25, 1977; Agnes Irene, born on April 5, 1981; Charles
Laurence, born on July 21, 1986; Myles Vincent, born on July 19, 1988; and Marie
Corinne, born on June 16, 1991.[12]
On October 21, 1993, after being married for more than 18 years to petitioner
and while their youngest child was only two years old, Carmen filed a verified
petition before the RTC of Cebu City praying for the declaration of nullity of their
marriage based on Article 36 of the Family Code. She claimed that Benjamin
suffered from psychological incapacity even at the time of the celebration of their
marriage, which, however, only became manifest thereafter. [13]
In her complaint, Carmen stated that prior to their marriage, she was already
aware that Benjamin used to drink and gamble occasionally with his friends. [14] But
after they were married, petitioner continued to drink regularly and would go home
at about midnight or sometimes in the wee hours of the morning drunk and violent.
He would confront and insult respondent, physically assault her and force her to have
sex with him. There were also instances when Benjamin used his gun and shot the
gate of their house.[15] Because of his drinking habit, Benjamins job as
anesthesiologist was affected to the point that he often had to refuse to answer the
call of his fellow doctors and to pass the task to other anesthesiologists. Some
surgeons even stopped calling him for his services because they perceived petitioner
to be unreliable. Respondent tried to talk to her husband about the latters drinking
problem, but Benjamin refused to acknowledge the same. [16]
Carmen also complained that petitioner deliberately refused to give financial
support to their family and would even get angry at her whenever she asked for

money for their children. Instead of providing support, Benjamin would spend his
money on drinking and gambling and would even buy expensive equipment for his
hobby.[17] He rarely stayed home [18] and even neglected his obligation to his
children.[19]
Aside from this, Benjamin also engaged in compulsive gambling.[20] He would
gamble two or three times a week and would borrow from his friends, brothers, or
from loan sharks whenever he had no money. Sometimes, Benjamin would pawn his
wifes own jewelry to finance his gambling. [21] There was also an instance when the
spouses had to sell their family car and even a portion of the lot Benjamin inherited
from his father just to be able to pay off his gambling debts. [22] Benjamin only
stopped going to the casinos in 1986 after he was banned therefrom for having
caused trouble, an act which he said he purposely committed so that he would be
banned from the gambling establishments.[23]
In sum, Carmens allegations of Benjamins psychological incapacity consisted of the
following manifestations:
1.
2.
3.

4.

Benjamins alcoholism, which adversely affected his family relationship


and his profession;
Benjamins violent nature brought about by his excessive and regular
drinking;
His compulsive gambling habit, as a result of which Benjamin found
it necessary to sell the family car twice and the property he inherited
from his father in order to pay off his debts, because he no longer had
money to pay the same; and
Benjamins irresponsibility and immaturity as shown by his failure and
refusal to give regular financial support to his family. [24]

In his answer, Benjamin denied being psychologically incapacitated. He


maintained that he is a respectable person, as his peers would confirm. He said that
he is an active member of social and athletic clubs and would drink and gamble only
for social reasons and for leisure. He also denied being a violent person, except when
provoked by circumstances.[25] As for his alleged failure to support his family
financially, Benjamin claimed that it was Carmen herself who would collect his
professional fees from Velez Hospital when he was still serving there as practicing
anesthesiologist.[26] In his testimony, Benjamin also insisted that he gave his family

financial support within his means whenever he could and would only get angry at
respondent for lavishly spending his hard-earned money on unnecessary
things.[27] He also pointed out that it was he who often comforted and took care of
their children, while Carmen played mahjong with her friends twice a week.[28]
During the trial, Carmens testimony regarding Benjamins drinking and
gambling habits and violent behavior was corroborated by Susana Wasawas, who
served as nanny to the spouses children from 1987 to 1992. [29] Wasawas stated that
she personally witnessed instances when Benjamin maltreated Carmen even in front
of their children.[30]
Carmen also presented as witness Dr. Pureza Trinidad-Oate, a
psychiatrist.[31] Instead of the usual personal interview, however, Dr. Oates
evaluation of Benjamin was limited to the transcript of stenographic notes taken
during Benjamins deposition because the latter had already gone to work as an
anesthesiologist in a hospital in South Africa. After reading the transcript of
stenographic notes, Dr. Oate concluded that Benjamins compulsive drinking,
compulsive gambling and physical abuse of respondent are clear indications that
petitioner suffers from a personality disorder. [32]
To refute Dr. Oates opinion, petitioner presented Dr. Renato D. Obra, a
psychiatrist and a consultant at the Department of Psychiatry
inDon Vicente Sotto Memorial Medical Center, as his expert witness.[33] Dr. Obra
evaluated Benjamins psychological behavior based on the transcript of stenographic
notes, as well as the psychiatric evaluation report prepared by Dr. A.J.L. Pentz, a
psychiatrist from the University ofPretoria in South Africa, and his (Dr. Obras)
interview with Benjamins brothers.[34] Contrary to Dr. Oates findings, Dr. Obra
observed that there is nothing wrong with petitioners personality, considering the
latters good relationship with his fellow doctors and his good track record as
anesthesiologist.[35]
On January 9, 1998, the lower court rendered its Decision[36] declaring the
marriage between petitioner and respondent null and void. The RTC gave credence
to Dr. Oates findings and the admissions made by Benjamin in the course of his
deposition, and found him to be psychologically incapacitated to comply with the
essential obligations of marriage. Specifically, the trial court found Benjamin an

excessive drinker, a compulsive gambler, someone who prefers his extra-curricular


activities to his family, and a person with violent tendencies, which character traits
find root in a personality defect existing even before his marriage to Carmen. The
decretal portion of the decision reads:
WHEREFORE, all the foregoing considered, judgment is hereby
rendered declaring the marriage between plaintiff and defendant null and
voidab initio pursuant to Art. 36 of the Family Code. x x x
xxxx
SO ORDERED.[37]

Aggrieved, petitioner appealed to the CA. On October 19, 2000, the CA rendered a
Decision[38] reversing the trial courts ruling. It faulted the trial courts finding, stating
that no proof was adduced to support the conclusion that Benjamin was
psychologically incapacitated at the time he married Carmen since Dr. Oates
conclusion was based only on theories and not on established fact, [39] contrary to the
guidelines set forth in Santos v. Court of Appeals[40] and in Rep. of the Phils. v. Court
of Appeals and Molina.[41]
Because of this, Carmen filed a motion for reconsideration, arguing that
the Molina guidelines should not be applied to this case since the Molina decision
was promulgated only on February 13, 1997, or more than five years after she had
filed her petition with the RTC. [42]She claimed that the Molina ruling could not be
made to apply retroactively, as it would run counter to the principle of stare
decisis. Initially, the CA denied the motion for reconsideration for having been filed
beyond the prescribed period. Respondent thereafter filed a manifestation explaining
compliance with the prescriptive period but the same was likewise denied for lack
of merit. Undaunted, respondent filed a petition for certiorari[43] with this Court. In
a Resolution[44] dated March 5, 2003, this Court granted the petition and directed the
CA to resolve Carmens motion for reconsideration. [45] On review, the CA decided to
reconsider its previous ruling. Thus, on November 17, 2003, it issued an Amended
Decision[46] reversing its first ruling and sustaining the trial courts decision.[47]
A motion for reconsideration was filed, this time by Benjamin, but the same was
denied by the CA in its December 13, 2004 Resolution.[48]

Hence, this petition.


For our resolution are the following issues:
I.

Whether the CA violated the rule on stare decisis when it refused


to
follow
the
guidelines
set
forth
under
the Santos and Molina cases;

II.

Whether the CA correctly ruled that the requirement of proof of


psychological incapacity for the declaration of absolute nullity of
marriage based on Article 36 of the Family Code has been
liberalized; and

III.

Whether the CAs decision declaring the marriage between


petitioner and respondent null and void [is] in accordance with law
and jurisprudence.

We find merit in the petition.


I. On the issue of stare decisis.
The principle of stare decisis enjoins adherence by lower courts to doctrinal
rules established by this Court in its final decisions. It is based on the principle that
once a question of law has been examined and decided, it should be deemed settled
and closed to further argument.[49] Basically, it is a bar to any attempt to relitigate
the same issues,[50] necessary for two simple reasons: economy and stability. In our
jurisdiction, the principle is entrenched in Article 8 of the Civil Code. [51]
This doctrine of adherence to precedents or stare decisis was applied by the
English courts and was later adopted by the United States. Associate Justice (now
Chief Justice) Reynato S. Punos discussion on the historical development of this
legal principle in his dissenting opinion in Lambino v. Commission on Elections[52] is
enlightening:
The latin phrase stare decisis et non quieta movere means stand by
the thing and do not disturb the calm. The doctrine started with the English
Courts. Blackstone observed that at the beginning of the 18th century, it
is an established rule to abide by former precedents where the same points

come again in litigation. As the rule evolved, early limits to its application
were recognized: (1) it would not be followed if it were plainly
unreasonable; (2) where courts of equal authority developed conflicting
decisions; and, (3) the binding force of the decision was the actual
principle or principles necessary for the decision; not the words or
reasoning used to reach the decision.
The doctrine migrated to the United States. It was recognized by
the framers of the U.S. Constitution. According to Hamilton, strict rules
and precedents are necessary to prevent arbitrary discretion in the
courts. Madison agreed but stressed that x x x once the precedent ventures
into the realm of altering or repealing the law, it should be rejected. Prof.
Consovoy well noted that Hamilton and Madison disagree about the
countervailing policy considerations that would allow a judge to abandon
a precedent. He added that their ideas reveal a deep internal conflict
between the concreteness required by the rule of law and the flexibility
demanded in error correction. It is this internal conflict that the Supreme
Court has attempted to deal with for over two centuries.
Indeed, two centuries of American case law will confirm Prof.
Consovoy's observation although stare decisis developed its own life in
theUnited States. Two strains of stare decisis have been isolated by legal
scholars. The first, known as vertical stare decisis deals with the duty of
lower courts to apply the decisions of the higher courts to cases involving
the same facts. The second, known as horizontal stare decisis requires
that high courts must follow its own precedents. Prof. Consovoy correctly
observes that vertical stare decisis has been viewed as an obligation, while
horizontalstare decisis, has been viewed as a policy, imposing choice but
not a command. Indeed, stare decisis is not one of the precepts set in stone
in our Constitution.
It is also instructive to distinguish the two kinds of horizontal stare
decisis
constitutional
stare
decisis
and
statutory
stare
decisis.Constitutional stare decisis involves judicial interpretations of
the Constitution while statutory stare decisis involves interpretations of
statutes. The distinction is important for courts enjoy more flexibility in
refusing to apply stare decisis in constitutional litigations. Justice
Brandeis' view on the binding effect of the doctrine in constitutional
litigations still holds sway today. In soothing prose, Brandeis stated: Stare
decisis is not . . . a universal and inexorable command. The rule of stare
decisis is not inflexible. Whether it shall be followed or departed from, is

a question entirely within the discretion of the court, which is again called
upon to consider a question once decided. In the same vein, the venerable
Justice Frankfurter opined: the ultimate touchstone of constitutionality is
the Constitution itself and not what we have said about it. In contrast, the
application of stare decisis on judicial interpretation of statutes is more
inflexible. As Justice Stevens explains: after a statute has been construed,
either by this Court or by a consistent course of decision by other federal
judges and agencies, it acquires a meaning that should be as clear as if the
judicial gloss had been drafted by the Congress itself. This stance reflects
both respect for Congress' role and the need to preserve the courts' limited
resources.
In general, courts follow the stare decisis rule for an ensemble of
reasons, viz.: (1) it legitimizes judicial institutions; (2) it promotes judicial
economy; and, (3) it allows for predictability. Contrariwise, courts refuse
to be bound by the stare decisis rule where (1) its application perpetuates
illegitimate and unconstitutional holdings; (2) it cannot accommodate
changing social and political understandings; (3) it leaves the power to
overturn bad constitutional law solely in the hands of Congress; and, (4)
activist judges can dictate the policy for future courts while judges that
respect stare decisis are stuck agreeing with them.
In its 200-year history, the U.S. Supreme Court has refused to
follow the stare decisis rule and reversed its decisions in 192 cases. The
most famous of these reversals is Brown v. Board of Education which
junked Plessy v. Ferguson's separate but equal doctrine. Plessy upheld as
constitutional a state law requirement that races be segregated on public
transportation. In Brown, the U.S. Supreme Court, unanimously held that
separate . . . is inherently unequal. Thus, by freeing itself from the shackles
of stare decisis, the U.S. Supreme Court freed the colored Americans from
the chains of inequality. In the Philippine setting, this Court has likewise
refused to be straitjacketed by the stare decisis rule in order to promote
public welfare. In La Bugal-B'laan Tribal Association, Inc. v. Ramos, we
reversed our original ruling that certain provisions of the Mining Law are
unconstitutional. Similarly, in Secretary of Justice v. Lantion, we
overturned our first ruling and held, on motion for reconsideration, that a
private respondent is bereft of the right to notice and hearing during the
evaluation stage of the extradition process.
An examination of decisions on stare decisis in major countries will
show that courts are agreed on the factors that should be considered before

overturning prior rulings. These are workability, reliance, intervening


developments in the law and changes in fact. In addition, courts put in the
balance the following determinants: closeness of the voting, age of the
prior decision and its merits.
The leading case in deciding whether a court should follow
the stare decisis rule in constitutional litigations is Planned Parenthood v.
Casey. It established a 4-pronged test. The court should (1) determine
whether the rule has proved to be intolerable simply in defying practical
workability; (2) consider whether the rule is subject to a kind of reliance
that would lend a special hardship to the consequences of overruling and
add inequity to the cost of repudiation; (3) determine whether related
principles of law have so far developed as to have the old rule no more
than a remnant of an abandoned doctrine; and, (4) find out whether facts
have so changed or come to be seen differently, as to have robbed the old
rule of significant application or justification. [53]

To be forthright, respondents argument that the doctrinal guidelines prescribed


in Santos and Molina should not be applied retroactively for being contrary to the
principle of stare decisis is no longer new. The same argument was also raised but
was struck down in Pesca v. Pesca,[54] and again in Antonio v. Reyes.[55] In these
cases, we explained that the interpretation or construction of a law by courts
constitutes a part of the law as of the date the statute is enacted. It is only when a
prior ruling of this Court is overruled, and a different view is adopted, that the new
doctrine may have to be applied prospectively in favor of parties who have relied on
the old doctrine and have acted in good faith, in accordance therewith under the
familiar rule of lex prospicit, non respicit.
II. On liberalizing the required proof for the declaration of nullity of marriage
under Article 36.
Now, petitioner wants to know if we have abandoned the Molina doctrine.
We have not.
In Edward Kenneth Ngo Te v. Rowena Ong Gutierrez Yu-Te,[56] we declared
that, in hindsight, it may have been inappropriate for the Court to impose a rigid set

of rules, as the one in Molina, in resolving all cases of psychological incapacity. We


said that instead of serving as a guideline, Molina unintentionally became a
straightjacket, forcing all cases involving psychological incapacity to fit into and be
bound by it, which is not only contrary to the intention of the law but unrealistic as
well because, with respect to psychological incapacity, no case can be considered as
on all fours with another.[57]
By the very nature of cases involving the application of Article 36, it is logical and
understandable to give weight to the expert opinions furnished by psychologists
regarding the psychological temperament of parties in order to determine the root
cause, juridical antecedence, gravity and incurability of the psychological
incapacity. However, such opinions, while highly advisable, are not conditions sine
qua non in granting petitions for declaration of nullity of marriage. [58] At best, courts
must treat such opinions as decisive but not indispensable evidence in determining
the merits of a given case. In fact, if the totality of evidence presented is enough to
sustain a finding of psychological incapacity, then actual medical or psychological
examination of the person concerned need not be resorted to. [59] The trial court, as in
any other given case presented before it, must always base its decision not solely on
the expert opinions furnished by the parties but also on the totality of evidence
adduced in the course of the proceedings.
It was for this reason that we found it necessary to emphasize in Ngo Te that
each case involving the application of Article 36 must be treated distinctly and
judged not on the basis of a priori assumptions, predilections or generalizations but
according to its own attendant facts. Courts should interpret the provision on a caseto-case basis, guided by experience, the findings of experts and researchers in
psychological disciplines, and by decisions of church tribunals.
Far from abandoning Molina, we simply suggested the relaxation of the
stringent requirements set forth therein, cognizant of the explanation given by the
Committee on the Revision of the Rules on the rationale of the Rule on Declaration
of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M.
No. 02-11-10-SC), viz.:
To require the petitioner to allege in the petition the particular root
cause of the psychological incapacity and to attach thereto the verified
written report of an accredited psychologist or psychiatrist have proved to

be too expensive for the parties. They adversely affect access to justice o
poor litigants. It is also a fact that there are provinces where these experts
are not available. Thus, the Committee deemed it necessary to relax this
stringent requirement enunciated in the Molina Case. The need for the
examination of a party or parties by a psychiatrist or clinical psychologist
and the presentation of psychiatric experts shall now be determined by the
court during the pre-trial conference.[60]

But where, as in this case, the parties had the full opportunity to present professional
and expert opinions of psychiatrists tracing the root cause, gravity and incurability
of a partys alleged psychological incapacity, then such expert opinion should be
presented and, accordingly, be weighed by the court in deciding whether to grant a
petition for nullity of marriage.
III. On petitioners psychological incapacity.
Coming now to the main issue, we find the totality of evidence adduced by
respondent insufficient to prove that petitioner is psychologically unfit to discharge
the duties expected of him as a husband, and more particularly, that he suffered from
such psychological incapacity as of the date of the marriage eighteen (18) years ago.
Accordingly, we reverse the trial courts and the appellate courts rulings declaring
the marriage between petitioner and respondent null and void ab initio.
The intendment of the law has been to confine the application of Article 36 to
the most serious cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the marriage. [61] The
psychological illness that must have afflicted a party at the inception of the marriage
should be a malady so grave and permanent as to deprive one of awareness of the
duties and responsibilities of the matrimonial bond he or she is about to assume. [62]
In this case, respondent failed to prove that petitioners defects were present at
the time of the celebration of their marriage. She merely cited that prior to their
marriage, she already knew that petitioner would occasionally drink and gamble with
his friends; but such statement, by itself, is insufficient to prove any pre-existing
psychological defect on the part of her husband. Neither did the evidence adduced
prove such defects to be incurable.

The evaluation of the two psychiatrists should have been the decisive evidence
in determining whether to declare the marriage between the parties null and void.
Sadly, however, we are not convinced that the opinions provided by these experts
strengthened respondents allegation of psychological incapacity. The two experts
provided diametrically contradicting psychological evaluations: Dr. Oate testified
that petitioners behavior is a positive indication of a personality disorder, [63] while
Dr. Obra maintained that there is nothing wrong with petitioners personality.
Moreover, there appears to be greater weight in Dr. Obras opinion because, aside
from analyzing the transcript of Benjamins deposition similar to what Dr. Oate did,
Dr. Obra also took into consideration the psychological evaluation report furnished
by another psychiatrist in South Africa who personally examined Benjamin, as well
as his (Dr. Obras) personal interview with Benjamins brothers. [64] Logically,
therefore, the balance tilts in favor of Dr. Obras findings.
Lest it be misunderstood, we are not condoning petitioners drinking and
gambling problems, or his violent outbursts against his wife. There is no valid excuse
to justify such a behavior. Petitioner must remember that he owes love, respect, and
fidelity to his spouse as much as the latter owes the same to him. Unfortunately, this
court finds respondents testimony, as well as the totality of evidence presented by
the respondent, to be too inadequate to declare him psychologically unfit pursuant
to Article 36.
It should be remembered that the presumption is always in favor of the validity
of marriage. Semper praesumitur pro matrimonio.[65]In this case, the presumption
has not been amply rebutted and must, perforce, prevail.
WHEREFORE, premises considered, the petition for review
on certiorari is GRANTED. The November 17, 2003 Amended Decision and the
December 13, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 59903
are accordingly REVERSED and SET ASIDE.
SO ORDERED.

THIRD DIVISION

[G.R. No. 136921. April 17, 2001]


LORNA GUILLEN PESCA, petitioner, vs. ZOSIMO A. PESCA, respondent.
DECISION
VITUG, J.:

Submitted for review is the decision of the Court of Appeals, promulgated on 27


May 1998, in C.A. G.R. CV. No. 52374, reversing the decision of the Regional Trial
Court (RTC) of Caloocan City, Branch 130, which has declared the marriage between
petitioner and respondent to be null and void ab initio on the ground of psychological
incapacity on the part of respondent.
Petitioner Lorna G. Pesca and respondent Zosimo A. Pesca first met sometime in
1975 while on board an inter-island vessel bound for Bacolod City. After a whirlwind
courtship, they got married on 03 March 1975. Initially, the young couple did not live
together as petitioner was still a student in college and respondent, a seaman, had to
leave the country on board an ocean-going vessel barely a month after the marriage. Six
months later, the young couple established their residence in Quezon City until they
were able to build their own house in Caloocan City where they finally resided. It was
blissful marriage for the couple during the two months of the year that they could stay
together when respondent was on vacation. The union begot four children, 19-year old
Ruhem, 17-year old Rez, 11-year old Ryan, and 9-year old Richie.
It started in 1988, petitioner said, when she noticed that respondent surprisingly
showed signs of psychological incapacity to perform his marital covenant. His "true
color" of being an emotionally immature and irresponsible husband became
apparent. He was cruel and violent. He was a habitual drinker, staying with friends daily
from 4:00 o'clock in the afternoon until 1:00 o'clock in the morning. When cautioned
to stop or, to at least, minimize his drinking, respondent would beat, slap and kick
her. At one time, he chased petitioner with a loaded shotgun and threatened to kill her
in the presence of the children. The children themselves were not spared from physical
violence.
Finally, on 19 November 1992, petitioner and her children left the conjugal abode
to live in the house of her sister in Quezon City as they could no longer bear his violent
ways. Two months later, petitioner decided to forgive respondent, and she returned
home to give him a chance to change. But, to her dismay, things did not so turn out as
expected. Indeed, matters became worse.
On the morning of 22 March 1994, about eight oclock, respondent assaulted
petitioner for about half an hour in the presence of the children. She was battered black
and blue. She submitted herself to medical examination at the Quezon City General

Hospital, which diagnosed her injuries as contusions and abrasions. Petitioner filed a
complaint with the barangay authorities, and a case was filed against respondent for
slight physical injuries. He was convicted by the Metropolitan Trial Court of Caloocan
City and sentenced to eleven days of imprisonment.
This time, petitioner and her children left the conjugal home for good and stayed
with her sister. Eventually, they decided to rent an apartment. Petitioner sued
respondent before the Regional Trial Court for the declaration of nullity of their
marriage invoking psychological incapacity. Petitioner likewise sought the custody of
her minor children and prayed for support pendente lite.
Summons, together with a copy of the complaint, was served on respondent on 25
April 1994 by personal service by the sheriff. As respondent failed to file an answer or
to enter his appearance within the reglementary period, the trial court ordered the city
prosecutor to look into a possible collusion between the parties. Prosecutor Rosa C.
Reyes, on 03 August 1994, submitted her report to the effect that she found no evidence
to establish that there was collusion between the parties.
On 11 January 1995, respondent belatedly filed, without leave of court, an answer,
and the same, although filed late, was admitted by the court. In his answer, respondent
admitted the fact of his marriage with petitioner and the birth of their children. He also
confirmed the veracity of Annex "A" of the complaint which listed the conjugal
property. Respondent vehemently denied, however, the allegation that he was
psychologically incapacitated.
On 15 November 1995, following hearings conducted by it, the trial court rendered
its decision declaring the marriage between petitioner and respondent to be null and
void ab initio on the basis of psychological incapacity on the part of respondent and
ordered the liquidation of the conjugal partnership.
Respondent appealed the above decision to the Court of Appeals, contending that
the trial court erred, particularly, in holding that there was legal basis to declare the
marriage null and void and in denying his motion to reopen the case.
The Court of Appeals reversed the decision of the trial court and declared the
marriage between petitioner and respondent valid and subsisting. The appellate court
said:
"Definitely the appellee has not established the following: That the appellant showed
signs of mental incapacity as would cause him to be truly incognitive of the basic
marital covenant, as so provided for in Article 68 of the Family Code; that the
incapacity is grave, has preceded the marriage and is incurable; that his incapacity to
meet his marital responsibility is because of a psychological, not physical illness; that
the root cause of the incapacity has been identified medically or clinically, and has

been proven by an expert; and that the incapacity is permanent and incurable in
nature.
The burden of proof to show the nullity of marriage lies in the plaintiff and any doubt
should be resolved in favor of the existence and continuation of the marriage and
against its dissolution and nullity."[1]
Petitioner, in her plea to this Court, would have the decision of the Court of Appeals
reversed on the thesis that the doctrine enunciated in Santos vs. Court of
Appeals,[2] promulgated on 14 January 1995, as well as the guidelines set out in Republic
vs. Court of Appeals and Molina,[3] promulgated on 13 February 1997, should have no
retroactive application and, on the assumption that the Molina ruling could be applied
retroactively, the guidelines therein outlined should be taken to be merely advisory and
not mandatory in nature. In any case, petitioner argues, the application
of the Santos and Molina dicta should warrant only a remand of the case to the trial
court for further proceedings and not its dismissal.
Be that as it may, respondent submits, the appellate court did not err in its assailed
decision for there is absolutely no evidence that has been shown to prove psychological
incapacity on his part as the term has been so defined in Santos.
Indeed, there is no merit in the petition.
The term psychological incapacity, as a ground for the declaration of nullity of a
marriage under Article 36 of the Family Code, has been explained by the Court
in Santos and reiterated in Molina. The Court, in Santos, concluded:
"It should be obvious, looking at all the foregoing disquisitions, including, and most
importantly, the deliberations of the Family Code Revision Committee itself, that the
use of the phrase `psychological incapacity under Article 36 of the Code has not been
meant to comprehend all such possible cases of psychoses as, likewise mentioned by
some ecclesiastical authorities, extremely low intelligence, immaturity, and like
circumstances (cited in Fr. Artemio Balumad's `Void and Voidable Marriages in the
Family Code and their Parallels in Canon Law, quoting form the Diagnostic Statistical
Manuel of Mental Disorder by the American Psychiatric Association; Edward
Hudson's `Handbook II for Marriage Nullity Cases). Article 36 of the Family Code
cannot be taken and construed independently of, but must stand in conjunction with,
existing precepts in our law on marriage. Thus correlated, `psychological incapacity
should refer to no less than a mental (not physical) incapacity that causes a party to be
truly incognitive of the basic marital covenants that concomitantly must be assumed
and discharged by the parties to the marriage which, as so expressed by Article 68 of
the Family Code, include their mutual obligations to live together, observe love,
respect and fidelity and render help and support. There is hardly any doubt that the

intendment of the law has been to confine the meaning of `psychological incapacity to
the most serious cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the marriage. This
psychologic condition must exist at the time the marriage is celebrated."
The "doctrine of stare decisis," ordained in Article 8 of the Civil Code, expresses
that judicial decisions applying or interpreting the law shall form part of the legal
system of the Philippines. The rule follows the settled legal maxim legis interpretado
legis vim obtinet that the interpretation placed upon the written law by a competent
court has the force of law.[4] The interpretation or construction placed by the courts establishes the
contemporaneous legislative intent of the law. The latter as so interpreted and construed would thus constitute a part
of that law as of the date the statute is enacted. It is only when a prior ruling of this Court finds itself later overruled,
and a different view is adopted, that the new doctrine may have to be applied prospectively in favor of parties who
have relied on the old doctrine and have acted in good faith in accordance therewith[5] under the familiar rule of lex
prospicit, non respicit.

The phrase psychological incapacity, borrowed from Canon law, is an entirely


novel provision in our statute books, and, until the relatively recent enactment of the
Family Code, the concept has escaped jurisprudential attention. It is in Santos when, for
the first time, the Court has given life to the term. Molina, that followed, has
additionally provided procedural guidelines to assist the courts and the parties in trying
cases for annulment of marriages grounded on psychological incapacity.Molina has
strengthened, not overturned, Santos.
At all events, petitioner has utterly failed, both in her allegations in the complaint
and in her evidence, to make out a case of psychological incapacity on the part of
respondent, let alone at the time of solemnization of the contract, so as to warrant a
declaration of nullity of the marriage. Emotional immaturity and irresponsibility,
invoked by her, cannot be equated with psychological incapacity.
The Court reiterates its reminder that marriage is an inviolable social institution and
the foundation of the family[6] that the State cherishes and protects. While the Court
commisserates with petitioner in her unhappy marital relationship with respondent,
totally terminating that relationship, however, may not necessarily be the fitting
denouement to it. In these cases, the law has not quite given up, neither should we.
WHEREFORE, the herein petition is DENIED. No costs.
SO ORDERED.
Melo, (Chairman), Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez,
JJ., concur.