Sie sind auf Seite 1von 201

1.) Lim vs. Pacquing [G.R. No. 115044.

January 27, 1995]


Ponente: PADILLA, J.
FACTS:
The Charter of the City of Manila was enacted by Congress on 18 June 1949 (R.A. No. 409).
On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from
local government to the Games and Amusements Board (GAB).
On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065
entitled An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development Corporation To
Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For
Other Purposes.
On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled
Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And
Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other
Forms Of Gambling, in Section 3 thereof, expressly revoked all existing franchises and permits issued by local
governments.
In May 1988, Associated Development Corporation (ADC) tried to operate a Jai-Alai. The government through
Games and Amusement Board intervened and invoked Presidential Decree No. 771 which expressly revoked
all existing franchises and permits to operate all forms of gambling facilities (including Jai-Alai) by local
governments. ADC assails the constitutionality of P.D. No. 771.
At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as follows:
1.

whether or not intervention by the Republic of the Philippines at this stage of the proceedings is proper;

2.
assuming such intervention is proper, whether or not the Associated Development Corporation has a
valid and subsisting franchise to maintain and operate the jai-alai;
3.
whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing
the aforementioned temporary restraining order (later writ of preliminary injunction); and
4.
whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing
the aforementioned writ of preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a question was raised
during the hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was the proper
remedy for the national government to take in questioning the existence of a valid ADC franchise to operate the
jai-alai or whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of Court was the
proper remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this Court
once and for all settle all substantive issues raised by the parties in these cases. Moreover, this Court can
consider the petition filed in G.R. No. 117263 as one for quo warranto which is within the original jurisdiction of
the Court under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director of Lands
v. Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed in Section 2 Rule
12 of the Rules of Court. The Court ruled in said case that a denial of the motions for intervention would "lead
the Court to commit an act of injustice to the movants, to their successor-in-interest and to all purchasers for

value and in good faith and thereby open the door to fraud, falsehood and misrepresentation, should
intervenors' claim be proven to be true."
In the present case, the resulting injustice and injury, should the national government's allegations be proven
correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to
maintain and operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively
discussed later, the national government contends that Manila Ordinance No. 7065 which purported to grant to
ADC a franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on
20 June 1953, or very much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in
Section 4 thereof, requires a legislative franchise, not a municipal franchise, for the operation of jai-alai.
Additionally, the national government argues that even assuming, arguendo, that the abovementioned
ordinance is valid, ADC's franchise was nonetheless effectively revoked by Presidential decree No. 771, issued
on 20 August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to operate all forms
of gambling facilities (including the jai-alai) issued by local governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of Manila
pursuant to its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the
constitutionality of PD No. 771 as violative of the equal protection and non-impairment clauses of the
Constitution. In this connection, counsel for ADC contends that this Court should really rule on the validity of
PD No. 771 to be able to determine whether ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the
issue of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the
present controversy, in view of ADC's insistence that it was granted a valid and legal franchise by Ordinance
No. 7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or
unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended
by any subsequent law or presidential issuance (when the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division
in said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional,
since only the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution. 4
And on the question of whether or not the government is estopped from contesting ADC's possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to
the City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No.
115044 in the exercise, not of its business or proprietary functions, but in the exercise of its governmental
functions to protect public morals and promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a statement of the
pertinent laws is in order.
1.
The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof
provides:

Sec. 18.

Legislative Powers. The Municipal Board shall have the following legislative powers:

xxx

xxx

xxx

(jj)
To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards,
pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or athletic contests, as well
as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.
2.
On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais
from local government to the Games and Amusements Board (GAB).
3.
On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse
Races and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The provisions of
Republic Act No. 954 relating to jai-alai are as follows:
Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on any basque pelota
game or event, or maintain or use a totalizator or other device, method or system to bet or gamble on any
basque pelota game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque pelota
games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a totalizator or
other device, method or system to bet or gamble on any basque pelota game or event outside the place,
enclosure, or fronton where the basque pelota game is held. (emphasis supplied).
4.
On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No.
7065 entitled "An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development
Corporation To Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And
Conditions And For Other Purposes."
5.
On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree,
entitled "Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And
Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other
Forms Of Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by local
governments.
6.
On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And
Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And
Similar Games of Skill In THE Greater Manila Area," was promulgated.
7
On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which
allowed the incumbent legislative powers until the first Congress was convened, issued Executive Order No.
169 expressly repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai
and Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal
Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in
Rep. Act No. 954 is used to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the
Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word
"legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the
Municipal Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the
City of Manila to allow ADC to operate the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409
merely to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but
that the term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the
power to regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national
government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid
franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses
the word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license, permit and
regulate wagers or betting" and to "grant exclusive rights to establishments", while Ordinance No. 7065
authorized the Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise"
wagers or betting, including the jai-alai, but retained for itself such power "to franchise". What Congress
delegated to the City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to
"license, permit, or regulate" which therefore means that a license or permit issued by the City of Manila to
operate a wager or betting activity, such as the jai-alai where bets are accepted, would not amount to
something meaningful UNLESS the holder of the permit or license was also FRANCHISED by the national
government to so operate. Moreover, even this power to license, permit, or regulate wagers or betting on jaialai was removed from local governments, including the City of Manila, and transferred to the GAB on 1
January 1951 by Executive Order No. 392. The net result is that the authority to grant franchises for the
operation of jai-alai frontons is in Congress, while the regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jaialai, it may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the
City of Manila.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting under
Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is enacted by
Congress expressly exempting or excluding certain forms of gambling from the reach of criminal law. Among
these form the reach of criminal law. Among these forms of gambling allowed by special law are the horse
races authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential
Decree No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games is
undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the Revised
Penal Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown any
such special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June
1949 gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in nature. 5 The regulatory
nature of these powers finds support not only in the plain words of the enumerations under Section 28 but also
in this Court's ruling in People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or
not a law of general application (such as, the Probation law-Act No. 4221) would or would not be operative
within the province, is unconstitutional for being an undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this Court
would likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would
delegate to the Municipal Board of Manila would give the latter the absolute and unlimited discretion to render
the penal code provisions on gambling inapplicable or inoperative to persons or entities issued permits to
operate gambling establishments in the City of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and
in harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No.
7065 should be taken together and it should then be clear that the legislative powers of the Municipal Board
should be understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer to
congressional franchises, as a necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the task at hand which will ultimately, and with
finality, decide the issues in this case is to determine whether PD No. 771 validly revoked ADC's franchise to
operate the jai-alai, assuming (without conceding) that it indeed possessed such franchise under Ordinance
No. 7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment
provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise
of the inherent police power of the State.
The police power has been described as the least limitable of the inherent powers of the State. It is based on
the ancient doctrine salus populi est suprema lex (the welfare of the people is the supreme law.) In the early
case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm
stated thus:
The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly termed the
"law of overruling necessity." It may be said to be that inherent and plenary power in the State which enables it
to prohibit all things hurtful to the comfort, safety and welfare of society. Carried onward by the current of
legislation, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the
purposes of the law do not go beyond the great principles that mean security for the public welfare or do not
arbitrarily interfere with the right of the individual.
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:
WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies against
vices and illegal gambling, these social ills are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize vices and
other forms of social ills in pursuance of the social and economic development program under the new society;
WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and dog races,
jai-alai and other forms of gambling there is a necessity to transfer the issuance of permit and/or franchise from
local government to the National Government.
It cannot be argued that the control and regulation of gambling do not promote public morals and welfare.
Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good,
honest and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must
minimize (if not eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice
Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In
making such choices, Congress has consulted its own wisdom, which this Court has no authority to review,
much less reverse. Well has it been said that courts do not sit to resolve the merits of conflicting theories. That
is the prerogative of the political departments. It is settled that questions regarding wisdom, morality and
practicability of statutes are not addressed to the judiciary but may be resolved only by the executive and
legislative departments, to which the function belongs in our scheme of government. (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no
relevance in the context of these cases since the reference there is to economic regulations. On the other
hand, jai-alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and
whether it should be permitted and, if so, under what conditions are questions primarily for the lawmaking
authority to determine, talking into account national and local interests. Here, it is the police power of the State
that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into
allegations that PD No. 771 was enacted to benefit a select group which was later given authority to operate
the jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v.
Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of
evidence to support ADC's allegation of improper motivation in the issuance of PD No. 771. In the second
place, as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No. 771,
which are reasonable and even laudable.
It should also be remembered that PD No. 771 provides that the national government can subsequently grant
franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged
that it filed an application for a franchise with the national government subsequent to the enactment of PD No.
771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures,
speculations and imagined biases which do not warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking
PD No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal
PD No. 771 which had revoked all franchises to operate jai-alais issued by local governments, thereby reaffirming the government policy that franchises to operate jai-alais are for the national government (not local
governments) to consider and approve.
On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to regulate and even prohibit through
the exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power
for the public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands of a
subject." This definition was given by Finch, adopted by Blackstone, and accepted by every authority since . . .
Today, a franchise being merely a privilege emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue of its police power through its
administrative agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when played for
bets, is pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such
as public transportation company, is to trivialize the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. and
yet, the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the
exclusive power to grant gambling franchises. Thus, all franchises then existing were revoked but were made
subject to reissuance by the national government upon compliance by the applicant with government-set
qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises
issued by local governments without qualification or exception. ADC cannot allege violation of the equal
protection clause simply because it was the only one affected by the decree, for as correctly pointed out by the
government, ADC was not singled out when all jai-alai franchises were revoked. Besides, it is too late in the

day for ADC to seek redress for alleged violation of its constitutional rights for it could have raised these issues
as early as 1975, almost twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic
Act No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject
which shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court
ruled that the requirement under the constitution that all laws should embrace only one subject which shall be
expressed in the title is sufficiently met if the title is comprehensive enough reasonably to include the general
object which the statute seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction.
While ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No.
954 and PD 771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal
right on the part of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction.
since PD No. 771 and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the
Supreme Court after due hearing, ADC was not entitled to the writs issued and consequently there was grave
abuse of discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

2.) JAWORSKI vs. PAGCOR


G.R. No. 144463 - January 14, 2004
FACTS:

The Philippine Amusement and Gaming Corporation (PAGCOR) is a government owned and controlled
corporation existing under PD No. 1869 issued on July 11, 1983 by then President Ferdinand Marcos.
On March 31, 1998, PAGCORs board of directors approved an instrument denominated as Grant of Authority
and Agreement for the Operation of Sports Betting and Internet Gaming, which granted Sports and Games
and Entertainment Corporation (SAGE) the authority to operate and maintain Sports Betting station in
PAGCORs casino locations, and Internet Gaming facilities to service local and international bettors, provided
that to the satisfaction of PAGCOR, appropriate safeguards and procedures are established to ensure the
integrity and fairness of the games. On September 1, 1998, PAGCOR, represented by its Chairperson, Alicia
LI. Reyes, and SAGE, represented by its Chairman of the Board, Henry Sy, Jr., and its President, Antonio D.
Lacdao, executed the above-named document. Pursuant to the authority granted by PAGCOR, SAGE
commended its operations by conducting gambling on the Internet on a trial-run basis, making pre-paid cards
and redemption of winnings available at various Bingo Bonanza outlets.
Petitioner Senator Robert Jaworski, in his capacity as member of the Senate and Chairman of the Senate
Committee on Games, Amusement and Sports, filed the instant petition, praying that the grant of authority by
PAGCOR in favor of SAGE be nullified. He maintains that PAGCOR committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it authorized SAGE to operate gambling on the internet. He
contends that PAGCOR is not authorized under its legislative franchise, PD No. 1869, to operate gambling on
the internet for the simple reason that the said decree could not have possibly contemplated internet gambling
since at the time of its enactment on July 11, 1983 the internet was yet inexistent and gambling activities were
confined exclusively to real-space. Further, he argues that the internet, being an international network of
computers, necessarily transcends the territorial jurisdiction of the Philippines, and the grant to SAGE of
authority to operate internet gambling contravenes the limitation of PAGCORs franchise, under Section 14 of
PD No. 1869 which provides: Place. The Corporation [i.e., PAGCOR] shall conduct gambling activities or
games of chance on land or water within the territorial jurisdiction of the Republic of the Philippines. x x x.
Moreover, according to petitioner, internet gambling does not fall under any of the categories of the authorized
gambling activities enumerated under Section 10 of PD No. 1869 which grants PAGCOR the right, privilege
and authority to operate and maintain gambling casinos, clubs, and other recreation or amusement places,
sports gaming pools, within the territorial jurisdiction of the Republic of the Philippines. He contends that
internet gambling could not have been included within the commonly accepted definition of gambling casinos,
clubs or other recreation or amusement places as these terms refer to a physical structure in real-space
where people who intend to bet or gamble go and play games of chance authorized by law.
The issues raised by petitioner are as follows:
I. WHETHER OR NOT RESPONDENT PAGCOR IS AUTHORIZED UNDER P.D. NO. 1869 TO OPERATE
GAMBLING ACTIVITIES ON THE INTERNET;
II. WHETHER RESPONDENT PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, OR
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN IT
AUTHORIZED RESPONDENT SAGE TO OPERATE INTERNET GAMBLING ON THE BASIS OF ITS RIGHT
"TO OPERATE AND MAINTAIN GAMBLING CASINOS, CLUBS AND OTHER AMUSEMENT PLACES"
UNDER SECTION 10 OF P.D. 1869;
III. WHETHER RESPONDENT PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
GRANTED AUTHORITY TO SAGE TO OPERATE GAMBLING ACTIVITIES IN THE INTERNET.
The above-mentioned issues may be summarized into a single pivotal question: Does PAGCORs legislative
franchise include the right to vest another entity, SAGE in this case, with the authority to operate Internet
gambling? Otherwise put, does Presidential Decree No. 1869 authorize PAGCOR to contract any part of its
franchise to SAGE by authorizing the latter to operate Internet gambling?

Before proceeding with our main discussion, let us first try to hurdle a number of important procedural matters
raised by the respondents.
In their separate Comments, respondents PAGCOR and SAGE insist that petitioner has no legal standing to
file the instant petition as a concerned citizen or as a member of the Philippine Senate on the ground that he is
not a real party-in-interest entitled to the avails of the suit. In this light, they argue that petitioner does not have
the requisite personal and substantial interest to impugn the validity of PAGCORs grant of authority to SAGE.
Objections to the legal standing of a member of the Senate or House of Representative to maintain a suit and
assail the constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies
or instrumentalities are not without precedent. Ordinarily, before a member of Congress may properly
challenge the validity of an official act of any department of the government there must be an unmistakable
showing that the challenged official act affects or impairs his rights and prerogatives as legislator.2 However in
a number of cases,3 we clarified that where a case involves an issue of utmost importance, or one of
overreaching significance to society, the Court, in its discretion, can brush aside procedural technicalities and
take cognizance of the petition. Considering that the instant petition involves legal questions that may have
serious implications on public interests, we rule that petitioner has the requisite legal standing to file this
petition.
Respondents likewise urge the dismissal of the petition for certiorari and prohibition because under Section 1,
Rule 65 of the 1997 Rules of Civil Procedure, these remedies should be directed to any tribunal, board, officer
or person whether exercising judicial, quasi-judicial, or ministerial functions. They maintain that in exercising its
legally-mandated franchise to grant authority to certain entities to operate a gambling or gaming activity,
PAGCOR is not performing a judicial or quasi-judicial act. Neither should the act of granting licenses or
authority to operate be construed as a purely ministerial act. According to them, in the event that this Court
takes cognizance of the instant petition, the same should be dismissed for failure of petitioner to observe the
hierarchy of courts.
Practically the same procedural infirmities were raised in Del Mar v. Philippine Amusement and Gaming
Corporation where an almost identical factual setting obtained. Petitioners therein filed a petition for injunction
directly before the Court which sought to enjoin respondent from operating the jai-alai games by itself or in joint
venture with another corporate entity allegedly in violation of law and the Constitution. Respondents contended
that the Court had no jurisdiction to take original cognizance of a petition for injunction because it was not one
of the actions specifically mentioned in Section 1 of Rule 56 of the 1997 Rules of Civil Procedure. Respondents
likewise took exception to the alleged failure of petitioners to observe the doctrine on hierarchy of courts. In
brushing aside the apparent procedural lapse, we held that "x x x this Court has the discretionary power to take
cognizance of the petition at bar if compelling reasons, or the nature and importance of the issues raised,
warrant the immediate exercise of its jurisdiction."4
In the case at bar, we are not inclined to rule differently. The petition at bar seeks to nullify, via a petition for
certiorari and prohibition filed directly before this Court, the "Grant of Authority and Agreement for the
Operation of Sports Betting and Internet Gaming" by virtue of which SAGE was vested by PAGCOR with the
authority to operate on-line Internet gambling. It is well settled that averments in the complaint, and not the
nomenclature given by the parties, determine the nature of the action.5 Although the petition alleges grave
abuse of discretion on the part of respondent PAGCOR, what it primarily seeks to accomplish is to prevent the
enforcement of the "Grant of Authority and Agreement for the Operation of Sports Betting and Internet
Gaming." Thus, the action may properly be characterized as one for Prohibition under Section 2 of Rule 65,
which incidentally, is another remedy resorted to by petitioner.
Granting arguendo that the present action cannot be properly treated as a petition for prohibition, the
transcendental importance of the issues involved in this case warrants that we set aside the technical defects
and take primary jurisdiction over the petition at bar. One cannot deny that the issues raised herein have
potentially pervasive influence on the social and moral well being of this nation, specially the youth; hence,
their proper and just determination is an imperative need. This is in accordance with the well-entrenched
principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and

promote the administration of justice. Their strict and rigid application, which would result in technicalities that
tend to frustrate, rather than promote substantial justice, must always be eschewed.6
Having disposed of these procedural issues, we now come to the substance of the action.
A legislative franchise is a special privilege granted by the state to corporations. It is a privilege of public
concern which cannot be exercised at will and pleasure, but should be reserved for public control and
administration, either by the government directly, or by public agents, under such conditions and regulations as
the government may impose on them in the interest of the public. It is Congress that prescribes the conditions
on which the grant of the franchise may be made. Thus the manner of granting the franchise, to whom it may
be granted, the mode of conducting the business, the charter and the quality of the service to be rendered and
the duty of the grantee to the public in exercising the franchise are almost always defined in clear and
unequivocal language.7
After a circumspect consideration of the foregoing discussion and the contending positions of the parties, we
hold that PAGCOR has acted beyond the limits of its authority when it passed on or shared its franchise to
SAGE.
In the Del Mar case where a similar issue was raised when PAGCOR entered into a joint venture agreement
with two other entities in the operation and management of jai alai games, the Court,8 in an En Banc
Resolution dated 24 August 2001, partially granted the motions for clarification filed by respondents therein
insofar as it prayed that PAGCOR has a valid franchise, but only by itself (i.e. not in association with any other
person or entity), to operate, maintain and/or manage the game of jai-alai.
In the case at bar, PAGCOR executed an agreement with SAGE whereby the former grants the latter the
authority to operate and maintain sports betting stations and Internet gaming operations. In essence, the grant
of authority gives SAGE the privilege to actively participate, partake and share PAGCORs franchise to operate
a gambling activity. The grant of franchise is a special privilege that constitutes a right and a duty to be
performed by the grantee. The grantee must not perform its activities arbitrarily and whimsically but must abide
by the limits set by its franchise and strictly adhere to its terms and conditionalities. A corporation as a creature
of the State is presumed to exist for the common good. Hence, the special privileges and franchises it receives
are subject to the laws of the State and the limitations of its charter. There is therefore a reserved right of the
State to inquire how these privileges had been employed, and whether they have been abused.9
While PAGCOR is allowed under its charter to enter into operators and/or management contracts, it is not
allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to
another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata
potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly
authorized to do so. In Lim v. Pacquing,10 the Court clarified that "since ADC has no franchise from Congress
to operate the jai-alai, it may not so operate even if it has a license or permit from the City Mayor to operate the
jai-alai in the City of Manila." By the same token, SAGE has to obtain a separate legislative franchise and not
"ride on" PAGCORs franchise if it were to legally operate on-line Internet gambling. WHEREFORE, in view of all
the foregoing, the instant petition is GRANTED. The "Grant of Authority and Agreement to Operate Sports Betting and
Internet Gaming" executed by PAGCOR in favor of SAGE is declared NULL and VOID.

3.) ABAKADA GURO PARTYLIST v. ERMITA


G.R. No. 168056 September 1, 2005
Facts: Mounting budget deficit, revenue generation, inadequate fiscal allocation for education, increased
emoluments for health workers, and wider coverage for full value-added tax benefits these are the reasons
why Republic Act No. 9337 (R.A. No. 9337) was enacted.
R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill Nos. 3555 and 3705, and Senate
Bill No. 1950.
Because of the conflicting provisions of the proposed bills the Senate agreed to the request of the House of
Representatives for a committee conference. The Conference Committee on the Disagreeing Provisions of
House Bill recommended the approval of its report, which the Senate and the House of the Representatives
did.

The President signed into law the consolidated House and Senate versions as Republic Act 9337. Before the
law was to take effect on July 1, 2005, the Court issued a temporary restraining order enjoining government
from implementing the law in response to a slew of petitions for certiorari and prohibition questioning the
constitutionality of the new law.
Among others, Petitioners contend that Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation of
legislative power, in violation of Article VI, Section 28(2) of the Constitution;
Issue: W/N there is an undue delegation of legislative power
Held: In the present case, the challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and
6 which reads as follows: That the President, upon the recommendation of the Secretary of Finance, shall,
effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following
conditions has been satisfied:
(i)
Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year
exceeds two and four-fifth percent (2 4/5%); or
(ii)
National government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1 %)
In every case of permissible delegation, there must be a showing that the delegation itself is valid. It is valid
only if the law (a) is complete in itself, setting forth therein the policy to be executed, carried out, or
implemented by the delegate;41 and (b) fixes a standard the limits of which are sufficiently determinate and
determinable to which the delegate must conform in the performance of his functions. A sufficient standard
is one which defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency
to apply it. It indicates the circumstances under which the legislative command is to be effected. Both tests are
intended to prevent a total transference of legislative authority to the delegate, who is not allowed to step into
the shoes of the legislature and exercise a power essentially legislative.
A distinction has rightfully been made between delegation of power to make the laws which necessarily
involves discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or
discretion as to its execution to be exercised under and in pursuance of the law, to which no valid objection can
be made.
The case before the Court is not a delegation of legislative power. It is simply a delegation of ascertainment of
facts upon which enforcement and administration of the increase rate under the law is contingent. The
legislature has made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact
or condition. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the
control of the executive. No discretion would be exercised by the President. Highlighting the absence of
discretion is the fact that the word shall is used in the common proviso. The use of the word shall connote a
mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of
discretion. Where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts
have no choice but to see to it that the mandate is obeyed.
There is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is
constitutionally permissible. Congress does not abdicate its functions or unduly delegate power when it
describes what job must be done, who must do it, and what is the scope of his authority; in our complex
economy that is frequently the only way in which the legislative process can go forward.
ISSUES
The Court defined the issues, as follows:
PROCEDURAL ISSUE
Whether R.A. No. 9337 violates the following provisions of the Constitution:

a. Article VI, Section 24, and


b. Article VI, Section 26(2)
SUBSTANTIVE ISSUES
1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate
the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12
of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
RULING OF THE COURT
As a prelude, the Court deems it apt to restate the general principles and concepts of value-added tax (VAT),
as the confusion and inevitably, litigation, breeds from a fallacious notion of its nature.
The VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange or lease of goods or
properties and services.8 Being an indirect tax on expenditure, the seller of goods or services may pass on the
amount of tax paid to the buyer,9 with the seller acting merely as a tax collector.10 The burden of VAT is
intended to fall on the immediate buyers and ultimately, the end-consumers.
In contrast, a direct tax is a tax for which a taxpayer is directly liable on the transaction or business it engages
in, without transferring the burden to someone else.11 Examples are individual and corporate income taxes,
transfer taxes, and residence taxes.12
In the Philippines, the value-added system of sales taxation has long been in existence, albeit in a different
mode. Prior to 1978, the system was a single-stage tax computed under the "cost deduction method" and was
payable only by the original sellers. The single-stage system was subsequently modified, and a mixture of the
"cost deduction method" and "tax credit method" was used to determine the value-added tax payable.13 Under
the "tax credit method," an entity can credit against or subtract from the VAT charged on its sales or outputs the
VAT paid on its purchases, inputs and imports.14
It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273, that the VAT system
was rationalized by imposing a multi-stage tax rate of 0% or 10% on all sales using the "tax credit method."15
E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT Law,16 R.A. No. 8241 or the Improved VAT
Law,17 R.A. No. 8424 or the Tax Reform Act of 1997,18 and finally, the presently beleaguered R.A. No. 9337,
also referred to by respondents as the VAT Reform Act.
The Court will now discuss the issues in logical sequence.
PROCEDURAL ISSUE
I.
Whether R.A. No. 9337 violates the following provisions of the Constitution:

a. Article VI, Section 24, and


b. Article VI, Section 26(2)
A. The Bicameral Conference Committee
Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference Committee exceeded its
authority by:
1) Inserting the stand-by authority in favor of the President in Sections 4, 5, and 6 of R.A. No. 9337;
2) Deleting entirely the no pass-on provisions found in both the House and Senate bills;
3) Inserting the provision imposing a 70% limit on the amount of input tax to be credited against the output tax;
and
4) Including the amendments introduced only by Senate Bill No. 1950 regarding other kinds of taxes in addition
to the value-added tax.
Petitioners now beseech the Court to define the powers of the Bicameral Conference Committee.
It should be borne in mind that the power of internal regulation and discipline are intrinsic in any legislative
body for, as unerringly elucidated by Justice Story, "[i]f the power did not exist, it would be utterly impracticable
to transact the business of the nation, either at all, or at least with decency, deliberation, and order."19 Thus,
Article VI, Section 16 (3) of the Constitution provides that "each House may determine the rules of its
proceedings." Pursuant to this inherent constitutional power to promulgate and implement its own rules of
procedure, the respective rules of each house of Congress provided for the creation of a Bicameral
Conference Committee.
Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives provides as follows:
Sec. 88. Conference Committee. In the event that the House does not agree with the Senate on the
amendment to any bill or joint resolution, the differences may be settled by the conference committees of both
chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible, adhere to and
support the House Bill. If the differences with the Senate are so substantial that they materially impair the
House Bill, the panel shall report such fact to the House for the latters appropriate action.
Sec. 89. Conference Committee Reports. . . . Each report shall contain a detailed, sufficiently explicit
statement of the changes in or amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on the Conference Committee Report prior to the
voting thereon. The House shall vote on the Conference Committee Report in the same manner and procedure
as it votes on a bill on third and final reading.
Rule XII, Section 35 of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House of Representatives on the provision of any
bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall
meet within ten (10) days after their composition. The President shall designate the members of the Senate
Panel in the conference committee with the approval of the Senate.

Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes
in, or amendments to the subject measure, and shall be signed by a majority of the members of each House
panel, voting separately.
A comparative presentation of the conflicting House and Senate provisions and a reconciled version thereof
with the explanatory statement of the conference committee shall be attached to the report.
...
The creation of such conference committee was apparently in response to a problem, not addressed by any
constitutional provision, where the two houses of Congress find themselves in disagreement over changes or
amendments introduced by the other house in a legislative bill. Given that one of the most basic powers of the
legislative branch is to formulate and implement its own rules of proceedings and to discipline its members,
may the Court then delve into the details of how Congress complies with its internal rules or how it conducts its
business of passing legislation? Note that in the present petitions, the issue is not whether provisions of the
rules of both houses creating the bicameral conference committee are unconstitutional, but whether the
bicameral conference committee has strictly complied with the rules of both houses, thereby remaining within
the jurisdiction conferred upon it by Congress.
In the recent case of Farias vs. The Executive Secretary,20 the Court En Banc, unanimously reiterated and
emphasized its adherence to the "enrolled bill doctrine," thus, declining therein petitioners plea for the Court to
go behind the enrolled copy of the bill. Assailed in said case was Congresss creation of two sets of bicameral
conference committees, the lack of records of said committees proceedings, the alleged violation of said
committees of the rules of both houses, and the disappearance or deletion of one of the provisions in the
compromise bill submitted by the bicameral conference committee. It was argued that such irregularities in the
passage of the law nullified R.A. No. 9006, or the Fair Election Act.
Striking down such argument, the Court held thus:
Under the "enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate President
and the certification of the Secretaries of both Houses of Congress that it was passed are conclusive of its due
enactment. A review of cases reveals the Courts consistent adherence to the rule. The Court finds no reason
to deviate from the salutary rule in this case where the irregularities alleged by the petitioners mostly involved
the internal rules of Congress, e.g., creation of the 2nd or 3rd Bicameral Conference Committee by the House.
This Court is not the proper forum for the enforcement of these internal rules of Congress, whether House or
Senate. Parliamentary rules are merely procedural and with their observance the courts have no concern.
Whatever doubts there may be as to the formal validity of Rep. Act No. 9006 must be resolved in its favor. The
Court reiterates its ruling in Arroyo vs. De Venecia, viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to inquire
into allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in the absence
of showing that there was a violation of a constitutional provision or the rights of private individuals. In Osmea
v. Pendatun, it was held: "At any rate, courts have declared that the rules adopted by deliberative bodies are
subject to revocation, modification or waiver at the pleasure of the body adopting them. And it has been said
that "Parliamentary rules are merely procedural, and with their observance, the courts have no concern. They
may be waived or disregarded by the legislative body." Consequently, "mere failure to conform to parliamentary
usage will not invalidate the action (taken by a deliberative body) when the requisite number of members have
agreed to a particular measure."21 (Emphasis supplied)
The foregoing declaration is exactly in point with the present cases, where petitioners allege irregularities
committed by the conference committee in introducing changes or deleting provisions in the House and Senate
bills. Akin to the Farias case,22 the present petitions also raise an issue regarding the actions taken by the
conference committee on matters regarding Congress compliance with its own internal rules. As stated earlier,
one of the most basic and inherent power of the legislature is the power to formulate rules for its proceedings
and the discipline of its members. Congress is the best judge of how it should conduct its own business
expeditiously and in the most orderly manner. It is also the sole

concern of Congress to instill discipline among the members of its conference committee if it believes that said
members violated any of its rules of proceedings. Even the expanded jurisdiction of this Court cannot apply to
questions regarding only the internal operation of Congress, thus, the Court is wont to deny a review of the
internal proceedings of a co-equal branch of government.
Moreover, as far back as 1994 or more than ten years ago, in the case of Tolentino vs. Secretary of Finance,23
the Court already made the pronouncement that "[i]f a change is desired in the practice [of the Bicameral
Conference Committee] it must be sought in Congress since this question is not covered by any constitutional
provision but is only an internal rule of each house." 24 To date, Congress has not seen it fit to make such
changes adverted to by the Court. It seems, therefore, that Congress finds the practices of the bicameral
conference committee to be very useful for purposes of prompt and efficient legislative action.
Nevertheless, just to put minds at ease that no blatant irregularities tainted the proceedings of the bicameral
conference committees, the Court deems it necessary to dwell on the issue. The Court observes that there
was a necessity for a conference committee because a comparison of the provisions of House Bill Nos. 3555
and 3705 on one hand, and Senate Bill No. 1950 on the other, reveals that there were indeed disagreements.
As pointed out in the petitions, said disagreements were as follows:
House Bill No. 3555
House Bill No.3705
Senate Bill No. 1950
With regard to "Stand-By Authority" in favor of President
Provides for 12% VAT on every sale of goods or properties (amending Sec. 106 of NIRC); 12% VAT on
importation of goods (amending Sec. 107 of NIRC); and 12% VAT on sale of services and use or lease of
properties (amending Sec. 108 of NIRC)
Provides for 12% VAT in general on sales of goods or properties and reduced rates for sale of certain locally
manufactured goods and petroleum products and raw materials to be used in the manufacture thereof
(amending Sec. 106 of NIRC); 12% VAT on importation of goods and reduced rates for certain imported
products including petroleum products (amending Sec. 107 of NIRC); and 12% VAT on sale of services and
use or lease of properties and a reduced rate for certain services including power generation (amending Sec.
108 of NIRC)
Provides for a single rate of 10% VAT on sale of goods or properties (amending Sec. 106 of NIRC), 10% VAT
on sale of services including sale of electricity by generation companies, transmission and distribution
companies, and use or lease of properties (amending Sec. 108 of NIRC)
With regard to the "no pass-on" provision
No similar provision
Provides that the VAT imposed on power generation and on the sale of petroleum products shall be absorbed
by generation companies or sellers, respectively, and shall not be passed on to consumers

Provides that the VAT imposed on sales of electricity by generation companies and services of transmission
companies and distribution companies, as well as those of franchise grantees of electric utilities shall not apply
to residential
end-users. VAT shall be absorbed by generation, transmission, and distribution companies.
With regard to 70% limit on input tax credit
Provides that the input tax credit for capital goods on which a VAT has been paid shall be equally distributed
over 5 years or the depreciable life of such capital goods; the input tax credit for goods and services other than
capital goods shall not exceed 5% of the total amount of such goods and services; and for persons engaged in
retail trading of goods, the allowable input tax credit shall not exceed 11% of the total amount of goods
purchased.
No similar provision
Provides that the input tax credit for capital goods on which a VAT has been paid shall be equally distributed
over 5 years or the depreciable life of such capital goods; the input tax credit for goods and services other than
capital goods shall not exceed 90% of the output VAT.
With regard to amendments to be made to NIRC provisions regarding income and excise taxes
No similar provision
No similar provision
Provided for amendments to several NIRC provisions regarding corporate income, percentage, franchise and
excise taxes
The disagreements between the provisions in the House bills and the Senate bill were with regard to (1) what
rate of VAT is to be imposed; (2) whether only the VAT imposed on electricity generation, transmission and
distribution companies should not be passed on to consumers, as proposed in the Senate bill, or both the VAT
imposed on electricity generation, transmission and distribution companies and the VAT imposed on sale of
petroleum products should not be passed on to consumers, as proposed in the House bill; (3) in what manner
input tax credits should be limited; (4) and whether the NIRC provisions on corporate income taxes,
percentage, franchise and excise taxes should be amended.
There being differences and/or disagreements on the foregoing provisions of the House and Senate bills, the
Bicameral Conference Committee was mandated by the rules of both houses of Congress to act on the same
by settling said differences and/or disagreements. The Bicameral Conference Committee acted on the
disagreeing provisions by making the following changes:
1. With regard to the disagreement on the rate of VAT to be imposed, it would appear from the Conference
Committee Report that the Bicameral Conference Committee tried to bridge the gap in the difference between
the 10% VAT rate proposed by the Senate, and the various rates with 12% as the highest VAT rate proposed
by the House, by striking a compromise whereby the present 10% VAT rate would be retained until certain
conditions arise, i.e., the value-added tax collection as a percentage of gross domestic product (GDP) of the
previous year exceeds 2 4/5%, or National Government deficit as a percentage of GDP of the previous year
exceeds 1%, when the President, upon recommendation of the Secretary of Finance shall raise the rate of
VAT to 12% effective January 1, 2006.

2. With regard to the disagreement on whether only the VAT imposed on electricity generation, transmission
and distribution companies should not be passed on to consumers or whether both the VAT imposed on
electricity generation, transmission and distribution companies and the VAT imposed on sale of petroleum
products may be passed on to consumers, the Bicameral Conference Committee chose to settle such
disagreement by altogether deleting from its Report any no pass-on provision.
3. With regard to the disagreement on whether input tax credits should be limited or not, the Bicameral
Conference Committee decided to adopt the position of the House by putting a limitation on the amount of
input tax that may be credited against the output tax, although it crafted its own language as to the amount of
the limitation on input tax credits and the manner of computing the same by providing thus:
(A) Creditable Input Tax. . . .
...
Provided, The input tax on goods purchased or imported in a calendar month for use in trade or business for
which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of
acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods,
excluding the VAT component thereof, exceeds one million Pesos (P1,000,000.00): PROVIDED, however, that
if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes,
then the input VAT shall be spread over such shorter period: . . .
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax exceeds the input tax, the
excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be
carried over to the succeeding quarter or quarters: PROVIDED that the input tax inclusive of input VAT carried
over from the previous quarter that may be credited in every quarter shall not exceed seventy percent (70%) of
the output VAT: PROVIDED, HOWEVER, THAT any input tax attributable to zero-rated sales by a VATregistered person may at his option be refunded or credited against other internal revenue taxes, . . .
4. With regard to the amendments to other provisions of the NIRC on corporate income tax, franchise,
percentage and excise taxes, the conference committee decided to include such amendments and basically
adopted the provisions found in Senate Bill No. 1950, with some changes as to the rate of the tax to be
imposed.
Under the provisions of both the Rules of the House of Representatives and Senate Rules, the Bicameral
Conference Committee is mandated to settle the differences between the disagreeing provisions in the House
bill and the Senate bill. The term "settle" is synonymous to "reconcile" and "harmonize."25 To reconcile or
harmonize disagreeing provisions, the Bicameral Conference Committee may then (a) adopt the specific
provisions of either the House bill or Senate bill, (b) decide that neither provisions in the House bill or the
provisions in the Senate bill would
be carried into the final form of the bill, and/or (c) try to arrive at a compromise between the disagreeing
provisions.
In the present case, the changes introduced by the Bicameral Conference Committee on disagreeing
provisions were meant only to reconcile and harmonize the disagreeing provisions for it did not inject any idea
or intent that is wholly foreign to the subject embraced by the original provisions.
The so-called stand-by authority in favor of the President, whereby the rate of 10% VAT wanted by the Senate
is retained until such time that certain conditions arise when the 12% VAT wanted by the House shall be
imposed, appears to be a compromise to try to bridge the difference in the rate of VAT proposed by the two
houses of Congress. Nevertheless, such compromise is still totally within the subject of what rate of VAT
should be imposed on taxpayers.

The no pass-on provision was deleted altogether. In the transcripts of the proceedings of the Bicameral
Conference Committee held on May 10, 2005, Sen. Ralph Recto, Chairman of the Senate Panel, explained the
reason for deleting the no pass-on provision in this wise:
. . . the thinking was just to keep the VAT law or the VAT bill simple. And we were thinking that no sector should
be a beneficiary of legislative grace, neither should any sector be discriminated on. The VAT is an indirect tax.
It is a pass on-tax. And lets keep it plain and simple. Lets not confuse the bill and put a no pass-on provision.
Two-thirds of the world have a VAT system and in this two-thirds of the globe, I have yet to see a VAT with a no
pass-though provision. So, the thinking of the Senate is basically simple, lets keep the VAT simple.26
(Emphasis supplied)
Rep. Teodoro Locsin further made the manifestation that the no pass-on provision "never really enjoyed the
support of either House."27
With regard to the amount of input tax to be credited against output tax, the Bicameral Conference Committee
came to a compromise on the percentage rate of the limitation or cap on such input tax credit, but again, the
change introduced by the Bicameral Conference Committee was totally within the intent of both houses to put
a cap on input tax that may be
credited against the output tax. From the inception of the subject revenue bill in the House of Representatives,
one of the major objectives was to "plug a glaring loophole in the tax policy and administration by creating vital
restrictions on the claiming of input VAT tax credits . . ." and "[b]y introducing limitations on the claiming of tax
credit, we are capping a major leakage that has placed our collection efforts at an apparent disadvantage."28
As to the amendments to NIRC provisions on taxes other than the value-added tax proposed in Senate Bill No.
1950, since said provisions were among those referred to it, the conference committee had to act on the same
and it basically adopted the version of the Senate.
Thus, all the changes or modifications made by the Bicameral Conference Committee were germane to
subjects of the provisions referred
to it for reconciliation. Such being the case, the Court does not see any grave abuse of discretion amounting to
lack or excess of jurisdiction committed by the Bicameral Conference Committee. In the earlier cases of
Philippine Judges Association vs. Prado29 and Tolentino vs. Secretary of Finance,30 the Court recognized the
long-standing legislative practice of giving said conference committee ample latitude for compromising
differences between the Senate and the House. Thus, in the Tolentino case, it was held that:
. . . it is within the power of a conference committee to include in its report an entirely new provision that is not
found either in the House bill or in the Senate bill. If the committee can propose an amendment consisting of
one or two provisions, there is no reason why it cannot propose several provisions, collectively considered as
an "amendment in the nature of a substitute," so long as such amendment is germane to the subject of the bills
before the committee. After all, its report was not final but needed the approval of both houses of Congress to
become valid as an act of the legislative department. The charge that in this case the Conference Committee
acted as a third legislative chamber is thus without any basis.31 (Emphasis supplied)
B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the Constitution on the "No-Amendment Rule"
Article VI, Sec. 26 (2) of the Constitution, states:
No bill passed by either House shall become a law unless it has passed three readings on separate days, and
printed copies thereof in its final form have been distributed to its Members three days before its passage,
except when the President certifies to the necessity of its immediate enactment to meet a public calamity or
emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall
be taken immediately thereafter, and the yeas and nays entered in the Journal.

Petitioners argument that the practice where a bicameral conference committee is allowed to add or delete
provisions in the House bill and the Senate bill after these had passed three readings is in effect a
circumvention of the "no amendment rule" (Sec. 26 (2), Art. VI of the 1987 Constitution), fails to convince the
Court to deviate from its ruling in the Tolentino case that:
Nor is there any reason for requiring that the Committees Report in these cases must have undergone three
readings in each of the two houses. If that be the case, there would be no end to negotiation since each house
may seek modification of the compromise bill. . . .
Art. VI. 26 (2) must, therefore, be construed as referring only to bills introduced for the first time in either
house of Congress, not to the conference committee report.32 (Emphasis supplied)
The Court reiterates here that the "no-amendment rule" refers only to the procedure to be followed by each
house of Congress with regard to bills initiated in each of said respective houses, before said bill is transmitted
to the other house for its concurrence or amendment. Verily, to construe said provision in a way as to proscribe
any further changes to a bill after one house has voted on it would lead to absurdity as this would mean that
the other house of Congress would be deprived of its constitutional power to amend or introduce changes to
said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot be taken to mean that the introduction by the
Bicameral Conference Committee of amendments and modifications to disagreeing provisions in bills that have
been acted upon by both houses of Congress is prohibited.
C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the Constitution on Exclusive Origination of
Revenue Bills
Coming to the issue of the validity of the amendments made regarding the NIRC provisions on corporate
income taxes and percentage, excise taxes. Petitioners refer to the following provisions, to wit:
Section 27
Rates of Income Tax on Domestic Corporation
28(A)(1)
Tax on Resident Foreign Corporation
28(B)(1)
Inter-corporate Dividends
34(B)(1)
Inter-corporate Dividends
116
Tax on Persons Exempt from VAT
117
Percentage Tax on domestic carriers and keepers of Garage
119
Tax on franchises
121

Tax on banks and Non-Bank Financial Intermediaries


148
Excise Tax on manufactured oils and other fuels
151
Excise Tax on mineral products
236
Registration requirements
237
Issuance of receipts or sales or commercial invoices
288
Disposition of Incremental Revenue
Petitioners claim that the amendments to these provisions of the NIRC did not at all originate from the House.
They aver that House Bill No. 3555 proposed amendments only regarding Sections 106, 107, 108, 110 and
114 of the NIRC, while House Bill No. 3705 proposed amendments only to Sections 106, 107,108, 109, 110
and 111 of the NIRC; thus, the other sections of the NIRC which the Senate amended but which amendments
were not found in the House bills are not intended to be amended by the House of Representatives. Hence,
they argue that since the proposed amendments did not originate from the House, such amendments are a
violation of Article VI, Section 24 of the Constitution.
The argument does not hold water.
Article VI, Section 24 of the Constitution reads:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives but the Senate may
propose or concur with amendments.
In the present cases, petitioners admit that it was indeed House Bill Nos. 3555 and 3705 that initiated the move
for amending provisions of the NIRC dealing mainly with the value-added tax. Upon transmittal of said House
bills to the Senate, the Senate came out with Senate Bill No. 1950 proposing amendments not only to NIRC
provisions on the value-added tax but also amendments to NIRC provisions on other kinds of taxes. Is the
introduction by the Senate of provisions not dealing directly with the value- added tax, which is the only kind of
tax being amended in the House bills, still within the purview of the constitutional provision authorizing the
Senate to propose or concur with amendments to a revenue bill that originated from the House?
The foregoing question had been squarely answered in the Tolentino case, wherein the Court held, thus:
. . . To begin with, it is not the law but the revenue bill which is required by the Constitution to "originate
exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. . . .
At this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced.
To insist that a revenue statute and not only the bill which initiated the legislative process culminating in the
enactment of the law must substantially be the same as the House bill would be to deny the Senates power

not only to "concur with amendments" but also to "propose amendments." It would be to violate the coequality
of legislative power of the two houses of Congress and in fact make the House superior to the Senate.

Given, then, the power of the Senate to propose amendments, the Senate can propose its own version even
with respect to bills which are required by the Constitution to originate in the House.
...
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff or tax bills, bills
authorizing an increase of the public debt, private bills and bills of local application must come from the House
of Representatives on the theory that, elected as they are from the districts, the members of the House can be
expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the national perspective. Both views are
thereby made to bear on the enactment of such laws.33 (Emphasis supplied)
Since there is no question that the revenue bill exclusively originated in the House of Representatives, the
Senate was acting within its
constitutional power to introduce amendments to the House bill when it included provisions in Senate Bill No.
1950 amending corporate income taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24
of the Constitution does not contain any prohibition or limitation on the extent of the amendments that may be
introduced by the Senate to the House revenue bill.
Furthermore, the amendments introduced by the Senate to the NIRC provisions that had not been touched in
the House bills are still in furtherance of the intent of the House in initiating the subject revenue bills. The
Explanatory Note of House Bill No. 1468, the very first House bill introduced on the floor, which was later
substituted by House Bill No. 3555, stated:
One of the challenges faced by the present administration is the urgent and daunting task of solving the
countrys serious financial problems. To do this, government expenditures must be strictly monitored and
controlled and revenues must be significantly increased. This may be easier said than done, but our fiscal
authorities are still optimistic the government will be operating on a balanced budget by the year 2009. In fact,
several measures that will result to significant expenditure savings have been identified by the administration. It
is supported with a credible package of revenue measures that include measures to improve tax administration
and control the leakages in revenues from income taxes and the value-added tax (VAT). (Emphasis supplied)
Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555, declared that:
In the budget message of our President in the year 2005, she reiterated that we all acknowledged that on top
of our agenda must be the restoration of the health of our fiscal system.
In order to considerably lower the consolidated public sector deficit and eventually achieve a balanced budget
by the year 2009, we need to seize windows of opportunities which might seem poignant in the beginning, but
in the long run prove effective and beneficial to the overall status of our economy. One such opportunity is a
review of existing tax rates, evaluating the relevance given our present conditions.34 (Emphasis supplied)
Notably therefore, the main purpose of the bills emanating from the House of Representatives is to bring in
sizeable revenues for the government
to supplement our countrys serious financial problems, and improve tax administration and control of the
leakages in revenues from income taxes and value-added taxes. As these house bills were transmitted to the
Senate, the latter, approaching the measures from the point of national perspective, can introduce
amendments within the purposes of those bills. It can provide for ways that would soften the impact of the VAT
measure on the consumer, i.e., by distributing the burden across all sectors instead of putting it entirely on the

shoulders of the consumers. The sponsorship speech of Sen. Ralph Recto on why the provisions on income
tax on corporation were included is worth quoting:
All in all, the proposal of the Senate Committee on Ways and Means will raise P64.3 billion in additional
revenues annually even while by mitigating prices of power, services and petroleum products.
However, not all of this will be wrung out of VAT. In fact, only P48.7 billion amount is from the VAT on twelve
goods and services. The rest of the tab P10.5 billion- will be picked by corporations.
What we therefore prescribe is a burden sharing between corporate Philippines and the consumer. Why should
the latter bear all the pain? Why should the fiscal salvation be only on the burden of the consumer?
The corporate worlds equity is in form of the increase in the corporate income tax from 32 to 35 percent, but
up to 2008 only. This will raise P10.5 billion a year. After that, the rate will slide back, not to its old rate of 32
percent, but two notches lower, to 30 percent.
Clearly, we are telling those with the capacity to pay, corporations, to bear with this emergency provision that
will be in effect for 1,200 days, while we put our fiscal house in order. This fiscal medicine will have an expiry
date.
For their assistance, a reward of tax reduction awaits them. We intend to keep the length of their sacrifice brief.
We would like to assure them that not because there is a light at the end of the tunnel, this government will
keep on making the tunnel long.
The responsibility will not rest solely on the weary shoulders of the small man. Big business will be there to
share the burden.35
As the Court has said, the Senate can propose amendments and in fact, the amendments made on provisions
in the tax on income of corporations are germane to the purpose of the house bills which is to raise revenues
for the government.
Likewise, the Court finds the sections referring to other percentage and excise taxes germane to the reforms to
the VAT system, as these sections would cushion the effects of VAT on consumers. Considering that certain
goods and services which were subject to percentage tax and excise tax would no longer be VAT-exempt, the
consumer would be burdened more as they would be paying the VAT in addition to these taxes. Thus, there is
a need to amend these sections to soften the impact of VAT. Again, in his sponsorship speech, Sen. Recto
said:
However, for power plants that run on oil, we will reduce to zero the present excise tax on bunker fuel, to
lessen the effect of a VAT on this product.
For electric utilities like Meralco, we will wipe out the franchise tax in exchange for a VAT.
And in the case of petroleum, while we will levy the VAT on oil products, so as not to destroy the VAT chain, we
will however bring down the excise tax on socially sensitive products such as diesel, bunker, fuel and
kerosene.
...
What do all these exercises point to? These are not contortions of giving to the left hand what was taken from
the right. Rather, these sprang from our concern of softening the impact of VAT, so that the people can cushion
the blow of higher prices they will have to pay as a result of VAT.36
The other sections amended by the Senate pertained to matters of tax administration which are necessary for
the implementation of the changes in the VAT system.

To reiterate, the sections introduced by the Senate are germane to the subject matter and purposes of the
house bills, which is to supplement our countrys fiscal deficit, among others. Thus, the Senate acted within its
power to propose those amendments.
SUBSTANTIVE ISSUES
I.
Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of the NIRC, violate the
following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
A. No Undue Delegation of Legislative Power
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escudero, et al. contend in common
that Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the NIRC
giving the President the stand-by authority to raise the VAT rate from 10% to 12% when a certain condition is
met, constitutes undue delegation of the legislative power to tax.
The assailed provisions read as follows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties.
(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale, barter or exchange of
goods or properties, a value-added tax equivalent to ten percent (10%) of the gross selling price or gross value
in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor:
provided, that the President, upon the recommendation of the Secretary of Finance, shall, effective January 1,
2006, raise the rate of value-added tax to twelve percent (12%), after any of the following conditions has been
satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
SEC. 5. Section 107 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 107. Value-Added Tax on Importation of Goods.
(A) In General. There shall be levied, assessed and collected on every importation of goods a value-added
tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining
tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by
the importer prior to the release of such goods from customs custody: Provided, That where the customs
duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based
on the landed cost plus excise taxes, if any: provided, further, that the President, upon the recommendation of
the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve percent
(12%) after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%) or

(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as follows:
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties
(A) Rate and Base of Tax. There shall be levied, assessed and collected, a value-added tax equivalent to ten
percent (10%) of gross receipts derived from the sale or exchange of services: provided, that the President,
upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of valueadded tax to twelve percent (12%), after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %). (Emphasis supplied)
Petitioners allege that the grant of the stand-by authority to the President to increase the VAT rate is a virtual
abdication by Congress of its exclusive power to tax because such delegation is not within the purview of
Section 28 (2), Article VI of the Constitution, which provides:
The Congress may, by law, authorize the President to fix within specified limits, and may impose, tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the government.
They argue that the VAT is a tax levied on the sale, barter or exchange of goods and properties as well as on
the sale or exchange of services, which cannot be included within the purview of tariffs under the exempted
delegation as the latter refers to customs duties, tolls or tribute payable upon merchandise to the government
and usually imposed on goods or merchandise imported or exported.
Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the President the legislative
power to tax is contrary to republicanism. They insist that accountability, responsibility and transparency should
dictate the actions of Congress and they should not pass to the President the decision to impose taxes. They
also argue that the law also effectively nullified the Presidents power of control, which includes the authority to
set aside and nullify the acts of her subordinates like the Secretary of Finance, by mandating the fixing of the
tax rate by the President upon the recommendation of the Secretary of Finance.
Petitioners Pimentel, et al. aver that the President has ample powers to cause, influence or create the
conditions provided by the law to bring about either or both the conditions precedent.
On the other hand, petitioners Escudero, et al. find bizarre and revolting the situation that the imposition of the
12% rate would be subject to the whim of the Secretary of Finance, an unelected bureaucrat, contrary to the
principle of no taxation without representation. They submit that the Secretary of Finance is not mandated to
give a favorable recommendation and he may not even give his recommendation. Moreover, they allege that
no guiding standards are provided in the law on what basis and as to how he will make his recommendation.
They claim, nonetheless, that any recommendation of the Secretary of Finance can easily be brushed aside by
the President since the former is a mere alter ego of the latter, such that, ultimately, it is the President who
decides whether to impose the increased tax rate or not.
A brief discourse on the principle of non-delegation of powers is instructive.
The principle of separation of powers ordains that each of the three great branches of government has
exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated sphere.37 A
logical

corollary to the doctrine of separation of powers is the principle of non-delegation of powers, as expressed in
the Latin maxim: potestas delegata non delegari potest which means "what has been delegated, cannot be
delegated."38 This doctrine is based on the ethical principle that such as delegated power constitutes not only
a right but a duty to be performed by the delegate through the instrumentality of his own judgment and not
through the intervening mind of another.39
With respect to the Legislature, Section 1 of Article VI of the Constitution provides that "the Legislative power
shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives." The powers which Congress is prohibited from delegating are those which are strictly, or
inherently and exclusively, legislative. Purely legislative power, which can never be delegated, has been
described as the authority to make a complete law complete as to the time when it shall take effect and as to
whom it shall be applicable and to determine the expediency of its enactment.40 Thus, the rule is that in
order that a court may be justified in holding a statute unconstitutional as a delegation of legislative power, it
must appear that the power involved is purely legislative in nature that is, one appertaining exclusively to the
legislative department. It is the nature of the power, and not the liability of its use or the manner of its exercise,
which determines the validity of its delegation.
Nonetheless, the general rule barring delegation of legislative powers is subject to the following recognized
limitations or exceptions:
(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
In every case of permissible delegation, there must be a showing that the delegation itself is valid. It is valid
only if the law (a) is complete in itself, setting forth therein the policy to be executed, carried out, or
implemented by the delegate;41 and (b) fixes a standard the limits of which are sufficiently determinate and
determinable to which the delegate must conform in the performance of his functions.42 A sufficient
standard is one which defines legislative policy, marks its limits, maps out its boundaries and specifies the
public agency to apply it. It indicates the circumstances under which the legislative command is to be
effected.43 Both tests are intended to prevent a total transference of legislative authority to the delegate, who
is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.44
In People vs. Vera,45 the Court, through eminent Justice Jose P. Laurel, expounded on the concept and extent
of delegation of power in this wise:
In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire
whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that
nothing was left to the judgment of any other appointee or delegate of the legislature.
...
The true distinction, says Judge Ranney, is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made.
...

It is contended, however, that a legislative act may be made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the
executive or the adoption by the people of a particular community. In Wayman vs. Southard, the Supreme
Court of the United States ruled that the legislature may delegate a power not legislative which it may itself
rightfully exercise. The power to ascertain facts is such a power which may be delegated. There is nothing
essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of
a law. That is a mental process common to all branches of the government. Notwithstanding the apparent
tendency, however, to relax the rule prohibiting delegation of legislative authority on account of the complexity
arising from social and economic forces at work in this modern industrial age, the orthodox pronouncement of
Judge Cooley in his work on Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the
Constitution of the United States in the following language speaking of declaration of legislative power to
administrative agencies: The principle which permits the legislature to provide that the administrative agent
may determine when the circumstances are such as require the application of a law is defended upon the
ground that at the time this authority is granted, the rule of public policy, which is the essence of the legislative
act, is determined by the legislature. In other words, the legislature, as it is its duty to do, determines that,
under given circumstances, certain executive or administrative action is to be taken, and that, under other
circumstances, different or no action at all is to be taken. What is thus left to the administrative official is not the
legislative determination of what public policy demands, but simply the ascertainment of what the facts of the
case require to be done according to the terms of the law by which he is governed. The efficiency of an Act as
a declaration of legislative will must, of course, come from Congress, but the ascertainment of the contingency
upon which the Act shall take effect may be left to such agencies as it may designate. The legislature, then,
may provide that a law shall take effect upon the happening of future specified contingencies leaving to some
other person or body the power to determine when the specified contingency has arisen. (Emphasis
supplied).46
In Edu vs. Ericta,47 the Court reiterated:
What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them;
the test is the completeness of the statute in all its terms and provisions when it leaves the hands of the
legislature. To determine whether or not there is an undue delegation of legislative power, the inquiry must be
directed to the scope and definiteness of the measure enacted. The legislative does not abdicate its functions
when it describes what job must be done, who is to do it, and what is the scope of his authority. For a complex
economy, that may be the only way in which the legislative process can go forward. A distinction has rightfully
been made between delegation of power to make the laws which necessarily involves a discretion as to what it
shall be, which constitutionally may not be done, and delegation of authority or discretion as to its execution to
be exercised under and in pursuance of the law, to which no valid objection can be made. The Constitution is
thus not to be regarded as denying the legislature the necessary resources of flexibility and practicability.
(Emphasis supplied).48
Clearly, the legislature may delegate to executive officers or bodies the power to determine certain facts or
conditions, or the happening of contingencies, on which the operation of a statute is, by its terms, made to
depend, but the legislature must prescribe sufficient standards, policies or limitations on their authority.49
While the power to tax cannot be delegated to executive agencies, details as to the enforcement and
administration of an exercise of such power may be left to them, including the power to determine the
existence of facts on which its operation depends.50
The rationale for this is that the preliminary ascertainment of facts as basis for the enactment of legislation is
not of itself a legislative function, but is simply ancillary to legislation. Thus, the duty of correlating information
and making recommendations is the kind of subsidiary activity which the legislature may perform through its
members, or which it may delegate to others to perform. Intelligent legislation on the complicated problems of
modern society is impossible in the absence of accurate information on the part of the legislators, and any
reasonable method of securing such information is proper.51 The Constitution as a continuously operative
charter of government does not require that Congress find for itself

every fact upon which it desires to base legislative action or that it make for itself detailed determinations which
it has declared to be prerequisite to application of legislative policy to particular facts and circumstances
impossible for Congress itself properly to investigate.52
In the present case, the challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6
which reads as follows:
That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%), after any of the following conditions has been
satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent
(1 %).
The case before the Court is not a delegation of legislative power. It is simply a delegation of ascertainment of
facts upon which enforcement and administration of the increase rate under the law is contingent. The
legislature has made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact
or condition. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the
control of the executive.
No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the
word shall is used in the common proviso. The use of the word shall connotes a mandatory order. Its use in a
statute denotes an imperative obligation and is inconsistent with the idea of discretion.53 Where the law is
clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to
it that the mandate is obeyed.54
Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any
of the conditions specified by Congress. This is a duty which cannot be evaded by the President. Inasmuch as
the law specifically uses the word shall, the exercise of discretion by the President does not come into play. It
is a clear directive to impose the 12% VAT rate when the specified conditions are present. The time of taking
into effect of the 12% VAT rate is based on the happening of a certain specified contingency, or upon the
ascertainment of certain facts or conditions by a person or body other than the legislature itself.
The Court finds no merit to the contention of petitioners ABAKADA GURO Party List, et al. that the law
effectively nullified the Presidents power of control over the Secretary of Finance by mandating the fixing of
the tax rate by the President upon the recommendation of the Secretary of Finance. The Court cannot also
subscribe to the position of petitioners
Pimentel, et al. that the word shall should be interpreted to mean may in view of the phrase "upon the
recommendation of the Secretary of Finance." Neither does the Court find persuasive the submission of
petitioners Escudero, et al. that any recommendation by the Secretary of Finance can easily be brushed aside
by the President since the former is a mere alter ego of the latter.
When one speaks of the Secretary of Finance as the alter ego of the President, it simply means that as head of
the Department of Finance he is the assistant and agent of the Chief Executive. The multifarious executive and
administrative functions of the Chief Executive are performed by and through the executive departments, and
the acts of the secretaries of such departments, such as the Department of Finance, performed and
promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive,
presumptively the acts of the Chief Executive. The Secretary of Finance, as such, occupies a political position
and holds office in an advisory capacity, and, in the language of Thomas Jefferson, "should be of the
President's bosom confidence" and, in the language of Attorney-General Cushing, is "subject to the direction of
the President."55

In the present case, in making his recommendation to the President on the existence of either of the two
conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. In
such instance, he is not subject to the power of control and direction of the President. He is acting as the agent
of the legislative department, to determine and declare the event upon which its expressed will is to take
effect.56 The Secretary of Finance becomes the means or tool by which legislative policy is determined and
implemented, considering that he possesses all the facilities to gather data and information and has a much
broader perspective to properly evaluate them. His function is to gather and collate statistical data and other
pertinent information and verify if any of the two conditions laid out by Congress is present. His personality in
such instance is in reality but a projection of that of Congress. Thus, being the agent of Congress and not of
the President, the President cannot alter or modify or nullify, or set aside the findings of the Secretary of
Finance and to substitute the judgment of the former for that of the latter.
Congress simply granted the Secretary of Finance the authority to ascertain the existence of a fact, namely,
whether by December 31, 2005, the value-added tax collection as a percentage of Gross Domestic Product
(GDP) of the previous year exceeds two and four-fifth percent (24/5%) or the national government deficit as a
percentage of GDP of the previous year exceeds one and one-half percent (1%). If either of these two
instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the
President. Then the 12% VAT rate must be imposed by the President effective January 1, 2006. There is no
undue delegation of legislative power but only of the discretion as to the execution of a law. This is
constitutionally permissible.57 Congress does not abdicate its functions or unduly delegate power when it
describes what job must be done, who must do it, and what is the scope of his authority; in our complex
economy that is frequently the only way in which the legislative process can go forward.58
As to the argument of petitioners ABAKADA GURO Party List, et al. that delegating to the President the
legislative power to tax is contrary to the principle of republicanism, the same deserves scant consideration.
Congress did not delegate the power to tax but the mere implementation of the law. The intent and will to
increase the VAT rate to 12% came from Congress and the task of the President is to simply execute the
legislative policy. That Congress chose to do so in such a manner is not within the province of the Court to
inquire into, its task being to interpret the law.59
The insinuation by petitioners Pimentel, et al. that the President has ample powers to cause, influence or
create the conditions to bring about either or both the conditions precedent does not deserve any merit as this
argument is highly speculative. The Court does not rule on allegations which are manifestly conjectural, as
these may not exist at all. The Court deals with facts, not fancies; on realities, not appearances. When the
Court acts on appearances instead of realities, justice and law will be short-lived.
B. The 12% Increase VAT Rate Does Not Impose an Unfair and Unnecessary Additional Tax Burden
Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate imposes an unfair and additional tax
burden on the people. Petitioners also argue that the 12% increase, dependent on any of the 2 conditions set
forth in the contested provisions, is ambiguous because it does not state if the VAT rate would be returned to
the original 10% if the rates are no longer satisfied. Petitioners also argue that such rate is unfair and
unreasonable, as the people are unsure of the applicable VAT rate from year to year.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any of the two conditions set forth
therein are satisfied, the President shall increase the VAT rate to 12%. The provisions of the law are clear. It
does not provide for a return to the 10% rate nor does it empower the President to so revert if, after the rate is
increased to 12%, the VAT collection goes below the 24/5 of the GDP of the previous year or that the national
government deficit as a percentage of GDP of the previous year does not exceed 1%.
Therefore, no statutory construction or interpretation is needed. Neither can conditions or limitations be
introduced where none is provided for. Rewriting the law is a forbidden ground that only Congress may tread
upon.60
Thus, in the absence of any provision providing for a return to the 10% rate, which in this case the Court finds
none, petitioners argument is, at best, purely speculative. There is no basis for petitioners fear of a fluctuating

VAT rate because the law itself does not provide that the rate should go back to 10% if the conditions provided
in Sections 4, 5 and 6 are no longer present. The rule is that where the provision of the law is clear and
unambiguous, so that there is no occasion for the court's seeking the legislative intent, the law must be taken
as it is, devoid of judicial addition or subtraction.61
Petitioners also contend that the increase in the VAT rate, which was allegedly an incentive to the President to
raise the VAT collection to at least 2 4/5 of the GDP of the previous year, should be based on fiscal adequacy.
Petitioners obviously overlooked that increase in VAT collection is not the only condition. There is another
condition, i.e., the national government deficit as a percentage of GDP of the previous year exceeds one and
one-half percent (1 %).
Respondents explained the philosophy behind these alternative conditions:
1. VAT/GDP Ratio > 2.8%
The condition set for increasing VAT rate to 12% have economic or fiscal meaning. If VAT/GDP is less than
2.8%, it means that government has weak or no capability of implementing the VAT or that VAT is not effective
in the function of the tax collection. Therefore, there is no value to increase it to 12% because such action will
also be ineffectual.
2. Natl Govt Deficit/GDP >1.5%
The condition set for increasing VAT when deficit/GDP is 1.5% or less means the fiscal condition of
government has reached a relatively sound position or is towards the direction of a balanced budget position.
Therefore, there is no need to increase the VAT rate since the fiscal house is in a relatively healthy position.
Otherwise stated, if the ratio is more than 1.5%, there is indeed a need to increase the VAT rate.62
That the first condition amounts to an incentive to the President to increase the VAT collection does not render
it unconstitutional so long as there is a public purpose for which the law was passed, which in this case, is
mainly to raise revenue. In fact, fiscal adequacy dictated the need for a raise in revenue.
The principle of fiscal adequacy as a characteristic of a sound tax system was originally stated by Adam Smith
in his Canons of Taxation (1776), as:
IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little
as possible over and above what it brings into the public treasury of the state.63
It simply means that sources of revenues must be adequate to meet government expenditures and their
variations.64
The dire need for revenue cannot be ignored. Our country is in a quagmire of financial woe. During the
Bicameral Conference Committee hearing, then Finance Secretary Purisima bluntly depicted the countrys
gloomy state of economic affairs, thus:
First, let me explain the position that the Philippines finds itself in right now. We are in a position where 90
percent of our revenue is used for debt service. So, for every peso of revenue that we currently raise, 90 goes
to debt service. Thats interest plus amortization of our debt. So clearly, this is not a sustainable situation.
Thats the first fact.
The second fact is that our debt to GDP level is way out of line compared to other peer countries that borrow
money from that international financial markets. Our debt to GDP is approximately equal to our GDP. Again,
that shows you that this is not a sustainable situation.
The third thing that Id like to point out is the environment that we are presently operating in is not as benign as
what it used to be the past five years.

What do I mean by that?


In the past five years, weve been lucky because we were operating in a period of basically global growth and
low interest rates. The past few months, we have seen an inching up, in fact, a rapid increase in the interest
rates in the leading economies of the world. And, therefore, our ability to borrow at reasonable prices is going
to be challenged. In fact, ultimately, the question is our ability to access the financial markets.
When the President made her speech in July last year, the environment was not as bad as it is now, at least
based on the forecast of most financial institutions. So, we were assuming that raising 80 billion would put us in
a position where we can then convince them to improve our ability to borrow at lower rates. But conditions
have changed on us because the interest rates have gone up. In fact, just within this room, we tried to access
the market for a billion dollars because for this year alone, the Philippines will have to borrow 4 billion dollars.
Of that amount, we have borrowed 1.5 billion. We issued last January a 25-year bond at 9.7 percent cost. We
were trying to access last week and the market was not as favorable and up to now we have not accessed and
we might pull back because the conditions are not very good.
So given this situation, we at the Department of Finance believe that we really need to front-end our deficit
reduction. Because it is deficit that is causing the increase of the debt and we are in what we call a debt spiral.
The more debt you have, the more deficit you have because interest and debt service eats and eats more of
your revenue. We need to get out of this debt spiral. And the only way, I think, we can get out of this debt spiral
is really have a front-end adjustment in our revenue base.65
The image portrayed is chilling. Congress passed the law hoping for rescue from an inevitable catastrophe.
Whether the law is indeed sufficient to answer the states economic dilemma is not for the Court to judge. In
the Farias case, the Court refused to consider the various arguments raised therein that dwelt on the wisdom
of Section 14 of R.A. No. 9006 (The Fair Election Act), pronouncing that:
. . . policy matters are not the concern of the Court. Government policy is within the exclusive dominion of the
political branches of the government. It is not for this Court to look into the wisdom or propriety of legislative
determination. Indeed, whether an enactment is wise or unwise, whether it is based on sound economic theory,
whether it is the best means to achieve the desired results, whether, in short, the legislative discretion within its
prescribed limits should be exercised in a particular manner are matters for the judgment of the legislature, and
the serious conflict of opinions does not suffice to bring them within the range of judicial cognizance.66
In the same vein, the Court in this case will not dawdle on the purpose of Congress or the executive policy,
given that it is not for the judiciary to "pass upon questions of wisdom, justice or expediency of legislation."67
II.
Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the NIRC; and Section 12 of
R.A. No. 9337, amending Section 114(C) of the NIRC, violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
A. Due Process and Equal Protection Clauses
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that Section 8 of R.A. No. 9337, amending
Sections 110 (A)(2), 110 (B), and Section 12 of R.A. No. 9337, amending Section 114 (C) of the NIRC are
arbitrary, oppressive, excessive and confiscatory. Their argument is premised on the constitutional right against
deprivation of life, liberty of property without due process of law, as embodied in Article III, Section 1 of the
Constitution.

Petitioners also contend that these provisions violate the constitutional guarantee of equal protection of the
law.
The doctrine is that where the due process and equal protection clauses are invoked, considering that they are
not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead
to such a conclusion. Absent such a showing, the presumption of validity must prevail.68
Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes a limitation on the amount of input
tax that may be credited against the output tax. It states, in part: "[P]rovided, that the input tax inclusive of the
input VAT carried over from the previous quarter that may be credited in every quarter shall not exceed seventy
percent (70%) of the output VAT: "
Input Tax is defined under Section 110(A) of the NIRC, as amended, as the value-added tax due from or paid
by a VAT-registered person on the importation of goods or local purchase of good and services, including lease
or use of property, in the course of trade or business, from a VAT-registered person, and Output Tax is the
value-added tax due on the sale or lease of taxable goods or properties or services by any person registered
or required to register under the law.
Petitioners claim that the contested sections impose limitations on the amount of input tax that may be claimed.
In effect, a portion of the input tax that has already been paid cannot now be credited against the output tax.
Petitioners argument is not absolute. It assumes that the input tax exceeds 70% of the output tax, and
therefore, the input tax in excess of 70% remains uncredited. However, to the extent that the input tax is less
than 70% of the output tax, then 100% of such input tax is still creditable.
More importantly, the excess input tax, if any, is retained in a businesss books of accounts and remains
creditable in the succeeding quarter/s. This is explicitly allowed by Section 110(B), which provides that "if the
input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters." In
addition, Section 112(B) allows a VAT-registered person to apply for the issuance of a tax credit certificate or
refund for any unused input taxes, to the extent that such input taxes have not been applied against the output
taxes. Such unused input tax may be used in payment of his other internal revenue taxes.
The non-application of the unutilized input tax in a given quarter is not ad infinitum, as petitioners
exaggeratedly contend. Their analysis of the effect of the 70% limitation is incomplete and one-sided. It ends at
the net effect that there will be unapplied/unutilized inputs VAT for a given quarter. It does not proceed further
to the fact that such unapplied/unutilized input tax may be credited in the subsequent periods as allowed by the
carry-over provision of Section 110(B) or that it may later on be refunded through a tax credit certificate under
Section 112(B).
Therefore, petitioners argument must be rejected.
On the other hand, it appears that petitioner Garcia failed to comprehend the operation of the 70% limitation on
the input tax. According to petitioner, the limitation on the creditable input tax in effect allows VAT-registered
establishments to retain a portion of the taxes they collect, which violates the principle that tax collection and
revenue should be for public purposes and expenditures
As earlier stated, the input tax is the tax paid by a person, passed on to him by the seller, when he buys goods.
Output tax meanwhile is the tax due to the person when he sells goods. In computing the VAT payable, three
possible scenarios may arise:
First, if at the end of a taxable quarter the output taxes charged by the seller are equal to the input taxes that
he paid and passed on by the suppliers, then no payment is required;
Second, when the output taxes exceed the input taxes, the person shall be liable for the excess, which has to
be paid to the Bureau of Internal Revenue (BIR);69 and

Third, if the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or
quarters. Should the input taxes result from zero-rated or effectively zero-rated transactions, any excess over
the output taxes shall instead be refunded to the taxpayer or credited against other internal revenue taxes, at
the taxpayers option.70
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input tax. Thus, a person can credit his
input tax only up to the extent of 70% of the output tax. In laymans term, the value-added taxes that a
person/taxpayer paid and passed on to him by a seller can only be credited up to 70% of the value-added
taxes that is due to him on a taxable transaction. There is no retention of any tax collection because the
person/taxpayer has already previously paid the input tax to a seller, and the seller will subsequently remit
such input tax to the BIR. The party directly liable for the payment of the tax is the seller.71 What only needs to
be done is for the person/taxpayer to apply or credit these input taxes, as evidenced by receipts, against his
output taxes.
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that the input tax partakes the nature of
a property that may not be confiscated, appropriated, or limited without due process of law.
The input tax is not a property or a property right within the constitutional purview of the due process clause. A
VAT-registered persons entitlement to the creditable input tax is a mere statutory privilege.
The distinction between statutory privileges and vested rights must be borne in mind for persons have no
vested rights in statutory privileges. The state may change or take away rights, which were created by the law
of the state, although it may not take away property, which was vested by virtue of such rights.72
Under the previous system of single-stage taxation, taxes paid at every level of distribution are not recoverable
from the taxes payable, although it becomes part of the cost, which is deductible from the gross revenue.
When Pres. Aquino issued E.O. No. 273 imposing a 10% multi-stage tax on all sales, it was then that the
crediting of the input tax paid on purchase or importation of goods and services by VAT-registered persons
against the output tax was introduced.73 This was adopted by the Expanded VAT Law (R.A. No. 7716),74 and
The Tax Reform Act of 1997 (R.A. No. 8424).75 The right to credit input tax as against the output tax is clearly
a privilege created by law, a privilege that also the law can remove, or in this case, limit.
Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of R.A. No. 9337,
amending Section 110(A) of the NIRC, which provides:
SEC. 110. Tax Credits.
(A) Creditable Input Tax.
Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business
for which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of
acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods,
excluding the VAT component thereof, exceeds One million pesos (P1,000,000.00): Provided, however, That if
the estimated useful life of the capital goods is less than five (5) years, as used for depreciation purposes, then
the input VAT shall be spread over such a shorter period: Provided, finally, That in the case of purchase of
services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or license upon
payment of the compensation, rental, royalty or fee.
The foregoing section imposes a 60-month period within which to amortize the creditable input tax on purchase
or importation of capital goods with acquisition cost of P1 Million pesos, exclusive of the VAT component. Such
spread out only poses a delay in the crediting of the input tax. Petitioners argument is without basis because
the taxpayer is not permanently deprived of his privilege to credit the input tax.
It is worth mentioning that Congress admitted that the spread-out of the creditable input tax in this case
amounts to a 4-year interest-free loan to the government.76 In the same breath, Congress also justified its
move by saying that the provision was designed to raise an annual revenue of 22.6 billion.77 The legislature

also dispelled the fear that the provision will fend off foreign investments, saying that foreign investors have
other tax incentives provided by law, and citing the case of China, where despite a 17.5% non-creditable VAT,
foreign investments were not deterred.78 Again, for whatever is the purpose of the 60-month amortization, this
involves executive economic policy and legislative wisdom in which the Court cannot intervene.
With regard to the 5% creditable withholding tax imposed on payments made by the government for taxable
transactions, Section 12 of R.A. No. 9337, which amended Section 114 of the NIRC, reads:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Value-added Tax. The Government or any of its political subdivisions, instrumentalities or
agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment on
account of each purchase of goods and services which are subject to the value-added tax imposed in Sections
106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of the
gross payment thereof: Provided, That the payment for lease or use of properties or property rights to
nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For purposes
of this Section, the payor or person in control of the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the
month the withholding was made.
Section 114(C) merely provides a method of collection, or as stated by respondents, a more simplified VAT
withholding system. The government in this case is constituted as a withholding agent with respect to their
payments for goods and services.
Prior to its amendment, Section 114(C) provided for different rates of value-added taxes to be withheld -- 3%
on gross payments for purchases of goods; 6% on gross payments for services supplied by contractors other
than by public works contractors; 8.5% on gross payments for services supplied by public work contractors; or
10% on payment for the lease or use of properties or property rights to nonresident owners. Under the present
Section 114(C), these different rates, except for the 10% on lease or property rights payment to nonresidents,
were deleted, and a uniform rate of 5% is applied.
The Court observes, however, that the law the used the word final. In tax usage, final, as opposed to
creditable, means full. Thus, it is provided in Section 114(C): "final value-added tax at the rate of five percent
(5%)."
In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The Tax Reform Act of 1997), the concept of
final withholding tax on income was explained, to wit:
SECTION 2.57. Withholding of Tax at Source
(A) Final Withholding Tax. Under the final withholding tax system the amount of income tax withheld by the
withholding agent is constituted as full and final payment of the income tax due from the payee on the said
income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in case of
his failure to withhold the tax or in case of underwithholding, the deficiency tax shall be collected from the
payor/withholding agent.
(B) Creditable Withholding Tax. Under the creditable withholding tax system, taxes withheld on certain
income payments are intended to equal or at least approximate the tax due of the payee on said income.
Taxes withheld on income payments covered by the expanded withholding tax (referred to in Sec. 2.57.2 of
these regulations) and compensation income (referred to in Sec. 2.78 also of these regulations) are creditable
in nature.
As applied to value-added tax, this means that taxable transactions with the government are subject to a 5%
rate, which constitutes as full payment of the tax payable on the transaction. This represents the net VAT

payable of the seller. The other 5% effectively accounts for the standard input VAT (deemed input VAT), in lieu
of the actual input VAT directly or attributable to the taxable transaction.79
The Court need not explore the rationale behind the provision. It is clear that Congress intended to treat
differently taxable transactions with the government.80 This is supported by the fact that under the old
provision, the 5% tax withheld by the government remains creditable against the tax liability of the seller or
contractor, to wit:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Creditable Value-added Tax. The Government or any of its political subdivisions,
instrumentalities or agencies, including government-owned or controlled corporations (GOCCs) shall, before
making payment on account of each purchase of goods from sellers and services rendered by contractors
which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold
the value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and
six percent (6%) on gross receipts for services rendered by contractors on every sale or installment payment
which shall be creditable against the value-added tax liability of the seller or contractor: Provided, however,
That in the case of government public works contractors, the withholding rate shall be eight and one-half
percent (8.5%): Provided, further, That the payment for lease or use of properties or property rights to
nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment. For this
purpose, the payor or person in control of the payment shall be considered as the withholding agent.
The valued-added tax withheld under this Section shall be remitted within ten (10) days following the end of the
month the withholding was made. (Emphasis supplied)
As amended, the use of the word final and the deletion of the word creditable exhibits Congresss intention to
treat transactions with the government differently. Since it has not been shown that the class subject to the 5%
final withholding tax has been unreasonably narrowed, there is no reason to invalidate the provision.
Petitioners, as petroleum dealers, are not the only ones subjected to the 5% final withholding tax. It applies to
all those who deal with the government.
Moreover, the actual input tax is not totally lost or uncreditable, as petitioners believe. Revenue Regulations
No. 14-2005 or the Consolidated Value-Added Tax Regulations 2005 issued by the BIR, provides that should
the actual input tax exceed 5% of gross payments, the excess may form part of the cost. Equally, should the
actual input tax be less than 5%, the difference is treated as income.81
Petitioners also argue that by imposing a limitation on the creditable input tax, the government gets to tax a
profit or value-added even if there is no profit or value-added.
Petitioners stance is purely hypothetical, argumentative, and again, one-sided. The Court will not engage in a
legal joust where premises are what ifs, arguments, theoretical and facts, uncertain. Any disquisition by the
Court on this point will only be, as Shakespeare describes life in Macbeth,82 "full of sound and fury, signifying
nothing."
Whats more, petitioners contention assumes the proposition that there is no profit or value-added. It need not
take an astute businessman to know that it is a matter of exception that a business will sell goods or services
without profit or value-added. It cannot be overstressed that a business is created precisely for profit.
The equal protection clause under the Constitution means that "no person or class of persons shall be
deprived of the same protection of laws which is enjoyed by other persons or other classes in the same place
and in like circumstances."83
The power of the State to make reasonable and natural classifications for the purposes of taxation has long
been established. Whether it relates to the subject of taxation, the kind of property, the rates to be levied, or the
amounts to be raised, the methods of assessment, valuation and collection, the States power is entitled to

presumption of validity. As a rule, the judiciary will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.84
Petitioners point out that the limitation on the creditable input tax if the entity has a high ratio of input tax, or
invests in capital equipment, or has several transactions with the government, is not based on real and
substantial differences to meet a valid classification.
The argument is pedantic, if not outright baseless. The law does not make any classification in the subject of
taxation, the kind of property, the rates to be levied or the amounts to be raised, the methods of assessment,
valuation and collection. Petitioners alleged distinctions are based on variables that bear different
consequences. While the implementation of the law may yield varying end results depending on ones profit
margin and value-added, the Court cannot go beyond what the legislature has laid down and interfere with the
affairs of business.
The equal protection clause does not require the universal application of the laws on all persons or things
without distinction. This might in fact sometimes result in unequal protection. What the clause requires is
equality among equals as determined according to a valid classification. By classification is meant the grouping
of persons or things similar to each other in certain particulars and different from all others in these same
particulars.85
Petitioners brought to the Courts attention the introduction of Senate Bill No. 2038 by Sens. S.R. Osmea III
and Ma. Ana Consuelo A.S. Madrigal on June 6, 2005, and House Bill No. 4493 by Rep. Eric D. Singson.
The proposed legislation seeks to amend the 70% limitation by increasing the same to 90%. This, according to
petitioners, supports their stance that the 70% limitation is arbitrary and confiscatory. On this score, suffice it to
say that these are still proposed legislations. Until Congress amends the law, and absent any unequivocal
basis for its unconstitutionality, the 70% limitation stays.
B. Uniformity and Equitability of Taxation
Article VI, Section 28(1) of the Constitution reads:
The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of
taxation.
Uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the
same rate. Different articles may be taxed at different amounts provided that the rate is uniform on the same
class everywhere with all people at all times.86
In this case, the tax law is uniform as it provides a standard rate of 0% or 10% (or 12%) on all goods and
services. Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the
NIRC, provide for a rate of 10% (or 12%) on sale of goods and properties, importation of goods, and sale of
services and use or lease of properties. These same sections also provide for a 0% rate on certain sales and
transaction.
Neither does the law make any distinction as to the type of industry or trade that will bear the 70% limitation on
the creditable input tax, 5-year amortization of input tax paid on purchase of capital goods or the 5% final
withholding tax by the government. It must be stressed that the rule of uniform taxation does not deprive
Congress of the power to classify subjects of taxation, and only demands uniformity within the particular
class.87
R.A. No. 9337 is also equitable. The law is equipped with a threshold margin. The VAT rate of 0% or 10% (or
12%) does not apply to sales of goods or services with gross annual sales or receipts not exceeding
P1,500,000.00.88 Also, basic marine and agricultural food products in their original state are still not subject to
the tax,89 thus ensuring that prices at the grassroots level will remain accessible. As was stated in Kapatiran
ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan:90

The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged
in business with an aggregate gross annual sales exceeding P200,000.00. Small corner sari-sari stores are
consequently exempt from its application. Likewise exempt from the tax are sales of farm and marine products,
so that the costs of basic food and other necessities, spared as they are from the incidence of the VAT, are
expected to be relatively lower and within the reach of the general public.
It is admitted that R.A. No. 9337 puts a premium on businesses with low profit margins, and unduly favors
those with high profit margins. Congress was not oblivious to this. Thus, to equalize the weighty burden the law
entails, the law, under Section 116, imposed a 3% percentage tax on VAT-exempt persons under Section
109(v), i.e., transactions with gross annual sales and/or receipts not exceeding P1.5 Million. This acts as a
equalizer because in effect, bigger businesses that qualify for VAT coverage and VAT-exempt taxpayers stand
on equal-footing.
Moreover, Congress provided mitigating measures to cushion the impact of the imposition of the tax on those
previously exempt. Excise taxes on petroleum products91 and natural gas92 were reduced. Percentage tax on
domestic carriers was removed.93 Power producers are now exempt from paying franchise tax.94
Aside from these, Congress also increased the income tax rates of corporations, in order to distribute the
burden of taxation. Domestic, foreign, and non-resident corporations are now subject to a 35% income tax rate,
from a previous 32%.95 Intercorporate dividends of non-resident foreign corporations are still subject to 15%
final withholding tax but the tax credit allowed on the corporations domicile was increased to 20%.96 The
Philippine Amusement and Gaming Corporation (PAGCOR) is not exempt from income taxes anymore.97
Even the sale by an artist of his works or services performed for the production of such works was not spared.
All these were designed to ease, as well as spread out, the burden of taxation, which would otherwise rest
largely on the consumers. It cannot therefore be gainsaid that R.A. No. 9337 is equitable.
C. Progressivity of Taxation
Lastly, petitioners contend that the limitation on the creditable input tax is anything but regressive. It is the
smaller business with higher input tax-output tax ratio that will suffer the consequences.
Progressive taxation is built on the principle of the taxpayers ability to pay. This principle was also lifted from
Adam Smiths Canons of Taxation, and it states:
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible,
in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy
under the protection of the state.
Taxation is progressive when its rate goes up depending on the resources of the person affected.98
The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The principle of progressive
taxation has no relation with the VAT system inasmuch as the VAT paid by the consumer or business for every
goods bought or services enjoyed is the same regardless of income. In
other words, the VAT paid eats the same portion of an income, whether big or small. The disparity lies in the
income earned by a person or profit margin marked by a business, such that the higher the income or profit
margin, the smaller the portion of the income or profit that is eaten by VAT. A converso, the lower the income or
profit margin, the bigger the part that the VAT eats away. At the end of the day, it is really the lower income
group or businesses with low-profit margins that is always hardest hit.
Nevertheless, the Constitution does not really prohibit the imposition of indirect taxes, like the VAT. What it
simply provides is that Congress shall "evolve a progressive system of taxation." The Court stated in the
Tolentino case, thus:

The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive.
What it simply provides is that Congress shall evolve a progressive system of taxation. The constitutional
provision has been interpreted to mean simply that direct taxes are . . . to be preferred [and] as much as
possible, indirect taxes should be minimized. (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES
221 (Second ed. 1977)) Indeed, the mandate to Congress is not to prescribe, but to evolve, a progressive tax
system. Otherwise, sales taxes, which perhaps are the oldest form of indirect taxes, would have been
prohibited with the proclamation of Art. VIII, 17 (1) of the 1973 Constitution from which the present Art. VI, 28
(1) was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to
avoid them by imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the law
minimizes the regressive effects of this imposition by providing for zero rating of certain transactions (R.A. No.
7716, 3, amending 102 (b) of the NIRC), while granting exemptions to other transactions. (R.A. No. 7716, 4
amending 103 of the NIRC)99
CONCLUSION
It has been said that taxes are the lifeblood of the government. In this case, it is just an enema, a first-aid
measure to resuscitate an economy in distress. The Court is neither blind nor is it turning a deaf ear on the
plight of the masses. But it does not have the panacea for the malady that the law seeks to remedy. As in other
cases, the Court cannot strike down a law as unconstitutional simply because of its yokes.
Let us not be overly influenced by the plea that for every wrong there is a remedy, and that the judiciary should
stand ready to afford relief. There are undoubtedly many wrongs the judicature may not correct, for instance,
those involving political questions. . . .
Let us likewise disabuse our minds from the notion that the judiciary is the repository of remedies for all
political or social ills; We should not forget that the Constitution has judiciously allocated the powers of
government to three distinct and separate compartments; and that judicial interpretation has tended to the
preservation of the independence of the three, and a zealous regard of the prerogatives of each, knowing full
well that one is not the guardian of the others and that, for official wrong-doing, each may be brought to
account, either by impeachment, trial or by the ballot box.100
The words of the Court in Vera vs. Avelino101 holds true then, as it still holds true now. All things considered,
there is no raison d'tre for the unconstitutionality of R.A. No. 9337.
WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions in G.R. Nos. 168056, 168207,
168461, 168463, and 168730, are hereby DISMISSED.
There being no constitutional impediment to the full enforcement and implementation of R.A. No. 9337, the
temporary restraining order issued by the Court on July 1, 2005 is LIFTED upon finality of herein decision.

4.) Akbayan vs Aquino July 16 2008


FACTS:
Petition for mandamus and prohibition was filed by the petitioners, as congresspersons, citizens and
taxpayers, requesting respondents to submit to them the full text of the Japan-Philippines Economic
Partnership Agreement (JPEPA).
Petitioner emphasize that the refusal of the government to disclose the said agreement violates there right to
information on matters of public concern and of public interest. That the non-disclosure of the same documents
undermines their right to effective and reasonable participation in all levels of social, political and economic
decision making.
Respondent herein invoke executive privilege. They relied on the ground that the matter sought involves a
diplomatic negotiation then in progress, thus constituting an exception to the right to information and the policy
of full disclosure of matters that are of public concern like the JPEPA. Those diplomatic negotiations are
covered by the doctrine of executive privilege.
Standing

For a petition for mandamus such as the one at bar to be given due course, it must be instituted by a party
aggrieved by the alleged inaction of any tribunal, corporation, board or person which unlawfully excludes said
party from the enjoyment of a legal right.7 Respondents deny that petitioners have such standing to sue. "[I]n
the interest of a speedy and definitive resolution of the substantive issues raised," however, respondents
consider it sufficient to cite a portion of the ruling in Pimentel v. Office of Executive Secretary8 which
emphasizes the need for a "personal stake in the outcome of the controversy" on questions of standing.
In a petition anchored upon the right of the people to information on matters of public concern, which is a public
right by its very nature, petitioners need not show that they have any legal or special interest in the result, it
being sufficient to show that they are citizens and, therefore, part of the general public which possesses the
right.9 As the present petition is anchored on the right to information and petitioners are all suing in their
capacity as citizens and groups of citizens including petitioners-members of the House of Representatives who
additionally are suing in their capacity as such, the standing of petitioners to file the present suit is grounded in
jurisprudence.
Mootness
Considering, however, that "[t]he principal relief petitioners are praying for is the disclosure of the contents of
the JPEPA prior to its finalization between the two States parties,"10 public disclosure of the text of the JPEPA
after its signing by the President, during the pendency of the present petition, has been largely rendered moot
and academic.
With the Senate deliberations on the JPEPA still pending, the agreement as it now stands cannot yet be
considered as final and binding between the two States. Article 164 of the JPEPA itself provides that the
agreement does not take effect immediately upon the signing thereof. For it must still go through the
procedures required by the laws of each country for its entry into force, viz:
Article 164
Entry into Force
This Agreement shall enter into force on the thirtieth day after the date on which the Governments of the
Parties exchange diplomatic notes informing each other that their respective legal procedures necessary for
entry into force of this Agreement have been completed. It shall remain in force unless terminated as provided
for in Article 165.11 (Emphasis supplied)
President Arroyos endorsement of the JPEPA to the Senate for concurrence is part of the legal procedures
which must be met prior to the agreements entry into force.
The text of the JPEPA having then been made accessible to the public, the petition has become moot and
academic to the extent that it seeks the disclosure of the "full text" thereof.
The petition is not entirely moot, however, because petitioners seek to obtain, not merely the text of the
JPEPA, but also the Philippine and Japanese offers in the course of the negotiations.12
A discussion of the substantive issues, insofar as they impinge on petitioners demand for access to the
Philippine and Japanese offers, is thus in order.
Grounds relied upon by petitioners
Petitioners assert, first, that the refusal of the government to disclose the documents bearing on the JPEPA
negotiations violates their right to information on matters of public concern13 and contravenes other
constitutional provisions on transparency, such as that on the policy of full public disclosure of all transactions
involving public interest.14 Second, they contend that non-disclosure of the same documents undermines their
right to effective and reasonable participation in all levels of social, political, and economic decision-making.15
Lastly, they proffer that divulging the contents of the JPEPA only after the agreement has been concluded will

effectively make the Senate into a mere rubber stamp of the Executive, in violation of the principle of
separation of powers.
Significantly, the grounds relied upon by petitioners for the disclosure of the latest text of the JPEPA are,
except for the last, the same as those cited for the disclosure of the Philippine and Japanese offers.
The first two grounds relied upon by petitioners which bear on the merits of respondents claim of privilege
shall be discussed. The last, being purely speculatory given that the Senate is still deliberating on the JPEPA,
shall not.
The JPEPA is a matter of public concern
To be covered by the right to information, the information sought must meet the threshold requirement that it be
a matter of public concern. Apropos is the teaching of Legaspi v. Civil Service Commission:
In determining whether or not a particular information is of public concern there is no rigid test which can be
applied. Public concern like public interest is a term that eludes exact definition. Both terms embrace a broad
spectrum of subjects which the public may want to know, either because these directly affect their lives, or
simply because such matters naturally arouse the interest of an ordinary citizen. In the final analysis, it is for
the courts to determine on a case by case basis whether the matter at issue is of interest or importance, as it
relates to or affects the public.16 (Underscoring supplied)
From the nature of the JPEPA as an international trade agreement, it is evident that the Philippine and
Japanese offers submitted during the negotiations towards its execution are matters of public concern. This,
respondents do not dispute. They only claim that diplomatic negotiations are covered by the doctrine of
executive privilege, thus constituting an exception to the right to information and the policy of full public
disclosure.
Respondents claim of privilege
It is well-established in jurisprudence that neither the right to information nor the policy of full public disclosure
is absolute, there being matters which, albeit of public concern or public interest, are recognized as privileged
in nature. The types of information which may be considered privileged have been elucidated in Almonte v.
Vasquez,17 Chavez v. PCGG,18 Chavez v. Public Estates Authority,19 and most recently in Senate v.
Ermita20 where the Court reaffirmed the validity of the doctrine of executive privilege in this jurisdiction and
dwelt on its scope.
Whether a claim of executive privilege is valid depends on the ground invoked to justify it and the context in
which it is made.21 In the present case, the ground for respondents claim of privilege is set forth in their
Comment, viz:
x x x The categories of information that may be considered privileged includes matters of diplomatic character
and under negotiation and review. In this case, the privileged character of the diplomatic negotiations has been
categorically invoked and clearly explained by respondents particularly respondent DTI Senior Undersecretary.
The documents on the proposed JPEPA as well as the text which is subject to negotiations and legal review by
the parties fall under the exceptions to the right of access to information on matters of public concern and
policy of public disclosure. They come within the coverage of executive privilege. At the time when the
Committee was requesting for copies of such documents, the negotiations were ongoing as they are still now
and the text of the proposed JPEPA is still uncertain and subject to change. Considering the status and nature
of such documents then and now, these are evidently covered by executive privilege consistent with existing
legal provisions and settled jurisprudence.
Practical and strategic considerations likewise counsel against the disclosure of the "rolling texts" which may
undergo radical change or portions of which may be totally abandoned. Furthermore, the negotiations of the
representatives of the Philippines as well as of Japan must be allowed to explore alternatives in the course of

the negotiations in the same manner as judicial deliberations and working drafts of opinions are accorded strict
confidentiality.22 (Emphasis and underscoring supplied)
The ground relied upon by respondents is thus not simply that the information sought involves a diplomatic
matter, but that it pertains to diplomatic negotiations then in progress.
Privileged character of diplomatic negotiations
The privileged character of diplomatic negotiations has been recognized in this jurisdiction. In discussing valid
limitations on the right to information, the Court in Chavez v. PCGG held that "information on inter-government
exchanges prior to the conclusion of treaties and executive agreements may be subject to reasonable
safeguards for the sake of national interest."23 Even earlier, the same privilege was upheld in Peoples
Movement for Press Freedom (PMPF) v. Manglapus24 wherein the Court discussed the reasons for the
privilege in more precise terms.
In PMPF v. Manglapus, the therein petitioners were seeking information from the Presidents representatives
on the state of the then on-going negotiations of the RP-US Military Bases Agreement.25 The Court denied the
petition, stressing that "secrecy of negotiations with foreign countries is not violative of the constitutional
provisions of freedom of speech or of the press nor of the freedom of access to information." The Resolution
went on to state, thus:
The nature of diplomacy requires centralization of authority and expedition of decision which are inherent in
executive action. Another essential characteristic of diplomacy is its confidential nature. Although much has
been said about "open" and "secret" diplomacy, with disparagement of the latter, Secretaries of State Hughes
and Stimson have clearly analyzed and justified the practice. In the words of Mr. Stimson:
"A complicated negotiation . . . cannot be carried through without many, many private talks and discussion,
man to man; many tentative suggestions and proposals. Delegates from other countries come and tell you in
confidence of their troubles at home and of their differences with other countries and with other delegates; they
tell you of what they would do under certain circumstances and would not do under other circumstances. . . If
these reports . . . should become public . . . who would ever trust American Delegations in another conference?
(United States Department of State, Press Releases, June 7, 1930, pp. 282-284.)."
xxxx
There is frequent criticism of the secrecy in which negotiation with foreign powers on nearly all subjects is
concerned. This, it is claimed, is incompatible with the substance of democracy. As expressed by one writer, "It
can be said that there is no more rigid system of silence anywhere in the world." (E.J. Young, Looking Behind
the Censorship, J. B. Lippincott Co., 1938) President Wilson in starting his efforts for the conclusion of the
World War declared that we must have "open covenants, openly arrived at." He quickly abandoned his thought.
No one who has studied the question believes that such a method of publicity is possible. In the moment that
negotiations are started, pressure groups attempt to "muscle in." An ill-timed speech by one of the parties or a
frank declaration of the concession which are exacted or offered on both sides would quickly lead to
widespread propaganda to block the negotiations. After a treaty has been drafted and its terms are fully
published, there is ample opportunity for discussion before it is approved. (The New American Government
and Its Works, James T. Young, 4th Edition, p. 194) (Emphasis and underscoring supplied)
Still in PMPF v. Manglapus, the Court adopted the doctrine in U.S. v. Curtiss-Wright Export Corp.26 that the
President is the sole organ of the nation in its negotiations with foreign countries, viz:
"x x x In this vast external realm, with its important, complicated, delicate and manifold problems, the President
alone has the power to speak or listen as a representative of the nation. He makes treaties with the advice and
consent of the Senate; but he alone negotiates. Into the field of negotiation the Senate cannot intrude; and
Congress itself is powerless to invade it. As Marshall said in his great argument of March 7, 1800, in the House
of Representatives, "The President is the sole organ of the nation in its external relations, and its sole

representative with foreign nations." Annals, 6th Cong., col. 613. . . (Emphasis supplied; underscoring in the
original)
Applying the principles adopted in PMPF v. Manglapus, it is clear that while the final text of the JPEPA may not
be kept perpetually confidential since there should be "ample opportunity for discussion before [a treaty] is
approved" the offers exchanged by the parties during the negotiations continue to be privileged even after
the JPEPA is published. It is reasonable to conclude that the Japanese representatives submitted their offers
with the understanding that "historic confidentiality"27 would govern the same. Disclosing these offers could
impair the ability of the Philippines to deal not only with Japan but with other foreign governments in future
negotiations.
A ruling that Philippine offers in treaty negotiations should now be open to public scrutiny would discourage
future Philippine representatives from frankly expressing their views during negotiations. While, on first
impression, it appears wise to deter Philippine representatives from entering into compromises, it bears noting
that treaty negotiations, or any negotiation for that matter, normally involve a process of quid pro quo, and
oftentimes negotiators have to be willing to grant concessions in an area of lesser importance in order to obtain
more favorable terms in an area of greater national interest. Apropos are the following observations of
Benjamin S. Duval, Jr.:
x x x [T]hose involved in the practice of negotiations appear to be in agreement that publicity leads to
"grandstanding," tends to freeze negotiating positions, and inhibits the give-and-take essential to successful
negotiation. As Sissela Bok points out, if "negotiators have more to gain from being approved by their own
sides than by making a reasoned agreement with competitors or adversaries, then they are inclined to 'play to
the gallery . . .'' In fact, the public reaction may leave them little option. It would be a brave, or foolish, Arab
leader who expressed publicly a willingness for peace with Israel that did not involve the return of the entire
West Bank, or Israeli leader who stated publicly a willingness to remove Israel's existing settlements from
Judea and Samaria in return for peace.28 (Emphasis supplied)
Indeed, by hampering the ability of our representatives to compromise, we may be jeopardizing higher national
goals for the sake of securing less critical ones.
Diplomatic negotiations, therefore, are recognized as privileged in this jurisdiction, the JPEPA negotiations
constituting no exception. It bears emphasis, however, that such privilege is only presumptive. For as Senate v.
Ermita holds, recognizing a type of information as privileged does not mean that it will be considered privileged
in all instances. Only after a consideration of the context in which the claim is made may it be determined if
there is a public interest that calls for the disclosure of the desired information, strong enough to overcome its
traditionally privileged status.
Whether petitioners have established the presence of such a public interest shall be discussed later. For now,
the Court shall first pass upon the arguments raised by petitioners against the application of PMPF v.
Manglapus to the present case.
Arguments proffered by petitioners against the application of PMPF v. Manglapus
Petitioners argue that PMPF v. Manglapus cannot be applied in toto to the present case, there being
substantial factual distinctions between the two.
To petitioners, the first and most fundamental distinction lies in the nature of the treaty involved. They stress
that PMPF v. Manglapus involved the Military Bases Agreement which necessarily pertained to matters
affecting national security; whereas the present case involves an economic treaty that seeks to regulate trade
and commerce between the Philippines and Japan, matters which, unlike those covered by the Military Bases
Agreement, are not so vital to national security to disallow their disclosure.
Petitioners argument betrays a faulty assumption that information, to be considered privileged, must involve
national security. The recognition in Senate v. Ermita29 that executive privilege has encompassed claims of

varying kinds, such that it may even be more accurate to speak of "executive privileges," cautions against such
generalization.
While there certainly are privileges grounded on the necessity of safeguarding national security such as those
involving military secrets, not all are founded thereon. One example is the "informers privilege," or the privilege
of the Government not to disclose the identity of a person or persons who furnish information of violations of
law to officers charged with the enforcement of that law.30 The suspect involved need not be so notorious as
to be a threat to national security for this privilege to apply in any given instance. Otherwise, the privilege would
be inapplicable in all but the most high-profile cases, in which case not only would this be contrary to longstanding practice. It would also be highly prejudicial to law enforcement efforts in general.
Also illustrative is the privilege accorded to presidential communications, which are presumed privileged
without distinguishing between those which involve matters of national security and those which do not, the
rationale for the privilege being that
x x x [a] frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of decision-making of those tasked to exercise
Presidential, Legislative and Judicial power. x x x31 (Emphasis supplied)
In the same way that the privilege for judicial deliberations does not depend on the nature of the case
deliberated upon, so presidential communications are privileged whether they involve matters of national
security.
It bears emphasis, however, that the privilege accorded to presidential communications is not absolute, one
significant qualification being that "the Executive cannot, any more than the other branches of government,
invoke a general confidentiality privilege to shield its officials and employees from investigations by the proper
governmental institutions into possible criminal wrongdoing." 32 This qualification applies whether the privilege
is being invoked in the context of a judicial trial or a congressional investigation conducted in aid of
legislation.33
Closely related to the "presidential communications" privilege is the deliberative process privilege recognized in
the United States. As discussed by the U.S. Supreme Court in NLRB v. Sears, Roebuck & Co,34 deliberative
process covers documents reflecting advisory opinions, recommendations and deliberations comprising part of
a process by which governmental decisions and policies are formulated. Notably, the privileged status of such
documents rests, not on the need to protect national security but, on the "obvious realization that officials will
not communicate candidly among themselves if each remark is a potential item of discovery and front page
news,"
the
objective
of
the
privilege
being
to
enhance
the
quality
of
agency
decisionshttp://web2.westlaw.com/find/default.wl?
rs=WLW7.07&serialnum=1975129772&fn=_top&sv=Split&tc=-1&findtype=Y&tf=-1&db=708&utid=
%7b532A6DBF-9B4C-4A5A-8F16-C20D9BAA36C4%7d&vr=2.0&rp=%2ffind
%2fdefault.wl&mt=WLIGeneralSubscription. 35
The diplomatic negotiations privilege bears a close resemblance to the deliberative process and presidential
communications privilege. It may be readily perceived that the rationale for the confidential character of
diplomatic negotiations, deliberative process, and presidential communications is similar, if not identical.
The earlier discussion on PMPF v. Manglapus36 shows that the privilege for diplomatic negotiations is meant
to encourage a frank exchange of exploratory ideas between the negotiating parties by shielding such
negotiations from public view. Similar to the privilege for presidential communications, the diplomatic
negotiations privilege seeks, through the same means, to protect the independence in decision-making of the
President, particularly in its capacity as "the sole organ of the nation in its external relations, and its sole
representative with foreign nations." And, as with the deliberative process privilege, the privilege accorded to
diplomatic negotiations arises, not on account of the content of the information per se, but because the
information is part of a process of deliberation which, in pursuit of the public interest, must be presumed
confidential.

The decision of the U.S. District Court, District of Columbia in Fulbright & Jaworski v. Department of the
Treasury37 enlightens on the close relation between diplomatic negotiations and deliberative process
privileges. The plaintiffs in that case sought access to notes taken by a member of the U.S. negotiating team
during the U.S.-French tax treaty negotiations. Among the points noted therein were the issues to be
discussed, positions which the French and U.S. teams took on some points, the draft language agreed on, and
articles which needed to be amended. Upholding the confidentiality of those notes, Judge Green ruled, thus:
Negotiations between two countries to draft a treaty represent a true example of a deliberative process. Much
give-and-take must occur for the countries to reach an accord. A description of the negotiations at any one
point would not provide an onlooker a summary of the discussions which could later be relied on as law. It
would not be "working law" as the points discussed and positions agreed on would be subject to change at any
date until the treaty was signed by the President and ratified by the Senate.
The policies behind the deliberative process privilege support non-disclosure. Much harm could accrue to the
negotiations process if these notes were revealed. Exposure of the pre-agreement positions of the French
negotiators might well offend foreign governments and would lead to less candor by the U. S. in recording the
events of the negotiations process. As several months pass in between negotiations, this lack of record could
hinder readily the U. S. negotiating team. Further disclosure would reveal prematurely adopted policies. If
these policies should be changed, public confusion would result easily.
Finally, releasing these snapshot views of the negotiations would be comparable to releasing drafts of the
treaty, particularly when the notes state the tentative provisions and language agreed on. As drafts of
regulations typically are protected by the deliberative process privilege, Arthur Andersen & Co. v. Internal
Revenue Service, C.A. No. 80-705 (D.C.Cir., May 21, 1982), drafts of treaties should be accorded the same
protection. (Emphasis and underscoring supplied)
Clearly, the privilege accorded to diplomatic negotiations follows as a logical consequence from the privileged
character of the deliberative process.
The Court is not unaware that in Center for International Environmental Law (CIEL), et al. v. Office of U.S.
Trade Representative38 where the plaintiffs sought information relating to the just-completed negotiation of a
United States-Chile Free Trade Agreement the same district court, this time under Judge Friedman,
consciously refrained from applying the doctrine in Fulbright and ordered the disclosure of the information
being sought.
Since the factual milieu in CIEL seemed to call for the straight application of the doctrine in Fulbright, a
discussion of why the district court did not apply the same would help illumine this Courts own reasons for
deciding the present case along the lines of Fulbright.
In both Fulbright and CIEL, the U.S. government cited a statutory basis for withholding information, namely,
Exemption 5 of the Freedom of Information Act (FOIA).39 In order to qualify for protection under Exemption 5,
a document must satisfy two conditions: (1) it must be either inter-agency or intra-agency in nature, and (2) it
must be both pre-decisional and part of the agency's deliberative or decision-making process.40
Judge Friedman, in CIEL, himself cognizant of a "superficial similarity of context" between the two cases,
based his decision on what he perceived to be a significant distinction: he found the negotiators notes that
were sought in Fulbright to be "clearly internal," whereas the documents being sought in CIEL were those
produced by or exchanged with an outside party, i.e. Chile. The documents subject of Fulbright being clearly
internal in character, the question of disclosure therein turned not on the threshold requirement of Exemption 5
that the document be inter-agency, but on whether the documents were part of the agency's pre-decisional
deliberative process. On this basis, Judge Friedman found that "Judge Green's discussion [in Fulbright] of the
harm that could result from disclosure therefore is irrelevant, since the documents at issue [in CIEL] are not
inter-agency, and the Court does not reach the question of deliberative process." (Emphasis supplied)

In fine, Fulbright was not overturned. The court in CIEL merely found the same to be irrelevant in light of its
distinct factual setting. Whether this conclusion was valid a question on which this Court would not pass the
ruling in Fulbright that "[n]egotiations between two countries to draft a treaty represent a true example of a
deliberative process" was left standing, since the CIEL court explicitly stated that it did not reach the question
of deliberative process.
Going back to the present case, the Court recognizes that the information sought by petitioners includes
documents produced and communicated by a party external to the Philippine government, namely, the
Japanese representatives in the JPEPA negotiations, and to that extent this case is closer to the factual
circumstances of CIEL than those of Fulbright.
Nonetheless, for reasons which shall be discussed shortly, this Court echoes the principle articulated in
Fulbright that the public policy underlying the deliberative process privilege requires that diplomatic
negotiations should also be accorded privileged status, even if the documents subject of the present case
cannot be described as purely internal in character.
It need not be stressed that in CIEL, the court ordered the disclosure of information based on its finding that
the first requirement of FOIA Exemption 5 that the documents be inter-agency was not met. In determining
whether the government may validly refuse disclosure of the exchanges between the U.S. and Chile, it
necessarily had to deal with this requirement, it being laid down by a statute binding on them.
In this jurisdiction, however, there is no counterpart of the FOIA, nor is there any statutory requirement similar
to FOIA Exemption 5 in particular. Hence, Philippine courts, when assessing a claim of privilege for diplomatic
negotiations, are more free to focus directly on the issue of whether the privilege being claimed is indeed
supported by public policy, without having to consider as the CIEL court did if these negotiations fulfill a
formal requirement of being "inter-agency." Important though that requirement may be in the context of
domestic negotiations, it need not be accorded the same significance when dealing with international
negotiations.
There being a public policy supporting a privilege for diplomatic negotiations for the reasons explained above,
the Court sees no reason to modify, much less abandon, the doctrine in PMPF v. Manglapus.
A second point petitioners proffer in their attempt to differentiate PMPF v. Manglapus from the present case is
the fact that the petitioners therein consisted entirely of members of the mass media, while petitioners in the
present case include members of the House of Representatives who invoke their right to information not just as
citizens but as members of Congress.
Petitioners thus conclude that the present case involves the right of members of Congress to demand
information on negotiations of international trade agreements from the Executive branch, a matter which was
not raised in PMPF v. Manglapus.
While indeed the petitioners in PMPF v. Manglapus consisted only of members of the mass media, it would be
incorrect to claim that the doctrine laid down therein has no bearing on a controversy such as the present,
where the demand for information has come from members of Congress, not only from private citizens.
The privileged character accorded to diplomatic negotiations does not ipso facto lose all force and effect simply
because the same privilege is now being claimed under different circumstances. The probability of the claim
succeeding in the new context might differ, but to say that the privilege, as such, has no validity at all in that
context is another matter altogether.
The Courts statement in Senate v. Ermita that "presidential refusals to furnish information may be actuated by
any of at least three distinct kinds of considerations [state secrets privilege, informers privilege, and a generic
privilege for internal deliberations], and may be asserted, with differing degrees of success, in the context of
either judicial or legislative investigations,"41 implies that a privilege, once recognized, may be invoked under
different procedural settings. That this principle holds true particularly with respect to diplomatic negotiations
may be inferred from PMPF v. Manglapus itself, where the Court held that it is the President alone who

negotiates treaties, and not even the Senate or the House of Representatives, unless asked, may intrude upon
that process.
Clearly, the privilege for diplomatic negotiations may be invoked not only against citizens demands for
information, but also in the context of legislative investigations.
Hence, the recognition granted in PMPF v. Manglapus to the privileged character of diplomatic negotiations
cannot be considered irrelevant in resolving the present case, the contextual differences between the two
cases notwithstanding.
As third and last point raised against the application of PMPF v. Manglapus in this case, petitioners proffer that
"the socio-political and historical contexts of the two cases are worlds apart." They claim that the constitutional
traditions and concepts prevailing at the time PMPF v. Manglapus came about, particularly the school of
thought that the requirements of foreign policy and the ideals of transparency were incompatible with each
other or the "incompatibility hypothesis," while valid when international relations were still governed by power,
politics and wars, are no longer so in this age of international cooperation.42
Without delving into petitioners assertions respecting the "incompatibility hypothesis," the Court notes that the
ruling in PMPF v. Manglapus is grounded more on the nature of treaty negotiations as such than on a particular
socio-political school of thought. If petitioners are suggesting that the nature of treaty negotiations have so
changed that "[a]n ill-timed speech by one of the parties or a frank declaration of the concession which are
exacted or offered on both sides" no longer "lead[s] to widespread propaganda to block the negotiations," or
that parties in treaty negotiations no longer expect their communications to be governed by historic
confidentiality, the burden is on them to substantiate the same. This petitioners failed to discharge.
Whether the privilege applies only at certain stages of the negotiation process
Petitioners admit that "diplomatic negotiations on the JPEPA are entitled to a reasonable amount of
confidentiality so as not to jeopardize the diplomatic process." They argue, however, that the same is privileged
"only at certain stages of the negotiating process, after which such information must necessarily be revealed to
the public."43 They add that the duty to disclose this information was vested in the government when the
negotiations moved from the formulation and exploratory stage to the firming up of definite propositions or
official recommendations, citing Chavez v. PCGG44 and Chavez v. PEA.45
The following statement in Chavez v. PEA, however, suffices to show that the doctrine in both that case and
Chavez v. PCGG with regard to the duty to disclose "definite propositions of the government" does not apply to
diplomatic negotiations:
We rule, therefore, that the constitutional right to information includes official information on on-going
negotiations before a final contract. The information, however, must constitute definite propositions by the
government and should not cover recognized exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public order. x x x46 (Emphasis and underscoring
supplied)
It follows from this ruling that even definite propositions of the government may not be disclosed if they fall
under "recognized exceptions." The privilege for diplomatic negotiations is clearly among the recognized
exceptions, for the footnote to the immediately quoted ruling cites PMPF v. Manglapus itself as an authority.
Whether there is sufficient public interest to overcome the claim of privilege
It being established that diplomatic negotiations enjoy a presumptive privilege against disclosure, even against
the demands of members of Congress for information, the Court shall now determine whether petitioners have
shown the existence of a public interest sufficient to overcome the privilege in this instance.
To clarify, there are at least two kinds of public interest that must be taken into account. One is the presumed
public interest in favor of keeping the subject information confidential, which is the reason for the privilege in

the first place, and the other is the public interest in favor of disclosure, the existence of which must be shown
by the party asking for information. 47
The criteria to be employed in determining whether there is a sufficient public interest in favor of disclosure
may be gathered from cases such as U.S. v. Nixon,48 Senate Select Committee on Presidential Campaign
Activities v. Nixon,49 and In re Sealed Case.50
U.S. v. Nixon, which involved a claim of the presidential communications privilege against the subpoena duces
tecum of a district court in a criminal case, emphasized the need to balance such claim of privilege against the
constitutional duty of courts to ensure a fair administration of criminal justice.
x x x the allowance of the privilege to withhold evidence that is demonstrably relevant in a criminal trial would
cut deeply into the guarantee of due process of law and gravely impair the basic function of the courts. A
Presidents acknowledged need for confidentiality in the communications of his office is general in nature,
whereas the constitutional need for production of relevant evidence in a criminal proceeding is specific and
central to the fair adjudication of a particular criminal case in the administration of justice. Without access to
specific facts a criminal prosecution may be totally frustrated. The Presidents broad interest in confidentiality of
communications will not be vitiated by disclosure of a limited number of conversations preliminarily shown to
have some bearing on the pending criminal cases. (Emphasis, italics and underscoring supplied)
Similarly, Senate Select Committee v. Nixon,51 which involved a claim of the presidential communications
privilege against the subpoena duces tecum of a Senate committee, spoke of the need to balance such claim
with the duty of Congress to perform its legislative functions.
The staged decisional structure established in Nixon v. Sirica was designed to ensure that the President and
those upon whom he directly relies in the performance of his duties could continue to work under a general
assurance that their deliberations would remain confidential. So long as the presumption that the public interest
favors confidentiality can be defeated only by a strong showing of need by another institution of government- a
showing that the responsibilities of that institution cannot responsibly be fulfilled without access to records of
the President's deliberations- we believed in Nixon v. Sirica, and continue to believe, that the effective
functioning of the presidential office will not be impaired. x x x
xxxx
The sufficiency of the Committee's showing of need has come to depend, therefore, entirely on whether the
subpoenaed materials are critical to the performance of its legislative functions. x x x (Emphasis and
underscoring supplied)
In re Sealed Case52 involved a claim of the deliberative process and presidential communications privileges
against a subpoena duces tecum of a grand jury. On the claim of deliberative process privilege, the court
stated:
The deliberative process privilege is a qualified privilege and can be overcome by a sufficient showing of need.
This need determination is to be made flexibly on a case-by-case, ad hoc basis. "[E]ach time [the deliberative
process privilege] is asserted the district court must undertake a fresh balancing of the competing interests,"
taking into account factors such as "the relevance of the evidence," "the availability of other evidence," "the
seriousness of the litigation," "the role of the government," and the "possibility of future timidity by government
employees. x x x (Emphasis, italics and underscoring supplied)
Petitioners have failed to present the strong and "sufficient showing of need" referred to in the immediately
cited cases. The arguments they proffer to establish their entitlement to the subject documents fall short of this
standard.
Petitioners go on to assert that the non-involvement of the Filipino people in the JPEPA negotiation process
effectively results in the bargaining away of their economic and property rights without their knowledge and
participation, in violation of the due process clause of the Constitution. They claim, moreover, that it is essential

for the people to have access to the initial offers exchanged during the negotiations since only through such
disclosure can their constitutional right to effectively participate in decision-making be brought to life in the
context of international trade agreements.
Whether it can accurately be said that the Filipino people were not involved in the JPEPA negotiations is a
question of fact which this Court need not resolve. Suffice it to state that respondents had presented
documents purporting to show that public consultations were conducted on the JPEPA. Parenthetically,
petitioners consider these "alleged consultations" as "woefully selective and inadequate."53
AT ALL EVENTS, since it is not disputed that the offers exchanged by the Philippine and Japanese
representatives have not been disclosed to the public, the Court shall pass upon the issue of whether access
to the documents bearing on them is, as petitioners claim, essential to their right to participate in decisionmaking.
The case for petitioners has, of course, been immensely weakened by the disclosure of the full text of the
JPEPA to the public since September 11, 2006, even as it is still being deliberated upon by the Senate and,
therefore, not yet binding on the Philippines. Were the Senate to concur with the validity of the JPEPA at this
moment, there has already been, in the words of PMPF v. Manglapus, "ample opportunity for discussion before
[the treaty] is approved."
The text of the JPEPA having been published, petitioners have failed to convince this Court that they will not be
able to meaningfully exercise their right to participate in decision-making unless the initial offers are also
published.
It is of public knowledge that various non-government sectors and private citizens have already publicly
expressed their views on the JPEPA, their comments not being limited to general observations thereon but on
its specific provisions. Numerous articles and statements critical of the JPEPA have been posted on the
Internet.54 Given these developments, there is no basis for petitioners claim that access to the Philippine and
Japanese offers is essential to the exercise of their right to participate in decision-making.
Petitioner-members of the House of Representatives additionally anchor their claim to have a right to the
subject documents on the basis of Congress inherent power to regulate commerce, be it domestic or
international. They allege that Congress cannot meaningfully exercise the power to regulate international trade
agreements such as the JPEPA without being given copies of the initial offers exchanged during the
negotiations thereof. In the same vein, they argue that the President cannot exclude Congress from the JPEPA
negotiations since whatever power and authority the President has to negotiate international trade agreements
is derived only by delegation of Congress, pursuant to Article VI, Section 28(2) of the Constitution and Sections
401 and 402 of Presidential Decree No. 1464.55
The subject of Article VI Section 28(2) of the Constitution is not the power to negotiate treaties and
international agreements, but the power to fix tariff rates, import and export quotas, and other taxes. Thus it
provides:
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national development program of the
Government.
As to the power to negotiate treaties, the constitutional basis thereof is Section 21 of Article VII the article on
the Executive Department which states:
No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all
the Members of the Senate.

The doctrine in PMPF v. Manglapus that the treaty-making power is exclusive to the President, being the sole
organ of the nation in its external relations, was echoed in BAYAN v. Executive Secretary56 where the Court
held:
By constitutional fiat and by the intrinsic nature of his office, the President, as head of State, is the sole organ
and authority in the external affairs of the country. In many ways, the President is the chief architect of the
nation's foreign policy; his "dominance in the field of foreign relations is (then) conceded." Wielding vast
powers and influence, his conduct in the external affairs of the nation, as Jefferson describes, is "executive
altogether."
As regards the power to enter into treaties or international agreements, the Constitution vests the same in the
President, subject only to the concurrence of at least two thirds vote of all the members of the Senate. In this
light, the negotiation of the VFA and the subsequent ratification of the agreement are exclusive acts which
pertain solely to the President, in the lawful exercise of his vast executive and diplomatic powers granted him
no less than by the fundamental law itself. Into the field of negotiation the Senate cannot intrude, and Congress
itself is powerless to invade it. x x x (Italics in the original; emphasis and underscoring supplied)
The same doctrine was reiterated even more recently in Pimentel v. Executive Secretary57 where the Court
ruled:
In our system of government, the President, being the head of state, is regarded as the sole organ and
authority in external relations and is the country's sole representative with foreign nations. As the chief architect
of foreign policy, the President acts as the country's mouthpiece with respect to international affairs. Hence, the
President is vested with the authority to deal with foreign states and governments, extend or withhold
recognition, maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign
relations. In the realm of treaty-making, the President has the sole authority to negotiate with other states.
Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the Constitution
provides a limitation to his power by requiring the concurrence of 2/3 of all the members of the Senate for the
validity of the treaty entered into by him. x x x (Emphasis and underscoring supplied)
While the power then to fix tariff rates and other taxes clearly belongs to Congress, and is exercised by the
President only by delegation of that body, it has long been recognized that the power to enter into treaties is
vested directly and exclusively in the President, subject only to the concurrence of at least two-thirds of all the
Members of the Senate for the validity of the treaty. In this light, the authority of the President to enter into
trade agreements with foreign nations provided under P.D. 146458 may be interpreted as an acknowledgment
of a power already inherent in its office. It may not be used as basis to hold the President or its representatives
accountable to Congress for the conduct of treaty negotiations.
This is not to say, of course, that the Presidents power to enter into treaties is unlimited but for the requirement
of Senate concurrence, since the President must still ensure that all treaties will substantively conform to all the
relevant provisions of the Constitution.
It follows from the above discussion that Congress, while possessing vast legislative powers, may not interfere
in the field of treaty negotiations. While Article VII, Section 21 provides for Senate concurrence, such pertains
only to the validity of the treaty under consideration, not to the conduct of negotiations attendant to its
conclusion. Moreover, it is not even Congress as a whole that has been given the authority to concur as a
means of checking the treaty-making power of the President, but only the Senate.
Thus, as in the case of petitioners suing in their capacity as private citizens, petitioners-members of the House
of Representatives fail to present a "sufficient showing of need" that the information sought is critical to the
performance of the functions of Congress, functions that do not include treaty-negotiation.
Respondents alleged failure to timely claim executive privilege

On respondents invocation of executive privilege, petitioners find the same defective, not having been done
seasonably as it was raised only in their Comment to the present petition and not during the House Committee
hearings.
That respondents invoked the privilege for the first time only in their Comment to the present petition does not
mean that the claim of privilege should not be credited. Petitioners position presupposes that an assertion of
the privilege should have been made during the House Committee investigations, failing which respondents
are deemed to have waived it.
When the House Committee and petitioner-Congressman Aguja requested respondents for copies of the
documents subject of this case, respondents replied that the negotiations were still on-going and that the draft
of the JPEPA would be released once the text thereof is settled and complete. There was no intimation that the
requested copies are confidential in nature by reason of public policy. The response may not thus be deemed a
claim of privilege by the standards of Senate v. Ermita, which recognizes as claims of privilege only those
which are accompanied by precise and certain reasons for preserving the confidentiality of the information
being sought.
Respondents failure to claim the privilege during the House Committee hearings may not, however, be
construed as a waiver thereof by the Executive branch. As the immediately preceding paragraph indicates,
what respondents received from the House Committee and petitioner-Congressman Aguja were mere requests
for information. And as priorly stated, the House Committee itself refrained from pursuing its earlier resolution
to issue a subpoena duces tecum on account of then Speaker Jose de Venecias alleged request to Committee
Chairperson Congressman Teves to hold the same in abeyance.
While it is a salutary and noble practice for Congress to refrain from issuing subpoenas to executive officials
out of respect for their office until resort to it becomes necessary, the fact remains that such requests are not
a compulsory process. Being mere requests, they do not strictly call for an assertion of executive privilege.
The privilege is an exemption to Congress power of inquiry.59 So long as Congress itself finds no cause to
enforce such power, there is no strict necessity to assert the privilege. In this light, respondents failure to
invoke the privilege during the House Committee investigations did not amount to a waiver thereof.
The Court observes, however, that the claim of privilege appearing in respondents Comment to this petition
fails to satisfy in full the requirement laid down in Senate v. Ermita that the claim should be invoked by the
President or through the Executive Secretary "by order of the President."60 Respondents claim of privilege is
being sustained, however, its flaw notwithstanding, because of circumstances peculiar to the case.
The assertion of executive privilege by the Executive Secretary, who is one of the respondents herein, without
him adding the phrase "by order of the President," shall be considered as partially complying with the
requirement laid down in Senate v. Ermita. The requirement that the phrase "by order of the President" should
accompany the Executive Secretarys claim of privilege is a new rule laid down for the first time in Senate v.
Ermita, which was not yet final and executory at the time respondents filed their Comment to the petition.61 A
strict application of this requirement would thus be unwarranted in this case.
Response to the Dissenting Opinion of the Chief Justice
We are aware that behind the dissent of the Chief Justice lies a genuine zeal to protect our peoples right to
information against any abuse of executive privilege. It is a zeal that We fully share.
The Court, however, in its endeavor to guard against the abuse of executive privilege, should be careful not to
veer towards the opposite extreme, to the point that it would strike down as invalid even a legitimate exercise
thereof.
We respond only to the salient arguments of the Dissenting Opinion which have not yet been sufficiently
addressed above.

1. After its historical discussion on the allocation of power over international trade agreements in the United
States, the dissent concludes that "it will be turning somersaults with history to contend that the President is
the sole organ for external relations" in that jurisdiction. With regard to this opinion, We make only the following
observations:
There is, at least, a core meaning of the phrase "sole organ of the nation in its external relations" which is not
being disputed, namely, that the power to directly negotiate treaties and international agreements is vested by
our Constitution only in the Executive. Thus, the dissent states that "Congress has the power to regulate
commerce with foreign nations but does not have the power to negotiate international agreements directly."62
What is disputed is how this principle applies to the case at bar.
The dissent opines that petitioner-members of the House of Representatives, by asking for the subject JPEPA
documents, are not seeking to directly participate in the negotiations of the JPEPA, hence, they cannot be
prevented from gaining access to these documents.
On the other hand, We hold that this is one occasion where the following ruling in Agan v. PIATCO63 and in
other cases both before and since should be applied:
This Court has long and consistently adhered to the legal maxim that those that cannot be done directly cannot
be done indirectly. To declare the PIATCO contracts valid despite the clear statutory prohibition against a direct
government guarantee would not only make a mockery of what the BOT Law seeks to prevent -- which is to
expose the government to the risk of incurring a monetary obligation resulting from a contract of loan between
the project proponent and its lenders and to which the Government is not a party to -- but would also render
the BOT Law useless for what it seeks to achieve - to make use of the resources of the private sector in the
"financing, operation and maintenance of infrastructure and development projects" which are necessary for
national growth and development but which the government, unfortunately, could ill-afford to finance at this
point in time.64
Similarly, while herein petitioners-members of the House of Representatives may not have been aiming to
participate in the negotiations directly, opening the JPEPA negotiations to their scrutiny even to the point of
giving them access to the offers exchanged between the Japanese and Philippine delegations would have
made a mockery of what the Constitution sought to prevent and rendered it useless for what it sought to
achieve when it vested the power of direct negotiation solely with the President.
What the U.S. Constitution sought to prevent and aimed to achieve in defining the treaty-making power of the
President, which our Constitution similarly defines, may be gathered from Hamiltons explanation of why the
U.S. Constitution excludes the House of Representatives from the treaty-making process:
x x x The fluctuating, and taking its future increase into account, the multitudinous composition of that body,
forbid us to expect in it those qualities which are essential to the proper execution of such a trust. Accurate and
comprehensive knowledge of foreign politics; a steady and systematic adherence to the same views; a nice
and uniform sensibility to national character, decision, secrecy and dispatch; are incompatible with a body so
variable and so numerous. The very complication of the business by introducing a necessity of the
concurrence of so many different bodies, would of itself afford a solid objection. The greater frequency of the
calls upon the house of representatives, and the greater length of time which it would often be necessary to
keep them together when convened, to obtain their sanction in the progressive stages of a treaty, would be
source of so great inconvenience and expense, as alone ought to condemn the project.65
These considerations a fortiori apply in this jurisdiction, since the Philippine Constitution, unlike that of the U.S.,
does not even grant the Senate the power to advise the Executive in the making of treaties, but only vests in
that body the power to concur in the validity of the treaty after negotiations have been concluded.66 Much less,
therefore, should it be inferred that the House of Representatives has this power.

Since allowing petitioner-members of the House of Representatives access to the subject JPEPA documents
would set a precedent for future negotiations, leading to the contravention of the public interests articulated
above which the Constitution sought to protect, the subject documents should not be disclosed.
2. The dissent also asserts that respondents can no longer claim the diplomatic secrets privilege over the
subject JPEPA documents now that negotiations have been concluded, since their reasons for nondisclosure
cited in the June 23, 2005 letter of Sec. Ermita, and later in their Comment, necessarily apply only for as long
as the negotiations were still pending;
In their Comment, respondents contend that "the negotiations of the representatives of the Philippines as well
as of Japan must be allowed to explore alternatives in the course of the negotiations in the same manner as
judicial deliberations and working drafts of opinions are accorded strict confidentiality." That respondents liken
the documents involved in the JPEPA negotiations to judicial deliberations and working drafts of opinions
evinces, by itself, that they were claiming confidentiality not only until, but even after, the conclusion of the
negotiations.
Judicial deliberations do not lose their confidential character once a decision has been promulgated by the
courts. The same holds true with respect to working drafts of opinions, which are comparable to intra-agency
recommendations. Such intra-agency recommendations are privileged even after the position under
consideration by the agency has developed into a definite proposition, hence, the rule in this jurisdiction that
agencies have the duty to disclose only definite propositions, and not the inter-agency and intra-agency
communications during the stage when common assertions are still being formulated.67
3. The dissent claims that petitioner-members of the House of Representatives have sufficiently shown their
need for the same documents to overcome the privilege. Again, We disagree.
The House Committee that initiated the investigations on the JPEPA did not pursue its earlier intention to
subpoena the documents. This strongly undermines the assertion that access to the same documents by the
House Committee is critical to the performance of its legislative functions. If the documents were indeed
critical, the House Committee should have, at the very least, issued a subpoena duces tecum or, like what the
Senate did in Senate v. Ermita, filed the present petition as a legislative body, rather than leaving it to the
discretion of individual Congressmen whether to pursue an action or not. Such acts would have served as
strong indicia that Congress itself finds the subject information to be critical to its legislative functions.
Further, given that respondents have claimed executive privilege, petitioner-members of the House of
Representatives should have, at least, shown how its lack of access to the Philippine and Japanese offers
would hinder the intelligent crafting of legislation. Mere assertion that the JPEPA covers a subject matter over
which Congress has the power to legislate would not suffice. As Senate Select Committee v. Nixon68 held, the
showing required to overcome the presumption favoring confidentiality turns, not only on the nature and
appropriateness of the function in the performance of which the material was sought, but also the degree to
which the material was necessary to its fulfillment. This petitioners failed to do.
Furthermore, from the time the final text of the JPEPA including its annexes and attachments was published,
petitioner-members of the House of Representatives have been free to use it for any legislative purpose they
may see fit. Since such publication, petitioners need, if any, specifically for the Philippine and Japanese offers
leading to the final version of the JPEPA, has become even less apparent.
In asserting that the balance in this instance tilts in favor of disclosing the JPEPA documents, the dissent
contends that the Executive has failed to show how disclosing them after the conclusion of negotiations would
impair the performance of its functions. The contention, with due respect, misplaces the onus probandi. While,
in keeping with the general presumption of transparency, the burden is initially on the Executive to provide
precise and certain reasons for upholding its claim of privilege, once the Executive is able to show that the
documents being sought are covered by a recognized privilege, the burden shifts to the party seeking
information to overcome the privilege by a strong showing of need.

When it was thus established that the JPEPA documents are covered by the privilege for diplomatic
negotiations pursuant to PMPF v. Manglapus, the presumption arose that their disclosure would impair the
performance of executive functions. It was then incumbent on petitioner- requesting parties to show that they
have a strong need for the information sufficient to overcome the privilege. They have not, however.
4. Respecting the failure of the Executive Secretary to explicitly state that he is claiming the privilege "by order
of the President," the same may not be strictly applied to the privilege claim subject of this case.
When the Court in Senate v. Ermita limited the power of invoking the privilege to the President alone, it was
laying down a new rule for which there is no counterpart even in the United States from which the concept of
executive privilege was adopted. As held in the 2004 case of Judicial Watch, Inc. v. Department of Justice,69
citing In re Sealed Case,70 "the issue of whether a President must personally invoke the [presidential
communications] privilege remains an open question." U.S. v. Reynolds,71 on the other hand, held that "[t]here
must be a formal claim of privilege, lodged by the head of the department which has control over the matter,
after actual personal consideration by that officer."
The rule was thus laid down by this Court, not in adherence to any established precedent, but with the aim of
preventing the abuse of the privilege in light of its highly exceptional nature. The Courts recognition that the
Executive Secretary also bears the power to invoke the privilege, provided he does so "by order of the
President," is meant to avoid laying down too rigid a rule, the Court being aware that it was laying down a new
restriction on executive privilege. It is with the same spirit that the Court should not be overly strict with
applying the same rule in this peculiar instance, where the claim of executive privilege occurred before the
judgment in Senate v. Ermita became final.
5. To show that PMPF v. Manglapus may not be applied in the present case, the dissent implies that the Court
therein erred in citing US v. Curtiss Wright72 and the book entitled The New American Government and Its
Work73 since these authorities, so the dissent claims, may not be used to calibrate the importance of the right
to information in the Philippine setting.
The dissent argues that since Curtiss-Wright referred to a conflict between the executive and legislative
branches of government, the factual setting thereof was different from that of PMPF v. Manglapus which
involved a collision between governmental power over the conduct of foreign affairs and the citizens right to
information.
That the Court could freely cite Curtiss-Wright a case that upholds the secrecy of diplomatic negotiations
against congressional demands for information in the course of laying down a ruling on the public right to
information only serves to underscore the principle mentioned earlier that the privileged character accorded to
diplomatic negotiations does not ipso facto lose all force and effect simply because the same privilege is now
being claimed under different circumstances.
PMPF v. Manglapus indeed involved a demand for information from private citizens and not an executivelegislative conflict, but so did Chavez v. PEA74 which held that "the [publics] right to information . . . does not
extend to matters recognized as privileged information under the separation of powers." What counts as
privileged information in an executive-legislative conflict is thus also recognized as such in cases involving the
publics right to information.
Chavez v. PCGG75 also involved the publics right to information, yet the Court recognized as a valid limitation
to that right the same privileged information based on separation of powers closed-door Cabinet meetings,
executive sessions of either house of Congress, and the internal deliberations of the Supreme Court.
These cases show that the Court has always regarded claims of privilege, whether in the context of an
executive-legislative conflict or a citizens demand for information, as closely intertwined, such that the
principles applicable to one are also applicable to the other.
The reason is obvious. If the validity of claims of privilege were to be assessed by entirely different criteria in
each context, this may give rise to the absurd result where Congress would be denied access to a particular

information because of a claim of executive privilege, but the general public would have access to the same
information, the claim of privilege notwithstanding.
Absurdity would be the ultimate result if, for instance, the Court adopts the "clear and present danger" test for
the assessment of claims of privilege against citizens demands for information. If executive information, when
demanded by a citizen, is privileged only when there is a clear and present danger of a substantive evil that the
State has a right to prevent, it would be very difficult for the Executive to establish the validity of its claim in
each instance. In contrast, if the demand comes from Congress, the Executive merely has to show that the
information is covered by a recognized privilege in order to shift the burden on Congress to present a strong
showing of need. This would lead to a situation where it would be more difficult for Congress to access
executive information than it would be for private citizens.
We maintain then that when the Executive has already shown that an information is covered by executive
privilege, the party demanding the information must present a "strong showing of need," whether that party is
Congress or a private citizen.
The rule that the same "showing of need" test applies in both these contexts, however, should not be
construed as a denial of the importance of analyzing the context in which an executive privilege controversy
may happen to be placed. Rather, it affirms it, for it means that the specific need being shown by the party
seeking information in every particular instance is highly significant in determining whether to uphold a claim of
privilege. This "need" is, precisely, part of the context in light of which every claim of privilege should be
assessed.
Since, as demonstrated above, there are common principles that should be applied to executive privilege
controversies across different contexts, the Court in PMPF v. Manglapus did not err when it cited the CurtissWright case.
The claim that the book cited in PMPF v. Manglapus entitled The New American Government and Its Work
could not have taken into account the expanded statutory right to information in the FOIA assumes that the
observations in that book in support of the confidentiality of treaty negotiations would be different had it been
written after the FOIA. Such assumption is, with due respect, at best, speculative.
As to the claim in the dissent that "[i]t is more doubtful if the same book be used to calibrate the importance of
the right of access to information in the Philippine setting considering its elevation as a constitutional right," we
submit that the elevation of such right as a constitutional right did not set it free from the legitimate restrictions
of executive privilege which is itself constitutionally-based.76 Hence, the comments in that book which were
cited in PMPF v. Manglapus remain valid doctrine.
6. The dissent further asserts that the Court has never used "need" as a test to uphold or allow inroads into
rights guaranteed under the Constitution. With due respect, we assert otherwise. The Court has done so
before, albeit without using the term "need."
In executive privilege controversies, the requirement that parties present a "sufficient showing of need" only
means, in substance, that they should show a public interest in favor of disclosure sufficient in degree to
overcome the claim of privilege.77 Verily, the Court in such cases engages in a balancing of interests. Such a
balancing of interests is certainly not new in constitutional adjudication involving fundamental rights. Secretary
of Justice v. Lantion,78 which was cited in the dissent, applied just such a test.
Given that the dissent has clarified that it does not seek to apply the "clear and present danger" test to the
present controversy, but the balancing test, there seems to be no substantial dispute between the position laid
down in this ponencia and that reflected in the dissent as to what test to apply. It would appear that the only
disagreement is on the results of applying that test in this instance.
The dissent, nonetheless, maintains that "it suffices that information is of public concern for it to be covered by
the right, regardless of the publics need for the information," and that the same would hold true even "if they
simply want to know it because it interests them." As has been stated earlier, however, there is no dispute that

the information subject of this case is a matter of public concern. The Court has earlier concluded that it is a
matter of public concern, not on the basis of any specific need shown by petitioners, but from the very nature of
the JPEPA as an international trade agreement.
However, when the Executive has as in this case invoked the privilege, and it has been established that the
subject information is indeed covered by the privilege being claimed, can a party overcome the same by
merely asserting that the information being demanded is a matter of public concern, without any further
showing required? Certainly not, for that would render the doctrine of executive privilege of no force and effect
whatsoever as a limitation on the right to information, because then the sole test in such controversies would
be whether an information is a matter of public concern.
Moreover, in view of the earlier discussions, we must bear in mind that, by disclosing the documents of the
JPEPA negotiations, the Philippine government runs the grave risk of betraying the trust reposed in it by the
Japanese representatives, indeed, by the Japanese government itself. How would the Philippine government
then explain itself when that happens? Surely, it cannot bear to say that it just had to release the information
because certain persons simply wanted to know it "because it interests them."
Thus, the Court holds that, in determining whether an information is covered by the right to information, a
specific "showing of need" for such information is not a relevant consideration, but only whether the same is a
matter of public concern. When, however, the government has claimed executive privilege, and it has
established that the information is indeed covered by the same, then the party demanding it, if it is to overcome
the privilege, must show that that the information is vital, not simply for the satisfaction of its curiosity, but for its
ability to effectively and reasonably participate in social, political, and economic decision-making.79
7. The dissent maintains that "[t]he treaty has thus entered the ultimate stage where the people can exercise
their right to participate in the discussion whether the Senate should concur in its ratification or not." (Emphasis
supplied) It adds that this right "will be diluted unless the people can have access to the subject JPEPA
documents". What, to the dissent, is a dilution of the right to participate in decision-making is, to Us, simply a
recognition of the qualified nature of the publics right to information. It is beyond dispute that the right to
information is not absolute and that the doctrine of executive privilege is a recognized limitation on that right.
Moreover, contrary to the submission that the right to participate in decision-making would be diluted, We
reiterate that our people have been exercising their right to participate in the discussion on the issue of the
JPEPA, and they have been able to articulate their different opinions without need of access to the JPEPA
negotiation documents.
Thus, we hold that the balance in this case tilts in favor of executive privilege.
8. Against our ruling that the principles applied in U.S. v. Nixon, the Senate Select Committee case, and In re
Sealed Case, are similarly applicable to the present controversy, the dissent cites the caveat in the Nixon case
that the U.S. Court was there addressing only the Presidents assertion of privilege in the context of a criminal
trial, not a civil litigation nor a congressional demand for information. What this caveat means, however, is only
that courts must be careful not to hastily apply the ruling therein to other contexts. It does not, however,
absolutely mean that the principles applied in that case may never be applied in such contexts.
Hence, U.S. courts have cited U.S. v. Nixon in support of their rulings on claims of executive privilege in
contexts other than a criminal trial, as in the case of Nixon v. Administrator of General Services80 which
involved former President Nixons invocation of executive privilege to challenge the constitutionality of the
"Presidential Recordings and Materials Preservation Act"81 and the above-mentioned In re Sealed Case
which involved a claim of privilege against a subpoena duces tecum issued in a grand jury investigation.
Indeed, in applying to the present case the principles found in U.S. v. Nixon and in the other cases already
mentioned, We are merely affirming what the Chief Justice stated in his Dissenting Opinion in Neri v. Senate
Committee on Accountability82 a case involving an executive-legislative conflict over executive privilege.
That dissenting opinion stated that, while Nixon was not concerned with the balance between the Presidents
generalized interest in confidentiality and congressional demands for information, "[n]onetheless the [U.S.]

Court laid down principles and procedures that can serve as torch lights to illumine us on the scope and use of
Presidential communication privilege in the case at bar."83 While the Court was divided in Neri, this opinion of
the Chief Justice was not among the points of disagreement, and We similarly hold now that the Nixon case is
a useful guide in the proper resolution of the present controversy, notwithstanding the difference in context.
Verily, while the Court should guard against the abuse of executive privilege, it should also give full recognition
to the validity of the privilege whenever it is claimed within the proper bounds of executive power, as in this
case. Otherwise, the Court would undermine its own credibility, for it would be perceived as no longer aiming to
strike a balance, but seeking merely to water down executive privilege to the point of irrelevance.
Conclusion
To recapitulate, petitioners demand to be furnished with a copy of the full text of the JPEPA has become moot
and academic, it having been made accessible to the public since September 11, 2006. As for their demand for
copies of the Philippine and Japanese offers submitted during the JPEPA negotiations, the same must be
denied, respondents claim of executive privilege being valid.
Diplomatic negotiations have, since the Court promulgated its Resolution in PMPF v. Manglapus on September
13, 1988, been recognized as privileged in this jurisdiction and the reasons proffered by petitioners against the
application of the ruling therein to the present case have not persuaded the Court. Moreover, petitioners both
private citizens and members of the House of Representatives have failed to present a "sufficient showing of
need" to overcome the claim of privilege in this case.
That the privilege was asserted for the first time in respondents Comment to the present petition, and not
during the hearings of the House Special Committee on Globalization, is of no moment, since it cannot be
interpreted as a waiver of the privilege on the part of the Executive branch.
For reasons already explained, this Decision shall not be interpreted as departing from the ruling in Senate v.
Ermita that executive privilege should be invoked by the President or through the Executive Secretary "by
order of the President."
WHEREFORE, the petition is DISMISSED.

5.) ARANETA v. DINGLASAN


84 PHIL 368
FACTS:
The five cases are consolidated for all of them present the same fundamental question. Antonio Araneta is
being charged for violating EO 62 which regulates rentals for houses and lots for residential buildings. Another
case is of Leon Ma. Guerrero seeking to have a permit issued for the exportation of his manufactured shoes.
Another is of Eulogio Rodriguez seeking to prohibit the treasury from disbursing funds pursuant to EO 225,
while another is of Antonio Barredo attacking EO 226 which appropriated funds to hold the national elections.
They all content that CA 671 or the emergency Powers Act is already inoperative and that all EOs issued under
said Act also ceased
ISSUE:
Whether or not the Emergency Powers Act has ceased to have any force and effect
HELD:
CA 671 does not fix the duration of its effectiveness. The intention of the act has to be sought for in its nature,
object to be accomplished, the purpose to be subserved and its relation to the Constitution. Article VI of the
Constitution provides that any law passed by virtue thereof should be for a limited period. It is presumed that
CA 671 was approved with this limitation in view. The opposite theory would make the law repugnant to the
Constitution, and is contrary to the principle that the legislature is deemed to have full knowledge of the
Constitutional scope of its power. CA 671 became inoperative when Congress met in regular session of May
25, 1946, and that EO Nos. 62, 192, 225 and 226 were issued without authority of law. In a regular session, the
power if Congress to legislate is not circumscribed except by the limitations imposed by the organic law.
Act No. 671 in full is as follows:
AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR INVOLVING THE
PHILIPPINES AND AUTHORIZING THE PRESIDENT TO PROMULGATE RULES AND REGULATIONS TO
MEET SUCH EMERGENCY.
Be it enacted by the National Assembly of the Philippines:
SECTION 1. The existence of war between the United States and other countries of Europe and Asia, which
involves the Philippines, makes it necessary to invest the President with extraordinary powers in order to meet
the resulting emergency.
"SEC. 2. Pursuant to the provisions of Article VI, section 26, of the Constitution, the President is hereby
authorized, during the existence of the emergency, to promulgate such rules and regulations as he may deem
necessary to carry out the national policy declared in section 1 hereof. Accordingly, he is, among other things,
empowered (a) to transfer the seat of the Government or any of its subdivisions, branches, departments,
offices, agencies or instrumentalities; (b) to reorganize the Government of the Commonwealth including the
determination of the order of precedence of the heads of the Executive Department; (c) to create new
subdivisions, branches, departments, agencies or instrumentalities of government and to abolish any of those
already existing; (d) to continue in force laws and appropriations which would lapse or otherwise become
inoperative, and to modify or suspend the operation or application of those of an administrative character; (e)
to impose new taxes or to increase, reduce, suspend or abolish those in existence; (f) to raise funds through
the issuance of bonds or otherwise, and to authorize the expenditure of the proceeds thereof; (g) to authorize
the national, provincial, city or municipal governments to incur in overdrafts for purposes that he may approve;
(h) to declare the suspension of the collection of credits or the payment of debts; and (i) to exercise such other

powers as he may deem to enable the Government to fulfill its responsibities and to maintain and enforce the
authority.
SEC. 3. The President of the Philippines shall as soon as practicable upon the convening of the Congress of
the Philippines report thereto all the rules and regulations promulgated by him under the powers herein
granted.
SEC. 4. This Act shall take effect upon its approval and the rules and regulations promulgated hereunder shall
be in force and effect until the Congress of the Philippines shall otherwise provide.
Section 26 of Article VI of the Constitution provides:
In time of war or other national emergency, the Congress may by law authorize the President, for a limited
period and subject to such restrictions as it may prescribe, to promulgate rules and regulations to carry out a
declared national policy.
Commonwealth Act No. 671 does not in term fix the duration of its effectiveness. The intention of the Act has to
be sought for in its nature, the object to be accomplish, the purpose to be subserved, and its relation to the
Constitution. The consequences of the various constructions offered will also be resorted to as additional aid to
interpretation. We test a rule by its results.
Article VI of the Constitution provides that any law passed by virtue thereof should be "for a limited period."
"Limited" has been defined to mean "restricted; bounded; prescribed; confined within positive bounds;
restrictive in duration, extent or scope." (Encyclopedia Law Dictionary, 3rd ed., 669; Black's Law Dictionary, 3rd
ed., 1120.) The words "limited period" as used in the Constitution are beyond question intended to mean
restrictive in duration. Emergency, in order to justify the delegation of emergency powers, "must be temporary
or it can not be said to be an emergency." (First Trust Joint Stock Land Bank of Chicago vs. Adolph P. Arp, et
al., 120 A. L. R., 937, 938.).
It is to be presumed that Commonwealth Act No. 671 was approved with this limitation in view. The opposite
theory would make the law repugnant to the Constitution, and is contrary to the principle that the legislature is
deemed to have full knowledge of the constitutional scope of its powers. The assertion that new legislation is
needed to repeal the act would not be in harmony with the Constitution either. If a new and different law were
necessary to terminate the delegation, the period for the delegation, it has been correctly pointed out, would be
unlimited, indefinite, negative and uncertain; "that which was intended to meet a temporary emergency may
become permanent law," (Peck vs. Fink, 2 Fed. [2d], 912); for Congress might not enact the repeal, and even if
it would, the repeal might not meet the approval of the President, and the Congress might not be able to
override the veto. Furthermore, this would create the anomaly that, while Congress might delegate its powers
by simple majority, it might not be able to recall them except by a two-third vote. In other words, it would be
easier for Congress to delegate its powers than to take them back. This is not right and is not, and ought not to
be, the law. Corwin, President: Office and Powers, 1948 ed., p. 160, says:
It is generally agreed that the maxim that the legislature may not delegate its powers signifies at the very least
that the legislature may not abdicate its powers: Yet how, in view of the scope that legislative delegations take
nowadays, is the line between delegation and abdication to be maintained? Only, I urge, by rendering the
delegated powers recoverable without the consent of the delegate; . . . .
Section 4 goes far to settle the legislative intention of this phase of Act No. 671. Section 4 stipulates that "the
rules and regulations promulgated thereunder shall be in full force and effect until the Congress of the
Philippines shall otherwise provide." The silence of the law regarding the repeal of the authority itself, in the
face of the express provision for the repeal of the rules and regulations issued in pursuance of it, a clear
manifestation of the belief held by the National Assembly that there was no necessity to provide for the former.
It would be strange if having no idea about the time the Emergency Powers Act was to be effective the National
Assemble failed to make a provision for this termination in the same way that it did for the termination of the
effects and incidents of the delegation. There would be no point in repealing or annulling the rules and
regulations promulgated under a law if the law itself was to remain in force, since, in that case, the President

could not only make new rules and regulations but he could restore the ones already annulled by the
legislature.
More anomalous than the exercise of legislative function by the Executive when Congress is in the
unobstructed exercise of its authority is the fact that there would be two legislative bodies operating over the
same field, legislating concurrently and simultaneously, mutually nullifying each other's actions. Even if the
emergency powers of the President, as suggested, be suspended while Congress was in session and be
revived after each adjournment, the anomaly would not be limited. Congress by a two-third vote could repeal
executive orders promulgated by the President during congressional recess, and the President in turn could
treat in the same manner, between sessions of Congress, laws enacted by the latter. This is not a fantastic
apprehension; in two instances it materialized. In entire good faith, and inspired only by the best interests of
the country as they saw them, a former President promulgated an executive order regulating house rentals
after he had vetoed a bill on the subject enacted by Congress, and the present Chief Executive issued an
executive order on export control after Congress had refused to approve the measure.
Quiet apart from these anomalies, there is good basis in the language of Act No. 671 for the inference that the
National Assembly restricted the life of the emergency powers of the President to the time the Legislature was
prevented from holding sessions due to enemy action or other causes brought on by the war. Section 3
provides:
The President of the Philippines shall as soon as practicable upon the convening of the Congress of the
Philippines report thereto all the rules and regulations promulgated by him under the powers herein granted.
The clear tenor of this provision is that there was to be only one meeting of Congress at which the President
was to give an account of his trusteeship. The section did not say each meeting, which it could very well have
said if that had been the intention. If the National Assembly did not think that the report in section 3 was to be
the first and last Congress Act No. 671 would lapsed, what reason could there be for its failure to provide in
appropriate and clear terms for the filing of subsequent reports? Such reports, if the President was expected to
continue making laws in the forms of rules, regulations and executive orders, were as important, of as
unimportant, as the initial one.
As a contemporary construction, President Quezon's statement regarding the duration of Act No. 671 is
enlightening and should carry much weight, considering his part in the passage and in the carrying out of the
law. Mr. Quezon, who called the National Assembly to a special session, who recommended the enactment of
the Emergency Powers Act, if indeed he was not its author, and who was the very President to be entrusted
with its execution, stated in his autobiography, "The Good Fight," that Act No. 671 was only "for a certain
period" and "would become invalid unless reenacted." These phrases connote automatical extinction of the law
upon the conclusion of a certain period. Together they denote that a new legislation was necessary to keep
alive (not to repeal) the law after the expiration of that period. They signify that the same law, not a different
one, had to be repassed if the grant should be prolonged.
What then was the contemplated period? President Quezon in the same paragraph of his autobiography
furnished part of the answer. He said he issued the call for a special session of the National Assembly "when it
became evident that we were completely helpless against air attack, and that it was most unlikely the
Philippine Legislature would hold its next regular session which was to open on January 1, 1942." (Emphasis
ours.) It can easily be discerned in this statement that the conferring of enormous powers upon the President
was decided upon with specific view to the inability of the National Assembly to meet. Indeed no other factor
than this inability could have motivated the delegation of powers so vast as to amount to an abdication by the
National Assembly of its authority. The enactment and continuation of a law so destructive of the foundations of
democratic institutions could not have been conceived under any circumstance short of a complete disruption
and dislocation of the normal processes of government. Anyway, if we are to uphold the constitutionality of the
act on the basis of its duration, we must start with the premise that it fixed a definite, limited period. As we have
indicated, the period that best comports with constitutional requirements and limitations, with the general
context of the law and with what we believe to be the main if not the sole raison d'etre for its enactment, was a
period coextensive with the inability of Congress to function, a period ending with the conventing of that body.

It is our considered opinion, and we so hold, that Commonwealth Act No. 671 became inoperative when
Congress met in regular session on May 25, 1946, and that Executive Orders Nos. 62, 192, 225 and 226 were
issued without authority of law. In setting the session of Congress instead of the first special session preceded
it as the point of expiration of the Act, we think giving effect to the purpose and intention of the National
Assembly. In a special session, the Congress may "consider general legislation or only such as he (President)
may designate." (Section 9, Article VI of the Constitution.) In a regular session, the power Congress to legislate
is not circumscribed except by the limitations imposed by the organic law.
Having arrived at this conclusion, we are relieved of the necessity of deciding the question as to which
department of government is authorized to inquire whether the contingency on which the law is predicated still
exists. The right of one or another department to declare the emergency terminated is not in issue. As a matter
of fact, we have endeavored to find the will of the National Assemblycall that will, an exercise of the police
power or the war power and, once ascertained, to apply it. Of course, the function of interpreting statutes in
proper cases, as in this, will not be denied the courts as their constitutional prerogative and duty. In so far as it
is insinuated that the Chief Executive has the exclusive authority to say that war not ended, and may act on the
strength of his opinion and findings in contravention of the law as the courts have construed it, no legal
principle can be found to support the proposition. There is no pretense that the President has independent or
inherent power to issue such executive orders as those under review. we take it that the respondents, in
sustaining the validity of these executive orders rely on Act No. 600, Act No. 620, or Act No. 671 of the former
Commonwealth and on no other source. To put it differently, the President's authority in this connection is
purely statutory, in no sense political or directly derived from the Constitution.
Act No. 671, as we have stressed, ended ex proprio vigore with the opening of the regular session of Congress
on May 25, 1946. Acts Nos. 600 and 620 contain stronger if not conclusive indication that they were selfliquidating. By express provision the rules and regulations to be eventually made in pursuance of Acts Nos.
600 and 620, respectively approved on August 19, 1940 and June 6, 1941, were to be good only up to the
corresponding dates of adjournment of the following sessions of the Legislature, "unless sooner amended or
repealed by the National Assembly." The logical deduction to be drawn from this provision is that in the mind of
the lawmakers the idea was fixed that the Acts themselves would lapse not latter than the rules and
regulations. The design to provide for the automatic repeal of those rules and regulations necessarily was
predicated on the consciousness of a prior or at best simultaneous repeal of their source. Were not this the
case, there would arise the curious spectacle, already painted, and easily foreseen, of the Legislature
amending or repealing rules and regulations of the President while the latter was empowered to keep or return
them into force and to issue new ones independently of the National Assembly. For the rest, the reasoning
heretofore adduced against the asserted indefinite continuance of the operation of Act No. 671 equally applies
to Acts Nos. 600 and 620.
The other corollary of the opinion we have reached is that the question whether war, in law or in fact,
continues, is irrelevant. If we were to that actual hostilities between the original belligerents are still raging, the
elusion would not be altered. After the convening of Congress new legislation had to be approved if the
continuation of the emergency powers, or some of them, was desired. In the light of the conditions surrounding
the approval of the Emergency Power Act, we are of the opinion that the "state of total emergency as a result
of war" envisaged in the preamble referred to the impending invasion and occupation of the Philippines by the
enemy and the consequent total disorganization of the Government, principally the impossibility for the
National Assembly to act. The state of affairs was one which called for immediate action and with which the
National Assembly would would not be able to cope. The war itself and its attendant chaos and calamities
could not have necessitated the delegation had the National Assembly been in a position to operate.
After all the criticism that have been made against the efficiency of the system of the separation of powers, the
fact remains that the Constitution has set up this form of government, with all its defects and shortcomings, in
preference to the commingling of powers in one man or group of men. The Filipino people by adopting
parliamentary government have given notice that they share the faith of other democracy-loving people in this
system, with all its faults, as the ideal. The point is, under this framework of government, legislation is
preserved for Congress all the time, not expecting periods of crisis no matter how serious. Never in the history
of the United States, the basic features of whose Constitution have been copied in ours, have the specific
functions of the legislative branch of enacting laws been surrendered to another department unless we

regard as legislating the carrying out of a legislative policy according to prescribed standards; no, not even
when that Republic was fighting a total war, or when it was engaged in a life-and-death struggle to preserve the
Union. The truth is that under our concept of constitutional government, in times of extreme perils more than in
normal circumstances "the various branches, executive, legislative, and judicial," given the ability to act, are
called upon "to the duties and discharge the responsibilities committed to them respectively."
These observations, though beyond the issue as formulated in this decision, may, we trust, also serve to
answer the vehement plea that for the good of the Nation, the President should retain his extraordinary powers
as long asturmoil and other ills directly or indirectly traceable to the late war harass the Philippines.
Upon the foregoing considerations, the petitions will be granted. In order to avoid any possible disruption and
interruption in the normal operation of the Government, we have deemed it best to depart in these cases from
the ordinary rule to the period for the effectivity of decisions, and to decree, as it is hereby decreed, that this
decision take effect fifteen days from the date of the entry of final judgment provided in section 8 of Rule 53 of
the Rules of Court in relation to section 2 of Rule 35. No costs will be charged.

6.) RODRIGUEZ v. GELLA 92 Phil. 603 Second Emergency Powers


Cases
Eulogio Rodriguez et al seek to invalidate Executive Orders 545 and 546 issued in 1952, the first appropriating
the sum of P37,850,500 for urgent and essential public works, and the second setting aside the sum of
P11,367,600 for relief in the provinces and cities visited by typhoons, floods, droughts, earthquakes, volcanic
action and other calamities. They sought to have Vicente Gella, then National Treasurer, be enjoined from
releasing funds pursuant to said EOs. These EOs were pursuant to Commonwealth Act 671. Note that prior to
Araneta vs Dinglasan, Congress passed House Bill 727 intending to revoke CA 671 but the same was vetoed
by the President due to the Korean War and his perception that war is still subsisting as a fact. Note also that
CA 671 was already declared inoperative by the Supreme Court in the same case of Araneta vs Dinglasan.
ISSUE: Whether or not the EOs are valid.
HELD: No. As similarly decided in the Araneta case, the EOs issued in pursuant to CA 671 shall be rendered
ineffective. The president did not invoke any actual emergencies or calamities emanating from the last world
war for which CA 671 has been intended. Without such invocation, the veto of the president cannot be of merit
for the emergency he feared cannot be attributed to the war contemplated in CA 671. Even if the president
vetoed the repealing bill the intent of Congress must be given due weight. For it would be absurd to contend
otherwise. For while Congress might delegate its power by a simple majority, it might not be able to recall
them except by two-third vote. In other words, it would be easier for Congress to delegate its powers than to
take them back. This is not right and is not, and ought not to be the law. Act No. 671 may be likened to an
ordinary contract of agency, whereby the consent of the agent is necessary only in the sense that he cannot be
compelled to accept the trust, in the same way that the principal cannot be forced to keep the relation in
eternity or at the will of the agent. Neither can it be suggested that the agency created under the Act is coupled
with interest.
Section 26 of Article VI of the Constitution provides that "in times of war or other national emergency, the
Congress may by law authorize the President, for a limited period and subject to such restrictions as it may
prescribe, to promulgate rules and regulations to carry out a declared national policy." Accordingly the National
Assembly passed Commonwealth Act No. 671, declaring (in section 1) the national policy that "the existence of
war between the United States and other countries of Europe and Asia, which involves the Philippines makes it
necessary to invest the President with extraordinary powers in order to meet the resulting emergency," and (in

section 2) authorizing the President, "during the existence of the emergency, to promulgate such rules and
regulations as he may deem necessary to carry out the national policy declared in section 1."
As the Act was expressly in pursuance of the constitutional provision, it has to be assumed that the National
Assembly intended it to be only for a limited period. If it be contended that the Act has not yet been duly
repealed, and such step is necessary to a cessation of the emergency powers delegated to the President, the
result would be obvious unconstitutionality, since it may never be repealed by the Congress, or if the latter ever
attempts to do so, the President may wield his veto. This eventuality has in fact taken place when the
President disapproved House Bill No. 727, repealing all Emergency Powers Acts. The situation will make the
Congress and the President or either as the principal authority to determine the indefinite duration of the
delegation of legislative powers, in palpable repugnance to the constitutional provision that any grant
thereunder must be for a limited period, necessarily to be fixed in the law itself and not dependent upon the
arbitrary or elastic will of either the Congress or the President.
Although House Bill No. 727, had been vetoed by the President and did not thereby become a regular statute,
it may at least be considered as a concurrent resolution of the Congress formally declaring the termination of
the emergency powers. To contend that the Bill needed presidential acquiescence to produce effect, would
lead to the anomalous, if not absurd, situation that, "while Congress might delegate its power by a simple
majority, it might not be able to recall them except by two-third vote. In other words, it would be easier for
Congress to delegate its powers than to take them back. This is not right and is not, and ought not to be the
law."2
Act No. 671 may be likened to an ordinary contract of agency, whereby the consent of the agent is necessary
only in the sense that he cannot be compelled to accept the trust, in the same way that the principal cannot be
forced to keep the relation in eternity or at the will of the agent. Neither can it be suggested that the agency
created under the Act is coupled with interest.
The logical view consistent with constitutionality is to hold that the powers lasted only during the emergency
resulting from the last world war which factually involved the Philippines when Act No. 671 was passed on
December 16, 1941. That emergency, which naturally terminated upon the ending of the last world war, was
contemplated by the members of the National Assembly on the foresight that the actual state of war could
prevent it from holding its next regular session. This is confirmed by the following statement of President
Quezon: "When it became evident that we were completely helpless against air attack and that it was most
unlikely the Philippine Legislature would hold its next regular session which was to open on January 1, 1942,
the National Assembly passed into history approving a resolution which reaffirmed the abiding faith of the
Filipino people in, and their loyalty to, the United States. The Assembly also enacted a law granting the
President of the Philippines all the powers that under the Philippine Constitution may be delegated to him in
time of war."3 When President Quezon said "in time of war", he an doubtedly meant such factual war as that
then raging.
As early as July 26, 1948, the Congress categorically declared that "since liberation conditions have gradually
returned to normal, but not so with regard to those who have suffered the ravages of war and who have not
received any relief for the loss and destruction resulting therefrom," and that "the emergency created by the
last war as regards these war sufferers being still existent, it is the declared policy of the state that as to them
the debt moratorium should be continued in force in a modified form."4 It is important to remember that
Republic Act No. 342 in which this declaration was made bore the approval of the President. Indeed, the latter
in his speech delivered on July 4, 1949, plainly proclaimed that "what emergencies it (the Republic) faces
today are incidental passing rains artificially created by seasonal partisanship, very common among
democracies but will disappear with the rains that follow the thunderclaps not later than November 8 of this
year," an admission, that such emergencies not only are not total but are not the result of the last war as
envisaged in Act No. 671.
If more is necessary to demonstrate the unmistakable stand of the legislative department on the alleged
existence of emergency, reference may be had to House Bill No. 727, hereinbefore referred to, repealing all
Emergency Powers Acts.

Moreover, section 26 of Article VI of the constitution, in virtue of which Act No. 671 was passed, authorizes the
delegation of powers by the Congress (1) in times of war or (2) other national emergency. The emergency
expressly spoken of in the title and in section 1 of the Act is one "in time of war," as distinguished from "other
national emergency" that may arise as an after-effect of war or from natural causes such as widespread
earthquakes, typhoons, floods, and the like. Certainly the typhoons that hit some provinces and cities in 1952
not only did not result from the last world war but were and could not have been contemplated by the
legislators. At any rate, the Congress is available for necessary special sessions, and it cannot let the people
down without somehow being answerable thereover.
As a matter of fact, the President, in returning to the Congress without his signature House Bill No. 727, did not
invoke any emergency resulting from the last world war, but only called attention to an impending emergency
that may be brought about by present complicated and troubled world conditions, and to the fact that our own
soldiers are fighting and dying in Korea in defense of democracy and freedom and for the preservation of our
Republic. The emergency thus feared cannot, however, be attributed to the war mentioned in Act No. 671 and
fought between Germany and Japan on one side and the Allied Powers on the other; and indications are that in
the next world war, if any, the communist countries will be aligned against the democracies. No departure can
be made from the national policy declared in section 1 of Act No. 671. New powers may be granted as often as
emergencies contemplated in the Constitution arise.
There is no point in the argument that the Philippines is still technically at war with Japan pending the
ratification of the peace treaty. In the first place, Act No. 671 referred to a factual war. In the second place, the
last world war was between the United States and Japan, the Philippines being involved only because it was
then under American sovereignty. In the third place, the United States had already signed the peace treaty with
Japan, and the Philippines has become an independent country since July 4, 1946.
It is pointed out that the passage of House Bill No. 727 is inconsistent with the claim that the emergency
powers are non-existent. But, from the debates in the House, it is patent that the Bill had to be approved
merely to remove all doubts, especially because this Court had heretofore failed, for lack of necessary majority,
to declare Act No. 671 entirely inoperative.
Reliance is placed on the petition of about seventy Congressmen and Senators and on House Resolution No.
99, urging the President to release and appropriate funds for essential and urgent public works and for relief in
the typhoon-stricken areas. It is enough to state, in reply, that the said petition and resolution cannot prevail
over the force and effect of House Bill No. 727 formally passed by two chambers of the Congress. If faith can
be accorded to the resolution of one house, there is more reason for accepting the solemn declarations of two
houses.
Even under the theory of some members of this court that insofar as the Congress had shown its readiness or
ability to act on a given matter, the emergency powers delegated to the President had been pro tanto
withdrawn, Executive Orders Nos. 545 and 546 must be declared as having no legal anchorage. We can take
judicial notice of the fact that the Congress has since liberation repeatedly been approving acts appropriating
funds for the operation of the Government, public works, and many others purposes, with the result that as to
such legislative task the Congress must be deemed to have long decided to assume the corresponding power
itself and to withdraw the same from the President. If the President had ceased to have powers with regards to
general appropriations, none can remain in respect of special appropriations; otherwise he may accomplish
indirectly what he cannot do directly. Besides, it is significant that Act No. 671 expressly limited the power of
the President to that continuing "in force" appropriations which would lapse or otherwise become inoperative,
so that, even assuming that the Act is still effective, it is doubtful whether the President can by executive orders
make new appropriations. The specific power "to continue in force laws and appropriations which would lapse
or otherwise become inoperative" is a limitation on the general power "to exercise such other powers as he
may deem necessary to enable the Government to fulfill its responsibilities and to maintain and enforce its
authority." Indeed, to hold that although the Congress has, for about seven years since liberation, been
normally functioning and legislating on every conceivable field, the President still has any residuary powers
under the Act, would necessarily lead to confusion and overlapping, if not conflict.

Shelter may not be sought in the proposition that the President should be allowed to exercise emergency
powers for the sake of speed and expediency in the interest and for the welfare of the people, because we
have the Constitution, designed to establish a government under a regime of justice, liberty and democracy. In
line with such primordial objective, our Government is democratic in form and based on the system of
separation of powers. Unless and until changed or amended, we shall have to abide by the letter and spirit of
the Constitution and be prepared to accept the consequences resulting from or inherent in disagreements
between, inaction or even refusal of the legislative and executive departments. Much as it is imperative in
some cases to have prompt official action, deadlocks in and slowness of democratic processes must be
preferred to concentration of powers in any one man or group of men for obvious reasons. The framers of the
Constitution, however, had the vision of and were careful in allowing delegation of legislative powers to the
President for a limited period "in times of war or other national emergency." They had thus entrusted to the
good judgment of the Congress the duty of coping with any national emergency by a more efficient procedure;
but it alone must decide because emergency in itself cannot and should not create power. In our democracy
the hope and survival of the nation lie in the wisdom and unselfish patriotism of all officials and in their faithful
adherence to the Constitution.
Wherefore, Executive Orders Nos. 545 and 546 are hereby declared null and void, and the respondents are
ordered to desist from appropriating, releasing, allotting, and expending the public funds set aside therein. So
ordered, without costs.

7.) DAVID v. ARROYO 489 SCRA 160 The Executive Branch


Presidential Proclamation 1017 Take Care Clause Take Over Power
Calling Out Power
In February 2006, due to the escape of some Magdalo members and the discovery of a plan (Oplan Hackle I)
to assassinate the president, then president Gloria Macapagal-Arroyo (GMA) issued Presidential Proclamation
1017 (PP1017) and is to be implemented by General Order No. 5 (GO 5). The said law was aimed to suppress
lawlessness and the connivance of extremists to bring down the government.
Pursuant to such PP, GMA cancelled all plans to celebrate EDSA I and at the same time revoked all permits
issued for rallies and other public organization/meeting. Notwithstanding the cancellation of their rally permit,
Kilusang Mayo Uno (KMU) head Randolf David proceeded to rally which led to his arrest.
Later that day, the Daily Tribune, which Cacho-Olivares is the editor, was raided by the CIDG and they seized
and confiscated anti-GMA articles and write ups. Later still, another known anti-GMA news agency (Malaya)
was raided and seized. On the same day, Beltran of Anakpawis, was also arrested. His arrest was however
grounded on a warrant of arrest issued way back in 1985 for his actions against Marcos. His supporters cannot
visit him in jail because of the current imposition of PP 1017 and GO 5.
In March, GMA issued PP 1021 which declared that the state of national emergency ceased to exist. David and
some opposition Congressmen averred that PP1017 is unconstitutional for it has no factual basis and it cannot
be validly declared by the president for such power is reposed in Congress. Also such declaration is actually a
declaration of martial law. Olivares-Cacho also averred that the emergency contemplated in the Constitution
are those of natural calamities and that such is an overbreadth. Petitioners claim that PP 1017 is an
overbreadth because it encroaches upon protected and unprotected rights. The Sol-Gen argued that the issue
has become moot and academic by reason of the lifting of PP 1017 by virtue of the declaration of PP 1021.
The Sol-Gen averred that PP 1017 is within the presidents calling out power, take care power and take over
power.
ISSUE: Whether or not PP 1017 and GO 5 is constitutional.
HELD: PP 1017 and its implementing GO are partly constitutional and partly unconstitutional.

The issue cannot be considered as moot and academic by reason of the lifting of the questioned PP. It is still in
fact operative because there are parties still affected due to the alleged violation of the said PP. Hence, the SC
can take cognition of the case at bar. The SC ruled that PP 1017 is constitutional in part and at the same time
some provisions of which are unconstitutional. The SC ruled in the following way;
Resolution by the SC on the Factual Basis of its declaration
The petitioners were not able to prove that GMA has no factual basis in issuing PP 1017 and GO 5. A reading
of the Solicitor Generals Consolidated Comment and Memorandum shows a detailed narration of the events
leading to the issuance of PP 1017, with supporting reports forming part of the records. Mentioned are the
escape of the Magdalo Group, their audacious threat of the Magdalo D-Day, the defections in the military,
particularly in the Philippine Marines, and the reproving statements from the communist leaders. There was
also the Minutes of the Intelligence Report and Security Group of the Philippine Army showing the growing
alliance between the NPA and the military. Petitioners presented nothing to refute such events. Thus, absent
any contrary allegations, the Court is convinced that the President was justified in issuing PP 1017 calling for
military aid. Indeed, judging the seriousness of the incidents, GMA was not expected to simply fold her arms
and do nothing to prevent or suppress what she believed was lawless violence, invasion or rebellion.
However, the exercise of such power or duty must not stifle liberty.
Resolution by the SC on the Overbreadth Theory
First and foremost, the overbreadth doctrine is an analytical tool developed for testing on their faces statutes
in free speech cases. The 7 consolidated cases at bar are not primarily freedom of speech cases. Also, a
plain reading of PP 1017 shows that it is not primarily directed to speech or even speech-related conduct. It is
actually a call upon the AFP to prevent or suppress all forms of lawless violence. Moreover, the overbreadth
doctrine is not intended for testing the validity of a law that reflects legitimate state interest in maintaining
comprehensive control over harmful, constitutionally unprotected conduct. Undoubtedly, lawless violence,
insurrection and rebellion are considered harmful and constitutionally unprotected conduct. Thus, claims of
facial overbreadth are entertained in cases involving statutes which, by their terms, seek to regulate only
spoken words and again, that overbreadth claims, if entertained at all, have been curtailed when invoked
against ordinary criminal laws that are sought to be applied to protected conduct. Here, the incontrovertible
fact remains that PP 1017 pertains to a spectrum of conduct, not free speech, which is manifestly subject to
state regulation.
Resolution by the SC on the Calling Out Power Doctrine
On the basis of Sec 17, Art 7 of the Constitution, GMA declared PP 1017. The SC considered the Presidents
calling-out power as a discretionary power solely vested in his wisdom, it stressed that this does not prevent
an examination of whether such power was exercised within permissible constitutional limits or whether it was
exercised in a manner constituting grave abuse of discretion. The SC ruled that GMA has validly declared PP
1017 for the Constitution grants the President, as Commander-in-Chief, a sequence of graduated powers.
From the most to the least benign, these are: the calling-out power, the power to suspend the privilege of the
writ of habeas corpus, and the power to declare Martial Law. The only criterion for the exercise of the callingout power is that whenever it becomes necessary, the President may call the armed forces to prevent or
suppress lawless violence, invasion or rebellion. And such criterion has been met.
Resolution by the SC on the Take Care Doctrine
Pursuant to the 2nd sentence of Sec 17, Art 7 of the Constitution (He shall ensure that the laws be faithfully
executed.) the president declared PP 1017. David et al averred that PP 1017 however violated Sec 1, Art 6 of
the Constitution for it arrogated legislative power to the President. Such power is vested in Congress. They
assail the clause to enforce obedience to all the laws and to all decrees, orders and regulations promulgated
by me personally or upon my direction. The SC noted that such provision is similar to the power that granted
former President Marcos legislative powers (as provided in PP 1081). The SC ruled that the assailed PP 1017
is unconstitutional insofar as it grants GMA the authority to promulgate decrees. Legislative power is
peculiarly within the province of the Legislature. Sec 1, Article 6 categorically states that [t]he legislative power

shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives. To be sure, neither Martial Law nor a state of rebellion nor a state of emergency can justify
GMA[s exercise of legislative power by issuing decrees. The president can only take care of the carrying out
of laws but cannot create or enact laws.
Resolution by the SC on the Take Over Power Doctrine
The president cannot validly order the taking over of private corporations or institutions such as the Daily
Tribune without any authority from Congress. On the other hand, the word emergency contemplated in the
constitution is not limited to natural calamities but rather it also includes rebellion. The SC made a distinction;
the president can declare the state of national emergency but her exercise of emergency powers does not
come automatically after it for such exercise needs authority from Congress. The authority from Congress must
be based on the following:
(1) There must be a war or other emergency.
(2) The delegation must be for a limited period only.
(3) The delegation must be subject to such restrictions as the Congress may prescribe.
(4) The emergency powers must be exercised to carry out a national policy declared by Congress.
Resolution by the SC on the Issue that PP 1017 is a Martial Law Declaration
The SC ruled that PP 1017 is not a Martial Law declaration and is not tantamount to it. It is a valid exercise of
the calling out power of the president by the president.

On March 7, 2006, the Court conducted oral arguments and heard the parties on the above interlocking issues
which may be summarized as follows:
A. PROCEDURAL:
1) Whether the issuance of PP 1021 renders the petitions moot and academic.
2) Whether petitioners in 171485 (Escudero et al.), G.R. Nos. 171400 (ALGI), 171483 (KMU et al.), 171489
(Cadiz et al.), and 171424 (Legarda) have legal standing.
B. SUBSTANTIVE:
1) Whetherthe Supreme Court can review the factual bases of PP 1017.
2) Whether PP 1017 and G.O. No. 5 are unconstitutional.
a. Facial Challenge
b. Constitutional Basis
c. As Applied Challenge
A. PROCEDURAL
First, we must resolve the procedural roadblocks.
I- Moot and Academic Principle

One of the greatest contributions of the American system to this country is the concept of judicial review
enunciated in Marbury v. Madison.21 This concept rests on the extraordinary simple foundation -The Constitution is the supreme law. It was ordained by the people, the ultimate source of all political authority.
It confers limited powers on the national government. x x x If the government consciously or unconsciously
oversteps these limitations there must be some authority competent to hold it in control, to thwart its
unconstitutional attempt, and thus to vindicate and preserve inviolate the will of the people as expressed in the
Constitution. This power the courts exercise. This is the beginning and the end of the theory of judicial
review.22
But the power of judicial review does not repose upon the courts a "self-starting capacity."23 Courts may
exercise such power only when the following requisites are present: first, there must be an actual case or
controversy; second, petitioners have to raise a question of constitutionality; third, the constitutional question
must be raised at the earliest opportunity; and fourth, the decision of the constitutional question must be
necessary to the determination of the case itself.24
Respondents maintain that the first and second requisites are absent, hence, we shall limit our discussion
thereon.
An actual case or controversy involves a conflict of legal right, an opposite legal claims susceptible of judicial
resolution. It is "definite and concrete, touching the legal relations of parties having adverse legal interest;" a
real and substantial controversy admitting of specific relief.25 The Solicitor General refutes the existence of
such actual case or controversy, contending that the present petitions were rendered "moot and academic" by
President Arroyos issuance of PP 1021.
Such contention lacks merit.
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening
events,26 so that a declaration thereon would be of no practical use or value.27 Generally, courts decline
jurisdiction over such case28 or dismiss it on ground of mootness.29
The Court holds that President Arroyos issuance of PP 1021 did not render the present petitions moot and
academic. During the eight (8) days that PP 1017 was operative, the police officers, according to petitioners,
committed illegal acts in implementing it. Are PP 1017 and G.O. No. 5 constitutional or valid? Do they justify
these alleged illegal acts? These are the vital issues that must be resolved in the present petitions. It must be
stressed that "an unconstitutional act is not a law, it confers no rights, it imposes no duties, it affords no
protection; it is in legal contemplation, inoperative."30
The "moot and academic" principle is not a magical formula that can automatically dissuade the courts in
resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of
the Constitution;31 second, the exceptional character of the situation and the paramount public interest is
involved;32 third, when constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public;33 and fourth, the case is capable of repetition yet evading review.34
All the foregoing exceptions are present here and justify this Courts assumption of jurisdiction over the instant
petitions. Petitioners alleged that the issuance of PP 1017 and G.O. No. 5 violates the Constitution. There is no
question that the issues being raised affect the publics interest, involving as they do the peoples basic rights
to freedom of expression, of assembly and of the press. Moreover, the Court has the duty to formulate guiding
and controlling constitutional precepts, doctrines or rules. It has the symbolic function of educating the bench
and the bar, and in the present petitions, the military and the police, on the extent of the protection given by
constitutional guarantees.35 And lastly, respondents contested actions are capable of repetition. Certainly, the
petitions are subject to judicial review.
In their attempt to prove the alleged mootness of this case, respondents cited Chief Justice Artemio V.
Panganibans Separate Opinion in Sanlakas v. Executive Secretary.36 However, they failed to take into

account the Chief Justices very statement that an otherwise "moot" case may still be decided "provided the
party raising it in a proper case has been and/or continues to be prejudiced or damaged as a direct result of its
issuance." The present case falls right within this exception to the mootness rule pointed out by the Chief
Justice.
II- Legal Standing
In view of the number of petitioners suing in various personalities, the Court deems it imperative to have a
more than passing discussion on legal standing or locus standi.
Locus standi is defined as "a right of appearance in a court of justice on a given question."37 In private suits,
standing is governed by the "real-parties-in interest" rule as contained in Section 2, Rule 3 of the 1997 Rules of
Civil Procedure, as amended. It provides that "every action must be prosecuted or defended in the name of the
real party in interest." Accordingly, the "real-party-in interest" is "the party who stands to be benefited or injured
by the judgment in the suit or the party entitled to the avails of the suit."38 Succinctly put, the plaintiffs standing
is based on his own right to the relief sought.
The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a "public right" in
assailing an allegedly illegal official action, does so as a representative of the general public. He may be a
person who is affected no differently from any other person. He could be suing as a "stranger," or in the
category of a "citizen," or taxpayer." In either case, he has to adequately show that he is entitled to seek
judicial protection. In other words, he has to make out a sufficient interest in the vindication of the public order
and the securing of relief as a "citizen" or "taxpayer.
Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk,39 where it was held that the plaintiff in a taxpayers suit is
in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the
expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As held by
the New York Supreme Court in People ex rel Case v. Collins:40 "In matter of mere public right, howeverthe
people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a
public offence be properly pursued and punished, and that a public grievance be remedied." With respect to
taxpayers suits, Terr v. Jordan41 held that "the right of a citizen and a taxpayer to maintain an action in courts
to restrain the unlawful use of public funds to his injury cannot be denied."
However, to prevent just about any person from seeking judicial interference in any official policy or act with
which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service,
the United State Supreme Court laid down the more stringent "direct injury" test in Ex Parte Levitt,42 later
reaffirmed in Tileston v. Ullman.43 The same Court ruled that for a private individual to invoke the judicial
power to determine the validity of an executive or legislative action, he must show that he has sustained a
direct injury as a result of that action, and it is not sufficient that he has a general interest common to all
members of the public.
This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera,44 it held that the person who
impugns the validity of a statute must have "a personal and substantial interest in the case such that he has
sustained, or will sustain direct injury as a result." The Vera doctrine was upheld in a litany of cases, such as,
Custodio v. President of the Senate,45 Manila Race Horse Trainers Association v. De la Fuente,46 Pascual v.
Secretary of Public Works47 and Anti-Chinese League of the Philippines v. Felix.48
However, being a mere procedural technicality, the requirement of locus standi may be waived by the Court in
the exercise of its discretion. This was done in the 1949 Emergency Powers Cases, Araneta v. Dinglasan,49
where the "transcendental importance" of the cases prompted the Court to act liberally. Such liberality was
neither a rarity nor accidental. In Aquino v. Comelec,50 this Court resolved to pass upon the issues raised due
to the "far-reaching implications" of the petition notwithstanding its categorical statement that petitioner therein
had no personality to file the suit. Indeed, there is a chain of cases where this liberal policy has been observed,
allowing ordinary citizens, members of Congress, and civic organizations to prosecute actions involving the
constitutionality or validity of laws, regulations and rulings.51

Thus, the Court has adopted a rule that even where the petitioners have failed to show direct injury, they have
been allowed to sue under the principle of "transcendental importance." Pertinent are the following cases:
(1) Chavez v. Public Estates Authority,52 where the Court ruled that the enforcement of the constitutional right
to information and the equitable diffusion of natural resources are matters of transcendental importance which
clothe the petitioner with locus standi;
(2) Bagong Alyansang Makabayan v. Zamora,53 wherein the Court held that "given the transcendental
importance of the issues involved, the Court may relax the standing requirements and allow the suit to prosper
despite the lack of direct injury to the parties seeking judicial review" of the Visiting Forces Agreement;
(3) Lim v. Executive Secretary,54 while the Court noted that the petitioners may not file suit in their capacity as
taxpayers absent a showing that "Balikatan 02-01" involves the exercise of Congress taxing or spending
powers, it reiterated its ruling in Bagong Alyansang Makabayan v. Zamora,55that in cases of transcendental
importance, the cases must be settled promptly and definitely and standing requirements may be relaxed.
By way of summary, the following rules may be culled from the cases decided by this Court. Taxpayers, voters,
concerned citizens, and legislators may be accorded standing to sue, provided that the following requirements
are met:
(1) the cases involve constitutional issues;
(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax measure is
unconstitutional;
(3) for voters, there must be a showing of obvious interest in the validity of the election law in question;
(4) for concerned citizens, there must be a showing that the issues raised are of transcendental importance
which must be settled early; and
(5) for legislators, there must be a claim that the official action complained of infringes upon their prerogatives
as legislators.
Significantly, recent decisions show a certain toughening in the Courts attitude toward legal standing.
In Kilosbayan, Inc. v. Morato,56 the Court ruled that the status of Kilosbayan as a peoples organization does
not give it the requisite personality to question the validity of the on-line lottery contract, more so where it does
not raise any issue of constitutionality. Moreover, it cannot sue as a taxpayer absent any allegation that public
funds are being misused. Nor can it sue as a concerned citizen as it does not allege any specific injury it has
suffered.
In Telecommunications and Broadcast Attorneys of the Philippines, Inc. v. Comelec,57 the Court reiterated the
"direct injury" test with respect to concerned citizens cases involving constitutional issues. It held that "there
must be a showing that the citizen personally suffered some actual or threatened injury arising from the alleged
illegal official act."
In Lacson v. Perez,58 the Court ruled that one of the petitioners, Laban ng Demokratikong Pilipino (LDP), is
not a real party-in-interest as it had not demonstrated any injury to itself or to its leaders, members or
supporters.
In Sanlakas v. Executive Secretary,59 the Court ruled that only the petitioners who are members of Congress
have standing to sue, as they claim that the Presidents declaration of a state of rebellion is a usurpation of the
emergency powers of Congress, thus impairing their legislative powers. As to petitioners Sanlakas, Partido
Manggagawa, and Social Justice Society, the Court declared them to be devoid of standing, equating them
with the LDP in Lacson.

Now, the application of the above principles to the present petitions.


The locus standi of petitioners in G.R. No. 171396, particularly David and Llamas, is beyond doubt. The same
holds true with petitioners in G.R. No. 171409, Cacho-Olivares and Tribune Publishing Co. Inc. They alleged
"direct injury" resulting from "illegal arrest" and "unlawful search" committed by police operatives pursuant to
PP 1017. Rightly so, the Solicitor General does not question their legal standing.
In G.R. No. 171485, the opposition Congressmen alleged there was usurpation of legislative powers. They
also raised the issue of whether or not the concurrence of Congress is necessary whenever the alarming
powers incident to Martial Law are used. Moreover, it is in the interest of justice that those affected by PP 1017
can be represented by their Congressmen in bringing to the attention of the Court the alleged violations of their
basic rights.
In G.R. No. 171400, (ALGI), this Court applied the liberality rule in Philconsa v. Enriquez,60 Kapatiran Ng Mga
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,61 Association of Small Landowners in the Philippines,
Inc. v. Secretary of Agrarian Reform,62 Basco v. Philippine Amusement and Gaming Corporation,63 and
Taada v. Tuvera,64 that when the issue concerns a public right, it is sufficient that the petitioner is a citizen
and has an interest in the execution of the laws.
In G.R. No. 171483, KMUs assertion that PP 1017 and G.O. No. 5 violated its right to peaceful assembly may
be deemed sufficient to give it legal standing. Organizations may be granted standing to assert the rights of
their members.65 We take judicial notice of the announcement by the Office of the President banning all rallies
and canceling all permits for public assemblies following the issuance of PP 1017 and G.O. No. 5.
In G.R. No. 171489, petitioners, Cadiz et al., who are national officers of the Integrated Bar of the Philippines
(IBP) have no legal standing, having failed to allege any direct or potential injury which the IBP as an institution
or its members may suffer as a consequence of the issuance of PP No. 1017 and G.O. No. 5. In Integrated Bar
of the Philippines v. Zamora,66 the Court held that the mere invocation by the IBP of its duty to preserve the
rule of law and nothing more, while undoubtedly true, is not sufficient to clothe it with standing in this case. This
is too general an interest which is shared by other groups and the whole citizenry. However, in view of the
transcendental importance of the issue, this Court declares that petitioner have locus standi.
In G.R. No. 171424, Loren Legarda has no personality as a taxpayer to file the instant petition as there are no
allegations of illegal disbursement of public funds. The fact that she is a former Senator is of no consequence.
She can no longer sue as a legislator on the allegation that her prerogatives as a lawmaker have been
impaired by PP 1017 and G.O. No. 5. Her claim that she is a media personality will not likewise aid her
because there was no showing that the enforcement of these issuances prevented her from pursuing her
occupation. Her submission that she has pending electoral protest before the Presidential Electoral Tribunal is
likewise of no relevance. She has not sufficiently shown that PP 1017 will affect the proceedings or result of
her case. But considering once more the transcendental importance of the issue involved, this Court may relax
the standing rules.
It must always be borne in mind that the question of locus standi is but corollary to the bigger question of
proper exercise of judicial power. This is the underlying legal tenet of the "liberality doctrine" on legal standing.
It cannot be doubted that the validity of PP No. 1017 and G.O. No. 5 is a judicial question which is of
paramount importance to the Filipino people. To paraphrase Justice Laurel, the whole of Philippine society now
waits with bated breath the ruling of this Court on this very critical matter. The petitions thus call for the
application of the "transcendental importance" doctrine, a relaxation of the standing requirements for the
petitioners in the "PP 1017 cases."1avvphil.net
This Court holds that all the petitioners herein have locus standi.
Incidentally, it is not proper to implead President Arroyo as respondent. Settled is the doctrine that the
President, during his tenure of office or actual incumbency,67 may not be sued in any civil or criminal case,
and there is no need to provide for it in the Constitution or law. It will degrade the dignity of the high office of

the President, the Head of State, if he can be dragged into court litigations while serving as such. Furthermore,
it is important that he be freed from any form of harassment, hindrance or distraction to enable him to fully
attend to the performance of his official duties and functions. Unlike the legislative and judicial branch, only one
constitutes the executive branch and anything which impairs his usefulness in the discharge of the many great
and important duties imposed upon him by the Constitution necessarily impairs the operation of the
Government. However, this does not mean that the President is not accountable to anyone. Like any other
official, he remains accountable to the people68 but he may be removed from office only in the mode provided
by law and that is by impeachment.69
B. SUBSTANTIVE
I. Review of Factual Bases
Petitioners maintain that PP 1017 has no factual basis. Hence, it was not "necessary" for President Arroyo to
issue such Proclamation.
The issue of whether the Court may review the factual bases of the Presidents exercise of his Commander-inChief power has reached its distilled point - from the indulgent days of Barcelon v. Baker70 and Montenegro v.
Castaneda71 to the volatile era of Lansang v. Garcia,72 Aquino, Jr. v. Enrile,73 and Garcia-Padilla v. Enrile.74
The tug-of-war always cuts across the line defining "political questions," particularly those questions "in regard
to which full discretionary authority has been delegated to the legislative or executive branch of the
government."75 Barcelon and Montenegro were in unison in declaring that the authority to decide whether an
exigency has arisen belongs to the President and his decision is final and conclusive on the courts. Lansang
took the opposite view. There, the members of the Court were unanimous in the conviction that the Court has
the authority to inquire into the existence of factual bases in order to determine their constitutional sufficiency.
From the principle of separation of powers, it shifted the focus to the system of checks and balances, "under
which the President is supreme, x x x only if and when he acts within the sphere allotted to him by the Basic
Law, and the authority to determine whether or not he has so acted is vested in the Judicial Department, which
in this respect, is, in turn, constitutionally supreme."76 In 1973, the unanimous Court of Lansang was divided in
Aquino v. Enrile.77 There, the Court was almost evenly divided on the issue of whether the validity of the
imposition of Martial Law is a political or justiciable question.78 Then came Garcia-Padilla v. Enrile which
greatly diluted Lansang. It declared that there is a need to re-examine the latter case, ratiocinating that "in
times of war or national emergency, the President must be given absolute control for the very life of the nation
and the government is in great peril. The President, it intoned, is answerable only to his conscience, the
People, and God."79
The Integrated Bar of the Philippines v. Zamora80 -- a recent case most pertinent to these cases at bar -echoed a principle similar to Lansang. While the Court considered the Presidents "calling-out" power as a
discretionary power solely vested in his wisdom, it stressed that "this does not prevent an examination of
whether such power was exercised within permissible constitutional limits or whether it was exercised in a
manner constituting grave abuse of discretion."This ruling is mainly a result of the Courts reliance on Section
1, Article VIII of 1987 Constitution which fortifies the authority of the courts to determine in an appropriate
action the validity of the acts of the political departments. Under the new definition of judicial power, the courts
are authorized not only "to settle actual controversies involving rights which are legally demandable and
enforceable," but also "to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the government." The latter part of
the authority represents a broadening of judicial power to enable the courts of justice to review what was
before a forbidden territory, to wit, the discretion of the political departments of the government.81 It speaks of
judicial prerogative not only in terms of power but also of duty.82
As to how the Court may inquire into the Presidents exercise of power, Lansang adopted the test that "judicial
inquiry can go no further than to satisfy the Court not that the Presidents decision is correct," but that "the
President did not act arbitrarily." Thus, the standard laid down is not correctness, but arbitrariness.83 In
Integrated Bar of the Philippines, this Court further ruled that "it is incumbent upon the petitioner to show that
the Presidents decision is totally bereft of factual basis" and that if he fails, by way of proof, to support his
assertion, then "this Court cannot undertake an independent investigation beyond the pleadings."

Petitioners failed to show that President Arroyos exercise of the calling-out power, by issuing PP 1017, is
totally bereft of factual basis. A reading of the Solicitor Generals Consolidated Comment and Memorandum
shows a detailed narration of the events leading to the issuance of PP 1017, with supporting reports forming
part of the records. Mentioned are the escape of the Magdalo Group, their audacious threat of the Magdalo DDay, the defections in the military, particularly in the Philippine Marines, and the reproving statements from the
communist leaders. There was also the Minutes of the Intelligence Report and Security Group of the Philippine
Army showing the growing alliance between the NPA and the military. Petitioners presented nothing to refute
such events. Thus, absent any contrary allegations, the Court is convinced that the President was justified in
issuing PP 1017 calling for military aid.
Indeed, judging the seriousness of the incidents, President Arroyo was not expected to simply fold her arms
and do nothing to prevent or suppress what she believed was lawless violence, invasion or rebellion. However,
the exercise of such power or duty must not stifle liberty.
II. Constitutionality of PP 1017 and G.O. No. 5
Doctrines of Several Political Theorists
on the Power of the President in Times of Emergency
This case brings to fore a contentious subject -- the power of the President in times of emergency. A glimpse at
the various political theories relating to this subject provides an adequate backdrop for our ensuing discussion.
John Locke, describing the architecture of civil government, called upon the English doctrine of prerogative to
cope with the problem of emergency. In times of danger to the nation, positive law enacted by the legislature
might be inadequate or even a fatal obstacle to the promptness of action necessary to avert catastrophe. In
these situations, the Crown retained a prerogative "power to act according to discretion for the public good,
without the proscription of the law and sometimes even against it."84 But Locke recognized that this moral
restraint might not suffice to avoid abuse of prerogative powers. Who shall judge the need for resorting to the
prerogative and how may its abuse be avoided? Here, Locke readily admitted defeat, suggesting that "the
people have no other remedy in this, as in all other cases where they have no judge on earth, but to appeal to
Heaven."85
Jean-Jacques Rousseau also assumed the need for temporary suspension of democratic processes of
government in time of emergency. According to him:
The inflexibility of the laws, which prevents them from adopting themselves to circumstances, may, in certain
cases, render them disastrous and make them bring about, at a time of crisis, the ruin of the State
It is wrong therefore to wish to make political institutions as strong as to render it impossible to suspend their
operation. Even Sparta allowed its law to lapse...
If the peril is of such a kind that the paraphernalia of the laws are an obstacle to their preservation, the method
is to nominate a supreme lawyer, who shall silence all the laws and suspend for a moment the sovereign
authority. In such a case, there is no doubt about the general will, and it clear that the peoples first intention is
that the State shall not perish.86
Rosseau did not fear the abuse of the emergency dictatorship or "supreme magistracy" as he termed it. For
him, it would more likely be cheapened by "indiscreet use." He was unwilling to rely upon an "appeal to
heaven." Instead, he relied upon a tenure of office of prescribed duration to avoid perpetuation of the
dictatorship.87
John Stuart Mill concluded his ardent defense of representative government: "I am far from condemning, in
cases of extreme necessity, the assumption of absolute power in the form of a temporary dictatorship."88

Nicollo Machiavellis view of emergency powers, as one element in the whole scheme of limited government,
furnished an ironic contrast to the Lockean theory of prerogative. He recognized and attempted to bridge this
chasm in democratic political theory, thus:
Now, in a well-ordered society, it should never be necessary to resort to extra constitutional measures; for
although they may for a time be beneficial, yet the precedent is pernicious, for if the practice is once
established for good objects, they will in a little while be disregarded under that pretext but for evil purposes.
Thus, no republic will ever be perfect if she has not by law provided for everything, having a remedy for every
emergency and fixed rules for applying it.89
Machiavelli in contrast to Locke, Rosseau and Mill sought to incorporate into the constitution a regularized
system of standby emergency powers to be invoked with suitable checks and controls in time of national
danger. He attempted forthrightly to meet the problem of combining a capacious reserve of power and speed
and vigor in its application in time of emergency, with effective constitutional restraints.90
Contemporary political theorists, addressing themselves to the problem of response to emergency by
constitutional democracies, have employed the doctrine of constitutional dictatorship.91 Frederick M. Watkins
saw "no reason why absolutism should not be used as a means for the defense of liberal institutions," provided
it "serves to protect established institutions from the danger of permanent injury in a period of temporary
emergency and is followed by a prompt return to the previous forms of political life."92 He recognized the two
(2) key elements of the problem of emergency governance, as well as all constitutional governance: increasing
administrative powers of the executive, while at the same time "imposing limitation upon that power."93
Watkins placed his real faith in a scheme of constitutional dictatorship. These are the conditions of success of
such a dictatorship: "The period of dictatorship must be relatively shortDictatorship should always be strictly
legitimate in characterFinal authority to determine the need for dictatorship in any given case must never rest
with the dictator himself"94 and the objective of such an emergency dictatorship should be "strict political
conservatism."
Carl J. Friedrich cast his analysis in terms similar to those of Watkins.95 "It is a problem of concentrating power
in a government where power has consciously been divided to cope with situations of unprecedented
magnitude and gravity. There must be a broad grant of powers, subject to equally strong limitations as to who
shall exercise such powers, when, for how long, and to what end."96 Friedrich, too, offered criteria for judging
the adequacy of any of scheme of emergency powers, to wit: "The emergency executive must be appointed by
constitutional means i.e., he must be legitimate; he should not enjoy power to determine the existence of an
emergency; emergency powers should be exercised under a strict time limitation; and last, the objective of
emergency action must be the defense of the constitutional order."97
Clinton L. Rossiter, after surveying the history of the employment of emergency powers in Great Britain,
France, Weimar, Germany and the United States, reverted to a description of a scheme of "constitutional
dictatorship" as solution to the vexing problems presented by emergency.98 Like Watkins and Friedrich, he
stated a priori the conditions of success of the "constitutional dictatorship," thus:
1) No general regime or particular institution of constitutional dictatorship should be initiated unless it is
necessary or even indispensable to the preservation of the State and its constitutional order
2) the decision to institute a constitutional dictatorship should never be in the hands of the man or men who
will constitute the dictator
3) No government should initiate a constitutional dictatorship without making specific provisions for its
termination
4) all uses of emergency powers and all readjustments in the organization of the government should be
effected in pursuit of constitutional or legal requirements
5) no dictatorial institution should be adopted, no right invaded, no regular procedure altered any more than
is absolutely necessary for the conquest of the particular crisis . . .

6) The measures adopted in the prosecution of the a constitutional dictatorship should never be permanent in
character or effect
7) The dictatorship should be carried on by persons representative of every part of the citizenry interested in
the defense of the existing constitutional order. . .
8) Ultimate responsibility should be maintained for every action taken under a constitutional dictatorship. . .
9) The decision to terminate a constitutional dictatorship, like the decision to institute one should never be in
the hands of the man or men who constitute the dictator. . .
10) No constitutional dictatorship should extend beyond the termination of the crisis for which it was
instituted
11) the termination of the crisis must be followed by a complete return as possible to the political and
governmental conditions existing prior to the initiation of the constitutional dictatorship99
Rossiter accorded to legislature a far greater role in the oversight exercise of emergency powers than did
Watkins. He would secure to Congress final responsibility for declaring the existence or termination of an
emergency, and he places great faith in the effectiveness of congressional investigating committees.100
Scott and Cotter, in analyzing the above contemporary theories in light of recent experience, were one in
saying that, "the suggestion that democracies surrender the control of government to an authoritarian ruler in
time of grave danger to the nation is not based upon sound constitutional theory." To appraise emergency
power in terms of constitutional dictatorship serves merely to distort the problem and hinder realistic analysis. It
matters not whether the term "dictator" is used in its normal sense (as applied to authoritarian rulers) or is
employed to embrace all chief executives administering emergency powers. However used, "constitutional
dictatorship" cannot be divorced from the implication of suspension of the processes of constitutionalism. Thus,
they favored instead the "concept of constitutionalism" articulated by Charles H. McIlwain:
A concept of constitutionalism which is less misleading in the analysis of problems of emergency powers, and
which is consistent with the findings of this study, is that formulated by Charles H. McIlwain. While it does not
by any means necessarily exclude some indeterminate limitations upon the substantive powers of government,
full emphasis is placed upon procedural limitations, and political responsibility. McIlwain clearly recognized the
need to repose adequate power in government. And in discussing the meaning of constitutionalism, he insisted
that the historical and proper test of constitutionalism was the existence of adequate processes for keeping
government responsible. He refused to equate constitutionalism with the enfeebling of government by an
exaggerated emphasis upon separation of powers and substantive limitations on governmental power. He
found that the really effective checks on despotism have consisted not in the weakening of government but, but
rather in the limiting of it; between which there is a great and very significant difference. In associating
constitutionalism with "limited" as distinguished from "weak" government, McIlwain meant government limited
to the orderly procedure of law as opposed to the processes of force. The two fundamental correlative
elements of constitutionalism for which all lovers of liberty must yet fight are the legal limits to arbitrary power
and a complete political responsibility of government to the governed.101
In the final analysis, the various approaches to emergency of the above political theorists - from Locks
"theory of prerogative," to Watkins doctrine of "constitutional dictatorship" and, eventually, to McIlwains
"principle of constitutionalism" --- ultimately aim to solve one real problem in emergency governance, i.e., that
of allotting increasing areas of discretionary power to the Chief Executive, while insuring that such powers will
be exercised with a sense of political responsibility and under effective limitations and checks.
Our Constitution has fairly coped with this problem. Fresh from the fetters of a repressive regime, the 1986
Constitutional Commission, in drafting the 1987 Constitution, endeavored to create a government in the
concept of Justice Jacksons "balanced power structure."102 Executive, legislative, and judicial powers are
dispersed to the President, the Congress, and the Supreme Court, respectively. Each is supreme within its own

sphere. But none has the monopoly of power in times of emergency. Each branch is given a role to serve as
limitation or check upon the other. This system does not weaken the President, it just limits his power, using
the language of McIlwain. In other words, in times of emergency, our Constitution reasonably demands that we
repose a certain amount of faith in the basic integrity and wisdom of the Chief Executive but, at the same time,
it obliges him to operate within carefully prescribed procedural limitations.
a. "Facial Challenge"
Petitioners contend that PP 1017 is void on its face because of its "overbreadth." They claim that its
enforcement encroached on both unprotected and protected rights under Section 4, Article III of the
Constitution and sent a "chilling effect" to the citizens.
A facial review of PP 1017, using the overbreadth doctrine, is uncalled for.
First and foremost, the overbreadth doctrine is an analytical tool developed for testing "on their faces" statutes
in free speech cases, also known under the American Law as First Amendment cases.103
A plain reading of PP 1017 shows that it is not primarily directed to speech or even speech-related conduct. It
is actually a call upon the AFP to prevent or suppress all forms of lawless violence. In United States v.
Salerno,104 the US Supreme Court held that "we have not recognized an overbreadth doctrine outside the
limited context of the First Amendment" (freedom of speech).
Moreover, the overbreadth doctrine is not intended for testing the validity of a law that "reflects legitimate state
interest in maintaining comprehensive control over harmful, constitutionally unprotected conduct." Undoubtedly,
lawless violence, insurrection and rebellion are considered "harmful" and "constitutionally unprotected
conduct." In Broadrick v. Oklahoma,105 it was held:
It remains a matter of no little difficulty to determine when a law may properly be held void on its face and
when such summary action is inappropriate. But the plain import of our cases is, at the very least, that facial
overbreadth adjudication is an exception to our traditional rules of practice and that its function, a limited one at
the outset, attenuates as the otherwise unprotected behavior that it forbids the State to sanction moves from
pure speech toward conduct and that conduct even if expressive falls within the scope of otherwise valid
criminal laws that reflect legitimate state interests in maintaining comprehensive controls over harmful,
constitutionally unprotected conduct.
Thus, claims of facial overbreadth are entertained in cases involving statutes which, by their terms, seek to
regulate only "spoken words" and again, that "overbreadth claims, if entertained at all, have been curtailed
when invoked against ordinary criminal laws that are sought to be applied to protected conduct."106 Here, the
incontrovertible fact remains that PP 1017 pertains to a spectrum of conduct, not free speech, which is
manifestly subject to state regulation.
Second, facial invalidation of laws is considered as "manifestly strong medicine," to be used "sparingly and
only as a last resort," and is "generally disfavored;"107 The reason for this is obvious. Embedded in the
traditional rules governing constitutional adjudication is the principle that a person to whom a law may be
applied will not be heard to challenge a law on the ground that it may conceivably be applied unconstitutionally
to others, i.e., in other situations not before the Court.108 A writer and scholar in Constitutional Law explains
further:
The most distinctive feature of the overbreadth technique is that it marks an exception to some of the usual
rules of constitutional litigation. Ordinarily, a particular litigant claims that a statute is unconstitutional as applied
to him or her; if the litigant prevails, the courts carve away the unconstitutional aspects of the law by
invalidating its improper applications on a case to case basis. Moreover, challengers to a law are not permitted
to raise the rights of third parties and can only assert their own interests. In overbreadth analysis, those rules
give way; challenges are permitted to raise the rights of third parties; and the court invalidates the entire statute
"on its face," not merely "as applied for" so that the overbroad law becomes unenforceable until a properly
authorized court construes it more narrowly. The factor that motivates courts to depart from the normal

adjudicatory rules is the concern with the "chilling;" deterrent effect of the overbroad statute on third parties not
courageous enough to bring suit. The Court assumes that an overbroad laws "very existence may cause
others not before the court to refrain from constitutionally protected speech or expression." An overbreadth
ruling is designed to remove that deterrent effect on the speech of those third parties.
In other words, a facial challenge using the overbreadth doctrine will require the Court to examine PP 1017 and
pinpoint its flaws and defects, not on the basis of its actual operation to petitioners, but on the assumption or
prediction that its very existence may cause others not before the Court to refrain from constitutionally
protected speech or expression. In Younger v. Harris,109 it was held that:
[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring correction of these
deficiencies before the statute is put into effect, is rarely if ever an appropriate task for the judiciary. The
combination of the relative remoteness of the controversy, the impact on the legislative process of the relief
sought, and above all the speculative and amorphous nature of the required line-by-line analysis of detailed
statutes,...ordinarily results in a kind of case that is wholly unsatisfactory for deciding constitutional questions,
whichever way they might be decided.
And third, a facial challenge on the ground of overbreadth is the most difficult challenge to mount successfully,
since the challenger must establish that there can be no instance when the assailed law may be valid. Here,
petitioners did not even attempt to show whether this situation exists.
Petitioners likewise seek a facial review of PP 1017 on the ground of vagueness. This, too, is unwarranted.
Related to the "overbreadth" doctrine is the "void for vagueness doctrine" which holds that "a law is facially
invalid if men of common intelligence must necessarily guess at its meaning and differ as to its application."110
It is subject to the same principles governing overbreadth doctrine. For one, it is also an analytical tool for
testing "on their faces" statutes in free speech cases. And like overbreadth, it is said that a litigant may
challenge a statute on its face only if it is vague in all its possible applications. Again, petitioners did not even
attempt to show that PP 1017 is vague in all its application. They also failed to establish that men of common
intelligence cannot understand the meaning and application of PP 1017.
b. Constitutional Basis of PP 1017
Now on the constitutional foundation of PP 1017.
The operative portion of PP 1017 may be divided into three important provisions, thus:
First provision:
"by virtue of the power vested upon me by Section 18, Artilce VII do hereby command the Armed Forces of
the Philippines, to maintain law and order throughout the Philippines, prevent or suppress all forms of lawless
violence as well any act of insurrection or rebellion"
Second provision:
"and to enforce obedience to all the laws and to all decrees, orders and regulations promulgated by me
personally or upon my direction;"
Third provision:
"as provided in Section 17, Article XII of the Constitution do hereby declare a State of National Emergency."
First Provision: Calling-out Power

The first provision pertains to the Presidents calling-out power. In Sanlakas v. Executive Secretary,111 this
Court, through Mr. Justice Dante O. Tinga, held that Section 18, Article VII of the Constitution reproduced as
follows:
Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever it
becomes necessary, he may call out such armed forces to prevent or suppress lawless violence, invasion or
rebellion. In case of invasion or rebellion, when the public safety requires it, he may, for a period not exceeding
sixty days, suspend the privilege of the writ of habeas corpus or place the Philippines or any part thereof under
martial law. Within forty-eight hours from the proclamation of martial law or the suspension of the privilege of
the writ of habeas corpus, the President shall submit a report in person or in writing to the Congress. The
Congress, voting jointly, by a vote of at least a majority of all its Members in regular or special session, may
revoke such proclamation or suspension, which revocation shall not be set aside by the President. Upon the
initiative of the President, the Congress may, in the same manner, extend such proclamation or suspension for
a period to be determined by the Congress, if the invasion or rebellion shall persist and public safety requires
it.
The Congress, if not in session, shall within twenty-four hours following such proclamation or suspension,
convene in accordance with its rules without need of a call.
The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of the factual
bases of the proclamation of martial law or the suspension of the privilege of the writ or the extension thereof,
and must promulgate its decision thereon within thirty days from its filing.
A state of martial law does not suspend the operation of the Constitution, nor supplant the functioning of the
civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military courts and
agencies over civilians where civil courts are able to function, nor automatically suspend the privilege of the
writ.
The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion or
offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or detained shall be judicially
charged within three days, otherwise he shall be released.
grants the President, as Commander-in-Chief, a "sequence" of graduated powers. From the most to the least
benign, these are: the calling-out power, the power to suspend the privilege of the writ of habeas corpus, and
the power to declare Martial Law. Citing Integrated Bar of the Philippines v. Zamora,112 the Court ruled that
the only criterion for the exercise of the calling-out power is that "whenever it becomes necessary," the
President may call the armed forces "to prevent or suppress lawless violence, invasion or rebellion." Are these
conditions present in the instant cases? As stated earlier, considering the circumstances then prevailing,
President Arroyo found it necessary to issue PP 1017. Owing to her Offices vast intelligence network, she is in
the best position to determine the actual condition of the country.
Under the calling-out power, the President may summon the armed forces to aid him in suppressing lawless
violence, invasion and rebellion. This involves ordinary police action. But every act that goes beyond the
Presidents calling-out power is considered illegal or ultra vires. For this reason, a President must be careful in
the exercise of his powers. He cannot invoke a greater power when he wishes to act under a lesser power.
There lies the wisdom of our Constitution, the greater the power, the greater are the limitations.
It is pertinent to state, however, that there is a distinction between the Presidents authority to declare a "state
of rebellion" (in Sanlakas) and the authority to proclaim a state of national emergency. While President Arroyos
authority to declare a "state of rebellion" emanates from her powers as Chief Executive, the statutory authority
cited in Sanlakas was Section 4, Chapter 2, Book II of the Revised Administrative Code of 1987, which
provides:

SEC. 4. Proclamations. Acts of the President fixing a date or declaring a status or condition of public
moment or interest, upon the existence of which the operation of a specific law or regulation is made to
depend, shall be promulgated in proclamations which shall have the force of an executive order.
President Arroyos declaration of a "state of rebellion" was merely an act declaring a status or condition of
public moment or interest, a declaration allowed under Section 4 cited above. Such declaration, in the words of
Sanlakas, is harmless, without legal significance, and deemed not written. In these cases, PP 1017 is more
than that. In declaring a state of national emergency, President Arroyo did not only rely on Section 18, Article
VII of the Constitution, a provision calling on the AFP to prevent or suppress lawless violence, invasion or
rebellion. She also relied on Section 17, Article XII, a provision on the States extraordinary power to take over
privately-owned public utility and business affected with public interest. Indeed, PP 1017 calls for the exercise
of an awesome power. Obviously, such Proclamation cannot be deemed harmless, without legal significance,
or not written, as in the case of Sanlakas.
Some of the petitioners vehemently maintain that PP 1017 is actually a declaration of Martial Law. It is no so.
What defines the character of PP 1017 are its wordings. It is plain therein that what the President invoked was
her calling-out power.
The declaration of Martial Law is a "warn[ing] to citizens that the military power has been called upon by the
executive to assist in the maintenance of law and order, and that, while the emergency lasts, they must, upon
pain of arrest and punishment, not commit any acts which will in any way render more difficult the restoration of
order and the enforcement of law."113
In his "Statement before the Senate Committee on Justice" on March 13, 2006, Mr. Justice Vicente V.
Mendoza,114 an authority in constitutional law, said that of the three powers of the President as Commanderin-Chief, the power to declare Martial Law poses the most severe threat to civil liberties. It is a strong medicine
which should not be resorted to lightly. It cannot be used to stifle or persecute critics of the government. It is
placed in the keeping of the President for the purpose of enabling him to secure the people from harm and to
restore order so that they can enjoy their individual freedoms. In fact, Section 18, Art. VII, provides:
A state of martial law does not suspend the operation of the Constitution, nor supplant the functioning of the
civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military courts and
agencies over civilians where civil courts are able to function, nor automatically suspend the privilege of the
writ.
Justice Mendoza also stated that PP 1017 is not a declaration of Martial Law. It is no more than a call by the
President to the armed forces to prevent or suppress lawless violence. As such, it cannot be used to justify
acts that only under a valid declaration of Martial Law can be done. Its use for any other purpose is a
perversion of its nature and scope, and any act done contrary to its command is ultra vires.
Justice Mendoza further stated that specifically, (a) arrests and seizures without judicial warrants; (b) ban on
public assemblies; (c) take-over of news media and agencies and press censorship; and (d) issuance of
Presidential Decrees, are powers which can be exercised by the President as Commander-in-Chief only where
there is a valid declaration of Martial Law or suspension of the writ of habeas corpus.
Based on the above disquisition, it is clear that PP 1017 is not a declaration of Martial Law. It is merely an
exercise of President Arroyos calling-out power for the armed forces to assist her in preventing or suppressing
lawless violence.
Second Provision: "Take Care" Power
The second provision pertains to the power of the President to ensure that the laws be faithfully executed. This
is based on Section 17, Article VII which reads:
SEC. 17. The President shall have control of all the executive departments, bureaus, and offices. He shall
ensure that the laws be faithfully executed.

As the Executive in whom the executive power is vested,115 the primary function of the President is to enforce
the laws as well as to formulate policies to be embodied in existing laws. He sees to it that all laws are
enforced by the officials and employees of his department. Before assuming office, he is required to take an
oath or affirmation to the effect that as President of the Philippines, he will, among others, "execute its
laws."116 In the exercise of such function, the President, if needed, may employ the powers attached to his
office as the Commander-in-Chief of all the armed forces of the country,117 including the Philippine National
Police118 under the Department of Interior and Local Government.119
Petitioners, especially Representatives Francis Joseph G. Escudero, Satur Ocampo, Rafael Mariano, Teodoro
Casio, Liza Maza, and Josel Virador argue that PP 1017 is unconstitutional as it arrogated upon President
Arroyo the power to enact laws and decrees in violation of Section 1, Article VI of the Constitution, which vests
the power to enact laws in Congress. They assail the clause "to enforce obedience to all the laws and to all
decrees, orders and regulations promulgated by me personally or upon my direction."
\
Petitioners contention is understandable. A reading of PP 1017 operative clause shows that it was lifted120
from Former President Marcos Proclamation No. 1081, which partly reads:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines by virtue of the powers vested
upon me by Article VII, Section 10, Paragraph (2) of the Constitution, do hereby place the entire Philippines as
defined in Article 1, Section 1 of the Constitution under martial law and, in my capacity as their Commander-inChief, do hereby command the Armed Forces of the Philippines, to maintain law and order throughout the
Philippines, prevent or suppress all forms of lawless violence as well as any act of insurrection or rebellion and
to enforce obedience to all the laws and decrees, orders and regulations promulgated by me personally or
upon my direction.
We all know that it was PP 1081 which granted President Marcos legislative power. Its enabling clause states:
"to enforce obedience to all the laws and decrees, orders and regulations promulgated by me personally or
upon my direction." Upon the other hand, the enabling clause of PP 1017 issued by President Arroyo is: to
enforce obedience to all the laws and to all decrees, orders and regulations promulgated by me personally or
upon my direction."
Is it within the domain of President Arroyo to promulgate "decrees"?
PP 1017 states in part: "to enforce obedience to all the laws and decrees x x x promulgated by me personally
or upon my direction."
The President is granted an Ordinance Power under Chapter 2, Book III of Executive Order No. 292
(Administrative Code of 1987). She may issue any of the following:
Sec. 2. Executive Orders. Acts of the President providing for rules of a general or permanent character in
implementation or execution of constitutional or statutory powers shall be promulgated in executive orders.
Sec. 3. Administrative Orders. Acts of the President which relate to particular aspect of governmental
operations in pursuance of his duties as administrative head shall be promulgated in administrative orders.
Sec. 4. Proclamations. Acts of the President fixing a date or declaring a status or condition of public moment
or interest, upon the existence of which the operation of a specific law or regulation is made to depend, shall
be promulgated in proclamations which shall have the force of an executive order.
Sec. 5. Memorandum Orders. Acts of the President on matters of administrative detail or of subordinate or
temporary interest which only concern a particular officer or office of the Government shall be embodied in
memorandum orders.

Sec. 6. Memorandum Circulars. Acts of the President on matters relating to internal administration, which
the President desires to bring to the attention of all or some of the departments, agencies, bureaus or offices of
the Government, for information or compliance, shall be embodied in memorandum circulars.
Sec. 7. General or Special Orders. Acts and commands of the President in his capacity as Commander-inChief of the Armed Forces of the Philippines shall be issued as general or special orders.
President Arroyos ordinance power is limited to the foregoing issuances. She cannot issue decrees similar to
those issued by Former President Marcos under PP 1081. Presidential Decrees are laws which are of the
same category and binding force as statutes because they were issued by the President in the exercise of his
legislative power during the period of Martial Law under the 1973 Constitution.121
This Court rules that the assailed PP 1017 is unconstitutional insofar as it grants President Arroyo the authority
to promulgate "decrees." Legislative power is peculiarly within the province of the Legislature. Section 1, Article
VI categorically states that "[t]he legislative power shall be vested in the Congress of the Philippines which
shall consist of a Senate and a House of Representatives." To be sure, neither Martial Law nor a state of
rebellion nor a state of emergency can justify President Arroyos exercise of legislative power by issuing
decrees.
Can President Arroyo enforce obedience to all decrees and laws through the military?
As this Court stated earlier, President Arroyo has no authority to enact decrees. It follows that these decrees
are void and, therefore, cannot be enforced. With respect to "laws," she cannot call the military to enforce or
implement certain laws, such as customs laws, laws governing family and property relations, laws on
obligations and contracts and the like. She can only order the military, under PP 1017, to enforce laws
pertinent to its duty to suppress lawless violence.
Third Provision: Power to Take Over
The pertinent provision of PP 1017 states:
x x x and to enforce obedience to all the laws and to all decrees, orders, and regulations promulgated by me
personally or upon my direction; and as provided in Section 17, Article XII of the Constitution do hereby declare
a state of national emergency.
The import of this provision is that President Arroyo, during the state of national emergency under PP 1017,
can call the military not only to enforce obedience "to all the laws and to all decrees x x x" but also to act
pursuant to the provision of Section 17, Article XII which reads:
Sec. 17. In times of national emergency, when the public interest so requires, the State may, during the
emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any
privately-owned public utility or business affected with public interest.
What could be the reason of President Arroyo in invoking the above provision when she issued PP 1017?
The answer is simple. During the existence of the state of national emergency, PP 1017 purports to grant the
President, without any authority or delegation from Congress, to take over or direct the operation of any
privately-owned public utility or business affected with public interest.
This provision was first introduced in the 1973 Constitution, as a product of the "martial law" thinking of the
1971 Constitutional Convention.122 In effect at the time of its approval was President Marcos Letter of
Instruction No. 2 dated September 22, 1972 instructing the Secretary of National Defense to take over "the
management, control and operation of the Manila Electric Company, the Philippine Long Distance Telephone
Company, the National Waterworks and Sewerage Authority, the Philippine National Railways, the Philippine
Air Lines, Air Manila (and) Filipinas Orient Airways . . . for the successful prosecution by the Government of its
effort to contain, solve and end the present national emergency."

Petitioners, particularly the members of the House of Representatives, claim that President Arroyos inclusion
of Section 17, Article XII in PP 1017 is an encroachment on the legislatures emergency powers.
This is an area that needs delineation.
A distinction must be drawn between the Presidents authority to declare "a state of national emergency" and to
exercise emergency powers. To the first, as elucidated by the Court, Section 18, Article VII grants the President
such power, hence, no legitimate constitutional objection can be raised. But to the second, manifold
constitutional issues arise.
Section 23, Article VI of the Constitution reads:
SEC. 23. (1) The Congress, by a vote of two-thirds of both Houses in joint session assembled, voting
separately, shall have the sole power to declare the existence of a state of war.
(2) In times of war or other national emergency, the Congress may, by law, authorize the President, for a
limited period and subject to such restrictions as it may prescribe, to exercise powers necessary and proper to
carry out a declared national policy. Unless sooner withdrawn by resolution of the Congress, such powers shall
cease upon the next adjournment thereof.
It may be pointed out that the second paragraph of the above provision refers not only to war but also to "other
national emergency." If the intention of the Framers of our Constitution was to withhold from the President the
authority to declare a "state of national emergency" pursuant to Section 18, Article VII (calling-out power) and
grant it to Congress (like the declaration of the existence of a state of war), then the Framers could have
provided so. Clearly, they did not intend that Congress should first authorize the President before he can
declare a "state of national emergency." The logical conclusion then is that President Arroyo could validly
declare the existence of a state of national emergency even in the absence of a Congressional enactment.
But the exercise of emergency powers, such as the taking over of privately owned public utility or business
affected with public interest, is a different matter. This requires a delegation from Congress.
Courts have often said that constitutional provisions in pari materia are to be construed together. Otherwise
stated, different clauses, sections, and provisions of a constitution which relate to the same subject matter will
be construed together and considered in the light of each other.123 Considering that Section 17 of Article XII
and Section 23 of Article VI, previously quoted, relate to national emergencies, they must be read together to
determine the limitation of the exercise of emergency powers.
Generally, Congress is the repository of emergency powers. This is evident in the tenor of Section 23 (2),
Article VI authorizing it to delegate such powers to the President. Certainly, a body cannot delegate a power
not reposed upon it. However, knowing that during grave emergencies, it may not be possible or practicable for
Congress to meet and exercise its powers, the Framers of our Constitution deemed it wise to allow Congress
to grant emergency powers to the President, subject to certain conditions, thus:
(1) There must be a war or other emergency.
(2) The delegation must be for a limited period only.
(3) The delegation must be subject to such restrictions as the Congress may prescribe.
(4) The emergency powers must be exercised to carry out a national policy declared by Congress.124
Section 17, Article XII must be understood as an aspect of the emergency powers clause. The taking over of
private business affected with public interest is just another facet of the emergency powers generally reposed
upon Congress. Thus, when Section 17 states that the "the State may, during the emergency and under
reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public

utility or business affected with public interest," it refers to Congress, not the President. Now, whether or not
the President may exercise such power is dependent on whether Congress may delegate it to him pursuant to
a law prescribing the reasonable terms thereof. Youngstown Sheet & Tube Co. et al. v. Sawyer,125 held:
It is clear that if the President had authority to issue the order he did, it must be found in some provision of the
Constitution. And it is not claimed that express constitutional language grants this power to the President. The
contention is that presidential power should be implied from the aggregate of his powers under the
Constitution. Particular reliance is placed on provisions in Article II which say that "The executive Power shall
be vested in a President . . . .;" that "he shall take Care that the Laws be faithfully executed;" and that he "shall
be Commander-in-Chief of the Army and Navy of the United States.
The order cannot properly be sustained as an exercise of the Presidents military power as Commander-inChief of the Armed Forces. The Government attempts to do so by citing a number of cases upholding broad
powers in military commanders engaged in day-to-day fighting in a theater of war. Such cases need not
concern us here. Even though "theater of war" be an expanding concept, we cannot with faithfulness to our
constitutional system hold that the Commander-in-Chief of the Armed Forces has the ultimate power as such to
take possession of private property in order to keep labor disputes from stopping production. This is a job for
the nations lawmakers, not for its military authorities.
Nor can the seizure order be sustained because of the several constitutional provisions that grant executive
power to the President. In the framework of our Constitution, the Presidents power to see that the laws are
faithfully executed refutes the idea that he is to be a lawmaker. The Constitution limits his functions in the
lawmaking process to the recommending of laws he thinks wise and the vetoing of laws he thinks bad. And the
Constitution is neither silent nor equivocal about who shall make laws which the President is to execute. The
first section of the first article says that "All legislative Powers herein granted shall be vested in a Congress of
the United States. . ."126
Petitioner Cacho-Olivares, et al. contends that the term "emergency" under Section 17, Article XII refers to
"tsunami," "typhoon," "hurricane"and"similar occurrences." This is a limited view of "emergency."
Emergency, as a generic term, connotes the existence of conditions suddenly intensifying the degree of
existing danger to life or well-being beyond that which is accepted as normal. Implicit in this definitions are the
elements of intensity, variety, and perception.127 Emergencies, as perceived by legislature or executive in the
United Sates since 1933, have been occasioned by a wide range of situations, classifiable under three (3)
principal heads: a) economic,128 b) natural disaster,129 and c) national security.130
"Emergency," as contemplated in our Constitution, is of the same breadth. It may include rebellion, economic
crisis, pestilence or epidemic, typhoon, flood, or other similar catastrophe of nationwide proportions or
effect.131 This is evident in the Records of the Constitutional Commission, thus:
MR. GASCON. Yes. What is the Committees definition of "national emergency" which appears in Section 13,
page 5? It reads:
When the common good so requires, the State may temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest.
MR. VILLEGAS. What I mean is threat from external aggression, for example, calamities or natural disasters.
MR. GASCON. There is a question by Commissioner de los Reyes. What about strikes and riots?
MR. VILLEGAS. Strikes, no; those would not be covered by the term "national emergency."
MR. BENGZON. Unless they are of such proportions such that they would paralyze government service.132
xxxxxx

MR. TINGSON. May I ask the committee if "national emergency" refers to military national emergency or could
this be economic emergency?"
MR. VILLEGAS. Yes, it could refer to both military or economic dislocations.
MR. TINGSON. Thank you very much.133
It may be argued that when there is national emergency, Congress may not be able to convene and, therefore,
unable to delegate to the President the power to take over privately-owned public utility or business affected
with public interest.
In Araneta v. Dinglasan,134 this Court emphasized that legislative power, through which extraordinary
measures are exercised, remains in Congress even in times of crisis.
"x x x
After all the criticisms that have been made against the efficiency of the system of the separation of powers,
the fact remains that the Constitution has set up this form of government, with all its defects and shortcomings,
in preference to the commingling of powers in one man or group of men. The Filipino people by adopting
parliamentary government have given notice that they share the faith of other democracy-loving peoples in this
system, with all its faults, as the ideal. The point is, under this framework of government, legislation is
preserved for Congress all the time, not excepting periods of crisis no matter how serious. Never in the history
of the United States, the basic features of whose Constitution have been copied in ours, have specific
functions of the legislative branch of enacting laws been surrendered to another department unless we
regard as legislating the carrying out of a legislative policy according to prescribed standards; no, not even
when that Republic was fighting a total war, or when it was engaged in a life-and-death struggle to preserve the
Union. The truth is that under our concept of constitutional government, in times of extreme perils more than in
normal circumstances the various branches, executive, legislative, and judicial, given the ability to act, are
called upon to perform the duties and discharge the responsibilities committed to them respectively."
Following our interpretation of Section 17, Article XII, invoked by President Arroyo in issuing PP 1017, this
Court rules that such Proclamation does not authorize her during the emergency to temporarily take over or
direct the operation of any privately owned public utility or business affected with public interest without
authority from Congress.
Let it be emphasized that while the President alone can declare a state of national emergency, however,
without legislation, he has no power to take over privately-owned public utility or business affected with public
interest. The President cannot decide whether exceptional circumstances exist warranting the take over of
privately-owned public utility or business affected with public interest. Nor can he determine when such
exceptional circumstances have ceased. Likewise, without legislation, the President has no power to point out
the types of businesses affected with public interest that should be taken over. In short, the President has no
absolute authority to exercise all the powers of the State under Section 17, Article VII in the absence of an
emergency powers act passed by Congress.
c. "AS APPLIED CHALLENGE"
One of the misfortunes of an emergency, particularly, that which pertains to security, is that military necessity
and the guaranteed rights of the individual are often not compatible. Our history reveals that in the crucible of
conflict, many rights are curtailed and trampled upon. Here, the right against unreasonable search and seizure;
the right against warrantless arrest; and the freedom of speech, of expression, of the press, and of assembly
under the Bill of Rights suffered the greatest blow.
Of the seven (7) petitions, three (3) indicate "direct injury."

In G.R. No. 171396, petitioners David and Llamas alleged that, on February 24, 2006, they were arrested
without warrants on their way to EDSA to celebrate the 20th Anniversary of People Power I. The arresting
officers cited PP 1017 as basis of the arrest.
In G.R. No. 171409, petitioners Cacho-Olivares and Tribune Publishing Co., Inc. claimed that on February 25,
2006, the CIDG operatives "raided and ransacked without warrant" their office. Three policemen were assigned
to guard their office as a possible "source of destabilization." Again, the basis was PP 1017.
And in G.R. No. 171483, petitioners KMU and NAFLU-KMU et al. alleged that their members were "turned
away and dispersed" when they went to EDSA and later, to Ayala Avenue, to celebrate the 20th Anniversary of
People Power I.
A perusal of the "direct injuries" allegedly suffered by the said petitioners shows that they resulted from the
implementation, pursuant to G.O. No. 5, of PP 1017.
Can this Court adjudge as unconstitutional PP 1017 and G.O. No 5 on the basis of these illegal acts? In
general, does the illegal implementation of a law render it unconstitutional?
Settled is the rule that courts are not at liberty to declare statutes invalid although they may be abused and
misabused135 and may afford an opportunity for abuse in the manner of application.136 The validity of a
statute or ordinance is to be determined from its general purpose and its efficiency to accomplish the end
desired, not from its effects in a particular case.137 PP 1017 is merely an invocation of the Presidents callingout power. Its general purpose is to command the AFP to suppress all forms of lawless violence, invasion or
rebellion. It had accomplished the end desired which prompted President Arroyo to issue PP 1021. But there is
nothing in PP 1017 allowing the police, expressly or impliedly, to conduct illegal arrest, search or violate the
citizens constitutional rights.
Now, may this Court adjudge a law or ordinance unconstitutional on the ground that its implementor committed
illegal acts? The answer is no. The criterion by which the validity of the statute or ordinance is to be measured
is the essential basis for the exercise of power, and not a mere incidental result arising from its exertion.138
This is logical. Just imagine the absurdity of situations when laws maybe declared unconstitutional just
because the officers implementing them have acted arbitrarily. If this were so, judging from the blunders
committed by policemen in the cases passed upon by the Court, majority of the provisions of the Revised
Penal Code would have been declared unconstitutional a long time ago.
President Arroyo issued G.O. No. 5 to carry into effect the provisions of PP 1017. General orders are "acts and
commands of the President in his capacity as Commander-in-Chief of the Armed Forces of the Philippines."
They are internal rules issued by the executive officer to his subordinates precisely for the proper and efficient
administration of law. Such rules and regulations create no relation except between the official who issues
them and the official who receives them.139 They are based on and are the product of, a relationship in which
power is their source, and obedience, their object.140 For these reasons, one requirement for these rules to be
valid is that they must be reasonable, not arbitrary or capricious.
G.O. No. 5 mandates the AFP and the PNP to immediately carry out the "necessary and appropriate actions
and measures to suppress and prevent acts of terrorism and lawless violence."
Unlike the term "lawless violence" which is unarguably extant in our statutes and the Constitution, and which is
invariably associated with "invasion, insurrection or rebellion," the phrase "acts of terrorism" is still an
amorphous and vague concept. Congress has yet to enact a law defining and punishing acts of terrorism.
In fact, this "definitional predicament" or the "absence of an agreed definition of terrorism" confronts not only
our country, but the international community as well. The following observations are quite apropos:
In the actual unipolar context of international relations, the "fight against terrorism" has become one of the
basic slogans when it comes to the justification of the use of force against certain states and against groups

operating internationally. Lists of states "sponsoring terrorism" and of terrorist organizations are set up and
constantly being updated according to criteria that are not always known to the public, but are clearly
determined by strategic interests.
The basic problem underlying all these military actions or threats of the use of force as the most recent by
the United States against Iraq consists in the absence of an agreed definition of terrorism.
Remarkable confusion persists in regard to the legal categorization of acts of violence either by states, by
armed groups such as liberation movements, or by individuals.
The dilemma can by summarized in the saying "One countrys terrorist is another countrys freedom fighter."
The apparent contradiction or lack of consistency in the use of the term "terrorism" may further be
demonstrated by the historical fact that leaders of national liberation movements such as Nelson Mandela in
South Africa, Habib Bourgouiba in Tunisia, or Ahmed Ben Bella in Algeria, to mention only a few, were
originally labeled as terrorists by those who controlled the territory at the time, but later became internationally
respected statesmen.
What, then, is the defining criterion for terrorist acts the differentia specifica distinguishing those acts from
eventually legitimate acts of national resistance or self-defense?
Since the times of the Cold War the United Nations Organization has been trying in vain to reach a consensus
on the basic issue of definition. The organization has intensified its efforts recently, but has been unable to
bridge the gap between those who associate "terrorism" with any violent act by non-state groups against
civilians, state functionaries or infrastructure or military installations, and those who believe in the concept of
the legitimate use of force when resistance against foreign occupation or against systematic oppression of
ethnic and/or religious groups within a state is concerned.
The dilemma facing the international community can best be illustrated by reference to the contradicting
categorization of organizations and movements such as Palestine Liberation Organization (PLO) which is a
terrorist group for Israel and a liberation movement for Arabs and Muslims the Kashmiri resistance groups
who are terrorists in the perception of India, liberation fighters in that of Pakistan the earlier Contras in
Nicaragua freedom fighters for the United States, terrorists for the Socialist camp or, most drastically, the
Afghani Mujahedeen (later to become the Taliban movement): during the Cold War period they were a group of
freedom fighters for the West, nurtured by the United States, and a terrorist gang for the Soviet Union. One
could go on and on in enumerating examples of conflicting categorizations that cannot be reconciled in any
way because of opposing political interests that are at the roots of those perceptions.
How, then, can those contradicting definitions and conflicting perceptions and evaluations of one and the same
group and its actions be explained? In our analysis, the basic reason for these striking inconsistencies lies in
the divergent interest of states. Depending on whether a state is in the position of an occupying power or in
that of a rival, or adversary, of an occupying power in a given territory, the definition of terrorism will "fluctuate"
accordingly. A state may eventually see itself as protector of the rights of a certain ethnic group outside its
territory and will therefore speak of a "liberation struggle," not of "terrorism" when acts of violence by this group
are concerned, and vice-versa.
The United Nations Organization has been unable to reach a decision on the definition of terrorism exactly
because of these conflicting interests of sovereign states that determine in each and every instance how a
particular armed movement (i.e. a non-state actor) is labeled in regard to the terrorists-freedom fighter
dichotomy. A "policy of double standards" on this vital issue of international affairs has been the unavoidable
consequence.
This "definitional predicament" of an organization consisting of sovereign states and not of peoples, in spite
of the emphasis in the Preamble to the United Nations Charter! has become even more serious in the
present global power constellation: one superpower exercises the decisive role in the Security Council, former
great powers of the Cold War era as well as medium powers are increasingly being marginalized; and the
problem has become even more acute since the terrorist attacks of 11 September 2001 I the United States.141

The absence of a law defining "acts of terrorism" may result in abuse and oppression on the part of the police
or military. An illustration is when a group of persons are merely engaged in a drinking spree. Yet the military or
the police may consider the act as an act of terrorism and immediately arrest them pursuant to G.O. No. 5.
Obviously, this is abuse and oppression on their part. It must be remembered that an act can only be
considered a crime if there is a law defining the same as such and imposing the corresponding penalty
thereon.
So far, the word "terrorism" appears only once in our criminal laws, i.e., in P.D. No. 1835 dated January 16,
1981 enacted by President Marcos during the Martial Law regime. This decree is entitled "Codifying The
Various Laws on Anti-Subversion and Increasing The Penalties for Membership in Subversive Organizations."
The word "terrorism" is mentioned in the following provision: "That one who conspires with any other person for
the purpose of overthrowing the Government of the Philippines x x x by force, violence, terrorism, x x x shall be
punished by reclusion temporal x x x."
P.D. No. 1835 was repealed by E.O. No. 167 (which outlaws the Communist Party of the Philippines) enacted
by President Corazon Aquino on May 5, 1985. These two (2) laws, however, do not define "acts of terrorism."
Since there is no law defining "acts of terrorism," it is President Arroyo alone, under G.O. No. 5, who has the
discretion to determine what acts constitute terrorism. Her judgment on this aspect is absolute, without
restrictions. Consequently, there can be indiscriminate arrest without warrants, breaking into offices and
residences, taking over the media enterprises, prohibition and dispersal of all assemblies and gatherings
unfriendly to the administration. All these can be effected in the name of G.O. No. 5. These acts go far beyond
the calling-out power of the President. Certainly, they violate the due process clause of the Constitution. Thus,
this Court declares that the "acts of terrorism" portion of G.O. No. 5 is unconstitutional.
Significantly, there is nothing in G.O. No. 5 authorizing the military or police to commit acts beyond what are
necessary and appropriate to suppress and prevent lawless violence, the limitation of their authority in
pursuing the Order. Otherwise, such acts are considered illegal.
We first examine G.R. No. 171396 (David et al.)
The Constitution provides that "the right of the people to be secured in their persons, houses, papers and
effects against unreasonable search and seizure of whatever nature and for any purpose shall be inviolable,
and no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized."142 The plain
import of the language of the Constitution is that searches, seizures and arrests are normally unreasonable
unless authorized by a validly issued search warrant or warrant of arrest. Thus, the fundamental protection
given by this provision is that between person and police must stand the protective authority of a magistrate
clothed with power to issue or refuse to issue search warrants or warrants of arrest.143
In the Brief Account144 submitted by petitioner David, certain facts are established: first, he was arrested
without warrant; second, the PNP operatives arrested him on the basis of PP 1017; third, he was brought at
Camp Karingal, Quezon City where he was fingerprinted, photographed and booked like a criminal suspect;
fourth,he was treated brusquely by policemen who "held his head and tried to push him" inside an unmarked
car; fifth, he was charged with Violation of Batas Pambansa Bilang No. 880145 and Inciting to Sedition; sixth,
he was detained for seven (7) hours; and seventh,he was eventually released for insufficiency of evidence.
Section 5, Rule 113 of the Revised Rules on Criminal Procedure provides:
Sec. 5. Arrest without warrant; when lawful. - A peace officer or a private person may, without a warrant, arrest
a person:
(a) When, in his presence, the person to be arrested has committed, is actually committing, or is attempting to
commit an offense.

(b) When an offense has just been committed and he has probable cause to believe based on personal
knowledge of facts or circumstances that the person to be arrested has committed it; and
x x x.
Neither of the two (2) exceptions mentioned above justifies petitioner Davids warrantless arrest. During the
inquest for the charges of inciting to sedition and violation of BP 880, all that the arresting officers could invoke
was their observation that some rallyists were wearing t-shirts with the invective "Oust Gloria Now" and their
erroneous assumption that petitioner David was the leader of the rally.146 Consequently, the Inquest
Prosecutor ordered his immediate release on the ground of insufficiency of evidence. He noted that petitioner
David was not wearing the subject t-shirt and even if he was wearing it, such fact is insufficient to charge him
with inciting to sedition. Further, he also stated that there is insufficient evidence for the charge of violation of
BP 880 as it was not even known whether petitioner David was the leader of the rally.147
But what made it doubly worse for petitioners David et al. is that not only was their right against warrantless
arrest violated, but also their right to peaceably assemble.
Section 4 of Article III guarantees:
No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the
people peaceably to assemble and petition the government for redress of grievances.
"Assembly" means a right on the part of the citizens to meet peaceably for consultation in respect to public
affairs. It is a necessary consequence of our republican institution and complements the right of speech. As in
the case of freedom of expression, this right is not to be limited, much less denied, except on a showing of a
clear and present danger of a substantive evil that Congress has a right to prevent. In other words, like other
rights embraced in the freedom of expression, the right to assemble is not subject to previous restraint or
censorship. It may not be conditioned upon the prior issuance of a permit or authorization from the government
authorities except, of course, if the assembly is intended to be held in a public place, a permit for the use of
such place, and not for the assembly itself, may be validly required.
The ringing truth here is that petitioner David, et al. were arrested while they were exercising their right to
peaceful assembly. They were not committing any crime, neither was there a showing of a clear and present
danger that warranted the limitation of that right. As can be gleaned from circumstances, the charges of inciting
to sedition and violation of BP 880 were mere afterthought. Even the Solicitor General, during the oral
argument, failed to justify the arresting officers conduct. In De Jonge v. Oregon,148 it was held that peaceable
assembly cannot be made a crime, thus:
Peaceable assembly for lawful discussion cannot be made a crime. The holding of meetings for peaceable
political action cannot be proscribed. Those who assist in the conduct of such meetings cannot be branded as
criminals on that score. The question, if the rights of free speech and peaceful assembly are not to be
preserved, is not as to the auspices under which the meeting was held but as to its purpose; not as to the
relations of the speakers, but whether their utterances transcend the bounds of the freedom of speech which
the Constitution protects. If the persons assembling have committed crimes elsewhere, if they have formed or
are engaged in a conspiracy against the public peace and order, they may be prosecuted for their conspiracy
or other violations of valid laws. But it is a different matter when the State, instead of prosecuting them for such
offenses, seizes upon mere participation in a peaceable assembly and a lawful public discussion as the basis
for a criminal charge.
On the basis of the above principles, the Court likewise considers the dispersal and arrest of the members of
KMU et al. (G.R. No. 171483) unwarranted. Apparently, their dispersal was done merely on the basis of
Malacaangs directive canceling all permits previously issued by local government units. This is arbitrary. The
wholesale cancellation of all permits to rally is a blatant disregard of the principle that "freedom of assembly is
not to be limited, much less denied, except on a showing of a clear and present danger of a substantive evil
that the State has a right to prevent."149 Tolerance is the rule and limitation is the exception. Only upon a
showing that an assembly presents a clear and present danger that the State may deny the citizens right to

exercise it. Indeed, respondents failed to show or convince the Court that the rallyists committed acts
amounting to lawless violence, invasion or rebellion. With the blanket revocation of permits, the distinction
between protected and unprotected assemblies was eliminated.
Moreover, under BP 880, the authority to regulate assemblies and rallies is lodged with the local government
units. They have the power to issue permits and to revoke such permits after due notice and hearing on the
determination of the presence of clear and present danger. Here, petitioners were not even notified and heard
on the revocation of their permits.150 The first time they learned of it was at the time of the dispersal. Such
absence of notice is a fatal defect. When a persons right is restricted by government action, it behooves a
democratic government to see to it that the restriction is fair, reasonable, and according to procedure.
G.R. No. 171409, (Cacho-Olivares, et al.) presents another facet of freedom of speech i.e., the freedom of the
press. Petitioners narration of facts, which the Solicitor General failed to refute, established the following: first,
the Daily Tribunes offices were searched without warrant;second, the police operatives seized several
materials for publication; third, the search was conducted at about 1:00 o clock in the morning of February 25,
2006; fourth, the search was conducted in the absence of any official of the Daily Tribune except the security
guard of the building; and fifth, policemen stationed themselves at the vicinity of the Daily Tribune offices.
Thereafter, a wave of warning came from government officials. Presidential Chief of Staff Michael Defensor
was quoted as saying that such raid was "meant to show a strong presence, to tell media outlets not to
connive or do anything that would help the rebels in bringing down this government." Director General Lomibao
further stated that "if they do not follow the standards and the standards are if they would contribute to
instability in the government, or if they do not subscribe to what is in General Order No. 5 and Proc. No. 1017
we will recommend a takeover." National Telecommunications Commissioner Ronald Solis urged television
and radio networks to "cooperate" with the government for the duration of the state of national emergency. He
warned that his agency will not hesitate to recommend the closure of any broadcast outfit that violates rules set
out for media coverage during times when the national security is threatened.151
The search is illegal. Rule 126 of The Revised Rules on Criminal Procedure lays down the steps in the conduct
of search and seizure. Section 4 requires that a search warrant be issued upon probable cause in connection
with one specific offence to be determined personally by the judge after examination under oath or affirmation
of the complainant and the witnesses he may produce. Section 8 mandates that the search of a house, room,
or any other premise be made in the presence of the lawful occupant thereof or any member of his family or in
the absence of the latter, in the presence of two (2) witnesses of sufficient age and discretion residing in the
same locality. And Section 9 states that the warrant must direct that it be served in the daytime, unless the
property is on the person or in the place ordered to be searched, in which case a direction may be inserted that
it be served at any time of the day or night. All these rules were violated by the CIDG operatives.
Not only that, the search violated petitioners freedom of the press. The best gauge of a free and democratic
society rests in the degree of freedom enjoyed by its media. In the Burgos v. Chief of Staff152 this Court held
that -As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan Mail"
and the "We Forum" newspapers. As a consequence of the search and seizure, these premises were
padlocked and sealed, with the further result that the printing and publication of said newspapers were
discontinued.
Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press
guaranteed under the fundamental law, and constitutes a virtual denial of petitioners' freedom to express
themselves in print. This state of being is patently anathematic to a democratic framework where a free, alert
and even militant press is essential for the political enlightenment and growth of the citizenry.
While admittedly, the Daily Tribune was not padlocked and sealed like the "Metropolitan Mail" and "We Forum"
newspapers in the above case, yet it cannot be denied that the CIDG operatives exceeded their enforcement
duties. The search and seizure of materials for publication, the stationing of policemen in the vicinity of the The
Daily Tribune offices, and the arrogant warning of government officials to media, are plain censorship. It is that

officious functionary of the repressive government who tells the citizen that he may speak only if allowed to do
so, and no more and no less than what he is permitted to say on pain of punishment should he be so rash as
to disobey.153 Undoubtedly, the The Daily Tribune was subjected to these arbitrary intrusions because of its
anti-government sentiments. This Court cannot tolerate the blatant disregard of a constitutional right even if it
involves the most defiant of our citizens. Freedom to comment on public affairs is essential to the vitality of a
representative democracy. It is the duty of the courts to be watchful for the constitutional rights of the citizen,
and against any stealthy encroachments thereon. The motto should always be obsta principiis.154
Incidentally, during the oral arguments, the Solicitor General admitted that the search of the Tribunes offices
and the seizure of its materials for publication and other papers are illegal; and that the same are inadmissible
"for any purpose," thus:
JUSTICE CALLEJO:
You made quite a mouthful of admission when you said that the policemen, when inspected the Tribune for the
purpose of gathering evidence and you admitted that the policemen were able to get the clippings. Is that not in
admission of the admissibility of these clippings that were taken from the Tribune?
SOLICITOR GENERAL BENIPAYO:
Under the law they would seem to be, if they were illegally seized, I think and I know, Your Honor, and these
are inadmissible for any purpose.155
xxxxxxxxx
SR. ASSO. JUSTICE PUNO:
These have been published in the past issues of the Daily Tribune; all you have to do is to get those past
issues. So why do you have to go there at 1 oclock in the morning and without any search warrant? Did they
become suddenly part of the evidence of rebellion or inciting to sedition or what?
SOLGEN BENIPAYO:
Well, it was the police that did that, Your Honor. Not upon my instructions.
SR. ASSO. JUSTICE PUNO:
Are you saying that the act of the policeman is illegal, it is not based on any law, and it is not based on
Proclamation 1017.
SOLGEN BENIPAYO:
It is not based on Proclamation 1017, Your Honor, because there is nothing in 1017 which says that the police
could go and inspect and gather clippings from Daily Tribune or any other newspaper.
SR. ASSO. JUSTICE PUNO:
Is it based on any law?
SOLGEN BENIPAYO:
As far as I know, no, Your Honor, from the facts, no.
SR. ASSO. JUSTICE PUNO:
So, it has no basis, no legal basis whatsoever?

SOLGEN BENIPAYO:
Maybe so, Your Honor. Maybe so, that is why I said, I dont know if it is premature to say this, we do not
condone this. If the people who have been injured by this would want to sue them, they can sue and there are
remedies for this.156
Likewise, the warrantless arrests and seizures executed by the police were, according to the Solicitor General,
illegal and cannot be condoned, thus:
CHIEF JUSTICE PANGANIBAN:
There seems to be some confusions if not contradiction in your theory.
SOLICITOR GENERAL BENIPAYO:
I dont know whether this will clarify. The acts, the supposed illegal or unlawful acts committed on the occasion
of 1017, as I said, it cannot be condoned. You cannot blame the President for, as you said, a misapplication of
the law. These are acts of the police officers, that is their responsibility.157
The Dissenting Opinion states that PP 1017 and G.O. No. 5 are constitutional in every aspect and "should
result in no constitutional or statutory breaches if applied according to their letter."
The Court has passed upon the constitutionality of these issuances. Its ratiocination has been exhaustively
presented. At this point, suffice it to reiterate that PP 1017 is limited to the calling out by the President of the
military to prevent or suppress lawless violence, invasion or rebellion. When in implementing its provisions,
pursuant to G.O. No. 5, the military and the police committed acts which violate the citizens rights under the
Constitution, this Court has to declare such acts unconstitutional and illegal.
In this connection, Chief Justice Artemio V. Panganibans concurring opinion, attached hereto, is considered an
integral part of this ponencia.
S U M M AT I O N
In sum, the lifting of PP 1017 through the issuance of PP 1021 a supervening event would have normally
rendered this case moot and academic. However, while PP 1017 was still operative, illegal acts were
committed allegedly in pursuance thereof. Besides, there is no guarantee that PP 1017, or one similar to it,
may not again be issued. Already, there have been media reports on April 30, 2006 that allegedly PP 1017
would be reimposed "if the May 1 rallies" become "unruly and violent." Consequently, the transcendental
issues raised by the parties should not be "evaded;" they must now be resolved to prevent future constitutional
aberration.
The Court finds and so holds that PP 1017 is constitutional insofar as it constitutes a call by the President for
the AFP to prevent or suppress lawless violence. The proclamation is sustained by Section 18, Article VII of the
Constitution and the relevant jurisprudence discussed earlier. However, PP 1017s extraneous provisions
giving the President express or implied power (1) to issue decrees; (2) to direct the AFP to enforce obedience
to all laws even those not related to lawless violence as well as decrees promulgated by the President; and (3)
to impose standards on media or any form of prior restraint on the press, are ultra vires and unconstitutional.
The Court also rules that under Section 17, Article XII of the Constitution, the President, in the absence of a
legislation, cannot take over privately-owned public utility and private business affected with public interest.
In the same vein, the Court finds G.O. No. 5 valid. It is an Order issued by the President acting as
Commander-in-Chief addressed to subalterns in the AFP to carry out the provisions of PP 1017. Significantly,
it also provides a valid standard that the military and the police should take only the "necessary and
appropriate actions and measures to suppress and prevent acts of lawless violence."But the words "acts of
terrorism" found in G.O. No. 5 have not been legally defined and made punishable by Congress and should

thus be deemed deleted from the said G.O. While "terrorism" has been denounced generally in media, no law
has been enacted to guide the military, and eventually the courts, to determine the limits of the AFPs authority
in carrying out this portion of G.O. No. 5.
On the basis of the relevant and uncontested facts narrated earlier, it is also pristine clear that (1) the
warrantless arrest of petitioners Randolf S. David and Ronald Llamas; (2) the dispersal of the rallies and
warrantless arrest of the KMU and NAFLU-KMU members; (3) the imposition of standards on media or any
prior restraint on the press; and (4) the warrantless search of the Tribune offices and the whimsical seizures of
some articles for publication and other materials, are not authorized by the Constitution, the law and
jurisprudence. Not even by the valid provisions of PP 1017 and G.O. No. 5.
Other than this declaration of invalidity, this Court cannot impose any civil, criminal or administrative sanctions
on the individual police officers concerned. They have not been individually identified and given their day in
court. The civil complaints or causes of action and/or relevant criminal Informations have not been presented
before this Court. Elementary due process bars this Court from making any specific pronouncement of civil,
criminal or administrative liabilities.
It is well to remember that military power is a means to an end and substantive civil rights are ends in
themselves. How to give the military the power it needs to protect the Republic without unnecessarily trampling
individual rights is one of the eternal balancing tasks of a democratic state.During emergency, governmental
action may vary in breadth and intensity from normal times, yet they should not be arbitrary as to unduly
restrain our peoples liberty.
Perhaps, the vital lesson that we must learn from the theorists who studied the various competing political
philosophies is that, it is possible to grant government the authority to cope with crises without surrendering the
two vital principles of constitutionalism: the maintenance of legal limits to arbitrary power, and political
responsibility of the government to the governed.158
WHEREFORE, the Petitions are partly granted. The Court rules that PP 1017 is CONSTITUTIONAL insofar as
it constitutes a call by President Gloria Macapagal-Arroyo on the AFP to prevent or suppress lawless violence.
However, the provisions of PP 1017 commanding the AFP to enforce laws not related to lawless violence, as
well as decrees promulgated by the President, are declared UNCONSTITUTIONAL. In addition, the provision
in PP 1017 declaring national emergency under Section 17, Article VII of the Constitution is
CONSTITUTIONAL, but such declaration does not authorize the President to take over privately-owned public
utility or business affected with public interest without prior legislation.
G.O. No. 5 is CONSTITUTIONAL since it provides a standard by which the AFP and the PNP should
implement PP 1017, i.e. whatever is "necessary and appropriate actions and measures to suppress and
prevent acts of lawless violence." Considering that "acts of terrorism" have not yet been defined and made
punishable by the Legislature, such portion of G.O. No. 5 is declared UNCONSTITUTIONAL.
The warrantless arrest of Randolf S. David and Ronald Llamas; the dispersal and warrantless arrest of the
KMU and NAFLU-KMU members during their rallies, in the absence of proof that these petitioners were
committing acts constituting lawless violence, invasion or rebellion and violating BP 880; the imposition of
standards on media or any form of prior restraint on the press, as well as the warrantless search of the Tribune
offices and whimsical seizure of its articles for publication and other materials, are declared
UNCONSTITUTIONAL.

8.) Divinagracia v. CBS (2009)


Doctrine: Although there is no doubt that the President may exercise the authority granted to him under
Section 5 of R.A. No. 7477 (charter of PBS) which provides that the President of the Philippines may
temporarily take over and operate the stations of the grantee, temporarily suspend the operation of any
stations in the interest of public safety, security and public welfare, or authorize the temporary use and
operation thereof by any agency of the Government, such authority can be exercised only under limited and
rather drastic circumstances. They still do not vest in the NTC the broad authority to cancel licenses and
permits.
Facts:
Santiago Divinagracia alleged that Consolidated Broadcasting System, Inc. (CBS) and Peoples Broadcasting
Service, Inc. (PBS), two of three radio networks that comprise Bombo Radyo Philippines, violated the terms of
their congressional franchises when they failed to offer at least 30 percent of their common stocks to the public
as required by law and their legislative franchises. Divinagracia claimed that because of the misuse and
violation of their franchises, the provisional authorities granted by the NTC to PBS and CBS to install, operate
and maintain various AM and FM broadcast stations had to be cancelled. The NTC however dismissed the
complaints, claiming that while it had full jurisdiction to revoke or cancel a PA or CPC for violations or
infractions of the terms and conditions embodied therein, the complaints actually constituted collateral attacks
on the legislative franchises of the two networks which are more properly the subject of a quo warranto action
to be commenced by the Solicitor General in the name of the Republic of the Philippines. Divinagracia went to
the Court of Appeals which upheld the NTCs denial. He then elevated the matter to the Supreme Court.

To fully understand the scope and dimensions of the regulatory realm of the NTC, it is essential to review the
legal background of the regulation process. As operative fact, any person or enterprise which wishes to
operate a broadcast radio or television station in the Philippines has to secure a legislative franchise in the
form of a law passed by Congress, and thereafter a license to operate from the NTC.
The franchise requirement traces its genesis to Act No. 3846, otherwise known as the Radio Control Act,
enacted in 1931.19 Section 1 thereof provided that "[n]o person, firm, company, association or corporation
shall construct, install, establish, or operate x x x a radio broadcasting station, without having first obtained a
franchise therefor from the National Assembly x x x"20 Section 2 of the law prohibited the construction or
installation of any station without a permit granted by the Secretary of Public Works and Communication, and
the operation of such station without a license issued by the same Department Secretary.21 The law likewise
empowered the Secretary of Public Works and Communication "to regulate the establishment, use, and
operation of all radio stations and of all forms of radio communications and transmissions within the Philippine
Islands and to issue such rules and regulations as may be necessary."22
Noticeably, our Radio Control Act was enacted a few years after the United States Congress had passed the
Radio Act of 1927. American broadcasters themselves had asked their Congress to step in and regulate the
radio industry, which was then in its infancy. The absence of government regulation in that market had led to
the emergence of hundreds of radio broadcasting stations, each using frequencies of their choice and
changing frequencies at will, leading to literal chaos on the airwaves. It was the Radio Act of 1927 which
introduced a licensing requirement for American broadcast stations, to be overseen eventually by the Federal
Communications Commission (FCC).23

This pre-regulation history of radio broadcast stations illustrates the continuing necessity of a government role
in overseeing the broadcast media industry, as opposed to other industries such as print media and the
Internet.24 Without regulation, the result would be a free-for-all market with rival broadcasters able with
impunity to sabotage the use by others of the airwaves.25 Moreover, the airwaves themselves the very
medium utilized by broadcastare by their very nature not susceptible to appropriation, much less be the
object of any claim of private or exclusive ownership. No private individual or enterprise has the physical
means, acting alone to actualize exclusive ownership and use of a particular frequency. That end, desirable as
it is among broadcasters, can only be accomplished if the industry itself is subjected to a regime of government
regulation whereby broadcasters receive entitlement to exclusive use of their respective or particular
frequencies, with the State correspondingly able by force of law to confine all broadcasters to the use of the
frequencies assigned to them.
Still, the dominant jurisprudential rationale for state regulation of broadcast media is more sophisticated than a
mere recognition of a need for the orderly administration of the airwaves. After all, a united broadcast industry
can theoretically achieve that goal through determined self-regulation. The key basis for regulation is rooted in
empiricism "that broadcast frequencies are a scarce resource whose use could be regulated and rationalized
only by the Government." This concept was first introduced in jurisprudence in the U.S. case of Red Lion v.
Federal Communications Commission.26
Red Lion enunciated the most comprehensive statement of the necessity of government oversight over
broadcast media. The U.S. Supreme Court observed that within years from the introduction of radio
broadcasting in the United States, "it became apparent that broadcast frequencies constituted a scarce
resource whose use could be regulated and rationalized only by the Government without government
control, the medium would be of little use because of the cacophony of competing voices, none of which could
be clearly and predictably heard." The difficulties posed by spectrum scarcity was concretized by the U.S. High
Court in this manner:
Scarcity is not entirely a thing of the past. Advances in technology, such as microwave transmission, have led
to more efficient utilization of the frequency spectrum, but uses for that spectrum have also grown apace.
Portions of the spectrum must be reserved for vital uses unconnected with human communication, such as
radio-navigational aids used by aircraft and vessels. Conflicts have even emerged between such vital functions
as defense preparedness and experimentation in methods of averting midair collisions through radio warning
devices. "Land mobile services" such as police, ambulance, fire department, public utility, and other
communications systems have been occupying an increasingly crowded portion of the frequency spectrum and
there are, apart from licensed amateur radio operators' equipment, 5,000,000 transmitters operated on the
"citizens' band" which is also increasingly congested. Among the various uses for radio frequency space,
including marine, aviation, amateur, military, and common carrier users, there are easily enough claimants to
permit use of the whole with an even smaller allocation to broadcast radio and television uses than now exists.
(citations omitted)27
After interrelating the premise of scarcity of resources with the First Amendment rights of broadcasters, Red
Lion concluded that government regulation of broadcast media was a necessity:
Where there are substantially more individuals who want to broadcast than there are frequencies to allocate, it
is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual
to speak, write, or publish. If 100 persons want broadcast [395 U.S. 367, 389] licenses but there are only 10
frequencies to allocate, all of them may have the same "right" to a license; but if there is to be any effective
communication by radio, only a few can be licensed and the rest must be barred from the airwaves. It would be
strange if the First Amendment, aimed at protecting and furthering communications, prevented the
Government from making radio communication possible by requiring licenses to broadcast and by limiting the
number of licenses so as not to overcrowd the spectrum.
This has been the consistent view of the Court. Congress unquestionably has the power to grant and deny
licenses and to eliminate existing stations. No one has a First Amendment right to a license or to monopolize a

radio frequency; to deny a station license because "the public interest" requires it "is not a denial of free
speech."
By the same token, as far as the First Amendment is concerned those who are licensed stand no better than
those to whom licenses are refused. A license permits broadcasting, but the licensee has no constitutional right
to be the one who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens.
There is nothing in the First Amendment which prevents the Government from requiring a licensee to share his
frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views
and voices which are representative of his community and which would otherwise, by necessity, be barred from
the airwaves.28
xxxx
Rather than confer frequency monopolies on a relatively small number of licensees, in a Nation of
200,000,000, the Government could surely have decreed that each frequency should be shared among all or
some of those who wish to use it, each being assigned a portion of the broadcast day or the broadcast week.
The ruling and regulations at issue here do not go quite so far. They assert that under specified circumstances,
a licensee must offer to make available a reasonable amount of broadcast time to those who have a view
different from that which has already been expressed on his station. The expression of a political endorsement,
or of a personal attack while dealing with a controversial public issue, simply triggers this time sharing. As we
have said, the First Amendment confers no right on licensees to prevent others from broadcasting on "their"
frequencies and no right to an unconditional monopoly of a scarce resource which the Government has denied
others the right to use.
In terms of constitutional principle, and as enforced sharing of a scarce resource, the personal attack and
political editorial rules are indistinguishable from the equal-time provision of 315, a specific enactment of
Congress requiring stations to set aside reply time under specified circumstances and to which the fairness
doctrine and these constituent regulations are important complements. That provision, which has been part of
the law since 1927, Radio Act of 1927, 18, 44 Stat. 1170, has been held valid by this Court as an obligation of
the licensee relieving him of any power in any way to prevent or censor the broadcast, and thus insulating him
from liability for defamation. The constitutionality of the statute under the First Amendment was unquestioned.
(citations omitted)29
As made clear in Red Lion, the scarcity of radio frequencies made it necessary for the government to step in
and allocate frequencies to competing broadcasters. In undertaking that function, the government is impelled
to adjudge which of the competing applicants are worthy of frequency allocation. It is through that role that it
becomes legally viable for the government to impose its own values and goals through a regulatory regime that
extends beyond the assignation of frequencies, notwithstanding the free expression guarantees enjoyed by
broadcasters. As the government is put in a position to determine who should be worthy to be accorded the
privilege to broadcast from a finite and limited spectrum, it may impose regulations to see to it that
broadcasters promote the public good deemed important by the State, and to withdraw that privilege from
those who fall short of the standards set in favor of other worthy applicants.
Such conditions are peculiar to broadcast media because of the scarcity of the airwaves. Indeed, any attempt
to impose such a regulatory regime on a medium that is not belabored under similar physical conditions, such
as print media, will be clearly antithetical to democratic values and the free expression clause. This Court,
which has adopted the "scarcity of resources" doctrine in cases such as Telecom. & Broadcast Attys. of the
Phils., Inc. v. COMELEC,30 emphasized the distinction citing Red Lion:
Petitioners complain that B.P. Blg. 881, 92 singles out radio and television stations to provide free air time.
They contend that newspapers and magazines are not similarly required as, in fact, in Philippine Press Institute
v. COMELEC we upheld their right to the payment of just compensation for the print space they may provide
under 90.
The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the same
treatment under the free speech guarantee of the Constitution as the print media. There are important

differences in the characteristics of the two media, however, which justify their differential treatment for free
speech purposes. Because of the physical limitations of the broadcast spectrum, the government must, of
necessity, allocate broadcast frequencies to those wishing to use them. There is no similar justification for
government allocation and regulation of the print media.
In the allocation of limited resources, relevant conditions may validly be imposed on the grantees or licensees.
The reason for this is that, as already noted, the government spends public funds for the allocation and
regulation of the broadcast industry, which it does not do in the case of the print media. To require the radio
and television broadcast industry to provide free air time for the COMELEC Time is a fair exchange for what
the industry gets.31
Other rationales may have emerged as well validating state regulation of broadcast media,32 but the reality of
scarce airwaves remains the primary, indisputable and indispensable justification for the government regulatory
role. The integration of the scarcity doctrine into the jurisprudence on broadcast media illustrates how the
libertarian ideal of the free expression clause may be tempered and balanced by actualities in the real world
while preserving the core essence of the constitutional guarantee. Indeed, without government regulation of
the broadcast spectrum, the ability of broadcasters to clearly express their views would be inhibited by the
anarchy of competition. Since the airwaves themselves are not susceptible to physical appropriation and
private ownership, it is but indispensable that the government step in as the guardian of the spectrum.
Reference to the scarcity doctrine is necessary to gain a full understanding of the paradigm that governs the
state regulation of broadcast media. That paradigm, as it exists in the United States, is contextually similar to
our own, except in one very crucial regard the dual franchise/license requirements we impose.
III.
Recall that the Radio Control Act specifically required the obtention of a legislative franchise for the operation
of a radio station in the Philippines. When the Public Service Act was enacted in 1936, the Public Service
Commission (PSC) was vested with jurisdiction over "public services," including over "wire or wireless
broadcasting stations."33 However, among those specifically exempted from the regulatory reach of the PSC
were "radio companies, except with respect to the fixing of rates."34 Thus, following the Radio Control Act, the
administrative regulation of "radio companies" remained with the Secretary of Public Works and
Communications. It appears that despite the advent of commercial television in the 1950s, no corresponding
amendment to either the Radio Control Act or the Public Service Act was passed to reflect that new technology
then.
Shortly after the 1972 declaration of martial law, President Marcos issued Presidential Decree (P.D.) No. 1,
which allocated to the Board of Communications the authority to issue CPCs for the operation of radio and
television broadcasting systems and to grant permits for the use of radio frequencies for such broadcasting
systems. In 1974, President Marcos promulgated Presidential Decree No. 576-A, entitled "Regulating the
Ownership and Operation of Radio and Television Stations and for other Purposes." Section 6 of that law
reads:
Section 6. All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or
television broadcasting systems shall terminate on December 31, 1981. Thereafter, irrespective of any
franchise, grants, license, permit, certificate or other forms of authority to operate granted by any office, agency
or person, no radio or television station shall be authorized to operated without the authority of the Board of
Communications and the Secretary of Public Works and Communications or their successors who have the
right and authority to assign to qualified parties frequencies, channels or other means of identifying
broadcasting systems; Provided, however, that any conflict over, or disagreement with a decision of the
aforementioned authorities may be appealed finally to the Office of the President within fifteen days from the
date the decision is received by the party in interest.
A few years later, President Marcos promulgated Executive Order (E.O.) No. 546, establishing among others
the National Telecommunications Commission. Section 15 thereof enumerates the various functions of the
NTC.

Section 15. Functions of the Commission. The Commission shall exercise the following functions:
a. Issue Certificate of Public Convenience for the operation of communications utilities and services, radio
communications systems, wire or wireless telephone or telegraph systems, radio and television broadcasting
system and other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular operators of public service
communications; and determine and prescribe charges or rates pertinent to the operation of such public utility
facilities and services except in cases where charges or rates are established by international bodies or
associations of which the Philippines is a participating member or by bodies recognized by the Philippine
Government as the proper arbiter of such charges or rates;
c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio
communication systems including amateur radio stations and radio and television broadcasting systems;
d. Sub-allocate series of frequencies of bands allocated by the International Telecommunications Union to the
specific services;
e. Establish and prescribe rules, regulations, standards, specifications in all cases related to the issued
Certificate of Public Convenience and administer and enforce the same;
f. Coordinate and cooperate with government agencies and other entities concerned with any aspect involving
communications with a view to continuously improve the communications service in the country;
g. Promulgate such rules and regulations, as public safety and interest may require, to encourage a larger and
more effective use of communications, radio and television broadcasting facilities, and to maintain effective
competition among private entities in these activities whenever the Commission finds it reasonably feasible;
h. Supervise and inspect the operation of radio stations and telecommunications facilities;
i. Undertake the examination and licensing of radio operators;
j. Undertake, whenever necessary, the registration of radio transmitters and transceivers; and
k. Perform such other functions as may be prescribed by law.
These enactments were considered when in 2003 the Court definitively resolved that the operation of a radio
or television station does require a congressional franchise. In Associated Communications & Wireless
Services v. NTC,35 the Court took note of the confusion then within the broadcast industry as to whether the
franchise requirement first ordained in the 1931 Radio Control Act remained extant given the enactment of P.D.
No. 576-A in 1974 and E.O. No. 546 in 1979. Notably, neither law had specifically required legislative
franchises for the operation of broadcast stations. Nonetheless, the Court noted that Section 1 of P.D. No. 576A had expressly referred to the franchise requirement in stating that "[n]o radio station or television channel
may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one
year ."36 Section 6 of that law made a similar reference to the franchise requirement.37 From those
references, the Court concluded that the franchise requirement under the Radio Control Act was not repealed
by P.D. No. 576-A.38
Turning to E.O. No. 546, the Court arrived at a similar conclusion, despite a Department of Justice Opinion
stating that the 1979 enactment had dispensed with the congressional franchise requirement. The Court
clarified that the 1989 ruling in Albano v. Reyes, to the effect that "franchises issued by Congress are not
required before each and every public utility may operate" did not dispense with the franchise requirement
insofar as broadcast stations are concerned.

Our ruling in Albano that a congressional franchise is not required before "each and every public utility may
operate" should be viewed in its proper light. Where there is a law such as P.D. No. 576-A which requires a
franchise for the operation of radio and television stations, that law must be followed until subsequently
repealed. As we have earlier shown, however, there is nothing in the subsequent E.O. No. 546 which evinces
an intent to dispense with the franchise requirement. In contradistinction with the case at bar, the law
applicable in Albano, i.e., E.O. No. 30, did not require a franchise for the Philippine Ports Authority to take over,
manage and operate the Manila International Port Complex and undertake the providing of cargo handling and
port related services thereat. Similarly, in Philippine Airlines, Inc. v. Civil Aeronautics Board, et al., we ruled that
a legislative franchise is not necessary for the operation of domestic air transport because "there is nothing in
the law nor in the Constitution which indicates that a legislative franchise is an indispensable requirement for
an entity to operate as a domestic air transport operator." Thus, while it is correct to say that specified agencies
in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does
not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as
this is clearly required under P.D. No. 576-A.39
The Court further observed that Congress itself had accepted it as a given that a legislative franchise is still
required to operate a broadcasting station in the Philippines.
That the legislative intent is to continue requiring a franchise for the operation of radio and television
broadcasting stations is clear from the franchises granted by Congress after the effectivity of E.O. No. 546 in
1979 for the operation of radio and television stations. Among these are: (1) R.A. No. 9131 dated April 24,
2001, entitled "An Act Granting the Iddes Broadcast Group, Inc., a Franchise to Construct, Install, Establish,
Operate and Maintain Radio and Television Broadcasting Stations in the Philippines"; (2) R.A. No. 9148 dated
July 31, 2001, entitled "An Act Granting the Hypersonic Broadcasting Center, Inc., a Franchise to Construct,
Install, Establish, Operate and Maintain Radio Broadcasting Stations in the Philippines;" and (3) R.A. No. 7678
dated February 17, 1994, entitled "An Act Granting the Digital Telecommunication Philippines, Incorporated, a
Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines." All three
franchises require the grantees to secure a CPCN/license/permit to construct and operate their
stations/systems. Likewise, the Tax Reform Act of 1997 provides in Section 119 for tax on franchise of radio
and/or television broadcasting companies x x x 40
Associated Communications makes clear that presently broadcast stations are still required to obtain a
legislative franchise, as they have been so since the passage of the Radio Control Act in 1931. By virtue of this
requirement, the broadcast industry falls within the ambit of Section 11, Article XII of the 1987 Constitution, the
one constitutional provision
concerned with the grant of franchises in the Philippines.41 The requirement of a legislative franchise likewise
differentiates the Philippine broadcast industry from that in America, where there is no need to secure a
franchise from the U.S. Congress.
It is thus clear that the operators of broadcast stations in the Philippines must secure a legislative franchise, a
requirement imposed by the Radio Control Act of 1931 and accommodated under the 1987 Constitution. At the
same time, the Court in Associated Communications referred to another form of "permission" required of
broadcast stations, that is the CPC issued by the NTC. What is the source of such requirement?
The Radio Control Act had also obliged radio broadcast stations to secure a permit from the Secretary of
Commerce and Industry42 prior to the construction or installation of any station.43 Said Department Secretary
was also empowered to regulate "the establishment, use and operation of all radio stations and of all forms of
radio communications and
transmission within the Philippines."44 Among the specific powers granted to the Secretary over radio stations
are the approval or disapproval of any application for the construction, installation, establishment or operation
of a radio station45 and the approval or disapproval of any application for renewal of station or operation
license.46

As earlier noted, radio broadcasting companies were exempted from the jurisdiction of the defunct Public
Service Commission except with respect to their rates; thus, they did not fall within the same regulatory regime
as other public services, the regime which was characterized by the need for CPC or CPCN. However,
following the Radio Control Act, it became clear that radio broadcast companies need to obtain a similar
license from the government in order to operate, at that time from the Department of Public Works and
Communications.
Then, as earlier noted, in 1972, President Marcos through P.D. No. 1, transferred to the Board of
Communications the function of issuing CPCs for the operation of radio and television broadcasting systems,
as well as the granting of permits for the use of radio frequencies for such broadcasting systems. With the
creation of the NTC, through E.O. No. 546 in 1979, that agency was vested with the power to "[i]ssue
certificate[s] of public convenience for the operation of radio and television broadcasting system[s]."47 That
power remains extant and undisputed to date.
This much thus is clear. Broadcast and television stations are required to obtain a legislative franchise, a
requirement imposed by the Radio Control Act and affirmed by our ruling in Associated Broadcasting. After
securing their legislative franchises, stations are required to obtain CPCs from the NTC before they can
operate their radio or television broadcasting systems. Such requirement while traceable also to the Radio
Control Act, currently finds its basis in E.O. No. 546, the law establishing the NTC.
From these same legal premises, the next and most critical question is whether the NTC has the power to
cancel the CPCs it has issued to legislative franchisees.
IV.
The complexities of our dual franchise/license regime for broadcast media should be understood within the
context of separation of powers. The right of a particular entity to broadcast over the airwaves is established by
law i.e., the legislative franchise and determined by Congress, the branch of government tasked with the
creation of rights and obligations. As with all other laws passed by Congress, the function of the executive
branch of government, to which the NTC belongs, is the implementation of the law. In broad theory, the legal
obligation of the NTC once Congress has established a legislative franchise for a broadcast media station is to
facilitate the operation by the franchisee of its broadcast stations. However, since the public administration of
the airwaves is a requisite for the operation of a franchise and is moreover a highly technical function,
Congress has delegated to the NTC the task of administration over the broadcast spectrum, including the
determination of available bandwidths and the allocation of such available bandwidths among the various
legislative franchisees. The licensing power of the NTC thus arises from the necessary delegation by Congress
of legislative power geared towards the orderly exercise by franchisees of the rights granted them by
Congress.
Congress may very well in its wisdom impose additional obligations on the various franchisees and accordingly
delegate to the NTC the power to ensure that the broadcast stations comply with their obligations under the
law. Because broadcast media enjoys a lesser degree of free expression protection as compared to their
counterparts in print, these legislative restrictions are generally permissible under the Constitution. Yet no
enactment of Congress may contravene the Constitution and its Bill of Rights; hence, whatever restrictions are
imposed by Congress on broadcast media franchisees remain susceptible to judicial review and analysis under
the jurisprudential framework for scrutiny of free expression cases involving the broadcast media.
The restrictions enacted by Congress on broadcast media franchisees have to pass the mettle of
constitutionality. On the other hand, the restrictions imposed by an administrative agency such as the NTC on
broadcast media franchisees will have to pass not only the test of constitutionality, but also the test of authority
and legitimacy, i.e., whether such restrictions have been imposed in the exercise of duly delegated legislative
powers from Congress. If the restriction or sanction imposed by the administrative agency cannot trace its
origin from legislative delegation, whether it is by virtue of a specific grant or from valid delegation of rulemaking power to the administrative agency, then the action of such administrative agency cannot be sustained.
The life and authority of an administrative agency emanates solely from an Act of Congress, and its faculties
confined within the parameters set by the legislative branch of government.

We earlier replicated the various functions of the NTC, as established by E.O. No. 546. One can readily notice
that even as the NTC is vested with the power to issue CPCs to broadcast stations, it is not expressly vested
with the power to cancel such CPCs, or otherwise empowered to prevent broadcast stations with duly issued
franchises and CPCs from operating radio or television stations.1avvphi1
In contrast, when the Radio Control Act of 1931 maintained a similar requirement for radio stations to obtain a
license from a government official (the Secretary of Commerce and Industry), it similarly empowered the
government, through the Secretary of Public Works and Communications, to suspend or revoke such license,
as indicated in Section 3(m):
Section 3. The Secretary of Public Works and Communications is hereby empowered, to regulate the
construction or manufacture, possession, control, sale and transfer of radio transmitters or transceivers
(combination transmitter-receiver) and the establishment, use, the operation of all radio stations and of all form
of radio communications and transmissions within the Philippines. In addition to the above he shall have the
following specific powers and duties:
(m) He may, at his direction bring criminal action against violators of the radio laws or the regulations and
confiscate the radio apparatus in case of illegal operation; or simply suspend or revoke the offenders station or
operator licenses or refuse to renew such licenses; or just reprimand and warn the offenders;48
Section 3(m) begets the question did the NTC retain the power granted in 1931 to the Secretary of Public
Works and Communications to "x x x suspend or revoke the offenders station or operator licenses or refuse to
renew such licenses"? We earlier adverted to the statutory history. The enactment of the Public Service Act in
1936 did not deprive the Secretary of regulatory jurisdiction over radio stations, which included the power to
impose fines. In fact, the Public Service Commission was precluded from exercising such jurisdiction, except
with respect to the fixing of rates.
Then, in 1972, the regulatory authority over broadcast media was transferred to the Board of Communications
by virtue of P. D. No. 1, which adopted, approved, and made as part of the law of the land the Integrated
Reorganization Plan which was prepared by the Commission on Reorganization.49 Among the cabinet
departments affected by the plan was the Department of Public Works and Communications, which was now
renamed the Department of Public Works, Transportation and Communication.50 New regulatory boards under
the administrative supervision of the Department were created, including the Board of Communications.51
The functions of the Board of Communications were enumerated in Part X, Chapter I, Article III, Sec. 5 of the
Integrated Reorganization Plan.52 What is noticeably missing from these enumerated functions of the Board of
Communications is the power to revoke or cancel CPCs, even as the Board was vested the power to issue the
same. That same pattern held true in 1976, when the Board of Communications was abolished by E.O. No.
546.53 Said executive order, promulgated by then President Marcos in the exercise of his legislative powers,
created the NTC but likewise withheld from it the authority to cancel licenses and CPCs, even as it was
empowered to issue CPCs. Given the very specific functions allocated by law to the NTC, it would be very
difficult to recognize any intent to allocate to the Commission such regulatory functions previously granted to
the Secretary of Public Works and Communications, but not included in the exhaustive list of functions
enumerated in Section 15.
Certainly, petitioner fails to point to any provision of E.O. No. 546 authorizing the NTC to cancel licenses.
Neither does he cite any provision under P.D. No. 1 or the Radio Control Act, even if Section 3(m) of the latter
law provides at least, the starting point of a fair argument. Instead, petitioner relies on the power granted to the
Public Service Commission to revoke CPCs or CPCNs under Section 16(m) of the Public Service Act.54 That
argument has been irrefragably refuted by Section 14 of the Public Service Act, and by jurisprudence, most
especially RCPI v. NTC.55 As earlier noted, at no time did radio companies fall under the jurisdiction of the
Public Service Commission as they were expressly excluded from its mandate under Section 14. In addition,
the Court ruled in RCPI that since radio companies, including broadcast stations and telegraphic agencies,
were never under the jurisdiction of the Public Service Commission except as to rate-fixing, that Commissions
authority to impose fines did not carry over to the NTC even while the other regulatory agencies that emanated

from the Commission did retain the previous authority their predecessor had exercised.56 No provision in the
Public Service Act thus can be relied upon by the petitioner to claim that the NTC has the authority to cancel
CPCs or licenses.
It is still evident that E.O. No. 546 provides no explicit basis to assert that the NTC has the power to cancel the
licenses or CPCs it has duly issued, even as the government office previously tasked with the regulation of
radio stations, the Secretary of Public Works and Communications, previously possessed such power by
express mandate of law. In order to sustain petitioners premise, the Court will be unable to rely on an
unequivocally current and extant provision of law that justifies the NTCs power to cancel CPCs. Petitioner
suggests that since the NTC has the power to issue CPCs, it necessarily has the power to revoke the same.
One might also argue that through the general rule-making power of the NTC, we can discern a right of the
NTC to cancel CPCs.
We must be mindful that the issue for resolution is not a run-of-the-mill matter which would be settled with ease
with the application of the principles of statutory construction. It is at this juncture that the constitutional
implications of this case must ascend to preeminence.
A.
It is beyond question that respondents, as with all other radio and television broadcast stations, find shelter in
the Bill of Rights, particularly Section 3, Article III of the Constitution. At the same time, as we have labored
earlier to point out, broadcast media stands, by reason of the conditions of scarcity, within a different tier of
protection from print media, which unlike broadcast, does not have any regulatory interaction with the
government during its operation.
Still, the fact that state regulation of broadcast media is constitutionally justified does not mean that its
practitioners are precluded from invoking Section 3, Article III of the Constitution in their behalf. Far from it. Our
democratic way of life is actualized by the existence of a free press, whether print media or broadcast media.
As with print media, free expression through broadcast media is protected from prior restraint or subsequent
punishment. The franchise and licensing requirements are mainly impositions of the laws of physics which
would stand to periodic reassessment as technology advances. The science of today renders state regulation
as a necessity, yet this should not encumber the courts from accommodating greater freedoms to broadcast
media when doing so would not interfere with the existing legitimate state interests in regulating the industry.
In FCC v. League of Women Voters of California,57 the U.S. Supreme Court reviewed a law prohibiting
noncommercial broadcast stations that received funding from a public corporation from "engaging in
editorializing." The U.S. Supreme Court acknowledged the differentiated First Amendment standard of review
that applied to broadcast media. Still, it struck down the restriction, holding that "[the] regulation impermissibly
sweeps within its prohibition a wide range of speech by wholly private stations on topics that do not take a
directly partisan stand or that have nothing whatever to do with federal, state, or local government."58 We are
similarly able to maintain fidelity to the fundamental rights of broadcasters even while upholding the rationale
behind the regulatory regime governing them.
Should petitioners position that the NTC has the power to cancel CPCs or licenses it has issued to broadcast
stations although they are in the first place empowered by their respective franchise to exercise their rights to
free expression and as members of a free press, be adopted broadcast media would be encumbered by
another layer of state restrictions. As things stand, they are already required to secure a franchise from
Congress and a CPC from the NTC in order to operate. Upon operation, they are obliged to comply with the
various regulatory issuances of the NTC, which has the power to impose fees and fines and other mandates it
may deem fit to prescribe in the exercise of its rule-making power.
The fact that broadcast media already labors under this concededly valid regulatory framework necessarily
creates inhibitions on its practitioners as they operate on a daily basis. Newspapers are able to print out their
daily editions without fear that a government agency such as the NTC will be able to suspend their publication
or fine them based on their content. Broadcast stations do already operate with that possibility in mind, and
that circumstance ineluctably restrains its content, notwithstanding the constitutional right to free expression.

However, the cancellation of a CPC or license to operate of a broadcast station, if we recognize that possibility,
is essentially a death sentence, the most drastic means to inhibit a broadcast media practitioner from
exercising the constitutional right to free speech, expression and of the press.
This judicial philosophy aligns well with the preferred mode of scrutiny in the analysis of cases with dimensions
of the right to free expression. When confronted with laws dealing with freedom of the mind or restricting the
political process, of laws dealing with the regulation of speech, gender, or race as well as other fundamental
rights as expansion from its earlier applications to equal protection, the Court has deemed it appropriate to
apply "strict scrutiny" when assessing the laws involved or the legal arguments pursued that would diminish the
efficacy of such constitutional right. The assumed authority of the NTC to cancel CPCs or licenses, if
sustained, will create a permanent atmosphere of a less free right to express on the part of broadcast media.
So that argument could be sustained, it will have to withstand the strict scrutiny from this Court.
Strict scrutiny entails that the presumed law or policy must be justified by a compelling state or government
interest, that such law or policy must be narrowly tailored to achieve that goal or interest, and that the law or
policy must be the least restrictive means for achieving that interest. It is through that lens that we examine
petitioners premise that the NTC has the authority to cancel licenses of broadcast franchisees.
B.
In analyzing the compelling government interest that may justify the investiture of authority on the NTC
advocated by petitioner, we cannot ignore the interest of the State as expressed in the respective legislative
franchises of the petitioner, R.A. No. 7477 and R. A. Act No. 7582. Since legislative franchises are extended
through statutes, they should receive recognition as the ultimate expression of State policy. What the
legislative franchises of respondents express is that the Congress, after due debate and deliberation, declares
it as State policy that respondents should have the right to operate broadcast stations. The President of the
Philippines, by affixing his signature to the law, concurs in such State policy.
Allowing the NTC to countermand State policy by revoking respondents vested legal right to operate broadcast
stations unduly gives to a mere administrative agency veto power over the implementation of the law and the
enforcement of especially vested legal rights. That concern would not arise if Congress had similarly
empowered the NTC with the power to revoke a franchisees right to operate broadcast stations. But as earlier
stated, there is no such expression in the law, and by presuming such right the Court will be acting contrary to
the stated State interest as expressed in respondents legislative franchises.
If we examine the particular franchises of respondents, it is readily apparent that Congress has especially
invested the NTC with certain powers with respect to their broadcast operations. Both R.A. No. 747759 and
R.A. No. 758260 require the grantee "to secure from the [NTC] the appropriate permits and licenses for its
stations," barring the private respondents from "using any frequency in the radio spectrum without having been
authorized by the [NTC]." At the same time, both laws provided that "[the NTC], however, shall not
unreasonably withhold or delay the grant of any such authority."
An important proviso is stipulated in the legislative franchises, particularly under Section 5 of R.A. No. 7477
and Section 3 of R.A. No. 7582, in relation to Section 11 of R.A. No. 3902.
Section 5. Right of Government. A special right is hereby reserved to the President of the Philippines, in
times of rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily
take over and operate the stations of the grantee, temporarily suspend the operation of any stations in the
interest of public safety, security and public welfare, or authorize the temporary use and operation thereof by
any agency of the Government, upon due compensation to the grantee, for the use of said stations during the
period when they shall be so operated.
The provision authorizes the President of the Philippines to exercise considerable infringements on the right of
the franchisees to operate their enterprises and the right to free expression. Such authority finds corollary
constitutional justification as well under Section 17, Article XII, which allows the State "in times of national
emergency, when the public interest so requires x x x during the emergency and under reasonable terms

prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business
affected with public interest." We do not doubt that the President or the State can exercise such authority
through the NTC, which remains an agency within the executive branch of government, but such can be
exercised only under limited and rather drastic circumstances. They still do not vest in the NTC the broad
authority to cancel licenses and permits.
These provisions granting special rights to the President in times of emergency are incorporated in our
understanding of the legislated state policy with respect to the operation by private respondents of their
legislative franchises. There are restrictions to the operation of such franchises, and when these restrictions
are indeed exercised there still may be cause for the courts to review whether said limitations are justified
despite Section 3, Article I of the Constitution. At the same time, the state policy as embodied in these
franchises is to restrict the governments ability to impair the freedom to broadcast of the stations only upon the
occurrence of national emergencies or events that compromise the national security.
It should be further noted that even the aforequoted provision does not authorize the President or the
government to cancel the licenses of the respondents. The temporary nature of the takeover or closure of the
station is emphasized in the provision. That fact further disengages the provision from any sense that such
delegated authority can be the source of a broad ruling affirming the right of the NTC to cancel the licenses of
franchisees.
With the legislated state policy strongly favoring the unimpeded operation of the franchisees stations, it
becomes even more difficult to discern what compelling State interest may be fulfilled in ceding to the NTC the
general power to cancel the franchisees CPCs or licenses absent explicit statutory authorization. This
absence of a compelling state interest strongly disfavors petitioners cause.
C.
Now, we shall tackle jointly whether a law or policy allowing the NTC to cancel CPCs or licenses is to be
narrowly tailored to achieve that requisite compelling State goal or interest, and whether such a law or policy is
the least restrictive means for achieving that interest. We addressed earlier the difficulty of envisioning the
compelling State interest in granting the NTC such authority. But let us assume for arguments sake, that
relieving the injury complained off by petitioner the failure of private respondents to open up ownership
through the initial public offering mandated by law is a compelling enough State interest to allow the NTC to
extend consequences by canceling the licenses or CPCs of the erring franchisee.
There is in fact a more appropriate, more narrowly-tailored and least restrictive remedy that is afforded by the
law. Such remedy is that adverted to by the NTC and the Court of Appeals the resort to quo warranto
proceedings under Rule 66 of the Rules of Court.
Under Section 1 of Rule 66, "an action for the usurpation of a public office, position or franchise may be
brought in the name of the Republic of the Philippines against a person who usurps, intrudes into, or unlawfully
holds or exercises public office, position or franchise."61 Even while the action is maintained in the name of the
Republic62 , the Solicitor General or a public prosecutor is obliged to commence such action upon complaint,
and upon good reason to believe that any case specified under Section 1 of Rule 66 can be established by
proof.63
The special civil action of quo warranto is a prerogative writ by which the Government can call upon any
person to show by what warrant he holds a public office or exercises a public franchise.64 It is settled that
"[t]he determination of the right to the exercise of a franchise, or whether the right to enjoy such privilege has
been forfeited by non-user, is more properly the subject of the prerogative writ of quo warranto, the right to
assert which, as a rule, belongs to the State upon complaint or otherwise, the reason being that the abuse of
a franchise is a public wrong and not a private injury."65 A forfeiture of a franchise will have to be declared in a
direct proceeding for the purpose brought by the State because a franchise is granted by law and its unlawful
exercise is primarily a concern of Government.66 Quo warranto is specifically available as a remedy if it is
thought that a government corporation has offended against its corporate charter or misused its franchise.67

The Court of Appeals correctly noted that in PLDT v. NTC,68 the Court had cited quo warranto as the
appropriate recourse with respect to an allegation by petitioner therein that a rival telecommunications
competitor had failed to construct its radio system within the ten (10) years from approval of its franchise, as
mandated by its legislative franchise.69 It is beyond dispute that quo warranto exists as an available and
appropriate remedy against the wrong imputed on private respondents.
Petitioners argue that since their prayer involves the cancellation of the provisional authority and CPCs, and
not the legislative franchise, then quo warranto fails as a remedy. The argument is artificial. The authority of the
franchisee to engage in broadcast operations is derived in the legislative mandate. To cancel the provisional
authority or the CPC is, in effect, to cancel the franchise or otherwise prevent its exercise. By law, the NTC is
incapacitated to frustrate such mandate by unduly withholding or canceling the provisional authority or the CPC
for reasons other than the orderly administration of the frequencies in the radio spectrum.
What should occur instead is the converse. If the courts conclude that private respondents have violated the
terms of their franchise and thus issue the writs of quo warranto against them, then the NTC is obliged to
cancel any existing licenses and CPCs since these permits draw strength from the possession of a valid
franchise. If the point has not already been made clear, then licenses issued by the NTC such as CPCs and
provisional authorities are junior to the legislative franchise enacted by Congress. The licensing authority of the
NTC is not on equal footing with the franchising authority of the State through Congress. The issuance of
licenses by the NTC implements the legislative franchises established by Congress, in the same manner that
the executive branch implements the laws of Congress rather than creates its own laws. And similar to the
inability of the executive branch to prevent the implementation of laws by Congress, the NTC cannot, without
clear and proper delegation by Congress, prevent the exercise of a legislative franchise by withholding or
canceling the licenses of the franchisee.
And the role of the courts, through quo warranto proceedings, neatly complements the traditional separation of
powers that come to bear in our analysis. The courts are entrusted with the adjudication of the legal status of
persons, the final arbiter of their rights and obligations under law. The question of whether a franchisee is in
breach of the franchise specially enacted for it by Congress is one inherently suited to a court of law, and not
for an administrative agency, much less one to which no such function has been delegated by Congress. In the
same way that availability of judicial review over laws does not preclude Congress from undertaking its own
remedial measures by appropriately amending laws, the viability of quo warranto in the instant cases does not
preclude Congress from enforcing its own prerogative by abrogating the legislative franchises of respondents
should it be distressed enough by the franchisees violation of the franchises extended to them.
Evidently, the suggested theory of petitioner to address his plaints simply overpowers the delicate balance of
separation of powers, and unduly grants superlative prerogatives to the NTC to frustrate the exercise of the
constitutional freedom speech, expression, and of the press. A more narrowly-tailored relief that is responsive
to the cause of petitioner not only exists, but is in fact tailor-fitted to the constitutional framework of our
government and the adjudication of legal and constitutional rights. Given the current status of the law, there is
utterly no reason for this Court to subscribe to the theory that the NTC has the presumed authority to cancel
licenses and CPCs issued to due holders of legislative franchise to engage in broadcast operations.
V.
An entire subset of questions may arise following this decision, involving issues or situations not presently
before us. We wish to make clear that the only aspect of the regulatory jurisdiction of the NTC that we are
ruling upon is its presumed power to cancel provisional authorities, CPCs or CPCNs and other such licenses
required of franchisees before they can engage in broadcast operations. Moreover, our conclusion that the
NTC has no such power is borne not simply from the statutory language of E.O. No. 546 or the respective
stipulations in private respondents franchises, but moreso, from the application of the strict scrutiny standard
which, despite its weight towards free speech, still involves the analysis of the competing interests of the
regulator and the regulated.

In resolving the present questions, it was of marked impact to the Court that the presumed power to cancel
would lead to utterly fatal consequences to the constitutional right to expression, as well as the legislated right
of these franchisees to broadcast. Other regulatory measures of less drastic impact will have to be assessed
on their own terms in the proper cases, and our decision today should not be accepted or cited as a blanket
shearing of the NTCs regulatory jurisdiction. In addition, considering our own present recognition of legislative
authority to regulate broadcast media on terms more cumbersome than print media, it should not be
discounted that Congress may enact amendments to the organic law of the NTC that would alter the legal
milieu from which we adjudicated today.1avvphi1.zw+
Still, the Court sees all benefit and no detriment in striking this blow in favor of free expression and of the
press. While the ability of the State to broadly regulate broadcast media is ultimately dictated by physics,
regulation with a light touch evokes a democracy mature enough to withstand competing viewpoints and
tastes. Perhaps unwittingly, the position advocated by petitioner curdles a most vital sector of the press
broadcast media within the heavy hand of the State. The argument is not warranted by law, and it betrays the
constitutional expectations on this Court to assert lines not drawn and connect the dots around throats that are
free to speak.
WHEREFORE, the instant petition is DENIED. No pronouncement as to costs.

9.) PEOPLE V. VERA G.R. No. L-45685 November 16 1937 En Banc


[Non Delegation of Legislative Powers]
FACTS:
Cu-Unjieng was convicted of criminal charges by the trial court of Manila. He filed a motion for reconsideration
and four motions for new trial but all were denied. He then elevated to the Supreme Court of United States for
review, which was also denied. The SC denied the petition subsequently filed by Cu-Unjieng for a motion for
new trial and thereafter remanded the case to the court of origin for execution of the judgment. CFI of Manila
referred the application for probation of the Insular Probation Office which recommended denial of the same.
Later, 7th branch of CFI Manila set the petition for hearing. The Fiscal filed an opposition to the granting of
probation to Cu Unjieng, alleging, among other things, that Act No. 4221, assuming that it has not been
repealed by section 2 of Article XV of the Constitution, is nevertheless violative of section 1, subsection (1),
Article III of the Constitution guaranteeing equal protection of the laws. The private prosecution also filed a
supplementary opposition, elaborating on the alleged unconstitutionality on Act No. 4221, as an undue
delegation of legislative power to the provincial boards of several provinces (sec. 1, Art. VI, Constitution).
ISSUE:
Whether or not there is undue delegation of powers.
RULING:
Yes. SC conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative
authority to the provincial boards and is, for this reason, unconstitutional and void.
The challenged section of Act No. 4221 in section 11 which reads as follows: "This Act shall apply only in those
provinces in which the respective provincial boards have provided for the salary of a probation officer at rates
not lower than those now provided for provincial fiscals. Said probation officer shall be appointed by the
Secretary of Justice and shall be subject to the direction of the Probation Office."
The provincial boards of the various provinces are to determine for themselves, whether the Probation Law
shall apply to their provinces or not at all. The applicability and application of the Probation Act are entirely
placed in the hands of the provincial boards. If the provincial board does not wish to have the Act applied in its
province, all that it has to do is to decline to appropriate the needed amount for the salary of a probation officer.
The clear policy of the law, as may be gleaned from a careful examination of the whole context, is to make the
application of the system dependent entirely upon the affirmative action of the different provincial boards
through appropriation of the salaries for probation officers at rates not lower than those provided for provincial
fiscals. Without such action on the part of the various boards, no probation officers would be appointed by the
Secretary of Justice to act in the provinces. The Philippines is divided or subdivided into provinces and it needs
no argument to show that if not one of the provinces and this is the actual situation now appropriate the
necessary fund for the salary of a probation officer, probation under Act No. 4221 would be illusory. There can
be no probation without a probation officer. Neither can there be a probation officer without the probation
system.
In their memorandums filed on October 23, 1937, counsel for the respondents maintain that Act No. 4221 is
constitutional because, contrary to the allegations of the petitioners, it does not constitute an undue delegation
of legislative power, does not infringe the equal protection clause of the Constitution, and does not encroach
upon the pardoning power of the Executive. In an additional memorandum filed on the same date, counsel for
the respondents reiterate the view that section 11 of Act No. 4221 is free from constitutional objections and
contend, in addition, that the private prosecution may not intervene in probation proceedings, much less
question the validity of Act No. 4221; that both the City Fiscal and the Solicitor-General are estopped from
questioning the validity of the Act; that the validity of Act cannot be attacked for the first time before this court;
that probation in unavailable; and that, in any event, section 11 of the Act No. 4221 is separable from the rest
of the Act. The last memorandum for the respondent Mariano Cu Unjieng was denied for having been filed out
of time but was admitted by resolution of this court and filed anew on
November 5, 1937. This
memorandum elaborates on some of the points raised by the respondents and refutes those brought up by the
petitioners.

In the scrutiny of the pleadings and examination of the various aspects of the present case, we noted that the
court below, in passing upon the merits of the application of the respondent Mariano Cu Unjieng and in denying
said application assumed the task not only of considering the merits of the application, but of passing upon the
culpability of the applicant, notwithstanding the final pronouncement of guilt by this court. (G.R. No. 41200.)
Probation implies guilt be final judgment. While a probation case may look into the circumstances attending the
commission of the offense, this does not authorize it to reverse the findings and conclusive of this court, either
directly or indirectly, especially wherefrom its own admission reliance was merely had on the printed briefs,
averments, and pleadings of the parties. As already observed by this court in Shioji vs. Harvey ([1922], 43
Phil., 333, 337), and reiterated in subsequent cases, "if each and every Court of First Instance could enjoy the
privilege of overruling decisions of the Supreme Court, there would be no end to litigation, and judicial chaos
would result." A becoming modesty of inferior courts demands conscious realization of the position that they
occupy in the interrelation and operation of the intergrated judicial system of the nation.
After threshing carefully the multifarious issues raised by both counsel for the petitioners and the respondents,
this court prefers to cut the Gordian knot and take up at once the two fundamental questions presented,
namely, (1) whether or not the constitutionality of Act No. 4221 has been properly raised in these proceedings;
and (2) in the affirmative, whether or not said Act is constitutional. Considerations of these issues will involve a
discussion of certain incidental questions raised by the parties.
To arrive at a correct conclusion on the first question, resort to certain guiding principles is necessary. It is a
well-settled rule that the constitutionality of an act of the legislature will not be determined by the courts unless
that question is properly raised and presented inappropriate cases and is necessary to a determination of the
case; i.e., the issue of constitutionality must be the very lis mota presented. (McGirr vs. Hamilton and Abreu
[1915], 30 Phil., 563, 568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.)
The question of the constitutionality of an act of the legislature is frequently raised in ordinary actions.
Nevertheless, resort may be made to extraordinary legal remedies, particularly where the remedies in the
ordinary course of law even if available, are not plain, speedy and adequate. Thus, in Cu Unjieng vs. Patstone
([1922]), 42 Phil., 818), this court held that the question of the constitutionality of a statute may be raised by the
petitioner in mandamus proceedings (see, also, 12 C. J., p. 783); and in Government of the Philippine Islands
vs. Springer ([1927], 50 Phil., 259 [affirmed in Springer vs. Government of the Philippine Islands (1928), 277 U.
S., 189; 72 Law. ed., 845]), this court declared an act of the legislature unconstitutional in an action of quo
warranto brought in the name of the Government of the Philippines. It has also been held that the
constitutionality of a statute may be questioned in habeas corpus proceedings (12 C. J., p. 783; Bailey on
Habeas Corpus, Vol. I, pp. 97, 117), although there are authorities to the contrary; on an application for
injunction to restrain action under the challenged statute (mandatory, see Cruz vs. Youngberg [1931], 56 Phil.,
234); and even on an application for preliminary injunction where the determination of the constitutional
question is necessary to a decision of the case. (12 C. J., p. 783.) The same may be said as regards
prohibition and certiorari.(Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U. S., 500; 70 Law. ed.,
1059; Bell vs. First Judicial District Court [1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6 Ann. Cas.,
982; 1 L. R. A. [N. S], 843, and cases cited). The case of Yu Cong Eng vs. Trinidad, supra, decided by this
court twelve years ago was, like the present one, an original action for certiorari and prohibition. The
constitutionality of Act No. 2972, popularly known as the Chinese Bookkeeping Law, was there challenged by
the petitioners, and the constitutional issue was not met squarely by the respondent in a demurrer. A point was
raised "relating to the propriety of the constitutional question being decided in original proceedings in
prohibition." This court decided to take up the constitutional question and, with two justices dissenting, held that
Act No. 2972 was constitutional. The case was elevated on writ of certiorari to the Supreme Court of the United
States which reversed the judgment of this court and held that the Act was invalid. (271 U. S., 500; 70 Law.
ed., 1059.) On the question of jurisdiction, however, the Federal Supreme Court, though its Chief Justice, said:
By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine supreme court is granted
concurrent jurisdiction in prohibition with courts of first instance over inferior tribunals or persons, and original
jurisdiction over courts of first instance, when such courts are exercising functions without or in excess of their
jurisdiction. It has been held by that court that the question of the validity of the criminal statute must usually be
raised by a defendant in the trial court and be carried regularly in review to the Supreme Court. (CadwalladerGibson Lumber Co. vs. Del Rosario, 26 Phil., 192). But in this case where a new act seriously affected

numerous persons and extensive property rights, and was likely to cause a multiplicity of actions, the Supreme
Court exercised its discretion to bring the issue to the act's validity promptly before it and decide in the interest
of the orderly administration of justice. The court relied by analogy upon the cases of Ex parte Young (209 U.
S., 123;52 Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup. Ct. Rep., 441; 14 Ann. Ca., 764; Traux vs. Raich, 239
U. S., 33; 60 Law. ed., 131; L. R. A. 1916D, 545; 36 Sup. Ct. Rep., 7; Ann. Cas., 1917B, 283; and Wilson vs.
New, 243 U. S., 332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37 Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024).
Although objection to the jurisdiction was raise by demurrer to the petition, this is now disclaimed on behalf of
the respondents, and both parties ask a decision on the merits. In view of the broad powers in prohibition
granted to that court under the Island Code, we acquiesce in the desire of the parties.
The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed
to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is
not legally vested. (High, Extraordinary Legal Remedies, p. 705.) The general rule, although there is a conflict
in the cases, is that the merit of prohibition will not lie whether the inferior court has jurisdiction independent of
the statute the constitutionality of which is questioned, because in such cases the interior court having
jurisdiction may itself determine the constitutionality of the statute, and its decision may be subject to review,
and consequently the complainant in such cases ordinarily has adequate remedy by appeal without resort to
the writ of prohibition. But where the inferior court or tribunal derives its jurisdiction exclusively from an
unconstitutional statute, it may be prevented by the writ of prohibition from enforcing that statute. (50 C. J.,
670; Ex parte Round tree [1874, 51 Ala., 42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish [1912],
109 Me., 384; 84 A., 799; Pennington vs. Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903], 54 W. Va., 54;
46 S. E., 185; Arnold vs. Shields [1837], 5 Dana, 19; 30 Am. Dec., 669.)
Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from Act No. 4221
which prescribes in detailed manner the procedure for granting probation to accused persons after their
conviction has become final and before they have served their sentence. It is true that at common law the
authority of the courts to suspend temporarily the execution of the sentence is recognized and, according to a
number of state courts, including those of Massachusetts, Michigan, New York, and Ohio, the power is inherent
in the courts (Commonwealth vs. Dowdican's Bail [1874], 115 Mass., 133; People vs. Stickel [1909], 156 Mich.,
557; 121 N. W., 497; People ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; Weber vs. State
[1898], 58 Ohio St., 616). But, in the leading case of Ex parte United States ([1916], 242 U. S., 27; 61 Law. ed.,
129; L. R. A., 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United
States expressed the opinion that under the common law the power of the court was limited to temporary
suspension, and brushed aside the contention as to inherent judicial power saying, through Chief Justice
White:
Indisputably under our constitutional system the right to try offenses against the criminal laws and upon
conviction to impose the punishment provided by law is judicial, and it is equally to be conceded that, in
exerting the powers vested in them on such subject, courts inherently possess ample right to exercise
reasonable, that is, judicial, discretion to enable them to wisely exert their authority. But these concessions
afford no ground for the contention as to power here made, since it must rest upon the proposition that the
power to enforce begets inherently a discretion to permanently refuse to do so. And the effect of the
proposition urged upon the distribution of powers made by the Constitution will become apparent when it is
observed that indisputable also is it that the authority to define and fix the punishment for crime is legislative
and includes the right in advance to bring within judicial discretion, for the purpose of executing the statute,
elements of consideration which would be otherwise beyond the scope of judicial authority, and that the right to
relieve from the punishment, fixed by law and ascertained according to the methods by it provided belongs to
the executive department.
Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs. Judge of First
Instance of Cavite (29 Phil., 265), decided by this court in 1915, also reached the conclusion that the power to
suspend the execution of sentences pronounced in criminal cases is not inherent in the judicial function. "All
are agreed", he said, "that in the absence of statutory authority, it does not lie within the power of the courts to
grant such suspensions." (at p. 278.) Both petitioner and respondents are correct, therefore, when they argue
that a Court of First Instance sitting in probation proceedings is a court of limited jurisdiction. Its jurisdiction in
such proceedings is conferred exclusively by Act No. 4221 of the Philippine Legislature.

It is, of course, true that the constitutionality of a statute will not be considered on application for prohibition
where the question has not been properly brought to the attention of the court by objection of some kind (Hill
vs. Tarver [1901], 130 Ala., 592; 30 S., 499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120; 168 S. W., 746).
In the case at bar, it is unquestionable that the constitutional issue has been squarely presented not only
before this court by the petitioners but also before the trial court by the private prosecution. The respondent,
Hon. Jose O Vera, however, acting as judge of the court below, declined to pass upon the question on the
ground that the private prosecutor, not being a party whose rights are affected by the statute, may not raise
said question. The respondent judge cited Cooley on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec.
177, pp. 760 and 762), and McGlue vs. Essex County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as
authority for the proposition that a court will not consider any attack made on the constitutionality of a statute
by one who has no interest in defeating it because his rights are not affected by its operation. The respondent
judge further stated that it may not motu proprio take up the constitutional question and, agreeing with Cooley
that "the power to declare a legislative enactment void is one which the judge, conscious of the fallibility of the
human judgment, will shrink from exercising in any case where he can conscientiously and with due regard to
duty and official oath decline the responsibility" (Constitutional Limitations, 8th ed., Vol. I, p. 332), proceeded
on the assumption that Act No. 4221 is constitutional. While therefore, the court a quo admits that the
constitutional question was raised before it, it refused to consider the question solely because it was not raised
by a proper party. Respondents herein reiterates this view. The argument is advanced that the private
prosecution has no personality to appear in the hearing of the application for probation of defendant Mariano
Cu Unjieng in criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of
constitutionality was not properly raised in the lower court. Although, as a general rule, only those who are
parties to a suit may question the constitutionality of a statute involved in a judicial decision, it has been held
that since the decree pronounced by a court without jurisdiction is void, where the jurisdiction of the court
depends on the validity of the statute in question, the issue of the constitutionality will be considered on its
being brought to the attention of the court by persons interested in the effect to be given the statute.(12 C. J.,
sec. 184, p. 766.) And, even if we were to concede that the issue was not properly raised in the court below by
the proper party, it does not follow that the issue may not be here raised in an original action of certiorari and
prohibitions. It is true that, as a general rule, the question of constitutionality must be raised at the earliest
opportunity, so that if not raised by the pleadings, ordinarily it may not be raised at the trial, and if not raised in
the trial court, it will not considered on appeal. (12 C. J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs.
Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in
the exercise of sounds discretion, may determine the time when a question affecting the constitutionality of a
statute should be presented. (In re Woolsey [1884], 95 N. Y., 135, 144.) Thus, in criminal cases, although there
is a very sharp conflict of authorities, it is said that the question may be raised for the first time at any stage of
the proceedings, either in the trial court or on appeal. (12 C. J., p. 786.) Even in civil cases, it has been held
that it is the duty of a court to pass on the constitutional question, though raised for the first time on appeal, if it
appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs.
Maysville & B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis Cordage Co. [1908], 214
Mo., 685; 113 S. W. 1108; Carmody vs. St. Louis Transit Co., [1905], 188 Mo., 572; 87 S. W., 913.) And it has
been held that a constitutional question will be considered by an appellate court at any time, where it involves
the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this
court to consider the constitutional question raised for the first time before this court in these proceedings, we
turn again and point with emphasis to the case of Yu Cong Eng vs. Trinidad, supra. And on the hypotheses that
the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the proper party
to raise the constitutional question here a point we do not now have to decide we are of the opinion that
the People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such
a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of
a statute must have a personal and substantial interest in the case such that he has sustained, or will
sustained, direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates
the constitution, the People of the Philippines, in whose name the present action is brought, has a substantial
interest in having it set aside. Of grater import than the damage caused by the illegal expenditure of public
funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. Hence,
the well-settled rule that the state can challenge the validity of its own laws. In Government of the Philippine
Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands
[1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an

action instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkins ([1889], 73
Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of Michigan, through its Attorney General, instituted
quo warranto proceedings to test the right of the respondents to renew a mining corporation, alleging that the
statute under which the respondents base their right was unconstitutional because it impaired the obligation of
contracts. The capacity of the chief law officer of the state to question the constitutionality of the statute was
though, as a general rule, only those who are parties to a suit may question the constitutionality of a statute
involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction
in void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of
constitutionality will be considered on its being brought to the attention of the court by persons interested in the
effect to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede that the issue was not
properly raised in the court below by the proper party, it does not follow that the issue may not be here raised
in an original action of certiorari and prohibition. It is true that, as a general rule, the question of constitutionality
must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be raised a
the trial, and if not raised in the trial court, it will not be considered on appeal. (12 C.J., p. 786. See, also,
Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general
rule admits of exceptions. Courts, in the exercise of sound discretion, may determine the time when a question
affecting the constitutionality of a statute should be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.)
Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be
raised for the first time at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p. 786.)
Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though
raised for first time on appeal, if it appears that a determination of the question is necessary to a decision of the
case. (McCabe's Adm'x vs. Maysville & B. S. R. Co. [1910], 136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St.
Louis, Cordage Co. [1908], 214 Mo. 685; 113 S. W., 1108; Carmody vs. St. Louis Transit Co. [1905], 188 Mo.,
572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by an appellate court
at any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S.,
870.) As to the power of this court to consider the constitutional question raised for the first time before this
court in these proceedings, we turn again and point with emphasis to the case of Yu Cong Eng. vs. Trinidad,
supra. And on the hypothesis that the Hongkong & Shanghai Banking Corporation, represented by the private
prosecution, is not the proper party to raise the constitutional question here a point we do not now have to
decide we are of the opinion that the People of the Philippines, represented by the Solicitor-General and the
Fiscal of the City of Manila, is such a proper party in the present proceedings. The unchallenged rule is that the
person who impugns the validity of a statute must have a personal and substantial interest in the case such
that he has sustained, or will sustain, direct injury as a result of its enforcement. It goes without saying that if
Act No. 4221 really violates the Constitution, the People of the Philippines, in whose name the present action is
brought, has a substantial interest in having it set aside. Of greater import than the damage caused by the
illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of
an invalid statute. Hence, the well-settled rule that the state can challenge the validity of its own laws. In
Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government
of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature
unconstitutional in an action instituted in behalf of the Government of the Philippines. In Attorney General vs.
Perkings([1889], 73 Mich., 303, 311, 312; 41 N.W., 426, 428, 429), the State of Michigan, through its Attorney
General, instituted quo warranto proceedings to test the right of the respondents to renew a mining
corporation, alleging that the statute under which the respondents base their right was unconstitutional
because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the
constitutionality of the statute was itself questioned. Said the Supreme Court of Michigan, through Champlin,
J.:
. . . The idea seems to be that the people are estopped from questioning the validity of a law enacted by their
representatives; that to an accusation by the people of Michigan of usurpation their government, a statute
enacted by the people of Michigan is an adequate answer. The last proposition is true, but, if the statute relied
on in justification is unconstitutional, it is statute only in form, and lacks the force of law, and is of no more
saving effect to justify action under it than if it had never been enacted. The constitution is the supreme law,
and to its behests the courts, the legislature, and the people must bow . . . The legislature and the respondents
are not the only parties in interest upon such constitutional questions. As was remarked by Mr. Justice Story, in
speaking of an acquiescence by a party affected by an unconstitutional act of the legislature: "The people have

a deep and vested interest in maintaining all the constitutional limitations upon the exercise of legislative
powers." (Allen vs. Mckeen, 1 Sum., 314.)
In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was brought by the
Attorney-General of Kansas to test the constitutionality of a statute of the state. In disposing of the question
whether or not the state may bring the action, the Supreme Court of Kansas said:
. . . the state is a proper party indeed, the proper party to bring this action. The state is always interested
where the integrity of its Constitution or statutes is involved.
"It has an interest in seeing that the will of the Legislature is not disregarded, and need not, as an individual
plaintiff must, show grounds of fearing more specific injury. (State vs. Kansas City 60 Kan., 518 [57 Pac.,
118])." (State vs. Lawrence, 80 Kan., 707; 103 Pac., 839.)
Where the constitutionality of a statute is in doubt the state's law officer, its Attorney-General, or county
attorney, may exercise his bet judgment as to what sort of action he will bring to have the matter determined,
either by quo warranto to challenge its validity (State vs. Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A.,
662), by mandamus to compel obedience to its terms (State vs. Dolley, 82 Kan., 533; 108 Pac., 846), or by
injunction to restrain proceedings under its questionable provisions (State ex rel. vs. City of Neodesha, 3 Kan.
App., 319; 45 Pac., 122).
Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917], 197 S. W.,
1006; State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181 La., 597; 160 S., 91;
State vs. Board of County Comr's [1934], 39 Pac. [2d], 286; First Const. Co. of Brooklyn vs. State [1917], 211
N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187 Ind., 339; 119 N.E., 417; State vs. Watkins [1933], 176
La., 837; 147 S., 8, 10, 11). In the case last cited, the Supreme Court of Luisiana said:
It is contended by counsel for Herbert Watkins that a district attorney, being charged with the duty of enforcing
the laws, has no right to plead that a law is unconstitutional. In support of the argument three decisions are
cited, viz.: State ex rel. Hall, District Attorney, vs. Judge of Tenth Judicial District (33 La. Ann., 1222); State ex
rel. Nicholls, Governor vs. Shakespeare, Mayor of New Orleans (41 Ann., 156; 6 So., 592); and State ex rel.,
Banking Co., etc. vs. Heard, Auditor (47 La. Ann., 1679; 18 So., 746; 47 L. R. A., 512). These decisions do not
forbid a district attorney to plead that a statute is unconstitutional if he finds if in conflict with one which it is his
duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the ruling was the judge should not,
merely because he believed a certain statute to be unconstitutional forbid the district attorney to file a bill of
information charging a person with a violation of the statute. In other words, a judge should not judicially
declare a statute unconstitutional until the question of constitutionality is tendered for decision, and unless it
must be decided in order to determine the right of a party litigant. State ex rel. Nicholls, Governor, etc., is
authority for the proposition merely that an officer on whom a statute imposes the duty of enforcing its
provisions cannot avoid the duty upon the ground that he considers the statute unconstitutional, and hence in
enforcing the statute he is immune from responsibility if the statute be unconstitutional. State ex rel. Banking
Co., etc., is authority for the proposition merely that executive officers, e.g., the state auditor and state
treasurer, should not decline to perform ministerial duties imposed upon them by a statute, on the ground that
they believe the statute is unconstitutional.
It is the duty of a district attorney to enforce the criminal laws of the state, and, above all, to support the
Constitution of the state. If, in the performance of his duty he finds two statutes in conflict with each other, or
one which repeals another, and if, in his judgment, one of the two statutes is unconstitutional, it is his duty to
enforce the other; and, in order to do so, he is compelled to submit to the court, by way of a plea, that one of
the statutes is unconstitutional. If it were not so, the power of the Legislature would be free from constitutional
limitations in the enactment of criminal laws.
The respondents do not seem to doubt seriously the correctness of the general proposition that the state may
impugn the validity of its laws. They have not cited any authority running clearly in the opposite direction. In
fact, they appear to have proceeded on the assumption that the rule as stated is sound but that it has no
application in the present case, nor may it be invoked by the City Fiscal in behalf of the People of the

Philippines, one of the petitioners herein, the principal reasons being that the validity before this court, that the
City Fiscal is estopped from attacking the validity of the Act and, not authorized challenge the validity of the Act
in its application outside said city. (Additional memorandum of respondents, October 23, 1937, pp. 8,. 10, 17
and 23.)
The mere fact that the Probation Act has been repeatedly relied upon the past and all that time has not been
attacked as unconstitutional by the Fiscal of Manila but, on the contrary, has been impliedly regarded by him as
constitutional, is no reason for considering the People of the Philippines estopped from nor assailing its validity.
For courts will pass upon a constitutional questions only when presented before it in bona fide cases for
determination, and the fact that the question has not been raised before is not a valid reason for refusing to
allow it to be raised later. The fiscal and all others are justified in relying upon the statute and treating it as valid
until it is held void by the courts in proper cases.
It remains to consider whether the determination of the constitutionality of Act No. 4221 is necessary to the
resolution of the instant case. For, ". . . while the court will meet the question with firmness, where its decision
is indispensable, it is the part of wisdom, and just respect for the legislature, renders it proper, to waive it, if the
case in which it arises, can be decided on other points." (Ex parte Randolph [1833], 20 F. Cas. No. 11, 558; 2
Brock., 447. Vide, also Hoover vs. wood [1857], 9 Ind., 286, 287.) It has been held that the determination of a
constitutional question is necessary whenever it is essential to the decision of the case (12 C. J., p. 782, citing
Long Sault Dev. Co. vs. Kennedy [1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff. 212 N.Y., 1: 105 N. E.,
849; Ann. Cas. 1915D, 56; and app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan
vs. Doddridge, 22 Gratt [63 Va.], 458; Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129 N. W.,
605), as where the right of a party is founded solely on a statute the validity of which is attacked. (12 C.J., p.
782, citing Central Glass Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972; Cheney vs. Beverly, 188 Mass.,
81; 74 N.E., 306). There is no doubt that the respondent Cu Unjieng draws his privilege to probation solely
from Act No. 4221 now being assailed.
Apart from the foregoing considerations, that court will also take cognizance of the fact that the Probation Act is
a new addition to our statute books and its validity has never before been passed upon by the courts; that may
persons accused and convicted of crime in the City of Manila have applied for probation; that some of them are
already on probation; that more people will likely take advantage of the Probation Act in the future; and that the
respondent Mariano Cu Unjieng has been at large for a period of about four years since his first conviction. All
wait the decision of this court on the constitutional question. Considering, therefore, the importance which the
instant case has assumed and to prevent multiplicity of suits, strong reasons of public policy demand that the
constitutionality of Act No. 4221 be now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271
U.S., 500; 70 Law. ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207 N.Y., 533; 101 N.E.,
442, 444; Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327; 133 N.W., 209, 211; 37 L.R.A.
[N.S.] 489; Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil., 304.) In Yu Cong Eng vs. Trinidad, supra, an
analogous situation confronted us. We said: "Inasmuch as the property and personal rights of nearly twelve
thousand merchants are affected by these proceedings, and inasmuch as Act No. 2972 is a new law not yet
interpreted by the courts, in the interest of the public welfare and for the advancement of public policy, we have
determined to overrule the defense of want of jurisdiction in order that we may decide the main issue. We have
here an extraordinary situation which calls for a relaxation of the general rule." Our ruling on this point was
sustained by the Supreme Court of the United States. A more binding authority in support of the view we have
taken can not be found.
We have reached the conclusion that the question of the constitutionality of Act No. 4221 has been properly
raised. Now for the main inquiry: Is the Act unconstitutional?
Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the Constitution. This
court, by clear implication from the provisions of section 2, subsection 1, and section 10, of Article VIII of the
Constitution, may declare an act of the national legislature invalid because in conflict with the fundamental lay.
It will not shirk from its sworn duty to enforce the Constitution. And, in clear cases, it will not hesitate to give
effect to the supreme law by setting aside a statute in conflict therewith. This is of the essence of judicial duty.

This court is not unmindful of the fundamental criteria in cases of this nature that all reasonable doubts should
be resolved in favor of the constitutionality of a statute. An act of the legislature approved by the executive, is
presumed to be within constitutional limitations. The responsibility of upholding the Constitution rests not on the
courts alone but on the legislature as well. "The question of the validity of every statute is first determined by
the legislative department of the government itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10; Case vs. Board of
Health and Heiser [1913], 24 Phil., 250, 276; U.S. vs. Joson [1913], 26 Phil., 1.) And a statute finally comes
before the courts sustained by the sanction of the executive. The members of the Legislature and the Chief
Executive have taken an oath to support the Constitution and it must be presumed that they have been true to
this oath and that in enacting and sanctioning a particular law they did not intend to violate the Constitution.
The courts cannot but cautiously exercise its power to overturn the solemn declarations of two of the three
grand departments of the governments. (6 R.C.L., p. 101.) Then, there is that peculiar political philosophy
which bids the judiciary to reflect the wisdom of the people as expressed through an elective Legislature and
an elective Chief Executive. It follows, therefore, that the courts will not set aside a law as violative of the
Constitution except in a clear case. This is a proposition too plain to require a citation of authorities.
One of the counsel for respondents, in the course of his impassioned argument, called attention to the fact that
the President of the Philippines had already expressed his opinion against the constitutionality of the Probation
Act, adverting that as to the Executive the resolution of this question was a foregone conclusion. Counsel,
however, reiterated his confidence in the integrity and independence of this court. We take notice of the fact
that the President in his message dated September 1, 1937, recommended to the National Assembly the
immediate repeal of the Probation Act (No. 4221); that this message resulted in the approval of Bill No. 2417 of
the Nationality Assembly repealing the probation Act, subject to certain conditions therein mentioned; but that
said bill was vetoed by the President on September 13, 1937, much against his wish, "to have stricken out
from the statute books of the Commonwealth a law . . . unfair and very likely unconstitutional." It is sufficient to
observe in this connection that, in vetoing the bill referred to, the President exercised his constitutional
prerogative. He may express the reasons which he may deem proper for taking such a step, but his reasons
are not binding upon us in the determination of actual controversies submitted for our determination. Whether
or not the Executive should express or in any manner insinuate his opinion on a matter encompassed within
his broad constitutional power of veto but which happens to be at the same time pending determination in this
court is a question of propriety for him exclusively to decide or determine. Whatever opinion is expressed by
him under these circumstances, however, cannot sway our judgment on way or another and prevent us from
taking what in our opinion is the proper course of action to take in a given case. It if is ever necessary for us to
make any vehement affirmance during this formative period of our political history, it is that we are independent
of the Executive no less than of the Legislative department of our government independent in the
performance of our functions, undeterred by any consideration, free from politics, indifferent to popularity, and
unafraid of criticism in the accomplishment of our sworn duty as we see it and as we understand it.
The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said Act encroaches
upon the pardoning power of the Executive; (2) that its constitutes an undue delegation of legislative power
and (3) that it denies the equal protection of the laws.
1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law, in force at the
time of the approval of Act No. 4221, otherwise known as the Probation Act, vests in the Governor-General of
the Philippines "the exclusive power to grant pardons and reprieves and remit fines and forfeitures". This
power is now vested in the President of the Philippines. (Art. VII, sec. 11, subsec. 6.) The provisions of the
Jones Law and the Constitution differ in some respects. The adjective "exclusive" found in the Jones Law has
been omitted from the Constitution. Under the Jones Law, as at common law, pardon could be granted any
time after the commission of the offense, either before or after conviction (Vide Constitution of the United
States, Art. II, sec. 2; In re Lontok [1922], 43 Phil., 293). The Governor-General of the Philippines was thus
empowered, like the President of the United States, to pardon a person before the facts of the case were fully
brought to light. The framers of our Constitution thought this undesirable and, following most of the state
constitutions, provided that the pardoning power can only be exercised "after conviction". So, too, under the
new Constitution, the pardoning power does not extend to "cases of impeachment". This is also the rule
generally followed in the United States (Vide Constitution of the United States, Art. II, sec. 2). The rule in
England is different. There, a royal pardon can not be pleaded in bar of an impeachment; "but," says
Blackstone, "after the impeachment has been solemnly heard and determined, it is not understood that the

king's royal grace is further restrained or abridged." (Vide, Ex parte Wells [1856], 18 How., 307; 15 Law. ed.,
421; Com. vs. Lockwood [1872], 109 Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio St.,
457; 23 am. Rep., 762.) The reason for the distinction is obvious. In England, Judgment on impeachment is not
confined to mere "removal from office and disqualification to hold and enjoy any office of honor, trust, or profit
under the Government" (Art. IX, sec. 4, Constitution of the Philippines) but extends to the whole punishment
attached by law to the offense committed. The House of Lords, on a conviction may, by its sentence, inflict
capital punishment, perpetual banishment, perpetual banishment, fine or imprisonment, depending upon the
gravity of the offense committed, together with removal from office and incapacity to hold office. (Com. vs.
Lockwood, supra.) Our Constitution also makes specific mention of "commutation" and of the power of the
executive to impose, in the pardons he may grant, such conditions, restrictions and limitations as he may deem
proper. Amnesty may be granted by the President under the Constitution but only with the concurrence of the
National Assembly. We need not dwell at length on the significance of these fundamental changes. It is
sufficient for our purposes to state that the pardoning power has remained essentially the same. The question
is: Has the pardoning power of the Chief Executive under the Jones Law been impaired by the Probation Act?
As already stated, the Jones Law vests the pardoning power exclusively in the Chief Executive. The exercise
of the power may not, therefore, be vested in anyone else.
". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor fettered by any
legislative restrictions, nor can like power be given by the legislature to any other officer or authority. The
coordinate departments of government have nothing to do with the pardoning power, since no person properly
belonging to one of the departments can exercise any powers appertaining to either of the others except in
cases expressly provided for by the constitution." (20 R.C.L., pp., , and cases cited.) " . . . where the pardoning
power is conferred on the executive without express or implied limitations, the grant is exclusive, and the
legislature can neither exercise such power itself nor delegate it elsewhere, nor interfere with or control the
proper exercise thereof, . . ." (12 C.J., pp. 838, 839, and cases cited.) If Act No. 4221, then, confers any
pardoning power upon the courts it is for that reason unconstitutional and void. But does it?
In the famous Killitts decision involving an embezzlement case, the Supreme Court of the United States ruled
in 1916 that an order indefinitely suspending sentenced was void. (Ex parte United States [1916], 242 U.S., 27;
61 Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355.) Chief Justice White, after
an exhaustive review of the authorities, expressed the opinion of the court that under the common law the
power of the court was limited to temporary suspension and that the right to suspend sentenced absolutely and
permanently was vested in the executive branch of the government and not in the judiciary. But, the right of
Congress to establish probation by statute was conceded. Said the court through its Chief Justice: ". . . and so
far as the future is concerned, that is, the causing of the imposition of penalties as fixed to be subject, by
probation legislation or such other means as the legislative mind may devise, to such judicial discretion as may
be adequate to enable courts to meet by the exercise of an enlarged but wise discretion the infinite variations
which may be presented to them for judgment, recourse must be had Congress whose legislative power on the
subject is in the very nature of things adequately complete." (Quoted in Riggs vs. United States [1926], 14 F.
[2d], 5, 6.) This decision led the National Probation Association and others to agitate for the enactment by
Congress of a federal probation law. Such action was finally taken on March 4, 1925 (chap. 521, 43 Stat. L.
159, U.S.C. title 18, sec. 724). This was followed by an appropriation to defray the salaries and expenses of a
certain number of probation officers chosen by civil service. (Johnson, Probation for Juveniles and Adults, p.
14.)
In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309), the Supreme
Court of the United States, through Chief Justice Taft, held that when a person sentenced to imprisonment by a
district court has begun to serve his sentence, that court has no power under the Probation Act of March 4,
1925 to grant him probation even though the term at which sentence was imposed had not yet expired. In this
case of Murray, the constitutionality of the probation Act was not considered but was assumed. The court
traced the history of the Act and quoted from the report of the Committee on the Judiciary of the United States
House of Representatives (Report No. 1377, 68th Congress, 2 Session) the following statement:
Prior to the so-called Killitts case, rendered in December, 1916, the district courts exercised a form of probation
either, by suspending sentence or by placing the defendants under state probation officers or volunteers. In
this case, however (Ex parte United States, 242 U.S., 27; 61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup. Ct.

Rep., 72 Ann. Cas. 1917B, 355), the Supreme Court denied the right of the district courts to suspend
sentenced. In the same opinion the court pointed out the necessity for action by Congress if the courts were to
exercise probation powers in the future . . .
Since this decision was rendered, two attempts have been made to enact probation legislation. In 1917, a bill
was favorably reported by the Judiciary Committee and passed the House. In 1920, the judiciary Committee
again favorably reported a probation bill to the House, but it was never reached for definite action.
If this bill is enacted into law, it will bring the policy of the Federal government with reference to its treatment of
those convicted of violations of its criminal laws in harmony with that of the states of the Union. At the present
time every state has a probation law, and in all but twelve states the law applies both to adult and juvenile
offenders. (see, also, Johnson, Probation for Juveniles and Adults [1928], Chap. I.)
The constitutionality of the federal probation law has been sustained by inferior federal courts. In Riggs vs.
United States supra, the Circuit Court of Appeals of the Fourth Circuit said:
Since the passage of the Probation Act of March 4, 1925, the questions under consideration have been
reviewed by the Circuit Court of Appeals of the Ninth Circuit (7 F. [2d], 590), and the constitutionality of the act
fully sustained, and the same held in no manner to encroach upon the pardoning power of the President. This
case will be found to contain an able and comprehensive review of the law applicable here. It arose under the
act we have to consider, and to it and the authorities cited therein special reference is made (Nix vs. James, 7
F. [2d], 590, 594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit (Kriebel vs.
U.S., 10 F. [2d], 762), likewise construing the Probation Act.
We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal language,
pointed to Congress as possessing the requisite power to enact probation laws, that a federal probation law as
actually enacted in 1925, and that the constitutionality of the Act has been assumed by the Supreme Court of
the United States in 1928 and consistently sustained by the inferior federal courts in a number of earlier cases.
We are fully convinced that the Philippine Legislature, like the Congress of the United States, may legally enact
a probation law under its broad power to fix the punishment of any and all penal offenses. This conclusion is
supported by other authorities. In Ex parte Bates ([1915], 20 N. M., 542; L.R.A. 1916A, 1285; 151 Pac., 698,
the court said: "It is clearly within the province of the Legislature to denominate and define all classes of crime,
and to prescribe for each a minimum and maximum punishment." And in State vs. Abbott ([1910], 87 S.C., 466;
33 L.R.A. [N. S.], 112; 70 S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The legislative power to set
punishment for crime is very broad, and in the exercise of this power the general assembly may confer on trial
judges, if it sees fit, the largest discretion as to the sentence to be imposed, as to the beginning and end of the
punishment and whether it should be certain or indeterminate or conditional." (Quoted in State vs. Teal [1918],
108 S. C., 455; 95 S. E., 69.) Indeed, the Philippine Legislature has defined all crimes and fixed the penalties
for their violation. Invariably, the legislature has demonstrated the desire to vest in the courts particularly the
trial courts large discretion in imposing the penalties which the law prescribes in particular cases. It is
believed that justice can best be served by vesting this power in the courts, they being in a position to best
determine the penalties which an individual convict, peculiarly circumstanced, should suffer. Thus, while courts
are not allowed to refrain from imposing a sentence merely because, taking into consideration the degree of
malice and the injury caused by the offense, the penalty provided by law is clearly excessive, the courts being
allowed in such case to submit to the Chief Executive, through the Department of Justice, such statement as it
may deem proper (see art. 5, Revised Penal Code), in cases where both mitigating and aggravating
circumstances are attendant in the commission of a crime and the law provides for a penalty composed of two
indivisible penalties, the courts may allow such circumstances to offset one another in consideration of their
number and importance, and to apply the penalty according to the result of such compensation. (Art. 63, rule 4,
Revised Penal Code; U.S. vs. Reguera and Asuategui [1921], 41 Phil., 506.) Again, article 64, paragraph 7, of
the Revised Penal Code empowers the courts to determine, within the limits of each periods, in case the
penalty prescribed by law contains three periods, the extent of the evil produced by the crime. In the imposition
of fines, the courts are allowed to fix any amount within the limits established by law, considering not only the
mitigating and aggravating circumstances, but more particularly the wealth or means of the culprit. (Art. 66,
Revised Penal Code.) Article 68, paragraph 1, of the same Code provides that "a discretionary penalty shall be

imposed" upon a person under fifteen but over nine years of age, who has not acted without discernment, but
always lower by two degrees at least than that prescribed by law for the crime which he has committed. Article
69 of the same Code provides that in case of "incomplete self-defense", i.e., when the crime committed is not
wholly excusable by reason of the lack of some of the conditions required to justify the same or to exempt from
criminal liability in the several cases mentioned in article 11 and 12 of the Code, "the courts shall impose the
penalty in the period which may be deemed proper, in view of the number and nature of the conditions of
exemption present or lacking." And, in case the commission of what are known as "impossible" crimes, "the
court, having in mind the social danger and the degree of criminality shown by the offender," shall impose upon
him either arresto mayor or a fine ranging from 200 to 500 pesos. (Art. 59, Revised Penal Code.)
Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is deducted form the
entire term of imprisonment, except in certain cases expressly mentioned (art. 29); the death penalty is not
imposed when the guilty person is more than seventy years of age, or where upon appeal or revision of the
case by the Supreme Court, all the members thereof are not unanimous in their voting as to the propriety of
the imposition of the death penalty (art. 47, see also, sec. 133, Revised Administrative Code, as amended by
Commonwealth Act No. 3); the death sentence is not to be inflicted upon a woman within the three years next
following the date of the sentence or while she is pregnant, or upon any person over seventy years of age (art.
83); and when a convict shall become insane or an imbecile after final sentence has been pronounced, or
while he is serving his sentenced, the execution of said sentence shall be suspended with regard to the
personal penalty during the period of such insanity or imbecility (art. 79).
But the desire of the legislature to relax what might result in the undue harshness of the penal laws is more
clearly demonstrated in various other enactments, including the probation Act. There is the Indeterminate
Sentence Law enacted in 1933 as Act No. 4103 and subsequently amended by Act No. 4225, establishing a
system of parole (secs. 5 to 100 and granting the courts large discretion in imposing the penalties of the law.
Section 1 of the law as amended provides; "hereafter, in imposing a prison sentence for an offenses punished
by the Revised Penal Code, or its amendments, the court shall sentence the accused to an indeterminate
sentence the maximum term of which shall be that which, in view of the attending circumstances, could be
properly imposed under the rules of the said Code, and to a minimum which shall be within the range of the
penalty next lower to that prescribed by the Code for the offense; and if the offense is punished by any other
law, the court shall sentence the accused to an indeterminate sentence, the maximum term of which shall not
exceed the maximum fixed by said law and the minimum shall not be less than the minimum term prescribed
by the same." Certain classes of convicts are, by section 2 of the law, excluded from the operation thereof. The
Legislature has also enacted the Juvenile Delinquency Law (Act No. 3203) which was subsequently amended
by Act No. 3559. Section 7 of the original Act and section 1 of the amendatory Act have become article 80 of
the Revised Penal Code, amended by Act No. 4117 of the Philippine Legislature and recently reamended by
Commonwealth Act No. 99 of the National Assembly. In this Act is again manifested the intention of the
legislature to "humanize" the penal laws. It allows, in effect, the modification in particular cases of the penalties
prescribed by law by permitting the suspension of the execution of the judgment in the discretion of the trial
court, after due hearing and after investigation of the particular circumstances of the offenses, the criminal
record, if any, of the convict, and his social history. The Legislature has in reality decreed that in certain cases
no punishment at all shall be suffered by the convict as long as the conditions of probation are faithfully
observed. It this be so, then, it cannot be said that the Probation Act comes in conflict with the power of the
Chief Executive to grant pardons and reprieves, because, to use the language of the Supreme Court of New
Mexico, "the element of punishment or the penalty for the commission of a wrong, while to be declared by the
courts as a judicial function under and within the limits of law as announced by legislative acts, concerns solely
the procedure and conduct of criminal causes, with which the executive can have nothing to do." (Ex parte
Bates, supra.) In Williams vs. State ([1926], 162 Ga., 327; 133 S.E., 843), the court upheld the constitutionality
of the Georgia probation statute against the contention that it attempted to delegate to the courts the pardoning
power lodged by the constitution in the governor alone is vested with the power to pardon after final sentence
has been imposed by the courts, the power of the courts to imposed any penalty which may be from time to
time prescribed by law and in such manner as may be defined cannot be questioned."
We realize, of course, the conflict which the American cases disclose. Some cases hold it unlawful for the
legislature to vest in the courts the power to suspend the operation of a sentenced, by probation or otherwise,
as to do so would encroach upon the pardoning power of the executive. (In re Webb [1895], 89 Wis., 354; 27

L.R.A., 356; 46 Am. St. Rep., 846; 62 N.W., 177; 9 Am. Crim., Rep., 702; State ex rel. Summerfield vs. Moran
[1919], 43 Nev., 150; 182 Pac., 927; Ex parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19
L.R.A. [N.S.], 1041; 132 Am. St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903], 202 Ill, 287; 67 N.E., 23; 63
L.R.A., 82; 95 Am. St. Rep., 230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep., 615; 41 L. R. A. [N. S.],
1144; 150 S. W., 162; Ex parte Shelor [1910], 33 Nev., 361;111 Pac., 291; Neal vs. State [1898], 104 Ga., 509;
42 L. R. A., 190; 69 Am. St. Rep., 175; 30 S. E. 858; State ex rel. Payne vs. Anderson [1921], 43 S. D., 630;
181 N. W., 839; People vs. Brown, 54 Mich., 15; 19 N. W., 571; States vs. Dalton [1903], 109 Tenn., 544; 72 S.
W., 456.)
Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs. Snook [1926;
D. C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d], 5; Murphy vs. States [1926], 171
Ark., 620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini [1912], 18 Cal. App., 166; 122 Pac., 831; Re
Nachnaber [1928], 89 Cal. App., 530; 265 Pac., 392; Ex parte De Voe [1931], 114 Cal. App., 730; 300 Pac.,
874; People vs. Patrick [1897], 118 Cal., 332; 50 Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168 Pac.,
1171; Belden vs. Hugo [1914], 88 Conn., 50; 91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133
S. E., 843; People vs. Heise [1913], 257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind., 534; 35 N.
E., 179; 23 L. R. A., 859; St. Hillarie, Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs. Stickle [1909],
156 Mich., 557; 121 N. W., 497; State vs. Fjolander [1914], 125 Minn., 529; State ex rel. Bottomnly vs. District
Court [1925], 73 Mont., 541; 237 Pac., 525; State vs. Everitt [1913], 164 N. C., 399; 79 S. E., 274; 47 L. R. A.
[N. S.], 848; State ex rel. Buckley vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State vs. Osborne [1911], 79 N.
J. Eq., 430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M., 542; L. R. A., 1916 A. 1285; 151 Pac., 698; People vs.
ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; 23 L. R. A., 856; 36 N. E., 386; 15 Am. Crim. Rep.,
675; People ex rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106 N. Y. Supp., 928; People vs. Goodrich [1914],
149 N. Y. Supp., 406; Moore vs. Thorn [1935], 245 App. Div., 180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N.
D., 38; L. R. A., 1915C, 1169; 149 N. W., 568; Ex parte Eaton [1925], 29 Okla., Crim. Rep., 275; 233 P., 781;
State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112;
70 S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods vs. State [1814], 130 Tenn.,
100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1913],70 Tex.,
Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim. Rep., 548; 165 S. W., 573; King vs.
State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 394; 162 S.
W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt., 197; 136
A., 24; Richardson vs. Com. [1921], 131 Va., 802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash., 287;
118 Pac., 42; State ex rel. Tingstand vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393; 396.)
We elect to follow this long catena of authorities holding that the courts may be legally authorized by the
legislature to suspend sentence by the establishment of a system of probation however characterized. State ex
rel. Tingstand vs. Starwich ([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393), deserved particular
mention. In that case, a statute enacted in 1921 which provided for the suspension of the execution of a
sentence until otherwise ordered by the court, and required that the convicted person be placed under the
charge of a parole or peace officer during the term of such suspension, on such terms as the court may
determine, was held constitutional and as not giving the court a power in violation of the constitutional provision
vesting the pardoning power in the chief executive of the state. (Vide, also, Re Giannini [1912], 18 Cal App.,
166; 122 Pac., 831.)
Probation and pardon are not coterminous; nor are they the same. They are actually district and different from
each other, both in origin and in nature. In People ex rel. Forsyth vs. Court of Sessions ([1894], 141 N. Y., 288,
294; 36 N. E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep., 675), the Court of Appeals of New York said:
. . . The power to suspend sentence and the power to grant reprieves and pardons, as understood when the
constitution was adopted, are totally distinct and different in their nature. The former was always a part of the
judicial power; the latter was always a part of the executive power. The suspension of the sentence simply
postpones the judgment of the court temporarily or indefinitely, but the conviction and liability following it, and
the civil disabilities, remain and become operative when judgment is rendered. A pardon reaches both the
punishment prescribed for the offense and the guilt of the offender. It releases the punishment, and blots out of
existence the guilt, so that in the eye of the law, the offender is as innocent as if he had never committed the
offense. It removes the penalties and disabilities, and restores him to all his civil rights. It makes him, as it
were, a new man, and gives him a new credit and capacity. (Ex parte Garland, 71 U. S., 4 Wall., 333; 18 Law.

ed., 366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U. S., 149; 24 Law. ed.,
442.)
The framers of the federal and the state constitutions were perfectly familiar with the principles governing the
power to grant pardons, and it was conferred by these instruments upon the executive with full knowledge of
the law upon the subject, and the words of the constitution were used to express the authority formerly
exercised by the English crown, or by its representatives in the colonies. (Ex parte Wells, 59 U. S., 18 How.,
307; 15 Law. ed., 421.) As this power was understood, it did not comprehend any part of the judicial functions
to suspend sentence, and it was never intended that the authority to grant reprieves and pardons should
abrogate, or in any degree restrict, the exercise of that power in regard to its own judgments, that criminal
courts has so long maintained. The two powers, so distinct and different in their nature and character, were still
left separate and distinct, the one to be exercised by the executive, and the other by the judicial department.
We therefore conclude that a statute which, in terms, authorizes courts of criminal jurisdiction to suspend
sentence in certain cases after conviction, a power inherent in such courts at common law, which was
understood when the constitution was adopted to be an ordinary judicial function, and which, ever since its
adoption, has been exercised of legislative power under the constitution. It does not encroach, in any just
sense, upon the powers of the executive, as they have been understood and practiced from the earliest times.
(Quoted with approval in Directors of Prisons vs. Judge of First Instance of Cavite [1915], 29 Phil., 265,
Carson, J., concurring, at pp. 294, 295.)
In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally and completely
exonerated. He is not exempt from the entire punishment which the law inflicts. Under the Probation Act, the
probationer's case is not terminated by the mere fact that he is placed on probation. Section 4 of the Act
provides that the probation may be definitely terminated and the probationer finally discharged from
supervision only after the period of probation shall have been terminated and the probation officer shall have
submitted a report, and the court shall have found that the probationer has complied with the conditions of
probation. The probationer, then, during the period of probation, remains in legal custody subject to the
control of the probation officer and of the court; and, he may be rearrested upon the non-fulfillment of the
conditions of probation and, when rearrested, may be committed to prison to serve the sentence originally
imposed upon him. (Secs. 2, 3, 5 and 6, Act No. 4221.)
The probation described in the act is not pardon. It is not complete liberty, and may be far from it. It is really a
new mode of punishment, to be applied by the judge in a proper case, in substitution of the imprisonment and
find prescribed by the criminal laws. For this reason its application is as purely a judicial act as any other
sentence carrying out the law deemed applicable to the offense. The executive act of pardon, on the contrary,
is against the criminal law, which binds and directs the judges, or rather is outside of and above it. There is
thus no conflict with the pardoning power, and no possible unconstitutionality of the Probation Act for this
cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.)
Probation should also be distinguished from reprieve and from commutation of the sentence. Snodgrass vs.
State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S. W., 162), is relied upon most strongly by
the petitioners as authority in support of their contention that the power to grant pardons and reprieves, having
been vested exclusively upon the Chief Executive by the Jones Law, may not be conferred by the legislature
upon the courts by means of probation law authorizing the indefinite judicial suspension of sentence. We have
examined that case and found that although the Court of Criminal Appeals of Texas held that the probation
statute of the state in terms conferred on the district courts the power to grant pardons to persons convicted of
crime, it also distinguished between suspensions sentence on the one hand, and reprieve and commutation of
sentence on the other. Said the court, through Harper, J.:
That the power to suspend the sentence does not conflict with the power of the Governor to grant reprieves is
settled by the decisions of the various courts; it being held that the distinction between a "reprieve" and a
suspension of sentence is that a reprieve postpones the execution of the sentence to a day certain, whereas a
suspension is for an indefinite time. (Carnal vs. People, 1 Parker, Cr. R., 262; In re Buchanan, 146 N. Y., 264;
40 N. E., 883), and cases cited in 7 Words & Phrases, pp. 6115, 6116. This law cannot be hold in conflict with

the power confiding in the Governor to grant commutations of punishment, for a commutations is not but to
change the punishment assessed to a less punishment.
In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the Supreme Court of
Montana had under consideration the validity of the adult probation law of the state enacted in 1913, now
found in sections 12078-12086, Revised Codes of 1921. The court held the law valid as not impinging upon the
pardoning power of the executive. In a unanimous decision penned by Justice Holloway, the court said:
. . . . the term "pardon", "commutation", and "respite" each had a well understood meaning at the time our
Constitution was adopted, and no one of them was intended to comprehend the suspension of the execution of
the judgment as that phrase is employed in sections 12078-12086. A "pardon" is an act of grace, proceeding
from the power intrusted with the execution of the laws which exempts the individual on whom it is bestowed
from the punishment the law inflicts for a crime he has committed (United States vs. Wilson, 7 Pet., 150; 8 Law.
ed., 640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a forgiveness of the offense
(Cook vs. Middlesex County, 26 N. J. Law, 326; Ex parte Powell, 73 Ala., 517; 49 Am. Rep., 71).
"Commutation" is a remission of a part of the punishment; a substitution of a less penalty for the one originally
imposed (Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs. Chamberlain, 107 Mich., 381; 65 N.
W., 235). A "reprieve" or "respite" is the withholding of the sentence for an interval of time (4 Blackstone's
Commentaries, 394), a postponement of execution (Carnal vs. People, 1 Parker, Cr. R. [N. Y.], 272), a
temporary suspension of execution (Butler vs. State, 97 Ind., 373).
Few adjudicated cases are to be found in which the validity of a statute similar to our section 12078 has been
determined; but the same objections have been urged against parole statutes which vest the power to parole in
persons other than those to whom the power of pardon is granted, and these statutes have been upheld quite
uniformly, as a reference to the numerous cases cited in the notes to Woods vs. State (130 Tenn., 100; 169 S.
W.,558, reported in L. R. A., 1915F, 531), will disclose. (See, also, 20 R. C. L., 524.)
We conclude that the Probation Act does not conflict with the pardoning power of the Executive. The pardoning
power, in respect to those serving their probationary sentences, remains as full and complete as if the
Probation Law had never been enacted. The President may yet pardon the probationer and thus place it
beyond the power of the court to order his rearrest and imprisonment. (Riggs vs. United States [1926],
14 F. [2d], 5, 7.)
2. But while the Probation Law does not encroach upon the pardoning power of the executive and is not for
that reason void, does section 11 thereof constitute, as contended, an undue delegation of legislative power?
Under the constitutional system, the powers of government are distributed among three coordinate and
substantially independent organs: the legislative, the executive and the judicial. Each of these departments of
the government derives its authority from the Constitution which, in turn, is the highest expression of popular
will. Each has exclusive cognizance of the matters within its jurisdiction, and is supreme within its own sphere.
The power to make laws the legislative power is vested in a bicameral Legislature by the Jones Law
(sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1, Constitution of the
Philippines). The Philippine Legislature or the National Assembly may not escape its duties and responsibilities
by delegating that power to any other body or authority. Any attempt to abdicate the power is unconstitutional
and void, on the principle that potestas delegata non delegare potest. This principle is said to have originated
with the glossators, was introduced into English law through a misreading of Bracton, there developed as a
principle of agency, was established by Lord Coke in the English public law in decisions forbidding the
delegation of judicial power, and found its way into America as an enlightened principle of free government. It
has since become an accepted corollary of the principle of separation of powers. (5 Encyc. of the Social
Sciences, p. 66.) The classic statement of the rule is that of Locke, namely: "The legislative neither must nor
can transfer the power of making laws to anybody else, or place it anywhere but where the people have."
(Locke on Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted
language: "One of the settled maxims in constitutional law is, that the power conferred upon the legislature to
make laws cannot be delegated by that department to any other body or authority. Where the sovereign power
of the state has located the authority, there it must remain; and by the constitutional agency alone the laws

must be made until the Constitution itself is charged. The power to whose judgment, wisdom, and patriotism
this high prerogative has been intrusted cannot relieve itself of the responsibilities by choosing other agencies
upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any
other body for those to which alone the people have seen fit to confide this sovereign trust." (Cooley on
Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil.,
327.) This court posits the doctrine "on the ethical principle that such a delegated power constitutes not only a
right but a duty to be performed by the delegate by the instrumentality of his own judgment acting immediately
upon the matter of legislation and not through the intervening mind of another. (U. S. vs. Barrias, supra, at p.
330.)
The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It admits of
exceptions. An exceptions sanctioned by immemorial practice permits the central legislative body to delegate
legislative powers to local authorities. (Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs.
Salaveria [1918], 39 Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct.
Rep., 256; State vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that
local affairs shall be managed by local authorities, and general affairs by the central authorities; and hence
while the rule is also fundamental that the power to make laws cannot be delegated, the creation of the
municipalities exercising local self government has never been held to trench upon that rule. Such legislation is
not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribed
local regulations, according to immemorial practice, subject of course to the interposition of the superior in
cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same principle, Congress is powered to
delegate legislative power to such agencies in the territories of the United States as it may select. A territory
stands in the same relation to Congress as a municipality or city to the state government. (United States vs.
Heinszen [1907], 206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United
States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.) Courts have also
sustained the delegation of legislative power to the people at large. Some authorities maintain that this may not
be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E.,
442; Ann. Cas., 1914C, 616). However, the question of whether or not a state has ceased to be republican in
form because of its adoption of the initiative and referendum has been held not to be a judicial but a political
question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32 Sup. Cet. Rep.,
224), and as the constitutionality of such laws has been looked upon with favor by certain progressive courts,
the sting of the decisions of the more conservative courts has been pretty well drawn. (Opinions of the Justices
[1894], 160 Mass., 586; 36 N. E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac.,
379; 1132 Pac., 402; 37 L. R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also,
legislative power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of the
Constitution of the Philippines provides that "The National Assembly may by law authorize the President,
subject to such limitations and restrictions as it may impose, to fix within specified limits, tariff rates, import or
export quotas, and tonnage and wharfage dues." And section 16 of the same article of the Constitution
provides that "In times of war or other national emergency, the National Assembly may by law authorize the
President, for a limited period and subject to such restrictions as it may prescribed, to promulgate rules and
regulations to carry out a declared national policy." It is beyond the scope of this decision to determine whether
or not, in the absence of the foregoing constitutional provisions, the President could be authorized to exercise
the powers thereby vested in him. Upon the other hand, whatever doubt may have existed has been removed
by the Constitution itself.
The case before us does not fall under any of the exceptions hereinabove mentioned.
The challenged section of Act No. 4221 in section 11 which reads as follows:
This Act shall apply only in those provinces in which the respective provincial boards have provided for the
salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation
officer shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation
Office. (Emphasis ours.)
In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to inquire
whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that

nothing was left to the judgment of any other appointee or delegate of the legislature. (6 R. C. L., p. 165.) In the
United States vs. Ang Tang Ho ([1922], 43 Phil., 1), this court adhered to the foregoing rule when it held an act
of the legislature void in so far as it undertook to authorize the Governor-General, in his discretion, to issue a
proclamation fixing the price of rice and to make the sale of it in violation of the proclamation a crime. (See and
cf. Compaia General de Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general
rule, however, is limited by another rule that to a certain extent matters of detail may be left to be filled in by
rules and regulations to be adopted or promulgated by executive officers and administrative boards. (6 R. C.
L., pp. 177-179.)
For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies endowed
with power to determine when the Act should take effect in their respective provinces. They are the agents or
delegates of the legislature in this respect. The rules governing delegation of legislative power to administrative
and executive officers are applicable or are at least indicative of the rule which should be here adopted. An
examination of a variety of cases on delegation of power to administrative bodies will show that the ratio
decidendi is at variance but, it can be broadly asserted that the rationale revolves around the presence or
absence of a standard or rule of action or the sufficiency thereof in the statute, to aid the delegate in
exercising the granted discretion. In some cases, it is held that the standard is sufficient; in others that is
insufficient; and in still others that it is entirely lacking. As a rule, an act of the legislature is incomplete and
hence invalid if it does not lay down any rule or definite standard by which the administrative officer or board
may be guided in the exercise of the discretionary powers delegated to it. (See Schecter vs. United States
[1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947; People ex rel. Rice vs. Wilson
Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See also R. C. L., title
"Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards in the exercise
of their discretionary power to determine whether or not the Probation Act shall apply in their respective
provinces? What standards are fixed by the Act? We do not find any and none has been pointed to us by the
respondents. The probation Act does not, by the force of any of its provisions, fix and impose upon the
provincial boards any standard or guide in the exercise of their discretionary power. What is granted, if we may
use the language of Justice Cardozo in the recent case of Schecter, supra, is a "roving commission" which
enables the provincial boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not
seemingly on its own authority extend the benefits of the Probation Act to the provinces but in reality leaves the
entire matter for the various provincial boards to determine. In other words, the provincial boards of the various
provinces are to determine for themselves, whether the Probation Law shall apply to their provinces or not at
all. The applicability and application of the Probation Act are entirely placed in the hands of the provincial
boards. If the provincial board does not wish to have the Act applied in its province, all that it has to do is to
decline to appropriate the needed amount for the salary of a probation officer. The plain language of the Act is
not susceptible of any other interpretation. This, to our minds, is a virtual surrender of legislative power to the
provincial boards.
"The true distinction", says Judge Ranney, "is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made." (Cincinnati, W. & Z. R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See
also, Sutherland on Statutory Construction, sec 68.) To the same effect are the decision of this court in
Municipality of Cardona vs. Municipality of Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of
Mindoro ([1919],39 Phil., 660) and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of these cases, this
court sustained the validity of the law conferring upon the Governor-General authority to adjust provincial and
municipal boundaries. In the second case, this court held it lawful for the legislature to direct non-Christian
inhabitants to take up their habitation on unoccupied lands to be selected by the provincial governor and
approved by the provincial board. In the third case, it was held proper for the legislature to vest in the
Governor-General authority to suspend or not, at his discretion, the prohibition of the importation of the foreign
cattle, such prohibition to be raised "if the conditions of the country make this advisable or if deceased among
foreign cattle has ceased to be a menace to the agriculture and livestock of the lands."
It should be observed that in the case at bar we are not concerned with the simple transference of details of
execution or the promulgation by executive or administrative officials of rules and regulations to carry into
effect the provisions of a law. If we were, recurrence to our own decisions would be sufficient. (U. S. vs. Barrias

[1908], 11 Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil.,
394; Cebu Autobus Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs.
Provincial Board of Mindoro [1919], 39 Phil., 660.)
It is connected, however, that a legislative act may be made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the
executive or the adoption by the people of a particular community (6 R. C. L., 116, 170-172; Cooley,
Constitutional Limitations, 8th ed., Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed.,
253), the Supreme Court of the United State ruled that the legislature may delegate a power not legislative
which it may itself rightfully exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W.,
738; 31 L. R. A., 112.) The power to ascertain facts is such a power which may be delegated. There is nothing
essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of
a law. That is a mental process common to all branches of the government. (Dowling vs. Lancashire Ins. Co.,
supra; In re Village of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs. Fries
[1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct., 495; 36 Law. ed.,
294.) Notwithstanding the apparent tendency, however, to relax the rule prohibiting delegation of legislative
authority on account of the complexity arising from social and economic forces at work in this modern industrial
age (Pfiffner, Public Administration [1936] ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July,
1931, Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol.
CLXI, pp. 147, 152), the orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations
finds restatement in Prof. Willoughby's treatise on the Constitution of the United States in the following
language speaking of declaration of legislative power to administrative agencies: "The principle which
permits the legislature to provide that the administrative agent may determine when the circumstances are
such as require the application of a law is defended upon the ground that at the time this authority is granted,
the rule of public policy, which is the essence of the legislative act, is determined by the legislature. In other
words, the legislature, as it its duty to do, determines that, under given circumstances, certain executive or
administrative action is to be taken, and that, under other circumstances, different of no action at all is to be
taken. What is thus left to the administrative official is not the legislative determination of what public policy
demands, but simply the ascertainment of what the facts of the case require to be done according to the terms
of the law by which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p.
1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed., 971, 974), it
was said: "The efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but
the ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it
may designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr [1859], 13
Cal., 343, 258.) The legislature, then may provide that a contingencies leaving to some other person or body
the power to determine when the specified contingencies has arisen. But, in the case at bar, the legislature has
not made the operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by
the provincial board. It leaves, as we have already said, the entire operation or non-operation of the law upon
the provincial board. the discretion vested is arbitrary because it is absolute and unlimited. A provincial board
need not investigate conditions or find any fact, or await the happening of any specified contingency. It is
bound by no rule, limited by no principle of expendiency announced by the legislature. It may take into
consideration certain facts or conditions; and, again, it may not. It may have any purpose or no purpose at all.
It need not give any reason whatsoever for refusing or failing to appropriate any funds for the salary of a
probation officer. This is a matter which rest entirely at its pleasure. The fact that at some future time we
cannot say when the provincial boards may appropriate funds for the salaries of probation officers and thus
put the law into operation in the various provinces will not save the statute. The time of its taking into effect, we
reiterate, would yet be based solely upon the will of the provincial boards and not upon the happening of a
certain specified contingency, or upon the ascertainment of certain facts or conditions by a person or body
other than legislature itself.
The various provincial boards are, in practical effect, endowed with the power of suspending the operation of
the Probation Law in their respective provinces. In some jurisdiction, constitutions provided that laws may be
suspended only by the legislature or by its authority. Thus, section 28, article I of the Constitution of Texas
provides that "No power of suspending laws in this state shall be exercised except by the legislature"; and
section 26, article I of the Constitution of Indiana provides "That the operation of the laws shall never be
suspended, except by authority of the General Assembly." Yet, even provisions of this sort do not confer

absolute power of suspension upon the legislature. While it may be undoubted that the legislature may
suspend a law, or the execution or operation of a law, a law may not be suspended as to certain individuals
only, leaving the law to be enjoyed by others. The suspension must be general, and cannot be made for
individual cases or for particular localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177,
178), it was said:
By the twentieth article of the declaration of rights in the constitution of this commonwealth, it is declared that
the power of suspending the laws, or the execution of the laws, ought never to be exercised but by the
legislature, or by authority derived from it, to be exercised in such particular cases only as the legislature shall
expressly provide for. Many of the articles in that declaration of rights were adopted from the Magna Charta of
England, and from the bill of rights passed in the reign of William and Mary. The bill of rights contains an
enumeration of the oppressive acts of James II, tending to subvert and extirpate the protestant religion, and the
laws and liberties of the kingdom; and the first of them is the assuming and exercising a power of dispensing
with and suspending the laws, and the execution of the laws without consent of parliament. The first article in
the claim or declaration of rights contained in the statute is, that the exercise of such power, by legal authority
without consent of parliament, is illegal. In the tenth section of the same statute it is further declared and
enacted, that "No dispensation by non obstante of or to any statute, or part thereof, should be allowed; but the
same should be held void and of no effect, except a dispensation be allowed of in such statute." There is an
implied reservation of authority in the parliament to exercise the power here mentioned; because, according to
the theory of the English Constitution, "that absolute despotic power, which must in all governments reside
somewhere," is intrusted to the parliament: 1 Bl. Com., 160.
The principles of our government are widely different in this particular. Here the sovereign and absolute power
resides in the people; and the legislature can only exercise what is delegated to them according to the
constitution. It is obvious that the exercise of the power in question would be equally oppressive to the subject,
and subversive of his right to protection, "according to standing laws," whether exercised by one man or by a
number of men. It cannot be supposed that the people when adopting this general principle from the English
bill of rights and inserting it in our constitution, intended to bestow by implication on the general court one of
the most odious and oppressive prerogatives of the ancient kings of England. It is manifestly contrary to the
first principles of civil liberty and natural justice, and to the spirit of our constitution and laws, that any one
citizen should enjoy privileges and advantages which are denied to all others under like circumstances; or that
ant one should be subject to losses, damages, suits, or actions from which all others under like circumstances
are exempted.
To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to the owner
of domestic animals wounded by it for the damages without proving a knowledge of it vicious disposition. By a
provision of the act, power was given to the board of supervisors to determine whether or not during the
current year their county should be governed by the provisions of the act of which that section constituted a
part. It was held that the legislature could not confer that power. The court observed that it could no more
confer such a power than to authorize the board of supervisors of a county to abolish in such county the days
of grace on commercial paper, or to suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis.,
504.) A similar statute in Missouri was held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59
Am. Dec., 275.) In that case a general statute formulating a road system contained a provision that "if the
county court of any county should be of opinion that the provisions of the act should not be enforced, they
might, in their discretion, suspend the operation of the same for any specified length of time, and thereupon the
act should become inoperative in such county for the period specified in such order; and thereupon order the
roads to be opened and kept in good repair, under the laws theretofore in force." Said the court: ". . . this act,
by its own provisions, repeals the inconsistent provisions of a former act, and yet it is left to the county court to
say which act shall be enforce in their county. The act does not submit the question to the county court as an
original question, to be decided by that tribunal, whether the act shall commence its operation within the
county; but it became by its own terms a law in every county not excepted by name in the act. It did not, then,
require the county court to do any act in order to give it effect. But being the law in the county, and having by its
provisions superseded and abrogated the inconsistent provisions of previous laws, the county court is . . .
empowered, to suspend this act and revive the repealed provisions of the former act. When the question is
before the county court for that tribunal to determine which law shall be in force, it is urge before us that the
power then to be exercised by the court is strictly legislative power, which under our constitution, cannot be

delegated to that tribunal or to any other body of men in the state. In the present case, the question is not
presented in the abstract; for the county court of Saline county, after the act had been for several months in
force in that county, did by order suspend its operation; and during that suspension the offense was committed
which is the subject of the present indictment . . . ." (See Mitchell vs. State [1901], 134 Ala., 392; 32 S., 687.)
True, the legislature may enact laws for a particular locality different from those applicable to other localities
and, while recognizing the force of the principle hereinabove expressed, courts in may jurisdiction have
sustained the constitutionality of the submission of option laws to the vote of the people. (6 R.C.L., p. 171.) But
option laws thus sustained treat of subjects purely local in character which should receive different treatment in
different localities placed under different circumstances. "They relate to subjects which, like the retailing of
intoxicating drinks, or the running at large of cattle in the highways, may be differently regarded in different
localities, and they are sustained on what seems to us the impregnable ground, that the subject, though not
embraced within the ordinary powers of municipalities to make by-laws and ordinances, is nevertheless within
the class of public regulations, in respect to which it is proper that the local judgment should control." (Cooley
on Constitutional Limitations, 5th ed., p. 148.) So that, while we do not deny the right of local self-government
and the propriety of leaving matters of purely local concern in the hands of local authorities or for the people of
small communities to pass upon, we believe that in matters of general of general legislation like that which
treats of criminals in general, and as regards the general subject of probation, discretion may not be vested in
a manner so unqualified and absolute as provided in Act No. 4221. True, the statute does not expressly state
that the provincial boards may suspend the operation of the Probation Act in particular provinces but,
considering that, in being vested with the authority to appropriate or not the necessary funds for the salaries of
probation officers, they thereby are given absolute discretion to determine whether or not the law should take
effect or operate in their respective provinces, the provincial boards are in reality empowered by the legislature
to suspend the operation of the Probation Act in particular provinces, the Act to be held in abeyance until the
provincial boards should decide otherwise by appropriating the necessary funds. The validity of a law is not
tested by what has been done but by what may be done under its provisions. (Walter E. Olsen & Co. vs.
Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.)
It in conceded that a great deal of latitude should be granted to the legislature not only in the expression of
what may be termed legislative policy but in the elaboration and execution thereof. "Without this power,
legislation would become oppressive and yet imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has been said
that popular government lives because of the inexhaustible reservoir of power behind it. It is unquestionable
that the mass of powers of government is vested in the representatives of the people and that these
representatives are no further restrained under our system than by the express language of the instrument
imposing the restraint, or by particular provisions which by clear intendment, have that effect. (Angara vs.
Electoral Commission [1936], 35 Off. Ga., 23; Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it
should be borne in mind that a constitution is both a grant and a limitation of power and one of these timehonored limitations is that, subject to certain exceptions, legislative power shall not be delegated.
We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative
authority to the provincial boards and is, for this reason, unconstitutional and void.
3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which prohibits the
denial to any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1. Constitution of the
Philippines.)
This basic individual right sheltered by the Constitution is a restraint on all the tree grand departments of our
government and on the subordinate instrumentalities and subdivision thereof, and on many constitutional
power, like the police power, taxation and eminent domain. The equal protection of laws, sententiously
observes the Supreme Court of the United States, "is a pledge of the protection of equal laws." (Yick Wo vs.
Hopkins [1886], 118 U. S., 356; 30 Law. ed., 220; 6 Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S.,
510; 39 Sup. Ct. Rep., 357; 63 Law. ed., 735.) Of course, what may be regarded as a denial of the equal
protection of the laws in a question not always easily determined. No rule that will cover every case can be
formulated. (Connolly vs. Union Sewer Pipe Co. [1902], 184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed.,
679.) Class legislation discriminating against some and favoring others in prohibited. But classification on a
reasonable basis, and nor made arbitrarily or capriciously, is permitted. (Finely vs. California [1911], 222 U. S.,

28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150; 41 Law. ed.,
666; 17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) The classification, however,
to be reasonable must be based on substantial distinctions which make real differences; it must be germane to
the purposes of the law; it must not be limited to existing conditions only, and must apply equally to each
member of the class. (Borgnis vs. Falk. Co. [1911], 147 Wis., 327, 353; 133 N. W., 209; 3 N. C. C. A., 649; 37
L. R. A. [N. S.], 489; State vs. Cooley, 56 Minn., 540; 530-552; 58 N. W., 150; Lindsley vs. Natural Carbonic
Gas Co.[1911], 220 U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C, 160; Lake
Shore & M. S. R. Co. vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374; Southern Ry.
Co. vs. Greene [1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17 Ann. Cas., 1247; Truax vs.
Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.)
In the case at bar, however, the resultant inequality may be said to flow from the unwarranted delegation of
legislative power, although perhaps this is not necessarily the result in every case. Adopting the example given
by one of the counsel for the petitioners in the course of his oral argument, one province may appropriate the
necessary fund to defray the salary of a probation officer, while another province may refuse or fail to do so. In
such a case, the Probation Act would be in operation in the former province but not in the latter. This means
that a person otherwise coming within the purview of the law would be liable to enjoy the benefits of probation
in one province while another person similarly situated in another province would be denied those same
benefits. This is obnoxious discrimination. Contrariwise, it is also possible for all the provincial boards to
appropriate the necessary funds for the salaries of the probation officers in their respective provinces, in which
case no inequality would result for the obvious reason that probation would be in operation in each and every
province by the affirmative action of appropriation by all the provincial boards. On that hypothesis, every
person coming within the purview of the Probation Act would be entitled to avail of the benefits of the Act.
Neither will there be any resulting inequality if no province, through its provincial board, should appropriate any
amount for the salary of the probation officer which is the situation now and, also, if we accept the
contention that, for the purpose of the Probation Act, the City of Manila should be considered as a province and
that the municipal board of said city has not made any appropriation for the salary of the probation officer.
These different situations suggested show, indeed, that while inequality may result in the application of the law
and in the conferment of the benefits therein provided, inequality is not in all cases the necessary result. But
whatever may be the case, it is clear that in section 11 of the Probation Act creates a situation in which
discrimination and inequality are permitted or allowed. There are, to be sure, abundant authorities requiring
actual denial of the equal protection of the law before court should assume the task of setting aside a law
vulnerable on that score, but premises and circumstances considered, we are of the opinion that section 11 of
Act No. 4221 permits of the denial of the equal protection of the law and is on that account bad. We see no
difference between a law which permits of such denial. A law may appear to be fair on its face and impartial in
appearance, yet, if it permits of unjust and illegal discrimination, it is within the constitutional prohibitions. (By
analogy, Chy Lung vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550; Henderson vs. Mayor [1876], 92 U.
S., 259; 23 Law. ed., 543; Ex parte Virginia [1880], 100 U. S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881],
103 U. S., 370; 26 Law. ed., 567; Soon Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs.
Hopkins [1886],118 U. S., 356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218; 18 Sup. Ct.
Rep., 583; 42 Law. ed., 1012; Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law. ed.,
Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S., 450; 38 Sup. Ct. Rep., 495; 62 Law. ed., 1154.) In other
words, statutes may be adjudged unconstitutional because of their effect in operation (General Oil Co. vs.
Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52 Law. ed., 754; State vs. Clement Nat. Bank [1911], 84
Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If the law has the effect of denying the equal protection of the law
it is unconstitutional. (6 R. C. L. p. 372; Civil Rights Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835;
Yick Wo vs. Hopkins, supra; State vs. Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs.
Dering, 84 Wis., 585; 54 N. W., 1104; 36 A. S. R., 948; 19 L. R. A., 858.) Under section 11 of the Probation Act,
not only may said Act be in force in one or several provinces and not be in force in other provinces, but one
province may appropriate for the salary of the probation officer of a given year and have probation during
that year and thereafter decline to make further appropriation, and have no probation is subsequent years.
While this situation goes rather to the abuse of discretion which delegation implies, it is here indicated to show
that the Probation Act sanctions a situation which is intolerable in a government of laws, and to prove how easy
it is, under the Act, to make the guaranty of the equality clause but "a rope of sand". (Brewer, J. Gulf C. & S. F.
Ry. Co. vs. Ellis [1897], 165 U. S., 150 154; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255.)lawph!1.net

Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United States ([1914], 234
U. S., 91; 58 Law. ed., 1231). In that case, the Supreme Court of the United States affirmed the decision of this
court (18 Phil., 1) by declining to uphold the contention that there was a denial of the equal protection of the
laws because, as held in Missouri vs. Lewis (Bowman vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed.,
991), the guaranty of the equality clause does not require territorial uniformity. It should be observed, however,
that this case concerns the right to preliminary investigations in criminal cases originally granted by General
Orders No. 58. No question of legislative authority was involved and the alleged denial of the equal protection
of the laws was the result of the subsequent enactment of Act No. 612, amending the charter of the City of
Manila (Act No. 813) and providing in section 2 thereof that "in cases triable only in the court of first instance of
the City of Manila, the defendant . . . shall not be entitled as of right to a preliminary examination in any case
where the prosecuting attorney, after a due investigation of the facts . . . shall have presented an information
against him in proper form . . . ." Upon the other hand, an analysis of the arguments and the decision indicates
that the investigation by the prosecuting attorney although not in the form had in the provinces was
considered a reasonable substitute for the City of Manila, considering the peculiar conditions of the city as
found and taken into account by the legislature itself.
Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a situation where
the constitution of Missouri permits appeals to the Supreme Court of the state from final judgments of any
circuit court, except those in certain counties for which counties the constitution establishes a separate court of
appeals called St. Louis Court of Appeals. The provision complained of, then, is found in the constitution itself
and it is the constitution that makes the apportionment of territorial jurisdiction.
We are of the opinion that section 11 of the Probation Act is unconstitutional and void because it is also
repugnant to equal-protection clause of our Constitution.
Section 11 of the Probation Act being unconstitutional and void for the reasons already stated, the next inquiry
is whether or not the entire Act should be avoided.
In seeking the legislative intent, the presumption is against any mutilation of a statute, and the courts will resort
to elimination only where an unconstitutional provision is interjected into a statute otherwise valid, and is so
independent and separable that its removal will leave the constitutional features and purposes of the act
substantially unaffected by the process. (Riccio vs. Hoboken, 69 N. J. Law., 649, 662; 63 L. R. A., 485; 55 Atl.,
1109, quoted in Williams vs. Standard Oil Co. [1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct.
Rep., 115; 60 A. L. R., 596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court stated the wellestablished rule concerning partial invalidity of statutes in the following language:
. . . where part of the a statute is void, as repugnant to the Organic Law, while another part is valid, the valid
portion, if separable from the valid, may stand and be enforced. But in order to do this, the valid portion must
be in so far independent of the invalid portion that it is fair to presume that the Legislative would have enacted
it by itself if they had supposed that they could not constitutionally enact the other. (Mutual Loan Co. vs.
Martell, 200 Mass., 482; 86 N. E., 916; 128 A. S. R., 446; Supervisors of Holmes Co. vs. Black Creek Drainage
District, 99 Miss., 739; 55 Sou., 963.) Enough must remain to make a complete, intelligible, and valid statute,
which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E., 798.) The void provisions
must be eliminated without causing results affecting the main purpose of the Act, in a manner contrary to the
intention of the Legislature. (State vs. A. C. L. R., Co., 56 Fla., 617, 642; 47 Sou., 969; Harper vs. Galloway, 58
Fla., 255; 51 Sou., 226; 26 L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe Co., 184 U. S., 540, 565;
People vs. Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S., 1135; State vs. Cognevich, 124 La.,
414; 50 Sou., 439.) The language used in the invalid part of a statute can have no legal force or efficacy for
any purpose whatever, and what remains must express the legislative will, independently of the void part, since
the court has no power to legislate. (State vs. Junkin, 85 Neb., 1; 122 N. W., 473; 23 L. R. A., N. S., 839; Vide,
also,. U. S., vs. Rodriguez [1918], 38 Phil., 759; Pollock vs. Farmers' Loan and Trust Co. [1895], 158 U. S.,
601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6 R.C.L., 121.)
It is contended that even if section 11, which makes the Probation Act applicable only in those provinces in
which the respective provincial boards provided for the salaries of probation officers were inoperative on
constitutional grounds, the remainder of the Act would still be valid and may be enforced. We should be

inclined to accept the suggestions but for the fact that said section is, in our opinion, is inseparably linked with
the other portions of the Act that with the elimination of the section what would be left is the bare idealism of
the system, devoid of any practical benefit to a large number of people who may be deserving of the intended
beneficial result of that system. The clear policy of the law, as may be gleaned from a careful examination of
the whole context, is to make the application of the system dependent entirely upon the affirmative action of
the different provincial boards through appropriation of the salaries for probation officers at rates not lower than
those provided for provincial fiscals. Without such action on the part of the various boards, no probation
officers would be appointed by the Secretary of Justice to act in the provinces. The Philippines is divided or
subdivided into provinces and it needs no argument to show that if not one of the provinces and this is the
actual situation now appropriate the necessary fund for the salary of a probation officer, probation under Act
No. 4221 would be illusory. There can be no probation without a probation officer. Neither can there be a
probation officer without the probation system.
Section 2 of the Acts provides that the probation officer shall supervise and visit the probationer. Every
probation officer is given, as to the person placed in probation under his care, the powers of the police officer. It
is the duty of the probation officer to see that the conditions which are imposed by the court upon the
probationer under his care are complied with. Among those conditions, the following are enumerated in section
3 of the Act:
That the probationer (a) shall indulge in no injurious or vicious habits;
(b) Shall avoid places or persons of disreputable or harmful character;
(c) Shall report to the probation officer as directed by the court or probation officers;
(d) Shall permit the probation officer to visit him at reasonable times at his place of abode or elsewhere;
(e) Shall truthfully answer any reasonable inquiries on the part of the probation officer concerning his conduct
or condition; "(f) Shall endeavor to be employed regularly; "(g) Shall remain or reside within a specified place or
locality;
(f) Shall make reparation or restitution to the aggrieved parties for actual damages or losses caused by his
offense;
(g) Shall comply with such orders as the court may from time to time make; and
(h) Shall refrain from violating any law, statute, ordinance, or any by-law or regulation, promulgated in
accordance with law.
The court is required to notify the probation officer in writing of the period and terms of probation. Under
section 4, it is only after the period of probation, the submission of a report of the probation officer and
appropriate finding of the court that the probationer has complied with the conditions of probation that
probation may be definitely terminated and the probationer finally discharged from supervision. Under section
5, if the court finds that there is non-compliance with said conditions, as reported by the probation officer, it
may issue a warrant for the arrest of the probationer and said probationer may be committed with or without
bail. Upon arraignment and after an opportunity to be heard, the court may revoke, continue or modify the
probation, and if revoked, the court shall order the execution of the sentence originally imposed. Section 6
prescribes the duties of probation officers: "It shall be the duty of every probation officer to furnish to all
persons placed on probation under his supervision a statement of the period and conditions of their probation,
and to instruct them concerning the same; to keep informed concerning their conduct and condition; to aid and
encourage them by friendly advice and admonition, and by such other measures, not inconsistent with the
conditions imposed by court as may seem most suitable, to bring about improvement in their conduct and
condition; to report in writing to the court having jurisdiction over said probationers at least once every two
months concerning their conduct and condition; to keep records of their work; make such report as are
necessary for the information of the Secretary of Justice and as the latter may require; and to perform such
other duties as are consistent with the functions of the probation officer and as the court or judge may direct.

The probation officers provided for in this Act may act as parole officers for any penal or reformatory institution
for adults when so requested by the authorities thereof, and, when designated by the Secretary of Justice shall
act as parole officer of persons released on parole under Act Number Forty-one Hundred and Three, without
additional compensation."
It is argued, however, that even without section 11 probation officers maybe appointed in the provinces under
section 10 of Act which provides as follows:
There is hereby created in the Department of Justice and subject to its supervision and control, a Probation
Office under the direction of a Chief Probation Officer to be appointed by the Governor-General with the advise
and consent of the Senate who shall receive a salary of four eight hundred pesos per annum. To carry out this
Act there is hereby appropriated out of any funds in the Insular Treasury not otherwise appropriated, the sum
of fifty thousand pesos to be disbursed by the Secretary of Justice, who is hereby authorized to appoint
probation officers and the administrative personnel of the probation officer under civil service regulations from
among those who possess the qualifications, training and experience prescribed by the Bureau of Civil
Service, and shall fix the compensation of such probation officers and administrative personnel until such
positions shall have been included in the Appropriation Act.
But the probation officers and the administrative personnel referred to in the foregoing section are clearly not
those probation officers required to be appointed for the provinces under section 11. It may be said, reddendo
singula singulis, that the probation officers referred to in section 10 above-quoted are to act as such, not in the
various provinces, but in the central office known as the Probation Office established in the Department of
Justice, under the supervision of the Chief Probation Officer. When the law provides that "the probation officer"
shall investigate and make reports to the court (secs. 1 and 4); that "the probation officer" shall supervise and
visit the probationer (sec. 2; sec. 6, par. d); that the probationer shall report to the "probationer officer" (sec. 3,
par. c.), shall allow "the probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any reasonable
inquiries on the part of "the probation officer" concerning his conduct or condition (sec. 3, par. 4); that the court
shall notify "the probation officer" in writing of the period and terms of probation (sec. 3, last par.), it means the
probation officer who is in charge of a particular probationer in a particular province. It never could have been
intention of the legislature, for instance, to require the probationer in Batanes, to report to a probationer officer
in the City of Manila, or to require a probation officer in Manila to visit the probationer in the said province of
Batanes, to place him under his care, to supervise his conduct, to instruct him concerning the conditions of his
probation or to perform such other functions as are assigned to him by law.
That under section 10 the Secretary of Justice may appoint as many probation officers as there are provinces
or groups of provinces is, of course possible. But this would be arguing on what the law may be or should be
and not on what the law is. Between is and ought there is a far cry. The wisdom and propriety of legislation is
not for us to pass upon. We may think a law better otherwise than it is. But much as has been said regarding
progressive interpretation and judicial legislation we decline to amend the law. We are not permitted to read
into the law matters and provisions which are not there. Not for any purpose not even to save a statute from
the doom of invalidity.
Upon the other hand, the clear intention and policy of the law is not to make the Insular Government defray the
salaries of probation officers in the provinces but to make the provinces defray them should they desire to have
the Probation Act apply thereto. The sum of P50,000, appropriated "to carry out the purposes of this Act", is to
be applied, among other things, for the salaries of probation officers in the central office at Manila. These
probation officers are to receive such compensations as the Secretary of Justice may fix "until such positions
shall have been included in the Appropriation Act". It was the intention of the legislature to empower the
Secretary of Justice to fix the salaries of the probation officers in the provinces or later on to include said
salaries in an appropriation act. Considering, further, that the sum of P50,000 appropriated in section 10 is to
cover, among other things, the salaries of the administrative personnel of the Probation Office, what would be
left of the amount can hardly be said to be sufficient to pay even nominal salaries to probation officers in the
provinces. We take judicial notice of the fact that there are 48 provinces in the Philippines and we do not think
it is seriously contended that, with the fifty thousand pesos appropriated for the central office, there can be in
each province, as intended, a probation officer with a salary not lower than that of a provincial fiscal. If this a
correct, the contention that without section 11 of Act No. 4221 said act is complete is an impracticable thing

under the remainder of the Act, unless it is conceded that in our case there can be a system of probation in the
provinces without probation officers.
Probation as a development of a modern penology is a commendable system. Probation laws have been
enacted, here and in other countries, to permit what modern criminologist call the "individualization of the
punishment", the adjustment of the penalty to the character of the criminal and the circumstances of his
particular case. It provides a period of grace in order to aid in the rehabilitation of a penitent offender. It is
believed that, in any cases, convicts may be reformed and their development into hardened criminals aborted.
It, therefore, takes advantage of an opportunity for reformation and avoids imprisonment so long as the
convicts gives promise of reform. (United States vs. Murray [1925], 275 U. S., 347 357, 358; 72 Law. ed., 309;
312, 313; 48 Sup. Ct. Rep., 146; Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The Welfare of society is its chief end
and aim. The benefit to the individual convict is merely incidental. But while we believe that probation is
commendable as a system and its implantation into the Philippines should be welcomed, we are forced by our
inescapable duty to set the law aside because of the repugnancy to our fundamental law.
In arriving at this conclusion, we have endeavored to consider the different aspects presented by able counsel
for both parties, as well in their memorandums as in their oral argument. We have examined the cases brought
to our attention, and others we have been able to reach in the short time at our command for the study and
deliberation of this case. In the examination of the cases and in then analysis of the legal principles involved
we have inclined to adopt the line of action which in our opinion, is supported better reasoned authorities and is
more conducive to the general welfare. (Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) Realizing the
conflict of authorities, we have declined to be bound by certain adjudicated cases brought to our attention,
except where the point or principle is settled directly or by clear implication by the more authoritative
pronouncements of the Supreme Court of the United States. This line of approach is justified because:
(a) The constitutional relations between the Federal and the State governments of the United States and the
dual character of the American Government is a situation which does not obtain in the Philippines;
(b) The situation of s state of the American Union of the District of Columbia with reference to the Federal
Government of the United States is not the situation of the province with respect to the Insular Government
(Art. I, sec. 8 cl. 17 and 10th Amendment, Constitution of the United States; Sims vs. Rives, 84 Fed. [2d], 871),
(c) The distinct federal and the state judicial organizations of the United States do not embrace the integrated
judicial system of the Philippines (Schneckenburger vs. Moran [1936], 35 Off. Gaz., p. 1317);
(d) "General propositions do not decide concrete cases" (Justice Holmes in Lochner vs. New York [1904], 198
U. S., 45, 76; 49 Law. ed., 937, 949) and, "to keep pace with . . . new developments of times and
circumstances" (Chief Justice Waite in Pensacola Tel. Co. vs. Western Union Tel. Co. [1899], 96 U. S., 1, 9; 24
Law. ed., 708; Yale Law Journal, Vol. XXIX, No. 2, Dec. 1919, 141, 142), fundamental principles should be
interpreted having in view existing local conditions and environment.
Act No. 4221 is hereby declared unconstitutional and void and the writ of prohibition is, accordingly, granted.
Without any pronouncement regarding costs. So ordered.

10.) AMOS P. FRANCIA JR., et. al. v. MUNICIPALITY OF MERCAUAYAN


G.R. No. 170432, 24 March 2008, First Division, (Corona, J.)
Before a local government unit may enter into the possession of the property sought to be expropriated, it must
(1) file a complaint for expropriation sufficient in form and substance in the proper court and (2) deposit with the
said court at least 15% of the property's fair market value based on its current tax declaration. The law does
not make the determination of a public purpose a condition precedent to the issuance of a writ of possession.
FACTS:
A Complaint for expropriation was filed by respondent Municipality of Meycauayan, Bulacan against the
property of petitioners Amos Francia, Cecilia Francia and Benjamin Francia. The Municipality of Meycauayan
seeks to use the said property in order to establish a common public terminal for all public utility vehicles. The
Regional Trial Court (RTC) ruled that the expropriation was for public purpose and issued an Order of
Expropriation.
On appeal, the Court of Appeals partially granted the petition. It nullified the Order of Expropriation except with
regard to the writ of possession. It upheld the decision of the RTC that in issuance of writ of possession, prior
determination of the existence of public purpose is necessary.

Petitioners essentially aver that the CA erred in upholding the RTC's orders that, in expropriation cases, prior
determination of the existence of a public purpose was not necessary for the issuance of a writ of possession.

We deny the petition.


Section 19 of Republic Act 71609 provides:
Section 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant
to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of
the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution
and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid
and definite offer has been previously made to the owner, and that such offer was not accepted; Provided,
further, That the local government unit may immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of
the fair market value of the property based on the current tax declaration of the property to be expropriated;
Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking of the property. (emphasis supplied)10
Before a local government unit may enter into the possession of the property sought to be expropriated, it must
(1) file a complaint for expropriation sufficient in form and substance in the proper court and (2) deposit with the
said court at least 15% of the property's fair market value based on its current tax declaration.11 The law does
not make the determination of a public purpose a condition precedent to the issuance of a writ of
possession.12
WHEREFORE, the petition is hereby DENIED.

11.) SOCIAL JUSTICE SOCIETY v. ATIENZA


Facts:
The Social Justice Society sought to compel respondent Hon. Jose L. Atienza, Jr., then mayor of the City of
Manila, to enforce Ordinance No. 8027 that was enacted by the Sangguniang Panlungsod of Manila in 2001.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the
owners and operators of businesses disallowed under the reclassification to cease and desist from operating
their businesses within six months from the date of effectivity of the ordinance. Among the businesses situated
in the area are the so-called Pandacan Terminals of the oil companies (the brief history of the
Pandacan Oil Terminals is here).

In 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum of understanding
(MOU) with the oil companies. They agreed that the scaling down of the Pandacan Terminals [was] the
most viable and practicable option. The Sangguniang Panlungsod ratified the MOU in Resolution No. 97. In
the same resolution, the Sanggunian declared that the MOU was effective only for a period of six months
starting 25 July 2002, which period was extended up to 30 April 2003.
This is the factual backdrop of the Supreme Courts 7 March 2007 Decision. The SC ruled that respondent had
the ministerial duty under the Local Government Code (LGC) to enforce all laws and ordinances relative to
the governance of the city, including Ordinance No. 8027. After the SC promulgated its Decision, Chevron
Philippines Inc. (Chevron), Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell) (the
oil companies) and the Republic of the Philippines, represented by the DOE, sought to intervene and
ask for a reconsideration of the decision.
Intervention of the oil companies and the DOE allowed in the interest of justice
Intervention is a remedy by which a third party, not originally impleaded in the proceedings, becomes a litigant
therein to enable him, her or it to protect or preserve a right or interest which may be affected by such
proceedings. The allowance or disallowance of a motion to intervene is addressed to the sound discretion of
the court. While the motions to intervene respectively filed by the oil companies and the DOE were filed out of
time, these motions were granted because they presented novel issues and arguments. DOEs
intervention was also allowed considering the transcendental importance of this case.
Ordinance No. 8119 did not impliedly repeal Ordinance No. 8027
Repeal by implication proceeds on the premise that where a statute of later date clearly reveals the intention of
the legislature to abrogate a prior act on the subject, that intention must be given effect. Implied repeals are not
favored and will not be so declared unless the intent of the legislators is manifest.
There are two kinds of implied repeal. The first is: where the provisions in the two acts on the same subject
matter are irreconcilably contradictory, the latter act, to the extent of the conflict, constitutes an implied repeal
of the earlier one. The second is: if the later act covers the whole subject of the earlier one and is clearly
intended as a substitute, it will operate to repeal the earlier law. The oil companies argue that the situation here
falls under the first category.
For the first kind of implied repeal, there must be an irreconcilable conflict between the two ordinances.
However, there was no legislative purpose to repeal Ordinance No. 8027. There is no conflict since both
ordinances actually have a common objective, i.e., to shift the zoning classification from industrial to
commercial (Ordinance No. 8027) or mixed residential/commercial (Ordinance No. 8119). While it is true that
both ordinances relate to the same subject matter, i.e., classification of the land use of the area where
Pandacan oil depot is located, if there is no intent to repeal the earlier enactment, every effort at reasonable
construction must be made to reconcile the ordinances so that both can be given effect.
Moreover, it is a well-settled rule in statutory construction that a subsequent general law does not repeal a prior
special law on the same subject unless it clearly appears that the legislature has intended by the latter general
act to modify or repeal the earlier special law. The special law must be taken as intended to constitute an
exception to, or a qualification of, the general act or provision. Ordinance No. 8027 is a special law since it
deals specifically with a certain area described therein (the Pandacan oil depot area) whereas Ordinance No.
8119 can be considered a general law as it covers the entire city of Manila.
Mandamus lies to compel respondent Mayor to enforce Ordinance No. 8027
The oil companies insist that mandamus does not lie against respondent in consideration of the separation of
powers of the executive and judiciary. However, while it is true that Courts will not interfere by mandamus
proceedings with the legislative or executive departments of the government in the legitimate exercise of its
powers, there is an exception to enforce mere ministerial acts required by law to be performed by some

officer thereof. A writ of mandamus is the power to compel the performance of an act which the law
specifically enjoins as a duty resulting from office, trust or station.
The oil companies also argue that petitioners had a plain, speedy and adequate remedy to compel respondent
to enforce Ordinance No. 8027, which was to seek relief from the President of the Philippines through the
Secretary of the Department of Interior and Local Government (DILG) by virtue of the Presidents power of
supervision over local government units. This suggested process, however, would be unreasonably long,
tedious and consequently injurious to the interests of the local government unit (LGU) and its constituents
whose welfare is sought to be protected. A party need not go first to the DILG in order to compel the
enforcement of an ordinance. Besides, the resort to an original action for mandamus before the SC is
undeniably allowed by the Constitution.
Ordinance No. 8027 is constitutional and valid
The tests of a valid ordinance are well established. For an ordinance to be valid, it must not only be within the
corporate powers of the LGU to enact and be passed according to the procedure prescribed by law, it must
also conform to the following substantive requirements: (1) must not contravene the Constitution or any statute;
(2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy and (6) must not be unreasonable. There
is no showing that the Ordinance is unconstitutional.
The City of Manila has the power to enact Ordinance No. 8027
Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its police power.
Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the
health, morals, peace, education, good order or safety and general welfare of the people. This power flows
from the recognition that salus populi est suprema lex (the welfare of the people is the supreme law).
While police power rests primarily with the national legislature, such power may be delegated. Section 16 of
the LGC, known as the general welfare clause, encapsulates the delegated police power to local governments.
LGUs like the City of Manila exercise police power through their respective legislative bodies, in this case, the
Sangguniang Panlungsod or the city council. Specifically, the Sanggunian can enact ordinances for the general
welfare of the city.
This police power was also provided for in RA 409 or the Revised Charter of the City of Manila. Specifically, the
Sanggunian has the power to reclassify land within the jurisdiction of the city.
The enactment of Ordinance No. 8027 is a legitimate exercise of police power
As with the State, local governments may be considered as having properly exercised their police power only if
the following requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require its exercise; and (2) the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals. In short, there must be a
concurrence of a lawful subject and a lawful method.
Ordinance No. 8027 is a valid police power measure because there is a concurrence of lawful subject and
lawful method. It was enacted for the purpose of promoting sound urban planning, ensuring health, public
safety and general welfare of the residents of Manila. The Sanggunian was impelled to take measures to
protect the residents of Manila from catastrophic devastation in case of a terrorist attack on the Pandacan
Terminals. Towards this objective, the Sanggunian reclassified the area defined in the ordinance from industrial
to commercial.
The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants of Manila
and not just of a particular class. The depot is perceived, rightly or wrongly, as a representation of western
interests which means that it is a terrorist target. As long as it there is such a target in their midst, the residents
of Manila are not safe. It therefore became necessary to remove these terminals to dissipate the threat. Wide

discretion is vested on the legislative authority to determine not only what the interests of the public require but
also what measures are necessary for the protection of such interests. Clearly, the Sanggunian was in the best
position to determine the needs of its constituents.
In the exercise of police power, property rights of individuals may be subjected to restraints and burdens in
order to fulfill the objectives of the government. Otherwise stated, the government may enact legislation that
may interfere with personal liberty, property, lawful businesses and occupations to promote the general
welfare. However, the interference must be reasonable and not arbitrary. And to forestall arbitrariness, the
methods or means used to protect public health, morals, safety or welfare must have a reasonable relation to
the end in view.
The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the area
where the depot is situated from industrial to commercial. A zoning ordinance is defined as a local city or
municipal legislation which logically arranges, prescribes, defines and apportions a given political subdivision
into specific land uses as present and future projection of needs. As a result of the zoning, the continued
operation of the businesses of the oil companies in their present location will no longer be permitted. The
power to establish zones for industrial, commercial and residential uses is derived from the police power itself
and is exercised for the protection and benefit of the residents of a locality. Consequently, the enactment of
Ordinance No. 8027 is within the power of the Sangguniang Panlungsod of the City of Manila and any resulting
burden on those affected cannot be said to be unjust.
Ordinance No. 8027 is not unfair, oppressive or confiscatory which amounts to taking without compensation
According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not only regulate but
also absolutely prohibits them from conducting operations in the City of Manila. However, the oil companies are
not prohibited from doing business in other appropriate zones in Manila. The City of Manila merely exercised
its power to regulate the businesses and industries in the zones it established.
The oil companies also argue that the ordinance is unfair and oppressive because they have invested billions
of pesos in the depot, and the forced closure will result in huge losses in income and tremendous costs in
constructing new facilities. This argument has no merit. In the exercise of police power, there is a limitation on
or restriction of property interests to promote public welfare which involves no compensable taking.
Compensation is necessary only when the states power of eminent domain is exercised. In eminent
domain, property is appropriated and applied to some public purpose. Property condemned under the exercise
of police power, on the other hand, is noxious or intended for a noxious or forbidden purpose and,
consequently, is not compensable. The restriction imposed to protect lives, public health and safety from
danger is not a taking. It is merely the prohibition or abatement of a noxious use which interferes with
paramount rights of the public. In the regulation of the use of the property, nobody else acquires the use or
interest therein, hence there is no compensable taking.
In this case, the properties of the oil companies and other businesses situated in the affected area remain
theirs. Only their use is restricted although they can be applied to other profitable uses permitted in the
commercial zone.
Ordinance No. 8027 is not partial and discriminatory
The oil companies take the position that the ordinance has discriminated against and singled out the Pandacan
Terminals despite the fact that the Pandacan area is congested with buildings and residences that do not
comply with the National Building Code, Fire Code and Health and Sanitation Code.
An ordinance based on reasonable classification does not violate the constitutional guaranty of the equal
protection of the law. The requirements for a valid and reasonable classification are: (1) it must rest on
substantial distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all members of the same class. The law may treat and regulate
one class differently from another class provided there are real and substantial differences to distinguish one
class from another.

Here, there is a reasonable classification. What the ordinance seeks to prevent is a catastrophic devastation
that will result from a terrorist attack. Unlike the depot, the surrounding community is not a high-value terrorist
target. Any damage caused by fire or explosion occurring in those areas would be nothing compared to the
damage caused by a fire or explosion in the depot itself. Accordingly, there is a substantial distinction. The
enactment of the ordinance which provides for the cessation of the operations of these terminals removes the
threat they pose. Therefore it is germane to the purpose of the ordinance. The classification is not limited to the
conditions existing when the ordinance was enacted but to future conditions as well. Finally, the ordinance is
applicable to all businesses and industries in the area it delineated.
Ordinance No. 8027 is not inconsistent with RA 7638 and RA 8479
The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it contravenes RA
7638 (DOE Act of 1992) and RA 8479 (Downstream Oil Industry Deregulation Law of 1998).
It is true that ordinances should not contravene existing statutes enacted by Congress. However, a brief survey
of decisions where the police power measure of the LGU clashed with national laws shows that the common
dominator is that the national laws were clearly and expressly in conflict with the ordinances/resolutions of the
LGUs. The inconsistencies were so patent that there was no room for doubt. This is not the case here. The
laws cited merely gave DOE general powers to establish and administer programs for the exploration,
transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy
resources and to encourage certain practices in the [oil] industry which serve the public interest and
are intended to achieve efficiency and cost reduction, ensure continuous supply of petroleum products.
These powers can be exercised without emasculating the LGUs of the powers granted them. When these
ambiguous powers are pitted against the unequivocal power of the LGU to enact police power and zoning
ordinances for the general welfare of its constituents, it is not difficult to rule in favor of the latter. Considering
that the powers of the DOE regarding the Pandacan Terminals are not categorical, the doubt must be resolved
in favor of the City of Manila.
The principle of local autonomy is enshrined in and zealously protected under the Constitution. An entire article
(Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of LGUs. The
LGC was specially promulgated by Congress to ensure the autonomy of local governments as mandated by
the Constitution. There is no showing how the laws relied upon by the oil companies and DOE stripped the City
of Manila of its power to enact ordinances in the exercise of its police power and to reclassify the land uses
within its jurisdiction.
The DOE cannot exercise the power of control over LGUs
Another reason that militates against the DOEs assertions is that Section 4 of Article X of the Constitution
confines the Presidents power over LGUs to one of general supervision. Consequently, the Chief
Executive or his or her alter egos, cannot exercise the power of control over them. The President and his or
her alter egos, the department heads, cannot interfere with the activities of local governments, so long as they
act within the scope of their authority. Accordingly, the DOE cannot substitute its own discretion for the
discretion exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local officials must
prevail as long as they are acting within the parameters of the Constitution and the law.
Ordinance No. 8027 is not invalid for failure to comply with RA 7924 and EO 72
The oil companies argue that zoning ordinances of LGUs are required to be submitted to the Metropolitan
Manila Development Authority (MMDA) for review and if found to be in compliance with its metropolitan
physical framework plan and regulations, it shall endorse the same to the Housing and Land Use Regulatory
Board (HLURB). Their basis is Section 3 (e) of RA 7924 and Section 1 of E.O. 72. They argue that because
Ordinance No. 8027 did not go through this review process, it is invalid.
The argument is flawed. RA 7942 does not give MMDA the authority to review land use plans and zoning
ordinances of cities and municipalities. This was only found in its implementing rules which made a reference

to EO 72. EO 72 expressly refers to comprehensive land use plans (CLUPs) only. Ordinance No. 8027 is
admittedly not a CLUP nor intended to be one. Instead, it is a very specific ordinance which reclassified the
land use of a defined area in order to prevent the massive effects of a possible terrorist attack. It is Ordinance
No. 8119 which was explicitly formulated as the Manila [CLUP] and Zoning Ordinance of 2006. CLUPs
are the ordinances which should be submitted to the MMDA for integration in its metropolitan physical
framework plan and approved by the HLURB to ensure that they conform with national guidelines and policies.
Moreover, even assuming that the MMDA review and HLURB ratification are necessary, the oil companies did
not present any evidence to show that these were not complied with. In accordance with the presumption of
validity in favor of an ordinance, its constitutionality or legality should be upheld in the absence of proof
showing that the procedure prescribed by law was not observed.
Conclusion
Essentially, the oil companies are fighting for their right to property. They allege that they stand to lose billions
of pesos if forced to relocate. However, based on the hierarchy of constitutionally protected rights, the right to
life enjoys precedence over the right to property. The reason is obvious: life is irreplaceable, property is not.
When the state or LGUs exercise of police power clashes with a few individuals right to property, the
former should prevail.
Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without a doubt,
there are no impediments to its enforcement and implementation. Any delay is unfair to the inhabitants of the
City of Manila and its leaders who have categorically expressed their desire for the relocation of the terminals.
Their power to chart and control their own destiny and preserve their lives and safety should not be curtailed by
the intervenors warnings of doomsday scenarios and threats of economic disorder if the ordinance is
enforced.
Just the same, the Court noted that it is not about to provoke a crisis by ordering the immediate relocation of
the Pandacan Terminals out of its present site. The enforcement of a decision, specially one with far-reaching
consequences, should always be within the bounds of reason, in accordance with a comprehensive and wellcoordinated plan, and within a time-frame that complies with the letter and spirit of our resolution. To this end,
the oil companies have no choice but to obey the law.

The issues raised by petitioners are as follows:


1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order the removal of
the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal Ordinance No. 8027.12
Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the Local
Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the Pandacan
Terminals of the oil companies. Instead, he has allowed them to stay.
Respondents defense is that Ordinance No. 8027 has been superseded by the MOU and the resolutions.14
However, he also confusingly argues that the ordinance and MOU are not inconsistent with each other and that
the latter has not amended the former. He insists that the ordinance remains valid and in full force and effect
and that the MOU did not in any way prevent him from enforcing and implementing it. He maintains that the
MOU should be considered as a mere guideline for its full implementation.15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust or station. Mandamus is an extraordinary writ that is employed
to compel the performance, when refused, of a ministerial duty that is already imposed on the respondent and
there is no other plain, speedy and adequate remedy in the ordinary course of law. The petitioner should have

a well-defined, clear and certain legal right to the performance of the act and it must be the clear and
imperative duty of respondent to do the act required to be done.17
Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is questionable or over
which a substantial doubt exists. The principal function of the writ of mandamus is to command and to
expedite, not to inquire and to adjudicate; thus, it is neither the office nor the aim of the writ to secure a legal
right but to implement that which is already established. Unless the right to the relief sought is unclouded,
mandamus will not issue.18
To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance, petitioner
SJS states that it is a political party registered with the Commission on Elections and has its offices in Manila. It
claims to have many members who are residents of Manila. The other petitioners, Cabigao and Tumbokon, are
allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding concerns
a public right and its object is to compel a public duty, the people who are interested in the execution of the
laws are regarded as the real parties in interest and they need not show any specific interest.19 Besides, as
residents of Manila, petitioners have a direct interest in the enforcement of the citys ordinances. Respondent
never questioned the right of petitioners to institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor, to "enforce
all laws and ordinances relative to the governance of the city.">20 One of these is Ordinance No. 8027. As the
chief executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it has not been repealed
by the Sanggunian or annulled by the courts.21 He has no other choice. It is his ministerial duty to do so. In
Dimaporo v. Mitra, Jr.,22 we stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing
the duty. The reason for this is obvious. It might seriously hinder the transaction of public business if these
officers were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing
duties upon them and which have not judicially been declared unconstitutional. Officers of the government from
the highest to the lowest are creatures of the law and are bound to obey it.23
The question now is whether the MOU entered into by respondent with the oil companies and the subsequent
resolutions passed by the Sanggunian have made the respondents duty to enforce Ordinance No. 8027
doubtful, unclear or uncertain. This is also connected to the second issue raised by petitioners, that is, whether
the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend or repeal Ordinance
No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No.
8027, the resolutions which ratified it and made it binding on the City of Manila expressly gave it full force and
effect only until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing
Ordinance No. 8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the
horror of the September 11, 2001 attack on the Twin Towers of the World Trade Center in New York City. The
objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely
occur in case of a terrorist attack25 on the Pandacan Terminals. No reason exists why such a protective
measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of
Manila, is directed to immediately enforce Ordinance No. 8027.

12.) GEROCHI v. DEPARTMENT OF ENERGY


Facts:
RA 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), whichsought to impose
a universal charge on all end-users of electricity for the purpose of funding NAPOCORs projects, was enacted
and took effect in 2001.Petitioners contest the constitutionality of the EPIRA, stating that the imposition of the
universalcharge on all end-users is oppressive and confiscatory and amounts to taxation withoutrepresentation
for not giving the consumers a chance to be heard and be represented.
The ultimate issues in the case at bar are:

1) Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax; and
2) Whether or not there is undue delegation of legislative power to tax on the part of the ERC.26
Before we discuss the issues, the Court shall first deal with an obvious procedural lapse.
Petitioners filed before us an original action particularly denominated as a Complaint assailing the
constitutionality of Sec. 34 of the EPIRA imposing the Universal Charge and Rule 18 of the EPIRA's IRR. No
doubt, petitioners have locus standi. They impugn the constitutionality of Sec. 34 of the EPIRA because they
sustained a direct injury as a result of the imposition of the Universal Charge as reflected in their electric bills.
However, petitioners violated the doctrine of hierarchy of courts when they filed this "Complaint" directly with
us. Furthermore, the Complaint is bereft of any allegation of grave abuse of discretion on the part of the ERC
or any of the public respondents, in order for the Court to consider it as a petition for certiorari or prohibition.
Article VIII, Section 5(1) and (2) of the 1987 Constitution27 categorically provides that:
SECTION 5. The Supreme Court shall have the following powers:
1. Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over
petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the rules of court may provide,
final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
But this Court's jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, and habeas
corpus, while concurrent with that of the regional trial courts and the Court of Appeals, does not give litigants
unrestrained freedom of choice of forum from which to seek such relief.28 It has long been established that this
Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate
courts, or where exceptional and compelling circumstances justify availment of a remedy within and call for the
exercise of our primary jurisdiction.29 This circumstance alone warrants the outright dismissal of the present
action.
This procedural infirmity notwithstanding, we opt to resolve the constitutional issue raised herein. We are
aware that if the constitutionality of Sec. 34 of the EPIRA is not resolved now, the issue will certainly resurface
in the near future, resulting in a repeat of this litigation, and probably involving the same parties. In the public
interest and to avoid unnecessary delay, this Court renders its ruling now.
The instant complaint is bereft of merit.
The First Issue
To resolve the first issue, it is necessary to distinguish the States power of taxation from the police power.
The power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no
limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes
the tax on the constituency that is to pay it.30 It is based on the principle that taxes are the lifeblood of the
government, and their prompt and certain availability is an imperious need.31 Thus, the theory behind the
exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of
promoting the general welfare and well-being of the people.32
On the other hand, police power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property.33 It is the most pervasive, the least limitable, and the most

demanding of the three fundamental powers of the State. The justification is found in the Latin maxims salus
populi est suprema lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas
(so use your property as not to injure the property of others). As an inherent attribute of sovereignty which
virtually extends to all public needs, police power grants a wide panoply of instruments through which the
State, as parens patriae, gives effect to a host of its regulatory powers.34 We have held that the power to
"regulate" means the power to protect, foster, promote, preserve, and control, with due regard for the interests,
first and foremost, of the public, then of the utility and of its patrons.35
The conservative and pivotal distinction between these two powers rests in the purpose for which the charge is
made. If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a
tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make the
imposition a tax.36
In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the State's police power, particularly
its regulatory dimension, is invoked. Such can be deduced from Sec. 34 which enumerates the purposes for
which the Universal Charge is imposed37 and which can be amply discerned as regulatory in character. The
EPIRA resonates such regulatory purposes, thus:
SECTION 2. Declaration of Policy. It is hereby declared the policy of the State:
(a) To ensure and accelerate the total electrification of the country;
(b) To ensure the quality, reliability, security and affordability of the supply of electric power;
(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full
public accountability to achieve greater operational and economic efficiency and enhance the competitiveness
of Philippine products in the global market;
(d) To enhance the inflow of private capital and broaden the ownership base of the power generation,
transmission and distribution sectors;
(e) To ensure fair and non-discriminatory treatment of public and private sector entities in the process of
restructuring the electric power industry;
(f) To protect the public interest as it is affected by the rates and services of electric utilities and other providers
of electric power;
(g) To assure socially and environmentally compatible energy sources and infrastructure;
(h) To promote the utilization of indigenous and new and renewable energy resources in power generation in
order to reduce dependence on imported energy;
(i) To provide for an orderly and transparent privatization of the assets and liabilities of the National Power
Corporation (NPC);
(j) To establish a strong and purely independent regulatory body and system to ensure consumer protection
and enhance the competitive operation of the electricity market; and
(k) To encourage the efficient use of energy and other modalities of demand side management.
From the aforementioned purposes, it can be gleaned that the assailed Universal Charge is not a tax, but an
exaction in the exercise of the State's police power. Public welfare is surely promoted.
Moreover, it is a well-established doctrine that the taxing power may be used as an implement of police
power.38 In Valmonte v. Energy Regulatory Board, et al.39 and in Gaston v. Republic Planters Bank,40 this
Court held that the Oil Price Stabilization Fund (OPSF) and the Sugar Stabilization Fund (SSF) were exactions

made in the exercise of the police power. The doctrine was reiterated in Osmea v. Orbos41 with respect to
the OPSF. Thus, we disagree with petitioners that the instant case is different from the aforementioned cases.
With the Universal Charge, a Special Trust Fund (STF) is also created under the administration of PSALM.42
The STF has some notable characteristics similar to the OPSF and the SSF, viz.:
1) In the implementation of stranded cost recovery, the ERC shall conduct a review to determine whether there
is under-recovery or over recovery and adjust (true-up) the level of the stranded cost recovery charge. In case
of an over-recovery, the ERC shall ensure that any excess amount shall be remitted to the STF. A separate
account shall be created for these amounts which shall be held in trust for any future claims of distribution
utilities for stranded cost recovery. At the end of the stranded cost recovery period, any remaining amount in
this account shall be used to reduce the electricity rates to the end-users.43
2) With respect to the assailed Universal Charge, if the total amount collected for the same is greater than the
actual availments against it, the PSALM shall retain the balance within the STF to pay for periods where a
shortfall occurs.44
3) Upon expiration of the term of PSALM, the administration of the STF shall be transferred to the DOF or any
of the DOF attached agencies as designated by the DOF Secretary.45
The OSG is in point when it asseverates:
Evidently, the establishment and maintenance of the Special Trust Fund, under the last paragraph of Section
34, R.A. No. 9136, is well within the pervasive and non-waivable power and responsibility of the government to
secure the physical and economic survival and well-being of the community, that comprehensive sovereign
authority we designate as the police power of the State.46
This feature of the Universal Charge further boosts the position that the same is an exaction imposed primarily
in pursuit of the State's police objectives. The STF reasonably serves and assures the attainment and
perpetuity of the purposes for which the Universal Charge is imposed, i.e., to ensure the viability of the
country's electric power industry.
The Second Issue
The principle of separation of powers ordains that each of the three branches of government has exclusive
cognizance of and is supreme in matters falling within its own constitutionally allocated sphere. A logical
corollary to the doctrine of separation of powers is the principle of non-delegation of powers, as expressed in
the Latin maxim potestas delegata non delegari potest (what has been delegated cannot be delegated). This is
based on the ethical principle that such delegated power constitutes not only a right but a duty to be performed
by the delegate through the instrumentality of his own judgment and not through the intervening mind of
another. 47
In the face of the increasing complexity of modern life, delegation of legislative power to various specialized
administrative agencies is allowed as an exception to this principle.48 Given the volume and variety of
interactions in today's society, it is doubtful if the legislature can promulgate laws that will deal adequately with
and respond promptly to the minutiae of everyday life. Hence, the need to delegate to administrative bodies the principal agencies tasked to execute laws in their specialized fields - the authority to promulgate rules and
regulations to implement a given statute and effectuate its policies. All that is required for the valid exercise of
this power of subordinate legislation is that the regulation be germane to the objects and purposes of the law
and that the regulation be not in contradiction to, but in conformity with, the standards prescribed by the law.
These requirements are denominated as the completeness test and the sufficient standard test.
Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such
that when it reaches the delegate, the only thing he will have to do is to enforce it. The second test mandates
adequate guidelines or limitations in the law to determine the boundaries of the delegate's authority and
prevent the delegation from running riot.49

The Court finds that the EPIRA, read and appreciated in its entirety, in relation to Sec. 34 thereof, is complete
in all its essential terms and conditions, and that it contains sufficient standards.
Although Sec. 34 of the EPIRA merely provides that "within one (1) year from the effectivity thereof, a Universal
Charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity end-users," and
therefore, does not state the specific amount to be paid as Universal Charge, the amount nevertheless is made
certain by the legislative parameters provided in the law itself. For one, Sec. 43(b)(ii) of the EPIRA provides:
SECTION 43. Functions of the ERC. The ERC shall promote competition, encourage market development,
ensure customer choice and penalize abuse of market power in the restructured electricity industry. In
appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing.
Towards this end, it shall be responsible for the following key functions in the restructured industry:
xxxx
(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with law, a
National Grid Code and a Distribution Code which shall include, but not limited to the following:
xxxx
(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities and
suppliers: Provided, That in the formulation of the financial capability standards, the nature and function of the
entity shall be considered: Provided, further, That such standards are set to ensure that the electric power
industry participants meet the minimum financial standards to protect the public interest. Determine, fix, and
approve, after due notice and public hearings the universal charge, to be imposed on all electricity end-users
pursuant to Section 34 hereof;
Moreover, contrary to the petitioners contention, the ERC does not enjoy a wide latitude of discretion in the
determination of the Universal Charge. Sec. 51(d) and (e) of the EPIRA50 clearly provides:
SECTION 51. Powers. The PSALM Corp. shall, in the performance of its functions and for the attainment of
its objective, have the following powers:
xxxx
(d) To calculate the amount of the stranded debts and stranded contract costs of NPC which shall form the
basis for ERC in the determination of the universal charge;
(e) To liquidate the NPC stranded contract costs, utilizing the proceeds from sales and other property
contributed to it, including the proceeds from the universal charge.
Thus, the law is complete and passes the first test for valid delegation of legislative power.
As to the second test, this Court had, in the past, accepted as sufficient standards the following: "interest of law
and order;"51 "adequate and efficient instruction;"52 "public interest;"53 "justice and equity;"54 "public
convenience and welfare;"55 "simplicity, economy and efficiency;"56 "standardization and regulation of medical
education;"57 and "fair and equitable employment practices."58 Provisions of the EPIRA such as, among
others, "to ensure the total electrification of the country and the quality, reliability, security and affordability of
the supply of electric power"59 and "watershed rehabilitation and management"60 meet the requirements for
valid delegation, as they provide the limitations on the ERCs power to formulate the IRR. These are sufficient
standards.
It may be noted that this is not the first time that the ERC's conferred powers were challenged. In Freedom
from Debt Coalition v. Energy Regulatory Commission,61 the Court had occasion to say:

In determining the extent of powers possessed by the ERC, the provisions of the EPIRA must not be read in
separate parts. Rather, the law must be read in its entirety, because a statute is passed as a whole, and is
animated by one general purpose and intent. Its meaning cannot to be extracted from any single part thereof
but from a general consideration of the statute as a whole. Considering the intent of Congress in enacting the
EPIRA and reading the statute in its entirety, it is plain to see that the law has expanded the jurisdiction of the
regulatory body, the ERC in this case, to enable the latter to implement the reforms sought to be accomplished
by the EPIRA. When the legislators decided to broaden the jurisdiction of the ERC, they did not intend to
abolish or reduce the powers already conferred upon ERC's predecessors. To sustain the view that the ERC
possesses only the powers and functions listed under Section 43 of the EPIRA is to frustrate the objectives of
the law.
In his Concurring and Dissenting Opinion62 in the same case, then Associate Justice, now Chief Justice,
Reynato S. Puno described the immensity of police power in relation to the delegation of powers to the ERC
and its regulatory functions over electric power as a vital public utility, to wit:
Over the years, however, the range of police power was no longer limited to the preservation of public health,
safety and morals, which used to be the primary social interests in earlier times. Police power now requires the
State to "assume an affirmative duty to eliminate the excesses and injustices that are the concomitants of an
unrestrained industrial economy." Police power is now exerted "to further the public welfare a concept as
vast as the good of society itself." Hence, "police power is but another name for the governmental authority to
further the welfare of society that is the basic end of all government." When police power is delegated to
administrative bodies with regulatory functions, its exercise should be given a wide latitude. Police power takes
on an even broader dimension in developing countries such as ours, where the State must take a more active
role in balancing the many conflicting interests in society. The Questioned Order was issued by the ERC,
acting as an agent of the State in the exercise of police power. We should have exceptionally good grounds to
curtail its exercise. This approach is more compelling in the field of rate-regulation of electric power rates.
Electric power generation and distribution is a traditional instrument of economic growth that affects not only a
few but the entire nation. It is an important factor in encouraging investment and promoting business. The
engines of progress may come to a screeching halt if the delivery of electric power is impaired. Billions of
pesos would be lost as a result of power outages or unreliable electric power services. The State thru the ERC
should be able to exercise its police power with great flexibility, when the need arises.
This was reiterated in National Association of Electricity Consumers for Reforms v. Energy Regulatory
Commission63 where the Court held that the ERC, as regulator, should have sufficient power to respond in
real time to changes wrought by multifarious factors affecting public utilities.
From the foregoing disquisitions, we therefore hold that there is no undue delegation of legislative power to the
ERC.
Petitioners failed to pursue in their Memorandum the contention in the Complaint that the imposition of the
Universal Charge on all end-users is oppressive and confiscatory, and amounts to taxation without
representation. Hence, such contention is deemed waived or abandoned per Resolution64 of August 3,
2004.65 Moreover, the determination of whether or not a tax is excessive, oppressive or confiscatory is an
issue which essentially involves questions of fact, and thus, this Court is precluded from reviewing the same.66
As a penultimate statement, it may be well to recall what this Court said of EPIRA:
One of the landmark pieces of legislation enacted by Congress in recent years is the EPIRA. It established a
new policy, legal structure and regulatory framework for the electric power industry. The new thrust is to tap
private capital for the expansion and improvement of the industry as the large government debt and the highly
capital-intensive character of the industry itself have long been acknowledged as the critical constraints to the
program. To attract private investment, largely foreign, the jaded structure of the industry had to be addressed.
While the generation and transmission sectors were centralized and monopolistic, the distribution side was
fragmented with over 130 utilities, mostly small and uneconomic. The pervasive flaws have caused a low
utilization of existing generation capacity; extremely high and uncompetitive power rates; poor quality of

service to consumers; dismal to forgettable performance of the government power sector; high system losses;
and an inability to develop a clear strategy for overcoming these shortcomings.
Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of the
assets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation
of the roles of various government agencies and the private entities. The law ordains the division of the
industry into four (4) distinct sectors, namely: generation, transmission, distribution and supply.
Corollarily, the NPC generating plants have to privatized and its transmission business spun off and privatized
thereafter.67
Finally, every law has in its favor the presumption of constitutionality, and to justify its nullification, there must
be a clear and unequivocal breach of the Constitution and not one that is doubtful, speculative, or
argumentative.68 Indubitably, petitioners failed to overcome this presumption in favor of the EPIRA. We find no
clear violation of the Constitution which would warrant a pronouncement that Sec. 34 of the EPIRA and Rule
18 of its IRR are unconstitutional and void.
WHEREFORE, the instant case is hereby DISMISSED for lack of merit.

13.) EXECUTIVE ECRETARY v. SOUTHWING HEAVY INDUSTRIES


Facts:
Petitioners are all locators inside the Subic Bay Freeport, who are all exporters of used motor vehicles and
spare parts, except used cars. Then President Arroyo issued EO 156 intended to promote the growth of he
local vehicle manufacturing industries and thus prohibiting the importation of usedcars. The Subic Bay locatorcompanies filed a petition for declaratory relief with RTC Olongapo seeking the declaration of the
unconstitutionality of Article 2, Section 3.1 of said EO. The RTC, affirrmed by the CA, declared the EO
Unconstitutional for usurping legislative powers and being repugnant to the Bases conversion law. The
government/s defense was that the petition for declaratory relief was not proper as it may only be filed prior to
any violation of rights. It further said that considering the there already a breach of respondents supposed right
because the cases were filed more than a year after the issuance of EO 156. 0n fact, numerous warrants of
sei1ure and detention were issued against imported used motor vehicles belonging to respondents.
The aforequoted decision of the Court of Appeals was elevated to this Court and docketed as G.R. No.
168741. In a Resolution dated October 4, 2005,10 said case was consolidated with G.R. No. 164171 and G.R.
No. 164172.
Petitioners are now before this Court contending that Article 2, Section 3.1 of EO 156 is valid and applicable to
the entire country, including the Freeeport. In support of their arguments, they raise procedural and substantive
issues bearing on the constitutionality of the assailed proviso. The procedural issues are: the lack of
respondents locus standi to question the validity of EO 156, the propriety of challenging EO 156 in a
declaratory relief proceeding and the applicability of a judgment on the pleadings in this case.
Petitioners argue that respondents will not be affected by the importation ban considering that their certificate
of registration and tax exemption do not authorize them to engage in the importation and/or trading of used
cars. They also aver that the actions filed by respondents do not qualify as declaratory relief cases. Section 1,
Rule 63 of the Rules of Court provides that a petition for declaratory relief may be filed before there is a breach
or violation of rights. Petitioners claim that there was already a breach of respondents supposed right because
the cases were filed more than a year after the issuance of EO 156. In fact, in Civil Case No. 30-0-2003,
numerous warrants of seizure and detention were issued against imported used motor vehicles belonging to
respondent Associations members.
Petitioners arguments lack merit.
The established rule that the constitutionality of a law or administrative issuance can be challenged by one who
will sustain a direct injury as a result of its enforcement11 has been satisfied in the instant case. The broad

subject of the prohibited importation is "all types of used motor vehicles." Respondents would definitely suffer a
direct injury from the implementation of EO 156 because their certificate of registration and tax exemption
authorize them to trade and/or import new and used motor vehicles and spare parts, except "used cars."12
Other types of motor vehicles imported and/or traded by respondents and not falling within the category of
used cars would thus be subjected to the ban to the prejudice of their business. Undoubtedly, respondents
have the legal standing to assail the validity of EO 156.
As to the propriety of declaratory relief as a vehicle for assailing the executive issuance, suffice it to state that
any breach of the rights of respondents will not affect the case. In Commission on Audit of the Province of
Cebu v. Province of Cebu,13 the Court entertained a suit for declaratory relief to finally settle the doubt as to
the proper interpretation of the conflicting laws involved, notwithstanding a violation of the right of the party
affected. We find no reason to deviate from said ruling mindful of the significance of the present case to the
national economy.
So also, summary judgments were properly rendered by the trial court because the issues involved in the
instant case were pure questions of law. A motion for summary judgment is premised on the assumption that
the issues presented need not be tried either because these are patently devoid of substance or that there is
no genuine issue as to any pertinent fact. It is a method sanctioned by the Rules of Court for the prompt
disposition of a civil action in which the pleadings raise only a legal issue, not a genuine issue as to any
material fact.14
At any rate, even assuming the procedural flaws raised by petitioners truly exist, the Court is not precluded
from brushing aside these technicalities and taking cognizance of the action filed by respondents considering
its importance to the public and in keeping with the duty to determine whether the other branches of the
government have kept themselves within the limits of the Constitution.15
We now come to the substantive issues, which are: (1) whether there is statutory basis for the issuance of EO
156; and (2) if the answer is in the affirmative, whether the application of Article 2, Section 3.1 of EO 156,
reasonable and within the scope provided by law.
The main thrust of the petition is that EO 156 is constitutional because it was issued pursuant to EO 226, the
Omnibus Investment Code of the Philippines and that its application should be extended to the Freeport
because the guarantee of RA 7227 on the free flow of goods into the said zone is merely an exemption from
customs duties and taxes on items brought into the Freeport and not an open floodgate for all kinds of goods
and materials without restriction.
In G.R. No. 168741, the Court of Appeals invalidated Article 2, Section 3.1 of EO 156, on the ground of lack of
any statutory basis for the President to issue the same. It held that the prohibition on the importation of used
motor vehicles is an exercise of police power vested on the legislature and absent any enabling law, the
exercise thereof by the President through an executive issuance, is void.
Police power is inherent in a government to enact laws, within constitutional limits, to promote the order, safety,
health, morals, and general welfare of society. It is lodged primarily with the legislature. By virtue of a valid
delegation of legislative power, it may also be exercised by the President and administrative boards, as well as
the lawmaking bodies on all municipal levels, including the barangay.16 Such delegation confers upon the
President quasi-legislative power which may be defined as the authority delegated by the law-making body to
the administrative body to adopt rules and regulations intended to carry out the provisions of the law and
implement legislative policy.17 To be valid, an administrative issuance, such as an executive order, must
comply with the following requisites:
(1) Its promulgation must be authorized by the legislature;
(2) It must be promulgated in accordance with the prescribed procedure;
(3) It must be within the scope of the authority given by the legislature; and

(4) It must be reasonable.18


Contrary to the conclusion of the Court of Appeals, EO 156 actually satisfied the first requisite of a valid
administrative order. It has both constitutional and statutory bases.
Delegation of legislative powers to the President is permitted in Section 28(2) of Article VI of the Constitution. It
provides:
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national development program of the
Government.19 (Emphasis supplied)
The relevant statutes to execute this provision are:
1) The Tariff and Customs Code which authorizes the President, in the interest of national economy, general
welfare and/or national security, to, inter alia, prohibit the importation of any commodity. Section 401 thereof,
reads:
Sec. 401. Flexible Clause.
a. In the interest of national economy, general welfare and/or national security, and subject to the limitations
herein prescribed, the President, upon recommendation of the National Economic and Development Authority
(hereinafter referred to as NEDA), is hereby empowered: x x x (2) to establish import quota or to ban imports of
any commodity, as may be necessary; x x x Provided, That upon periodic investigations by the Tariff
Commission and recommendation of the NEDA, the President may cause a gradual reduction of protection
levels granted in Section One hundred and four of this Code, including those subsequently granted pursuant to
this section. (Emphasis supplied)
2) Executive Order No. 226, the Omnibus Investment Code of the Philippines which was issued on July 16,
1987, by then President Corazon C. Aquino, in the exercise of legislative power under the Provisional Freedom
Constitution,20 empowers the President to approve or reject the prohibition on the importation of any
equipment or raw materials or finished products. Pertinent provisions thereof, read:
ART. 4. Composition of the board. The Board of Investments shall be composed of seven (7) governors: The
Secretary of Trade and Industry, three (3) Undersecretaries of Trade and Industry to be chosen by the
President; and three (3) representatives from the government agencies and the private sector x x x.
ART. 7. Powers and duties of the Board.
xxxx
(12) Formulate and implement rationalization programs for certain industries whose operation may result in
dislocation, overcrowding or inefficient use of resources, thus impeding economic growth. For this purpose, the
Board may formulate guidelines for progressive manufacturing programs, local content programs, mandatory
sourcing requirements and dispersal of industries. In appropriate cases and upon approval of the President,
the Board may restrict, either totally or partially, the importation of any equipment or raw materials or finished
products involved in the rationalization program; (Emphasis supplied)
3) Republic Act No. 8800, otherwise known as the "Safeguard Measures Act" (SMA), and entitled "An Act
Protecting Local Industries By Providing Safeguard Measures To Be Undertaken In Response To Increased
Imports And Providing Penalties For Violation Thereof,"21 designated the Secretaries22 of the Department of
Trade and Industry (DTI) and the Department of Agriculture, in their capacity as alter egos of the President, as
the implementing authorities of the safeguard measures, which include, inter alia, modification or imposition of
any quantitative restriction on the importation of a product into the Philippines. The purpose of the SMA is
stated in the declaration of policy, thus:

SEC. 2. Declaration of Policy. The State shall promote competitiveness of domestic industries and producers
based on sound industrial and agricultural development policies, and efficient use of human, natural and
technical resources. In pursuit of this goal and in the public interest, the State shall provide safeguard
measures to protect domestic industries and producers from increased imports which cause or threaten to
cause serious injury to those domestic industries and producers.
There are thus explicit constitutional and statutory permission authorizing the President to ban or regulate
importation of articles and commodities into the country.
Anent the second requisite, that is, that the order must be issued or promulgated in accordance with the
prescribed procedure, it is necessary that the nature of the administrative issuance is properly determined. As
in the enactment of laws, the general rule is that, the promulgation of administrative issuances requires
previous notice and hearing, the only exception being where the legislature itself requires it and mandates that
the regulation shall be based on certain facts as determined at an appropriate investigation.23 This exception
pertains to the issuance of legislative rules as distinguished from interpretative rules which give no real
consequence more than what the law itself has already prescribed;24 and are designed merely to provide
guidelines to the law which the administrative agency is in charge of enforcing.25 A legislative rule, on the
other hand, is in the nature of subordinate legislation, crafted to implement a primary legislation.
In Commissioner of Internal Revenue v. Court of Appeals,26 and Commissioner of Internal Revenue v. Michel
J. Lhuillier Pawnshop, Inc.,27 the Court enunciated the doctrine that when an administrative rule goes beyond
merely providing for the means that can facilitate or render less cumbersome the implementation of the law
and substantially increases the burden of those governed, it behooves the agency to accord at least to those
directly affected a chance to be heard and, thereafter, to be duly informed, before the issuance is given the
force and effect of law.
In the instant case, EO 156 is obviously a legislative rule as it seeks to implement or execute primary
legislative enactments intended to protect the domestic industry by imposing a ban on the importation of a
specified product not previously subject to such prohibition. The due process requirements in the issuance
thereof are embodied in Section 40128 of the Tariff and Customs Code and Sections 5 and 9 of the SMA29
which essentially mandate the conduct of investigation and public hearings before the regulatory measure or
importation ban may be issued.
In the present case, respondents neither questioned before this Court nor with the courts below the procedure
that paved the way for the issuance of EO 156. What they challenged in their petitions before the trial court
was the absence of "substantive due process" in the issuance of the EO.30 Their main contention before the
court a quo is that the importation ban is illogical and unfair because it unreasonably drives them out of
business to the prejudice of the national economy.
Considering the settled principle that in the absence of strong evidence to the contrary, acts of the other
branches of the government are presumed to be valid,31 and there being no objection from the respondents
as to the procedure in the promulgation of EO 156, the presumption is that said executive issuance duly
complied with the procedures and limitations imposed by law.
To determine whether EO 156 has complied with the third and fourth requisites of a valid administrative
issuance, to wit, that it was issued within the scope of authority given by the legislature and that it is
reasonable, an examination of the nature of a Freeport under RA 7227 and the primordial purpose of the
importation ban under the questioned EO is necessary.
RA 7227 was enacted providing for, among other things, the sound and balanced conversion of the Clark and
Subic military reservations and their extensions into alternative productive uses in the form of Special
Economic and Freeport Zone, or the Subic Bay Freeport, in order to promote the economic and social
development of Central Luzon in particular and the country in general.

The Rules and Regulations Implementing RA 7227 specifically defines the territory comprising the Subic Bay
Freeport, referred to as the Special Economic and Freeport Zone in Section 12 of RA 7227 as "a separate
customs territory consisting of the City of Olongapo and the Municipality of Subic, Province of Zambales, the
lands occupied by the Subic Naval Base and its contiguous extensions as embraced, covered and defined by
the 1947 Philippine-U.S. Military Base Agreement as amended and within the territorial jurisdiction of Morong
and Hermosa, Province of Bataan, the metes and bounds of which shall be delineated by the President of the
Philippines; provided further that pending establishment of secure perimeters around the entire SBF, the SBF
shall refer to the area demarcated by the SBMA pursuant to Section 1332 hereof."
Among the salient provisions of RA 7227 are as follows:
SECTION 12. Subic Special Economic Zone.
xxxx
The abovementioned zone shall be subject to the following policies:
xxxx
(a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent
provisions of the Local Government Code, the Subic Special Economic Zone shall be developed into a selfsustaining, industrial, commercial, financial and investment center to generate employment opportunities in
and around the zone and to attract and promote productive foreign investments;
(b) The Subic Special Economic Zone shall be operated and managed as a separate customs territory
ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special
Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital
and equipment. However, exportation or removal of goods from the territory of the Subic Special Economic
Zone to the other parts of the Philippine territory shall be subject to customs duties and taxes under the
Customs and Tariff Code and other relevant tax laws of the Philippines;
The Freeport was designed to ensure free flow or movement of goods and capital within a portion of the
Philippine territory in order to attract investors to invest their capital in a business climate with the least
governmental intervention. The concept of this zone was explained by Senator Guingona in this wise:
Senator Guingona. Mr. President, the special economic zone is successful in many places, particularly Hong
Kong, which is a free port. The difference between a special economic zone and an industrial estate is simply
expansive in the sense that the commercial activities, including the establishment of banks, services, financial
institutions, agro-industrial activities, maybe agriculture to a certain extent.
This delineates the activities that would have the least of government intervention, and the running of the
affairs of the special economic zone would be run principally by the investors themselves, similar to a housing
subdivision, where the subdivision owners elect their representatives to run the affairs of the subdivision, to set
the policies, to set the guidelines.
We would like to see Subic area converted into a little Hong Kong, Mr. President, where there is a hub of free
port and free entry, free duties and activities to a maximum spur generation of investment and jobs.
While the investor is reluctant to come in the Philippines, as a rule, because of red tape and perceived delays,
we envision this special economic zone to be an area where there will be minimum government interference.
The initial outlay may not only come from the Government or the Authority as envisioned here, but from them
themselves, because they would be encouraged to invest not only for the land but also for the buildings and
factories. As long as they are convinced that in such an area they can do business and reap reasonable profits,
then many from other parts, both local and foreign, would invest, Mr. President.33 (Emphasis, added)

With minimum interference from the government, investors can, in general, engage in any kind of business as
well as import and export any article into and out of the Freeport. These are among the rights accorded to
Subic Bay Freeport Enterprises under Section 39 of the Rules and Regulations Implementing RA 7227, thus
SEC. 39. Rights and Obligations.- SBF Enterprises shall have the following rights and obligations:
a. To freely engage in any business, trade, manufacturing, financial or service activity, and to import and export
freely all types of goods into and out of the SBF, subject to the provisions of the Act, these Rules and other
regulations that may be promulgated by the SBMA;
Citing, inter alia, the interpellations of Senator Enrile, petitioners claim that the "free flow or movement of goods
and capital" only means that goods and material brought within the Freeport shall not be subject to customs
duties and other taxes and should not be construed as an open floodgate for entry of all kinds of goods. They
thus surmise that the importation ban on motor vehicles is applicable within the Freeport. Pertinent
interpellations of Senator Enrile on the concept of Freeport is as follows:
Senator Enrile: Mr. President, I think we are talking here of sovereign concepts, not territorial concepts. The
concept that we are supposed to craft here is to carve out a portion of our terrestrial domain as well as our
adjacent waters and say to the world: "Well, you can set up your factories in this area that we are
circumscribing, and bringing your equipment and bringing your goods, you are not subject to any taxes and
duties because you are not within the customs jurisdiction of the Republic of the Philippines, whether you store
the goods or only for purposes of transshipment or whether you make them into finished products again to be
reexported to other lands."
xxxx
My understanding of a "free port" is, we are in effect carving out a part of our territory and make it as if it were
foreign territory for purposes of our customs laws, and that people can come, bring their goods, store them
there and bring them out again, as long as they do not come into the domestic commerce of the Republic.
We do not really care whether these goods are stored here. The only thing that we care is for our people to
have an employment because of the entry of these goods that are being discharged, warehoused and
reloaded into the ships so that they can be exported. That will generate employment for us. For as long as that
is done, we are saying, in effect, that we have the least contact with our tariff and customs laws and our tax
laws. Therefore, we consider these goods as outside of the customs jurisdiction of the Republic of the
Philippines as yet, until we draw them from this territory and bring them inside our domestic commerce. In
which case, they have to pass through our customs gate. I thought we are carving out this entire area and
convert it into this kind of concept.34
However, contrary to the claim of petitioners, there is nothing in the foregoing excerpts which absolutely limits
the incentive to Freeport investors only to exemption from customs duties and taxes. Mindful of the legislative
intent to attract investors, enhance investment and boost the economy, the legislature could not have limited
the enticement only to exemption from taxes. The minimum interference policy of the government on the
Freeport extends to the kind of business that investors may embark on and the articles which they may import
or export into and out of the zone. A contrary interpretation would defeat the very purpose of the Freeport and
drive away investors.
It does not mean, however, that the right of Freeport enterprises to import all types of goods and article is
absolute. Such right is of course subject to the limitation that articles absolutely prohibited by law cannot be
imported into the Freeport.35 Nevertheless, in determining whether the prohibition would apply to the Freeport,
resort to the purpose of the prohibition is necessary.
In issuing EO 156, particularly the prohibition on importation under Article 2, Section 3.1, the President
envisioned to rationalize the importation of used motor vehicles and to enhance the capabilities of the
Philippine motor manufacturing firms to be globally competitive producers of completely build-up units and their
parts and components for the local and export markets.36 In justifying the issuance of EO 156, petitioners

alleged that there has been a decline in the sales of new vehicles and a remarkable growth of the sales of
imported used motor vehicles. To address the same, the President issued the questioned EO to prevent further
erosion of the already depressed market base of the local motor vehicle industry and to curtail the harmful
effects of the increase in the importation of used motor vehicles.37
Taking our bearings from the foregoing discussions, we hold that the importation ban runs afoul the third
requisite for a valid administrative order. To be valid, an administrative issuance must not be ultra vires or
beyond the limits of the authority conferred. It must not supplant or modify the Constitution, its enabling statute
and other existing laws, for such is the sole function of the legislature which the other branches of the
government cannot usurp. As held in United BF Homeowners Association v. BF Homes, Inc.:38
The rule-making power of a public administrative body is a delegated legislative power, which it may not use
either to abridge the authority given it by Congress or the Constitution or to enlarge its power beyond the scope
intended. Constitutional and statutory provisions control what rules and regulations may be promulgated by
such a body, as well as with respect to what fields are subject to regulation by it. It may not make rules and
regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it
is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.
In the instant case, the subject matter of the laws authorizing the President to regulate or forbid importation of
used motor vehicles, is the domestic industry. EO 156, however, exceeded the scope of its application by
extending the prohibition on the importation of used cars to the Freeport, which RA 7227, considers to some
extent, a foreign territory. The domestic industry which the EO seeks to protect is actually the "customs
territory" which is defined under the Rules and Regulations Implementing RA 7227, as follows:
"the portion of the Philippines outside the Subic Bay Freeport where the Tariff and Customs Code of the
Philippines and other national tariff and customs laws are in force and effect."39
The proscription in the importation of used motor vehicles should be operative only outside the Freeport and
the inclusion of said zone within the ambit of the prohibition is an invalid modification of RA 7227. Indeed, when
the application of an administrative issuance modifies existing laws or exceeds the intended scope, as in the
instant case, the issuance becomes void, not only for being ultra vires, but also for being unreasonable.
This brings us to the fourth requisite. It is an axiom in administrative law that administrative authorities should
not act arbitrarily and capriciously in the issuance of rules and regulations. To be valid, such rules and
regulations must be reasonable and fairly adapted to secure the end in view. If shown to bear no reasonable
relation to the purposes for which they were authorized to be issued, then they must be held to be invalid.40
There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable exercise of
police power. The deterioration of the local motor manufacturing firms due to the influx of imported used motor
vehicles is an urgent national concern that needs to be swiftly addressed by the President. In the exercise of
delegated police power, the executive can therefore validly proscribe the importation of these vehicles. Thus, in
Taxicab Operators of Metro Manila, Inc. v. Board of Transportation,41 the Court held that a regulation phasing
out taxi cabs more than six years old is a valid exercise of police power. The regulation was sustained as
reasonable holding that the purpose thereof was to promote the convenience and comfort and protect the
safety of the passengers.
The problem, however, lies with respect to the application of the importation ban to the Freeport. The Court
finds no logic in the all encompassing application of the assailed provision to the Freeport which is outside the
customs territory. As long as the used motor vehicles do not enter the customs territory, the injury or harm
sought to be prevented or remedied will not arise. The application of the law should be consistent with the
purpose of and reason for the law. Ratione cessat lex, et cessat lex. When the reason for the law ceases, the
law ceases. It is not the letter alone but the spirit of the law also that gives it life.42 To apply the proscription to
the Freeport would not serve the purpose of the EO. Instead of improving the general economy of the country,
the application of the importation ban in the Freeport would subvert the avowed purpose of RA 7227 which is to
create a market that would draw investors and ultimately boost the national economy.

In similar cases, we also declared void the administrative issuance or ordinances concerned for being
unreasonable. To illustrate, in De la Cruz v. Paras,43 the Court held as unreasonable and unconstitutional an
ordinance characterized by overbreadth. In that case, the Municipality of Bocaue, Bulacan, prohibited the
operation of all night clubs, cabarets and dance halls within its jurisdiction for the protection of public morals.
As explained by the Court:
x x x It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the
term reasonable. The objective of fostering public morals, a worthy and desirable end can be attained by a
measure that does not encompass too wide a field. Certainly the ordinance on its face is characterized by
overbreadth. The purpose sought to be achieved could have been attained by reasonable restrictions rather
than by an absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not
lightly set aside legislative action when there is not a clear invasion of personal or property rights under the
guise of police regulation." It is clear that in the guise of a police regulation, there was in this instance a clear
invasion of personal or property rights, personal in the case of those individuals desirous of patronizing those
night clubs and property in terms of the investments made and salaries to be earned by those therein
employed.
Lupangco v. Court of Appeals,44 is a case involving a resolution issued by the Professional Regulation
Commission which prohibited examinees from attending review classes and receiving handout materials, tips,
and the like three days before the date of examination in order to preserve the integrity and purity of the
licensure examinations in accountancy. Besides being unreasonable on its face and violative of academic
freedom, the measure was found to be more sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving
them of legitimate means of review or preparation on those last three precious days when they should be
refreshing themselves with all that they have learned in the review classes and preparing their mental and
psychological make-up for the examination day itself would be like uprooting the tree to get rid of a rotten
branch. What is needed to be done by the respondent is to find out the source of such leakages and stop it
right there. If corrupt officials or personnel should be terminated from their loss, then so be it. Fixers or
swindlers should be flushed out. Strict guidelines to be observed by examiners should be set up and if
violations are committed, then licenses should be suspended or revoked. x x x
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,45 the Court likewise struck down as unreasonable
and overbreadth a city ordinance granting an exclusive franchise for 25 years, renewable for another 25 years,
to one entity for the construction and operation of one common bus and jeepney terminal facility in Lucena
City. While professedly aimed towards alleviating the traffic congestion alleged to have been caused by the
existence of various bus and jeepney terminals within the city, the ordinance was held to be beyond what is
reasonably necessary to solve the traffic problem in the city.
By parity of reasoning, the importation ban in this case should also be declared void for its too sweeping and
unnecessary application to the Freeport which has no bearing on the objective of the prohibition. If the aim of
the EO is to prevent the entry of used motor vehicles from the Freeport to the customs territory, the solution is
not to forbid entry of these vehicles into the Freeport, but to intensify governmental campaign and measures to
thwart illegal ingress of used motor vehicles into the customs territory.
At this juncture, it must be mentioned that on June 19, 1993, President Fidel V. Ramos issued Executive Order
No. 97-A, "Further Clarifying The Tax And Duty-Free Privilege Within The Subic Special Economic And Free
Port Zone," Section 1 of which provides:
SECTION 1. The following guidelines shall govern the tax and duty-free privilege within the Secured Area of
the Subic Special Economic and Free Port Zone:
1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be the only
completely tax and duty-free area in the SSEFPZ. Business enterprises and individuals (Filipinos and

foreigners) residing within the Secured Area are free to import raw materials, capital goods, equipment, and
consumer items tax and dutry-free. Consumption items, however, must be consumed within the Secured Area.
Removal of raw materials, capital goods, equipment and consumer items out of the Secured Area for sale to
non-SSEFPZ registered enterprises shall be subject to the usual taxes and duties, except as may be provided
herein.
In Tiu v. Court of Appeals46 as reiterated in Coconut Oil Refiners Association, Inc. v. Torres,47 this provision
limiting the special privileges on tax and duty-free importation in the presently fenced-in former Subic Naval
Base has been declared valid and constitutional and in accordance with RA 7227. Consistent with these rulings
and for easier management and monitoring of activities and to prevent fraudulent importation of merchandise
and smuggling, the free flow and importation of used motor vehicles shall be operative only within the "secured
area."
In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void insofar as it is made applicable to the
presently secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-A. Pursuant to
the separability clause48 of EO 156, Section 3.1 is declared valid insofar as it applies to the customs territory
or the Philippine territory outside the presently secured fenced-in former Subic Naval Base area as stated in
Section 1.1 of EO 97-A. Hence, used motor vehicles that come into the Philippine territory via the secured
fenced-in former Subic Naval Base area may be stored, used or traded therein, or exported out of the
Philippine territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in
former Subic Naval Base area.
WHEREFORE, the petitions are PARTIALLY GRANTED and the May 24, 2004 Decisions of Branch 72,
Regional Trial Court of Olongapo City, in Civil Case No. 20-0-04 and Civil Case No. 22-0-04; and the February
14, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 63284, are MODIFIED insofar as they declared
Article 2, Section 3.1 of Executive Order No. 156, void in its entirety.
Said provision is declared VALID insofar as it applies to the Philippine territory outside the presently fenced-in
former Subic Naval Base area and VOID with respect to its application to the secured fenced-in former Subic
Naval Base area.

14.) TATAD v. SECRETARY OF ENERGY Oil Deregulation Law


Considering that oil is not endemic to this country, history shows that the government has always been finding
ways to alleviate the oil industry. The government created laws accommodate these innovations in the oil
industry. One such law is the Downstream Oil Deregulation Act of 1996 or RA 8180. This law allows that any
person or entity may import or purchase any quantity of crude oil and petroleum products from a foreign or
domestic source, lease or own and operate refineries and other downstream oil facilities and market such
crude oil or use the same for his own requirement, subject only to monitoring by the Department of Energy.
Tatad assails the constitutionality of the law. He claims, among others, that the imposition of different tariff rates
on imported crude oil and imported refined petroleum products violates the equal protection clause. Tatad
contends that the 3%-7% tariff differential unduly favors the three existing oil refineries and discriminates
against prospective investors in the downstream oil industry who do not have their own refineries and will have
to source refined petroleum products from abroad.3% is to be taxed on unrefined crude products and 7% on
refined crude products.
ISSUE: Whether or not RA 8180 is constitutional.

HELD: The SC declared the unconstitutionality of RA 8180 because it violated Sec 19 of Art 12 of the
Constitution. It violated that provision because it only strengthens oligopoly which is contrary to free
competition. It cannot be denied that our downstream oil industry is operated and controlled by an oligopoly, a
foreign oligopoly at that. Petron, Shell and Caltex stand as the only major league players in the oil market. All
other players belong to the lilliputian league. As the dominant players, Petron, Shell and Caltex boast of
existing refineries of various capacities. The tariff differential of 4% therefore works to their immense benefit.
Yet, this is only one edge of the tariff differential. The other edge cuts and cuts deep in the heart of their
competitors. It erects a high barrier to the entry of new players. New players that intend to equalize the market
power of Petron, Shell and Caltex by building refineries of their own will have to spend billions of pesos. Those
who will not build refineries but compete with them will suffer the huge disadvantage of increasing their product
cost by 4%. They will be competing on an uneven field. The argument that the 4% tariff differential is desirable
because it will induce prospective players to invest in refineries puts the cart before the horse. The first need is
to attract new players and they cannot be attracted by burdening them with heavy disincentives. Without new
players belonging to the league of Petron, Shell and Caltex, competition in our downstream oil industry is an
idle dream.
RA 8180 is unconstitutional on the ground inter alia that it discriminated against the new players insofar as it
placed them at a competitive disadvantage vis--vis the established oil companies by requiring them to meet
certain conditions already being observed by the latter.

In March 1996, Congress took the audacious step of deregulating the downstream oil industry. It enacted R.A.
No. 8180, entitled the "Downstream Oil Industry Deregulation Act of 1996." Under the deregulated
environment, "any person or entity may import or purchase any quantity of crude oil and petroleum products
from a foreign or domestic source, lease or own and operate refineries and other downstream oil facilities and
market such crude oil or use the same for his own requirement," subject only to monitoring by the Department
of
Energy. 11
The deregulation process has two phases: the transition phase and the full deregulation phase. During the
transition phase, controls of the non-pricing aspects of the oil industry were to be lifted. The following were to
be accomplished: (1) liberalization of oil importation, exportation, manufacturing, marketing and distribution, (2)
implementation of an automatic pricing mechanism, (3) implementation of an automatic formula to set margins
of dealers and rates of haulers, water transport operators and pipeline concessionaires, and (4) restructuring of
oil taxes. Upon full deregulation, controls on the price of oil and the foreign exchange cover were to be lifted
and the OPSF was to be abolished.
The first phase of deregulation commenced on August 12, 1996.
On February 8, 1997, the President implemented the full deregulation of the Downstream Oil Industry through
E.O. No. 372.
The petitions at bar assail the constitutionality of various provisions of R.A No. 8180 and E.O. No. 372.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment of section 5(b) of R.A. No. 8180.
Section 5(b) provides:
b)
Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff duty shall be
imposed and collected on imported crude oil at the rate of three percent (3%) and imported refined petroleum
products at the rate of seven percent (7%), except fuel oil and LPG, the rate for which shall be the same as
that for imported crude oil: Provided, That beginning on January 1, 2004 the tariff rate on imported crude oil
and refined petroleum products shall be the same: Provided, further, That this provision may be amended only
by an Act of Congress.

The petition is anchored on three arguments:


First, that the imposition of different tariff rates on imported crude oil and imported refined petroleum products
violates the equal protection clause. Petitioner contends that the 3%-7% tariff differential unduly favors the
three existing oil refineries and discriminates against prospective investors in the downstream oil industry who
do not have their own refineries and will have to source refined petroleum products from abroad.
Second, that the imposition of different tariff rates does not deregulate the downstream oil industry but instead
controls the oil industry, contrary to the avowed policy of the law. Petitioner avers that the tariff differential
between imported crude oil and imported refined petroleum products bars the entry of other players in the oil
industry because it effectively protects the interest of oil companies with existing refineries. Thus, it runs
counter to the objective of the law "to foster a truly competitive market."
Third, that the inclusion of the tariff provision in section 5(b) of R.A. No. 8180 violates Section 26(1) Article VI of
the Constitution requiring every law to have only one subject which shall be expressed in its title. Petitioner
contends that the imposition of tariff rates in section 5(b) of R.A. No. 8180 is foreign to the subject of the law
which is the deregulation of the downstream oil industry.
In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo, Enrique Garcia, Wigberto Tanada, Flag
Human Rights Foundation, Inc., Freedom from Debt Coalition (FDC) and Sanlakas contest the constitutionality
of section 15 of R.A. No. 8180 and E.O. No. 392. Section 15 provides:
Sec. 15.
Implementation of Full Deregulation. Pursuant to Section 5(e) of Republic Act No. 7638, the
DOE shall, upon approval of the President, implement the full deregulation of the downstream oil industry not
later than March 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude
oil and petroleum products in the world market are declining and when the exchange rate of the peso in
relation to the US dollar is stable. Upon the implementation of the full deregulation as provided herein, the
transition phase is deemed terminated and the following laws are deemed repealed:
xxx

xxx

xxx

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


WHEREAS, Republic Act No. 7638, otherwise known as the "Department of Energy Act of 1992," provides
that, at the end of four years from its effectivity last December 1992, "the Department (of Energy) shall, upon
approval of the President, institute the programs and time table of deregulation of appropriate energy projects
and activities of the energy sector;"
WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as the "Downstream Oil Industry
Deregulation Act of 1996," provides that "the DOE shall, upon approval of the President, implement full
deregulation of the downstream oil industry not later than March, 1997. As far as practicable, the DOE shall
time the full deregulation when the prices of crude oil and petroleum products in the world market are declining
and when the exchange rate of the peso in relation to the US dollar is stable;"
WHEREAS, pursuant to the recommendation of the Department of Energy, there is an imperative need to
implement the full deregulation of the downstream oil industry because of the following recent developments:
(i) depletion of the buffer fund on or about 7 February 1997 pursuant to the Energy Regulatory Board's Order
dated 16 January 1997; (ii) the prices of crude oil had been stable at $21-$23 per barrel since October 1996
while prices of petroleum products in the world market had been stable since mid-December of last year.
Moreover, crude oil prices are beginning to soften for the last few days while prices of some petroleum
products had already declined; and (iii) the exchange rate of the peso in relation to the US dollar has been
stable for the past twelve (12) months, averaging at around P26.20 to one US dollar;
WHEREAS, Executive Order No. 377 dated 31 October 1996 provides for an institutional framework for the
administration of the deregulated industry by defining the functions and responsibilities of various government
agencies;

WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the industry will foster a truly competitive
market which can better achieve the social policy objectives of fair prices and adequate, continuous supply of
environmentally-clean and high quality petroleum products;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by the powers vested in
me by law, do hereby declare the full deregulation of the downstream oil industry.
In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners offer the following submissions:
First, section 15 of R.A. No. 8180 constitutes an undue delegation of legislative power to the President and the
Secretary of Energy because it does not provide a determinate or determinable standard to guide the
Executive Branch in determining when to implement the full deregulation of the downstream oil industry.
Petitioners contend that the law does not define when it is practicable for the Secretary of Energy to
recommend to the President the full deregulation of the downstream oil industry or when the President may
consider it practicable to declare full deregulation. Also, the law does not provide any specific standard to
determine when the prices of crude oil in the world market are considered to be declining nor when the
exchange rate of the peso to the US dollar is considered stable.
Second, petitioners aver that E.O. No. 392 implementing the full deregulation of the downstream oil industry is
arbitrary and unreasonable because it was enacted due to the alleged depletion of the OPSF fund a
condition not found in R.A. No. 8180.
Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the formation of a de facto cartel among the three
existing oil companies Petron, Caltex and Shell in violation of the constitutional prohibition against
monopolies, combinations in restraint of trade and unfair competition.
Respondents, on the other hand, fervently defend the constitutionality of R.A. No. 8180 and E.O. No. 392. In
addition, respondents contend that the issues raised by the petitions are not justiciable as they pertain to the
wisdom of the law. Respondents further aver that petitioners have no locus standi as they did not sustain nor
will they sustain direct injury as a result of the implementation of R.A. No. 8180.
The petitions were heard by the Court on September 30, 1997. On October 7, 1997, the Court ordered the
private respondents oil companies "to maintain the status quo and to cease and desist from increasing the
prices of gasoline and other petroleum fuel products for a period of thirty (30) days . . . subject to further orders
as conditions may warrant."
We shall now resolve the petitions on the merit. The petitions raise procedural and substantive issues bearing
on the constitutionality of R.A. No. 8180 and E.O. No. 392. The procedural issues are: (1) whether or not the
petitions raise a justiciable controversy, and (2) whether or not the petitioners have the standing to assail the
validity of the subject law and executive order. The substantive issues are: (1) whether or not section 5 (b)
violates the one title one subject requirement of the Constitution; (2) whether or not the same section
violates the equal protection clause of the Constitution; (3) whether or not section 15 violates the constitutional
prohibition on undue delegation of power; (4) whether or not E.O. No. 392 is arbitrary and unreasonable; and
(5) whether or not R.A. No. 8180 violates the constitutional prohibition against monopolies, combinations in
restraint of trade and unfair competition.
We shall first tackle the procedural issues. Respondents claim that the avalanche of arguments of the
petitioners assail the wisdom of R.A. No. 8180. They aver that deregulation of the downstream oil industry is a
policy decision made by Congress and it cannot be reviewed, much less be reversed by this Court. In
constitutional parlance, respondents contend that the petitions failed to raise a justiciable controversy.
Respondents' joint stance is unnoteworthy. Judicial power includes not only the duty of the courts to settle
actual controversies involving rights which are legally demandable and enforceable, but also the duty to
determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the government. 12 The courts, as guardians of the Constitution,

have the inherent authority to determine whether a statute enacted by the legislature transcends the limit
imposed by the fundamental law. Where a statute violates the Constitution, it is not only the right but the duty
of the judiciary to declare such act as unconstitutional and void. 13 We held in the recent case of Tanada v.
Angara: 14
xxx

xxx

xxx

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the
petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously alleged
to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the
dispute. The question thus posed is judicial rather than political. The duty to adjudicate remains to assure that
the supremacy of the Constitution is upheld. Once a controversy as to the application or interpretation of a
constitutional provision is raised before this Court, it becomes a legal issue which the Court is bound by
constitutional mandate to decide.
Even a sideglance at the petitions will reveal that petitioners have raised constitutional issues which deserve
the resolution of this Court in view of their seriousness and their value as precedents. Our statement of facts
and definition of issues clearly show that petitioners are assailing R.A. No. 8180 because its provisions infringe
the Constitution and not because the law lacks wisdom. The principle of separation of power mandates that
challenges on the constitutionality of a law should be resolved in our courts of justice while doubts on the
wisdom of a law should be debated in the halls of Congress. Every now and then, a law may be denounced in
court both as bereft of wisdom and constitutionally infirmed. Such denunciation will not deny this Court of its
jurisdiction to resolve the constitutionality of the said law while prudentially refusing to pass on its wisdom.
The effort of respondents to question the locus standi of petitioners must also fall on barren ground. In
language too lucid to be misunderstood, this Court has brightlined its liberal stance on a petitioner's locus
standi where the petitioner is able to craft an issue of transcendental significance to the people. 15 In Kapatiran
ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 16 we stressed:
xxx

xxx

xxx

Objections to taxpayers' suit for lack of sufficient personality, standing or interest are, however, in the main
procedural matters. Considering the importance to the public of the cases at bar, and in keeping with the
Court's duty, under the 1987 Constitution, to determine whether or not the other branches of government have
kept themselves within the limits of the Constitution and the laws and that they have not abused the discretion
given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of these
petitions.
There is not a dot of disagreement between the petitioners and the respondents on the far reaching importance
of the validity of RA No. 8180 deregulating our downstream oil industry. Thus, there is no good sense in being
hypertechnical on the standing of petitioners for they pose issues which are significant to our people and which
deserve our forthright resolution.
We shall now track down the substantive issues. In G.R. No. 124360 where petitioner is Senator Tatad, it is
contended that section 5(b) of R.A. No. 8180 on tariff differential violates the provision 17 of the Constitution
requiring every law to have only one subject which should be expressed in its title. We do not concur with this
contention. As a policy, this Court has adopted a liberal construction of the one title one subject rule. We
have consistently ruled 18 that the title need not mirror, fully index or catalogue all contents and minute details
of a law. A law having a single general subject indicated in the title may contain any number of provisions, no
matter how diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and
may be considered in furtherance of such subject by providing for the method and means of carrying out the
general subject. 19 We hold that section 5(b) providing for tariff differential is germane to the subject of R.A.
No. 8180 which is the deregulation of the downstream oil industry. The section is supposed to sway
prospective investors to put up refineries in our country and make them rely less on imported petroleum. 20
We shall, however, return to the validity of this provision when we examine its blocking effect on new entrants
to the oil market.

We shall now slide to the substantive issues in G.R. No. 127867. Petitioners assail section 15 of R.A. No. 8180
which fixes the time frame for the full deregulation of the downstream oil industry. We restate its pertinent
portion for emphasis, viz.:
Sec. 15.
Implementation of Full Deregulation Pursuant to section 5(e) of Republic Act No. 7638, the
DOE shall, upon approval of the President, implement the full deregulation of the downstream oil industry not
later than March 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude
oil and petroleum products in the world market are declining and when the exchange rate of the peso in
relation to the US dollar is stable . . .
Petitioners urge that the phrases "as far as practicable," "decline of crude oil prices in the world market" and
"stability of the peso exchange rate to the US dollar" are ambivalent, unclear and inconcrete in meaning. They
submit that they do not provide the "determinate or determinable standards" which can guide the President in
his decision to fully deregulate the downstream oil industry. In addition, they contend that E.O. No. 392 which
advanced the date of full deregulation is void for it illegally considered the depletion of the OPSF fund as a
factor.
The power of Congress to delegate the execution of laws has long been settled by this Court. As early as 1916
in Compania General de Tabacos de Filipinas vs. The Board of Public Utility Commissioners, 21 this Court
thru, Mr. Justice Moreland, held that "the true distinction is between the delegation of power to make the law,
which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made." Over the years, as the legal engineering of men's relationship became more difficult,
Congress has to rely more on the practice of delegating the execution of laws to the executive and other
administrative agencies. Two tests have been developed to determine whether the delegation of the power to
execute laws does not involve the abdication of the power to make law itself. We delineated the metes and
bounds of these tests in Eastern Shipping Lines, Inc. VS. POEA, 22 thus:
There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz:
the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its
terms and conditions when it leaves the legislative such that when it reaches the delegate the only thing he will
have to do is to enforce it. Under the sufficient standard test, there must be adequate guidelines or limitations
in the law to map out the boundaries of the delegate's authority and prevent the delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power essentially legislative.
The validity of delegating legislative power is now a quiet area in our constitutional landscape. As sagely
observed, delegation of legislative power has become an inevitability in light of the increasing complexity of the
task of government. Thus, courts bend as far back as possible to sustain the constitutionality of laws which are
assailed as unduly delegating legislative powers. Citing Hirabayashi v. United States 23 as authority, Mr.
Justice Isagani A. Cruz states "that even if the law does not expressly pinpoint the standard, the courts will
bend over backward to locate the same elsewhere in order to spare the statute, if it can, from constitutional
infirmity." 24
Given the groove of the Court's rulings, the attempt of petitioners to strike down section 15 on the ground of
undue delegation of legislative power cannot prosper. Section 15 can hurdle both the completeness test and
the sufficient standard test. It will be noted that Congress expressly provided in R.A. No. 8180 that full
deregulation will start at the end of March 1997, regardless of the occurrence of any event. Full deregulation at
the end of March 1997 is mandatory and the Executive has no discretion to postpone it for any purported
reason. Thus, the law is complete on the question of the final date of full deregulation. The discretion given to
the President is to advance the date of full deregulation before the end of March 1997. Section 15 lays down
the standard to guide the judgment of the President he is to time it as far as practicable when the prices of
crude oil and petroleum products in the world market are declining and when the exchange rate of the peso in
relation to the US dollar is stable.

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been defined in
R.A. No. 8180 as they do not set determinate or determinable standards. The stubborn submission deserves
scant consideration. The dictionary meanings of these words are well settled and cannot confuse men of
reasonable intelligence. Webster defines "practicable" as meaning possible to practice or perform, "decline" as
meaning to take a downward direction, and "stable" as meaning firmly established. 25 The fear of petitioners
that these words will result in the exercise of executive discretion that will run riot is thus groundless. To be
sure, the Court has sustained the validity of similar, if not more general standards in other cases. 26
It ought to follow that the argument that E.O. No. 392 is null and void as it was based on indeterminate
standards set by R.A. 8180 must likewise fail. If that were all to the attack against the validity of E.O. No. 392,
the issue need not further detain our discourse. But petitioners further posit the thesis that the Executive
misapplied R.A. No. 8180 when it considered the depletion of the OPSF fund as a factor in fully deregulating
the downstream oil industry in February 1997. A perusal of section 15 of R.A. No. 8180 will readily reveal that it
only enumerated two factors to be considered by the Department of Energy and the Office of the President,
viz.: (1) the time when the prices of crude oil and petroleum products in the world market are declining, and (2)
the time when the exchange rate of the peso in relation to the US dollar is stable. Section 15 did not mention
the depletion of the OPSF fund as a factor to be given weight by the Executive before ordering full
deregulation. On the contrary, the debates in Congress will show that some of our legislators wanted to impose
as a pre-condition to deregulation a showing that the OPSF fund must not be in deficit. 27 We therefore hold
that the Executive department failed to follow faithfully the standards set by R.A. No. 8180 when it considered
the extraneous factor of depletion of the OPSF fund. The misappreciation of this extra factor cannot be justified
on the ground that the Executive department considered anyway the stability of the prices of crude oil in the
world market and the stability of the exchange rate of the peso to the dollar. By considering another factor to
hasten full deregulation, the Executive department rewrote the standards set forth in R.A. 8180. The Executive
is bereft of any right to alter either by subtraction or addition the standards set in R.A. No. 8180 for it has no
power to make laws. To cede to the Executive the power to make law is to invite tyranny, indeed, to transgress
the principle of separation of powers. The exercise of delegated power is given a strict scrutiny by courts for
the delegate is a mere agent whose action cannot infringe the terms of agency. In the cases at bar, the
Executive co-mingled the factor of depletion of the OPSF fund with the factors of decline of the price of crude
oil in the world market and the stability of the peso to the US dollar. On the basis of the text of E.O. No. 392, it
is impossible to determine the weight given by the Executive department to the depletion of the OPSF fund. It
could well be the principal consideration for the early deregulation. It could have been accorded an equal
significance. Or its importance could be nil. In light of this uncertainty, we rule that the early deregulation under
E.O. No. 392 constitutes a misapplication of R.A. No. 8180.
We now come to grips with the contention that some provisions of R.A. No. 8180 violate section 19 of Article
XII of the 1987 Constitution. These provisions are:
(1)
Section 5 (b) which states "Any law to the contrary notwithstanding and starting with the effectivity of
this Act, tariff duty shall be imposed and collected on imported crude oil at the rate of three percent (3%) and
imported refined petroleum products at the rate of seven percent (7%) except fuel oil and LPG, the rate for
which shall be the same as that for imported crude oil. Provided, that beginning on January 1, 2004 the tariff
rate on imported crude oil and refined petroleum products shall be the same. Provided, further, that this
provision may be amended only by an Act of Congress."
(2)
Section 6 which states "To ensure the security and continuity of petroleum crude and products
supply, the DOE shall require the refiners and importers to maintain a minimum inventory equivalent to ten
percent (10%) of their respective annual sales volume or forty (40) days of supply, whichever is lower," and
(3)
Section 9 (b) which states "To ensure fair competition and prevent cartels and monopolies in the
downstream oil industry, the following acts shall be prohibited:
xxx

xxx

xxx

(b)
Predatory pricing which means selling or offering to sell any product at a price unreasonably below the
industry average cost so as to attract customers to the detriment of competitors.
On the other hand, section 19 of Article XII of the Constitution allegedly violated by the aforestated provisions
of R.A. No. 8180 mandates: "The State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be allowed."
A monopoly is a privilege or peculiar advantage vested in one or more persons or companies, consisting in the
exclusive right or power to carry on a particular business or trade, manufacture a particular article, or control
the sale or the whole supply of a particular commodity. It is a form of market structure in which one or only a
few firms dominate the total sales of a product or service. 28 On the other hand, a combination in restraint of
trade is an agreement or understanding between two or more persons, in the form of a contract, trust, pool,
holding company, or other form of association, for the purpose of unduly restricting competition, monopolizing
trade and commerce in a certain commodity, controlling its, production, distribution and price, or otherwise
interfering with freedom of trade without statutory authority. 29 Combination in restraint of trade refers to the
means while monopoly refers to the end. 30
Article 186 of the Revised Penal Code and Article 28 of the New Civil Code breathe life to this constitutional
policy. Article 186 of the Revised Penal Code penalizes monopolization and creation of combinations in
restraint of
trade, 31 while Article 28 of the New Civil Code makes any person who shall engage in unfair competition
liable for damages. 32
Respondents aver that sections 5(b), 6 and 9(b) implement the policies and objectives of R.A. No. 8180. They
explain that the 4% tariff differential is designed to encourage new entrants to invest in refineries. They stress
that the inventory requirement is meant to guaranty continuous domestic supply of petroleum and to
discourage fly-by-night operators. They also submit that the prohibition against predatory pricing is intended to
protect prospective entrants. Respondents manifested to the Court that new players have entered the
Philippines after deregulation and have now captured 3% 5% of the oil market.
The validity of the assailed provisions of R.A. No. 8180 has to be decided in light of the letter and spirit of our
Constitution, especially section 19, Article XII. Beyond doubt, the Constitution committed us to the free
enterprise system but it is a system impressed with its own distinctness. Thus, while the Constitution embraced
free enterprise as an economic creed, it did not prohibit per se the operation of monopolies which can,
however, be regulated in the public interest. 33 Thus too, our free enterprise system is not based on a market
of pure and unadulterated competition where the State pursues a strict hands-off policy and follows the let-thedevil devour the hindmost rule. Combinations in restraint of trade and unfair competitions are absolutely
proscribed and the proscription is directed both against the State as well as the private sector. 34 This distinct
free enterprise system is dictated by the need to achieve the goals of our national economy as defined by
section 1, Article XII of the Constitution which are: more equitable distribution of opportunities, income and
wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality of life for all, especially the
underprivileged. It also calls for the State to protect Filipino enterprises against unfair competition and trade
practices.
Section 19, Article XII of our Constitution is anti-trust in history and in spirit. It espouses competition. The
desirability of competition is the reason for the prohibition against restraint of trade, the reason for the
interdiction of unfair competition, and the reason for regulation of unmitigated monopolies. Competition is thus
the underlying principle of section 19, Article XII of our Constitution which cannot be violated by R.A. No. 8180.
We subscribe to the observation of Prof. Gellhorn that the objective of anti-trust law is "to assure a competitive
economy, based upon the belief that through competition producers will strive to satisfy consumer wants at the
lowest price with the sacrifice of the fewest resources. Competition among producers allows consumers to bid
for goods and services, and thus matches their desires with society's opportunity costs." 35 He adds with
appropriateness that there is a reliance upon "the operation of the 'market' system (free enterprise) to decide
what shall be produced, how resources shall be allocated in the production process, and to whom the various

products will be distributed. The market system relies on the consumer to decide what and how much shall be
produced, and on competition, among producers to determine who will manufacture it."
Again, we underline in scarlet that the fundamental principle espoused by section 19, Article XII of the
Constitution is competition for it alone can release the creative forces of the market. But the competition that
can unleash these creative forces is competition that is fighting yet is fair. Ideally, this kind of competition
requires the presence of not one, not just a few but several players. A market controlled by one player
(monopoly) or dominated by a handful of players (oligopoly) is hardly the market where honest-to-goodness
competition will prevail. Monopolistic or oligopolistic markets deserve our careful scrutiny and laws which
barricade the entry points of new players in the market should be viewed with suspicion.
Prescinding from these baseline propositions, we shall proceed to examine whether the provisions of R.A. No.
8180 on tariff differential, inventory reserves, and predatory prices imposed substantial barriers to the entry
and exit of new players in our downstream oil industry. If they do, they have to be struck down for they will
necessarily inhibit the formation of a truly competitive market. Contrariwise, if they are insignificant
impediments, they need not be stricken down.
In the cases at bar, it cannot be denied that our downstream oil industry is operated and controlled by an
oligopoly, a foreign oligopoly at that. Petron, Shell and Caltex stand as the only major league players in the oil
market. All other players belong to the lilliputian league. As the dominant players, Petron, Shell and Caltex
boast of existing refineries of various capacities. The tariff differential of 4% therefore works to their immense
benefit. Yet, this is only one edge of the tariff differential. The other edge cuts and cuts deep in the heart of their
competitors. It erects a high barrier to the entry of new players. New players that intend to equalize the market
power of Petron, Shell and Caltex by building refineries of their own will have to spend billions of pesos. Those
who will not build refineries but compete with them will suffer the huge disadvantage of increasing their product
cost by 4%. They will be competing on an uneven field. The argument that the 4% tariff differential is desirable
because it will induce prospective players to invest in refineries puts the cart before the horse. The first need is
to attract new players and they cannot be attracted by burdening them with heavy disincentives. Without new
players belonging to the league of Petron, Shell and Caltex, competition in our downstream oil industry is an
idle dream.
The provision on inventory widens the balance of advantage of Petron, Shell and Caltex against prospective
new players. Petron, Shell and Caltex can easily comply with the inventory requirement of R.A. No. 8180 in
view of their existing storage facilities. Prospective competitors again will find compliance with this requirement
difficult as it will entail a prohibitive cost. The construction cost of storage facilities and the cost of inventory can
thus scare prospective players. Their net effect is to further occlude the entry points of new players, dampen
competition and enhance the control of the market by the three (3) existing oil companies.
Finally, we come to the provision on predatory pricing which is defined as ". . . selling or offering to sell any
product at a price unreasonably below the industry average cost so as to attract customers to the detriment of
competitors." Respondents contend that this provision works against Petron, Shell and Caltex and protects
new entrants. The ban on predatory pricing cannot be analyzed in isolation. Its validity is interlocked with the
barriers imposed by R.A. No. 8180 on the entry of new players. The inquiry should be to determine whether
predatory pricing on the part of the dominant oil companies is encouraged by the provisions in the law blocking
the entry of new players. Text-writer
Hovenkamp, 36 gives the authoritative answer and we quote:
xxx

xxx

xxx

The rationale for predatory pricing is the sustaining of losses today that will give a firm monopoly profits in the
future. The monopoly profits will never materialize, however, if the market is flooded with new entrants as soon
as the successful predator attempts to raise its price. Predatory pricing will be profitable only if the market
contains significant barriers to new entry.
As aforediscsussed, the 4% tariff differential and the inventory requirement are significant barriers which
discourage new players to enter the market. Considering these significant barriers established by R.A. No.

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

xxx

xxx

The general rule is that where part of a statute is void as repugnant to the Constitution, while another part is
valid, the valid portion, if separable from the invalid, may stand and be enforced. The presence of a separability
clause in a statute creates the presumption that the legislature intended separability, rather than complete
nullity of the statute. To justify this result, the valid portion must be so far independent of the invalid portion that
it is fair to presume that the legislature would have enacted it by itself if it had supposed that it could not
constitutionally enact the other. Enough must remain to make a complete, intelligible and valid statute, which
carries out the legislative intent. . . .
The exception to the general rule is that when the parts of a statute are so mutually dependent and connected,
as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the
legislature intended them as a whole, the nullity of one part will vitiate the rest. In making the parts of the
statute dependent, conditional, or connected with one another, the legislature intended the statute to be carried
out as a whole and would not have enacted it if one part is void, in which case if some parts are
unconstitutional, all the other provisions thus dependent, conditional, or connected must fall with them.
R.A. No. 8180 contains a separability clause. Section 23 provides that "if for any reason, any section or
provision of this Act is declared unconstitutional or invalid, such parts not affected thereby shall remain in full
force and effect." This separability clause notwithstanding, we hold that the offending provisions of R.A. No.
8180 so permeate its essence that the entire law has to be struck down. The provisions on tariff differential,
inventory and predatory pricing are among the principal props of R.A. No. 8180. Congress could not have
deregulated the downstream oil industry without these provisions. Unfortunately, contrary to their intent, these
provisions on tariff differential, inventory and predatory pricing inhibit fair competition, encourage monopolistic
power and interfere with the free interaction of market forces. R.A. No. 8180 needs provisions to vouchsafe
free and fair competition. The need for these vouchsafing provisions cannot be overstated. Before
deregulation, PETRON, SHELL and CALTEX had no real competitors but did not have a free run of the market
because government controls both the pricing and non-pricing aspects of the oil industry. After deregulation,
PETRON, SHELL and CALTEX remain unthreatened by real competition yet are no longer subject to control by
government with respect to their pricing and non-pricing decisions. The aftermath of R.A. No. 8180 is a
deregulated market where competition can be corrupted and where market forces can be manipulated by
oligopolies.
The fall out effects of the defects of R.A. No. 8180 on our people have not escaped Congress. A lot of our
leading legislators have come out openly with bills seeking the repeal of these odious and offensive provisions
in R.A. No. 8180. In the Senate, Senator Freddie Webb has filed S.B. No. 2133 which is the result of the
hearings conducted by the Senate Committee on Energy. The hearings revealed that (1) there was a need to
level the playing field for the new entrants in the downstream oil industry, and (2) there was no law punishing a
person for selling petroleum products at unreasonable prices. Senator Alberto G. Romulo also filed S.B. No.

2209 abolishing the tariff differential beginning January 1, 1998. He declared that the amendment ". . . would
mean that instead of just three (3) big oil companies there will be other major oil companies to provide more
competitive prices for the market and the consuming public." Senator Heherson T . Alvarez, one of the principal
proponents of R.A. No. 8180, also filed S.B. No. 2290 increasing the penalty for violation of its section 9. It is
his opinion as expressed in the explanatory note of the bill that the present oil companies are engaged in
cartelization despite R.A. No. 8180, viz,:
xxx

xxx

xxx

Since the downstream oil industry was fully deregulated in February 1997, there have been eight (8) fuel price
adjustments made by the three oil majors, namely: Caltex Philippines, Inc.; Petron Corporation; and Pilipinas
Shell Petroleum Corporation. Very noticeable in the price adjustments made, however, is the uniformity in the
pump prices of practically all petroleum products of the three oil companies. This, despite the fact, that their
selling rates should be determined by a combination of any of the following factors: the prevailing peso-dollar
exchange rate at the time payment is made for crude purchases, sources of crude, and inventory levels of both
crude and refined petroleum products. The abovestated factors should have resulted in different, rather than
identical prices.
The fact that the three (3) oil companies' petroleum products are uniformly priced suggests collusion,
amounting to cartelization, among Caltex Philippines, Inc., Petron Corporation and Pilipinas Shell Petroleum
Corporation to fix the prices of petroleum products in violation of paragraph (a), Section 9 of R.A. No. 8180.
To deter this pernicious practice and to assure that present and prospective players in the downstream oil
industry conduct their business with conscience and propriety, cartel-like activities ought to be severely
penalized.
Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a uniform tariff rate on imported crude oil and
refined petroleum products. In the explanatory note of the bill, he declared in no uncertain terms that ". . . the
present set-up has raised serious public concern over the way the three oil companies have uniformly adjusted
the prices of oil in the country, an indication of a possible existence of a cartel or a cartel-like situation within
the downstream oil industry. This situation is mostly attributed to the foregoing provision on tariff differential,
which has effectively discouraged the entry of new players in the downstream oil industry."
In the House of Representatives, the moves to rehabilitate R.A. No. 8180 are equally feverish. Representative
Leopoldo E. San Buenaventura has filed H.B. No. 9826 removing the tariff differential for imported crude oil
and imported refined petroleum products. In the explanatory note of the bill, Rep. Buenaventura explained:
xxx

xxx

xxx

As we now experience, this difference in tariff rates between imported crude oil and imported refined petroleum
products, unwittingly provided a built-in-advantage for the three existing oil refineries in the country and
eliminating competition which is a must in a free enterprise economy. Moreover, it created a disincentive for
other players to engage even initially in the importation and distribution of refined petroleum products and
ultimately in the putting up of refineries. This tariff differential virtually created a monopoly of the downstream
oil industry by the existing three oil companies as shown by their uniform and capricious pricing of their
products since this law took effect, to the great disadvantage of the consuming public.
Thus, instead of achieving the desired effects of deregulation, that of free enterprise and a level playing field in
the downstream oil industry, R.A. 8180 has created an environment conducive to cartelization, unfavorable,
increased, unrealistic prices of petroleum products in the country by the three existing refineries.
Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent collusion among the present oil
companies by strengthening the oversight function of the government, particularly its ability to subject to a
review any adjustment in the prices of gasoline and other petroleum products. In the explanatory note of the
bill, Rep. Punzalan, Jr., said:

xxx

xxx

xxx

To avoid this, the proposed bill seeks to strengthen the oversight function of government, particularly its ability
to review the prices set for gasoline and other petroleum products. It grants the Energy Regulatory Board
(ERB) the authority to review prices of oil and other petroleum products, as may be petitioned by a person,
group or any entity, and to subsequently compel any entity in the industry to submit any and all documents
relevant to the imposition of new prices. In cases where the Board determines that there exist collusion,
economic conspiracy, unfair trade practice, profiteering and/or overpricing, it may take any step necessary to
protect the public, including the readjustment of the prices of petroleum products. Further, the Board may also
impose the fine and penalty of imprisonment, as prescribed in Section 9 of R.A. 8180, on any person or entity
from the oil industry who is found guilty of such prohibited acts.
By doing all of the above, the measure will effectively provide Filipino consumers with a venue where their
grievances can be heard and immediately acted upon by government.
Thus, this bill stands to benefit the Filipino consumer by making the price-setting process more transparent and
making it easier to prosecute those who perpetrate such prohibited acts as collusion, overpricing, economic
conspiracy and unfair trade.
Representative Sergio A.F . Apostol filed H.B. No. 10039 to remedy an omission in R.A. No. 8180 where there
is no agency in government that determines what is "reasonable" increase in the prices of oil products.
Representative Dente O. Tinga, one of the principal sponsors of R.A. No. 8180, filed H.B. No. 10057 to
strengthen its anti-trust provisions. He elucidated in its explanatory note:
xxx

xxx

xxx

The definition of predatory pricing, however, needs to be tightened up particularly with respect to the definitive
benchmark price and the specific anti-competitive intent. The definition in the bill at hand which was taken from
the Areeda-Turner test in the United States on predatory pricing resolves the questions. The definition reads,
"Predatory pricing means selling or offering to sell any oil product at a price below the average variable cost for
the purpose of destroying competition, eliminating a competitor or discouraging a competitor from entering the
market."
The appropriate actions which may be resorted to under the Rules of Court in conjunction with the oil
deregulation law are adequate. But to stress their availability and dynamism, it is a good move to incorporate
all the remedies in the law itself. Thus, the present bill formalizes the concept of government intervention and
private suits to address the problem of antitrust violations. Specifically, the government may file an action to
prevent or restrain any act of cartelization or predatory pricing, and if it has suffered any loss or damage by
reason of the antitrust violation it may recover damages. Likewise, a private person or entity may sue to
prevent or restrain any such violation which will result in damage to his business or property, and if he has
already suffered damage he shall recover treble damages. A class suit may also be allowed.
To make the DOE Secretary more effective in the enforcement of the law, he shall be given additional powers
to gather information and to require reports.
Representative Erasmo B. Damasing filed H.B. No. 7885 and has a more unforgiving view of R.A. No. 8180.
He wants it completely repealed. He explained:
xxx

xxx

xxx

Contrary to the projections at the time the bill on the Downstream Oil Industry Deregulation was discussed and
debated upon in the plenary session prior to its approval into law, there aren't any new players or investors in
the oil industry. Thus, resulting in practically a cartel or monopoly in the oil industry by the three (3) big oil
companies, Caltex, Shell and Petron. So much so, that with the deregulation now being partially implemented,
the said oil companies have succeeded in increasing the prices of most of their petroleum products with little or
no interference at all from the government. In the month of August, there was an increase of Fifty centavos

(50) per liter by subsidizing the same with the OPSF, this is only temporary as in March 1997, or a few
months from now, there will be full deregulation (Phase II) whereby the increase in the prices of petroleum
products will be fully absorbed by the consumers since OPSF will already be abolished by then. Certainly, this
would make the lives of our people, especially the unemployed ones, doubly difficult and unbearable.
The much ballyhooed coming in of new players in the oil industry is quite remote considering that these
prospective investors cannot fight the existing and well established oil companies in the country today, namely,
Caltex, Shell and Petron. Even if these new players will come in, they will still have no chance to compete with
the said three (3) existing big oil companies considering that there is an imposition of oil tariff differential of 4%
between importation of crude oil by the said oil refineries paying only 3% tariff rate for the said importation and
7% tariff rate to be paid by businessmen who have no oil refineries in the Philippines but will import finished
petroleum/oil products which is being taxed with 7% tariff rates.
So, if only to help the many who are poor from further suffering as a result of unmitigated increase in oil
products due to deregulation, it is a must that the Downstream Oil Industry Deregulation Act of 1996, or R.A.
8180 be repealed completely.
Various resolutions have also been filed in the Senate calling for an immediate and comprehensive review of
R.A. No. 8180 to prevent the downpour of its ill effects on the people. Thus, S. Res. No. 574 was filed by
Senator Gloria M. Macapagal entitled Resolution "Directing the Committee on Energy to Inquire Into The
Proper Implementation of the Deregulation of the Downstream Oil Industry and Oil Tax Restructuring As
Mandated Under R.A. Nos. 8180 and 8184, In Order to Make The Necessary Corrections In the Apparent
Misinterpretation Of The Intent And Provision Of The Laws And Curb The Rising Tide Of Disenchantment
Among The Filipino Consumers And Bring About The Real Intentions And Benefits Of The Said Law." Senator
Blas P. Ople filed S. Res. No. 664 entitled resolution "Directing the Committee on Energy To Conduct An
Inquiry In Aid Of Legislation To Review The Government's Oil Deregulation Policy In Light Of The Successive
Increases In Transportation, Electricity And Power Rates, As well As Of Food And Other Prime Commodities
And Recommend Appropriate Amendments To Protect The Consuming Public." Senator Ople observed:
xxx

xxx

xxx

WHEREAS, since the passage of R.A. No. 8180, the Energy Regulatory Board (ERB) has imposed successive
increases in oil prices which has triggered increases in electricity and power rates, transportation fares, as well
as in prices of food and other prime commodities to the detriment of our people, particularly the poor;
WHEREAS, the new players that were expected to compete with the oil cartel-Shell, Caltex and Petron-have
not come in;
WHEREAS, it is imperative that a review of the oil deregulation policy be made to consider appropriate
amendments to the existing law such as an extension of the transition phase before full deregulation in order to
give the competitive market enough time to develop;
WHEREAS, the review can include the advisability of providing some incentives in order to attract the entry of
new oil companies to effect a dynamic competitive market;
WHEREAS, it may also be necessary to defer the setting up of the institutional framework for full deregulation
of the oil industry as mandated under Executive Order No. 377 issued by President Ramos last October 31,
1996 . . .
Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution "Directing the Committees on Energy and
Public Services In Aid Of Legislation To Assess The Immediate Medium And Long Term Impact of Oil
Deregulation On Oil Prices And The Economy." Among the reasons for the resolution is the finding that "the
requirement of a 40-day stock inventory effectively limits the entry of other oil firms in the market with the
consequence that instead of going down oil prices will rise."

Parallel resolutions have been filed in the House of Representatives. Representative Dante O. Tinga filed H.
Res. No. 1311 "Directing The Committee on Energy To Conduct An Inquiry, In Aid of Legislation, Into The
Pricing Policies And Decisions Of The Oil Companies Since The Implementation of Full Deregulation Under the
Oil Deregulation Act (R.A. No. 8180) For the Purpose of Determining In the Context Of The Oversight
Functions Of Congress Whether The Conduct Of The Oil Companies, Whether Singly Or Collectively,
Constitutes Cartelization Which Is A Prohibited Act Under R.A. No. 8180, And What Measures Should Be
Taken To Help Ensure The Successful Implementation Of The Law In Accordance With Its Letter And Spirit,
Including Recommending Criminal Prosecution Of the Officers Concerned Of the Oil Companies If Warranted
By The Evidence, And For Other Purposes." Representatives Marcial C. Punzalan, Jr. Dante O. Tinga and
Antonio E. Bengzon III filed H.R. No. 894 directing the House Committee on Energy to inquire into the proper
implementation of the deregulation of the downstream oil industry. House Resolution No. 1013 was also filed
by Representatives Edcel C. Lagman, Enrique T . Garcia, Jr. and Joker P. Arroyo urging the President to
immediately suspend the implementation of E.O. No. 392.
In recent memory there is no law enacted by the legislature afflicted with so much constitutional deformities as
R.A. No. 8180. Yet, R.A. No. 8180 deals with oil, a commodity whose supply and price affect the ebb and flow
of the lifeblood of the nation. Its shortage of supply or a slight, upward spiral in its price shakes our economic
foundation. Studies show that the areas most impacted by the movement of oil are food manufacture, land
transport, trade, electricity and water. 38 At a time when our economy is in a dangerous downspin, the
perpetuation of R.A. No. 8180 threatens to multiply the number of our people with bent backs and begging
bowls. R.A. No. 8180 with its anti-competition provisions cannot be allowed by this Court to stand even while
Congress is working to remedy its defects.
The Court, however, takes note of the plea of PETRON, SHELL and CALTEX to lift our restraining order to
enable them to adjust upward the price of petroleum and petroleum products in view of the plummeting value
of the peso. Their plea, however, will now have to be addressed to the Energy Regulatory Board as the effect
of the declaration of unconstitutionality of R.A. No. 8180 is to revive the former laws it repealed. 39 The length
of our return to the regime of regulation depends on Congress which can fasttrack the writing of a new law on
oil deregulation in accord with the Constitution.
With this Decision, some circles will chide the Court for interfering with an economic decision of Congress.
Such criticism is charmless for the Court is annulling R.A. No. 8180 not because it disagrees with deregulation
as an economic policy but because as cobbled by Congress in its present form, the law violates the
Constitution. The right call therefor should be for Congress to write a new oil deregulation law that conforms
with the Constitution and not for this Court to shirk its duty of striking down a law that offends the Constitution.
Striking down R.A. No. 8180 may cost losses in quantifiable terms to the oil oligopolists. But the loss in
tolerating the tampering of our Constitution is not quantifiable in pesos and centavos. More worthy of protection
than the supra-normal profits of private corporations is the sanctity of the fundamental principles of the
Constitution. Indeed when confronted by a law violating the Constitution, the Court has no option but to strike it
down dead. Lest it is missed, the Constitution is a covenant that grants and guarantees both the political and
economic rights of the people. The Constitution mandates this Court to be the guardian not only of the people's
political rights but their economic rights as well. The protection of the economic rights of the poor and the
powerless is of greater importance to them for they are concerned more with the exoterics of living and less
with the esoterics of liberty. Hence, for as long as the Constitution reigns supreme so long will this Court be
vigilant in upholding the economic rights of our people especially from the onslaught of the powerful. Our
defense of the people's economic rights may appear heartless because it cannot be half-hearted.
IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is declared unconstitutional and E.O. No. 372
void.

15.) Ynot v IAC (1987) 148 SCRA 659

J. Cruz (The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades "Strike
but hear me first!" It is this cry that the petitioner in effect repeats here as he challenges the constitutionality of
Executive Order No. 626-A.)

Facts:
Petitioner transported 6 caracbaos from Masbate to Iloilo in 1984 and those were confiscated by the station
commander in Barotac, Iloilo for violating E.O. 626 A which prohibits transportation of a carabao or carabeef
from one province to another. Confiscation will be a result of this.
The petitioner sued for recovery, and the Regional Trial Court of Iloilo City issued a writ of replevin upon his
filing of a supersedeas bond of P12,000.00. After considering the merits of the case, the court sustained the
confiscation of the carabaos and, since they could no longer be produced, ordered the confiscation of the
bond. The court also declined to rule on the constitutionality of the executive order, as raise by the petitioner,
for lack of authority and also for its presumed validity.
The same result was decided in the trial court.
In the Supreme Court, he then petitioned against the constitutionality of the E.O. due to the outright
confiscation without giving the owner the right to heard before an impartial court as guaranteed by due
process. He also challenged the improper exercise of legislative power by the former president
under Amendment 6 of the 1973 constitution wherein Marcos was given emergency powers to issue letters
of instruction that had the force of law.

The said executive order reads in full as follows:


WHEREAS, the President has given orders prohibiting the interprovincial movement of carabaos and the
slaughtering of carabaos not complying with the requirements of Executive Order No. 626 particularly with
respect to age;
WHEREAS, it has been observed that despite such orders the violators still manage to circumvent the
prohibition against inter-provincial movement of carabaos by transporting carabeef instead; and
WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626 and the prohibition
against interprovincial movement of carabaos, it is necessary to strengthen the said Executive Order and
provide for the disposition of the carabaos and carabeef subject of the violation;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested
in me by the Constitution, do hereby promulgate the following:
SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no carabao regardless of age,
sex, physical condition or purpose and no carabeef shall be transported from one province to another. The
carabao or carabeef transported in violation of this Executive Order as amended shall be subject to
confiscation and forfeiture by the government, to be distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat Inspection Commission may ay see fit, in the case of
carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case
of carabaos.
SECTION 2. This Executive Order shall take effect immediately.
Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen hundred and eighty.
(SGD.) FERDINAND E. MARCOS

The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes outright
confiscation of the carabao or carabeef being transported across provincial boundaries. His claim is that the
penalty is invalid because it is imposed without according the owner a right to be heard before a competent
and impartial court as guaranteed by due process. He complains that the measure should not have been
presumed, and so sustained, as constitutional. There is also a challenge to the improper exercise of the
legislative power by the former President under Amendment No. 6 of the 1973 Constitution. 4
While also involving the same executive order, the case of Pesigan v. Angeles 5 is not applicable here. The
question raised there was the necessity of the previous publication of the measure in the Official Gazette
before it could be considered enforceable. We imposed the requirement then on the basis of due process of
law. In doing so, however, this Court did not, as contended by the Solicitor General, impliedly affirm the
constitutionality of Executive Order No. 626-A. That is an entirely different matter.
This Court has declared that while lower courts should observe a becoming modesty in examining
constitutional questions, they are nonetheless not prevented from resolving the same whenever warranted,
subject only to review by the highest tribunal. 6 We have jurisdiction under the Constitution to "review, revise,
reverse, modify or affirm on appeal or certiorari, as the law or rules of court may provide," final judgments and
orders of lower courts in, among others, all cases involving the constitutionality of certain measures. 7 This
simply means that the resolution of such cases may be made in the first instance by these lower courts.
And while it is true that laws are presumed to be constitutional, that presumption is not by any means
conclusive and in fact may be rebutted. Indeed, if there be a clear showing of their invalidity, and of the need to
declare them so, then "will be the time to make the hammer fall, and heavily," 8 to recall Justice Laurel's
trenchant warning. Stated otherwise, courts should not follow the path of least resistance by simply presuming
the constitutionality of a law when it is questioned. On the contrary, they should probe the issue more deeply,
to relieve the abscess, paraphrasing another distinguished jurist, 9 and so heal the wound or excise the
affliction.
Judicial power authorizes this; and when the exercise is demanded, there should be no shirking of the task for
fear of retaliation, or loss of favor, or popular censure, or any other similar inhibition unworthy of the bench,
especially this Court.
The challenged measure is denominated an executive order but it is really presidential decree, promulgating a
new rule instead of merely implementing an existing law. It was issued by President Marcos not for the purpose
of taking care that the laws were faithfully executed but in the exercise of his legislative authority under
Amendment No. 6. It was provided thereunder that whenever in his judgment there existed a grave emergency
or a threat or imminence thereof or whenever the legislature failed or was unable to act adequately on any
matter that in his judgment required immediate action, he could, in order to meet the exigency, issue decrees,
orders or letters of instruction that were to have the force and effect of law. As there is no showing of any
exigency to justify the exercise of that extraordinary power then, the petitioner has reason, indeed, to question
the validity of the executive order. Nevertheless, since the determination of the grounds was supposed to have
been made by the President "in his judgment, " a phrase that will lead to protracted discussion not really
necessary at this time, we reserve resolution of this matter until a more appropriate occasion. For the nonce,
we confine ourselves to the more fundamental question of due process.
It is part of the art of constitution-making that the provisions of the charter be cast in precise and unmistakable
language to avoid controversies that might arise on their correct interpretation. That is the Ideal. In the case of
the due process clause, however, this rule was deliberately not followed and the wording was purposely kept
ambiguous. In fact, a proposal to de