EN

BANC
[G.R. No. L-9657. November 29, 1956.]
LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL COCONUT
CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and BOARD OF
LIQUIDATORS, Defendants-Appellants.

D E C I S I O N
BAUTISTA ANGELO, J.:
Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila.
During the pendency of Civil Case No. 2293 of said court, entitled Francisco Sycip vs. National Coconut
Corporation, Assistant Corporate Counsel Federico Alikpala, counsel forDefendant, requested said
stenographers for copies of the transcript of the stenographic notes taken by them during the
hearing. Plaintiffs complied with the request by delivering to Counsel Alikpala the needed transcript
containing 714 pages and thereafter submitted to him their bills for the payment of their fees. The
National Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A.
Matoto for said transcript at the rate of P1 per page.
Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these
fees and sought the recovery of the amounts paid. On January 19, 1953, the Auditor General required
the Plaintiffs to reimburse said amounts on the strength of a circular of the Department of Justice
wherein the opinion was expressed that the National Coconut Corporation, being a government entity,
was exempt from the payment of the fees in question. On February 6, 1954, the Auditor General issued
an order directing the Cashier of the Department of Justice to deduct from the salary of Leopoldo T.
Bacani the amount of P25 every payday and from the salary of Mateo A. Matoto the amount of P10
every payday beginning March 30, 1954. To prevent deduction of these fees from their salaries and
secure a judicial ruling that the National Coconut Corporation is not a government entity within the
purview of section 16, Rule 130 of the Rules of Court, this action was instituted in the Court of First
Instance of Manila.
Defendants set up as a defense that the National Coconut Corporation is a government entity within the
purview of section 2 of the Revised Administrative Code of 1917 and, hence, it is exempt from paying
the stenographers fees under Rule 130 of the Rules of Court. After trial, the court found for
the Plaintiffs declaring (1) that Defendant National Coconut Corporation is not a government entity
within the purview of section 16, Rule 130 of the Rules of Court; (2) that the payments already made
by said Defendant to Plaintiffs herein and received by the latter from the former in the total amount of
P714, for copies of the stenographic transcripts in question, are valid, just and legal; and (3)
that Plaintiffs are under no obligation whatsoever to make a refund of these payments already received
by them. This is an appeal from said decision.
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Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from
paying the legal fees provided for therein, and among these fees are those which stenographers may
charge for the transcript of notes taken by them that may be requested by any interested person
(section 8). The fees in question are for the transcript of notes taken during the hearing of a case in
which the National Coconut Corporation is interested, and the transcript was requested by its assistant
corporate counsel for the use of said corporation.

On the other hand, section 2 of the Revised Administrative Code defines the scope of the term
Government of the Republic of the Philippines as follows:
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The Government of the Philippine Islands is a term which refers to the corporate governmental entity
through which the functions of government are exercised throughout the Philippine Islands, including,
save as the contrary appears from the context, the various arms through which political authority is
made effective in said Islands, whether pertaining to the central Government or to the provincial or
municipal branches or other form of local government.
The question now to be determined is whether the National Coconut Corporation may be considered as
included in the term Government of the Republic of the Philippines for the purposes of the exemption
of the legal fees provided for in Rule 130 of the Rules of Court.
As may be noted, the term Government of the Republic of the Philippines refers to a government
entity through which the functions of government are exercised, including the various arms through
which political authority is made effective in the Philippines, whether pertaining to the central
government or to the provincial or municipal branches or other form of local government. This requires
a little digression on the nature and functions of our government as instituted in our Constitution.
To begin with, we state that the term Government may be defined as that institution or aggregate of
institutions by which an independent society makes and carries out those rules of action which are
necessary to enable men to live in a social state, or which are imposed upon the people forming that
society by those who possess the power or authority of prescribing them (U.S. vs. Dorr, 2 Phil., 332).
This institution, when referring to the national government, has reference to what our Constitution has
established composed of three great departments, the legislative, executive, and the judicial, through
which the powers and functions of government are exercised. These functions are twofold: constitute
and ministrant. The former are those which constitute the very bonds of society and are compulsory in
nature; the latter are those that are undertaken only by way of advancing the general interests of
society, and are merely optional. President Wilson enumerates the constituent functions as follows:
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(1) The keeping of order and providing for the protection of persons and property from violence and
robbery.
(2) The fixing of the legal relations between man and wife and between parents and children.
(3) The regulation of the holding, transmission, and interchange of property, and the determination of
its liabilities for debt or for crime.
(4) The determination of contract rights between individuals.
(5) The definition and punishment of crime.
(6) The administration of justice in civil cases.
(7) The determination of the political duties, privileges, and relations of citizens.
(8) Dealings of the state with foreign powers: the preservation of the state from external danger or
encroachment and the advancement of its international interests. (Malcolm, The Government of the
Philippine Islands, p. 19.)
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The most important of the ministrant functions are: public works, public education, public charity,
health and safety regulations, and regulations of trade and industry. The principles deter mining
whether or not a government shall exercise certain of these optional functions are: (1) that a
government should do for the public welfare those things which private capital would not naturally
undertake and (2) that a government should do these things which by its very nature it is better
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equipped to administer for the public welfare than is any private individual or group of individuals.
(Malcolm, The Government of the Philippine Islands, pp. 19-20.)
From the above we may infer that, strictly speaking, there are functions which our government is
required to exercise to promote its objectives as expressed in our Constitution and which are exercised
by it as an attribute of sovereignty, and those which it may exercise to promote merely the welfare,
progress and prosperity of the people. To this latter class belongs the organization of those corporations
owned or controlled by the government to promote certain aspects of the economic life of our people
such as the National Coconut Corporation. These are what we call government-owned or controlled
corporations which may take on the form of a private enterprise or one organized with powers and
formal characteristics of a private corporations under the Corporation Law.
The question that now arises is: Does the fact that these corporation perform certain functions of
government make them a part of the Government of the Philippines?
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The answer is simple: they do not acquire that status for the simple reason that they do not come
under the classification of municipal or public corporation. Take for instance the National Coconut
Corporation. While it was organized with the purpose of adjusting the coconut industry to a position
independent of trade preferences in the United States and of providing Facilities for the better curing
of copra products and the proper utilization of coconut by-products, a function which our government
has chosen to exercise to promote the coconut industry, however, it was given a corporate power
separate and distinct from our government, for it was made subject to the provisions of our Corporation
Law in so far as its corporate existence and the powers that it may exercise are concerned (sections 2
and 4, Commonwealth Act No. 518). It may sue and be sued in the same manner as any other private
corporations, and in this sense it is an entity different from our government. As this Court has aptly said,
The mere fact that the Government happens to be a majority stockholder does not make it a public
corporation (National Coal Co. vs. Collector of Internal Revenue, 46 Phil., 586-587). By becoming a
stockholder in the National Coal Company, the Government divested itself of its sovereign character so
far as respects the transactions of the corporation . Unlike the Government, the corporation may be
sued without its consent, and is subject to taxation. Yet the National Coal Company remains an agency
or instrumentality of government. (Government of the Philippine Islands vs. Springer, 50 Phil., 288.)
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To recapitulate, we may mention that the term Government of the Republic of the Philippines used in
section 2 of the Revised Administrative Code refers only to that government entity through which the
functions of the government are exercised as an attribute of sovereignty, and in this are included those
arms through which political authority is made effective whether they be provincial, municipal or other
form of local government. These are what we call municipal corporations. They do not include
government entities which are given a corporate personality separate and distinct from the government
and which are governed by the Corporation Law. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charters. They do not therefore come within
the exemption clause prescribed in section 16, Rule 130 of our Rules of Court.
Public corporations are those formed or organized for the government of a portion of the State.
(Section 3, Republic Act No. 1459, Corporation Law).
The generally accepted definition of a municipal corporation would only include organized cities and
towns, and like organizations, with political and legislative powers for the local, civil government and
police regulations of the inhabitants of the particular district included in the boundaries of the
corporation. Heller vs. Stremmel, 52 Mo. 309, 312.
In its more general sense the phrase municipal corporation may include both towns and counties, and
other public corporations created by government for political purposes. In its more common and limited

signification, it embraces only incorporated villages, towns and cities. Dunn vs. Court of County
Revenues, 85 Ala. 144, 146, 4 So. 661. (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.)
We may, therefore, define a municipal corporation in its historical and strict sense to be the
incorporation, by the authority of the government, of the inhabitants of a particular place or district,
and authorizing them in their corporate capacity to exercise subordinate specified powers of legislation
and regulation with respect to their local and internal concerns. This power of local government is the
distinctive purpose and the distinguishing feature of a municipal corporation proper. (Dillon, Municipal
Corporations, 5th ed., Vol. I, p. 59.)
It is true that under section 8, Rule 130, stenographers may only charge as fees P0.30 for each page of
transcript of not less than 200 words before the appeal is taken and P0.15 for each page after the filing
of the appeal, but in this case the National Coconut Corporation has agreed and in fact has paid P1.00
per page for the services rendered by the Plaintiffs and has not raised any objection to the amount paid
until its propriety was disputed by the Auditor General. The payment of the fees in question became
therefore contractual and as such is valid even if it goes beyond the limit prescribed in section 8, Rule
130 of the Rules of Court.
As regards the question of procedure raised by Appellants, suffice it to say that the same is insubstantial,
considering that this case refers not to a money claim disapproved by the Auditor General but to an
action of prohibition the purpose of which is to restrain the officials concerned from deducting
from Plaintiffs salaries the amount paid to them as stenographers fees. This case does not come under
section 1, Rule 45 of the Rules of Court relative to appeals from a decision of the Auditor General.
Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.
Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia and
Felix, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21484

November 29, 1969

THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING ADMINISTRATION

(ACCFA), petitioner,
vs.
ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS' ASSOCIATION, and THE COURT
OF INDUSTRIAL RELATIONS, respondents.
Deogracias E. Lerma and Esmeraldo U. Guloy for petitioner Agricultural Credit and Cooperative
Financing Administration.
Office of the Agrarian Counsel, Department of Justice for petitioner Agricultural Credit Administration
J. C. Espinas and Associates for respendents Confederation of Unions in Government Corporations
Offices, et al. Mariano B. Tuason for respondent Court of Industrial Relations.
MAKALINTAL, J.:

These are two separate appeals by certiorari from the decision dated March 25, 1963 (G.R. No. L21484) and the order dated May 21, 1964 (G.R. No. L-23605) as affirmed by the resolutions en
banc, of the Court of Industrial Relations, in Cases Nos. 3450-ULP and 1327-MC, respectively. The
parties, except the Confederation of Unions in Government Corporations and Offices (CUGCO),
being practically the same and the principal issues involved related, only one decision is now
rendered in these two cases.
The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government
agency created under Republic Act No. 821, as amended. Its administrative machinery was
reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land
Reform Code (Republic Act No. 3844). On the other hand, the ACCFA Supervisors' Association
(ASA) and the ACCFA Workers' Association (AWA), hereinafter referred to as the Unions, are labor
organizations composed of the supervisors and the rank-and-file employees, respectively, in the
ACCFA (now ACA).
G.R. No. L-21484
On September 4, 1961 a collective bargaining agreement, which was to be effective for a period of
one (1) year from July 1, 1961, was entered into by and between the Unions and the ACCFA. A few
months thereafter, the Unions started protesting against alleged violations and non-implementation
of said agreement. Finally, on October 25, 1962 the Unions declared a strike, which was ended
when the strikers voluntarily returned to work on November 26, 1962.
On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in
Government Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial
Relations against the ACCFA (Case No. 3450-ULP) for having allegedly committed acts of unfair
labor practice, namely: violation of the collective bargaining agreement in order to discourage the
members of the Unions in the exercise of their right to self-organization, discrimination against said
members in the matter of promotions, and refusal to bargain. The ACCFA denied the charges and
interposed as affirmative and special defenses lack of jurisdiction of the CIR over the case, illegality
of the bargaining contract, expiration of said contract and lack of approval by the office of the
President of the fringe benefits provided for therein. Brushing aside the foregoing defenses, the CIR
in its decision dated March 25, 1963 ordered the ACCFA:
1. To cease and desist from committing further acts tending to discourage the members of
complainant unions in the exercise of their right to self-organization;
2. To comply with and implement the provision of the collective bargaining contract executed
on September 4, 1961, including the payment of P30.00 a month living allowance;
3. To bargain in good faith and expeditiously with the herein complainants.
The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the
CIR en banc. Thereupon it brought this appeal by certiorari.
The ACCFA raises the following issues in its petition, to wit:
1. Whether or not the respondent court has jurisdiction over this case, which in turn depends
on whether or not ACCFA exercised governmental or proprietary functions.

2. Whether or not the collective bargaining agreement between the petitioner and the
respondent union is valid; if valid, whether or not it has already lapsed; and if not, whether or
not its (sic) fringe benefits are already enforceable.
3. Whether or not there is a legal and/or factual basis for the finding of the respondent court
that the petitioner had committed acts of unfair labor practice.
4. Whether or not it is within the competence of the court to enforce the collective bargaining
agreement between the petitioner and the respondent unions, the same having already
expired.
G.R. No. L-23605
During the pendency of the above mentioned case (G.R. No. L-21484), specifically on August 8,
1963, the President of the Philippines signed into law the Agricultural Land Reform Code (Republic
Act No. 3844), which among other things required the reorganization of the administrative machinery
of the Agricultural Credit and Cooperative Financing Administration (ACCFA) and changed its name
to Agricultural Credit Administration (ACA). On March 17, 1964 the ACCFA Supervisors' Association
and the ACCFA Workers' Association filed a petition for certification election with the Court of
Industrial Relations (Case No. 1327-MC) praying that they be certified as the exclusive bargaining
agents for the supervisors and rank-and-file employees, respectively, in the ACA. The trial Court in
its order dated March 30, 1964 directed the Manager or Officer-in-Charge of the ACA to allow the
posting of said order "for the information of all employees and workers thereof," and to answer the
petition. In compliance therewith, the ACA, while admitting most of the allegations in the petition,
denied that the Unions represented the majority of the supervisors and rank-and-file workers,
respectively, in the ACA. It further alleged that the petition was premature, that the ACA was not the
proper party to be notified and to answer the petition, and that the employees and supervisors could
not lawfully become members of the Unions, nor be represented by them. However, in a joint
manifestation of the Unions dated May 7, 1964, with the conformity of the ACA Administrator and of
the Agrarian Counsel in his capacity as such and as counsel for the National Land Reform Council, it
was agreed "that the union petitioners in this case represent the majority of the employees in their
respective bargaining units" and that only the legal issues raised would be submitted for the
resolution of the trial Court.
Finding the remaining grounds for ACA's opposition to the petition to be without merit, the trial Court
in its order dated May 21, 1964 certified "the ACCFA Workers' Association and the ACCFA
Supervisors' Association as the sole and exclusive bargaining representatives of the rank-and-file
employees and supervisors, respectively, of the Agricultural Credit Administration." Said order was
affirmed by the CIR en banc in its resolution dated August 24, 1964.
On October 2, 1964 the ACA filed in this Court a petition for certiorari with urgent motion to stay the
CIR order of May 21, 1964. In a resolution dated October 6, 1964, this Court dismissed the petition
for "lack of adequate allegations," but the dismissal was later reconsidered when the ACA complied
with the formal requirement stated in said resolution. As prayed for, this Court ordered the CIR to
stay the execution of its order of May 21, 1964.
In this appeal, the ACA in effect challenges the jurisdiction of the CIR to entertain the petition of the
Unions for certification election on the ground that it (ACA) is engaged in governmental functions.
The Unions join the issue on this single point, contending that the ACA forms proprietary functions.

Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other
governmental agencies,1 to extend credit and similar assistance to agriculture, in pursuance of the
policy enunciated in Section 2 as follows:
SEC. 2. Declaration of Policy. It is the policy of the State:
(1) To establish owner-cultivatorships and the economic family-size farm as the basis of
Philippine agriculture and, as a consequence, divert landlord capital in agriculture to
industrial development;
(2) To achieve a dignified existence for the small farmers free from pernicious institutional
restraints and practices;
(3) To create a truly viable social and economic structure in agriculture conducive to greater
productivity and higher farm incomes;
(4) To apply all labor laws equally and without discrimination to both industrial and
agricultural wage earners;
(5) To provide a more vigorous and systematic land resettlement program and public land
distribution; and
(6) To make the small farmers more independent, self-reliant and responsible citizens, and a
source of genuine strength in our democratic society.
The implementation of the policy thus enunciated, insofar as the role of the ACA therein is
concerned, is spelled out in Sections 110 to 118, inclusive, of the Land Reform Code. Section 110
provides that "the administrative machinery of the ACCFA shall be reorganized to enable it to align
its activities with the requirements and objective of this Code and shall be known as the Agricultural
Credit Administration." Under Section 112 the sum of P150,000,000 was appropriated out of national
funds to finance the additional credit functions of the ACA as a result of the land reform program laid
down in the Code. Section 103 grants the ACA the privilege of rediscounting with the Central Bank,
the Development Bank of the Philippines and the Philippine National Bank. Section 105 directs the
loaning activities of the ACA "to stimulate the development of farmers' cooperatives," including those
"relating to the production and marketing of agricultural products and those formed to manage and/or
own, on a cooperative basis, services and facilities, such as irrigation and transport systems,
established to support production and/or marketing of agricultural products." Section 106 deals with
the extension by ACA of credit to small farmers in order to stimulate agricultural production. Sections
107 to 112 lay down certain guidelines to be followed in connection with the granting of loans, such
as security, interest and supervision of credit. Sections 113 to 118, inclusive, invest the ACA with
certain rights and powers not accorded to non-governmental entities, thus:
SEC. 113. Auditing of Operations. For the effective supervision of farmers' cooperatives,
the head of the Agricultural Credit Administration shall have the power to audit their
operations, records and books of account and to issue subpoena and subpoena duces
tecum to compel the attendance of witnesses and the production of books, documents and
records in the conduct of such audit or of any inquiry into their affairs. Any person who,
without lawful cause, fails to obey such subpoena or subpoena duces tecum shall, upon
application of the head of Agricultural Credit Administration with the proper court, be liable to
punishment for contempt in the manner provided by law and if he is an officer of the
Association, to suspension or removal from office.

SEC. 114. Prosecution of officials. The Agricultural Credit Administration, through the
appropriate provincial or city fiscal, shall have the power to file and prosecute any and all
actions which it may have against any and all officials or employees of farmers' cooperatives
arising from misfeasance or malfeasance in office.
SEC. 115. Free Notarial Service. Any justice of the peace, in his capacity as notary exofficio, shall render service free of charge to any person applying for a loan under this Code
either in administering the oath or in the acknowledgment of instruments relating to such
loan.
SEC. 116. Free Registration of Deeds. Any register of deeds shall accept for registration,
free of charge any instrument relative to a loan made under this Code.
SEC. 117. Writing-off Unsecured and Outstanding Loans. Subject to the approval of the
President upon recommendation of the Auditor General, the Agricultural Credit
Administration may write-off from its books, unsecured and outstanding loans and accounts
receivable which may become uncollectible by reason of the death or disappearance of the
debtor, should there be no visible means of collecting the same in the foreseeable future, or
where the debtor has been verified to have no income or property whatsoever with which to
effect payment. In all cases, the writing-off shall be after five years from the date the debtor
defaults.
SEC. 118. Exemption from Duties, Taxes and Levies. The Agricultural Credit
Administration is hereby exempted from the payment of all duties, taxes, levies, and fees,
including docket and sheriff's fees, of whatever nature or kind, in the performance of its
functions and in the exercise of its powers hereunder.
The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as
given by Section 113, is in the nature of the visitorial power of the sovereign, which only a
government agency specially delegated to do so by the Congress may legally exercise.
On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled: "Rendering in Full Force
and Effect the Plan of Reorganization Proposed by the Special Committee on Reorganization of
Agencies for Land Reform for the Administrative Machinery of the Agricultural Land Reform Code,"
and contains the following pertinent provisions:
Section 3. The Land Reform Project Administration2 shall be considered a single
organization and the personnel complement of the member agencies including the legal
officers of the Office of the Agrarian Counsel which shall provide legal services to the LRPA
shall be regarded as one personnel pool from which the requirements of the operations shall
be drawn and subject only to the civil service laws, rules and regulations, persons from one
agency may be freely assigned to positions in another agency within the LRPA when the
interest of the service so demands.
Section 4. The Land Reform Project Administration shall be considered as one organization
with respect to the standardization of job descriptions position classification and wage and
salary structures to the end that positions involving the same or equivalent qualifications and
equal responsibilities and effort shall have the same remuneration.
Section 5. The Civil Service laws, rules and regulations with respect to promotions,
particularly in the consideration of person next in rank, shall be made applicable to the Land
Reform Project Administration as a single agency so that qualified individuals in one member

agency must be considered in considering promotion to higher positions in another member

agency.
The implementation of the land reform program of the government according to Republic Act No.
3844 is most certainly a governmental, not a proprietary, function; and for that purpose Executive
Order No. 75 has placed the ACA under the Land Reform Project Administration together with the
other member agencies, the personnel complement of all of which are placed in one single pool and
made available for assignment from one agency to another, subject only to Civil Service laws, rules
and regulations, position classification and wage structures.
The appointing authority in respect of the officials and employees of the ACA is the President of the
Philippines, as stated in a 1st indorsement by his office to the Chairman of the National Reform
Council dated May 22, 1964, as follows:
Appointments of officials and employees of the National Land Reform Council and its
agencies may be made only by the President, pursuant to the provisions of Section 79(D) of
the Revised Administrative Code. In accordance with the policy and practice, such
appointments should be prepared for the signature of the Executive Secretary, "By Authority
ofthe President".3
When the Agricultural Reform Code was being considered by the Congress, the nature of the ACA
was the subject of the following exposition on the Senate floor:
Senator Tolentino: . . . . "The ACA is not going to be a profit making institution. It is supposed
to be a public service of the government to the lessees and farmer-owners of the lands that
may be bought after expropriation from owners. It is the government here that is the lender.
The government should not exact a higher interest than what we are telling a private
landowner now in his relation to his tenants if we give to their farmers a higher rate of interest
. . . ." (pp. 17 & 18, Senate Journal No. 16, July 3, 1963)
The reason is obvious, to pinpoint responsibility for many losses in the government, in order to avoid
irresponsible lending of government money to pinpoint responsibility for many losses . . . .
Senator Manglapus: ". . . But assuming that hypothesis, that is the reason why we are
appropriating P150,000,000.00 for the Agricultural Credit Administration which will go to
intensified credit operations on the barrio level . . ." (p. 3, Senate Journal No. 7).
That it is the reason why we are providing for the expansion of the ACCFA and the weeding out of
the cooperative activity of the ACCFA and turning this over to the Agricultural Productivity
Commission, so that the Agricultural Credit Administration will concentrate entirely on the facilitation
of credit on the barrio level with the massive support of 150 million provided by the government. . . .
(pp. 4 & 5 of Senate Journal No. 7, July 3, 1963)
. . . But by releasing them from this situation, we feel that we are putting them in a much better
condition than that in which they are found by providing them with a business-like way of obtaining
credit, not depending on a paternalistic system but one which is business-like that is to say, a
government office, which on the barrio level will provide them that credit directly . . . . (p. 40, Senate
Journal No. 7, July 3, 1963) (emphasis supplied).
The considerations set forth above militate quite strongly against the recognition of collective
bargaining powers in the respondent Unions within the context of Republic Act No. 875, and hence
against the grant of their basic petition for certification election as proper bargaining units. The ACA

is a government office or agency engaged in governmental, not proprietary functions. These

functions may not be strictly what President Wilson described as "constituent" (as distinguished from
"ministrant"),4 such as those relating to the maintenance of peace and the prevention of crime, those
regulating property and property rights, those relating to the administration of justice and the
determination of political duties of citizens, and those relating to national defense and foreign
relations. Under this traditional classification, such constituent functions are exercised by the State
as attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the
people these letter functions being ministrant he exercise of which is optional on the part of the
government.
The growing complexities of modern society, however, have rendered this traditional classification of
the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to
private enterprise and initiative and which the government was called upon to enter optionally, and
only "because it was better equipped to administer for the public welfare than is any private
individual or group of individuals,"5 continue to lose their well-defined boundaries and to be absorbed
within activities that the government must undertake in its sovereign capacity if it is to meet the
increasing social challenges of the times. Here as almost everywhere else the tendency is
undoubtedly towards a greater socialization of economic forces. Here of course this development
was envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of
principle concerning the promotion of social justice.
It was in furtherance of such policy that the Land Reform Code was enacted and the various
agencies, the ACA among them, established to carry out its purposes. There can be no dispute as to
the fact that the land reform program contemplated in the said Code is beyond the capabilities of any
private enterprise to translate into reality. It is a purely governmental function, no less than, say, the
establishment and maintenance of public schools and public hospitals. And when, aside from the
governmental objectives of the ACA, geared as they are to the implementation of the land reform
program of the State, the law itself declares that the ACA is a government office, with the formulation
of policies, plans and programs vested no longer in a Board of Governors, as in the case of the
ACCFA, but in the National Land Reform Council, itself a government instrumentality; and that its
personnel are subject to Civil Service laws and to rules of standardization with respect to positions
and salaries, any vestige of doubt as to the governmental character of its functions disappears.
In view of the foregoing premises, we hold that the respondent Unions are not entitled to the
certification election sought in the Court below. Such certification is admittedly for purposes of
bargaining in behalf of the employees with respect to terms and conditions of employment, including
the right to strike as a coercive economic weapon, as in fact the said unions did strike in 1962
against the ACCFA (G.R. No. L-21824).6 This is contrary to Section 11 of Republic Act No. 875,
which provides:
SEC. 11. Prohibition Against Strike in the Government The terms and conditions of
employment in the Government, including any political subdivision or instrumentality thereof,
are governed by law and it is declared to be the policy of this Act that employees therein
shall not strike for the purposes of securing changes or modification in their terms and
conditions of employment. Such employees may belong to any labor organization which
does not impose the obligation to strike or to join in strike: Provided, However, that this
section shall apply only to employees employed in governmental functions of the
Government including but not limited to governmental corporations.7
With the reorganization of the ACCFA and its conversion into the ACA under the Land Reform Code
and in view of our ruling as to the governmental character of the functions of the ACA, the decision
of the respondent Court dated March 25, 1963, and the resolution en banc affirming it, in the unfair

labor practice case filed by the ACCFA, which decision is the subject of the present review in G. R.
No. L-21484, has become moot and academic, particularly insofar as the order to bargain
collectively with the respondent Unions is concerned.
What remains to be resolved is the question of fringe benefits provided for in the collective
bargaining contract of September 4, 1961. The position of the ACCFA in this regard is that the said
fringe benefits have not become enforceable because the condition that they should first be
approved by the Office of the President has not been complied with. The Unions, on the other hand,
contend that no such condition existed in the bargaining contract, and the respondent Court upheld
this contention in its decision.
It is to be listed that under Section 3, Article XIV, of the agreement, the same "shall not become
effective unless and until the same is duly ratified by the Board of Governors of the Administration."
Such approval was given even before the formal execution of the agreement, by virtue of
"Resolution No. 67, Regular Meeting No. 7, FY 1960-61, held on August 17, 1961," but with the
proviso that "the fringe benefits contained therein shall take effect only if approved by the office of
the President." The condition is, therefore, deemed to be incorporated into the agreement by
reference.
On October 23, 1962 the Office of the President, in a letter signed by the Executive Secretary,
expressed its approval of the bargaining contract "provided the salaries and benefits therein fixed
are not in conflict with applicable laws and regulations, are believed to be reasonable considering
the exigencies of the service and the welfare of the employees, and are well within the financial
ability of the particular corporation to bear."
On July 1, 1963 the ACCFA management and the Unions entered into an agreement for the
implementation of the decision of the respondent Court concerning the fringe benefits, thus:
In the meantime, only Cost of Living Adjustment, Longevity Pay, and Night Differential
Benefits accruing from July 1, 1961 to June 30, 1963 shall be paid to all employees entitled
thereto, in the following manner:
A) The sum of P180,000 shall be set aside for the payment of:
1) Night differential benefits for Security Guards.
2) Cost of Living Adjustment and Longevity Pay.
3) The unpaid balance due employees on Item A (1) and (2) this paragraph shall be paid in
monthly installments as finances permit but not beyond December 20, 1963.
3. All benefits accruing after July 1, 1963, shall be allowed to accumulate but payable only
after all benefits accruing up to June 30, 1963, as per CIR decision hereinabove referred to
shall have been settled in full; provided, however, that commencing July 1, 1963 and for a
period of only two (2) months thereafter (during which period the ACCFA and the Unions
shall negotiate a new Collective Bargaining Agreement) the provisions of the September 4,
1961 Collective Bargaining Agreement shall be temporarily suspended, except as to Cost of
Living Adjustment and "political" or non-economic privileges and benefits thereunder.
On July 24, 1963 the ACCFA Board of Governors ratified the agreement thus entered into, pursuant
to the provision thereof requiring such ratification, but with the express qualification that the same

was "without prejudice to the pending appeal in the Supreme Court . . . in Case No. 3450-ULP." The
payment of the fringe benefits agreed upon, to our mind, shows that the same were within the
financial capability of the ACCFA then, and hence justifies the conclusion that this particular
condition imposed by the Office of the President in its approval of the bargaining contract was
satisfied.
We hold, therefore, that insofar as the fringe benefits already paid are concerned, there is no reason
to set aside the decision of the respondent Court, but that since the respondent Unions have no right
to the certification election sought by them nor, consequently, to bargain collectively with the
petitioner, no further fringe benefits may be demanded on the basis of any collective bargaining
agreement.
The decisions and orders appealed from are set aside and/or modified in accordance with the
foregoing pronouncements. No costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez, Castro, Teehankee and Barredo, JJ., concur.
Zaldivar, J., concurs in the result.

FIRST DIVISION

[G.R. No. 106440. January 29, 1996]

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA

MANOSCA, petitioners, vs. HON. COURT OF APPEALS, HON.
BENJAMIN V. PELAYO, Presiding Judge, RTC-Pasig, Metro
Manila, Branch 168, HON. GRADUACION A. REYES CLARAVAL,
Presiding Judge, RTC-Pasig, Metro Manila, Branch 71,
and REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
VITUG, J.:

In this appeal, via a petition for review on certiorari, from the decision of
the Court of Appeals, dated 15 January 1992, in CA-G.R. SP No. 24969
(entitled Alejandro Manosca, et al. v.Hon. Benjamin V. Pelayo, et al.), this
Court is asked to resolve whether or not the public use requirement of
Eminent Domain is extant in the attempted expropriation by the Republic of a
492-square-meter parcel of land so declared by the National Historical
Institute (NHI) as a national historical landmark.
[1]

The facts of the case are not in dispute.

Petitioners inherited a piece of land located at P. Burgos Street, Calzada,

Taguig, Metro Manila, with an area of about four hundred ninety-two (492)
square meters. When the parcel was ascertained by the NHI to have been the
birthsite of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed
Resolution No. 1, Series of 1986, pursuant to Section 4 of Presidential
Decree No. 260, declaring the land to be a national historical landmark. The
resolution was, on 06 January 1986, approved by the Minister of Education,
Culture and Sports. Later, the opinion of the Secretary of Justice was asked
on the legality of the measure. In his Opinion No. 133, Series of 1987, the
Secretary of Justice replied in the affirmative; he explained:
[2]

According to your guidelines, national landmarks are places or objects that are
associated with an event, achievement, characteristic, or modification that makes a
turning point or stage in Philippine history.Thus, the birthsite of the founder of
the Iglesia ni Cristo, the late Felix Y. Manalo, who, admittedly, had made
contributions to Philippine history and culture has been declared as a national
landmark. It has been held that places invested with unusual historical interest is a
public use for which the power of eminent domain may be authorized x x x.
In view thereof, it is believed that the National Historical Institute as an agency of the
Government charged with the maintenance and care of national shrines, monuments
and landmarks and the development of historical sites that may be declared as national
shrines, monuments and/or landmarks, may initiate the institution of condemnation
proceedings for the purpose of acquiring the lot in question in accordance with the
procedure provided for in Rule 67 of the Revised Rules of Court. The proceedings
should be instituted by the Office of the Solicitor General in behalf of the Republic.
Accordingly, on 29 May 1989, the Republic, through the Office of the
Solicitor-General, instituted a complaint for expropriation before the Regional
Trial Court of Pasig for and in behalf of the NHI alleging, inter alia, that:
[3]

Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute
issued Resolution No. 1, Series of 1986, which was approved on January, 1986 by the
then Minister of Education, Culture and Sports, declaring the above described parcel
of land which is the birthsite of Felix Y. Manalo, founder of the Iglesia ni Cristo, as a
National Historical Landmark. The plaintiff perforce needs the land as such national
historical landmark which is a public purpose.
At the same time, respondent Republic filed an urgent motion for the
issuance of an order to permit it to take immediate possession of the
property. The motion was opposed by petitioners. After a hearing, the trial
court issued, on 03 August 1989, an order fixing the provisional market
[4]

(P54,120.00) and assessed (P16,236.00) values of the property and

authorizing the Republic to take over the property once the required sum
would have been deposited with the Municipal Treasurer of Taguig, Metro
Manila.
Petitioners moved to dismiss the complaint on the main thesis that the
intended expropriation was not for a public purpose and, incidentally, that
the act would constitute an application of public funds, directly or indirectly, for
the use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to
the provision of Section 29(2), Article VI, of the 1987 Constitution. Petitioners
sought, in the meanwhile, a suspension in the implementation of the 03rd
August 1989 order of the trial court.
[5]

On 15 February 1990, following the filing by respondent Republic of its

reply to petitioners motion seeking the dismissal of the case, the trial court
issued its denial of said motion to dismiss. Five (5) days later, or on 20
February 1990, another order was issued by the trial court, declaring moot
and academic the motion for reconsideration and/or suspension of the order
of 03 August 1989 with the rejection of petitioners motion to dismiss.
Petitioners motion for the reconsideration of the 20th February 1990 order
was likewise denied by the trial court in its 16th April 1991 order.
[6]

[7]

[8]

Petitioners then lodged a petition for certiorari and prohibition with the
Court of Appeals. In its now disputed 15th January 1992 decision, the
appellate court dismissed the petition on the ground that the remedy of appeal
in the ordinary course of law was an adequate remedy and that the petition
itself, in any case, had failed to show any grave abuse of discretion or lack of
jurisdictional competence on the part of the trial court. A motion for the
reconsideration of the decision was denied in the 23rd July 1992 resolution of
the appellate court.
We begin, in this present recourse of petitioners, with a few known
postulates.
Eminent domain, also often referred to as expropriation and, with less
frequency, as condemnation, is, like police power and taxation, an inherent
power of sovereignty. It need not be clothed with any constitutional gear to
exist; instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is
generally so described as the highest and most exact idea of property
remaining in the government that may be acquired for some public purpose
through a method in the nature of a forced purchase by the State. It is a right
to take or reassert dominion over property within the state for public use or to
meet a public exigency. It is said to be an essential part of governance even in
[9]

its most primitive form and thus inseparable from sovereignty. The only
direct constitutional qualification is that private property shall not be taken for
public use without just compensation. This proscription is intended to provide
a safeguard against possible abuse and so to protect as well the individual
against whose property the power is sought to be enforced.
[10]

[11]

Petitioners assert that the expropriation has failed to meet the guidelines
set by this Court in the case of Guido v. Rural Progress Administration, to
wit: (a) the size of the land expropriated; (b) the large number of people
benefited; and, (c) the extent of social and economic reform. Petitioners
suggest that we confine the concept of expropriation only to the following
public uses, i.e., the [12]

[13]

[14]

x x x taking of property for military posts, roads, streets, sidewalks, bridges, ferries,
levees, wharves, piers, public buildings including schoolhouses, parks, playgrounds,
plazas, market places, artesian wells, water supply and sewerage systems, cemeteries,
crematories, and railroads.
This view of petitioners is much too limitative and restrictive.
The court, in Guido, merely passed upon the issue of the extent of the
Presidents power under Commonwealth Act No. 539 to, specifically, acquire
private lands for subdivision into smaller home lots or farms for resale to bona
fide tenants or occupants. It was in this particular context of the statute that
the Court had made the pronouncement. The guidelines in Guidowere not
meant to be preclusive in nature and, most certainly, the power of eminent
domain should not now be understood as being confined only to the
expropriation of vast tracts of land and landed estates.
[15]

The term public use, not having been otherwise defined by the
constitution, must be considered in its general concept of meeting a public
need or a public exigency. Black summarizes the characterization given by
various courts to the term; thus:
[16]

Public Use. Eminent domain. The constitutional and statutory basis for taking
property by eminent domain. For condemnation purposes, public use is one which
confers same benefit or advantage to the public; it is not confined to actual use by
public. It is measured in terms of right of public to use proposed facilities for which
condemnation is sought and, as long as public has right of use, whether exercised by
one or many members of public, a public advantage or public benefit accrues
sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457 P. 2d
769, 772, 773.

Public use, in constitutional provisions restricting the exercise of the right to take
private property in virtue of eminent domain, means a use concerning the whole
community as distinguished from particular individuals. But each and every member
of society need not be equally interested in such use, or be personally and directly
affected by it; if the object is to satisfy a great public want or exigency, that is
sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct. 689, 692, 67
L.Ed. 1186. The term may be said to mean public usefulness, utility, or advantage, or
what is productive of general benefit. It may be limited to the inhabitants of a small or
restricted locality, but must be in common, and not for a particular individual. The use
must be a needful one for the public, which cannot be surrendered without obvious
general loss and inconvenience. A public use for which land may be taken defies
absolute definition for it changes with varying conditions of society, new appliances
in the sciences, changing conceptions of scope and functions of government, and other
differing circumstances brought about by an increase in population and new modes of
communication and transportation. Katz v. Brandon, 156Conn., 521, 245 A.2d
579,586.
[17]

The validity of the exercise of the power of eminent domain for traditional
purposes is beyond question; it is not at all to be said, however, that public
use should thereby be restricted to such traditional uses. The idea that public
use is strictly limited to clear cases of use by the public has long been
discarded. This Court in Heirs of Juancho Ardona v. Reyes, quoting from
Berman v. Parker (348 U.S. 25; 99 L. ed. 27), held:
[18]

We do not sit to determine whether a particular housing project is or is not

desirable. The concept of the public welfare is broad and inclusive. See DayBrite
Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L. Ed. 469, 472, 72 S Ct 405. The
values it represents are spiritual as well as physical, aesthetic as well as monetary. It is
within the power of the legislature to determine that the community should be
beautiful as well as healthy, spacious as well as clean, well-balanced as well as
carefully patrolled. In the present case, the Congress and its authorized agencies have
made determinations that take into account a wide variety of values. It is not for us to
reappraise them. If those who govern the District of Columbia decide that the Nations
Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear. For the power of eminent domain is merely the
means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L.
ed. 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668,
679, 40 L. ed. 576, 580, 16 S Ct 427.

It has been explained as early as Sea v. Manila Railroad Co., that:

[19]

x x x A historical research discloses the meaning of the term public use to be one of
constant growth. As society advances, its demands upon the individual increase and
each demand is a new use to which the resources of the individual may be devoted. x
x x for whatever is beneficially employed for the community is a public use.
Chief Justice Enrique M. Fernando states:
The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not so any more. As long as the
purpose of the taking is public, then the power of eminent domain comes into play. As
just noted, the constitution in at least two cases, to remove any doubt, determines what
is public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed for the general welfare
satisfies the requirement of public use.
[20]

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land
Tenure Administration, has viewed the Constitution a dynamic instrument
and one that is not to be construed narrowly or pedantically so as to enable it
to meet adequately whatever problems the future has in store. Fr. Joaquin
Bernas, a noted constitutionalist himself, has aptly observed that what, in fact,
has ultimately emerged is a concept of public use which is just as broad as
public welfare.
[21]

[22]

Petitioners ask: But (w)hat is the so-called unusual interest that the
expropriation of (Felix Manalos) birthplace become so vital as to be a public
use appropriate for the exercise of the power of eminent domain when only
members of the Iglesia ni Cristo would benefit? This attempt to give some
religious perspective to the case deserves little consideration, for what should
be significant is the principal objective of, not the casual consequences that
might follow from, the exercise of the power. The purpose in setting up the
marker is essentially to recognize the distinctive contribution of the late Felix
Manalo to the culture of the Philippines, rather than to commemorate his
founding and leadership of the Iglesia ni Cristo. The practical reality that
greater benefit may be derived by members of the Iglesia ni Cristo than by
most others could well be true but such a peculiar advantage still remains to
be merely incidental and secondary in nature. Indeed, that only a few would

actually benefit from the expropriation of property does not necessarily

diminish the essence and character of public use.
[23]

Petitioners contend that they have been denied due process in the fixing
of the provisional value of their property. Petitioners need merely to be
reminded that what the law prohibits is the lack of opportunity to be
heard; contrary to petitioners argument, the records of this case are replete
with pleadings that could have dealt, directly or indirectly, with the provisional
value of the property.
[24]

[25]

Petitioners, finally, would fault respondent appellate court in sustaining the

trial courts order which considered inapplicable the case of Noble v. City
of Manila. Both courts held correctly. The Republic was not a party to the
alleged contract of exchange between the Iglesia ni Cristo and petitioners
which (the contracting parties) alone, not the Republic, could properly be
bound.
[26]

All considered, the Court finds the assailed decision to be in accord with
law and jurisprudence.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
Padilla, Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-53487 May 25, 1981
ANDRES GARCES, Reverend Father SERGIO MARILAO OSMEA, NICETAS DAGAR and
JESUS EDULLANTES, petitioners,
vs.
Hon. NUMERIANO G. ESTENZO, Presiding Judge of the Court of First Instance of Leyte,
Ormoc City Branch V, BARANGAY COUNCIL of Valencia, Ormoc City, Barangay Captain
MANUEL C. VELOSO, Councilmen GAUDENCIO LAVEZARES, TOMAS CABATINGAN and
MAXIMINO NAVARRO, Barangay Secretary CONCHITA MARAYA and Barangay Treasurer
LUCENA BALTAZAR, respondents.

AQUINO, J.:

1wph1.t

This case is about the constitutionality of four resolutions of the barangay council of Valencia, Ormoc
City, regarding the acquisition of the wooden image of San Vicente Ferrer to be used in the

celebration of his annual feast day. That issue was spawned by the controversy as to whether the
parish priest or a layman should have the custody of the image.
On March 23, 1976, the said barangay council adopted Resolution No. 5, "reviving the traditional
socio-religious celebration" every fifth day of April "of the feast day of Seor San Vicente Ferrer, the
patron saint of Valencia".
That resolution designated the members of nine committees who would take charge of the 1976
festivity. lt provided for (1) the acquisition of the image of San Vicente Ferrer and (2) the construction
of a waiting shed as the barangay's projects. Funds for the two projects would be obtained through
the selling of tickets and cash donations " (Exh A or 6).
On March 26, 1976, the barangay council passed Resolution No. 6 which specified that, in
accordance with the practice in Eastern Leyte, Councilman Tomas Cabatingan, the Chairman
or hermano mayor of the fiesta, would be the caretaker of the image of San Vicente Ferrer and that
the image would remain in his residence for one year and until the election of his successor as
chairman of the next feast day.
It was further provided in the resolution that the image would be made available to the Catholic
parish church during the celebration of the saint's feast day (Exh. B or 7).
Resolutions Nos. 5 and 6 were submitted to a plebiscite and were duly ratified by the barangay
general assembly on March 26, 1976. Two hundred seventy-two voters ratified the two resolutions
(Exh. 2 and 5).
Funds were raised by means of solicitations0 and cash donations of the barangay residents and
those of the neighboring places of Valencia. With those funds, the waiting shed was constructed and
the wooden image of San Vicente Ferrer was acquired in Cebu City by the barangay council for four
hundred pesos (Exh. F-l, 3 and 4).
On April 5, 1976, the image was temporarily placed in the altar of the Catholic church of Barangay
Valencia so that the devotees could worship the saint during the mass for the fiesta.
A controversy arose after the mass when the parish priest, Father Sergio Marilao Osmea refused to
return that image to the barangay council on the pretext that it was the property of the church
because church funds were used for its acquisition.
Several days after the fiesta or on April 11, 1976, on the occasion of his sermon during a mass,
Father Osmea allegedly uttered defamatory remarks against the barangay captain, Manuel C.
Veloso, apparently in connection with the disputed image. That incident provoked Veloso to file
against Father Osmea in the city court of Ormoc City a charge for grave oral defamation.
Father Osmea retaliated by filing administrative complaints against Veloso with the city mayor's
office and the Department of Local Government and Community Development on the grounds of
immorality, grave abuse of authority, acts unbecoming a public official and ignorance of the law.
Meanwhile, the image of San Vicente Ferrer remained in the Catholic church of Valencia. Because
Father Osmea did not accede to the request of Cabatingan to have custody of the image and
"maliciously ignored" the council's Resolution No. 6, the council enacted on May 12, 1976 Resolution
No. 10, authorizing the hiring of a lawyer to file a replevin case against Father Osmea for the

recovery of the image (Exh. C or 8). On June 14, 1976, the barangay council passed Resolution No.
12, appointing Veloso as its representative in the replevin case (Exh. D or 9).
The replevin case was filed in the city court of Ormoc City against Father Osmea and Bishop
Cipriano Urgel (Exh. F). After the barangay council had posted a cash bond of eight hundred pesos,
Father Osmea turned over the image to the council (p. 10, Rollo). ln his answer to the complaint for
replevin, he assailed the constitutionality of the said resolutions (Exh. F-1).
Later, he and three other persons, Andres Garces, a member of the Aglipayan Church, and two
Catholic laymen, Jesus Edullantes and Nicetas Dagar, filed against the barangay council and its
members (excluding two members) a complaint in the Court of First Instance at Ormoc City, praying
for the annulment of the said resolutions (Civil Case No. 1680-0).
The lower court dismissed the complaint. lt upheld the validity of the resolutions. The petitioners
appealed under Republic Act No. 5440. The petitioners contend that the barangay council was not
duly constituted because lsidoro M. Maago, Jr., the chairman of the kabataang barangay, was not
allowed to participate in its sessions.
Barangays used to be known as citizens assemblies (Presidential Decrees Nos. 86 and 86-A).
Presidential Decree No. 557, which took effect on September 21, 1974, 70 O.G. 8450-L, directed
that all barrios should be known as barangays and adopted the Revised Barrio Charter as the
Barangay Charter.
Barrios are units of municipalities or municipal districts in which they are situated. They are quasimunicipal corporations endowed with such powers" as are provided by law "for the performance of
particular government functions, to be exercised by and through their respective barrio governments
in conformity with law" (Sec. 2, Revised Barrio Charter, R.A. No. 3590).
The barrio assembly consists of all persons who are residents of the barrio for at least six months,
eighteen years of age or over and Filipino citizens duly registered in the list kept by the barrio
secretary (Sec. 4, Ibid).
The barrio council, now barangay council, is composed of the barangay captain and six councilmen
(Sec. 7, Ibid). Section 3 of Presidential Decree No. 684, which took effect on April 15, 1975, provides
that "the barangay youth chairman shall be an ex-officio member of the barangay council", having
the same powers and functions as a barangay councilman.
In this case, Maago, the barangay youth chairman, was notified of the sessions of the barangay
council to be held on March 23 and 26, 1976 but he was not able to attend those sessions because
he was working with a construction company based at Ipil, Ormoc City (Par. 2[d] Exh. 1).
Maago's absence from the sessions of the barangay council did not render the said resolutions
void. There was a quorum when the said resolutions were passed.
The other contention of the petitioners is that the resolutions contravene the constitutional provisions
that "no law shall be made respecting an establishment of religion" and that "no public money or
property shall ever be appropriated, applied, paid, or used, directly or indirectly, for the use, benefit,
or support of any sect, church, denomination, sectarian institution, or system of religion, or for the
use, benefit, or support of any priest, preacher, minister, or other religious teacher or dignitary as
such. except when such priest, preacher, minister, or dignitary is assigned to the armed forces, or to
any penal institution, or government orphanage or leprosarium (Sec. 8, Article IV and sec. 18[2],
Article VIII, Constitution).

That contention is glaringly devoid of merit. The questioned resolutions do not directly or indirectly
establish any religion, nor abridge religious liberty, nor appropriate public money or property for the
benefit of any sect, priest or clergyman. The image was purchased with private funds, not with tax
money. The construction of a waiting shed is entirely a secular matter.
Manifestly puerile and flimsy is Petitioners argument that the barangay council favored the Catholic
religion by using the funds raised by solicitations and donations for the purchase of the patron saint's
wooden image and making the image available to the Catholic church.
The preposterousness of that argument is rendered more evident by the fact that counsel advanced
that argument in behalf of the petitioner, Father Osmea the parish priest.
The wooden image was purchased in connection with the celebration of the barrio fiesta honoring
the patron saint, San Vicente Ferrer, and not for the purpose of favoring any religion nor interfering
with religious matters or the religious beliefs of the barrio residents. One of the highlights of the fiesta
was the mass. Consequently, the image of the patron saint had to be placed in the church when the
mass was celebrated.
If there is nothing unconstitutional or illegal in holding a fiesta and having a patron saint for the
barrio, then any activity intended to facilitate the worship of the patron saint (such as the acquisition
and display of his image) cannot be branded as illegal.
As noted in the first resolution, the barrio fiesta is a socio-religious affair. Its celebration is an
ingrained tradition in rural communities. The fiesta relieves the monotony and drudgery of the lives of
the masses.
The barangay council designated a layman as the custodian of the wooden image in order to
forestall any suspicion that it is favoring the Catholic church. A more practical reason for that
arrangement would be that the image, if placed in a layman's custody, could easily be made
available to any family desiring to borrow the image in connection with prayers and novenas.
The contradictory positions of the petitioners are shown in their affidavits. Petitioner Garces swore
that the said resolutions favored the Catholic church. On the other hand, petitioners Dagar and
Edullantes swore that the resolutions prejudiced the Catholics because they could see the image in
the church only once a year or during the fiesta (Exh. H and J).
We find that the momentous issues of separation of church and state, freedom of religion annd the
use of public money to favor any sect or church are not involved at all in this case even remotely or
indirectly. lt is not a microcosmic test case on those issues.
This case is a petty quarrel over the custody of a saint's image. lt would never have arisen if the
parties had been more diplomatic and tactful and if Father Osmea had taken the trouble of causing
contributions to be solicited from his own parishioners for the purchase of another image of San
Vicente Ferrer to be installed in his church.
There can be no question that the image in question belongs to the barangay council. Father
Osmea claim that it belongs to his church is wrong. The barangay council, as owner of the image,
has the right to determine who should have custody thereof.

If it chooses to change its mind and decides to give the image to the Catholic church. that action
would not violate the Constitution because the image was acquired with private funds and is its
private property.
The council has the right to take measures to recover possession of the image by enacting
Resolutions Nos. 10 and 12.
Not every governmental activity which involves the expenditure of public funds and which has some
religious tint is violative of the constitutional provisions regarding separation of church and state,
freedom of worship and banning the use of public money or property.
In Aglipay vs. Ruiz, 64 Phil. 201, what was involved was Act No. 4052 which appropriated sixty
thousand pesos for the cost of plates and the printing of postage stamps with new designs. Under
the law, the Director of Posts, with the approval of the Department Head and the President of the
Philippines, issued in 1936 postage stamps to commemorate the celebration in Manila of the 33rd
International Eucharistic Congress sponsored by the Catholic Church.
The purpose of the stamps was to raise revenue and advertise the Philippines. The design of the
stamps showed a map of the Philippines and nothing about the Catholic Church. No religious
purpose was intended.
Monsignor Gregorio Aglipay, the founder and head of the Philippine Independent Church, sought to
enjoin the sale of those commemorative postage stamps.
It was held that the issuance of the stamps, while linked inseparably with an event of a religious
character, was not designed as a propaganda for the Catholic Church. Aglipay's prohibition suit was
dismissed.
The instant case is easily distinguishable from Verzosa vs. Fernandez, 49 Phil., 627 and 55 Phil.
307, where a religious brotherhood, La Archicofradia del Santisimo Sacramento, organized for the
purpose of raising funds to meet the expenses for the annual fiesta in honor of the Most Holy
Sacrament and the Virgin Lady of Guadalupe, was held accountable for the funds which it held as
trustee. 0
Finding that the petitioners have no cause of action for the annulment of the barangay resolutions,
the lower court's judgment dismissing their amended petition is affirmed. No costs.
SO ORDERED.
Fernando C.J., Barredo, Makasiar, Guerrero, De Castro and Melencio-Herrera, JJ., concur.
Teehankee, J., concur in the result.
Fernandez, J., Concepcion Jr. J., are on leave.

EN BANC

[G.R. No. 153888. July 9, 2003]

1wph1.t

ISLAMIC DAWAH COUNCIL OF THE PHILIPPINES, INC., herein

represented by PROF. ABDULRAFIH H. SAYEDY, petitioner, vs.
OFFICE OF THE EXECUTIVE SECRETARY of the Office of the
President of the Philippines, herein represented by HON.
ALBERTO G. ROMULO, Executive Secretary, and the OFFICE ON
MUSLIM AFFAIRS, herein represented by its Executive Director,
HABIB MUJAHAB HASHIM, respondents.
DECISION
CORONA, J.:

Before us is a petition for prohibition filed by petitioner Islamic Dawah

Council of the Philippines, Inc. (IDCP) praying for the declaration of nullity of
Executive Order (EO) 46, s. 2001 and the prohibition of herein respondents
Office of the Executive Secretary and Office of Muslim Affairs (OMA) from
implementing the subject EO.
Petitioner IDCP, a corporation that operates under Department of Social
Welfare and Development License No. SB-01-085, is a non-governmental
organization that extends voluntary services to the Filipino people, especially
to Muslim communities. It claims to be a federation of national Islamic
organizations and an active member of international organizations such as the
Regional Islamic Dawah Council of Southeast Asia and the Pacific
(RISEAP) and The World Assembly of Muslim Youth. The RISEAP
accredited petitioner to issue halal certifications in the Philippines. Thus,
among the functions petitioner carries out is to conduct seminars, orient
manufacturers on halal food and issue halal certifications to qualified products
and manufacturers.
[1]

[2]

Petitioner alleges that, on account of the actual need to certify food

products as halal and also due to halal food producers request, petitioner
formulated in 1995 internal rules and procedures based on the Quran and the
Sunnah for the analysis of food, inspection thereof and issuance of halal
certifications. In that same year, petitioner began to issue, for a fee,
certifications to qualified products and food manufacturers. Petitioner even
adopted for use on its halal certificates a distinct sign or logo registered in the
Philippine Patent Office under Patent No. 4-2000-03664.
[3]

[4]

On October 26, 2001, respondent Office of the Executive Secretary issued

EO 46 creating the Philippine Halal Certification Scheme and designating
respondent OMA to oversee its implementation. Under the EO, respondent
[5]

OMA has the exclusive authority to issue halal certificates and perform other
related regulatory activities.
On May 8, 2002, a news article entitled OMA Warns NGOs Issuing Illegal
Halal Certification was published in the Manila Bulletin, a newspaper of
general circulation. In said article, OMA warned Muslim consumers to buy
only products with its official halal certification since those without said
certification had not been subjected to careful analysis and therefore could
contain pork or its derivatives. Respondent OMA also sent letters to food
manufacturers asking them to secure the halal certification only from OMA lest
they violate EO 46 and RA 4109. As a result, petitioner lost revenues after
food manufacturers stopped securing certifications from it.
[6]

Hence, this petition for prohibition.

Petitioner contends that the subject EO violates the constitutional
provision on the separation of Church and State. It is unconstitutional for the
government to formulate policies and guidelines on the halal certification
scheme because said scheme is a function only religious organizations, entity
or scholars can lawfully and validly perform for the Muslims. According to
petitioner, a food product becomes halal only after the performance of Islamic
religious ritual and prayer. Thus, only practicing Muslims are qualified to
slaughter animals for food. A government agency like herein respondent OMA
cannot therefore perform a religious function like certifying qualified food
products as halal.
[7]

Petitioner also maintains that the respondents violated Section 10, Article
III of the 1987 Constitution which provides that (n)o law impairing the
obligation of contracts, shall be passed. After the subject EO was
implemented, food manufacturers with existing contracts with petitioner
ceased to obtain certifications from the latter.
Moreover, petitioner argues that the subject EO violates Sections 15 and
16 of Article XIII of the 1987 Constitution which respectively provide:
ROLE AND RIGHTS OF PEOPLES ORGANIZATIONS
Sec. 15. The State shall respect the role of independent peoples organizations to
enable the people to pursue and protect, within the democratic framework, their
legitimate and collective interests and aspirations through peaceful and lawful means.
Peoples organizations are bona fide associations of citizens with demonstrated
capacity to promote the public interest and with identifiable leadership, membership,
and structure.

Sec. 16. The rights of the people and their organizations to effective and reasonable
participation at all levels of social, political, and economic decision-making shall not
be abridged. The State shall, by law, facilitate, the establishment of adequate
consultation mechanisms.
According to petitioner, the subject EO was issued with utter haste and
without even consulting Muslim peoples organizations like petitioner before it
became effective.
We grant the petition.
OMA was created in 1981 through Executive Order No. 697 (EO 697) to
ensure the integration of Muslim Filipinos into the mainstream of Filipino
society with due regard to their beliefs, customs, traditions, and
institutions. OMA deals with the societal, legal, political and economic
concerns of the Muslim community as a national cultural community and not
as a religious group. Thus, bearing in mind the constitutional barrier between
the Church and State, the latter must make sure that OMA does not intrude
into purely religious matters lest it violate the non-establishment clause and
the free exercise of religion provision found in Article III, Section 5 of the 1987
Constitution.
[8]

[9]

Freedom of religion was accorded preferred status by the framers of our

fundamental law. And this Court has consistently affirmed this preferred
status, well aware that it is "designed to protect the broadest possible liberty of
conscience, to allow each man to believe as his conscience directs, to profess
his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good.
[10]

Without doubt, classifying a food product as halal is a religious function

because the standards used are drawn from the Quran and Islamic beliefs. By
giving OMA the exclusive power to classify food products as halal, EO 46
encroached on the religious freedom of Muslim organizations like herein
petitioner to interpret for Filipino Muslims what food products are fit for Muslim
consumption. Also, by arrogating to itself the task of issuing halal
certifications, the State has in effect forced Muslims to accept its own
interpretation of the Quran and Sunnah on halal food.
To justify EO 46s intrusion into the subject religious activity, the Solicitor
General argues that the freedom of religion is subservient to the police power
of the State. By delegating to OMA the authority to issue halal certifications,
the government allegedly seeks to protect and promote the muslim Filipinos
right to health, and to instill health consciousness in them.
We disagree.

Only the prevention of an immediate and grave danger to the security and
welfare of the community can justify the infringement of religious freedom. If
the government fails to show the seriousness and immediacy of the threat,
State intrusion is constitutionally unacceptable. In a society with a democratic
framework like ours, the State must minimize its interference with the affairs of
its citizens and instead allow them to exercise reasonable freedom of personal
and religious activity.
[11]

In the case at bar, we find no compelling justification for the government to

deprive Muslim organizations, like herein petitioner, of their religious right to
classify a product as halal, even on the premise that the health of Muslim
Filipinos can be effectively protected by assigning to OMA the exclusive
power to issue halal certifications. The protection and promotion of the Muslim
Filipinos right to health are already provided for in existing laws and
ministered to by government agencies charged with ensuring that food
products released in the market are fit for human consumption, properly
labeled and safe. Unlike EO 46, these laws do not encroach on the religious
freedom of Muslims.
Section 48(4) of the Administrative Code of 1987 gives to the National
Meat Inspection Commission (NMIC) of the Department of Agriculture (DOA)
the power to inspect slaughtered animals intended for human consumption to
ensure the safety of the meat released in the market. Another law, RA 7394,
otherwise known as The Consumer Act of 1992, gives to certain government
departments the duty to protect the interests of the consumer, promote his
general welfare and to establish standards of conduct for business and
industry. To this end, a food product, before its distribution to the market, is
required to secure the Philippine Standard Certification Mark after the
concerned department inspects and certifies its compliance with quality and
safety standards.
[12]

[13]

One such government agency designated by RA 7394 is the Bureau of

Food and Drugs (BFD) of the Department of Health (DOH). Under Article 22
of said law, BFD has the duty to promulgate and enforce rules and regulations
fixing and establishing a reasonable definition and standard of identity, a
standard of quality and a standard of fill of containers for food. The BFD also
ensures that food products released in the market are not adulterated.
[14]

Furthermore, under Article 48 of RA 7394, the Department of Trade and

Industry (DTI) is tasked to protect the consumer against deceptive, unfair and
unconscionable sales acts or practices as defined in Article 50. DTI also
enforces compulsory labeling and fair packaging to enable the consumer to
obtain accurate information as to the nature, quality and quantity of the
[15]

contents of consumer products and to facilitate his comparison of the value of

such products.
[16]

With these regulatory bodies given detailed functions on how to screen

and check the quality and safety of food products, the perceived danger
against the health of Muslim and non-Muslim Filipinos alike is totally avoided.
Of great help are the provisions on labeling of food products (Articles 74 to
85) of RA 7394. In fact, through these labeling provisions, the State ably
informs the consuming public of the contents of food products released in the
market. Stiff sanctions are imposed on violators of said labeling requirements.
[17]

Through the laws on food safety and quality, therefore, the

State indirectly aids Muslim consumers in differentiating food from non-food
products. The NMIC guarantees that the meat sold in the market has been
thoroughly inspected and fit for consumption. Meanwhile, BFD ensures that
food products are properly categorized and have passed safety and quality
standards. Then, through the labeling provisions enforced by the DTI, Muslim
consumers are adequately apprised of the products that contain substances
or ingredients that, according to their Islamic beliefs, are not fit for human
intake. These are the non-secular steps put in place by the State to ensure
that the Muslim consumers right to health is protected. The halal certifications
issued by petitioner and similar organizations come forward as the official
religious approval of a food product fit for Muslim consumption.
We do not share respondents apprehension that the absence of a central
administrative body to regulate halal certifications might give rise to schemers
who, for profit, will issue certifications for products that are not actually halal.
Aside from the fact that Muslim consumers can actually verify through the
labels whether a product contains non-food substances, we believe that they
are discerning enough to know who the reliable and competent certifying
organizations in their community are. Before purchasing a product, they can
easily avert this perceived evil by a diligent inquiry on the reliability of the
concerned certifying organization.
WHEREFORE, the petition is GRANTED. Executive Order 46, s. 2001, is
hereby declared NULL AND VOID. Consequently, respondents are prohibited
from enforcing the same.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Panganiban, Ynares-Santiago, Carpio, AustriaMartinez, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Puno, J., concur with the opinion of J., Vitug.
Vitug, J., please see Separate Opinion.

Quisumbing, Sandoval-Gutierrez, J., on official leave

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-13954

August 12, 1959

GENARO GERONA, ET AL., petitioners-appellants,

vs.
THE HONORABLE SECRETARY OF EDUCATION, ET AL., respondents-appellees.
K.V. Felon and Hayed C. Cavington for appellant.
Office of the Solicitor General Edilberto Barot and Solicitor Conrado T. Limcaoco for appellees.
MONTEMAYOR, J.:
Petitioners are Appealing the decision of the Court of First Instance of Masbate dismissing their
complaint. Acting upon the "Urgent Motion for Writ of Preliminary Injunction" filed on behalf of
petitioners of December 12, 1958, and without objection on the part of the Solicitor General, by
resolution of this Court of December 16, we issued the corresponding writ of preliminary injunction
restraining respondents from excluding or banning petitioners-appellants, their children and all other
of Jehovah's Witnesses for whom this action has been brought, from admission to public schools,
particularly the Buenavista Community School, solely on account of their refusal to salute the flag or
preventing their return to school should they have already been banned, until further orders from this
Court.
The facts involved are not disputed. On June 11, 1955, Republic Act No. 1265 was approved and
went into effect. Acting upon section 2 of said Act authorizing and directing the Secretary of
Education to issue or cause to be issued rules and regulations for the proper conduct of the flag
ceremony, said Secretary issued Department Order No. 8, series of 1955 on July 21, 1955 which
Department Order quoting Republic Act No. 1265 in its entirety, we reproduce below for purpose of
reference:
"Republic of the Philippines
Department of Education
Office of the Secretary
Manila
Department Order
No. 8, s. 1955
July 21, 1955
COMPULSORY DAILY FLAG CEREMONY IN ALL PUBLIC AND PRIVATE SCHOOLS
To the Director of Public Schools and the Director of Private Schools:

1. Quoted below is Republic Act No. 1265 entitled "An Act making Flag Ceremony
Compulsory in all Educational Institutions," which is self-explanatory.
SECTION 1. All educational institutions henceforth observe daily flag ceremony,
which shall be simple and dignified and shall include the playing or singing of the
Philippine National Anthem.
SECTION 2. The Secretary of Education is hereby authorized and directed to issue
or cause to be issued rules and regulations for the proper conduct of the flag
ceremony herein provided.
SECTION 3. Failure of refusal to observe the flag ceremony provided by this Act and
in accordance with rules and regulations issued by the Secretary of Education, after
proper notice and hearing, shall subject the educational institution concerned and its
head to public censure as an administrative punishment which shall be published at
least once in a newspaper of general circulation.
In case of failure to observe for the second time the flag ceremony provided by this Act, the
Secretary of Education, after proper notice and hearing, shall cause the cancellation of the
recognition or permit of the private educational institution responsible for such failure.
SECTION 4. This Act shall take effect upon its approval.
Approved, June 11, 1955.
2. As provided in Section 2 of the Act, the rules and regulations governing the proper
conduct of the required flag ceremony, given in the in closure to this Order, are hereby
promulgated. These rules and regulations should be made known to all teachers and school
officials, public and private. The patriotic objective or significance of the Act should be
explained to all pupils and students in the schools and to all communities through the purok
organizations and community assemblies.
(Sgd.) G. HERNANDEZ, JR.
Secretary of Education
Incl.:
As stated
(Inclosure of Department order No. 8, s. 1955)
RULES AND REGULATIONS FOR CONDUCTING THE FLAG CEREMONY IN ALL EDUCATIONAL
INSTITUTIONS
1. The Filipino Flag shall be displayed by all educational institutions, public and private, every
school day throughout the year. It shall be raised at sunrise and lowered at sunset. The flag
staff must be straight, slightly and gently tapering at the end, and of such height as would
give the Flag a commanding position in front of the building or within the compound.

2. Every public and private educational institution shall hold a flag-raising ceremony every
morning except when it is raining, in which event the ceremony may be conducted indoors in
the best way possible. A retreat shall be held in the afternoon of the same day.
The flag-raising ceremony in the morning shall be conducted in the following manner:
a. Pupils and teachers or students and faculty members who are in school and its premises
shall assemble in formation facing the flag. At command, books shall be put away or held in
the left hand and everybody shall come to attention. Those with hats shall uncover. No one
shall enter or leave the school grounds during the ceremony.
b. The assembly shall sing the Philippine National Anthem accompanied by the school band
or without the accompaniment if it has none; or the anthem may be played by the school
band alone. At the first note of the Anthem, the flag shall be raised briskly. While the flag is
being raised, all persons present shall stand at attention and execute a salute. Boys and
men with hats shall salute by placing that hat over the heart. Those without hats may stand
with their arms and hands downed and straight at the sides. Those in military or Boy Scout
uniform shall give the salute prescribed by their regulations. The salute shall be started as
the Flag rises, and completed upon last note of the anthem.
c. Immediately following the singing of the Anthem, the assembly shall recite in unison of
following patriotic pledge (English or vernacular version 0, which may bring the ceremony to
a close. This is required of all public schools and of private schools which are intended for
Filipino students or whose population is predominantly Filipino.
ENGLISH VERSION
I Love the Philippines.
It is the land of my birth,
It is the home of my people.
It protects me and helps me to be strong, happy and useful.
In return, I will heed the counsel of my parents;
I will obey the rules of my school;
I will perform the duties of a patriotic, law-abiding citizen;
I will serve my country unselfishly and faithfully;
I will be a true Filipino in thought, in word, in deed.
3. The retreat shall be observed as follows:
a. Teachers and pupils or faculty members and students whose classes and after the last
school period in the afternoon before sun down shall assemble facing the flag. At command,
the Philippine National Anthem shall be sung with accompaniment of the school band. If the
school has no band, the assembly will only sing the Anthem. Boys who have been taking
part in preparatory military training or Boy Scout activities shall attend the retreat in formation
and execute the salute prescribed for them. Others shall execute the same salute and
observe the same deportment as required of them in the flag-raising ceremony. The flag
should be lowered slowly so that it will be in the hands of the color detail at the sound of the
last note of the Anthem.
b. If the school so prefers, it may have its bugle corp play "To the Colors", instead of the
singing of the National Anthem, for the retreat. At the sound of the first note, the assembly
shall stand at attention facing the flag and observe the same deportment as required in the

flag-raising ceremony. Or, it may have its bugle corp play "To the Colors" and at the sound of
the first note everybody within hearing distance shall stand at attention, face the flag, and
observe the same deportment as required in the flag-raising ceremony.
4. The flag should be handled reverently in raising or lowering it and not allowed to touch the
ground. This can be insured by having one pupil hold the flag while another pupil fastening it
to or unfasten it from the halyard.
5. To display the National Flag at half-mast when necessary, it must be hoisted to full-mast,
allowing it to fly there for a moment, and then brought down to half-mast. To lower the flag, it
must again be hoisted to full-mast before bringing it down."
In his turn the Director of Public Schools issued Circular No. 22, series of 1955, on July 30, 1955
addressed to Division Superintendents of Schools, enclosing a copy of Department Order No. 8,
series of 1955 and enjoining strict compliance therewith.
It would appear that pursuant to the Department Order in question, the flag ceremony contemplated
therein was held daily in every school, public and private. Petitioners' children attending the
Buenavista Community School, Uson, Masbate, refused to salute the flag, sing the national anthem
and recite the patriotic pledge contrary to the requirement of Department Order No. 8; as a result
they were expelled from school sometime in September, 1955. It is said that other children similarly
situated who refused or failed to comply with the requirement about saluting the flag are under
threats of being also expelled from all public schools in the Philippines.
Petitioners thru counsel wrote to the Secretary of Education petitioning that in the implementation of
this flag ceremony, they and their children attending school be allowed to remain silent and stand at
attention with their arms and hands down and straight at the sides and that they be exempted from
executing the formal salute, singing of the National Anthem and the reciting of the patriotic pledge,
giving their reason for the same. On December 16, 1955 the Secretary of Education wrote to
counsel for petitioner denying the petition, making it clear that the denial was the final and absolute
stand of the Department of Education on the matter and that counsel may thereafter feel free to seek
a judicial determination of the constitutionality or interpretation of Republic Act No. 1265 as
construed and applied to Jehovah's Witnesses. The letter also informed petitioners' counsel that with
reference to his letter of December 1, 1955 relative to the request for reinstatement of petitioners'
children who had been expelled from school for non-compliance with Department Order No. 8, no
favorable action could be taken thereon. So, on March 27, 1957 petitioners commenced the present
action asking that a writ of preliminary injunction issue to restrain the Secretary of Education and the
Director of Public Schools from enforcing Department Order No. 8 "as applied to petitioners and all
others of Jehovah's Witnesses for whom this action is brought and to restrain them from excluding
from the public schools the children of the petitioners on account of their refusal to execute a formal
salute to the flag, sing the national anthem and recite the patriotic pledge, and that after hearing, the
trial court declare Department Order No. 8 invalid and contrary to the Bill of Rights and that the
preliminary injunction prayed for be made permanent.
Petitioners-appellants belong to what is called the JEHOVAH'S WITNESS, an unincorporated body
teaching that the obligation imposed by law of God is superior to that of laws enacted by the State.
Their religious beliefs include a literal version of Exodus, Chapter 20, verses 4 and 5, which say:
"Thou shalt not make unto thee any graven image, or any likeness of anything that is in heaven
above, or that is in the earth beneath, or that is in the water under the earth; thou shalt not bow down
thyself to them, nor serve them." They consider that the flag is an "image within this command. For
this reason they refuse to salute it.

To further make clear the stand of petitioners as to the relative position and priority of religious
teaching on the one hand and laws promulgated by the State on the other, we quote from appellant's
brief on page 50 thereof:
In Halter vs. Nebraska, 205 U.S. 34, 41, 27 S. Ct. 419, 51 L. Ed. 696 (1907), the United
States Supreme Court held that the flag `is an emblem of National sovereignty,
To many persons the saluting of a national flag means nothing. To a sincere person who
believed in God and the Bible as his Word, and who is in a covenant with Almighty God to do
his will exclusively, it means much. To such person "sovereignty" means the supreme
authority or power. Many believe that "the higher powers," mentioned in the Bible at Romans
13:1, means the "sovereign state"; but to the Christian this means Jehovah God and his son,
Christ Jesus, Jehovah's anointed King. They, Father and Son are the higher powers, to
whom all must be subject and joyfully obey. (Emphasis supplied)
The question involved in this appeal is a highly important one. We are called upon to determine the
right of a citizen as guaranteed by the Constitution about freedom of religious belief and the right to
practice it as against the power and authority of the State to limit or restrain the same. Our task is
lessened by the fact that petitioners do not challenge the legality or constitutionality of Republic Act
1265. All that they question is the legality or constitutionality of Department Order No. 8, series of
1955 of the Department of Education implementing said Republic Act.
The realm of belief and creed is infinitive and limitless bounded only by one's imagination and
though. So is the freedom of belief, including religious belief, limitless and without bounds. One may
believe in most anything, however strange, bizarre and unreasonable the same may appear to
others, even heretical when weighed in the scales of orthodoxy or doctrinal standards. But between
the freedom of belief and the exercise of said belief, there is quite a stretch of road to travel. If the
exercise of said religious belief clashes with the established institutions of society and with the law,
then the former must yield and give way to the latter. The Government steps in and either restrains
said exercise or even prosecutes the one exercising it.
One may believe in polygamy because it is permitted by his religious, but the moment he translates
said religious belief into an overt act, such as engaging or practising plural marriages, he may be
prosecuted for bigamy and he may not plead or involve his religious belief as a defense or as matter
of exemption from the operation of the law.
In the case of Reynolds vs. U.S. (98 U.S. 145) the U.S. Supreme Court upheld the validity of a law
prohibiting and punishing polygamy even as against the claim of religious belief of the Mormons.
Said the Court:
So here, as a law of the organization of society under the exclusive dominion of the United
States, it is provided that plural marriages shall not be allowed. Can a man excuse his
practices to the contrary because of his religious belief? To permit this would be to make the
professed doctrines of religious belief superior to the law of the land, and in effect to permit
every citizen to become a law unto himself. Government could exist only in name under such
circumstance. (emphasis supplied)
Again, one may not believe in the payment of taxes because he may claim that according to his
religious belief, the payment of taxes means service to one other than God. As long as he confines
himself to mere belief, well and good. But when he puts said belief into practice and he actually
refuses to pay taxes on his property or on his business, then the States steps in, compels payment,
and enforces it either by court action or levy and distraint.

One of the important questions to determine here is the true meaning and significance of the Filipino
flag. Petitioners believe and maintain that it is an image and therefore to salute the same is to go
against their religious belief. "Thou shalt not make unto thee any graven . . . thou shalt not bow down
thyself to them or serve them." They also claim that the flag salute is a religious ceremony,
participation in which is forbidden by their religious belief. We disagree. Appellants themselves (page
51 of their brief) concede that the flag is a symbol of the State. They give the meaning of the word
"image" on page 51 of their brief as follows:
Under the word "image" this comment is given by Webster: "Image, in modern usage,
commonly suggestsreligious veneration." (Emphasis supplied)
The flag is not an image but a symbol of the Republic of the Philippines, an emblem of national
sovereignty, of national unity and cohesion and of freedom and liberty which it and the Constitution
guarantee and protect. Considering the complete separation of church and state in our system of
governments, the flag is utterly devoid of any religious significance. Saluting the flag consequently
does not involve any religious ceremony. The flag salute, particularly the recital of the pledge of
loyalty is no more a religious ceremony than the taking of an oath of office by a public official or by a
candidate for admission to the bar. In said oath, taken while his right hand is raised, he swears
allegiance to the Republic of the Philippines, promise to defend the Constitution and even invokes
the help of God; and it is to be doubted whether a member of Jehovah's Witness who is a candidate
for admission to the Philippine Bar would object to taking the oath on the ground that is religious
ceremony.
After all, the determination of whether a certain ritual is or is not a religious ceremony must rest with
the courts. It cannot be left to a a religious group or sect, much less to a follower of said group or
sect; otherwise, there would be confusion and misunderstanding for there might be as many
interpretations and meaning to be given to a certain ritual or ceremony as there are religious groups
or sects or followers, all depending upon the meaning which they, though in all sincerity and good
faith, may want to give to such ritual or ceremony.
We understand that petitioners, during the flag ceremony, are willing to remain silent and stand at
attention with their arms and hands down straight at the sides, and they agree that boys, members
of Jehovah's Witness who have been taking part in military training or Boy Scout activities, and are
in uniform, may execute the salute to the flag prescribed by the Circular for them. So, the
requirement contained in Department Order No. 8 that during the flag ceremony those without hats
may stand with their arms and hands down and straight at the sides, including the formal salute by
boys in military and boy Scout uniform, meets with the conformity of petitioners. Of course, there is
the other requirement that boys and men with hats shall salute the flag by placing their hats over the
heart, but petitioners and other members of the Jehovah's Witness could well solve this
requirements or avoid it by putting away their hats just as pupils books, may put them away, at
command (Rules and Regulations, Sec. 2, par. [a]). Consequently, the opposition of petitioners to
the flag salute may be reduced to their objection to singing the National Anthem and reciting the
patriotic pledge.
After a careful and conscientious examination of the patriotic pledge as reproduced at the beginning
of this decision, frankly we find nothing, absolutely nothing, objectionable, even from the point of
view of religious belief. The school child or student is simply made to say that he loves the
Philippines because it is the land of his birth and the home of his people; that because it protects
him, in return he will heed the counsel of his parents, obey the rules and regulations of his school,
perform the duties of a patriotic and law-abiding citizen; and serve his country unselfishly and faithly,
and that he would be a true Filipino in thought, in word, and in deed. He is not even made to pledge
allegiance to the flag or to the Republic for which it stands. So that even if we assume for a moment

that the flag were an image, connoting religious and veneration instead of a mere symbol of the
State and of national unity, the religious scruples of appellants against bowing to and venerating an
image are not interfered with or otherwise jeopardized.
And as to the singing of the National Anthem, which we reproduce below:
Land of the morning,
Child of the sun returning.
With fervor burning,
Thee do our souls adore.
Land dear and holy,
Cradle of noble heroes,
Ne'er shall invaders,
Trample thy sacred shores.
Ever within thy skies and thy clouds,
and o'er thy hills and sea,
Do we behold the radiance, feel the throb
of glorious liberty.
Thy banner, dear to all our hearts,
Its sun and stars alight.
Onever shall its shining field
Be dimmed by tyrant's might.
Beautiful land of love,
Olandoflight,
In thine embrace `tis rapture to lie.
But is glory ever, when thou art wronged,
For us, they sons to suffer and die.
the same thing may be said; that it speaks only of love of country, of patriotism, liberty and the glory
of suffering and dying for it. It does not even speak of resorting to force and engaging in military
service or duty to defend the country, which service might meet with objection on the part of
conscientious objectors. Surely, petitioners do not disclaim or disavow these noble and sacred
feelings of patriotism, respect, even veneration for the flag and love of coutnry for which the flag
stands.
Men may differ and do differ on religous beliefs and creeds, government policies, the wisdom and
legality of laws, even the correctness of judicial decisions and decrees; but in the field of love of
country, reverence for the flag, national unity and patriotism, they can hardly afford to differ, for these
are matters in which they are mutually and viatlly interested, for to them, they mean national
existence and survival as a nation or national extinction.
In enforcing the flag salute on the petitioners, there was absolutely no compulsion involved, and for
their failure or refusal to obey school regulations about the flag salute they were not being
persecuted. Neither were they being criminally prosecuted under threat of penal sacntion. If they
chose not to obey the flag salute regulation, they merely lost the benefits of public education being
maintained at the expense of their fellow citizens, nothing more. According to a popular expression,
they could take it or leave it. Having elected not to comply with the regulations about the flag salute,
they forfeited their right to attend public schools.
In the case of Hamilton vs. University of California, 293 U.S. 243, 79 L. ed. 343, quite similar to the
present case, appellants therein were taxpayers and citizens of the United States and of California.
The University of California received endowment and support from the State legislature under

certain conditions such as that any resident of California of the age of 14 years or upward of
approved moral character shall have the right to enter the University as a student and receive
instructions therein. The University as part of its cirriculum and instruction required military science
and tactics in the Reserve Officers Training Corps. Appellants conformed to all requirements of the
University except taking the course in military science and tactics and for this the regents of the
University suspended them. Appellants were members of the Methodist Espiscopal Church and of
the Epworth League. For many years their fathers have been ordained ministers of that church. They
believed that war and preparation for war is a violation of their religious belief. In other words, they
were conscientious objectors to war. They believed that war, training for war, and military training
were immoral, wrong and contrary to the letter and spirit of the teaching of God and precepts of the
Christian religion. They petitioned for exemption from the military science and tactics course but the
regents refused to make military training optional or to exempt them and they were suspended. So
they initiated court action with a California Supreme Court to compel the regents of the University to
admit them. In that action they assailed the validity of the State law providing for military training in
the University. The petition was denied by the State Supreme Court. In affirming the decision of the
State Supreme Court, the Supreme Court of the United States held that:
. . . California has not drafted or called them to attend the University. They are seeking
education offered by the State and at the same time insisting that they be excluded from the
prescribed course solely upon grounds of their religious beliefs and consicientious objections
to war, preparation for war and military education. Taken on the basis of the facts alleged in
the petition, appellants' contentions amount to no more than an assertion that the due
process clause of the Fourtheenth Amendment as a safeguard of liberty' confers the right to
be students in the state university free from obligation to take military training as one of the
conditions of attendance.
Viewed in the light of our decisions that proposition must at once be put aside as untenable .
..
In United States vs. Macintosh, 283 U.S. 605, 75 L. ed. 1302, 51 S. Ct. 570, a later
naturalization case, the applicant was unwilling, because of conscientious objections, to take
unqualifiedly the statutory oath of allegiance which contains this statement: "That he will
support and defend the constitution and laws of the United States against all enemies,
foreign and domestic, and bear true faith and allegiance to the same." U.S.C. title 8, Sec.
381. His petition stated that he was willing if necessary to take up arms in defense of this
country, "but I should want to be free to judge of the necessity." In amplification he said: "I do
not undertake to support "my country, right or wrong" in any dispute which may arise, and I
am not willing to poromise beforehand, and without knowing the cause for which my country
may go to war, either that I will or that I will not "take up arms in defense of this country,"
however "necessary" the war may seem to be to the government of the day." The opinion of
this court quotes from petitioner's brief a statement to the effect that it is a fixed principle of
our Constitution, zealously guarded by our laws, that a citizen cannot be forced and need not
bear arms in a war if he has conscientious religious scruples against doing so." And,
referring to that part of the argument in behalf of the applicant this court said (p. 623): "This,
if it means what it seems to say, is an astonishing statement. Of course, there is no such
principle of the Constitution, fixed or otherwise. The conscientious objector is relieved from
the obligation to bear arms in obedience to no constitutional provision, express or implied;
but because, and only because, it has accorded with the policy of Congress thus to relieve
him . . . The previlege of the native-born conscientious objector to avoid bearing arms comes
not from the Constitution but from the acts of Congress. That body may grant or withhold the
exemption as in its wisdom it sees fit; and if it be withheld, the native-born conscientious
objector cannot successfully assert the privilege. No other conclusion is compatible with the
well-nigh limitless extent of the war power as above illustrated, which include by necessary

implication, the power, inthe last extremity, to compel armed serviced of any citizen in the
land, without regard to his objections or his views in respect of the justice or morality of the
particular war or of war in general. In Jacobson v. Massachusetts, 197 U.S. 11, 29, 49 L. ed.
643, 651, 25 S. Ct. 358, 3 Ann. Cas, 765, this Court (upholding a state compulsory
vaccination law) speaking of the liberties guaranteed to the individual by the Fourteenth
Amendment, said: "... and yet he may be compelled, by force if need be, against his will and
without regard to his personal wishes or his pecuniary intersts, or even his religious or
political convictions, to take his place in the ranks of the army of his country and risk the
chance of being shot down in its defense.
And see University of Maryland v. Coale, 165 Md. 224, 167 A. 54, a case, similar to that now
before us, decided against the contention of a student in the University of Maryland who on
conscientious grounds objected to military training there required. His appeal to this Court
was dismissed for the want of a substantial federal questions. 290 U.S. 597, 78 L. ed. 525,
54 S. Ct. 131.
Plainly there is no ground for the contention that the regents' order, requiring able-bodied
male students under the age of twenty-four as a condition of their enrollment to take the
prescribed instruction in military science and tactics, transgresses any constitutional right
asserted by these appellants.
Mr. Justice Cardozo in his concurring opinion said:
I assume for present purposes that religious liberty protected by the First Amendment
against invasion by the nation is protected by the Fourteenth Amendment against invasion
by the states.
Accepting that premise, I cannot find in the respondents' ordinance an obstruction by the
state to "the free exercise" of religion as the phrase was understood by the foundrs of hte
nation, and by the generations that have followed. Davis vs. Beasin, 133 U.S. 333, 342, 33 L.
ed. 637, 10 s.Ct. 299.
There is no occasion at this time to mark the limits of governmental power in the exaction of
military service when the nation is at peace. The petitioners have not been required to bear
arms for any hostile purpose, offensive or defensive, either now or in the future. They have
not even been required in any absolute or peremptory way to join courses of instruction that
will fit them to bear arms. If they elect to resort to an institution for higher education
maintained with the state's moneys, then they are comanded to follow courses of instruction
believed by the state to be vital to its welfare. This may be condemned by some unwise or
illiberal or unfair when there is violence to conscientious scruples, either religious or merely
ethical. More must be shown to set the ordinance at naught. In controversies of this order
courts do not concern themselves with matters of legislative policy, unrelated to privileges or
liberties secured by the organic law. The first Amendment, if it be read into the Fourteenth,
makes invalid any state law `respecting an establishment of religion or prohibiting the free
exercise thereof.' Instruction in military science is not instruction in the practice or tenets of a
religion. Neither directly nor indirectly is government establishing a state religion when it
insists upon such training. Instruction in military science, unaccompanied here by any pledge
of military service, is not an interference by the state with the free exercise of religion when
the liberties of the constitution are read in the light of a century and a half of history during
days of peace and war . . .

Manifestly a different doctrine would carry us to lengths that have never yet been dreamed
of. The conscientious objector, if his liberties were to be thus extended, might refuse to
contribute taxes in furtherance of a war, whether for attack or for defense, or in furtherance
of any other end, condemned by his conscience as irreligious or immoral. The right of private
judgment has never yet been so exalted above the powers and the compulsion of the
agencies of government. One who is a martyr to a principlewhich may turn out in the end
to be a delusion or an errordoes not prove by his martyrdom that he has kept within the
law."
We are not unmindful of the decision of the United States Federal Supreme Court on similar set of
facts. In the case of Minersville School District vs. Gobitis, 310 U.S. 586, 84 L. ed. 1375, two
Jehovah Witnesses children were expelled from the public school of Minersville for refusing to salute
the national flag in accordance with the regulations poromulgated by the school board for the daily
flag ceremony. Their father Gobitsi on behalf of his two children and in his own behalf brought suit to
enjoin the school authorities from continuing to exact the execution of the flag ceremony as a
condition of his children's admittance in school. After trial, the District Court gave him relief and this
decree was affirmed by the Circuit Court of Appeals. On appeal to the Federal Supreme Court, the
decrees of both the District Court and the Circuit Court of Appeals were reversed with the lone
dissent of Chief Justice Stone, on the ground that the requirement of participation of all pupils in the
public schools in the flag ceremony did not infringe the due process law and liberty guaranteed by
the Constitution, particularly the one referring to religious freedom and belief. Three years later, that
is, on June 14, 1943, the ruling laid down in the Minersville School District vs. Gobitis case, was in
the case of West Virginia State Board of Education vs. Bernette, 319 U.S. 624-671 reversed by a
sharply divided court, the majority opinion being penned by Mr. Justice Jackson in which Justice
Black, Douglas and Murphy concurred; while Mr. Justice Frankfurter who wrote the opinion in the
Gobitis case, filed a long dissenting opinion, and Justices Roberts and Reed adhered to the views
expressed in the Gobitis case.
Neither attempting to justify the ruling laid down in the Minersville vs. Gobitis case nor desiring to
criticize the doctrine of the West Virginia vs. Barnette case, frankly, we are more inclined to favor the
former as more in keeping with the spirit of our Constitution and the government policy as laid down
in Republic Act No. 1265 entitles "An Act Making Flag Ceremony Compulsory In All Educational
Institutions".
We cannot help thinking that one reason that may have possibly influenced the decision in the West
Virginia State Board of Education vs. Barnette case, was that the children involved in said case and
their parents found themselves in a serious dilemma for refusing to salute the flag as required by the
regulations of the School Board. They were expelled by the School Board and their absence was
considered unlawful and because of the law of compulsory school atendance of all children of school
age, they were considered as truants and the school officials threatened to send them to
reformatories maintained for criminially inclinded juveniles. Parents of such children have been
prosecuted or were threatened with prosecution for cause such as alleged delinquency and if
convicted, were subject to fine not exceeding $50.00 and a jail term not exceeding 30 days. That is
why in the majority opinion it was stated:
. . . The sole conflict is between authority and rights of the individual. The state asserts
power to conditions access to public education on making a prescribed sign and profession
and at the same time to coerce attendance by punishing both parent and child . . .
Such a grave and embarrassing situation, however, does not obtain in the Philippines. True, we
have a law (Republic Act 896) requiring compulsory enrollment of children of shcool age, but said
law contains so many exceptions and exemptions that it can be said that a child of school age is

very seldom compelled to attend school, let alone the fact that almost invariably, there is school
crisis every year wherein the pupils applying for admission in public schools could not be
accommodated, and what is equally important is that there is no punishment or penal sanction either
for the pupil who fail to attend school or is expelled for failure to comply with school regulations such
as the compulsory flag salute ceremony, or his parents.
In the case of re Summers, 325 U.S. 561-578, decided on June 11, 1945, that is, two years after the
decision in the case of West Virginia, the Supreme Court of the United States affirmed a decision of
the Illinois Supreme Court refusing admission of petitioner Clyde Wilson Summers to the Illinois Bar.
Summers had complied with tall the prerequisites to admission to the Bar of that state, but he was a
conscientious objector who did not believe in the use of force or war because of his religious belief.
He described this attitude of his as follows:
The so-called "misconduct" for which petitioner could be reproached for is his taking the New
Testament too seriously. Instead of merely reading or preaching the Sermon on the Mount,
he tries to practice it. The only fault of the petitioner consists in his attempt to act as a good
Christian in accordance with his interpreation of the Bible, and according to the dictates of
his conscience. We respectfully submit that the profession of law does nt shut its gates to
persons who have qualified in all other respects even when they follow in the footsteps of
that Great Teacher of mankind who delivered the Sermon on the Mount. We respectfully
submit that under our Constitutional guarantees even good Christians who have met all the
requirements for the admission to the bar may be admitted to practice law
The Constitution of Illinois required service in the militia in time of war of men of petitioner's age
group. The Federal Supreme Court defined the position of Summers as a conscientious objector in
the following words:
. . . without detailing petitioner's testimony before the Committee or his subsequent
statments in the record, his position may be compendiously stated as one of non-violence.
Petitioner will not serve in the armed forces. While he recognizes a difference between the
military and police forces, he would not act in the latter to coerce threatened violations.
Petitioner would not use force to meet aggression against himself or his family, no matter
how aggravated or whether or not carrying a danger of bodily harm to himself or others. He
is a believer in passive resistance. We need to consider only his attitude toward service in
the armed forces.
It was not denied that Summers was unwilling to serve in the militia of Illinois because of his religious
belief. In affirming the decision of the Illinois Supreme Court excluding Summers from the practice of
law in that state, the Federal Supreme Court held that the action of the State Supreme Court did not
violate the principle of religious freedom contained in the Constitution.
If a man lived, say on an island, alone and all by himself without neighbors, he would normally have
complete and absolute rights as to the way he lives, his religion, incuding the manners he practices
his religious beliefs. There would be no laws to obey, no rules and regulations to follow. He would be
subject only to Nature's physical laws. But man iis gregarious by nature and instinct and he
gravitates toward community life, to receive and enjoy the benefits of society and of social and
political organization. The moment he does this and he becomes a member of a community or
nation, he has to give rights for the benefit of his fellow citizens and for the general welfare, just as
his fellow men and companions also agree to a limitation of their rights in his favor. So, with his
religion. He may retain retain his freedom or religious belief, but as to practising the same, he would
have to give up some of those practices repugnant to the general welfare and subordinate them to

the laws and sovereignty of the State. In order words, the practice of religion or religious belief is
subject to reasonable and non-discrminatory laws and regulations by the state.
In the case of Prince vs. Commonwealth of Massachusetts, 88 L. ed. 645, the United States
Supreme Court affirmed a decision convicting Sarah Prince of a violation of the Child Labor Law of
Massachusetts. Mr. Justice Rutledge who wrote the opinion tersely described the case thus:
The case brings for review another episode in the conflict between Jehovah's Witneses and
state authority. This time Sarah Prince appeals from convictions for violating Massachusetts'
child labor laws, by acts said to be a rightful exercise of her religious convictions.
When the offenses where committed she was the aunt and custodian of Betty M. Simmons,
a girl nine years of age. . . . (Emphasis supplied)
The defendant in this case allowed Betty, under here legal cutody who was at the same time niece,
to distribute religious pamphlets intended to propagate the religion of Johovah Wiitness. The
question involved was whether or not the law in question contravened the Fourtheenth Amendment
by denying appellant freedom of religion and denying to her the equal protection of the law.
Defendant claimed that the child was exercising her God given right and her constitutional right to
preach the gospel and that no preacher of God's commands shold be interfered with. She rested her
case squarely on freedom of religion. In affirming the judgment of conviction and upholding the law
as agains the claiim of relgion and the exercise of religious belief, the court said:
. . . And neither rights of religion nor lights of parenthood are beyond limitation. Acting to
guard the general interest in youth's well-being, the state as parens patriae may restrict the
parent's control by requiring shcool attendance, regulating or prohibiting the child's labor, and
in many other ways. Its authority is not nullified merely because the parent grounds his claim
to control the child's course of conduct on religion or conscience. Thus, he cannot claim
freedom from compulsory vaccination for the child more than for himself on relgious grounds.
The right to practice religion freely does not include liberty to expose the community or the
child to communicable disease or the latter to ill health or death. . . . It is too late now to
doubt that legislation appropriately designed to reach such evils is withinthe state's police
power, whether against the parent's claim to control of the child or one that religious scruples
dictate contrary action.
Incidentally, it must be noted that this case was decided after that of West Virginia vs.
Barnette, supra.
In requiring school pupils to participate in the flag salute, the State thru the Secretary of Education
was not imposing a religion or religious belief or a religious test on said students. It was merely
enforcing a non-discriminatory school regulation applicable to all alike whether Christian, Moslem,
Protestant or Jehovah's Witness. The State was merely carrying out the duty imposed upon it by the
Constitution which charges it with supervision over and regulation of all educational institutions, to
establish and maintain a complete and adequate system of public education, and see to it that all
schools aim to develop among other things, civic conscience and teach the duties of citizenship.
(Art. XIV, section 5 of the Constitution). It does nothing more than try to inculcate in the minds of the
school population during the formative period of their life, love of country and love of the flag, all of
which make for united and patriotic citizenry, so that later in after years they may be ready and
willing to serve, fight, even die for it. It is well known that whatever is taught to the youth during this
period, such as love of God, of parents, respect for elders, love of the truth, loyalty, honoring one's
word and respecting the rights of other, becomes a habit or second nature that will remain with them
always. School children of kingdoms and empires are taught early to respect and love the king or the

emperor for these rulers and sovereigns symbolize the nation, and the children as future citizens or
subjects will come to love their country.
Petitioners do not question the right of public schools to conduct the flag salute ceremony regularly
but they do "question the attempt to compel conscientious objectors guided by the word of God to
salute the flag or participate in the ceremony to specific commandment of Jehovah God. It is
perfectly proper and lawful for one nt bound by a covenant with Jehovah to salute the flag when that
person desires to salute it. It is entirely wrong to interfere with that right or prevent such one from
saluting the flag. Conversely, it is also true that it is wrong and illegal to compel one who, for
concience' sake, cannot participate in the ceremony." (p. 85, Appellant's Brief)
The trouble with exempting petitioners from participation in the flag ceremony aside from the fact
that they have no valid right to such exemption is that the latter would disrupt shcool discipline and
demoralize the rest of the school population which by far constitutes the great majority. If the
children of Jehovah Witnesses are exempted, then the other pupils, especially the young ones
seeing no reason for such exemption, would naturlly ask for the same privilege because they might
want to do something else such as play or study, instead of standing at attention saluting the flag
and singing the national anthem and reciting the patriotic pledge, all of which consume considerable
time; and if to avoid odions discrimination this exemption is extended to others, then the flag
ceremony would soon be a thing of the past or perhaps conducted with very few participants, and
the time will come when we would have citizens untaught and uninculcated in and not imbued with
reverence for the flag and love of country, admiration for national heroes, and patriotism a
pathetic, even tragic situation, and all because a small portion of the shcool population imposed its
will, demanded and was granted an exemption. In a way that might be regarded as tyranny of the
minority, and a small minority at that.
In a few cases, such exemptions in a limited way have been afforded members of a religious group.
Conscientious objectors in the United States who because of their religion were unwilling to serve in
the war particularly as regards actual fighting or field duty, were allowed to do some work in relation
to the war, but not involving combat duty or the use of force. But that was by special legislation. If
that is possible here as regards exemption from participation in the flag ceremony, then petitioners
would have to look to the Legislature, not the courts for relief.
The freedom of religious belief guaranteed by the Constitution does not and cannot mean exemption
form or non-compliance with reasonable and non-discriminatory laws, rules and regulations
promulgated by competent authority. As was said by Mr. Justice Frankfurter in h is dissent in West
Virginia vs. Barnette, supra:
The constitutional protection of religious freedom ... gave religious equality, not civil
immunity. Its essence is freedom from conformity to religious dogma, not freedom from
conformity to law because of religious dogma. Religious loyalties may be exercised without
hindrance from the State, not the State may not exercise that which except by leave of
religious loyalties is within the domain of temporal power. Otherwise, each individual could
set up his own censor against obedience to laws conscientiously deemed for the public good
by those whose business it is to make laws. (West Virginia State Board vs. Barnette, supra,
at p. 653; emphasis supplied)
In conclusion we find and hold that the Filipino flag is not an image that requires religious veneration;
rather it is symbol of the Republic of the Philippines, of sovereignty, an emblem of freedom, liberty
and national unity; that the flag salute is nt a religious ceremony but an act and profession of love
and allegiance and pledge of loyalty to the fatherland which the flag stands for; that by authority of
the legislature, the Secretary of Education was duly authorized to promulgate Department Order No.

8, series of 1955; that the requirement of observance of the flag ceremony or salute provided for in
said Department Order No. 8, does not violate the Constitutional provision about freedom of religion
and exercise of religion; that compliance with the non-discriminatory and reasonable rules and
regulations and school disicipline, including observance of the flag ceremony is a prerequisite to
attendance in public schools; and that for failure and refusal to participate in the flag ceremony,
petitioners were properly excluded and dismissed from the public shcool they were attending.
In view of the foregoing, the appealed decision is affirmed. The writ of preliminary injunction
heretofore issued is ordered dissolved. No costs.
Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador and Endencia, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 95770 March 1, 1993

ROEL EBRALINAG, EMILY EBRALINAG, represented by their parents MR. & MRS.
LEONARDO EBRALINAG, JUSTINIANA TANTOG, represented by her father AMOS TANTOG;
JEMILOYAO & JOEL OYAO, represented by their parents MR. & MRS. ELIEZER OYAO;
JANETH DIAMOS & JEREMIAS DIAMOS, represented by parents MR. & MRS. GODOFREDO
DIAMOS; SARA OSTIA & JONATHAN OSTIA, represented by their parents MR. & MRS.
FAUTO OSTIA; IRVIN SEQUINO & RENAN SEQUINO, represented by their parents MR. &
MRS. LYDIO SEQUINO; NAPTHALE TANACAO, represented by his parents MR. & MRS.
MANUEL TANACAO; PRECILA PINO, represented by her parents MR. & MRS. FELIPE PINO;
MARICRIS ALFAR, RUWINA ALFAR, represented by their parents MR. & MRS. HERMINIGILDO
ALFAR; FREDESMINDA ALFAR & GUMERSINDO ALFAR, represented by their parents
ABDON ALFAR; ALBERTO ALFAR & ARISTIO ALFAR, represented by their parents MR. &
MRS. GENEROSO ALFAR; MARTINO VILLAR, represented by his parents MR. & MRS.
GENARO VILLAR; PERGEBRIEL GUINITA & CHAREN GUINITA, represented by their parents
MR. & MRS. CESAR GUINITA; ALVIN DOOP, represented by his parents MR. & MRS.
LEONIDES DOOP; RHILYN LAUDE, represented by her parents MR. & MRS. RENE LAUDE;
LEOREMINDA MONARES, represented by her parents, MR. & MRS. FLORENCIO MONARES;
MERCY MONTECILLO, represented by her parents MR. & MRS. MANUEL MONTECILLO;
ROBERTO TANGAHA, represented by his parent ILUMINADA TANGAHA; EVELYN, MARIA &
FLORA TANGAHA, represented by their parents MR. & MRS. ALBERTO TANGAHA; MAXIMO
EBRALINAG, represented by his parents, MR. & MRS. PAQUITO EBRALINAG; JUTA CUMON,
GIDEON CUMON & JONATHAN CUMON, represented by their father RAFAEL CUMON; EVIE
LUMAKANG & JUNAR LUMAKANG, represented by their parents MR. & MRS. LUMAKANG;
EMILIO SARSOZO, PAZ AMOR SARSOZO & IGNA MARIE SARSOZO, represented by their
parents MR. & MRS. VIRGILIO SARSOZO; MICHAEL JOSEPH & HENRY JOSEPH, represented
by parent ANNIE JOSEPH; EMERSON TABLASON & MASTERLOU TABLASON, represented
by their parent EMERLITO TABLASON, petitioners,
vs.
THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU, respondent.
G.R. No. 95887 March 1, 1993

MAY AMOLO, represented by her parents MR. & MRS. ISAIAS AMOLO; REDFORD ALSADO,
JOEBERT ALSADO & RUDYARD ALSADO, represented by their parents MR. & MRS.
ABELARDO ALSADO; NELIA ALSADO, REU ALSADO & LILIBETH ALSADO, represented by
their parents MR. & MRS. ROLANDO ALSADO; SUZETTE NAPOLES, represented by her
parents ISMAILITO NAPOLES & OPHELIA NAPOLES; JESICA CARMELOTES, represented by
her parents MR. & MRS. SERGIO CARMELOTES; BABY JEAN MACAPAS, represented by her
parents MR. & MRS. TORIBIO MACAPAS; GERALDINE ALSADO, represented by her parents
MR. & MRS. JOEL ALSADO; RAQUEL DEMOTOR & LEAH DEMOTOR, represented by their
parents MR. & MRS. LEONARDO DEMOTOR; JURELL VILLA & MELONEY VILLA, represented
by their parents MR. & MRS. JOVENIANO VILLA; JONELL HOPE MAHINAY, MARY GRACE
MAHINAY and MAGDALENE MAHINAY, represented by their parents MR. & MRS. FELIX
MAHINAY; JONALYN ANTIOLA and JERWIN ANTIOLA, represented by their parents FELIFE
ANTIOLA and ANECITA ANTIOLA; MARIA CONCEPCION CABUYAO, represented by her
parents WENIFREDO CABUYAO and ESTRELLITA CABUYAO, NOEMI TURNO represented by
her parents MANUEL TURNO and VEVENCIA TURNO; SOLOMON PALATULON, SALMERO
PALATULON and ROSALINDA PALATULON, represented by their parents MARTILLANO
PALATULON and CARMILA PALATULON, petitioners,
vs.
THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU and ANTONIO A. SANGUTAN,
respondents.
Felino M. Ganal for petitioners.
The Solicitor General for respondents.

GRIO-AQUINO, J.:
These two special civil actions for certiorari, Mandamus and Prohibition were consolidated
because they raise essentially the same issue: whether school children who are members or
a religious sect known as Jehovah's Witnesses may be expelled from school (both public and
private), for refusing, on account of their religious beliefs, to take part in the flag ceremony
which includes playing (by a band) or singing the Philippine national anthem, saluting the
Philippine flag and reciting the patriotic pledge.
In G.R. No. 95770 "Roel Ebralinag, et al. vs. Division Superintendent of Schools of Cebu and
Manuel F. Biongcog, Cebu District Supervisor," the petitioners are 43 high school and
elementary school students in the towns of Daan Bantayan, Pinamungajan, Carcar, and
Taburan Cebu province. All minors, they are assisted by their parents who belong to the
religious group known as Jehovah's Witnesses which claims some 100,000 "baptized
publishers" in the Philippines.
In G.R. No. 95887, "May Amolo, et al. vs. Division Superintendent of Schools of Cebu and
Antonio A. Sangutan," the petitioners are 25 high school and grade school students enrolled
in public schools in Asturias, Cebu, whose parents are Jehovah's Witnesses. Both petitions
were prepared by the same counsel, Attorney Felino M. Ganal.
All the petitioners in these two cases were expelled from their classes by the public school
authorities in Cebu for refusing to salute the flag, sing the national anthem and recite the
patriotic pledge as required by Republic Act No. 1265 of July 11, 1955, and by Department
Order No. 8 dated July 21, 1955 of the Department of Education, Culture and Sports (DECS)

making the flag ceremony compulsory in all educational institutions. Republic Act No. 1265
provides:
Sec. 1. All educational institutions shall henceforth observe daily flag
ceremony, which shall be simple and dignified and shall include the playing or
singing of the Philippine National anthem.
Sec. 2. The Secretary of Education is hereby authorized and directed to issue
or cause to be issued rules and regulations for the proper conduct of the flag
ceremony herein provided.
Sec. 3. Failure or refusal to observe the flag ceremony provided by this Act and
in accordance with rules and regulations issued by the Secretary of Education,
after proper notice and hearing, shall subject the educational institution
concerned and its head to public censure as an administrative punishment
which shall be published at least once in a newspaper of general circulation.
In case of failure to observe for the second time the flag-ceremony provided by
this Act, the Secretary of Education, after proper notice and hearing, shall
cause the cancellation of the recognition or permit of the private educational
institution responsible for such failure.
The implementing rules and regulations in Department Order No. 8 provide:
RULES AND REGULATIONS FOR CONDUCTING THE FLAG CEREMONY IN ALL
EDUCATIONAL INSTITUTIONS.
1. The Filipino Flag shall be displayed by all educational institutions, public
and private, every school day throughout the year. It shall be raised at sunrise
and lowered at sunset. The flag-staff must be straight, slightly and gently
tapering at the end, and of such height as would give the Flag a commanding
position in front of the building or within the compound.
2. Every public and private educational institution shall hold a flag-raising
ceremony every morning except when it is raining, in which event the
ceremony may be conducted indoors in the best way possible. A retreat shall
be held in the afternoon of the same day. The flag-raising ceremony in the
morning shall be conducted in the following manner:
a. Pupils and teachers or students and faculty members who are
in school and its premises shall assemble in formation facing
the flag. At command, books shall be put away or held in the left
hand and everybody shall come to attention. Those with hats
shall uncover. No one shall enter or leave the school grounds
during the ceremony.
b. The assembly shall sing the Philippine National
Anthem accompanied by the school band or without the
accompaniment if it has none; or the anthem may be played by
the school band alone. At the first note of the Anthem, the flag
shall be raised briskly. While the flag is being raised, all persons
present shall stand at attention and execute a salute. Boys and

men with hats shall salute by placing the hat over the heart.
Those without hat may stand with their arms and hands down
and straight at the sides. Those in military or Boy Scout uniform
shall give the salute prescribed by their regulations. The salute
shall be started as the Flag rises, and completed upon last note
of the anthem.
c. Immediately following the singing of the Anthem, the
assembly shall recite in unison the following patriotic
pledge (English or vernacular version), which may bring the
ceremony to a close. This is required of all public schools and of
private schools which are intended for Filipino students or
whose population is predominantly Filipino.
English Version
I love the Philippines.
It is the land of my birth;
It is the home of my people.
It protects me and helps me to be, strong, happy and useful.
In return, I will heed the counsel of my parents;
I will obey the rules of my school;
I will perform the duties of a patriotic, law-abiding citizen;
I will serve my country unselfishly and faithfully;
I will be a true, Filipino in thought, in word, in deed.
xxx xxx xxx
Jehovah's Witnesses admittedly teach their children not to salute the flag, sing the national
anthem, and recite the patriotic pledge for they believe that those are "acts of worship" or
"religious devotion" (p. 10,Rollo) which they "cannot conscientiously give . . . to anyone or
anything except God" (p. 8, Rollo). They feel bound by the Bible's command to "guard
ourselves from
idols 1 John 5:21" (p. 9, Rollo). They consider the flag as an image or idol representing the
State (p. 10, Rollo). They think the action of the local authorities in compelling the flag salute
and pledge transcends constitutional limitations on the State's power and invades the sphere
of the intellect and spirit which the Constitution protect against official control (p. 10, Rollo).
This is not the first time that the question, of whether the children of Jehovah's Witnesses
may be expelled from school for disobedience of R.A. No. 1265 and Department Order No. 8,
series of 1955, has been raised before this Court.
The same issue was raised in 1959 in Gerona, et al. vs. Secretary of Education, et al., 106
Phil. 2 (1959) and Balbuna, et al. vs. Secretary of Education, 110 Phil. 150 (1960). This Court in
the Gerona case upheld the expulsion of the students, thus:
The flag is not an image but a symbol of the Republic of the Philippines, an
emblem of national sovereignty, of national unity and cohesion and of freedom
and liberty which it and the Constitution guarantee and protect. Under a
system of complete separation of church and state in the government, the flag
is utterly devoid of any religious significance. Saluting the flag does not
involve any religious ceremony. The flag salute is no more a religious

ceremony than the taking of an oath of office by a public official or by a

candidate for admission to the bar.
In requiring school pupils to participate in the flag salute, the State thru the
Secretary of Education is not imposing a religion or religious belief or a
religious test on said students. It is merely enforcing a
non-discriminatory school regulation applicable to all alike whether Christian,
Moslem, Protestant or Jehovah's Witness. The State is merely carrying out the
duty imposed upon it by the Constitution which charges it with supervision
over and regulation of all educational institutions, to establish and maintain a
complete and adequate system of public education, and see to it that all
schools aim to develop, among other things, civic conscience and teach the
duties of citizenship.
The children of Jehovah's Witnesses cannot be exempted from participation in
the flag ceremony. They have no valid right to such exemption. Moreover,
exemption to the requirement will disrupt school discipline and demoralize the
rest of the school population which by far constitutes the great majority.
The freedom of religious belief guaranteed by the Constitution does not and
cannot mean exemption from or non-compliance with reasonable and nondiscriminatory laws, rules and regulations promulgated by competent
authority. (pp. 2-3).
Gerona was reiterated in Balbuna, as follows:
The Secretary of Education was duly authorized by the Legislature thru
Republic Act 1265 to promulgate said Department Order, and its provisions
requiring the observance of the flag salute, not being a religious ceremony but
an act and profession of love and allegiance and pledge of loyalty to the
fatherland which the flag stands for, does not violate the constitutional
provision on freedom of religion. (Balbuna, et al. vs. Secretary of Education, et
al., 110 Phil. 150).
Republic Act No. 1265 and the ruling in Gerona have been incorporated in Section 28, Title VI,
Chapter 9 of the Administrative Code of 1987 (Executive Order No. 292) which took effect on
September 21, 1988 (one year after its publication in the Official Gazette, Vol. 63, No. 38 of
September 21, 1987). Paragraph 5 of Section 28 gives legislative cachet to the ruling
in Gerona, thus:
5. Any teacher or student or pupil who refuses to join or participate in the flag
ceremony may be dismissed after due investigation.
However, the petitioners herein have not raised in issue the constitutionality of the above
provision of the new Administrative Code of 1987. They have targeted only Republic Act No.
1265 and the implementing orders of the DECS.
In 1989, the DECS Regional Office in Cebu received complaints about teachers and pupils
belonging to the Jehovah's Witnesses, and enrolled in various public and private schools,
who refused to sing the Philippine national anthem, salute the Philippine flag and recite the
patriotic pledge. Division Superintendent of Schools, Susana B. Cabahug of the Cebu
Division of DECS, and Dr. Atty. Marcelo M. Bacalso, Assistant Division Superintendent,

recalling this Court's decision in Gerona, issued Division Memorandum No. 108, dated
November 17, 1989 (pp. 147-148, Rollo of G.R. No. 95770) directing District Supervisors, High
School Principals and Heads of Private Educational institutions as follows:
1. Reports reaching this Office disclose that there are a number of teachers,
pupils, students, and school employees in public schools who refuse to salute
the Philippine flag or participate in the daily flag ceremony because of some
religious belief.
2. Such refusal not only undermines Republic Act No. 1265 and the DECS
Department Order No. 8, Series of 1955 (Implementing Rules and Regulations)
but also strikes at the heart of the DECS sustained effort to inculcate
patriotism and nationalism.
3. Let it be stressed that any belief that considers the flag as an image is not in
any manner whatever a justification for not saluting the Philippine flag or not
participating in flag ceremony. Thus, the Supreme Court of the Philippine says:
The flag is not an image but a symbol of the Republic of the
Philippines, an emblem of national sovereignty, of national unity
and cohesion and freedom and liberty which it and the
Constitution guarantee and protect. (Gerona, et al. vs. Sec. of
Education, et al., 106 Phil. 11.)
4. As regards the claim for freedom of belief, which an objectionist may
advance, the Supreme Court asserts:
But between the freedom of belief and the exercise of said belief,
there is quite a stretch of road to travel. If the exercise of said
religious belief clashes with the established institutions of
society and with the law, then the former must yield and give
way to the latter. (Gerona, et al. vs. Sec. of Education, et al., 106
Phil. 11.)
5. Accordingly, teachers and school employees who choose not to participate
in the daily flag ceremony or to obey the flag salute regulation spelled out in
Department Order No. 8, Series of 1955, shall be considered removed from the
service after due process.
6. In strong language about pupils and students who do the same the Supreme
Court has this to say:
If they choose not to obey the flag salute regulation, they merely
lost the benefits of public education being maintained at the
expense of their fellow Citizens, nothing more. According to a
popular expression, they could take it or leave it! Having elected
not to comply with the regulation about the flag salute they
forfeited their right to attend public schools. (Gerona, et al. vs.
Sec. of Education, et al., 106 Phil. 15.)

7. School administrators shall therefore submit to this Office a report on those

who choose not to participate in flag ceremony or salute the Philippine flag.
(pp. 147-148, Rollo of G.R. No. 95770; Emphasis supplied).
Cebu school officials resorted to a number of ways to persuade the children of Jehovah's
Witnesses to obey the memorandum. In the Buenavista Elementary School, the children were
asked to sign an Agreement (Kasabutan) in the Cebuano dialect promising to sing the
national anthem, place their right hand on their breast until the end of the song and recite the
pledge of allegiance to the flag (Annex D, p. 46, Rollo of G.R. No. 95770 and p. 48, Rollo of
G.R. No. 95887), but they refused to sign the "Kasabutan" (p. 20, Rollo of G.R. No. 95770).
In Tubigmanok Elementary School, the Teacher-In-Charge, Antonio A. Sangutan, met with the
Jehovah's Witnesses' parents, as disclosed in his letter of October 17, 1990, excerpts from
which reveal the following:
After two (2) fruitless confrontation meetings with the Jehovah's Witnesses'
parents on October 2, 1990 and yesterday due to their firm stand not to salute
the flag of the Republic of the Philippines during Flag Ceremony and other
occasions, as mandated by law specifically Republic Act No. 1265, this Office
hereby orders the dropping from the list in the School Register (BPS Form I) of
all teachers, all Jehovah Witness pupils from Grade I up to Grade VI effective
today.
xxx xxx xxx
This order is in compliance with Division Memorandum No. 108 s. 1989 dated
November 17, 1989 by virtue of Department Order No. 8 s. 1955 dated July 21,
1955 in accordance with Republic Act No. 1265 and Supreme Court Decision of
a case "Genaro Gerona, et al., Petitioners and Appellants vs. The Honorable
Secretary of Education, et al., Respondents and Appellees' dated August 12,
1959 against their favor. (p. 149, Rollo of G.R. No. 95770.)
In the Daan Bantayan District, the District Supervisor, Manuel F. Biongcog, ordered the
"dropping from the rolls" of students who "opted to follow their religious belief which is
against the Flag Salute Law" on the theory that "they forfeited their right to attend public
schools." (p. 47, Rollo of G.R. No. 95770.)
1st Indorsement
DAANBANTAYAN DISTRICT II
Daanbantayan, Cebu, July 24, 1990.
Respectfully returned to Mrs. Alicia A. Diaz, School In Charge [sic], Agujo
Elementary School with the information that this office is sad to order the
dropping of Jeremias Diamos and Jeaneth Diamos, Grades III and IV pupils
respectively from the roll since they opted to follow their religious belief which
is against the Flag Salute Law (R.A. 1265) and DECS Order No. 8, series of
1955, having elected not to comply with the regulation about the flag salute
they forfeited their right to attend public schools (Gerona, et al. vs. Sec. of
Education, et al., 106 Philippines 15). However, should they change their mind
to respect and follow the Flag Salute Law they may be re-accepted.

(Sgd.) MANUEL F. BIONGCOG

District Supervisor
(p. 47, Rollo of G.R. No. 95770.)
The expulsion as of October 23, 1990 of the 43 petitioning students of the Daanbantayan
National High School, Agujo Elementary School, Calape Barangay National High School,
Pinamungajan Provincial High School, Tabuelan Central School, Canasojan Elementary
School, Liboron Elementary School, Tagaytay Primary School, San Juan Primary School and
Northern Central Elementary School of San Fernando, Cebu, upon order of then Acting
Division Superintendent Marcelo Bacalso, prompted some Jehovah's Witnesses in Cebu to
appeal to the Secretary of Education Isidro Cario but the latter did not answer their letter. (p.
21, Rollo.)
The petition in G.R. No. 95887 was filed by 25 students who were similarly expelled because
Dr. Pablo Antopina, who succeeded Susana Cabahug as Division Superintendent of Schools,
would not recall the expulsion orders of his predecessor. Instead, he verbally caused the
expulsion of some more children of Jehovah's Witnesses.
On October 31, 1990, the students and their parents filed these special civil actions
for Mandamus,Certiorari and Prohibition alleging that the public respondents acted without
or in excess of their jurisdiction and with grave abuse of discretion (1) in ordering their
expulsion without prior notice and hearing, hence, in violation of their right to due process,
their right to free public education, and their right to freedom of speech, religion and worship
(p. 23, Rollo). The petitioners pray that:
c. Judgment be rendered:
i. declaring null and void the expulsion or dropping from the
rolls of herein petitioners from their respective schools;
ii. prohibiting and enjoining respondent from further barring the
petitioners from their classes or otherwise implementing the
expulsion ordered on petitioners; and
iii. compelling the respondent and all persons acting for him to
admit and order the re-admission of petitioners to their
respective schools. (p. 41, Rollo.)
and that pending the determination of the merits of these cases, a temporary restraining
order be issued enjoining the respondents from enforcing the expulsion of the petitioners
and to re-admit them to their respective classes.
On November 27, 1990, the Court issued a temporary restraining order and a writ of
preliminary mandatory injunction commanding the respondents to immediately re-admit the
petitioners to their respective classes until further orders from this Court (p. 57, Rollo).
The Court also ordered the Secretary of Education and Cebu District Supervisor Manuel F.
Biongcog to be impleaded as respondents in these cases.

On May 13, 1991, the Solicitor General filed a consolidated comment to the petitions (p.
98, Rollo) defending the expulsion orders issued by the public respondents on the grounds
that:
1. Bizarre religious practices of the Jehovah's Witnesses produce rebellious
and anti-social school children and consequently disloyal and mutant Filipino
citizens.
2. There are no new and valid grounds to sustain the charges of the Jehovah's
Witnesses that the DECS' rules and regulations on the flag salute ceremonies
are violative of their freedom of religion and worship.
3. The flag salute is devoid of any religious significance; instead, it inculcates
respect and love of country, for which the flag stands.
4. The State's compelling interests being pursued by the DECS' lawful
regulations in question do not warrant exemption of the school children of the
Jehovah's Witnesses from the flag salute ceremonies on the basis of their own
self-perceived religious convictions.
5. The issue is not freedom of speech but enforcement of law and
jurisprudence.
6. State's power to regulate repressive and unlawful religious practices
justified, besides having scriptural basis.
7. The penalty of expulsion is legal and valid, more so with the enactment of
Executive Order No. 292 (The Administrative Code of 1987).
Our task here is extremely difficult, for the 30-year old decision of this court
in Gerona upholding the flag salute law and approving the expulsion of students who refuse
to obey it, is not lightly to be trifled with.
It is somewhat ironic however, that after the Gerona ruling had received legislative cachet by
its in corporation in the Administrative Code of 1987, the present Court believes that the time
has come to re-examine it. The idea that one may be compelled to salute the flag, sing the
national anthem, and recite the patriotic pledge, during a flag ceremony on pain of being
dismissed from one's job or of being expelled from school, is alien to the conscience of the
present generation of Filipinos who cut their teeth on the Bill of Rights which guarantees
their rights to free speech ** and the free exercise of religious profession and worship (Sec. 5,
Article III, 1987 Constitution; Article IV, Section 8, 1973 Constitution; Article III, Section 1[7],
1935 Constitution).
Religious freedom is a fundamental right which is entitled to the highest priority and the
amplest protection among human rights, for it involves the relationship of man to his Creator
(Chief Justice Enrique M. Fernando's separate opinion in German vs. Barangan, 135 SCRA
514, 530-531).
The right to religious profession and worship has a two-fold aspect, vis.,
freedom to believe and freedom to act on one's belief. The first is absolute as
long as the belief is confined within the realm of thought. The second is

subject to regulation where the belief is translated into external acts that affect
the public welfare (J. Cruz, Constitutional Law, 1991 Ed., pp. 176-177).
Petitioners stress, however, that while they do not take part in the compulsory flag ceremony,
they do not engage in "external acts" or behavior that would offend their countrymen who
believe in expressing their love of country through the observance of the flag ceremony.
They quietly stand at attention during the flag ceremony to show their respect for the right of
those who choose to participate in the solemn proceedings (Annex F, Rollo of G.R. No.
95887, p. 50 and Rollo of G.R. No. 95770, p. 48). Since they do not engage in disruptive
behavior, there is no warrant for their expulsion.
The sole justification for a prior restraint or limitation on the exercise of
religious freedom (according to the late Chief Justice Claudio Teehankee in his
dissenting opinion in German vs. Barangan, 135 SCRA 514, 517) is the
existence of a grave and present danger of a character both grave and
imminent, of a serious evil to public safety, public morals, public health or any
other legitimate public interest, that the State has a right (and duty) to
prevent." Absent such a threat to public safety, the expulsion of the petitioners
from the schools is not justified.
The situation that the Court directly predicted in Gerona that:
The flag ceremony will become a thing of the past or perhaps conducted with
very few participants, and the time will come when we would have citizens
untaught and uninculcated in and not imbued with reverence for the flag and
love of country, admiration for national heroes, and patriotism a pathetic,
even tragic situation, and all because a small portion of the school population
imposed its will, demanded and was granted an exemption. (Gerona, p. 24.)
has not come to pass. We are not persuaded that by exempting the Jehovah's Witnesses
from saluting the flag, singing the national anthem and reciting the patriotic pledge, this
religious group which admittedly comprises a "small portion of the school population" will
shake up our part of the globe and suddenly produce a nation "untaught and uninculcated in
and unimbued with reverence for the flag, patriotism, love of country and admiration for
national heroes" (Gerona vs. Sec. of Education, 106 Phil. 2, 24). After all, what the petitioners
seek only is exemption from the flag ceremony, not exclusion from the public schools where
they may study the Constitution, the democratic way of life and form of government, and
learn not only the arts, sciences, Philippine history and culture but also receive training for a
vocation of profession and be taught the virtues of "patriotism, respect for human rights,
appreciation for national heroes, the rights and duties of citizenship, and moral and spiritual
values (Sec. 3[2], Art. XIV, 1987 Constitution) as part of the curricula. Expelling or banning the
petitioners from Philippine schools will bring about the very situation that this Court had
feared in Gerona. Forcing a small religious group, through the iron hand of the law, to
participate in a ceremony that violates their religious beliefs, will hardly be conducive to love
of country or respect for dully constituted authorities.
As Mr. Justice Jackson remarked in West Virginia vs. Barnette, 319 U.S. 624 (1943):
. . . To believe that patriotism will not flourish if patriotic ceremonies are
voluntary and spontaneous instead of a compulsory routine is to make an
unflattering estimate of the appeal of our institutions to free minds. . . . When
they [diversity] are so harmless to others or to the State as those we deal with

here, the price is not too great. But freedom to differ is not limited to things
that do not matter much. That would be a mere shadow of freedom. The test of
its substance is the right to differ as to things that touch the heart of the
existing order.
Furthermore, let it be noted that coerced unity and loyalty even to the country,
. . . assuming that such unity and loyalty can be attained through coercion
is not a goal that is constitutionally obtainable at the expense of religious
liberty. A desirable end cannot be promoted by prohibited means. (Meyer vs.
Nebraska, 262 U.S. 390, 67 L. ed. 1042, 1046.)
Moreover, the expulsion of members of Jehovah's Witnesses from the schools where they
are enrolled will violate their right as Philippine citizens, under the 1987 Constitution, to
receive free education, for it is the duty of the State to "protect and promote the right of all
citizens to quality education . . . and to make such education accessible to all (Sec. 1, Art.
XIV).
In Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, 72-75, we upheld the exemption
of members of the Iglesia ni Cristo, from the coverage of a closed shop agreement between
their employer and a union because it would violate the teaching of their church not to join
any labor group:
. . . It is certain that not every conscience can be accommodated by all the laws
of the land; but when general laws conflict with scruples of conscience,
exemptions ought to be granted unless some "compelling state interests"
intervenes. (Sherbert vs. Berner, 374 U.S. 398, 10 L. Ed. 2d 965, 970, 83 S. Ct.
1790.)
We hold that a similar exemption may be accorded to the Jehovah's Witnesses with regard to
the observance of the flag ceremony out of respect for their religious beliefs, however
"bizarre" those beliefs may seem to others. Nevertheless, their right not to participate in the
flag ceremony does not give them a right to disrupt such patriotic exercises. Paraphrasing
the warning cited by this Court in Non vs. DamesII, 185 SCRA 523, 535, while the highest
regard must be afforded their right to the free exercise of their religion, "this should not be
taken to mean that school authorities are powerless to discipline them" if they should commit
breaches of the peace by actions that offend the sensibilities, both religious and patriotic, of
other persons. If they quietly stand at attention during the flag ceremony while their
classmates and teachers salute the flag, sing the national anthem and recite the patriotic
pledge, we do not see how such conduct may possibly disturb the peace, or pose "a grave
and present danger of a serious evil to public safety, public morals, public health or any other
legitimate public interest that the State has a right (and duty) to prevent (German vs.
Barangan, 135 SCRA 514, 517).
Before we close this decision, it is appropriate to recall the Japanese occupation of our
country in 1942-1944 when every Filipino, regardless of religious persuasion, in fear of the
invader, saluted the Japanese flag and bowed before every Japanese soldier. Perhaps, if
petitioners had lived through that dark period of our history, they would not quibble now
about saluting the Philippine flag. For when liberation came in 1944 and our own flag was
proudly hoisted aloft again, it was a beautiful sight to behold that made our hearts pound
with pride and joy over the newly-regained freedom and sovereignty of our nation.

Although the Court upholds in this decision the petitioners' right under our Constitution to
refuse to salute the Philippine flag on account of their religious beliefs, we hope,
nevertheless, that another foreign invasion of our country will not be necessary in order for
our countrymen to appreciate and cherish the Philippine flag.
WHEREFORE, the petition for certiorari and prohibition is GRANTED. The expulsion orders
issued by the public respondents against the petitioners are hereby ANNULLED AND SET
ASIDE. The temporary restraining order which was issued by this Court is hereby made
permanent.
SO ORDERED.
Narvasa, C.J., Feliciano, Bidin, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo and
Campos, Jr., JJ., concur.
Quiason, J., took no part.
Gutierrez, Jr., J., is on leave.

Republic of the Philippines

Supreme Court
Manila
EN BANC
CHINA NATIONAL MACHINERY &
EQUIPMENT CORP. (GROUP),
Petitioner,

G.R. No. 185572

versus

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,

HON. CESAR D. SANTAMARIA, in his

official capacity as Presiding Judge of
Branch 145, Regional Trial Court of
Makati City, HERMINIO HARRY L.
ROQUE, JR., JOEL R. BUTUYAN,
ROGER R. RAYEL, ROMEL R.
BAGARES,
CHRISTOPHER
FRANCISCO C. BOLASTIG, LEAGUE
OF URBAN POOR FOR ACTION
(LUPA), KILUSAN NG MARALITA SA

Present:

MEYCAUAYAN
(KMM-LUPA
REYES, and
CHAPTER), DANILO M. CALDERON,
PERLAS-BERNABE, JJ.
VICENTE C. ALBAN, MERLYN M.
VAAL,
LOLITA
S.
QUINONES,
RICARDO
D.
LANOZO,
JR.,
CONCHITA G. GOZO, MA. TERESA D.
ZEPEDA, JOSEFINA A. LANOZO, and
SERGIO
C.
LEGASPI,
JR.,
KALIPUNAN
NG
DAMAYANG
MAHIHIRAP
(KADAMAY),
EDY
CLERIGO,
RAMMIL
DINGAL, Promulgated:
NELSON B. TERRADO, CARMEN
February 7, 2012
DEUNIDA, and EDUARDO LEGSON,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
SERENO, J.:
This is a Petition for Review on Certiorari with Prayer for the Issuance of a
Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the
30 September 2008 Decision and 5 December 2008 Resolution of the Court of
Appeals (CA) in CAG.R. SP No. 103351.[1]
On 14 September 2002, petitioner China National Machinery & Equipment Corp.
(Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a
Memorandum of Understanding with the North Luzon Railways Corporation
(Northrail), represented by its president, Jose L. Cortes, Jr. for the conduct of a
feasibility study on a possible railway line from Manila to San Fernando, La Union
(the Northrail Project).[2]
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the
Department of Finance of the Philippines (DOF) entered into a Memorandum of
Understanding (Aug 30 MOU), wherein China agreed to extend Preferential
Buyers Credit to the Philippine government to finance the Northrail Project.[3] The
Chinese government designated EXIM Bank as the lender, while the Philippine
government named the DOF as the borrower.[4] Under the Aug 30 MOU, EXIM
Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the

DOF, payable in 20 years, with a 5-year grace period, and at the rate of 3% per
annum.[5]
On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui
(Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec.
Camacho) informing him of CNMEGs designation as the Prime Contractor for the
Northrail Project.[6]
On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for
the construction of Section I, Phase I of the North Luzon Railway System from
Caloocan to Malolos on a turnkey basis (the Contract Agreement).[7] The contract
price for the Northrail Project was pegged at USD 421,050,000.[8]
On 26 February 2004, the Philippine government and EXIM Bank entered
into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA
04055 (the Loan Agreement).[9] In the Loan Agreement, EXIM Bank agreed to
extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of
the Philippine government in order to finance the construction of Phase I of the
Northrail Project.[10]
On 13 February 2006, respondents filed a Complaint for Annulment of
Contract and Injunction with Urgent Motion for Summary Hearing to Determine
the Existence of Facts and Circumstances Justifying the Issuance of Writs of
Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG,
the Office of the Executive Secretary, the DOF, the Department of Budget and
Management, the National Economic Development Authority and
Northrail.[11] The case was docketed as Civil Case No. 06-203 before the Regional
Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br.
145). In the Complaint, respondents alleged that the Contract Agreement and the
Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic
Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement
Reform Act; (c) Presidential Decree No. 1445, otherwise known as the
Government Auditing Code; and (d) Executive Order No. 292, otherwise known as
the Administrative Code.[12]
RTC Br. 145 issued an Order dated 17 March 2006 setting the case for
hearing on the issuance of injunctive reliefs.[13] On 29 March 2006, CNMEG filed

an Urgent Motion for Reconsideration of this Order.[14] Before RTC Br. 145 could
rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that
the trial court did not have jurisdiction over (a) its person, as it was an agent of the
Chinese government, making it immune from suit, and (b) the subject matter, as
the Northrail Project was a product of an executive agreement.[15]
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs
Motion to Dismiss and setting the case for summary hearing to determine whether
the injunctive reliefs prayed for should be issued.[16] CNMEG then filed a Motion
for Reconsideration,[17] which was denied by the trial court in an Order dated 10
March 2008.[18] Thus, CNMEG filed before the CA a Petition for Certiorari with
Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April
2008.[19]
In the assailed Decision dated 30 September 2008, the appellate court
dismissed the Petition for Certiorari.[20] Subsequently, CNMEG filed a Motion for
Reconsideration,[21] which was denied by the CA in a Resolution dated 5 December
2008.[22] Thus, CNMEG filed the instant Petition for Review on Certiorari dated 21
January 2009, raising the following issues: [23]
Whether or not petitioner CNMEG is an agent of the sovereign
Peoples Republic of China.
Whether or not the Northrail contracts are products of an
executive agreement between two sovereign states.
Whether or not the certification from the Department of Foreign
Affairs is necessary under the foregoing circumstances.
Whether or not the act being undertaken by petitioner CNMEG is
an act jure imperii.
Whether or not the Court of Appeals failed to avoid a procedural
limbo in the lower court.
Whether or not the Northrail Project is subject to competitive
public bidding.

Whether or not the Court of Appeals ignored the ruling of this

Honorable Court in the Neri case.

CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br.
145 for lack of jurisdiction. It likewise requests this Court for the issuance of a TRO
and, later on, a writ of preliminary injunction to restrain public respondent from
proceeding with the disposition of Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
1.
2.

Whether CNMEG is entitled to immunity, precluding it from being

sued before a local court.
Whether the Contract Agreement is an executive agreement, such that
it cannot be questioned by or before a local court.

First issue: Whether CNMEG is entitled to

immunity
This Court explained the doctrine of sovereign immunity in Holy See v.
Rosario,[24] to wit:
There are two conflicting concepts of sovereign immunity, each
widely held and firmly established. According to the classical or
absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the newer
or restrictive theory, the immunity of the sovereign is recognized only
with regard to public acts or acts jure imperii of a state, but not with
regard to private acts or acts jure gestionis. (Emphasis supplied;
citations omitted.)
xxx xxx xxx
The restrictive theory came about because of the entry of
sovereign states into purely commercial activities remotely connected
with the discharge of governmental functions. This is particularly true
with respect to the Communist states which took control of nationalized
business activities and international trading.

In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed

the Philippines adherence to the restrictive theory as follows:
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract does
not, per se, mean that sovereign states may, at all times, be sued in local
courts. The complexity of relationships between sovereign states, brought
about by their increasing commercial activities, mothered a
more restrictive application of the doctrine.
xxx xxx xxx
As it stands now, the application of the doctrine of immunity
from
suit
has
been restricted to sovereign or governmental
activities (jure imperii). The mantle of state immunity cannot be extended
to commercial, private and proprietary acts (jure gestionis).[26] (Emphasis
supplied.)

Since the Philippines adheres to the restrictive theory, it is crucial to ascertain

the legal nature of the act involved whether the entity claiming immunity performs
governmental, as opposed to proprietary, functions. As held in United States of
America v. Ruiz [27]
The restrictive application of State immunity is proper only when
the proceedings arise out of commercial transactions of the foreign
sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an
individual and can thus be deemed to have tacitly given its consent to be
sued only when it enters into business contracts. It does not apply where
the contract relates to the exercise of its sovereign functions.[28]

A.
CNMEG is engaged in a proprietary
activity.
A threshold question that must be answered is whether CNMEG performs
governmental or proprietary functions. A thorough examination of the basic facts of
the case would show that CNMEG is engaged in a proprietary activity.

The parties executed the Contract Agreement for the purpose of constructing
the Luzon Railways, viz:[29]
WHEREAS the Employer (Northrail) desired to construct the
railways form Caloocan to Malolos, section I, Phase I of Philippine North
Luzon Railways Project (hereinafter referred to as THE PROJECT);
AND WHEREAS the Contractor has offered to provide the Project on
Turnkey basis, including design, manufacturing, supply, construction,
commissioning, and training of the Employers personnel;
AND WHEREAS the Loan Agreement of the Preferential Buyers
Credit between Export-Import Bank of China and Department of Finance of
Republic of the Philippines;
NOW, THEREFORE, the parties agree to sign this Contract for the
Implementation of the Project.

The above-cited portion of the Contract Agreement, however, does not on its
own reveal whether the construction of the Luzon railways was meant to be a
proprietary endeavor. In order to fully understand the intention behind and the
purpose of the entire undertaking, the Contract Agreement must not be read in
isolation. Instead, it must be construed in conjunction with three other documents
executed in relation to the Northrail Project, namely: (a) the Memorandum of
Understanding dated 14 September 2002 between Northrail and CNMEG;[30] (b)
the letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho;[31] and
(c) the Loan Agreement.[32]
1. Memorandum of Understanding dated
14 September 2002
The Memorandum of Understanding dated 14 September 2002 shows that
CNMEG sought the construction of the Luzon Railways as a proprietary venture.
The relevant parts thereof read:
WHEREAS, CNMEG has the financial capability, professional
competence and technical expertise to assess the state of the [Main Line

North (MLN)] and recommend implementation plans as well as

undertake its rehabilitation and/or modernization;
WHEREAS, CNMEG has expressed interest in the
rehabilitation and/or modernization of the MLN from Metro
Manila to San Fernando, La Union passing through the provinces of
Bulacan, Pampanga, Tarlac, Pangasinan and La Union (the Project);
WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs
proposal to undertake a Feasibility Study (the Study) at no cost to
NORTHRAIL CORP.;
WHEREAS, the NORTHRAIL CORP. also welcomes
CNMEGs interest in undertaking the Project with Suppliers
Credit and intends to employ CNMEG as the Contractor for the
Project subject to compliance with Philippine and Chinese laws,
rules and regulations for the selection of a contractor;
WHEREAS, the NORTHRAIL CORP. considers CNMEGs
proposal advantageous to the Government of the Republic of
the Philippines and has therefore agreed to assist CNMEG in the
conduct of the aforesaid Study;
xxx xxx xxx
II. APPROVAL PROCESS
2.1

As soon as possible after completion and presentation of the

Study in accordance with Paragraphs 1.3 and 1.4 above and in
compliance with necessary governmental laws, rules,
regulations and procedures required from both parties, the
parties shall commence the preparation and negotiation of the
terms and conditions of the Contract (the Contract) to be
entered into between them on the implementation of the
Project. The parties shall use their best endeavors to
formulate and finalize a Contract with a view to signing the
Contract within one hundred twenty (120) days from
CNMEGs presentation of the Study.[33] (Emphasis supplied)

Clearly, it was CNMEG that initiated the undertaking, and not the Chinese
government. The Feasibility Study was conducted not because of any diplomatic
gratuity from or exercise of sovereign functions by the Chinese government, but
was plainly a business strategy employed by CNMEG with a view to securing this
commercial enterprise.

2.

Letter dated 1 October 2003

That CNMEG, and not the Chinese government, initiated the

Northrail Project was confirmed by Amb. Wang in his letter dated 1 October
2003, thus:
1.
CNMEG has the proven competence and capability to
undertake the Project as evidenced by the ranking of 42 given by the
ENR among 225 global construction companies.
2.
CNMEG already signed an MOU with the North Luzon
Railways Corporation last September 14, 2000 during the visit of
Chairman Li Peng. Such being the case, they have already established
an initial working relationship with your North Luzon Railways
Corporation. This would categorize CNMEG as the state
corporation within the Peoples Republic of China which initiated
our Governments involvement in the Project.
3.
Among the various state corporations of the Peoples
Republic of China, only CNMEG has the advantage of being fully
familiar with the current requirements of the Northrail Project having
already accomplished a Feasibility Study which was used as inputs by
the North Luzon Railways Corporation in the approvals (sic) process
required by the Republic of thePhilippines.[34] (Emphasis supplied.)

Thus, the desire of CNMEG to secure the Northrail Project was in the
ordinary or regular course of its business as a global construction company. The
implementation of the Northrail Project was intended to generate profit for CNMEG,
with the Contract Agreement placing a contract price of USD 421,050,000 for the
venture.[35] The use of the term state corporation to refer to CNMEG was only
descriptive of its nature as a government-owned and/or -controlled corporation,

and its assignment as the Primary Contractor did not imply that it was acting on
behalf of China in the performance of the latters sovereign functions. To imply
otherwise would result in an absurd situation, in which all Chinese corporations
owned by the state would be automatically considered as performing governmental
activities, even if they are clearly engaged in commercial or proprietary pursuits.

3.

The Loan Agreement

CNMEG claims immunity on the ground that the Aug 30 MOU on the
financing of the Northrail Project was signed by the Philippine and Chinese
governments, and its assignment as the Primary Contractor meant that it was bound
to perform a governmental function on behalf of China. However, the Loan
Agreement, which originated from the same Aug 30 MOU, belies this
reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery
of this Agreement by the Borrower constitute, and the Borrowers
performance of and compliance with its obligations under this Agreement
will constitute, private and commercial acts done and performed for
commercial purposes under the laws of the Republic of the
Philippines and neither the Borrower nor any of its assets is entitled
to any immunity or privilege (sovereign or otherwise) from suit,
execution or any other legal process with respect to its obligations
under this Agreement, as the case may be, in any
jurisdiction. Notwithstanding the foregoing, the Borrower does not waive
any immunity with respect of its assets which are (i) used by a diplomatic
or consular mission of the Borrower and (ii) assets of a military character
and under control of a military authority or defense agency and (iii)
located in the Philippines and dedicated to public or governmental use (as
distinguished from patrimonial assets or assets dedicated to commercial
use). (Emphasis supplied.)
(k) Proceedings to Enforce Agreement In any proceeding in the
Republic of the Philippines to enforce this Agreement, the choice of the
laws of the Peoples Republic of China as the governing law hereof will be
recognized and such law will be applied. The waiver of immunity by the
Borrower, the irrevocable submissions of the Borrower to the non-

exclusive jurisdiction of the courts of the Peoples Republic of China and

the appointment of the Borrowers Chinese Process Agent is legal, valid,
binding and enforceable and any judgment obtained in the Peoples
Republic of China will be if introduced, evidence for enforcement in any
proceedings against the Borrower and its assets in the Republic of the
Philippines provided that (a) the court rendering judgment had jurisdiction
over the subject matter of the action in accordance with its jurisdictional
rules, (b) the Republic had notice of the proceedings, (c) the judgment of
the court was not obtained through collusion or fraud, and (d) such
judgment was not based on a clear mistake of fact or law.[36]

Further, the Loan Agreement likewise contains this express waiver of

immunity:
15.5 Waiver of Immunity The Borrower irrevocably and
unconditionally waives, any immunity to which it or its property may at
any time be or become entitled, whether characterized as sovereign
immunity or otherwise, from any suit, judgment, service of process upon
it or any agent, execution on judgment, set-off, attachment prior to
judgment, attachment in aid of execution to which it or its assets may be
entitled in any legal action or proceedings with respect to this Agreement
or any of the transactions contemplated hereby or hereunder.
Notwithstanding the foregoing, the Borrower does not waive any
immunity in respect of its assets which are (i) used by a diplomatic or
consular mission of the Borrower, (ii) assets of a military character and
under control of a military authority or defense agency and (iii) located in
the Philippines and dedicated to a public or governmental use (as
distinguished from patrimonial assets or assets dedicated to commercial
use).[37]

Thus, despite petitioners claim that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese government,
and not because of any motivation to do business in the Philippines,[38] it is clear
from the foregoing provisions that the Northrail Project was a purely commercial
transaction.
Admittedly, the Loan Agreement was entered into between EXIM Bank and
the Philippine government, while the Contract Agreement was between Northrail
and CNMEG. Although the Contract Agreement is silent on the classification of the

legal nature of the transaction, the foregoing provisions of the Loan Agreement,
which is an inextricable part of the entire undertaking, nonetheless reveal the
intention of the parties to the Northrail Project to classify the whole venture as
commercial or proprietary in character.
Thus, piecing together the content and tenor of the Contract Agreement, the
Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter
dated 1 October 2003, and the Loan Agreement would reveal the desire of
CNMEG to construct the Luzon Railways in pursuit of a purely commercial
activity performed in the ordinary course of its business.
B.
CNMEG failed to adduce evidence
that it is immune from suit under Chinese
law.
Even assuming arguendo that CNMEG performs governmental functions,
such claim does not automatically vest it with immunity. This view finds support
in Malong v. Philippine National Railways, in which this Court held that (i)mmunity
from suit is determined by the character of the objects for which the entity was
organized.[39]
In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische
Zusammenarbeit
(GTZ)
v.
CA[40] must
be
examined.
In Deutsche
Gesellschaft, Germany and thePhilippines entered into a Technical Cooperation
Agreement, pursuant to which both signed an arrangement promoting the Social
Health InsuranceNetworking and Empowerment (SHINE) project. The two
governments named their respective implementing organizations: the Department of
Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for
the Philippines, and GTZ for the implementation of Germanys contributions. In
ruling that GTZ was not immune from suit, this Court held:
The arguments raised by GTZ and the [Office of the Solicitor
General (OSG)] are rooted in several indisputable facts. The SHINE
project was implemented pursuant to the bilateral agreements between
the Philippine and German governments. GTZ was tasked, under the
1991 agreement, with the implementation of the contributions of the
German government. The activities performed by GTZ pertaining to

the SHINE project are governmental in nature, related as they are to

the promotion of health insurance in the Philippines. The fact that GTZ
entered into employment contracts with the private respondents did not
disqualify it from invoking immunity from suit, as held in cases such as
Holy See v. Rosario, Jr., which set forth what remains valid doctrine:
Certainly, the mere entering into a contract by a
foreign state with a private party cannot be the ultimate
test. Such an act can only be the start of the inquiry. The
logical question is whether the foreign state is engaged in
the activity in the regular course of business. If the foreign
state is not engaged regularly in a business or trade, the
particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially
when it is not undertaken for gain or profit.
Beyond dispute is the tenability of the comment points (sic) raised
by GTZ and the OSG that GTZ was not performing proprietary
functions notwithstanding its entry into the particular employment
contracts. Yet there is an equally fundamental premise which GTZ and the
OSG fail to address, namely: Is GTZ, by conception, able to enjoy
the Federal Republics immunity from suit?
The principle of state immunity from suit, whether a local state or
a foreign state, is reflected in Section 9, Article XVI of the Constitution,
which states that the State may not be sued without its consent. Who or
what consists of the State? For one, the doctrine is available to foreign
States insofar as they are sought to be sued in the courts of the local
State, necessary as it is to avoid unduly vexing the peace of nations.
If the instant suit had been brought directly against the Federal
Republic of Germany, there would be no doubt that it is a suit brought
against a State, and the only necessary inquiry is whether said State had
consented to be sued. However, the present suit was brought against
GTZ. It is necessary for us to understand what precisely are the
parameters of the legal personality of GTZ.
Counsel for GTZ characterizes GTZ as the implementing
agency of the Government of the Federal Republic of Germany, a
depiction similarly adopted by the OSG. Assuming that the
characterization is correct, it does not automatically invest GTZ with

the ability to invoke State immunity from suit. The distinction lies in
whether the agency is incorporated or unincorporated.
xxx xxx xxx
State immunity from suit may be waived by general or special
law. The special law can take the form of the original charter of the
incorporated government agency. Jurisprudence is replete with examples
of incorporated government agencies which were ruled not entitled to
invoke immunity from suit, owing to provisions in their charters
manifesting their consent to be sued.
xxx xxx xxx
It is useful to note that on the part of the Philippine government, it
had designated two entities, the Department of Health and the Philippine
Health Insurance Corporation (PHIC), as the implementing agencies in
behalf of the Philippines. The PHIC was established under Republic Act
No. 7875, Section 16 (g) of which grants the corporation the power to sue
and be sued in court. Applying the previously cited jurisprudence, PHIC
would not enjoy immunity from suit even in the performance of its
functions connected with SHINE, however, (sic) governmental in nature as
(sic) they may be.
Is GTZ an incorporated agency of the German government?
There is some mystery surrounding that question. Neither GTZ nor
the OSG go beyond the claim that petitioner is the implementing
agency of the Government of the Federal Republic of Germany. On
the other hand, private respondents asserted before the Labor Arbiter
that GTZ was a private corporation engaged in the implementation of
development projects. The Labor Arbiter accepted that claim in his
Order denying the Motion to Dismiss, though he was silent on that point
in his Decision. Nevertheless, private respondents argue in their
Comment that the finding that GTZ was a private corporation was never
controverted, and is therefore deemed admitted. In its Reply, GTZ
controverts that finding, saying that it is a matter of public knowledge
that the status of petitioner GTZ is that of the implementing agency, and
not that of a private corporation.
In truth, private respondents were unable to adduce any evidence
to substantiate their claim that GTZ was a private corporation, and the

Labor Arbiter acted rashly in accepting such claim without explanation.

But neither has GTZ supplied any evidence defining its legal nature
beyond that of the bare descriptive implementing agency. There is no
doubt that the 1991 Agreement designated GTZ as the implementing
agency in behalf of the German government. Yet the catch is that
such term has no precise definition that is responsive to our
concerns. Inherently, an agent acts in behalf of a principal, and the
GTZ can be said to act in behalf of the German state. But that is as
far as implementing agency could take us. The term by itself does not
supply whether GTZ is incorporated or unincorporated, whether it
is owned by the German state or by private interests, whether it has
juridical personality independent of the German government or
none at all.
xxx xxx xxx
Again, we are uncertain of the corresponding legal
implications under German law surrounding a private company
owned by the Federal Republic of Germany. Yet taking the
description on face value, the apparent equivalent under Philippine
law is that of a corporation organized under the Corporation Code
but owned by the Philippine government, or a government-owned or
controlled corporation without original charter. And it bears notice
that Section 36 of the Corporate Code states that [e]very corporation
incorporated under this Code has the power and capacity x x x to sue
and be sued in its corporate name.
It is entirely possible that under German law, an entity such as
GTZ or particularly GTZ itself has not been vested or has been
specifically deprived the power and capacity to sue and/or be sued. Yet in
the proceedings below and before this Court, GTZ has failed to
establish that under German law, it has not consented to be sued
despite it being owned by the Federal Republic of Germany. We
adhere to the rule that in the absence of evidence to the contrary,
foreign laws on a particular subject are presumed to be the same as
those of the Philippines, and following the most intelligent
assumption we can gather, GTZ is akin to a governmental owned or
controlled corporation without original charter which, by virtue of
the Corporation Code, has expressly consented to be sued. At the very
least, like the Labor Arbiter and the Court of Appeals, this Court has no

basis in fact to conclude or presume that GTZ enjoys immunity from

suit.[41] (Emphasis supplied.)

Applying the foregoing ruling to the case at bar, it is readily apparent that
CNMEG cannot claim immunity from suit, even if it contends that it performs
governmental functions. Its designation as the Primary Contractor does not
automatically grant it immunity, just as the term implementing agency has no
precise definition for purposes of ascertaining whether GTZ was immune from suit.
Although CNMEG claims to be a government-owned corporation, it failed to adduce
evidence that it has not consented to be sued under Chinese law. Thus, following
this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to the
contrary, CNMEG is to be presumed to be a government-owned and -controlled
corporation without an original charter. As a result, it has the capacity to sue and be
sued under Section 36 of the Corporation Code.
C.
CNMEG failed to present a
certification from the Department of
Foreign Affairs.
In Holy See,[42] this Court reiterated the oft-cited doctrine that the determination
by the Executive that an entity is entitled to sovereign or diplomatic immunity is a
political question conclusive upon the courts, to wit:
In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court,
it requests the Foreign Office of the state where it is sued to convey to
the court that said defendant is entitled to immunity.
xxx xxx xxx
In the Philippines, the practice is for the foreign government or
the international organization to first secure an executive
endorsement of its claim of sovereign or diplomatic immunity. But
how the Philippine Foreign Office conveys its endorsement to the courts
varies. In International Catholic Migration Commission v. Calleja, 190
SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter
directly to the Secretary of Labor and Employment, informing the latter

that the respondent-employer could not be sued because it enjoyed

diplomatic immunity. In World Health Organization v. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a
telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S.
Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval
Base at Olongapo City, Zambales, a suggestion to respondent Judge. The
Solicitor General embodied the suggestion in a Manifestation and
Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through
the Office of Legal Affairs moved with this Court to be allowed to
intervene on the side of petitioner. The Court allowed the said
Department to file its memorandum in support of petitioners claim of
sovereign immunity.
In some cases, the defense of sovereign immunity was submitted
directly to the local courts by the respondents through their private
counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v.
Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America v. Guinto, 182 SCRA 644 [1990] and companion cases). In
cases where the foreign states bypass the Foreign Office, the courts can
inquire into the facts and make their own determination as to the nature
of the acts and transactions involved.[43] (Emphasis supplied.)

The question now is whether any agency of the Executive Branch can make a
determination of immunity from suit, which may be considered as conclusive upon the
courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor
Relations Commission (NLRC),[44] emphasized the DFAs competence and authority to
provide such necessary determination, to wit:
The DFAs function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic
immunities, a determination which, when challenge, (sic) entitles it
to seek relief from the court so as not to seriously impair the conduct
of the country's foreign relations. The DFA must be allowed to plead
its case whenever necessary or advisable to enable it to help keep the
credibility of the Philippine government before the international
community. When international agreements are concluded, the
parties thereto are deemed to have likewise accepted the

responsibility of seeing to it that their agreements are duly regarded.

In our country, this task falls principally of (sic) the DFA as being
the highest executive department with the competence and authority
to so act in this aspect of the international arena.[45] (Emphasis
supplied.)

Further, the fact that this authority is exclusive to the DFA was also
emphasized in this Courts ruling in Deutsche Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings,
noted that it was imperative for petitioners to secure from the Department
of Foreign Affairs a certification of respondents diplomatic status and
entitlement to diplomatic privileges including immunity from suits. The
requirement might not necessarily be imperative. However, had GTZ
obtained such certification from the DFA, it would have provided
factual basis for its claim of immunity that would, at the very least,
establish a disputable evidentiary presumption that the foreign party
is indeed immune which the opposing party will have to overcome
with its own factual evidence. We do not see why GTZ could not
have secured such certification or endorsement from the DFA for
purposes of this case. Certainly, it would have been highly prudential for
GTZ to obtain the same after the Labor Arbiter had denied the motion to
dismiss. Still, even at this juncture,we do not see any evidence that the
DFA, the office of the executive branch in charge of our diplomatic
relations, has indeed endorsed GTZs claim of immunity. It may be
possible that GTZ tried, but failed to secure such certification, due to the
same concerns that we have discussed herein.
Would the fact that the Solicitor General has endorsed GTZs
claim of States immunity from suit before this Court sufficiently
substitute for the DFA certification? Note that the rule in public
international law quoted in Holy See referred to endorsement by
the Foreign Office of the State where the suit is filed, such foreign
office in the Philippines being the Department of Foreign Affairs.
Nowhere in the Comment of the OSG is it manifested that the DFA
has endorsed GTZs claim, or that the OSG had solicited the DFAs
views on the issue. The arguments raised by the OSG are virtually the
same as the arguments raised by GTZ without any indication of any
special and distinct perspective maintained by the Philippine
government on the issue. The Comment filed by the OSG does not

inspire the same degree of confidence as a certification from the

DFA would have elicited.[46] (Emphasis supplied.)

In the case at bar, CNMEG offers the Certification executed by the Economic
and Commercial Office of the Embassy of the Peoples Republic of China, stating
that the Northrail Project is in pursuit of a sovereign activity.[47] Surely, this is not
the kind of certification that can establish CNMEGs entitlement to immunity from
suit, as Holy Seeunequivocally refers to the determination of the Foreign Office of
the state where it is sued.
Further, CNMEG also claims that its immunity from suit has the executive
endorsement of both the OSG and the Office of the Government Corporate Counsel
(OGCC), which must be respected by the courts. However, as expressly enunciated
in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that
matter, does not inspire the same degree of confidence as a DFA certification. Even
with a DFA certification, however, it must be remembered that this Court is not
precluded from making an inquiry into the intrinsic correctness of such certification.
D.
An agreement to submit any
dispute to arbitration may be construed as
an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides
for a waiver by implication of state immunity. In the said law, the agreement to
submit disputes to arbitration in a foreign country is construed as an implicit waiver
of immunity from suit. Although there is no similar law in the Philippines, there is
reason to apply the legal reasoning behind the waiver in this case.
The Conditions of Contract,[48] which is an integral part of the Contract
Agreement,[49] states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION
33.1. Amicable Settlement

Both parties shall attempt to amicably settle all disputes or

controversies arising from this Contract before the commencement of
arbitration.
33.2. Arbitration
All disputes or controversies arising from this Contract which
cannot be settled between the Employer and the Contractor shall be
submitted to arbitration in accordance with the UNCITRAL Arbitration
Rules at present in force and as may be amended by the rest of this
Clause.
The
appointing
authority
shall
be Hong
Kong International Arbitration Center. The place of arbitration shall be in
Hong Kong at Hong Kong International Arbitration Center (HKIAC).

Under the above provisions, if any dispute arises between Northrail and
CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration.
In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in
the Philippines would be subject to the Special Rules on Alternative Dispute
Resolution (Special Rules). Rule 13 thereof provides for the Recognition and
Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special
Rules, the party to arbitration wishing to have an arbitral award recognized and
enforced in the Philippines must petition the proper regional trial court (a) where the
assets to be attached or levied upon is located; (b) where the acts to be enjoined are
being performed; (c) in the principal place of business in the Philippines of any of
the parties; (d) if any of the parties is an individual, where any of those individuals
resides; or (e) in the National Capital Judicial Region.
From all the foregoing, it is clear that CNMEG has agreed that it will not be
afforded immunity from suit. Thus, the courts have the competence and jurisdiction
to ascertain the validity of the Contract Agreement.
Second issue: Whether the Contract
Agreement is an executive agreement
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna
Convention) defines a treaty as follows:

[A]n international agreement concluded between States in written

form and governed by international law, whether embodied in a single
instrument or in two or more related instruments and whatever its
particular designation.

In Bayan Muna v. Romulo, this Court held that an executive agreement is

similar to a treaty, except that the former (a) does not require legislative
concurrence; (b) is usually less formal; and (c) deals with a narrower range of
subject matters.[50]
Despite these differences, to be considered an executive agreement, the
following three requisites provided under the Vienna Convention must nevertheless
concur: (a) the agreement must be between states; (b) it must be written; and (c) it
must governed by international law. The first and the third requisites do not obtain in
the case at bar.
A.
CNMEG is neither a government nor
a government agency.
The
Contract
Agreement
was
not
concluded
between
[51]
the Philippines and China, but between Northrail and CNMEG. By the terms of
the Contract Agreement, Northrail is a government-owned or -controlled
corporation, while CNMEG is a corporation duly organized and created under the
laws of the Peoples Republic of China.[52] Thus, both Northrail and CNMEG entered
into the Contract Agreement as entities with personalities distinct and separate from
the Philippine and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese government.
As previously discussed, the fact that Amb. Wang, in his letter dated 1 October
2003,[53]described CNMEG as a state corporation and declared its designation as the
Primary Contractor in the Northrail Project did not mean it was to perform sovereign
functions on behalf of China. That label was only descriptive of its nature as a stateowned corporation, and did not preclude it from engaging in purely commercial or
proprietary ventures.

B.
The Contract Agreement is to be
governed by Philippine law.
Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the
Contract Agreement is an integral part of the latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE
The contract shall in all respects be read and construed in
accordance with the laws of the Philippines.
The contract shall be written in English language. All
correspondence and other documents pertaining to the Contract which are
exchanged by the parties shall be written in English language.

Since the Contract Agreement explicitly provides that Philippine law shall be
applicable, the parties have effectively conceded that their rights and obligations
thereunder are not governed by international law.
It is therefore clear from the foregoing reasons that the Contract Agreement
does not partake of the nature of an executive agreement. It is merely an ordinary
commercial contract that can be questioned before the local courts.
WHEREFORE, the instant Petition is DENIED. Petitioner China National
Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and
the Contract Agreement is not an executive agreement. CNMEGs prayer for the
issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot
and academic. This case isREMANDED to the Regional Trial Court of Makati,
Branch 145, for further proceedings as regards the validity of the contracts subject
of Civil Case No. 06-203.
No pronouncement on costs of suit.
SO ORDERED.
EN BANC
[G.R No. 187167 : August 16, 2011]
PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF. HARRY C.
ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA
BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO, SHERYL

BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA, ROMINA BERNARDO, VALERIE PAGASA
BUENAVENTURA, EDAN MARRI CAETE, VANN ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY
DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER, RAOULLE OSEN FERRER,
CARLA REGINA GREPO, ANNA MARIE CECILIA GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA
LUISA MANALAYSAY, MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA,
WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES MARK TERRY RIDON,
JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE ROA, NICHOLAS SANTIZO,
MELISSA CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA ANNE TORNO, MARIA ESTER
VANGUARDIA, AND MARCELINO VELOSO III, PETITIONERS, VS. HON. EDUARDO ERMITA, IN HIS
CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO ROMULO, IN HIS CAPACITY AS SECRETARY
OF THE DEPARTMENT OF FOREIGN AFFAIRS, HON. ROLANDO ANDAYA, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, HON. DIONY VENTURA, IN HIS
CAPACITY AS ADMINISTRATOR OF THE NATIONAL MAPPING & RESOURCE INFORMATION
AUTHORITY, AND HON. HILARIO DAVIDE, JR., IN HIS CAPACITY AS REPRESENTATIVE OF THE
PERMANENT MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE UNITED NATIONS,
RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act No.
9522[1] (RA 9522) adjusting the country's archipelagic baselines and classifying the baseline regime of
nearby territories.
The Antecedents
In 1961, Congress passed Republic Act No. 3046 (RA 3046)[2] demarcating the maritime baselines of the
Philippines as an archipelagic State.[3] This law followed the framing of the Convention on the Territorial Sea
and the Contiguous Zone in 1958 (UNCLOS I),[4] codifying, among others, the sovereign right of States
parties over their "territorial sea," the breadth of which, however, was left undetermined. Attempts to fill
this void during the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile. Thus,
domestically, RA 3046 remained unchanged for nearly five decades, save for legislation passed in 1968
(Republic Act No. 5446 [RA 5446]) correcting typographical errors and reserving the drawing of baselines
around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The
change was prompted by the need to make RA 3046 compliant with the terms of the United Nations
Convention on the Law of the Sea (UNCLOS III),[5] which the Philippines ratified on 27 February
1984.[6] Among others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of
archipelagic States like the Philippines[7] and sets the deadline for the filing of application for the extended
continental shelf.[8] Complying with these requirements, RA 9522 shortened one baseline, optimized the
location of some basepoints around the Philippine archipelago and classified adjacent territories, namely, the
Kalayaan Island Group (KIG) and the Scarborough Shoal, as "regimes of islands" whose islands generate
their own applicable maritime zones.
Petitioners, professors of law, law students and a legislator, in their respective capacities as "citizens,
taxpayers or x x x legislators,"[9] as the case may be, assail the constitutionality of RA 9522 on two principal
grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach of the
Philippine state's sovereign power, in violation of Article 1 of the 1987 Constitution,[10]embodying the terms
of the Treaty of Paris[11] and ancillary treaties,[12] and (2) RA 9522 opens the country's waters landward of
the baselines to maritime passage by all vessels and aircrafts, undermining Philippine sovereignty and
national security, contravening the country's nuclear-free policy, and damaging marine resources, in
violation of relevant constitutional provisions.[13]
In addition, petitioners contend that RA 9522's treatment of the KIG as "regime of islands" not only results
in the loss of a large maritime area but also prejudices the livelihood of subsistence fishermen.[14] To
buttress their argument of territorial diminution, petitioners facially attack RA 9522 for what it excluded and
included - its failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS III's framework
of regime of islands to determine the maritime zones of the KIG and the Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the petition's
compliance with the case or controversy requirement for judicial review grounded on petitioners' alleged
lack of locus standi and (2) the propriety of the writs of certiorari and prohibition to assail the
constitutionality of RA 9522. On the merits, respondents defended RA 9522 as the country's compliance with
the terms of UNCLOS III, preserving Philippine territory over the KIG or Scarborough Shoal. Respondents
add that RA 9522 does not undermine the country's security, environment and economic interests or
relinquish the Philippines' claim over Sabah.
Respondents also question the normative force, under international law, of petitioners' assertion that what
Spain ceded to the United States under the Treaty of Paris were the islands and all the watersfound within
the boundaries of the rectangular area drawn under the Treaty of Paris.
We left unacted petitioners' prayer for an injunctive writ.
The Issues
The petition raises the following issues:
1. Preliminarily 1.
2.

Whether petitioners possess locus standi to bring this suit; and

Whether the writs of certiorari and prohibition are the proper remedies to assail the constitutionality
of RA 9522.

2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court
On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as citizens and
(2) the writs of certiorari and prohibition are proper remedies to test the constitutionality of RA 9522. On the
merits, we find no basis to declare RA 9522 unconstitutional.
On the Threshold Issues
Petitioners Possess Locus
Standi as Citizens
Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers because the
petition alleges neither infringement of legislative prerogative[15] nor misuse of public funds,[16]occasioned by
the passage and implementation of RA 9522. Nonetheless, we recognize petitioners'locus standi as citizens
with constitutionally sufficient interest in the resolution of the merits of the case which undoubtedly raises
issues of national significance necessitating urgent resolution. Indeed, owing to the peculiar nature of RA
9522, it is understandably difficult to find other litigants possessing "a more direct and specific interest" to
bring the suit, thus satisfying one of the requirements for granting citizenship standing.[17]
The Writs of Certiorari and Prohibition
Are Proper Remedies to Test
the Constitutionality of Statutes
In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance of
the offices of the writs of certiorari and prohibition, noting that the writs cannot issue absent any showing of
grave abuse of discretion in the exercise of judicial, quasi-judicial or ministerial powers on the part of
respondents and resulting prejudice on the part of petitioners.[18]
Respondents' submission holds true in ordinary civil proceedings. When this Court exercises its constitutional
power of judicial review, however, we have, by tradition, viewed the writs of certiorari and prohibition as
proper remedial vehicles to test the constitutionality of statutes,[19] and indeed, of acts of other branches of
government.[20] Issues of constitutional import are sometimes crafted out of statutes which, while having no
bearing on the personal interests of the petitioners, carry such relevance in the life of this nation that the
Court inevitably finds itself constrained to take cognizance of the case and pass upon the issues raised, noncompliance with the letter of procedural rules notwithstanding. The statute sought to be reviewed here is
one such law.

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool
to Demarcate the Country's
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory
Petitioners submit that RA 9522 "dismembers a large portion of the national territory"[21] because it discards
the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related treaties,
successively encoded in the definition of national territory under the 1935, 1973 and 1987 Constitutions.
Petitioners theorize that this constitutional definition trumps any treaty or statutory provision denying the
Philippines sovereign control over waters, beyond the territorial sea recognized at the time of the Treaty of
Paris, that Spain supposedly ceded to the United States. Petitioners argue that from the Treaty of Paris'
technical description, Philippine sovereignty over territorial waters extends hundreds of nautical miles
around the Philippine archipelago, embracing the rectangular area delineated in the Treaty of Paris.[22]
Petitioners' theory fails to persuade us.
UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating,
among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the
baselines], contiguous zone [24 nautical miles from the baselines], exclusive economic zone [200 nautical
miles from the baselines]), and continental shelves that UNCLOS III delimits.[23] UNCLOS III was the
culmination of decades-long negotiations among United Nations members to codify norms regulating the
conduct of States in the world's oceans and submarine areas, recognizing coastal and archipelagic States'
graduated authority over a limited span of waters and submarine lands along their coasts.
On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-out
specific basepoints along their coasts from which baselines are drawn, either straight or contoured, to serve
as geographic starting points to measure the breadth of the maritime zones and continental shelf. Article 48
of UNCLOS III on archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive economic
zone and the continental shelf. - The breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf shall be measured from archipelagic baselines drawn in
accordance with article 47. (Emphasis supplied)
Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with
precision the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of
the international community of the scope of the maritime space and submarine areas within which States
parties exercise treaty-based rights, namely, the exercise of sovereignty over territorial waters (Article 2),
the jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article
33), and the right to exploit the living and non-living resources in the exclusive economic zone (Article 56)
and continental shelf (Article 77).
Even under petitioners' theory that the Philippine territory embraces the islands and all the waterswithin the
rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be drawn
in accordance with RA 9522 because this is the only way to draw the baselines in conformity with UNCLOS
III. The baselines cannot be drawn from the boundaries or other portions of the rectangular area delineated
in the Treaty of Paris, but from the "outermost islands and drying reefs of the archipelago."[24]
UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners
claim, diminution of territory. Under traditional international law typology, States acquire (or conversely,
lose) territory through occupation, accretion, cession and prescription,[25] not by executing multilateral
treaties on the regulations of sea-use rights or enacting statutes to comply with the treaty's terms to delimit
maritime zones and continental shelves. Territorial claims to land features are outside UNCLOS III, and are
instead governed by the rules on general international law.[26]
RA 9522's Use of the Framework
of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent

with the Philippines' Claim of Sovereignty

Over these Areas
Petitioners next submit that RA 9522's use of UNCLOS III's regime of islands framework to draw the
baselines, and to measure the breadth of the applicable maritime zones of the KIG, "weakens our territorial
claim" over that area.[27] Petitioners add that the KIG's (and Scarborough Shoal's) exclusion from the
Philippine archipelagic baselines results in the loss of "about 15,000 square nautical miles of territorial
waters," prejudicing the livelihood of subsistence fishermen.[28] A comparison of the configuration of the
baselines drawn under RA 3046 and RA 9522 and the extent of maritime space encompassed by each law,
coupled with a reading of the text of RA 9522 and its congressional deliberations, vis- -vis the Philippines'
obligations under UNCLOS III, belie this view.
The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely followed
the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped to optimize the
location of basepoints and adjust the length of one baseline (and thus comply with UNCLOS III's limitation
on the maximum length of baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough
Shoal lie outside of the baselines drawn around the Philippine archipelago. This undeniable cartographic fact
takes the wind out of petitioners' argument branding RA 9522 as a statutory renunciation of the Philippines'
claim over the KIG, assuming that baselines are relevant for this purpose.
Petitioners' assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA 9522 is
similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of
basepoints, increased the Philippines' total maritime space (covering its internal waters, territorial sea and
exclusive economic zone) by 145,216 square nautical miles, as shown in the table below:[29]

Extent of maritime
area using RA 3046,
as amended, taking
into account the
Treaty of Paris'
delimitation (in
square nautical
miles)

Extent of maritime
area using RA 9522,
taking into account
UNCLOS III (in square
nautical miles)

Internal or
archipelagic
waters

166,858

171,435

Territorial Sea

274,136

32,106

Exclusive
Economic Zone
TOTAL

382,669
440,994

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even
extends way beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of
course, where there are overlapping exclusive economic zones of opposite or adjacent States, there will
have to be a delineation of maritime boundaries in accordance with UNCLOS III.[30]
Further, petitioners' argument that the KIG now lies outside Philippine territory because the baselines that
RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text the
Philippines' continued claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises sovereignty
and jurisdiction shall be determined as "Regime of Islands" under the Republic of the Philippines
consistent with Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS):
a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and
b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)
Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine archipelago,
adverse legal effects would have ensued. The Philippines would have committed a breach of two provisions
of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he drawing of such baselines shall not
depart to any appreciable extent from the general configuration of the archipelago." Second, Article 47 (2)
of UNCLOS III requires that "the length of the baselines shall not exceed 100 nautical miles," save for three
per cent (3%) of the total number of baselines which can reach up to 125 nautical miles.[31]
Although the Philippines has consistently claimed sovereignty over the KIG[32] and the Scarborough Shoal for
several decades, these outlying areas are located at an appreciable distance from the nearest shoreline of
the Philippine archipelago,[33] such that any straight baseline loped around them from the nearest basepoint
will inevitably "depart to an appreciable extent from the general configuration of the archipelago."
The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to emphasize
the foregoing during the Senate deliberations:
What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the
Scarborough Shoal are outside our archipelagic baseline because if we put them inside our baselines we
might be accused of violating the provision of international law which states: "The drawing of such baseline
shall not depart to any appreciable extent from the general configuration of the archipelago." So sa loob ng
ating baseline, dapat magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi natin
masasabing malapit sila sa atin although we are still allowed by international law to claim them as our own.
This is called contested islands outside our configuration. We see that our archipelago is defined by the
orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon sa itaas,
that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the Spratlys. Malayo na
sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines para lamang masama
itong dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng United Nations because of
the rule that it should follow the natural configuration of the archipelago.[34] (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III's limits. The need to shorten
this baseline, and in addition, to optimize the location of basepoints using current maps, became imperative
as discussed by respondents:
[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer limits of its
maritime zones including the extended continental shelf in the manner provided by Article 47 of [UNCLOS
III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some technical
deficiencies, to wit:
1.

The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is
140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the
[UNCLOS III], which states that "The length of such baselines shall not exceed 100 nautical miles,
except that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed
that length, up to a maximum length of 125 nautical miles."

2.

The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from the
baselines system. This will enclose an additional 2,195 nautical miles of water.

3.

Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic
survey methods. Accordingly, some of the points, particularly along the west coasts of Luzon down
to Palawan were later found to be located either inland or on water, not on low-water line and
drying reefs as prescribed by Article 47.[35]

Hence, far from surrendering the Philippines' claim over the KIG and the Scarborough Shoal, Congress'
decision to classify the KIG and the Scarborough Shoal as "`Regime[s] of Islands' under the Republic of the
Philippines consistent with Article 121"[36] of UNCLOS III manifests the Philippine State's responsible
observance of its pacta sunt servanda obligation under UNCLOS III. Under Article 121 of UNCLOS III, any
"naturally formed area of land, surrounded by water, which is above water at high tide," such as portions of
the KIG, qualifies under the category of "regime of islands," whose islands generate their own applicable
maritime zones.[37]
Statutory Claim Over Sabah under
RA 5446 Retained
Petitioners' argument for the invalidity of RA 9522 for its failure to textualize the Philippines' claim over
Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps open
the door for drawing the baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in
this Act is without prejudice to the delineation of the baselines of the territorial sea around the
territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has
acquired dominion and sovereignty. (Emphasis supplied)
UNCLOS III and RA 9522 not
Incompatible with the Constitution's
Delineation of Internal Waters
As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally
"converts" internal waters into archipelagic waters, hence subjecting these waters to the right of innocent
and sea lanes passage under UNCLOS III, including overflight. Petitioners extrapolate that these passage
rights indubitably expose Philippine internal waters to nuclear and maritime pollution hazards, in violation of
the Constitution.[38]
Whether referred to as Philippine "internal waters" under Article I of the Constitution[39] or as "archipelagic
waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water lying
landward of the baselines, including the air space over it and the submarine areas underneath. UNCLOS III
affirms this:
Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed and
subsoil. 1.

The sovereignty of an archipelagic State extends to the waters enclosed by the

archipelagic baselines drawn in accordance with article 47, described as archipelagic waters,
regardless of their depth or distance from the coast.

2.

This sovereignty extends to the air space over the archipelagic waters, as well as to their
bed and subsoil, and the resources contained therein.

xxxx

4.

The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and
subsoil, and the resources contained therein.

(Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal and international law norms
subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in the interest of
maintaining unimpeded, expeditious international navigation, consistent with the international law principle
of freedom of navigation. Thus, domestically, the political branches of the Philippine government, in the

competent discharge of their constitutional powers, may pass legislation designating routes within the
archipelagic waters to regulate innocent and sea lanes passage.[40]Indeed, bills drawing nautical highways
for sea lanes passage are now pending in Congress.[41]
In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate to
grant innocent passage rights over the territorial sea or archipelagic waters, subject to the treaty's
limitations and conditions for their exercise.[42] Significantly, the right of innocent passage is a customary
international law,[43] thus automatically incorporated in the corpus of Philippine law.[44] No modern State can
validly invoke its sovereignty to absolutely forbid innocent passage that is exercised in accordance with
customary international law without risking retaliatory measures from the international community.
The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent
passage and sea lanes passage[45] does not place them in lesser footing vis- -vis continental coastal States
which are subject, in their territorial sea, to the right of innocent passage and the right of transit passage
through international straits. The imposition of these passage rights through archipelagic waters under
UNCLOS III was a concession by archipelagic States, in exchange for their right to claim all the waters
landward of their baselines, regardless of their depth or distance from the coast, as archipelagic waters
subject to their territorial sovereignty. More importantly, the recognition of archipelagic States' archipelago
and the waters enclosed by their baselines as one cohesive entity prevents the treatment of their islands as
separate islands under UNCLOS III.[46] Separate islands generate their own maritime zones, placing the
waters between islands separated by more than 24 nautical miles beyond the States' territorial sovereignty,
subjecting these waters to the rights of other States under UNCLOS III.[47]
Petitioners' invocation of non-executory constitutional provisions in Article II (Declaration of Principles and
State Policies)[48] must also fail. Our present state of jurisprudence considers the provisions in Article II as
mere legislative guides, which, absent enabling legislation, "do not embody judicially enforceable
constitutional rights x x x."[49] Article II provisions serve as guides in formulating and interpreting
implementing legislation, as well as in interpreting executory provisions of the Constitution. Although Oposa
v. Factoran[50] treated the right to a healthful and balanced ecology under Section 16 of Article II as an
exception, the present petition lacks factual basis to substantiate the claimed constitutional violation. The
other provisions petitioners cite, relating to the protection of marine wealth (Article XII, Section 2,
paragraph 2[51]) and subsistence fishermen (Article XIII, Section 7[52]), are not violated by RA 9522.
In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone,
reserving solely to the Philippines the exploitation of all living and non-living resources within such zone.
Such a maritime delineation binds the international community since the delineation is in strict observance
of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the international community will of
course reject it and will refuse to be bound by it.
UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui generismaritime
space - the exclusive economic zone - in waters previously part of the high seas. UNCLOS III grants new
rights to coastal States to exclusively exploit the resources found within this zone up to 200 nautical
miles.[53] UNCLOS III, however, preserves the traditional freedom of navigation of other States that attached
to this zone beyond the territorial sea before UNCLOS III.
RA 9522 and the Philippines' Maritime Zones
Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to pass
RA 9522.[54] We have looked at the relevant provision of UNCLOS III[55] and we find petitioners' reading
plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to this Court.
Moreover, the luxury of choosing this option comes at a very steep price. Absent an UNCLOS III compliant
baselines law, an archipelagic State like the Philippines will find itself devoid of internationally acceptable
baselines from where the breadth of its maritime zones and continental shelf is measured. This is recipe for
a two-fronted disaster: first, it sends an open invitation to the seafaring powers to freely enter and exploit
the resources in the waters and submarine areas around our archipelago; and second, it weakens the
country's case in any international dispute over Philippine maritime space. These are consequences
Congress wisely avoided.
The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas, as
embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of the Philippines'
maritime zones and continental shelf. RA 9522 is therefore a most vital step on the part of the Philippines in
safeguarding its maritime zones, consistent with the Constitution and our national interest.

WHEREFORE, we DISMISS the petition.

SO ORDERED.
Corona, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Bersamin, Peralta, Villarama, Jr.,
Del Castillo, Abad, Perez, Mendoza, and Sereno, JJ.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and
represented by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA,
minor, represented by her parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD
and PATRISHA, all surnamed FLORES, minors and represented by their parents ENRICO and
NIDA FLORES, GIANINA DITA R. FORTUN, minor, represented by her parents SIGRID and
DOLORES FORTUN, GEORGE II and MA. CONCEPCION, all surnamed MISA, minors and
represented by their parents GEORGE and MYRA MISA, BENJAMIN ALAN V. PESIGAN,
minor, represented by his parents ANTONIO and ALICE PESIGAN, JOVIE MARIE ALFARO,
minor, represented by her parents JOSE and MARIA VIOLETA ALFARO, MARIA
CONCEPCION T. CASTRO, minor, represented by her parents FREDENIL and JANE CASTRO,
JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO JOAQUIN T.
NARVASA, minor, represented by his parents GREGORIO II and CRISTINE CHARITY
NARVASA, MA. MARGARITA, JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all
surnamed SAENZ, minors, represented by their parents ROBERTO and AURORA SAENZ,
KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and DAVID IAN, all surnamed KING, minors,
represented by their parents MARIO and HAYDEE KING, DAVID, FRANCISCO and THERESE
VICTORIA, all surnamed ENDRIGA, minors, represented by their parents BALTAZAR and
TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA, minors, represented
by their parents ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR. and MARIETTE, all
surnamed CARDAMA, minors, represented by their parents MARIO and LINA CARDAMA,
CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and
represented by their parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH, STEPHEN
JOHN and ISAIAH JAMES, all surnamed QUIPIT, minors, represented by their parents JOSE
MAX and VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and FRANCISCO, all
surnamed BIBAL, minors, represented by their parents FRANCISCO, JR. and MILAGROS
BIBAL, and THE PHILIPPINE ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the
Department of Environment and Natural Resources, and THE HONORABLE ERIBERTO U.
ROSARIO, Presiding Judge of the RTC, Makati, Branch 66, respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology
which the petitioners dramatically associate with the twin concepts of "inter-generational
responsibility" and "inter-generational justice." Specifically, it touches on the issue of whether the
said petitioners have a cause of action to "prevent the misappropriation or impairment" of Philippine
rainforests and "arrest the unabated hemorrhage of the country's vital life support systems and
continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati,
Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial Region. The principal
plaintiffs therein, now the principal petitioners, are all minors duly represented and joined by their
respective parents. Impleaded as an additional plaintiff is the Philippine Ecological Network, Inc.
(PENI), a domestic, non-stock and non-profit corporation organized for the purpose of, inter alia,
engaging in concerted action geared for the protection of our environment and natural resources.
The original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources (DENR). His substitution in this petition by the
new Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners. 1 The complaint 2 was instituted as a taxpayers' class suit 3 and alleges that the plaintiffs "are
all citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment
of the natural resource treasure that is the country's virgin tropical forests." The same was filed for
themselves and others who are equally concerned about the preservation of said resource but are "so
numerous that it is impracticable to bring them all before the Court." The minors further asseverate that
they "represent their generation as well as generations yet unborn." 4 Consequently, it is prayed for that
judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons acting in his
behalf to
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving
new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the premises." 5
The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands
has a land area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant
rainforests in which varied, rare and unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool which is irreplaceable; they are also the
habitat of indigenous Philippine cultures which have existed, endured and flourished since time
immemorial; scientific evidence reveals that in order to maintain a balanced and healthful ecology,
the country's land area should be utilized on the basis of a ratio of fifty-four per cent (54%) for forest
cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and other uses;
the distortion and disturbance of this balance as a consequence of deforestation have resulted in a
host of environmental tragedies, such as (a) water shortages resulting from drying up of the water
table, otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of
the water table as a result of the intrusion therein of salt water, incontrovertible examples of which
may be found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and
the consequential loss of soil fertility and agricultural productivity, with the volume of soil eroded

estimated at one billion (1,000,000,000) cubic meters per annum approximately the size of the
entire island of Catanduanes, (d) the endangering and extinction of the country's unique, rare and
varied flora and fauna, (e) the disturbance and dislocation of cultural communities, including the
disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life leading to a critical reduction in marine
resource productivity, (g) recurrent spells of drought as is presently experienced by the entire
country, (h) increasing velocity of typhoon winds which result from the absence of windbreakers, (i)
the floodings of lowlands and agricultural plains arising from the absence of the absorbent
mechanism of forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams
constructed and operated for the purpose of supplying water for domestic uses, irrigation and the
generation of electric power, and (k) the reduction of the earth's capacity to process carbon dioxide
gases which has led to perplexing and catastrophic climatic changes such as the phenomenon of
global warming, otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be submitted as a
matter of judicial notice. This notwithstanding, they expressed their intention to present expert
witnesses as well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares
of rainforests constituting roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million
hectares of said rainforests or four per cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth
rainforests are left, barely 2.8% of the entire land mass of the Philippine archipelago
and about 3.0 million hectares of immature and uneconomical secondary growth
forests.
11. Public records reveal that the defendant's, predecessors have granted timber
license agreements ('TLA's') to various corporations to cut the aggregate area of 3.89
million hectares for commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered is hereto attached
as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25
hectares per hour nighttime, Saturdays, Sundays and holidays included the
Philippines will be bereft of forest resources after the end of this ensuing decade, if
not earlier.
13. The adverse effects, disastrous consequences, serious injury and irreparable
damage of this continued trend of deforestation to the plaintiff minor's generation and
to generations yet unborn are evident and incontrovertible. As a matter of fact, the

environmental damages enumerated in paragraph 6 hereof are already being felt,

experienced and suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest the
remaining forest stands will work great damage and irreparable injury to plaintiffs
especially plaintiff minors and their successors who may never see, use, benefit
from and enjoy this rare and unique natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of the natural
resource property he holds in trust for the benefit of plaintiff minors and succeeding
generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology
and are entitled to protection by the State in its capacity as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with the defendant's office.
On March 2, 1990, plaintiffs served upon defendant a final demand to cancel all
logging permits in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to the
continuing serious damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is an act
violative of the rights of plaintiffs, especially plaintiff minors who may be left with a
country that is desertified (sic), bare, barren and devoid of the wonderful flora, fauna
and indigenous cultures which the Philippines had been abundantly blessed with.
19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to
the public policy enunciated in the Philippine Environmental Policy which, in pertinent
part, states that it is the policy of the State
(a) to create, develop, maintain and improve conditions under which man and nature
can thrive in productive and enjoyable harmony with each other;
(b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive to a life of
dignity and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's
is contradictory to the Constitutional policy of the State to
a. effect "a more equitable distribution of opportunities, income and wealth" and
"make full and efficient use of natural resources (sic)." (Section 1, Article XII of the
Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);

c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section
14, Article XIV,id.);
d. "protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind the natural
law and violative of plaintiffs' right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the
instant action to arrest the unabated hemorrhage of the country's vital life support
systems and continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the
complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him
and (2) the issue raised by the plaintiffs is a political question which properly pertains to the
legislative or executive branches of Government. In their 12 July 1990 Opposition to the Motion, the
petitioners maintain that (1) the complaint shows a clear and unmistakable cause of action, (2) the
motion is dilatory and (3) the action presents a justiciable question as it involves the defendant's
abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to
dismiss. 7 In the said order, not only was the defendant's claim that the complaint states no cause of
action against him and that it raises a political question sustained, the respondent Judge further ruled
that the granting of the relief prayed for would result in the impairment of contracts which is prohibited by
the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of
Court and ask this Court to rescind and set aside the dismissal order on the ground that the
respondent Judge gravely abused his discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the petition and required the parties to submit
their respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf
of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it
contains sufficient allegations concerning their right to a sound environment based on Articles 19, 20
and 21 of the Civil Code (Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating
the DENR, Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy),
Section 16, Article II of the 1987 Constitution recognizing the right of the people to a balanced and
healthful ecology, the concept of generational genocide in Criminal Law and the concept of man's
inalienable right to self-preservation and self-perpetuation embodied in natural law. Petitioners
likewise rely on the respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard
the people's right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in
granting Timber License Agreements (TLAs) to cover more areas for logging than what is available
involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment clause,
petitioners maintain that the same does not apply in this case because TLAs are not contracts. They

likewise submit that even if TLAs may be considered protected by the said clause, it is well settled
that they may still be revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their complaint a
specific legal right violated by the respondent Secretary for which any relief is provided by law. They
see nothing in the complaint but vague and nebulous allegations concerning an "environmental right"
which supposedly entitles the petitioners to the "protection by the state in its capacity as parens
patriae." Such allegations, according to them, do not reveal a valid cause of action. They then
reiterate the theory that the question of whether logging should be permitted in the country is a
political question which should be properly addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners' resources is not to file an action to court, but
to lobby before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done
by the State without due process of law. Once issued, a TLA remains effective for a certain period of
time usually for twenty-five (25) years. During its effectivity, the same can neither be revised nor
cancelled unless the holder has been found, after due notice and hearing, to have violated the terms
of the agreement or other forestry laws and regulations. Petitioners' proposition to have all the TLAs
indiscriminately cancelled without the requisite hearing would be violative of the requirements of due
process.
Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil
Case No. 90-777 as a class suit. The original defendant and the present respondents did not take
issue with this matter. Nevertheless, We hereby rule that the said civil case is indeed a class suit.
The subject matter of the complaint is of common and general interest not just to several, but to all
citizens of the Philippines. Consequently, since the parties are so numerous, it, becomes
impracticable, if not totally impossible, to bring all of them before the court. We likewise declare that
the plaintiffs therein are numerous and representative enough to ensure the full protection of all
concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12, Rule
3 of the Revised Rules of Court are present both in the said civil case and in the instant petition, the
latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they represent
their generation as well as generations yet unborn. We find no difficulty in ruling that they can, for
themselves, for others of their generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned.
Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. 9 Such rhythm
and harmony indispensably include, inter alia, the judicious disposition, utilization, management, renewal
and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and
other natural resources to the end that their exploration, development and utilization be equitably
accessible to the present as well as future generations. 10 Needless to say, every generation has a
responsibility to the next to preserve that rhythm and harmony for the full enjoyment of a balanced and
healthful ecology. Put a little differently, the minors' assertion of their right to a sound environment
constitutes, at the same time, the performance of their obligation to ensure the protection of that right for
the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits
of the petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation of
the issues raised and arguments adduced by the parties, We do not hesitate to find for the

petitioners and rule against the respondent Judge's challenged order for having been issued with
grave abuse of discretion amounting to lack of jurisdiction. The pertinent portions of the said order
reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot help
but agree with the defendant. For although we believe that plaintiffs have but the
noblest of all intentions, it (sic) fell short of alleging, with sufficient definiteness, a
specific legal right they are seeking to enforce and protect, or a specific legal wrong
they are seeking to prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the
Court notes that the Complaint is replete with vague assumptions and vague
conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action
in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed with
political color and involving a matter of public policy, may not be taken cognizance of
by this Court without doing violence to the sacred principle of "Separation of Powers"
of the three (3) co-equal branches of the Government.
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For to
do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient
definiteness a specific legal right involved or a specific legal wrong committed, and that the
complaint is replete with vague assumptions and conclusions based on unverified data. A reading of
the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right the right to a balanced and
healthful ecology which, for the first time in our nation's constitutional history, is solemnly
incorporated in the fundamental law. Section 16, Article II of the 1987 Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of nature.
This right unites with the right to health which is provided for in the preceding section
of the same article:
Sec. 15. The State shall protect and promote the right to health of the people and
instill health consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles
and State Policies and not under the Bill of Rights, it does not follow that it is less important than any
of the civil and political rights enumerated in the latter. Such a right belongs to a different category of
rights altogether for it concerns nothing less than self-preservation and self-perpetuation aptly and
fittingly stressed by the petitioners the advancement of which may even be said to predate all
governments and constitutions. As a matter of fact, these basic rights need not even be written in the
Constitution for they are assumed to exist from the inception of humankind. If they are now explicitly

mentioned in the fundamental charter, it is because of the well-founded fear of its framers that
unless the rights to a balanced and healthful ecology and to health are mandated as state policies by
the Constitution itself, thereby highlighting their continuing importance and imposing upon the state a
solemn obligation to preserve the first and protect and advance the second, the day would not be too
far when all else would be lost not only for the present generation, but also for those to come
generations which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain from
impairing the environment. During the debates on this right in one of the plenary sessions of the
1986 Constitutional Commission, the following exchange transpired between Commissioner Wilfrido
Villacorta and Commissioner Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions against all
forms of pollution air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment
necessarily carries with it the correlative duty of not impairing the
same and, therefore, sanctions may be provided for impairment of
environmental balance. 12
The said right implies, among many other things, the judicious management and conservation of the
country's forests.
Without such forests, the ecological or environmental balance would be irreversiby disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as
well as the other related provisions of the Constitution concerning the conservation, development
and utilization of the country's natural resources, 13 then President Corazon C. Aquino promulgated on
10 June 1987 E.O. No. 192, 14 Section 4 of which expressly mandates that the Department of
Environment and Natural Resources "shall be the primary government agency responsible for the
conservation, management, development and proper use of the country's environment and natural
resources, specifically forest and grazing lands, mineral, resources, including those in reservation and
watershed areas, and lands of the public domain, as well as the licensing and regulation of all natural
resources as may be provided for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos." Section 3 thereof makes the
following statement of policy:
Sec. 3. Declaration of Policy. It is hereby declared the policy of the State to ensure
the sustainable use, development, management, renewal, and conservation of the
country's forest, mineral, land, off-shore areas and other natural resources, including
the protection and enhancement of the quality of the environment, and equitable
access of the different segments of the population to the development and the use of
the country's natural resources, not only for the present generation but for future
generations as well. It is also the policy of the state to recognize and apply a true
value system including social and environmental cost implications relative to their
utilization, development and conservation of our natural resources.

This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987, 15specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. (1) The State shall ensure, for the benefit of the
Filipino people, the full exploration and development as well as the judicious
disposition, utilization, management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources, consistent with the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such natural resources
equitably accessible to the different segments of the present as well as future
generations.
(2) The State shall likewise recognize and apply a true value system that takes into
account social and environmental cost implications relative to the utilization,
development and conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance and
protecting and enhancing the quality of the environment." Section 2 of the same Title, on the other
hand, specifically speaks of the mandate of the DENR; however, it makes particular reference to the
fact of the agency's being subject to law and higher authority. Said section provides:
Sec. 2. Mandate. (1) The Department of Environment and Natural Resources shall
be primarily responsible for the implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the
State's constitutional mandate to control and supervise the exploration, development,
utilization, and conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as
the bases for policy formulation, and have defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution, specific
statutes already paid special attention to the "environmental right" of the present and future
generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152
(Philippine Environment Code) were issued. The former "declared a continuing policy of the State (a)
to create, develop, maintain and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it speaks of
the "responsibilities of each generation as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is
as clear as the DENR's duty under its mandate and by virtue of its powers and functions under
E.O. No. 192 and the Administrative Code of 1987 to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to respect or
protect the same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs,
which they claim was done with grave abuse of discretion, violated their right to a balanced and
healthful ecology; hence, the full protection thereof requires that no further TLAs should be renewed
or granted.

A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of the other;
and its essential elements are legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails
to state a cause of action, 19 the question submitted to the court for resolution involves the sufficiency of
the facts alleged in the complaint itself. No other matter should be considered; furthermore, the truth of
falsity of the said allegations is beside the point for the truth thereof is deemed hypothetically admitted.
The only issue to be resolved in such a case is: admitting such alleged facts to be true, may the court
render a valid judgment in accordance with the prayer in the complaint? 20 InMilitante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise the utmost care and
circumspection in passing upon a motion to dismiss on the ground of the absence thereof [cause of
action] lest, by its failure to manifest a correct appreciation of the facts alleged and deemed hypothetically
admitted, what the law grants or recognizes is effectively nullified. If that happens, there is a blot on the
legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements under the introductory
affirmative allegations, as well as the specific averments under the sub-heading CAUSE OF
ACTION, to be adequate enough to show, prima facie, the claimed violation of their rights. On the
basis thereof, they may thus be granted, wholly or partly, the reliefs prayed for. It bears stressing,
however, that insofar as the cancellation of the TLAs is concerned, there is the need to implead, as
party defendants, the grantees thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy
formulation or determination by the executive or legislative branches of Government is not squarely
put in issue. What is principally involved is the enforcement of a right vis-a-vis policies already
formulated and expressed in legislation. It must, nonetheless, be emphasized that the political
question doctrine is no longer, the insurmountable obstacle to the exercise of judicial power or the
impenetrable shield that protects executive and legislative actions from judicial inquiry or review. The
second paragraph of section 1, Article VIII of the Constitution states that:
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a
distinguished member of this Court, says:
The first part of the authority represents the traditional concept of judicial power,
involving the settlement of conflicting rights as conferred as law. The second part of
the authority represents a broadening of judicial power to enable the courts of justice
to review what was before forbidden territory, to wit, the discretion of the political
departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme
Court, the power to rule upon even the wisdom of the decisions of the executive and
the legislature and to declare their acts invalid for lack or excess of jurisdiction
because tainted with grave abuse of discretion. The catch, of course, is the meaning

of "grave abuse of discretion," which is a very elastic phrase that can expand or
contract according to the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:
In the case now before us, the jurisdictional objection becomes even less tenable
and decisive. The reason is that, even if we were to assume that the issue presented
before us was political in nature, we would still not be precluded from revolving it
under the expanded jurisdiction conferred upon us that now covers, in proper cases,
even the political question. Article VII, Section 1, of the Constitution clearly provides:
...
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of
contracts clause found in the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For to
do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even
invoke in his motion to dismiss the non-impairment clause. If he had done so, he would have acted
with utmost infidelity to the Government by providing undue and unwarranted benefits and
advantages to the timber license holders because he would have forever bound the Government to
strictly respect the said licenses according to their terms and conditions regardless of changes in
policy and the demands of public interest and welfare. He was aware that as correctly pointed out by
the petitioners, into every timber license must be read Section 20 of the Forestry Reform Code (P.D.
No. 705) which provides:
. . . Provided, That when the national interest so requires, the President may amend,
modify, replace or rescind any contract, concession, permit, licenses or any other
form of privilege granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not
a contract, property or a property right protested by the due process clause of the
Constitution. In Tan vs. Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. A timber
license is not a contract within the purview of the due process clause; it is only a
license or privilege, which can be validly withdrawn whenever dictated by public
interest or public welfare as in this case.
A license is merely a permit or privilege to do what otherwise would be unlawful, and
is not a contract between the authority, federal, state, or municipal, granting it and
the person to whom it is granted; neither is it property or a property right, nor does it
create a vested right; nor is it taxation (37 C.J. 168). Thus, this Court held that the
granting of license does not create irrevocable rights, neither is it property or property
rights (People vs. Ong Tin, 54 O.G. 7576).

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary: 26
. . . Timber licenses, permits and license agreements are the principal instruments by
which the State regulates the utilization and disposition of forest resources to the end
that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the
forest products therein. They may be validly amended, modified, replaced or
rescinded by the Chief Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process of law clause
[See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v.
Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant case does
not involve a law or even an executive issuance declaring the cancellation or modification of existing
timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting
further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very
nature and purpose, such as law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is not meant to be
absolute. The same is understood to be subject to reasonable legislative regulation
aimed at the promotion of public health, moral, safety and welfare. In other words,
the constitutional guaranty of non-impairment of obligations of contract is limited by
the exercise of the police power of the State, in the interest of public health, safety,
moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American
Life Insurance Co. vs. Auditor General, 30 to wit:
Under our form of government the use of property and the making of contracts are
normally matters of private and not of public concern. The general rule is that both
shall be free of governmental interference. But neither property rights nor contract
rights are absolute; for government cannot exist if the citizen may at will use his
property to the detriment of his fellows, or exercise his freedom of contract to work
them harm. Equally fundamental with the private right is that of the public to regulate
it in the common interest.
In short, the non-impairment clause must yield to the police power of the state. 31
Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with
respect to the prayer to enjoin the respondent Secretary from receiving, accepting, processing,

renewing or approving new timber licenses for, save in cases of renewal, no contract would have as
of yet existed in the other instances. Moreover, with respect to renewal, the holder is not entitled to it
as a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the
challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby
set aside. The petitioners may therefore amend their complaint to implead as defendants the holders
or grantees of the questioned timber license agreements.
No pronouncement as to costs.
SO ORDERED.
Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Quiason, JJ.,
concur.
Narvasa, C.J., Puno and Vitug, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24693

July 31, 1967

ERMITA-MALATE HOTEL AND MOTEL OPERATORS ASSOCIATION, INC., HOTEL DEL MAR
INC. and GO CHIU, petitioners-appellees,
vs.
THE HONORABLE CITY MAYOR OF MANILA, respondent-appellant.
VICTOR ALABANZA, intervenor-appellee.
Panganiban, Abad and Associates Law Office for respondent-appellant.
J. M. Aruego, Tenchavez and Associates for intervenor-appellee.
FERNANDO, J.:
The principal question in this appeal from a judgment of the lower court in an action for prohibition is
whether Ordinance No. 4760 of the City of Manila is violative of the due process clause. The lower
court held that it is and adjudged it "unconstitutional, and, therefore, null and void." For reasons to be
more specifically set forth, such judgment must be reversed, there being a failure of the requisite
showing to sustain an attack against its validity.
The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the petitioners,
Ermita-Malate Hotel and Motel Operators Association, one of its members, Hotel del Mar Inc., and a
certain Go Chiu, who is "the president and general manager of the second petitioner" against the
respondent Mayor of the City of Manila who was sued in his capacity as such "charged with the
general power and duty to enforce ordinances of the City of Manila and to give the necessary orders
for the faithful execution and enforcement of such ordinances." (par. 1). It was alleged that the
petitioner non-stock corporation is dedicated to the promotion and protection of the interest of its
eighteen (18) members "operating hotels and motels, characterized as legitimate businesses duly

licensed by both national and city authorities, regularly paying taxes, employing and giving livelihood
to not less than 2,500 person and representing an investment of more than P3 million."1 (par. 2). It
was then alleged that on June 13, 1963, the Municipal Board of the City of Manila enacted
Ordinance No. 4760, approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who
was at the time acting as Mayor of the City of Manila. (par. 3).
After which the alleged grievances against the ordinance were set forth in detail. There was the
assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact insofar
as it would regulate motels, on the ground that in the revised charter of the City of Manila or in any
other law, no reference is made to motels; that Section 1 of the challenged ordinance is
unconstitutional and void for being unreasonable and violative of due process insofar as it would
impose P6,000.00 fee per annum for first class motels and P4,500.00 for second class motels; that
the provision in the same section which would require the owner, manager, keeper or duly
authorized representative of a hotel, motel, or lodging house to refrain from entertaining or accepting
any guest or customer or letting any room or other quarter to any person or persons without his filling
up the prescribed form in a lobby open to public view at all times and in his presence, wherein the
surname, given name and middle name, the date of birth, the address, the occupation, the sex, the
nationality, the length of stay and the number of companions in the room, if any, with the name,
relationship, age and sex would be specified, with data furnished as to his residence certificate as
well as his passport number, if any, coupled with a certification that a person signing such form has
personally filled it up and affixed his signature in the presence of such owner, manager, keeper or
duly authorized representative, with such registration forms and records kept and bound together, it
also being provided that the premises and facilities of such hotels, motels and lodging houses would
be open for inspection either by the City Mayor, or the Chief of Police, or their duly authorized
representatives is unconstitutional and void again on due process grounds, not only for being
arbitrary, unreasonable or oppressive but also for being vague, indefinite and uncertain, and likewise
for the alleged invasion of the right to privacy and the guaranty against self-incrimination; that
Section 2 of the challenged ordinance classifying motels into two classes and requiring the
maintenance of certain minimum facilities in first class motels such as a telephone in each room, a
dining room or, restaurant and laundry similarly offends against the due process clause for being
arbitrary, unreasonable and oppressive, a conclusion which applies to the portion of the ordinance
requiring second class motels to have a dining room; that the provision of Section 2 of the
challenged ordinance prohibiting a person less than 18 years old from being accepted in such
hotels, motels, lodging houses, tavern or common inn unless accompanied by parents or a lawful
guardian and making it unlawful for the owner, manager, keeper or duly authorized representative of
such establishments to lease any room or portion thereof more than twice every 24 hours, runs
counter to the due process guaranty for lack of certainty and for its unreasonable, arbitrary and
oppressive character; and that insofar as the penalty provided for in Section 4 of the challenged
ordinance for a subsequent conviction would, cause the automatic cancellation of the license of the
offended party, in effect causing the destruction of the business and loss of its investments, there is
once again a transgression of the due process clause.
There was a plea for the issuance of preliminary injunction and for a final judgment declaring the
above ordinance null and void and unenforceable. The lower court on July 6, 1963 issued a writ of
preliminary injunction ordering respondent Mayor to refrain from enforcing said Ordinance No. 4760
from and after July 8, 1963.
In the a answer filed on August 3, 1963, there was an admission of the personal circumstances
regarding the respondent Mayor and of the fact that petitioners are licensed to engage in the hotel or
motel business in the City of Manila, of the provisions of the cited Ordinance but a denial of its
alleged nullity, whether on statutory or constitutional grounds. After setting forth that the petition did
fail to state a cause of action and that the challenged ordinance bears a reasonable relation, to a
proper purpose, which is to curb immorality, a valid and proper exercise of the police power and that

only the guests or customers not before the court could complain of the alleged invasion of the right
to privacy and the guaranty against self incrimination, with the assertion that the issuance of the
preliminary injunction ex parte was contrary to law, respondent Mayor prayed for, its dissolution and
the dismissal of the petition.
Instead of evidence being offered by both parties, there was submitted a stipulation of facts dated
September 28, 1964, which reads:
1. That the petitioners Ermita-Malate Hotel and Motel Operators Association, Inc. and Hotel
del Mar Inc. are duly organized and existing under the laws of the Philippines, both with
offices in the City of Manila, while the petitioner Go Chin is the president and general
manager of Hotel del Mar Inc., and the intervenor Victor Alabanza is a resident of Baguio
City, all having the capacity to sue and be sued;
2. That the respondent Mayor is the duly elected and incumbent City Mayor and chief
executive of the City of Manila charged with the general power and duty to enforce
ordinances of the City of Manila and to give the necessary orders for the faithful execution
and enforcement of such ordinances;
3. That the petitioners are duly licensed to engage in the business of operating hotels and
motels in Malate and Ermita districts in Manila;
4. That on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No.
4760, which was approved on June 14, 1963, by Vice-Mayor Herminio Astorga, then the
acting City Mayor of Manila, in the absence of the respondent regular City Mayor, amending
sections 661, 662, 668-a, 668-b and 669 of the compilation of the ordinances of the City of
Manila besides inserting therein three new sections. This ordinance is similar to the one
vetoed by the respondent Mayor (Annex A) for the reasons stated in its 4th Indorsement
dated February 15, 1963 (Annex B);
5. That the explanatory note signed by then Councilor Herminio Astorga was submitted with
the proposed ordinance (now Ordinance 4760) to the Municipal Board, copy of which is
attached hereto as Annex C;
6. That the City of Manila derived in 1963 an annual income of P101,904.05 from license
fees paid by the 105 hotels and motels (including herein petitioners) operating in the City of
Manila.
1wph1.t

Thereafter came a memorandum for respondent on January 22, 1965, wherein stress was laid on
the presumption of the validity of the challenged ordinance, the burden of showing its lack of
conformity to the Constitution resting on the party who assails it, citing not only U.S. v. Salaveria, but
likewise applicable American authorities. Such a memorandum likewise refuted point by point the
arguments advanced by petitioners against its validity. Then barely two weeks later, on February 4,
1965, the memorandum for petitioners was filed reiterating in detail what was set forth in the petition,
with citations of what they considered to be applicable American authorities and praying for a
judgment declaring the challenged ordinance "null and void and unenforceable" and making
permanent the writ of preliminary injunction issued.
After referring to the motels and hotels, which are members of the petitioners association, and
referring to the alleged constitutional questions raised by the party, the lower court observed: "The
only remaining issue here being purely a question of law, the parties, with the nod of the Court,
agreed to file memoranda and thereafter, to submit the case for decision of the Court." It does

appear obvious then that without any evidence submitted by the parties, the decision passed upon
the alleged infirmity on constitutional grounds of the challenged ordinance, dismissing as is
undoubtedly right and proper the untenable objection on the alleged lack of authority of the City of
Manila to regulate motels, and came to the conclusion that "the challenged Ordinance No. 4760 of
the City of Manila, would be unconstitutional and, therefore, null and void." It made permanent the
preliminary injunction issued against respondent Mayor and his agents "to restrain him from
enforcing the ordinance in question." Hence this appeal.
As noted at the outset, the judgment must be reversed. A decent regard for constitutional doctrines
of a fundamental character ought to have admonished the lower court against such a sweeping
condemnation of the challenged ordinance. Its decision cannot be allowed to stand, consistently with
what has hitherto been the accepted standards of constitutional adjudication, in both procedural and
substantive aspects.
Primarily what calls for a reversal of such a decision is the absence of any evidence to offset the
presumption of validity that attaches to a challenged statute or ordinance. As was expressed
categorically by Justice Malcolm: "The presumption is all in favor of validity x x x . The action of the
elected representatives of the people cannot be lightly set aside. The councilors must, in the very
nature of things, be familiar with the necessities of their particular municipality and with all the facts
and circumstances which surround the subject and necessitate action. The local legislative body, by
enacting the ordinance, has in effect given notice that the regulations are essential to the well being
of the people x x x . 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.2
It admits of no doubt therefore that there being a presumption of validity, the necessity for evidence
to rebut it is unavoidable, unless the statute or ordinance is void on its face which is not the case
here. The principle has been nowhere better expressed than in the leading case of O'Gorman &
Young v. Hartford Fire Insurance Co.,3 where the American Supreme Court through Justice Brandeis
tersely and succinctly summed up the matter thus: The statute here questioned deals with a subject
clearly within the scope of the police power. We are asked to declare it void on the ground that the
specific method of regulation prescribed is unreasonable and hence deprives the plaintiff of due
process of law. As underlying questions of fact may condition the constitutionality of legislation of
this character, the resumption of constitutionality must prevail in the absence of some factual
foundation of record for overthrowing the statute." No such factual foundation being laid in the
present case, the lower court deciding the matter on the pleadings and the stipulation of facts, the
presumption of validity must prevail and the judgment against the ordinance set aside.
Nor may petitioners assert with plausibility that on its face the ordinance is fatally defective as being
repugnant to the due process clause of the Constitution. The mantle of protection associated with
the due process guaranty does not cover petitioners. This particular manifestation of a police power
measure being specifically aimed to safeguard public morals is immune from such imputation of
nullity resting purely on conjecture and unsupported by anything of substance. To hold otherwise
would be to unduly restrict and narrow the scope of police power which has been properly
characterized as the most essential, insistent and the least limitable of powers,4extending as it does
"to all the great public needs."5 It would be, to paraphrase another leading decision, to destroy the
very purpose of the state if it could be deprived or allowed itself to be deprived of its competence to
promote public health, public morals, public safety and the genera welfare.6 Negatively put, police
power is "that inherent and plenary power in the State which enables it to prohibit all that is hurt full
to the comfort, safety, and welfare of society.7
There is no question but that the challenged ordinance was precisely enacted to minimize certain
practices hurtful to public morals. The explanatory note of the Councilor Herminio Astorga included

as annex to the stipulation of facts, speaks of the alarming increase in the rate of prostitution,
adultery and fornication in Manila traceable in great part to the existence of motels, which "provide a
necessary atmosphere for clandestine entry, presence and exit" and thus become the "ideal haven
for prostitutes and thrill-seekers." The challenged ordinance then proposes to check the clandestine
harboring of transients and guests of these establishments by requiring these transients and guests
to fill up a registration form, prepared for the purpose, in a lobby open to public view at all times, and
by introducing several other amendatory provisions calculated to shatter the privacy that
characterizes the registration of transients and guests." Moreover, the increase in the licensed fees
was intended to discourage "establishments of the kind from operating for purpose other than legal"
and at the same time, to increase "the income of the city government." It would appear therefore that
the stipulation of facts, far from sustaining any attack against the validity of the ordinance, argues
eloquently for it.
It is a fact worth noting that this Court has invariably stamped with the seal of its approval,
ordinances punishing vagrancy and classifying a pimp or procurer as a vagrant;8 provide a license
tax for and regulating the maintenance or operation of public dance halls;9 prohibiting
gambling;10 prohibiting jueteng;11 and monte;12prohibiting playing of panguingui on days other than
Sundays or legal holidays;13 prohibiting the operation of pinball machines;14 and prohibiting any
person from keeping, conducting or maintaining an opium joint or visiting a place where opium is
smoked or otherwise used,15 all of which are intended to protect public morals.
On the legislative organs of the government, whether national or local, primarily rest the exercise of
the police power, which, it cannot be too often emphasized, is the power to prescribe regulations to
promote the health, morals, peace, good order, safety and general welfare of the people. In view of
the requirements of due process, equal protection and other applicable constitutional guaranties
however, the exercise of such police power insofar as it may affect the life, liberty or property of any
person is subject to judicial inquiry. Where such exercise of police power may be considered as
either capricious, whimsical, unjust or unreasonable, a denial of due process or a violation of any
other applicable constitutional guaranty may call for correction by the courts.
We are thus led to considering the insistent, almost shrill tone, in which the objection is raised to the
question of due process.16 There is no controlling and precise definition of due process. It furnishes
though a standard to which the governmental action should conform in order that deprivation of life,
liberty or property, in each appropriate case, be valid. What then is the standard of due process
which must exist both as a procedural and a substantive requisite to free the challenged ordinance,
or any governmental action for that matter, from the imputation of legal infirmity sufficient to spell its
doom? It is responsiveness to the supremacy of reason, obedience to the dictates of justice.
Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy the due process
requirement, official action, to paraphrase Cardozo, must not outrun the bounds of reason and result
in sheer oppression. Due process is thus hostile to any official action marred by lack of
reasonableness. Correctly it has been identified as freedom from arbitrariness. It is the embodiment
of the sporting idea of fair play.17 It exacts fealty "to those strivings for justice" and judges the act of
officialdom of whatever branch "in the light of reason drawn from considerations of fairness that
reflect [democratic] traditions of legal and political thought."18 It is not a narrow or "technical
conception with fixed content unrelated to time, place and circumstances,"19 decisions based on
such a clause requiring a "close and perceptive inquiry into fundamental principles of our
society."20 Questions of due process are not to be treated narrowly or pedantically in slavery to form
or phrases.21
It would thus be an affront to reason to stigmatize an ordinance enacted precisely to meet what a
municipal lawmaking body considers an evil of rather serious proportion an arbitrary and capricious
exercise of authority. It would seem that what should be deemed unreasonable and what would
amount to an abdication of the power to govern is inaction in the face of an admitted deterioration of

the state of public morals. To be more specific, the Municipal Board of the City of Manila felt the
need for a remedial measure. It provided it with the enactment of the challenged ordinance. A strong
case must be found in the records, and, as has been set forth, none is even attempted here to attach
to an ordinance of such character the taint of nullity for an alleged failure to meet the due process
requirement. Nor does it lend any semblance even of deceptive plausibility to petitioners' indictment
of Ordinance No. 4760 on due process grounds to single out such features as the increased fees for
motels and hotels, the curtailment of the area of freedom to contract, and, in certain particulars, its
alleged vagueness.
Admittedly there was a decided increase of the annual license fees provided for by the challenged
ordinance for hotels and motels, 150% for the former and over 200% for the latter, first-class motels
being required to pay a P6,000 annual fee and second-class motels, P4,500 yearly. It has been the
settled law however, as far back as 1922 that municipal license fees could be classified into those
imposed for regulating occupations or regular enterprises, for the regulation or restriction of nonuseful occupations or enterprises and for revenue purposes only.22 As was explained more in detail
in the above Cu Unjieng case: (2) Licenses for non-useful occupations are also incidental to the
police power and the right to exact a fee may be implied from the power to license and regulate, but
in fixing amount of the license fees the municipal corporations are allowed a much wider discretion in
this class of cases than in the former, and aside from applying the well-known legal principle that
municipal ordinances must not be unreasonable, oppressive, or tyrannical, courts have, as a general
rule, declined to interfere with such discretion. The desirability of imposing restraint upon the number
of persons who might otherwise engage in non-useful enterprises is, of course, generally an
important factor in the determination of the amount of this kind of license fee. Hence license fees
clearly in the nature of privilege taxes for revenue have frequently been upheld, especially in of
licenses for the sale of liquors. In fact, in the latter cases the fees have rarely been declared
unreasonable.23
Moreover in the equally leading case of Lutz v. Araneta24 this Court affirmed the doctrine earlier
announced by the American Supreme Court that taxation may be made to implement the state's
police power. Only the other day, this Court had occasion to affirm that the broad taxing authority
conferred by the Local Autonomy Act of 1959 to cities and municipalities is sufficiently plenary to
cover a wide range of subjects with the only limitation that the tax so levied is for public purposes,
just and uniform.25
As a matter of fact, even without reference to the wide latitude enjoyed by the City of Manila in
imposing licenses for revenue, it has been explicitly held in one case that "much discretion is given
to municipal corporations in determining the amount," here the license fee of the operator of a
massage clinic, even if it were viewed purely as a police power measure.26 The discussion of this
particular matter may fitly close with this pertinent citation from another decision of significance: "It is
urged on behalf of the plaintiffs-appellees that the enforcement of the ordinance could deprive them
of their lawful occupation and means of livelihood because they can not rent stalls in the public
markets. But it appears that plaintiffs are also dealers in refrigerated or cold storage meat, the sale
of which outside the city markets under certain conditions is permitted x x x . And surely, the mere
fact, that some individuals in the community may be deprived of their present business or a
particular mode of earning a living cannot prevent the exercise of the police power. As was said in a
case, persons licensed to pursue occupations which may in the public need and interest be affected
by the exercise of the police power embark in these occupations subject to the disadvantages which
may result from the legal exercise of that power."27
Nor does the restriction on the freedom to contract, insofar as the challenged ordinance makes it
unlawful for the owner, manager, keeper or duly authorized representative of any hotel, motel,
lodging house, tavern, common inn or the like, to lease or rent room or portion thereof more than
twice every 24 hours, with a proviso that in all cases full payment shall be charged, call for a different

conclusion. Again, such a limitation cannot be viewed as a transgression against the command of
due process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the
opportunity for the immoral or illegitimate use to which such premises could be, and, according to
the explanatory note, are being devoted. How could it then be arbitrary or oppressive when there
appears a correspondence between the undeniable existence of an undesirable situation and the
legislative attempt at correction. Moreover, petitioners cannot be unaware that every regulation of
conduct amounts to curtailment of liberty which as pointed out by Justice Malcolm cannot be
absolute. Thus: "One thought which runs through all these different conceptions of liberty is plainly
apparent. It is this: 'Liberty' as understood in democracies, is not license; it is 'liberty regulated by
law.' Implied in the term is restraint by law for the good of the individual and for the greater good of
the peace and order of society and the general well-being. No man can do exactly as he pleases.
Every man must renounce unbridled license. The right of the individual is necessarily subject to
reasonable restraint by general law for the common good x x x The liberty of the citizen may be
restrained in the interest of the public health, or of the public order and safety, or otherwise within the
proper scope of the police power."28
A similar observation was made by Justice Laurel: "Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the general welfare may interfere with
personal liberty, with property, and with business and occupations. Persons and property may be
subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and
prosperity of the state x x x To this fundamental aim of our Government the rights of the individual
are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into anarchy. Neither should authority be made
to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and personal discipline, so
that there may be established the resultant equilibrium, which means peace and order and
happiness for all.29
It is noteworthy that the only decision of this Court nullifying legislation because of undue deprivation
of freedom to contract, People v. Pomar,30 no longer "retains its virtuality as a living principle. The
policy of laissez faire has to some extent given way to the assumption by the government of the right
of intervention even in contractual relations affected with public interest.31 What may be stressed
sufficiently is that if the liberty involved were freedom of the mind or the person, the standard for the
validity of governmental acts is much more rigorous and exacting, but where the liberty curtailed
affects at the most rights of property, the permissible scope of regulatory measure is wider.32 How
justify then the allegation of a denial of due process?
Lastly, there is the attempt to impugn the ordinance on another due process ground by invoking the
principles of vagueness or uncertainty. It would appear from a recital in the petition itself that what
seems to be the gravamen of the alleged grievance is that the provisions are too detailed and
specific rather than vague or uncertain. Petitioners, however, point to the requirement that a guest
should give the name, relationship, age and sex of the companion or companions as indefinite and
uncertain in view of the necessity for determining whether the companion or companions referred to
are those arriving with the customer or guest at the time of the registry or entering the room With him
at about the same time or coming at any indefinite time later to join him; a proviso in one of its
sections which cast doubt as to whether the maintenance of a restaurant in a motel is dependent
upon the discretion of its owners or operators; another proviso which from their standpoint would
require a guess as to whether the "full rate of payment" to be charged for every such lease thereof
means a full day's or merely a half-day's rate. It may be asked, do these allegations suffice to render
the ordinance void on its face for alleged vagueness or uncertainty? To ask the question is to
answer it. From Connally v. General Construction Co.33 toAdderley v. Florida,34 the principle has
been consistently upheld that what makes a statute susceptible to such a charge is an enactment
either forbidding or requiring the doing of an act that men of common intelligence must necessarily

guess at its meaning and differ as to its application. Is this the situation before us? A citation from
Justice Holmes would prove illuminating: "We agree to all the generalities about not supplying
criminal laws with what they omit but there is no canon against using common sense in construing
laws as saying what they obviously mean."35
That is all then that this case presents. As it stands, with all due allowance for the arguments
pressed with such vigor and determination, the attack against the validity of the challenged
ordinance cannot be considered a success. Far from it. Respect for constitutional law principles so
uniformly held and so uninterruptedly adhered to by this Court compels a reversal of the appealed
decision.
Wherefore, the judgment of the lower court is reversed and the injunction issued lifted forthwith. With
costs.
Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Concepcion, C.J. and Dizon, J., are on leave.

FIRST DIVISION
[G.R. No. 135962. March 27, 2000]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
DECISION
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts to solve
urgent problems of the people. But even when government is armed with the
best of intention, we cannot allow it to run roughshod over the rule of law.
Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA
to open for public use a private road in a private subdivision. While we hold
that the general welfare should be promoted, we stress that it should not be
achieved at the expense of the rule of law. h Y
Petitioner MMDA is a government agency tasked with the delivery of basic
services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA)
is a non-stock, non-profit corporation whose members are homeowners in
Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the
registered owner of Neptune Street, a road inside Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its
Chairman, a notice dated December 22, 1995 requesting respondent to open

Neptune Street to public vehicular traffic starting January 2, 1996. The notice
reads: Court
"SUBJECT: NOTICE of the Opening of Neptune Street to Traffic
"Dear President Lindo,
"Please be informed that pursuant to the mandate of the MMDA
law or Republic Act No. 7924 which requires the Authority to
rationalize the use of roads and/or thoroughfares for the safe and
convenient movement of persons, Neptune Street shall be
opened to vehicular traffic effective January 2, 1996.
"In view whereof, the undersigned requests you to voluntarily
open the points of entry and exit on said street.
"Thank you for your cooperation and whatever assistance that
may be extended by your association to the MMDA personnel
who will be directing traffic in the area.
"Finally, we are furnishing you with a copy of the handwritten
instruction of the President on the matter.
"Very truly yours,
PROSPERO I. ORETA
Chairman"

[1]

On the same day, respondent was apprised that the perimeter wall separating
the subdivision from the adjacent Kalayaan Avenue would be
demolished. Sppedsc
On January 2, 1996, respondent instituted against petitioner before the
Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for
injunction. Respondent prayed for the issuance of a temporary restraining
order and preliminary injunction enjoining the opening of Neptune Street and
prohibiting the demolition of the perimeter wall. The trial court issued a
temporary restraining order the following day.
On January 23, 1996, after due hearing, the trial court denied issuance of a
preliminary injunction. Respondent questioned the denial before the Court of
[2]

Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular

inspection of Neptune Street and on February 13, 1996, it issued a writ of
preliminary injunction enjoining the implementation of the MMDAs proposed
action.
[3]

[4]

On January 28, 1997, the appellate court rendered a Decision on the merits of
the case finding that the MMDA has no authority to order the opening of
Neptune Street, a private subdivision road and cause the demolition of its
perimeter walls. It held that the authority is lodged in the City Council of
Makati by ordinance. The decision disposed of as follows: Jurissc
"WHEREFORE, the Petition is GRANTED; the challenged Order
dated January 23, 1995, in Civil Case No. 96-001, is SET ASIDE
and the Writ of Preliminary Injunction issued on February 13,
1996 is hereby made permanent.
"For want of sustainable substantiation, the Motion to Cite
Roberto L. del Rosario in contempt is denied.
[5]

"No pronouncement as to costs.

"SO ORDERED."

[6]

The Motion for Reconsideration of the decision was denied on September 28,
1998. Hence, this recourse. Jksm
Petitioner MMDA raises the following questions:
"I
HAS THE METROPOLITAN MANILA DEVELOPMENT
AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE
STREET TO PUBLIC TRAFFIC PURSUANT TO ITS
REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION
PRECEDENT BEFORE THE MMDA MAY ORDER THE
OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?
III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC.

ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY
OF THE MMDA TO OPEN THE SUBJECT STREET? Jlexj
V
WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE
THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE
AFFECTED BEL-AIR RESIDENTS AND BAVA OFFICERS?
V
HAS RESPONDENT COME TO COURT WITH UNCLEAN
HANDS?"
[7]

Neptune Street is owned by respondent BAVA. It is a private road inside BelAir Village, a private residential subdivision in the heart of the financial and
commercial district of Makati City. It runs parallel to Kalayaan Avenue, a
national road open to the general public. Dividing the two (2) streets is a
concrete perimeter wall approximately fifteen (15) feet high. The western end
of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a
subdivision road open to public vehicular traffic, while its eastern end
intersects Makati Avenue, a national road. Both ends of Neptune Street are
guarded by iron gates. Edp mis
Petitioner MMDA claims that it has the authority to open Neptune Street to
public traffic because it is an agent of the state endowed with police power in
the delivery of basic services in Metro Manila. One of these basic services is
traffic management which involves the regulation of the use of thoroughfares
to insure the safety, convenience and welfare of the general public. It is
alleged that the police power of MMDA was affirmed by this Court in the
consolidated cases of Sangalang v. Intermediate Appellate Court. From the
premise that it has police power, it is now urged that there is no need for the
City of Makati to enact an ordinance opening Neptune street to the public.
[8]

[9]

Police power is an inherent attribute of sovereignty. It has been defined as the

power vested by the Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable laws, statutes and
ordinances, either with penalties or without, not repugnant to the Constitution,
as they shall judge to be for the good and welfare of the commonwealth, and
for the subjects of the same. The power is plenary and its scope is vast and
[10]

pervasive, reaching and justifying measures for public health, public safety,
public morals, and the general welfare.
[11]

It bears stressing that police power is lodged primarily in the National

Legislature. It cannot be exercised by any group or body of individuals not
possessing legislative power. The National Legislature, however, may
delegate this power to the President and administrative boards as well as the
lawmaking bodies of municipal corporations or local government units. Once
delegated, the agents can exercise only such legislative powers as are
conferred on them by the national lawmaking body.
[12]

[13]

[14]

[15]

A local government is a "political subdivision of a nation or state which is

constituted by law and has substantial control of local affairs." The Local
Government Code of 1991 defines a local government unit as a "body politic
and corporate" -- one endowed with powers as a political subdivision of the
National Government and as a corporate entity representing the inhabitants of
its territory. Local government units are the provinces, cities, municipalities
and barangays. They are also the territorial and political subdivisions of the
state.
[16]

[17]

[18]

[19]

[20]

Our Congress delegated police power to the local government units in

the Local Government Code of 1991. This delegation is found in Section 16
of the same Code, known as the general welfare clause, viz: Chief
"Sec. 16. General Welfare.Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants."
[21]

Local government units exercise police power through their respective

legislative bodies. The legislative body of the provincial government is
the sangguniang panlalawigan, that of the city government is

the sangguniang panlungsod, that of the municipal government is

the sangguniang bayan, and that of the barangay is the sangguniang
barangay. The Local Government Code of 1991 empowers the sangguniang
panlalawigan, sangguniang panlungsod and sangguniang bayan to
"enact ordinances, approve resolutions and appropriate funds for the general
welfare of the [province, city or municipality, as the case may be], and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of
the corporate powers of the [province, city municipality] provided under the
Code x x x." The same Code gives the sangguniang barangay the power to
"enact ordinances as may be necessary to discharge the responsibilities
conferred upon it by law or ordinance and to promote the general welfare of
the inhabitants thereon."
[22]

[23]

Metropolitan or Metro Manila is a body composed of several local

government units - i.e., twelve (12) cities and five (5) municipalities, namely,
the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon,
Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the
municipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig.With
the passage of Republic Act (R. A.) No. 7924 in 1995, Metropolitan
Manila was declared as a "special development and administrative
region" and the Administration of "metro-wide" basic services affecting
the region placed under "a development authority" referred to as the
MMDA.
[24]

[25]

"Metro-wide services" are those "services which have metro-wide impact

and transcend local political boundaries or entail huge expenditures such that
it would not be viable for said services to be provided by the individual local
government units comprising Metro Manila." There are seven (7) basic
metro-wide services and the scope of these services cover the following: (1)
development planning; (2) transport and traffic management; (3) solid waste
disposal and management; (4) flood control and sewerage management; (5)
urban renewal, zoning and land use planning, and shelter services; (6) health
and sanitation, urban protection and pollution control; and (7) public safety.
The basic service of transport and traffic management includes the
following: Lexjuris
[26]

"(b) Transport and traffic management which include the

formulation, coordination, and monitoring of policies,
standards, programs and projects to rationalize the existing
transport operations, infrastructure requirements, the use of
thoroughfares, and promotion of safe and convenient
movement of persons and goods; provision for the mass

transport system and the institution of a system to regulate

road users; administration and implementation of all traffic
enforcement operations, traffic engineering services and
traffic education programs, including the institution of a
single ticketing system in Metropolitan Manila;"
[27]

In the delivery of the seven (7) basic services, the MMDA has the
following powers and functions: Esm
"Sec. 5. Functions and powers of the Metro Manila Development
Authority.The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of
medium and long-term plans and programs for the delivery of
metro-wide services, land use and physical development within
Metropolitan Manila, consistent with national development
objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of
medium-term investment programs for metro-wide services which
shall indicate sources and uses of funds for priority programs and
projects, and which shall include the packaging of projects and
presentation to funding institutions; Esmsc
(c) Undertake and manage on its own metro-wide programs and
projects for the delivery of specific services under its jurisdiction,
subject to the approval of the Council. For this purpose, MMDA
can create appropriate project management offices;
(d) Coordinate and monitor the implementation of such plans,
programs and projects in Metro Manila; identify bottlenecks and
adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in
Metro Manila, and shall coordinate and regulate the
implementation of all programs and projects concerning
traffic management, specifically pertaining to enforcement,
engineering and education. Upon request, it shall be
extended assistance and cooperation, including but not
limited to, assignment of personnel, by all other government
agencies and offices concerned;

(f) Install and administer a single ticketing system, fix,

impose and collect fines and penalties for all kinds of
violations of traffic rules and regulations, whether moving or
non-moving in nature, and confiscate and suspend or revoke
drivers licenses in the enforcement of such traffic laws and
regulations, the provisions of RA 4136 and PD 1605 to the
contrary notwithstanding. For this purpose, the Authority
shall impose all traffic laws and regulations in Metro Manila,
through its traffic operation center, and may deputize
members of the PNP, traffic enforcers of local government
units, duly licensed security guards, or members of nongovernmental organizations to whom may be delegated
certain authority, subject to such conditions and
requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the
objectives of the MMDA, including the undertaking of delivery of
basic services to the local government units, when deemed
necessary subject to prior coordination with and consent of the
local government unit concerned." Jurismis
The implementation of the MMDAs plans, programs and projects is
undertaken by the local government units, national government agencies,
accredited peoples organizations, non-governmental organizations, and the
private sector as well as by the MMDA itself. For this purpose, the MMDA has
the power to enter into contracts, memoranda of agreement and other
cooperative arrangements with these bodies for the delivery of the required
services within Metro Manila.
[28]

The governing board of the MMDA is the Metro Manila Council. The
Council is composed of the mayors of the component 12 cities and 5
municipalities, the president of the Metro Manila Vice-Mayors League and the
president of the Metro Manila Councilors League. The Council is headed by
a Chairman who is appointed by the President and vested with the rank of
cabinet member. As the policy-making body of the MMDA, the Metro Manila
Council approves metro-wide plans, programs and projects, and issues the
necessary rules and regulations for the implementation of said plans; it
approves the annual budget of the MMDA and promulgates the rules and
regulations for the delivery of basic services, collection of service and
regulatory fees, fines and penalties. These functions are particularly
enumerated as follows: LEX
[29]

"Sec. 6. Functions of the Metro Manila Council. (a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and
issue rules and regulations deemed necessary by the MMDA to
carry out the purposes of this Act;
(c) It may increase the rate of allowances and per diems of the
members of the Council to be effective during the term of the
succeeding Council. It shall fix the compensation of the officers
and personnel of the MMDA, and approve the annual budget
thereof for submission to the Department of Budget and
Management (DBM);
(d) It shall promulgate rules and regulations and set policies and
standards for metro-wide application governing the delivery of
basic services, prescribe and collect service and regulatory fees,
and impose and collect fines and penalties." Jj sc
Clearly, the scope of the MMDAs function is limited to the delivery of the
seven (7) basic services. One of these is transport and traffic management
which includes the formulation and monitoring of policies, standards and
projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares and promotion of the safe movement
of persons and goods. It also covers the mass transport system and the
institution of a system of road regulation, the administration of all traffic
enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro Manila
for traffic violations. Under this service, the MMDA is expressly authorized "to
set the policies concerning traffic" and "coordinate and regulate the
implementation of all traffic management programs." In addition, the MMDA
may "install and administer a single ticketing system," fix, impose and collect
fines and penalties for all traffic violations. Ca-lrsc
It will be noted that the powers of the MMDA are limited to the following acts:
formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installation of a system and
administration. There is no syllable in R. A. No. 7924 that grants the
MMDA police power, let alone legislative power. Even the Metro Manila
Council has not been delegated any legislative power. Unlike the legislative
bodies of the local government units, there is no provision in R. A. No. 7924

that empowers the MMDA or its Council to "enact ordinances, approve

resolutions and appropriate funds for the general welfare" of the inhabitants of
Metro Manila. The MMDA is, as termed in the charter itself, a "development
authority." It is an agency created for the purpose of laying down policies and
coordinating with the various national government agencies, peoples
organizations, non-governmental organizations and the private sector for the
efficient and expeditious delivery of basic services in the vast metropolitan
area. All its functions are administrative in nature and these are actually
summed up in the charter itself, viz:
[30]

"Sec. 2. Creation of the Metropolitan Manila Development

Authority. -- x x x.
The MMDA shall perform planning, monitoring and
coordinative functions, and in the process exercise regulatory
and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy
of the local government units concerning purely local matters."
[31]

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate

Appellate Court where we upheld a zoning ordinance issued by the Metro
Manila Commission (MMC), the predecessor of the MMDA, as an exercise of
police power. The first Sangalang decision was on the merits of the
petition, while the second decision denied reconsideration of the first case
and in addition discussed the case of Yabut v. Court of Appeals.
[32]

[33]

[34]

Sangalang v. IAC involved five (5) consolidated petitions filed by respondent

BAVA and three residents of Bel-Air Village against other residents of the
Village and the Ayala Corporation, formerly the Makati Development
Corporation, as the developer of the subdivision. The petitioners sought to
enforce certain restrictive easements in the deeds of sale over their respective
lots in the subdivision. These were the prohibition on the setting up of
commercial and advertising signs on the lots, and the condition that the lots
be used only for residential purposes. Petitioners alleged that respondents,
who were residents along Jupiter Street of the subdivision, converted their
residences into commercial establishments in violation of the "deed
restrictions," and that respondent Ayala Corporation ushered in the full
commercialization" of Jupiter Street by tearing down the perimeter wall that
separated the commercial from the residential section of the village.
[35]

The petitions were dismissed based on Ordinance No. 81 of the Municipal

Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission

(MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A

Residential Zone, with its boundary in the south extending to the center line of
Jupiter Street. The Municipal Ordinance was adopted by the MMC under the
Comprehensive Zoning Ordinance for the National Capital Region and
promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated
therein as bounded by Jupiter Street and the block adjacent thereto was
classified as a High Intensity Commercial Zone.
[36]

We ruled that since both Ordinances recognized Jupiter Street as the

boundary between Bel-Air Village and the commercial district, Jupiter Street
was not for the exclusive benefit of Bel-Air residents. We also held that the
perimeter wall on said street was constructed not to separate the residential
from the commercial blocks but simply for security reasons, hence, in tearing
down said wall, Ayala Corporation did not violate the "deed restrictions" in the
deeds of sale. Scc-alr
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a
legitimate exercise of police power. The power of the MMC and the Makati
Municipal Council to enact zoning ordinances for the general welfare prevailed
over the "deed restrictions".
[37]

In the second Sangalang/Yabut decision, we held that the opening of Jupiter

Street was warranted by the demands of the common good in terms of "traffic
decongestion and public convenience." Jupiter was opened by the Municipal
Mayor to alleviate traffic congestion along the public streets adjacent to the
Village. The same reason was given for the opening to public vehicular traffic
of Orbit Street, a road inside the same village. The destruction of the gate in
Orbit Street was also made under the police power of the municipal
government. The gate, like the perimeter wall along Jupiter, was a public
nuisance because it hindered and impaired the use of property, hence, its
summary abatement by the mayor was proper and legal.
[38]

[39]

Contrary to petitioners claim, the two Sangalang cases do not apply to

the case at bar. Firstly, both involved zoning ordinances passed by the
municipal council of Makati and the MMC. In the instant case, the basis for the
proposed opening of Neptune Street is contained in the notice of December
22, 1995 sent by petitioner to respondent BAVA, through its president. The
notice does not cite any ordinance or law, either by the Sangguniang
Panlungsod of Makati City or by the MMDA, as the legal basis for the
proposed opening of Neptune Street. Petitioner MMDA simply relied on its
authority under its charter "to rationalize the use of roads and/or thoroughfares
for the safe and convenient movement of persons." Rationalizing the use of

roads and thoroughfares is one of the acts that fall within the scope of
transport and traffic management. By no stretch of the imagination, however,
can this be interpreted as an express or implied grant of ordinance-making
power, much less police power. Misjuris
Secondly, the MMDA is not the same entity as the MMC
in Sangalang. Although the MMC is the forerunner of the present MMDA,
an examination of Presidential Decree (P. D.) No. 824, the charter of the
MMC, shows that the latter possessed greater powers which were not
bestowed on the present MMDA. Jjlex
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.)
No. 824. It comprised the Greater Manila Area composed of the contiguous
four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13)
municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon,
Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the
province of Rizal, and Valenzuela in the province of Bulacan. Metropolitan
Manila was created as a response to the finding that the rapid growth of
population and the increase of social and economic requirements in these
areas demand a call for simultaneous and unified development; that the public
services rendered by the respective local governments could be administered
more efficiently and economically if integrated under a system of central
planning; and this coordination, "especially in the maintenance of peace and
order and the eradication of social and economic ills that fanned the flames of
rebellion and discontent [were] part of reform measures under Martial Law
essential to the safety and security of the State."
[40]

[41]

Metropolitan Manila was established as a "public corporation" with the

following powers: Calrs-pped
"Section 1. Creation of the Metropolitan Manila.There is hereby
created a public corporation, to be known as the Metropolitan
Manila, vested with powers and attributes of a corporation
including the power to make contracts, sue and be sued,
acquire, purchase, expropriate, hold, transfer and dispose of
property and such other powers as are necessary to carry
out its purposes. The Corporation shall be administered by a
Commission created under this Decree."
[42]

The administration of Metropolitan Manila was placed under the Metro Manila
Commission (MMC) vested with the following powers:

"Sec. 4. Powers and Functions of the Commission. - The

Commission shall have the following powers and functions:
1. To act as a central government to establish and administer
programs and provide services common to the area;
2. To levy and collect taxes and special assessments, borrow and
expend money and issue bonds, revenue certificates, and other
obligations of indebtedness. Existing tax measures should,
however, continue to be operative until otherwise modified or
repealed by the Commission;
3. To charge and collect fees for the use of public service
facilities;
4. To appropriate money for the operation of the metropolitan
government and review appropriations for the city and municipal
units within its jurisdiction with authority to disapprove the same if
found to be not in accordance with the established policies of the
Commission, without prejudice to any contractual obligation of the
local government units involved existing at the time of approval of
this Decree;
5. To review, amend, revise or repeal all ordinances,
resolutions and acts of cities and municipalities within
Metropolitan Manila;
6. To enact or approve ordinances, resolutions and to fix
penalties for any violation thereof which shall not exceed a
fine of P10,000.00 or imprisonment of six years or both such
fine and imprisonment for a single offense;
7. To perform general administrative, executive and policy-making
functions;
8. To establish a fire control operation center, which shall direct
the fire services of the city and municipal governments in the
metropolitan area;
9. To establish a garbage disposal operation center, which shall
direct garbage collection and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which

shall direct traffic activities; Jjjuris
11. To coordinate and monitor governmental and private activities
pertaining to essential services such as transportation, flood
control and drainage, water supply and sewerage, social, health
and environmental services, housing, park development, and
others;
12. To insure and monitor the undertaking of a comprehensive
social, economic and physical planning and development of the
area;
13. To study the feasibility of increasing barangay participation in
the affairs of their respective local governments and to propose to
the President of the Philippines definite programs and policies for
implementation;
14. To submit within thirty (30) days after the close of each fiscal
year an annual report to the President of the Philippines and to
submit a periodic report whenever deemed necessary; and
15. To perform such other tasks as may be assigned or directed
by the President of the Philippines." Sc jj
The MMC was the "central government" of Metro Manila for the purpose of
establishing and administering programs providing services common to the
area. As a "central government" it had the power to levy and collect taxes and
special assessments, the power to charge and collect fees; the power to
appropriate money for its operation, and at the same time, review
appropriations for the city and municipal units within its jurisdiction. It was
bestowed the power to enact or approve ordinances, resolutions and fix
penalties for violation of such ordinances and resolutions. It also had the
power to review, amend, revise or repeal all ordinances, resolutions and acts
of any of the four (4) cities and thirteen (13) municipalities comprising Metro
Manila.
P. D. No. 824 further provided:
"Sec. 9. Until otherwise provided, the governments of the four
cities and thirteen municipalities in the Metropolitan Manila shall
continue to exist in their present form except as may be

inconsistent with this Decree. The members of the existing city

and municipal councils in Metropolitan Manila shall, upon
promulgation of this Decree, and until December 31, 1975,
become members of the Sangguniang Bayan which is hereby
created for every city and municipality of Metropolitan
Manila.
In addition, the Sangguniang Bayan shall be composed of as
many barangay captains as may be determined and chosen by
the Commission, and such number of representatives from other
sectors of the society as may be appointed by the President upon
recommendation of the Commission.
x x x.
The Sangguniang Bayan may recommend to the Commission
ordinances, resolutions or such measures as it may adopt;
Provided, that no such ordinance, resolution or measure
shall become effective, until after its approval by the
Commission; and Provided further, that the power to impose
taxes and other levies, the power to appropriate money and
the power to pass ordinances or resolutions with penal
sanctions shall be vested exclusively in the Commission."
The creation of the MMC also carried with it the creation of the
Sangguniang Bayan. This was composed of the members of the component
city and municipal councils, barangay captains chosen by the MMC and
sectoral representatives appointed by the President. The Sangguniang
Bayan had the power to recommend to the MMC the adoption of ordinances,
resolutions or measures. It was the MMC itself, however, that possessed
legislative powers. All ordinances, resolutions and measures recommended
by the Sangguniang Bayan were subject to the MMCs approval. Moreover,
the power to impose taxes and other levies, the power to appropriate money,
and the power to pass ordinances or resolutions with penal sanctions were
vested exclusively in the MMC. Sce-dp
Thus, Metropolitan Manila had a "central government," i.e., the MMC
which fully possessed legislative and police powers. Whatever
legislative powers the component cities and municipalities had were all
subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to

restore the autonomy of the local government units in Metro Manila. Hence,
Sections 1 and 2 of Article X of the 1987 Constitution provided: Sj cj
"Section 1. The territorial and political subdivisions of the Republic
of the Philippines are the provinces, cities, municipalities and
barangays. There shall be autonomous regions in Muslim
Mindanao and the Cordilleras as herein provided.
Section 2. The territorial and political subdivisions shall enjoy local
autonomy."
The Constitution, however, recognized the necessity of creating metropolitan
regions not only in the existing National Capital Region but also in potential
equivalents in the Visayas and Mindanao. Section 11 of the same Article X
thus provided:
[43]

"Section 11. The Congress may, by law, create special

metropolitan political subdivisions, subject to a plebiscite as set
forth in Section 10 hereof. The component cities and
municipalities shall retain their basic autonomy and shall be
entitled to their own local executives and legislative assemblies.
The jurisdiction of the metropolitan authority that will thereby be
created shall be limited to basic services requiring coordination."
The Constitution itself expressly provides that Congress may, by law, create
"special metropolitan political subdivisions" which shall be subject to approval
by a majority of the votes cast in a plebiscite in the political units directly
affected; the jurisdiction of this subdivision shall be limited to basic services
requiring coordination; and the cities and municipalities comprising this
subdivision shall retain their basic autonomy and their own local executive and
legislative assemblies. Pending enactment of this law, the Transitory
Provisions of the Constitution gave the President of the Philippines the power
to constitute the Metropolitan Authority, viz:
[44]

"Section 8. Until otherwise provided by Congress, the President

may constitute the Metropolitan Authority to be composed of the
heads of all local government units comprising the Metropolitan
Manila area."
[45]

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and
constituted the Metropolitan Manila Authority (MMA). The powers and

functions of the MMC were devolved to the MMA. It ought to be

stressed, however, that not all powers and functions of the MMC were
passed to the MMA. The MMAs power was limited to the "delivery of
basic urban services requiring coordination in Metropolitan
Manila." The MMAs governing body, the Metropolitan Manila Council,
although composed of the mayors of the component cities and
municipalities, was merely given the power of: (1) formulation of policies
on the delivery of basic services requiring coordination and
consolidation; and (2) promulgation of resolutions and other issuances,
approval of a code of basic services and the exercise of its rule-making
power.
[46]

[47]

[48]

Under the 1987 Constitution, the local government units became primarily
responsible for the governance of their respective political subdivisions.
The MMAs jurisdiction was limited to addressing common problems
involving basic services that transcended local boundaries. It did not have
legislative power. Its power was merely to provide the local government units
technical assistance in the preparation of local development plans. Any
semblance of legislative power it had was confined to a "review [of] legislation
proposed by the local legislative assemblies to ensure consistency among
local governments and with the comprehensive development plan of Metro
Manila," and to "advise the local governments accordingly."
[49]

When R.A. No. 7924 took effect, Metropolitan Manila became a "special
development and administrative region" and the MMDA a "special
development authority" whose functions were "without prejudice to the
autonomy of the affected local government units." The character of the
MMDA was clearly defined in the legislative debates enacting its charter.
R. A. No. 7924 originated as House Bill No. 14170/ 11116 and was introduced
by several legislators led by Dante Tinga, Roilo Golez and Feliciano
Belmonte. It was presented to the House of Representatives by the
Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor.
The bill was a product of Committee consultations with the local government
units in the National Capital Region (NCR), with former Chairmen of the MMC
and MMA, and career officials of said agencies. When the bill was first taken
up by the Committee on Local Governments, the following debate took place:
[50]

"THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain.

This has been debated a long time ago, you know. Its a special
we can create a special metropolitan political subdivision. Supreme

Actually, there are only six (6) political subdivisions provided for in
the Constitution: barangay, municipality, city, province, and we
have the Autonomous Region of Mindanao and we have the
Cordillera. So we have 6. Now.
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of
the Autonomous Region, that is also specifically mandated by the
Constitution.
THE CHAIRMAN: Thats correct. But it is considered to be a
political subdivision. What is the meaning of a political
subdivision? Meaning to say, that it has its own government,
it has its own political personality, it has the power to tax,
and all governmental powers: police power and everything.
All right. Authority is different; because it does not have its
own government. It is only a council, it is an organization of
political subdivision, powers, no, which is not imbued with
any political power. Esmmis
If you go over Section 6, where the powers and functions of
the Metro Manila Development Authority, it is purely
coordinative. And it provides here that the council is policymaking. All right.
Under the Constitution is a Metropolitan Authority with
coordinative power. Meaning to say, it coordinates all of the
different basic services which have to be delivered to the
constituency. All right.
There is now a problem. Each local government unit is given its respective as
a political subdivision. Kalookan has its powers, as provided for and protected
and guaranteed by the Constitution. All right, the exercise. However, in the
exercise of that power, it might be deleterious and disadvantageous to other
local government units. So, we are forming an authority where all of these will
be members and then set up a policy in order that the basic services can be
effectively coordinated. All right. justice
Of course, we cannot deny that the MMDA has to survive. We
have to provide some funds, resources. But it does not
possess any political power. We do not elect the Governor.
We do not have the power to tax. As a matter of fact, I was
trying to intimate to the author that it must have the power to sue

and be sued because it coordinates. All right. It coordinates

practically all these basic services so that the flow and the
distribution of the basic services will be continuous. Like traffic, we
cannot deny that. Its before our eyes. Sewerage, flood control,
water system, peace and order, we cannot deny these. Its right on
our face. We have to look for a solution. What would be the right
solution? All right, we envision that there should be a coordinating
agency and it is called an authority. All right, if you do not want to
call it an authority, its alright. We may call it a council or maybe a
management agency.
x x x."

[51]

Clearly, the MMDA is not a political unit of government. The power

delegated to the MMDA is that given to the Metro Manila Council to
promulgate administrative rules and regulations in the implementation of the
MMDAs functions. There is no grant of authority to enact ordinances and
regulations for the general welfare of the inhabitants of the
metropolis. This was explicitly stated in the last Committee deliberations prior
to the bills presentation to Congress. Thus: Ed-p
"THE CHAIRMAN: Yeah, but we have to go over the suggested
revision. I think this was already approved before, but it was
reconsidered in view of the proposals, set-up, to make the MMDA
stronger. Okay, so if there is no objection to paragraph "f" And
then next is paragraph "b," under Section 6. "It shall approve
metro-wide plans, programs and projects and issue
ordinances or resolutions deemed necessary by the MMDA
to carry out the purposes of this Act." Do you have the
powers? Does the MMDA because that takes the form of a
local government unit, a political subdivision.
HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor.
When we say that it has the policies, its very clear that those
policies must be followed. Otherwise, whats the use of
empowering it to come out with policies. Now, the policies may be
in the form of a resolution or it may be in the form of a ordinance.
The term "ordinance" in this case really gives it more teeth, your
honor. Otherwise, we are going to see a situation where you have
the power to adopt the policy but you cannot really make it stick
as in the case now, and I think here is Chairman Bunye. I think he
will agree that that is the case now. Youve got the power to set a

policy, the body wants to follow your policy, then we say lets call it
an ordinance and see if they will not follow it.
THE CHAIRMAN: Thats very nice. I like that. However, there is a
constitutional impediment. You are making this MMDA a
political subdivision. The creation of the MMDA would be
subject to a plebiscite. That is what Im trying to avoid. Ive
been trying to avoid this kind of predicament. Under the
Constitution it states: if it is a political subdivision, once it is
created it has to be subject to a plebiscite. Im trying to make
this as administrative. Thats why we place the Chairman as a
cabinet rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are
saying there is .
THE CHAIRMAN: In setting up ordinances, it is a political
exercise. Believe me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into
issuances of rules and regulations. That would be it shall
also be enforced. Jksm
HON. BELMONTE: Okay, I will .
HON. LOPEZ: And you can also say that violation of such
rule, you impose a sanction. But you know, ordinance has a
different legal connotation.
HON. BELMONTE: All right. I defer to that opinion, your
Honor. sc
THE CHAIRMAN: So instead of ordinances, say rules and
regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually
considering resolutions now.
THE CHAIRMAN: Rules and resolutions.
HON. BELMONTE: Rules, regulations and resolutions."

[52]

The draft of H. B. No. 14170/ 11116 was presented by the Committee to the
House of Representatives. The explanatory note to the bill stated that the
proposed MMDA is a "development authority" which is a "national agency, not
a political government unit." The explanatory note was adopted as the
sponsorship speech of the Committee on Local Governments. No
interpellations or debates were made on the floor and no amendments
introduced. The bill was approved on second reading on the same day it was
presented.
[53]

[54]

When the bill was forwarded to the Senate, several amendments were made.
These amendments, however, did not affect the nature of the MMDA as
originally conceived in the House of Representatives.
[55]

It is thus beyond doubt that the MMDA is not a local government unit or
a public corporation endowed with legislative power. It is not even a
"special metropolitan political subdivision" as contemplated in Section 11,
Article X of the Constitution. The creation of a "special metropolitan political
subdivision" requires the approval by a majority of the votes cast in a
plebiscite in the political units directly affected. R. A. No. 7924 was not
submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of
the MMDA is not an official elected by the people, but appointed by the
President with the rank and privileges of a cabinet member. In fact, part of his
function is to perform such other duties as may be assigned to him by the
President, whereas in local government units, the President merely
exercises supervisory authority. This emphasizes the administrative
character of the MMDA. Newmiso
[56]

[57]

Clearly then, the MMC under P. D. No. 824 is not the same entity as the
MMDA under R. A. No. 7924. Unlike the MMC, the MMDA has no power to
enact ordinances for the welfare of the community. It is the local
government units, acting through their respective legislative councils, that
possess legislative power and police power. In the case at bar, the
Sangguniang Panlungsod of Makati City did not pass any ordinance or
resolution ordering the opening of Neptune Street, hence, its proposed
opening by petitioner MMDA is illegal and the respondent Court of Appeals
did not err in so ruling. We desist from ruling on the other issues as they are
unnecessary. Esmso
We stress that this decision does not make light of the MMDAs noble efforts to
solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams and
traffic bottlenecks plague the metropolis. Even our once sprawling boulevards
and avenues are now crammed with cars while city streets are clogged with

motorists and pedestrians. Traffic has become a social malaise affecting our
peoples productivity and the efficient delivery of goods and services in the
country. The MMDA was created to put some order in the metropolitan
transportation system but unfortunately the powers granted by its charter are
limited. Its good intentions cannot justify the opening for public use of a private
street in a private subdivision without any legal warrant. The promotion of the
general welfare is not antithetical to the preservation of the rule of law. Sdjad
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 39549 are affirmed. Sppedsc
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Pardo, and Ynares-Santiago,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 92389 September 11, 1991
HON. JEJOMAR C. BINAY and the MUNICIPALITY OF MAKATI, petitioners,
vs.
HON. EUFEMIO DOMINGO and the COMMISSION ON AUDIT, respondents.
Jejomar C. Binay for himself and for his co-petitioner.
Manuel D. Tamase and Rafael C. Marquez for respondents.

PARAS, J.:p
The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted under Resolution
No. 243, of the Municipality of Makati is a valid exercise of police power under the general welfare
clause.
The pertinent facts are:
On September 27, 1988, petitioner Municipality, through its Council, approved Resolution No. 60
which reads:
A RESOLUTION TO CONFIRM AND/OR RATIFY THE ONGOING BURIAL
ASSISTANCE PROGRAM INITIATED BY THE OFFICE OF THE MAYOR, OF

EXTENDING FINANCIAL ASSISTANCE OF FIVE HUNDRED PESOS (P500.00) TO

A BEREAVED FAMILY, FUNDS TO BE TAKEN OUT OF UNAPPROPRIATED
AVAILABLE FUNDS EXISTING IN THE MUNICIPAL TREASURY. (Rollo, Annnex
"A" p. 39)
Qualified beneficiaries, under the Burial Assistance Program, are bereaved families of Makati whose
gross family income does not exceed two thousand pesos (P2,000.00) a month. The beneficiaries,
upon fulfillment of other requirements, would receive the amount of five hundred pesos (P500.00)
cash relief from the Municipality of Makati. (Reno, Annex "13", p. 41)
Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary certified
a disbursement fired of four hundred thousand pesos (P400,000.00) for the implementation of the
Burial Assistance Program. (Rollo, Annex "C", p. 43).
Resolution No. 60 was referred to respondent Commission on Audit (COA) for its expected
allowance in audit. Based on its preliminary findings, respondent COA disapproved Resolution No.
60 and disallowed in audit the disbursement of finds for the implementation thereof. (Rollo, Annex
"D", P. 44)
Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48, respectively) filed by
petitioners Mayor Jejomar Binay, were denied by respondent in its Decision No. 1159, in the
following manner:
Your request for reconsideration is predicated on the following grounds, to wit:
1. Subject Resolution No. 60, s. 1988, of the Municipal Council of Makati and the
intended disbursements fall within the twin principles of 'police power and parens
patriae and
2. The Metropolitan Manila Commission (MMC), under a Certification, dated June 5,
1989, has already appropriated the amount of P400,000.00 to implement the Id
resolution, and the only function of COA on the matter is to allow the financial
assistance in question.
The first contention is believed untenable. Suffice it to state that:
a statute or ordinance must have a real substantial, or rational
relation to the public safety, health, morals, or general welfare to be
sustained as a legitimate exercise of the police power. The mere
assertion by the legislature that a statute relates to the public health,
safety, or welfare does not in itself bring the statute within the police
power of a state for there must always be an obvious and real
connection between the actual provisions of a police regulations and
its avowed purpose, and the regulation adopted must be reasonably
adapted to accomplish the end sought to be attained. 16 Am. Jur 2d,
pp. 542-543; emphasis supplied).
Here, we see no perceptible connection or relation between the objective sought to
be attained under Resolution No. 60, s. 1988, supra, and the alleged public safety,
general welfare, etc. of the inhabitants of Makati.

Anent the second contention, let it be stressed that Resolution No. 60 is still subject
to the limitation that the expenditure covered thereby should be for a public purpose,
i.e., that the disbursement of the amount of P500.00 as burial assistance to a
bereaved family of the Municipality of Makati, or a total of P400,000.00 appropriated
under the Resolution, should be for the benefit of the whole, if not the majority, of the
inhabitants of the Municipality and not for the benefit of only a few individuals as in
the present case. On this point government funds or property shall be spent or used
solely for public purposes. (Cf. Section 4[2], P.D. 1445). (pp. 50-51, Rollo)
Bent on pursuing the Burial Assistance Program the Municipality of Makati, through its Council,
passed Resolution No. 243, re-affirming Resolution No. 60 (Rollo, Annex "H", p. 52).
However, the Burial Assistance Program has been stayed by COA Decision No. 1159. Petitioner,
through its Mayor, was constrained to file this special civil action of certiorari praying that COA
Decision No. 1159 be set aside as null and void.
The police power is a governmental function, an inherent attribute of sovereignty, which was born
with civilized government. It is founded largely on the maxims, "Sic utere tuo et ahenum non laedas
and "Salus populi est suprema lex Its fundamental purpose is securing the general welfare, comfort
and convenience of the people.
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of Agusan del
Norte, 163 SCRA 182). Before a municipal corporation may exercise such power, there must be a
valid delegation of such power by the legislature which is the repository of the inherent powers of the
State. A valid delegation of police power may arise from express delegation, or be inferred from the
mere fact of the creation of the municipal corporation; and as a general rule, municipal corporations
may exercise police powers within the fair intent and purpose of their creation which are reasonably
proper to give effect to the powers expressly granted, and statutes conferring powers on public
corporations have been construed as empowering them to do the things essential to the enjoyment
of life and desirable for the safety of the people. (62 C.J.S., p. 277). The so-called inferred police
powers of such corporations are as much delegated powers as are those conferred in express
terms, the inference of their delegation growing out of the fact of the creation of the municipal
corporation and the additional fact that the corporation can only fully accomplish the objects of its
creation by exercising such powers. (Crawfordsville vs. Braden, 28 N.E. 849). Furthermore,
municipal corporations, as governmental agencies, must have such measures of the power as are
necessary to enable them to perform their governmental functions. The power is a continuing one,
founded on public necessity. (62 C.J.S. p. 273) Thus, not only does the State effectuate its purposes
through the exercise of the police power but the municipality does also. (U.S. v. Salaveria, 39 Phil.
102).
Municipal governments exercise this power under the general welfare clause: pursuant thereto they
are clothed with authority to "enact such ordinances and issue such regulations as may be
necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall
be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace
and order, improve public morals, promote the prosperity and general welfare of the municipality and
the inhabitants thereof, and insure the protection of property therein." (Sections 91, 149, 177 and
208, BP 337). And under Section 7 of BP 337, "every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers necessary and
proper for governance such as to promote health and safety, enhance prosperity, improve morals,
and maintain peace and order in the local government unit, and preserve the comfort and
convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals, peace, education,
good order or safety and general welfare of the people. It is the most essential, insistent, and
illimitable of powers. In a sense it is the greatest and most powerful attribute of the government. It is
elastic and must be responsive to various social conditions. (Sangalang, et al. vs. IAC, 176 SCRA
719). On it depends the security of social order, the life and health of the citizen, the comfort of an
existence in a thickly populated community, the enjoyment of private and social life, and the
beneficial use of property, and it has been said to be the very foundation on which our social system
rests. (16 C.J.S., P. 896) However, it is not confined within narrow circumstances of precedents
resting on past conditions; it must follow the legal progress of a democratic way of life. (Sangalang,
et al. vs. IAC,supra).
In the case at bar, COA is of the position that there is "no perceptible connection or relation between
the objective sought to be attained under Resolution No. 60, s. 1988, supra, and the alleged public
safety, general welfare. etc. of the inhabitants of Makati." (Rollo, Annex "G", p. 51).
Apparently, COA tries to re-define the scope of police power by circumscribing its exercise to "public
safety, general welfare, etc. of the inhabitants of Makati."
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all comprehensiveness.
Its scope, over-expanding to meet the exigencies of the times, even to anticipate the future where it
could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits.
The police power of a municipal corporation is broad, and has been said to be commensurate with,
but not to exceed, the duty to provide for the real needs of the people in their health, safety, comfort,
and convenience as consistently as may be with private rights. It extends to all the great public
needs, and, in a broad sense includes all legislation and almost every function of the municipal
government. It covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it is not limited
thereto, but is broadened to deal with conditions which exists so as to bring out of them the greatest
welfare of the people by promoting public convenience or general prosperity, and to everything
worthwhile for the preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128).
Thus, it is deemed inadvisable to attempt to frame any definition which shall absolutely indicate the
limits of police power.
COA's additional objection is based on its contention that "Resolution No. 60 is still subject to the
limitation that the expenditure covered thereby should be for a public purpose, ... should be for the
benefit of the whole, if not the majority, of the inhabitants of the Municipality and not for the benefit of
only a few individuals as in the present case." (Rollo, Annex "G", p. 51).
COA is not attuned to the changing of the times. Public purpose is not unconstitutional merely
because it incidentally benefits a limited number of persons. As correctly pointed out by the Office of
the Solicitor General, "the drift is towards social welfare legislation geared towards state policies to
provide adequate social services (Section 9, Art. II, Constitution), the promotion of the general
welfare (Section 5, Ibid) social justice (Section 10, Ibid) as well as human dignity and respect for
human rights. (Section 11, Ibid." (Comment, p. 12)
The care for the poor is generally recognized as a public duty. The support for the poor has long
been an accepted exercise of police power in the promotion of the common good.

There is no violation of the equal protection clause in classifying paupers as subject of legislation.
Paupers may be reasonably classified. Different groups may receive varying treatment. Precious to
the hearts of our legislators, down to our local councilors, is the welfare of the paupers. Thus,
statutes have been passed giving rights and benefits to the disabled, emancipating the tenant-farmer
from the bondage of the soil, housing the urban poor, etc.
Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a paragon
of the continuing program of our government towards social justice. The Burial Assistance Program
is a relief of pauperism, though not complete. The loss of a member of a family is a painful
experience, and it is more painful for the poor to be financially burdened by such death. Resolution
No. 60 vivifies the very words of the late President Ramon Magsaysay 'those who have less in life,
should have more in law." This decision, however must not be taken as a precedent, or as an official
go-signal for municipal governments to embark on a philanthropic orgy of inordinate dole-outs for
motives political or otherwise.
PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is hereby GRANTED
and the Commission on Audit's Decision No. 1159 is hereby SET ASIDE.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea,
Regalado and Davide, Jr., JJ., concur.
Gutierrez, Jr. and Feliciano, JJ., are on leave.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 131719

May 25, 2004

THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF LABOR

AND EMPLOYMENT, AND THE SECRETARY OF FOREIGN AFFAIRS, OWWA PUNO,
ADMINISTRATOR, and POEA ADMINISTRATOR, petitioners,
vs.
THE HON. COURT OF APPEALS and ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER
(ARCO-PHIL.), INC., representing its members: Worldcare Services Internationale, Inc.,
Steadfast
International Recruitment Corporation, Dragon International Manpower Services Corporation,
Verdant Manpower Mobilization Corporation, Brent Overseas Personnel, Inc., ARL Manpower
Services, Inc., Dahlzhen International Services, Inc., Interworld Placement Center, Inc., Lakas
Tao Contract Services, Ltd. Co., and SSC Multiservices, respondents.
DECISION
CALLEJO, SR., J.:
In this petition for review on certiorari, the Executive Secretary of the President of the Philippines,
the Secretary of Justice, the Secretary of Foreign Affairs, the Secretary of Labor and Employment,

the POEA Administrator and the OWWA Administrator, through the Office of the Solicitor General,
assail the Decision1 of the Court of Appeals in CA-G.R. SP No. 38815 affirming the Order2 of the
Regional Trial Court of Quezon City dated August 21, 1995 in Civil Case No. Q-95-24401, granting
the plea of the petitioners therein for a writ of preliminary injunction and of the writ of preliminary
injunction issued by the trial court on August 24, 1995.
The Antecedents
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995, took effect on July 15, 1995. The Omnibus Rules and Regulations Implementing the Migrant
Workers and Overseas Filipino Act of 1995 was, thereafter, published in the April 7, 1996 issue of
the Manila Bulletin. However, even before the law took effect, the Asian Recruitment Council
Philippine Chapter, Inc. (ARCO-Phil.) filed, on July 17, 1995, a petition for declaratory relief under
Rule 63 of the Rules of Court with the Regional Trial Court of Quezon City to declare as
unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j), (l) and (m), Section 7,
paragraphs (a) and (b), and Sections 9 and 10 of the law, with a plea for the issuance of a temporary
restraining order and/or writ of preliminary injunction enjoining the respondents therein from
enforcing the assailed provisions of the law.
In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was self-executory
and that no implementing rules were needed. It prayed that the court issue a temporary restraining
order to enjoin the enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment, Section 7
on penalties for illegal recruitment, and Section 9 on venue of criminal actions for illegal
recruitments, viz:
Viewed in the light of the foregoing discussions, there appears to be urgent an imperative
need for this Honorable Court to maintain the status quo by enjoining the implementation or
effectivity of the questioned provisions of RA 8042, by way of a restraining order otherwise,
the member recruitment agencies of the petitioner will suffer grave or irreparable damage or
injury. With the effectivity of RA 8042, a great majority of the duly licensed recruitment
agencies have stopped or suspended their operations for fear of being prosecuted under the
provisions of a law that are unjust and unconstitutional. This Honorable Court may take
judicial notice of the fact that processing of deployment papers of overseas workers for the
past weeks have come to a standstill at the POEA and this has affected thousands of
workers everyday just because of the enactment of RA 8042. Indeed, this has far reaching
effects not only to survival of the overseas manpower supply industry and the active
participating recruitment agencies, the countrys economy which has survived mainly due to
the dollar remittances of the overseas workers but more importantly, to the poor and the
needy who are in dire need of income-generating jobs which can only be obtained from
abroad. The loss or injury that the recruitment agencies will suffer will then be immeasurable
and irreparable. As of now, even foreign employers have already reduced their manpower
requirements from the Philippines due to their knowledge that RA 8042 prejudiced and
adversely affected the local recruitment agencies.3
On August 1, 1995, the trial court issued a temporary restraining order effective for a period of only
twenty (20) days therefrom.
After the petitioners filed their comment on the petition, the ARCO-Phil. filed an amended petition,
the amendments consisting in the inclusion in the caption thereof eleven (11) other corporations
which it alleged were its members and which it represented in the suit, and a plea for a temporary
restraining order enjoining the respondents from enforcing Section 6 subsection (i), Section 6

subsection (k) and paragraphs 15 and 16 thereof, Section 8, Section 10, paragraphs 1 and 2, and
Sections 11 and 40 of Rep. Act No. 8042.
The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to (m), Section
7(a) to (b), and Section 10 paragraphs (1) and (2), quoted as follows:
(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL MIGRANT
WORKERS IS THE POSSESSION OF SKILLS. PURSUANT TO THIS AND AS SOON AS
PRACTICABLE, THE GOVERNMENT SHALL DEPLOY AND/OR ALLOW THE
DEPLOYMENT ONLY OF SKILLED FILIPINO WORKERS.4
Sec. 2 subsection (i, 2nd par.)
Nonetheless, the deployment of Filipino overseas workers, whether land-based or seabased, by local service contractors and manning agents employing them shall be
encourages (sic). Appropriate incentives may be extended to them.

II. ILLEGAL RECRUITMENT

SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad,
whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-licensee or nonholder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged. It shall, likewise, include the following acts, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly any amount greater than that specified in
the schedule of allowable fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount greater than that actually received
by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code;
(d) To induce or attempt to induce a worker already employed to quit his employment
in order to offer him another unless the transfer is designed to liberate a worker from
oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public

health or morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and
Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies,
remittance of foreign exchange earnings, separation from jobs, departures and such
other matters or information as may be required by the Secretary of Labor and
Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts
approved and verified by the Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including the period of the expiration of
the same without the approval of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an officer
or member of the Board of any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor
Code and its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as determined by the Department of
Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault. Illegal recruitment
when committed by a syndicate or in large scale shall be considered an offense
involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or
direction of their business shall be liable.

SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of
not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of
not less than two hundred thousand pesos (P200,000.00) nor more than five hundred
thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally
recruited is less than eighteen (18) years of age or committed by a non-licensee or nonholder of authority.
Sec. 8.
Prohibition on Officials and Employees. It shall be unlawful for any official or employee of
the Department of Labor and Employment, the Philippine Overseas Employment
Administration (POEA), or the Overseas Workers Welfare Administration (OWWA), or the
Department of Foreign Affairs, or other government agencies involved in the implementation
of this Act, or their relatives within the fourth civil degree of consanguinity or affinity, to
engage, directly or indirectly, in the business of recruiting migrant workers as defined in this
Act. The penalties provided in the immediate preceding paragraph shall be imposed upon
them. (underscoring supplied)

Sec. 10, pars. 1 & 2.

Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide,within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in
the contract for overseas employment and shall be a condition precedent for its approval.
The performance bond to be filed by the recruitment/placement agency, as provided by law,
shall be answerable for all money claims or damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.

SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. The preliminary
investigations of cases under this Act shall be terminated within a period of thirty (30)
calendar days from the date of their filing. Where the preliminary investigation is conducted
by a prosecution officer and a prima facie case is established, the corresponding information
shall be filed in court within twenty-four (24) hours from the termination of the investigation. If
the preliminary investigation is conducted by a judge and a prima facie case is found to exist,
the corresponding information shall be filed by the proper prosecution officer within fortyeight (48) hours from the date of receipt of the records of the case.
The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate Section 1,
Article III of the Constitution.5 According to the respondent, Section 6(g) and (i) discriminated against

unskilled workers and their families and, as such, violated the equal protection clause, as well as
Article II, Section 126 and Article XV, Sections 17 and 3(3) of the Constitution.8 As the law
encouraged the deployment of skilled Filipino workers, only overseas skilled workers are granted
rights. The respondent stressed that unskilled workers also have the right to seek employment
abroad. According to the respondent, the right of unskilled workers to due process is violated
because they are prevented from finding employment and earning a living abroad. It cannot be
argued that skilled workers are immune from abuses by employers, while unskilled workers are
merely prone to such abuses. It was pointed out that both skilled and unskilled workers are
subjected to abuses by foreign employers. Furthermore, the prohibition of the deployment of
unskilled workers abroad would only encourage fly-by-night illegal recruiters.
According to the respondent, the grant of incentives to service contractors and manning agencies to
the exclusion of all other licensed and authorized recruiters is an invalid classification. Licensed and
authorized recruiters are thus deprived of their right to property and due process and to the "equality
of the person." It is understandable for the law to prohibit illegal recruiters, but to discriminate against
licensed and registered recruiters is unconstitutional.
The respondent, likewise, alleged that Section 6, subsections (a) to (m) is unconstitutional because
licensed and authorized recruitment agencies are placed on equal footing with illegal recruiters. It
contended that while the Labor Code distinguished between recruiters who are holders of licenses
and non-holders thereof in the imposition of penalties, Rep. Act No. 8042 does not make any
distinction. The penalties in Section 7(a) and (b) being based on an invalid classification are,
therefore, repugnant to the equal protection clause, besides being excessive; hence, such penalties
are violative of Section 19(1), Article III of the Constitution.9 It was also pointed out that the penalty
for officers/officials/employees of recruitment agencies who are found guilty of economic sabotage or
large-scale illegal recruitment under Rep. Act No. 8042 is life imprisonment. Since recruitment
agencies usually operate with a manpower of more than three persons, such agencies are forced to
shut down, lest their officers and/or employees be charged with large scale illegal recruitment or
economic sabotage and sentenced to life imprisonment. Thus, the penalty imposed by law, being
disproportionate to the prohibited acts, discourages the business of licensed and registered
recruitment agencies.
The respondent also posited that Section 6(m) and paragraphs (15) and (16), Sections 8, 9 and 10,
paragraph 2 of the law violate Section 22, Article III of the Constitution10 prohibiting ex-post facto
laws and bills of attainder. This is because the provisions presume that a licensed and registered
recruitment agency is guilty of illegal recruitment involving economic sabotage, upon a finding that it
committed any of the prohibited acts under the law. Furthermore, officials, employees and their
relatives are presumed guilty of illegal recruitment involving economic sabotage upon such finding
that they committed any of the said prohibited acts.
The respondent further argued that the 90-day period in Section 10, paragraph (1) within which a
labor arbiter should decide a money claim is relatively short, and could deprive licensed and
registered recruiters of their right to due process. The period within which the summons and the
complaint would be served on foreign employees and, thereafter, the filing of the answer to the
complaint would take more than 90 days. This would thereby shift on local licensed and authorized
recruiters the burden of proving the defense of foreign employers. Furthermore, the respondent
asserted, Section 10, paragraph 2 of the law, which provides for the joint and several liability of the
officers and employees, is a bill of attainder and a violation of the right of the said corporate officers
and employees to due process. Considering that such corporate officers and employees act with
prior approval of the board of directors of such corporation, they should not be liable, jointly and
severally, for such corporate acts.

The respondent asserted that the following provisions of the law are unconstitutional:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined herein shall be
filed with the Regional Trial Court of the province or city where the offense was committed or
where the offended party actually resides at the time of the commission of the offense:
Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the
exclusion of other courts: Provided, however, That the aforestated provisions shall also apply
to those criminal actions that have already been filed in court at the time of the effectivity of
this Act.

SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
Sec. 40.
The departments and agencies charged with carrying out the provisions of this Act shall,
within ninety (90) days after the effectiviy of this Act, formulate the necessary rules and
regulations for its effective implementation.
According to the respondent, the said provisions violate Section 5(5), Article VIII of the
Constitution11 because they impair the power of the Supreme Court to promulgate rules of
procedure.
In their answer to the petition, the petitioners alleged, inter alia, that (a) the respondent has no cause
of action for a declaratory relief; (b) the petition was premature as the rules implementing Rep. Act
No. 8042 not having been released as yet; (c) the assailed provisions do not violate any provisions
of the Constitution; and, (d) the law was approved by Congress in the exercise of the police power of
the State. In opposition to the respondents plea for injunctive relief, the petitioners averred that:
As earlier shown, the amended petition for declaratory relief is devoid of merit for failure of petitioner
to demonstrate convincingly that the assailed law is unconstitutional, apart from the defect and
impropriety of the petition. One who attacks a statute, alleging unconstitutionality must prove its
invalidity beyond reasonable doubt (Caleon v. Agus Development Corporation, 207 SCRA 748). All
reasonable doubts should be resolved in favor of the constitutionality of a statute (People v. Vera, 65
Phil. 56). This presumption of constitutionality is based on the doctrine of separation of powers which
enjoin upon each department a becoming respect for the acts of the other departments (Garcia vs.
Executive Secretary, 204 SCRA 516 [1991]). Necessarily, the ancillary remedy of a temporary
restraining order and/or a writ of preliminary injunction prayed for must fall. Besides, an act of
legislature approved by the executive is presumed to be within constitutional bounds (National Press
Club v. Commission on Elections, 207 SCRA 1).12
After the respective counsels of the parties were heard on oral arguments, the trial court issued on
August 21, 1995, an order granting the petitioners plea for a writ of preliminary injunction upon a
bond of P50,000. The petitioner posted the requisite bond and on August 24, 1995, the trial court
issued a writ of preliminary injunction enjoining the enforcement of the following provisions of Rep.
Act No. 8042 pending the termination of the proceedings:

 Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m), and pars.
15 & 16; Section 7, subsections (a) & (b); Section 8; Section 9; Section 10; pars. 1 & 2;
Section 11; and Section 40 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995. 13
The petitioners filed a petition for certiorari with the Court of Appeals assailing the order and the writ
of preliminary injunction issued by the trial court on the following grounds:
1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its memberagencies to be protected by the injunctive relief and/or violation of said rights by the
enforcement of the assailed sections of R.A. 8042;
2. Respondent Judge fixed a P50,000 injunction bond which is grossly inadequate to answer
for the damage which petitioner-officials may sustain, should respondent ARCO-PHIL. be
finally adjudged as not being entitled thereto.14
The petitioners asserted that the respondent is not the real party-in-interest as petitioner in the trial
court. It is inconceivable how the respondent, a non-stock and non-profit corporation, could sustain
direct injury as a result of the enforcement of the law. They argued that if, at all, any damage would
result in the implementation of the law, it is the licensed and registered recruitment agencies and/or
the unskilled Filipino migrant workers discriminated against who would sustain the said injury or
damage, not the respondent. The respondent, as petitioner in the trial court, was burdened to
adduce preponderant evidence of such irreparable injury, but failed to do so. The petitioners further
insisted that the petition a quo was premature since the rules and regulations implementing the law
had yet to be promulgated when such petition was filed. Finally, the petitioners averred that the
respondent failed to establish the requisites for the issuance of a writ of preliminary injunction
against the enforcement of the law and the rules and regulations issued implementing the same.
On December 5, 1997, the appellate court came out with a four-page decision dismissing the petition
and affirming the assailed order and writ of preliminary injunction issued by the trial court. The
appellate court, likewise, denied the petitioners motion for reconsideration of the said decision.
The petitioners now come to this Court in a petition for review on certiorari on the following grounds:
1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its
member-agencies to be protected by the injunctive relief and/or violation of said rights by the
enforcement of the assailed sections of R.A. 8042;
2. The P50,000 injunction bond fixed by the court a quo and sustained by the Court of
Appeals is grossly inadequate to answer for the damage which petitioners-officials may
sustain, should private respondent ARCO-PHIL. be finally adjudged as not being entitled
thereto.15
On February 16, 1998, this Court issued a temporary restraining order enjoining the respondents
from enforcing the assailed order and writ of preliminary injunction.
The Issues
The core issue in this case is whether or not the trial court committed grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary

injunction on a bond of onlyP50,000 and whether or not the appellate court erred in affirming the trial
courts order and the writ of preliminary injunction issued by it.
The petitioners contend that the respondent has no locus standi. It is a non-stock, non-profit
organization; hence, not the real party-in-interest as petitioner in the action. Although the respondent
filed the petition in the Regional Trial Court in behalf of licensed and registered recruitment agencies,
it failed to adduce in evidence a certified copy of its Articles of Incorporation and the resolutions of
the said members authorizing it to represent the said agencies in the proceedings. Neither is the suit
of the respondent a class suit so as to vest in it a personality to assail Rep. Act No. 8042; the
respondent is service-oriented while the recruitment agencies it purports to represent are profitoriented. The petitioners assert that the law is presumed constitutional and, as such, the respondent
was burdened to make a case strong enough to overcome such presumption and establish a clear
right to injunctive relief.
The petitioners bewail the P50,000 bond fixed by the trial court for the issuance of a writ of
preliminary injunction and affirmed by the appellate court. They assert that the amount is grossly
inadequate to answer for any damages that the general public may suffer by reason of the nonenforcement of the assailed provisions of the law. The trial court committed a grave abuse of its
discretion in granting the respondents plea for injunctive relief, and the appellate court erred in
affirming the order and the writ of preliminary injunction issued by the trial court.
The respondent, for its part, asserts that it has duly established its locus standi and its right to
injunctive relief as gleaned from its pleadings and the appendages thereto. Under Section 5, Rule 58
of the Rules of Court, it was incumbent on the petitioners, as respondents in the RTC, to show cause
why no injunction should issue. It avers that the injunction bond posted by the respondent was more
than adequate to answer for any injury or damage the petitioners may suffer, if any, by reason of the
writ of preliminary injunction issued by the RTC. In any event, the assailed provisions of Rep. Act
No. 8042 exposed its members to the immediate and irreparable damage of being deprived of their
right to a livelihood without due process, a property right protected under the Constitution.
The respondent contends that the commendable purpose of the law to eradicate illegal recruiters
should not be done at the expense and to the prejudice of licensed and authorized recruitment
agencies. The writ of preliminary injunction was necessitated by the great number of duly licensed
recruitment agencies that had stopped or suspended their business operations for fear that their
officers and employees would be indicted and prosecuted under the assailed oppressive penal
provisions of the law, and meted excessive penalties. The respondent, likewise, urges that the Court
should take judicial notice that the processing of deployment papers of overseas workers have come
to a virtual standstill at the POEA.
The Courts Ruling
The petition is meritorious.
The Respondent Has Locus Standi
To File the Petition in the RTC in Representation of the Eleven Licensed and Registered
Recruitment Agencies Impleaded in the Amended Petition
The modern view is that an association has standing to complain of injuries to its members. This
view fuses the legal identity of an association with that of its members.16 An association has standing
to file suit for its workers despite its lack of direct interest if its members are affected by the action.
An organization has standing to assert the concerns of its constituents.17

In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on Elections,18 we

held that standing jus tertii would be recognized only if it can be shown that the party suing has
some substantial relation to the third party, or that the right of the third party would be diluted unless
the party in court is allowed to espouse the third partys constitutional claims.
In this case, the respondent filed the petition for declaratory relief under Rule 64 of the Rules of
Court for and in behalf of its eleven (11) licensed and registered recruitment agencies which are its
members, and which approved separate resolutions expressly authorizing the respondent to file the
said suit for and in their behalf. We note that, under its Articles of Incorporation, the respondent was
organized for the purposes inter alia of promoting and supporting the growth and development of the
manpower recruitment industry, both in the local and international levels; providing, creating and
exploring employment opportunities for the exclusive benefit of its general membership; enhancing
and promoting the general welfare and protection of Filipino workers; and, to act as the
representative of any individual, company, entity or association on matters related to the manpower
recruitment industry, and to perform other acts and activities necessary to accomplish the purposes
embodied therein. The respondent is, thus, the appropriate party to assert the rights of its members,
because it and its members are in every practical sense identical. The respondent asserts that the
assailed provisions violate the constitutional rights of its members and the officers and employees
thereof. The respondent is but the medium through which its individual members seek to make more
effective the expression of their voices and the redress of their grievances.19
However, the respondent has no locus standi to file the petition for and in behalf of unskilled
workers. We note that it even failed to implead any unskilled workers in its petition. Furthermore, in
failing to implead, as parties-petitioners, the eleven licensed and registered recruitment agencies it
claimed to represent, the respondent failed to comply with Section 2 of Rule 6320 of the Rules of
Court. Nevertheless, since the eleven licensed and registered recruitment agencies for which the
respondent filed the suit are specifically named in the petition, the amended petition is deemed
amended to avoid multiplicity of suits.21
The Assailed Order and Writ of
Preliminary Injunction Is Mooted
By Case Law
The respondent justified its plea for injunctive relief on the allegation in its amended petition that its
members are exposed to the immediate and irreparable danger of being deprived of their right to a
livelihood and other constitutional rights without due process, on its claim that a great number of duly
licensed recruitment agencies have stopped or suspended their operations for fear that (a) their
officers and employees would be prosecuted under the unjust and unconstitutional penal provisions
of Rep. Act No. 8042 and meted equally unjust and excessive penalties, including life imprisonment,
for illegal recruitment and large scale illegal recruitment without regard to whether the recruitment
agencies involved are licensed and/or authorized; and, (b) if the members of the respondent, which
are licensed and authorized, decide to continue with their businesses, they face the stigma and the
curse of being labeled "illegal recruiters." In granting the respondents plea for a writ of preliminary
injunction, the trial court held, without stating the factual and legal basis therefor, that the
enforcement of Rep. Act No. 8042, pendente lite, would cause grave and irreparable injury to the
respondent until the case is decided on its merits.
We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the Court had, in a
catena of cases, applied the penal provisions in Section 6, including paragraph (m) thereof, and the
last two paragraphs therein defining large scale illegal recruitment committed by officers and/or

employees of recruitment agencies by themselves and in connivance with private individuals, and
imposed the penalties provided in Section 7 thereof, including the penalty of life imprisonment.22 The
Informations therein were filed after preliminary investigations as provided for in Section 11 of Rep.
Act No. 8042 and in venues as provided for in Section 9 of the said act. InPeople v. Chowdury,23 we
held that illegal recruitment is a crime of economic sabotage and must be enforced.
In People v. Diaz,24 we held that Rep. Act No. 8042 is but an amendment of the Labor Code of the
Philippines and is not an ex-post facto law because it is not applied retroactively. In JMM Promotion
and Management, Inc. v. Court of Appeals,25 the issue of the extent of the police power of the State
to regulate a business, profession or calling vis--vis the equal protection clause and the nonimpairment clause of the Constitution were raised and we held, thus:
A profession, trade or calling is a property right within the meaning of our constitutional
guarantees. One cannot be deprived of the right to work and the right to make a living
because these rights are property rights, the arbitrary and unwarranted deprivation of which
normally constitutes an actionable wrong.
Nevertheless, no right is absolute, and the proper regulation of a profession, calling,
business or trade has always been upheld as a legitimate subject of a valid exercise of the
police power by the state particularly when their conduct affects either the execution of
legitimate governmental functions, the preservation of the State, the public health and
welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas, it
must of course be within the legitimate range of legislative action to define the mode and
manner in which every one may so use his own property so as not to pose injury to himself
or others.
In any case, where the liberty curtailed affects at most the rights of property, the permissible
scope of regulatory measures is certainly much wider. To pretend that licensing or
accreditation requirements violates the due process clause is to ignore the settled practice,
under the mantle of the police power, of regulating entry to the practice of various trades or
professions. Professionals leaving for abroad are required to pass rigid written and practical
exams before they are deemed fit to practice their trade. Seamen are required to take tests
determining their seamanship. Locally, the Professional Regulation Commission has begun
to require previously licensed doctors and other professionals to furnish documentary proof
that they had either re-trained or had undertaken continuing education courses as a
requirement for renewal of their licenses. It is not claimed that these requirements pose an
unwarranted deprivation of a property right under the due process clause. So long as
professionals and other workers meet reasonable regulatory standards no such deprivation
exists.
Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of
the Constitution to support their argument that the government cannot enact the assailed
regulatory measures because they abridge the freedom to contract. In Philippine Association
of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the
Constitution must yield to the loftier purposes targeted by the government." Equally
important, into every contract is read provisions of existing law, and always, a reservation of
the police power for so long as the agreement deals with a subject impressed with the public
welfare.
A last point. Petitioners suggest that the singling out of entertainers and performing artists
under the assailed department orders constitutes class legislation which violates the equal
protection clause of the Constitution. We do not agree.

The equal protection clause is directed principally against undue favor and individual or class
privilege. It is not intended to prohibit legislation which is limited to the object to which it is
directed or by the territory in which it is to operate. It does not require absolute equality, but
merely that all persons be treated alike under like conditions both as to privileges conferred
and liabilities imposed. We have held, time and again, that the equal protection clause of the
Constitution does not forbid classification for so long as such classification is based on real
and substantial differences having a reasonable relation to the subject of the particular
legislation. If classification is germane to the purpose of the law, concerns all members of the
class, and applies equally to present and future conditions, the classification does not violate
the equal protection guarantee.26
The validity of Section 6 of R.A. No. 8042 which provides that employees of recruitment agencies
may be criminally liable for illegal recruitment has been upheld in People v. Chowdury:27
As stated in the first sentence of Section 6 of RA 8042, the persons who may be held liable
for illegal recruitment are the principals, accomplices and accessories. An employee of a
company or corporation engaged in illegal recruitment may be held liable as principal,
together with his employer, if it is shown that he actively and consciously participated in
illegal recruitment. It has been held that the existence of the corporate entity does not shield
from prosecution the corporate agent who knowingly and intentionally causes the corporation
to commit a crime. The corporation obviously acts, and can act, only by and through its
human agents, and it is their conduct which the law must deter. The employee or agent of a
corporation engaged in unlawful business naturally aids and abets in the carrying on of such
business and will be prosecuted as principal if, with knowledge of the business, its purpose
and effect, he consciously contributes his efforts to its conduct and promotion, however slight
his contribution may be. 28
By its rulings, the Court thereby affirmed the validity of the assailed penal and procedural provisions
of Rep. Act No. 8042, including the imposable penalties therefor. Until the Court, by final judgment,
declares that the said provisions are unconstitutional, the enforcement of the said provisions cannot
be enjoined.
The RTC Committed Grave Abuse of Its Discretion Amounting to Excess or Lack of Jurisdiction in
Issuing the Assailed Order and the Writ of Preliminary Injunction
The matter of whether to issue a writ of preliminary injunction or not is addressed to the sound
discretion of the trial court. However, if the court commits grave abuse of its discretion in issuing the
said writ amounting to excess or lack of jurisdiction, the same may be nullified via a writ of certiorari
and prohibition.
In Social Security Commission v. Judge Bayona,29 we ruled that a law is presumed constitutional
until otherwise declared by judicial interpretation. The suspension of the operation of the law is a
matter of extreme delicacy because it is an interference with the official acts not only of the duly
elected representatives of the people but also of the highest magistrate of the land.
In Younger v. Harris, Jr.,30 the Supreme Court of the United States emphasized, thus:
Federal injunctions against state criminal statutes, either in their entirety or with respect to
their separate and distinct prohibitions, are not to be granted as a matter of course, even if
such statutes are unconstitutional. No citizen or member of the community is immune from
prosecution, in good faith, for his alleged criminal acts. The imminence of such a prosecution
even though alleged to be unauthorized and, hence, unlawful is not alone ground for relief in

equity which exerts its extraordinary powers only to prevent irreparable injury to the plaintiff
who seeks its aid. 752 Beal v. Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61 S.Ct. 418,
420, 85 L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:
"It does not appear from the record that petitioners have been threatened with any injury
other than that incidental to every criminal proceeding brought lawfully and in good faith "
319 U.S., at 164, 63 S.Ct., at 881.31
The possible unconstitutionality of a statute, on its face, does not of itself justify an injunction against
good faith attempts to enforce it, unless there is a showing of bad faith, harassment, or any other
unusual circumstance that would call for equitable relief.32 The "on its face" invalidation of statutes
has been described as "manifestly strong medicine," to be employed "sparingly and only as a last
resort," and is generally disfavored.33
To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed to be
unconstitutional, the party must establish that it will suffer irreparable harm in the absence of
injunctive relief and must demonstrate that it is likely to succeed on the merits, or that there are
sufficiently serious questions going to the merits and the balance of hardships tips decidedly in its
favor.34 The higher standard reflects judicial deference toward "legislation or regulations developed
through presumptively reasoned democratic processes." Moreover, an injunction will alter, rather
than maintain, the status quo, or will provide the movant with substantially all the relief sought and
that relief cannot be undone even if the defendant prevails at a trial on the merits.35 Considering that
injunction is an exercise of equitable relief and authority, in assessing whether to issue a preliminary
injunction, the courts must sensitively assess all the equities of the situation, including the public
interest.36 In litigations between governmental and private parties, courts go much further both to
give and withhold relief in furtherance of public interest than they are accustomed to go when only
private interests are involved.37 Before the plaintiff may be entitled to injunction against future
enforcement, he is burdened to show some substantial hardship.38
The fear or chilling-effect of the assailed penal provisions of the law on the members of the
respondent does not by itself justify prohibiting the State from enforcing them against those whom
the State believes in good faith to be punishable under the laws:
Just as the incidental "chilling effect" of such statutes does not automatically render them
unconstitutional, so the chilling effect that admittedly can result from the very existence of
certain laws on the statute books does not in itself justify prohibiting the State from carrying
out the important and necessary task of enforcing these laws against socially harmful
conduct that the State believes in good faith to be punishable under its laws and the
Constitution.39
It must be borne in mind that subject to constitutional limitations, Congress is empowered to define
what acts or omissions shall constitute a crime and to prescribe punishments therefor.40 The power
is inherent in Congress and is part of the sovereign power of the State to maintain peace and order.
Whatever views may be entertained regarding the severity of punishment, whether one believes in
its efficiency or its futility, these are peculiarly questions of legislative policy.41 The comparative
gravity of crimes and whether their consequences are more or less injurious are matters for the
State and Congress itself to determine.42 Specification of penalties involves questions of legislative
policy.43

Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing
wholly passive conduct, defining crimes in vague or overbroad language and failing to grant fair
warning of illegal conduct.44Class legislation is such legislation which denies rights to one which are
accorded to others, or inflicts upon one individual a more severe penalty than is imposed upon
another in like case offending.45 Bills of attainder are legislative acts which inflict punishment on
individuals or members of a particular group without a judicial trial. Essential to a bill of attainder are
a specification of certain individuals or a group of individuals, the imposition of a punishment, penal
or otherwise, and the lack of judicial trial.46
Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their
relatives employed in government agencies charged with the enforcement of the law for illegal
recruitment and imposing life imprisonment for those who commit large scale illegal recruitment is
not offensive to the Constitution. The accused may be convicted of illegal recruitment and large
scale illegal recruitment only if, after trial, the prosecution is able to prove all the elements of the
crime charged.47
The possibility that the officers and employees of the recruitment agencies, which are members of
the respondent, and their relatives who are employed in the government agencies charged in the
enforcement of the law, would be indicted for illegal recruitment and, if convicted sentenced to life
imprisonment for large scale illegal recruitment, absent proof of irreparable injury, is not sufficient on
which to base the issuance of a writ of preliminary injunction to suspend the enforcement of the
penal provisions of Rep. Act No. 8042 and avert any indictments under the law.48 The normal course
of criminal prosecutions cannot be blocked on the basis of allegations which amount to speculations
about the future.49
There is no allegation in the amended petition or evidence adduced by the respondent that the
officers and/or employees of its members had been threatened with any indictments for violations of
the penal provisions of Rep. Act No. 8042. Neither is there any allegation therein that any of its
members and/or their officers and employees committed any of the acts enumerated in Section 6(a)
to (m) of the law for which they could be indicted. Neither did the respondent adduce any evidence in
the RTC that any or all of its members or a great number of other duly licensed and registered
recruitment agencies had to stop their business operations because of fear of indictments under
Sections 6 and 7 of Rep. Act No. 8042. The respondent merely speculated and surmised that
licensed and registered recruitment agencies would close shop and stop business operations
because of the assailed penal provisions of the law. A writ of preliminary injunction to enjoin the
enforcement of penal laws cannot be based on such conjectures or speculations. The Court cannot
take judicial notice that the processing of deployment papers of overseas workers have come to a
virtual standstill at the POEA because of the assailed provisions of Rep. Act No. 8042. The
respondent must adduce evidence to prove its allegation, and the petitioners accorded a chance to
adduce controverting evidence.
The respondent even failed to adduce any evidence to prove irreparable injury because of the
enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of time
constraints, its members would have to defend foreign employees in cases before the Labor Arbiter
is based on speculations. Even if true, such inconvenience or difficulty is hardly irreparable injury.
The trial court even ignored the public interest involved in suspending the enforcement of Rep. Act
No. 8042 vis--vis the eleven licensed and registered recruitment agencies represented by the
respondent. In People v. Gamboa,50 we emphasized the primary aim of Rep. Act No. 8042:
Preliminarily, the proliferation of illegal job recruiters and syndicates preying on innocent
people anxious to obtain employment abroad is one of the primary considerations that led to

the enactment of The Migrant Workers and Overseas Filipinos Act of 1995. Aimed at
affording greater protection to overseas Filipino workers, it is a significant improvement on
existing laws in the recruitment and placement of workers for overseas employment.
Otherwise known as the Magna Carta of OFWs, it broadened the concept of illegal
recruitment under the Labor Code and provided stiffer penalties thereto, especially those that
constitute economic sabotage, i.e., Illegal Recruitment in Large Scale and Illegal Recruitment
Committed by a Syndicate.51
By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial court
frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed them to continue
victimizing hapless and innocent people desiring to obtain employment abroad as overseas workers,
and blocked the attainment of the salutary policies52 embedded in Rep. Act No. 8042. It bears
stressing that overseas workers, land-based and sea-based, had been remitting to the Philippines
billions of dollars which over the years had propped the economy.
In issuing the writ of preliminary injunction, the trial court considered paramount the interests of the
eleven licensed and registered recruitment agencies represented by the respondent, and
capriciously overturned the presumption of the constitutionality of the assailed provisions on the
barefaced claim of the respondent that the assailed provisions of Rep. Act No. 8042 are
unconstitutional. The trial court committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction in issuing the assailed order and writ of preliminary injunction. It is for this reason
that the Court issued a temporary restraining order enjoining the enforcement of the writ of
preliminary injunction issued by the trial court.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the
appellate court isREVERSED AND SET ASIDE. The Order of the Regional Trial Court dated August
21, 1995 in Civil Case No. Q-95-24401 and the Writ of Preliminary Injunction issued by it in the said
case on August 24, 1995 are NULLIFIED. No costs.
SO ORDERED.
Puno*, Quisumbing**, Austria-Martinez, and Tinga, JJ., concur.

SECOND DIVISION

[G.R. No. 162994. September 17, 2004]

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.

TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC. respondent.
RESOLUTION
TINGA, J.:

Confronting the Court in this petition is a novel question, with constitutional

overtones, involving the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor
company.
This is a Petition for Review on Certiorari assailing the Decision dated
May 19, 2003 and the Resolution dated March 26, 2004 of the Court of
Appeals in CA-G.R. SP No. 62434.
[1]

[2]

Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo

Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24,
1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees to study and abide by existing company rules;
to disclose to management any existing or future relationship by consanguinity
or affinity with co-employees or employees of competing drug companies and
should management find that such relationship poses a possible conflict of
interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an
employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies. If management perceives a conflict of interest or
a potential conflict between such relationship and the employees employment
with the company, the management and the employee will explore the
possibility of a transfer to another department in a non-counterchecking
position or preparation for employment outside the company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines
Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy
was Astras Branch Coordinator in Albay. She supervised the district
managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
[3]

Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship with
Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.
In January 1999, Tecsons superiors informed him that his marriage to
Bettsy gave rise to a conflict of interest. Tecsons superiors reminded him that
he and Bettsy should decide which one of them would resign from their jobs,

although they told him that they wanted to retain him as much as possible
because he was performing his job well.
Tecson requested for time to comply with the company policy against
entering into a relationship with an employee of a competitor company. He
explained that Astra, Bettsys employer, was planning to merge with Zeneca,
another drug company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsys separation from her company,
the potential conflict of interest would be eliminated. At the same time, they
would be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the
problem. In September 1999, Tecson applied for a transfer in Glaxos milk
division, thinking that since Astra did not have a milk division, the potential
conflict of interest would be eliminated. His application was denied in view of
Glaxos least-movement-possible policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao
City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its
decision, but his request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought
the matter to Glaxos Grievance Committee. Glaxo, however, remained firm in
its decision and gave Tescon until February 7, 2000 to comply with the
transfer order. Tecson defied the transfer order and continued acting as
medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his
salary, but was not issued samples of products which were competing with
similar products manufactured by Astra. He was also not included in product
conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson
a separation pay of one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15, 2000, the National
Conciliation and Mediation Board (NCMB) rendered its Decisiondeclaring as
valid Glaxos policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxos right to transfer
Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals
assailing the NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review on the ground that the NCMB did not err in rendering

its Decision. The appellate court held that Glaxos policy prohibiting its
employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives.
[4]

Tecson
filed
a Motion
for
Reconsideration of
the
appellate
courts Decision, but the motion was denied by the appellate court in
its Resolution dated March 26, 2004.
[5]

Petitioners filed the instant petition, arguing therein that (i) the Court of
Appeals erred in affirming the NCMBs finding that the Glaxos policy
prohibiting its employees from marrying an employee of a competitor
company is valid; and (ii) the Court of Appeals also erred in not finding that
Tecson was constructively dismissed when he was transferred to a new sales
territory, and deprived of the opportunity to attend products seminars and
training sessions.
[6]

Petitioners contend that Glaxos policy against employees marrying

employees of competitor companies violates the equal protection clause of
the Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees
right to marry.
[7]

They also argue that Tecson was constructively dismissed as shown by

the following circumstances: (1) he was transferred from the Camarines SurCamarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he
suffered a diminution in pay, (3) he was excluded from attending seminars
and training sessions for medical representatives, and (4) he was prohibited
from promoting respondents products which were competing with Astras
products.
[8]

In its Comment on the petition, Glaxo argues that the company policy
prohibiting its employees from having a relationship with and/or marrying an
employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that
Tecsons reassignment from the Camarines Norte-Camarines Sur sales area
to the Butuan City-Surigao City and Agusan del Sur sales area does not
amount to constructive dismissal.
[9]

Glaxo insists that as a company engaged in the promotion and sale of

pharmaceutical products, it has a genuine interest in ensuring that its
employees avoid any activity, relationship or interest that may conflict with
their responsibilities to the company. Thus, it expects its employees to avoid
having personal or family interests in any competitor company which may
influence their actions and decisions and consequently deprive Glaxo of

legitimate profits. The policy is also aimed at preventing a competitor

company from gaining access to its secrets, procedures and policies.
[10]

It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor
companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based
on valid grounds.
[11]

According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra,

posed a real and potential conflict of interest. Astras products were in direct
competition with 67% of the products sold by Glaxo. Hence, Glaxos
enforcement of the foregoing policy in Tecsons case was a valid exercise of
its management prerogatives. In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but to
ask his wife to resign from Astra instead.
[12]

[13]

Glaxo also points out that Tecson can no longer question the assailed
company policy because when he signed his contract of employment, he was
aware that such policy was stipulated therein. In said contract, he also agreed
to resign from respondent if the management finds that his relationship with
an employee of a competitor company would be detrimental to the interests of
Glaxo.
[14]

Glaxo likewise insists that Tecsons reassignment to another sales area

and his exclusion from seminars regarding respondents new products did not
amount to constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from
the Camarines Sur-Camarines Norte sales area to the Butuan CitySurigao City and Agusan del Sur sales area.Glaxo asserts that in effecting the
reassignment, it also considered the welfare of Tecsons family. Since
Tecsons hometown was in Agusan del Sur and his wife traces her roots
to ButuanCity, Glaxo assumed that his transfer from the Bicol region to
the Butuan City sales area would be favorable to him and his family as he
would be relocating to a familiar territory and minimizing his travel expenses.
[15]

In addition, Glaxo avers that Tecsons exclusion from the seminar

concerning the new anti-asthma drug was due to the fact that said product
was in direct competition with a drug which was soon to be sold by Astra, and
hence, would pose a potential conflict of interest for him. Lastly, the delay in
Tecsons receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was

delivered to his new sales area instead of Naga City because the supplier
thought he already transferred to Butuan).
[16]

The Court is tasked to resolve the following issues: (1) Whether the Court
of Appeals erred in ruling that Glaxos policy against its employees marrying
employees from competitor companies is valid, and in not holding that said
policy violates the equal protection clause of the Constitution; (2) Whether
Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being
questioned by petitioners provides:
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of
competing drug companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from the Company as a matter
of Company policy.
[17]

The same contract also stipulates that Tecson agrees to abide by the
existing company rules of Glaxo, and to study and become acquainted with
such policies. In this regard, the Employee Handbook of Glaxo expressly
informs its employees of its rules regarding conflict of interest:
[18]

1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.

c. To avoid outside employment or other interests for income which would impair
their effective job performance.
d. To consult with Management on such activities or relationships that may lead to
conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity
with co-employees of competing drug companies are expected to disclose such
relationship to the Management. If management perceives a conflict or potential
conflict of interest, every effort shall be made, together by management and the
employee, to arrive at a solution within six (6) months, either by transfer to another
department in a non-counter checking position, or by career preparation toward
outside employment after Glaxo Wellcome. Employees must be prepared for possible
resignation within six (6) months, if no other solution is feasible.
[19]

No reversible error can be ascribed to the Court of Appeals when it ruled

that Glaxos policy prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management
prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo
only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor
to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair play.
[20]

[21]

As held in a Georgia, U.S.A case, it is a legitimate business practice to

guard business confidentiality and protect a competitive position by evenhandedly disqualifying from jobs male and female applicants or employees
who are married to a competitor. Consequently, the court ruled than an
employer that discharged an employee who was married to an employee of
an active competitor did not violate Title VII of the Civil Rights Act of
1964. The Court pointed out that the policy was applied to men and women
equally, and noted that the employers business was highly competitive and
that gaining inside information would constitute a competitive advantage.
[22]

[23]

The challenged company policy does not violate the equal protection
clause of the Constitution as petitioners erroneously suggest. It is a settled
principle that the commands of the equal protection clause are addressed only
to the state or those acting under color of its authority. Corollarily, it has
been held in a long array of U.S. Supreme Court decisions that the equal
protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful. The only exception occurs when the state in any
of its manifestations or actions has been found to have become entwined or
involved in the wrongful private conduct. Obviously, however, the exception
is not present in this case. Significantly, the company actually enforced the
policy after repeated requests to the employee to comply with the
policy. Indeed, the application of the policy was made in an impartial and
even-handed manner, with due regard for the lot of the employee.
[24]

[25]

[26]

[27]

In any event, from the wordings of the contractual provision and the policy
in its employee handbook, it is clear that Glaxo does not impose an absolute
prohibition against relationships between its employees and those of
competitor companies. Its employees are free to cultivate relationships with
and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that
may arise out of such relationships. As succinctly explained by the appellate
court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the individual. However, an
employees personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .
[28]

The Court of Appeals also correctly noted that the assailed company
policy which forms part of respondents Employee Code of Conduct and of its
contracts with its employees, such as that signed by Tecson, was made
known to him prior to his employment. Tecson, therefore, was aware of that

restriction when he signed his employment contract and when he entered into
a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into
a contract of employment with Glaxo, the stipulations therein have the force of
law between them and, thus, should be complied with in good faith. He is
therefore estopped from questioning said policy.
[29]

The Court finds no merit in petitioners contention that Tecson was

constructively dismissed when he was transferred from the Camarines NorteCamarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the companys seminar
on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. None of these conditions
are present in the instant case. The record does not show that Tecson was
demoted or unduly discriminated upon by reason of such transfer. As found by
the appellate court, Glaxo properly exercised its management prerogative in
reassigning Tecson to the Butuan City sales area:
[30]

. . . In this case, petitioners transfer to another place of assignment was merely in

keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties include
monitoring sales of Astra products, conducting sales drives, establishing and
furthering relationship with customers, collection, monitoring and managing Astras
inventoryshe therefore takes an active participation in the market war characterized as
it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioners sales territory covers Camarines Sur and Camarines Norte
while his wife is supervising a branch of her employer in Albay. The proximity of
their areas of responsibility, all in the same Bicol Region, renders the conflict of
interest not only possible, but actual, as learning by one spouse of the others market
strategies in the region would be inevitable. [Managements] appreciation of a conflict
of interest is therefore not merely illusory and wanting in factual basis
[31]

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations

Commission, which involved a complaint filed by a medical representative
against his employer drug company for illegal dismissal for allegedly
terminating his employment when he refused to accept his reassignment to a
new area, the Court upheld the right of the drug company to transfer or
[32]

reassign its employee in accordance with its operational demands and

requirements. The ruling of the Court therein, quoted hereunder, also finds
application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.
[33]

As noted earlier, the challenged policy has been implemented by Glaxo

impartially and disinterestedly for a long period of time. In the case at bar, the
record shows that Glaxo gave Tecson several chances to eliminate the
conflict of interest brought about by his relationship with Bettsy. When their
relationship was still in its initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his employment with the
company and on the companys interests. After Tecson married Bettsy, Glaxo
gave him time to resolve the conflict by either resigning from the company or
asking his wife to resign from Astra. Glaxo even expressed its desire to retain
Tecson in its employ because of his satisfactory performance and suggested
that he ask Bettsy to resign from her company instead. Glaxo likewise
acceded to his repeated requests for more time to resolve the conflict of
interest. When the problem could not be resolved after several years of
waiting, Glaxo was constrained to reassign Tecson to a sales area different
from that handled by his wife for Astra. Notably, the Court did not terminate
Tecson from employment but only reassigned him to another area where his
home province, Agusan del Sur, was included. In effecting Tecsons transfer,
Glaxo even considered the welfare of Tecsons family. Clearly, the foregoing
dispels any suspicion of unfairness and bad faith on the part of Glaxo.
[34]

WHEREFORE, the Petition is DENIED for lack of merit. Costs against

petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-46496

February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and

NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents.
Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial
Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.
LAUREL, J.:
The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled
case has filed a motion for reconsideration and moves that, for the reasons stated in his motion, we
reconsider the following legal conclusions of the majority opinion of this Court:
1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o
que no sea para una determinada, termina o bien por voluntad de cualquiera de las partes o
cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre en la
localidad o cunado se termine la obra;
2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya
colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos
por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser
empleados u obreros de la misma;
3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus
osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a
readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso, no es
culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del
Commonwealth, aunque su negativa a readmitir se deba a que dichos obreros pertenecen a
un determinado organismo obrero, puesto que tales ya han dejado deser empleados suyos
por terminacion del contrato en virtud del paro.
The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the
judgement rendered by the majority of this Court and the remanding of the case to the Court of
Industrial Relations for a new trial, and avers:
1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather
soles in ANG TIBAY making it necessary for him to temporarily lay off the members of the
National Labor Union Inc., is entirely false and unsupported by the records of the Bureau of
Customs and the Books of Accounts of native dealers in leather.
2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme
to systematically prevent the forfeiture of this bond despite the breach of his CONTRACT
with the Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re
supposed delay of leather soles from the States) was but a scheme to systematically prevent
the forfeiture of this bond despite the breach of his CONTRACT with the Philippine Army.

4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union
dominated by Toribio Teodoro, the existence and functions of which are illegal. (281 U.S.,
548, petitioner's printed memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to collective bargaining, majority rule
and elective representation are highly essential and indispensable. (Sections 2 and 5,
Commonwealth Act No. 213.)
6. That the century provisions of the Civil Code which had been (the) principal source of
dissensions and continuous civil war in Spain cannot and should not be made applicable in
interpreting and applying the salutary provisions of a modern labor legislation of American
origin where the industrial peace has always been the rule.
7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating
against the National Labor Union, Inc., and unjustly favoring the National Workers'
Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the respondents that even with the
exercise of due diligence they could not be expected to have obtained them and offered as
evidence in the Court of Industrial Relations.
9. That the attached documents and exhibits are of such far-reaching importance and effect
that their admission would necessarily mean the modification and reversal of the judgment
rendered herein.
The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the
respondent National Labor Union, Inc.
In view of the conclusion reached by us and to be herein after stead with reference to the motion for
a new trial of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary
to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed to dispose of
the motion for new trial of the respondent labor union. Before doing this, however, we deem it
necessary, in the interest of orderly procedure in cases of this nature, in interest of orderly procedure
in cases of this nature, to make several observations regarding the nature of the powers of the Court
of Industrial Relations and emphasize certain guiding principles which should be observed in the trial
of cases brought before it. We have re-examined the entire record of the proceedings had before the
Court of Industrial Relations in this case, and we have found no substantial evidence that the
exclusion of the 89 laborers here was due to their union affiliation or activity. The whole transcript
taken contains what transpired during the hearing and is more of a record of contradictory and
conflicting statements of opposing counsel, with sporadic conclusion drawn to suit their own views. It
is evident that these statements and expressions of views of counsel have no evidentiary value.
The Court of Industrial Relations is a special court whose functions are specifically stated in the law
of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated
judicial system of the nation. It is not intended to be a mere receptive organ of the Government.
Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and
deciding only cases that are presented to it by the parties litigant, the function of the Court of
Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and
dynamic. It not only exercises judicial or quasi-judicial functions in the determination of disputes
between employers and employees but its functions in the determination of disputes between
employers and employees but its functions are far more comprehensive and expensive. It has
jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question,

matter controversy or dispute arising between, and/or affecting employers and employees or
laborers, and regulate the relations between them, subject to, and in accordance with, the provisions
of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of prevention,
arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to cause
a strike or lockout, arising from differences as regards wages, shares or compensation, hours of
labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers,
provided that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty,
and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by
any or both of the parties to the controversy and certified by the Secretary of labor as existing and
proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court for the
sake of public interest. (Section 4,ibid.) It shall, before hearing the dispute and in the course of such
hearing, endeavor to reconcile the parties and induce them to settle the dispute by amicable
agreement. (Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall
investigate and study all industries established in a designated locality, with a view to determinating
the necessity and fairness of fixing and adopting for such industry or locality a minimum wage or
share of laborers or tenants, or a maximum "canon" or rental to be paid by the "inquilinos" or tenants
or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement
of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the more
effective system of official investigation and compulsory arbitration in order to determine specific
controversies between labor and capital industry and in agriculture. There is in reality here a
mingling of executive and judicial functions, which is a departure from the rigid doctrine of the
separation of governmental powers.
In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated
September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R.
No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of
Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act requires
it to "act according to justice and equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any technicalities or legal forms and shall not
be bound by any technical rules of legal evidence but may inform its mind in such manner as it may
deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not be restricted to the
specific relief claimed or demands made by the parties to the industrial or agricultural dispute, but
may include in the award, order or decision any matter or determination which may be deemed
necessary or expedient for the purpose of settling the dispute or of preventing further industrial or
agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court
have been especially regulated by the rules recently promulgated by the rules recently promulgated
by this Court to carry into the effect the avowed legislative purpose. The fact, however, that the
Court of Industrial Relations may be said to be free from the rigidity of certain procedural
requirements does not mean that it can, in justifiable cases before it, entirely ignore or disregard the
fundamental and essential requirements of due process in trials and investigations of an
administrative character. There are primary rights which must be respected even in proceedings of
this character:
(1) The first of these rights is the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit evidence in support thereof. In the
language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed.
1129, "the liberty and property of the citizen shall be protected by the rudimentary
requirements of fair play.
(2) Not only must the party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the tribunal must consider the
evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906,
80 law. ed. 1288.) In the language of this court inEdwards vs. McCoy, 22 Phil., 598, "the right

to adduce evidence, without the corresponding duty on the part of the board to consider it, is
vain. Such right is conspicuously futile if the person or persons to whom the evidence is
presented can thrust it aside without notice or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply
a necessity which cannot be disregarded, namely, that of having something to support it is a
nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This principle
emanates from the more fundamental is contrary to the vesting of unlimited power anywhere.
Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding or conclusion (City of Manila
vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the
evidence must be "substantial." (Washington, Virginia and Maryland Coach Co. v. national
labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means
such relevant evidence as a reasonable mind accept as adequate to support a conclusion."
(Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989;
National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; BallstonStillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The
statute provides that "the rules of evidence prevailing in courts of law and equity shall not be
controlling.' The obvious purpose of this and similar provisions is to free administrative
boards from the compulsion of technical rules so that the mere admission of matter which
would be deemed incompetent inn judicial proceedings would not invalidate the
administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct.
563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R.
Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and
Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable
flexibility in administrative procedure does not go far as to justify orders without a basis in
evidence having rational probative force. Mere uncorroborated hearsay or rumor does not
constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board,
59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"
(5) The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected. (Interstate Commence
Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by
confining the administrative tribunal to the evidence disclosed to the parties, can the latter be
protected in their right to know and meet the case against them. It should not, however,
detract from their duty actively to see that the law is enforced, and for that purpose, to use
the authorized legal methods of securing evidence and informing itself of facts material and
relevant to the controversy. Boards of inquiry may be appointed for the purpose of
investigating and determining the facts in any given case, but their report and decision are
only advisory. (Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations
may refer any industrial or agricultural dispute or any matter under its consideration or
advisement to a local board of inquiry, a provincial fiscal. a justice of the peace or any public
official in any part of the Philippines for investigation, report and recommendation, and may
delegate to such board or public official such powers and functions as the said Court of
Industrial Relations may deem necessary, but such delegation shall not affect the exercise of
the Court itself of any of its powers. (Section 10, ibid.)
(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the
views of a subordinate in arriving at a decision. It may be that the volume of work is such that
it is literally Relations personally to decide all controversies coming before them. In the
United States the difficulty is solved with the enactment of statutory authority authorizing

examiners or other subordinates to render final decision, with the right to appeal to board or
commission, but in our case there is no such statutory authority.
(7) The Court of Industrial Relations should, in all controversial questions, render its decision
in such a manner that the parties to the proceeding can know the various issues involved,
and the reasons for the decision rendered. The performance of this duty is inseparable from
the authority conferred upon it.
In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to
the alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A),
the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a
national way, a conclusion of law.
This result, however, does not now preclude the concession of a new trial prayed for the by
respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed by
Toribio Teodoro was but a scheme adopted to systematically discharged all the members of the
National Labor Union Inc., from work" and this avernment is desired to be proved by the petitioner
with the "records of the Bureau of Customs and the Books of Accounts of native dealers in leather";
that "the National Workers Brotherhood Union of Ang Tibay is a company or employer union
dominated by Toribio Teodoro, the existence and functions of which are illegal." Petitioner further
alleges under oath that the exhibits attached to the petition to prove his substantial avernments" are
so inaccessible to the respondents that even within the exercise of due diligence they could not be
expected to have obtained them and offered as evidence in the Court of Industrial Relations", and
that the documents attached to the petition "are of such far reaching importance and effect that their
admission would necessarily mean the modification and reversal of the judgment rendered herein."
We have considered the reply of Ang Tibay and its arguments against the petition. By and large,
after considerable discussions, we have come to the conclusion that the interest of justice would be
better served if the movant is given opportunity to present at the hearing the documents referred to
in his motion and such other evidence as may be relevant to the main issue involved. The legislation
which created the Court of Industrial Relations and under which it acts is new. The failure to grasp
the fundamental issue involved is not entirely attributable to the parties adversely affected by the
result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the
entire record of this case shall be remanded to the Court of Industrial Relations, with instruction that
it reopen the case, receive all such evidence as may be relevant and otherwise proceed in
accordance with the requirements set forth hereinabove. So ordered.
Avancea, C. J., Villa-Real, Imperial, Diaz, Concepcion and Moran, JJ., concur.

FIRST DIVISION
[G.R. No. 128845. June 1, 2000]
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS
(ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity
as the Secretary of Labor and Employment; HON. CRESENCIANO B.
TRAJANO in his capacity as the Acting Secretary of Labor and
Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.

DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of
private respondent School, mostly Filipinos, cry discrimination. We agree.
That the local-hires are paid more than their colleagues in other schools is, of
course, beside the point. The point is that employees should be given equal
pay for work of equal value. That is a principle long honored in this jurisdiction.
That is a principle that rests on fundamental notions of justice. That is the
principle we uphold today.
Private respondent International School, Inc. (the School, for short), pursuant
to Presidential Decree 732, is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary
residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to
[1]

employ its own teaching and management personnel selected by

it either locally or abroad, from Philippine or other nationalities,
such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have
been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of
its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.
The School employs four tests to determine whether a faculty member should
be classified as a foreign-hire or a local hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic allegiance?
d.....Was the individual hired abroad specifically to work in the
School and was the School responsible for bringing that individual
to the Philippines?
[2]

Should the answer to any of these queries point to the Philippines, the faculty
member is classified as a local hire; otherwise, he or she is deemed a foreignhire.
The School grants foreign-hires certain benefits not accorded local-hires.
These include housing, transportation, shipping costs, taxes, and home leave
travel allowance. Foreign-hires are also paid a salary rate twenty-five percent
(25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely:
(a) the "dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his
home country, leave his family and friends, and take the risk of
deviating from a promising career path-all for the purpose of
pursuing his profession as an educator, but this time in a foreign
land. The new foreign hire is faced with economic realities: decent
abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children,
adequate insurance against illness and death, and of course the
primary benefit of a basic salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again
with the same economic reality after his term: that he will
eventually and inevitably return to his home country where he will
have to confront the uncertainty of obtaining suitable employment
after a long period in a foreign land.
The compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in terms
of attracting competent professionals in the field of international
education.
[3]

When negotiations for a new collective bargaining agreement were held on

June 1995, petitioner International School Alliance of Educators, "a legitimate
labor union and the collective bargaining representative of all faculty
members" of the School, contested the difference in salary rates between
foreign and local-hires. This issue, as well as the question of whether foreignhires should be included in the appropriate bargaining unit, eventually caused
a deadlock between the parties.
[4]

On September 7, 1995, petitioner filed a notice of strike. The failure of the

National Conciliation and Mediation Board to bring the parties to a

compromise prompted the Department of Labor and Employment (DOLE) to

assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting
Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo
A. Quisumbing subsequently denied petitioner's motion for reconsideration in
an Order dated March 19, 1997. Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty
members, numbering 38 in all, with nationalities other than Filipino, who have
been hired locally and classified as local hires. The Acting Secretary of Labor
found that these non-Filipino local-hires received the same benefits as the
Filipino local-hires:
[5]

The compensation package given to local-hires has been shown to apply to

all, regardless of race. Truth to tell, there are foreigners who have been hired
locally and who are paid equally as Filipino local hires.
[6]

The Acting Secretary upheld the point-of-hire classification for the distinction
in salary rates:
The principle "equal pay for equal work" does not find application
in the present case. The international character of the School
requires the hiring of foreign personnel to deal with different
nationalities and different cultures, among the student population.
We also take cognizance of the existence of a system of salaries
and benefits accorded to foreign hired personnel which system is
universally recognized. We agree that certain amenities have to
be provided to these people in order to entice them to render their
services in the Philippines and in the process remain competitive
in the international market.
Furthermore, we took note of the fact that foreign hires have
limited contract of employment unlike the local hires who enjoy
security of tenure. To apply parity therefore, in wages and other
benefits would also require parity in other terms and conditions of
employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the

conditions and provisions for salary and professional
compensation wherein the parties agree as follows:
All members of the bargaining unit shall be
compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School
has the discretion to recruit and hire expatriate
teachers from abroad, under terms and conditions
that are consistent with accepted international
practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the
Overseas Recruited Staff (OSRS) salary schedule.
The 25% differential is reflective of the agreed value
of system displacement and contracted status of the
OSRS as differentiated from the tenured status of
Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition
of the difference in the status of two types of employees, hence,
the difference in their salaries.
The Union cannot also invoke the equal protection clause to
justify its claim of parity. It is an established principle of
constitutional law that the guarantee of equal protection of the
laws is not violated by legislation or private covenants based on
reasonable classification. A classification is reasonable if it is
based on substantial distinctions and apply to all members of the
same class. Verily, there is a substantial distinction between
foreign hires and local hires, the former enjoying only a limited
tenure, having no amenities of their own in the Philippines and
have to be given a good compensation package in order to attract
them to join the teaching faculty of the School.
[7]

We cannot agree.
That public policy abhors inequality and discrimination is beyond contention.
Our Constitution and laws reflect the policy against these evils. The
Constitution in the Article on Social Justice and Human Rights exhorts
[8]

Congress to "give highest priority to the enactment of measures that protect

and enhance the right of all people to human dignity, reduce social, economic,
and political inequalities." The very broad Article 19 of the Civil Code requires
every person, "in the exercise of his rights and in the performance of his
duties, [to] act with justice, give everyone his due, and observe honesty and
good faith."
International law, which springs from general principles of law, likewise
proscribes discrimination. General principles of law include principles of
equity, i.e., the general principles of fairness and justice, based on the test of
what is reasonable. The Universal Declaration of Human Rights, the
International Covenant on Economic, Social, and Cultural Rights, the
International Convention on the Elimination of All Forms of Racial
Discrimination, the Convention against Discrimination in Education, the
Convention (No. 111) Concerning Discrimination in Respect of Employment
and Occupation - all embody the general principle against discrimination, the
very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.
[9]

[10]

[11]

[12]

[13]

[14]

[15]

[16]

In the workplace, where the relations between capital and labor are often
skewed in favor of capital, inequality and discrimination by the employer are
all the more reprehensible.
The Constitution specifically provides that labor is entitled to "humane
conditions of work." These conditions are not restricted to the physical
workplace - the factory, the office or the field - but include as well the manner
by which employers treat their employees.
[17]

The Constitution also directs the State to promote "equality of employment

opportunities for all." Similarly, the Labor Code provides that the State shall
"ensure equal work opportunities regardless of sex, race or creed." It would be
an affront to both the spirit and letter of these provisions if the State, in spite of
its primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms and
conditions of employment.
[18]

[19]

[20]

Discrimination, particularly in terms of wages, is frowned upon by the Labor

Code. Article 135, for example, prohibits and penalizes the payment of
lesser compensation to a female employee as against a male employee for
work of equal value. Article 248 declares it an unfair labor practice for an
employer to discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.
[21]

Notably, the International Covenant on Economic, Social, and Cultural Rights,

supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of
work, which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum,
with:
i.....Fair wages and equal remuneration for work of
equal value without distinction of any kind, in
particular women being guaranteed conditions of work
not inferior to those enjoyed by men, with equal pay
for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the
long honored legal truism of "equal pay for equal work." Persons who work
with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. This rule applies to the
School, its "international character" notwithstanding.
[22]

The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreign-hires. The Court finds this argument a
little cavalier. If an employer accords employees the same position and rank,
the presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer pays
one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to
injury. The employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly.
[23]

The employer in this case has failed to discharge this burden. There is no
evidence here that foreign-hires perform 25% more efficiently or effectively
than the local-hires. Both groups have similar functions and responsibilities,
which they perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their
domicile to rationalize the distinction in salary rates without violating the
principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or

recompense for services performed." Similarly, the Philippine Legal
Encyclopedia states that "salary" is the "[c]onsideration paid at regular
intervals for the rendering of services." In Songco v. National Labor
Relations Commission, we said that:
[24]

"salary" means a recompense or consideration made to a person

for his pains or industry in another man's business. Whether it be
derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of
compensation for services rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries
should not be used as an enticement to the prejudice of local-hires. The localhires perform the same services as foreign-hires and they ought to be paid the
same salaries as the latter. For the same reason, the "dislocation factor" and
the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits accorded them
which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and
promote their welfare," "to afford labor full protection." The State, therefore,
has the right and duty to regulate the relations between labor and
capital. These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements included,
must yield to the common good. Should such contracts contain stipulations
that are contrary to public policy, courts will not hesitate to strike down these
stipulations.
[25]

[26]

[27]

[28]

In this case, we find the point-of-hire classification employed by respondent

School to justify the distinction in the salary rates of foreign-hires and local
hires to be an invalid classification. There is no reasonable distinction
between the services rendered by foreign-hires and local-hires. The practice
of the School of according higher salaries to foreign-hires contravenes public
policy and, certainly, does not deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same bargaining
unit as the local-hires.

A bargaining unit is "a group of employees of a given employer, comprised of

all or less than all of the entire body of employees, consistent with equity to
the employer indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the
law." The factors in determining the appropriate collective bargaining unit are
(1) the will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status. The basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the combination which will
best assure to all employees the exercise of their collective bargaining rights.
[29]

[30]

[31]

It does not appear that foreign-hires have indicated their intention to be

grouped together with local-hires for purposes of collective bargaining. The
collective bargaining history in the School also shows that these groups were
always treated separately. Foreign-hires have limited tenure; local-hires enjoy
security of tenure. Although foreign-hires perform similar functions under the
same working conditions as the local-hires, foreign-hires are accorded certain
benefits not granted to local-hires. These benefits, such as housing,
transportation, shipping costs, taxes, and home leave travel allowance, are
reasonably related to their status as foreign-hires, and justify the exclusion of
the former from the latter. To include foreign-hires in a bargaining unit with
local-hires would not assure either group the exercise of their respective
collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby
GRANTED IN PART. The Orders of the Secretary of Labor and Employment
dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET
ASIDE insofar as they uphold the practice of respondent School of according
foreign-hires higher salaries than local-hires.
SO ORDERED.
Puno, and Pardo, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.
Ynares-Santiago, J., on leave.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION
G.R. No. 77372 April 29, 1988
LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN A. MESINA, ALEXANDER R.
REGUYAL, JOCELYN P. CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA,
ERNESTOC. BLAS, JR., ELPEDIO M. ALMAZAN, KARL CAESAR R. RIMANDO, petitioner,
vs.
COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondent.
Balgos & Perez Law Offices for petitioners.
The Solicitor General for respondents.

GANCAYCO, J.:
Is the Regional Trial Court of the same category as the Professional Regulation Commission so that
it cannot pass upon the validity of the administrative acts of the latter? Can this Commission lawfully
prohibit the examiness from attending review classes, receiving handout materials, tips, or the like
three (3) days before the date of the examination? Theses are the issues presented to the court by
this petition for certiorari to review the decision of the Court of Appeals promulagated on January 13,
1987, in CA-G.R. SP No. 10598, * declaring null and void the other dated Ocober 21, 1986 issued by the Regional Trial Court of
Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo L. Lupangco, et al. vs. Professional Regulation Commission."

The records shows the following undisputed facts:

On or about October 6, 1986, herein respondent Professional Regulation Commission (PRC) issued
Resolution No. 105 as parts of its "Additional Instructions to Examiness," to all those applying for
admission to take the licensure examinations in accountancy. The resolution embodied the following
pertinent provisions:
No examinee shall attend any review class, briefing, conference or the like
conducted by, or shall receive any hand-out, review material, or any tip from any
school, college or university, or any review center or the like or any reviewer,
lecturer, instructor official or employee of any of the aforementioned or similars
institutions during the three days immediately proceeding every examination day
including examination day.
Any examinee violating this instruction shall be subject to the sanctions prescribed by
Sec. 8, Art. III of the Rules and Regulations of the Commission. 1
On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations
in accountancy schedule on October 25 and November 2 of the same year, filed on their own behalf
of all others similarly situated like them, with the Regional Trial Court of Manila, Branch XXXII, a
complaint for injuction with a prayer with the issuance of a writ of a preliminary injunction against
respondent PRC to restrain the latter from enforcing the above-mentioned resolution and to declare
the same unconstitution.

Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court
had no jurisdiction to review and to enjoin the enforcement of its resolution. In an Order of October
21, 1987, the lower court declared that it had jurisdiction to try the case and enjoined the respondent
commission from enforcing and giving effect to Resolution No. 105 which it found to be
unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a
petition for the nullification of the above Order of the lower court. Said petiton was granted in the
Decision of the Court of Appeals promulagated on January 13, 1987, to wit:
WHEREFORE, finding the petition meritorious the same is hereby GRANTED and
the other dated October 21, 1986 issued by respondent court is declared null and
void. The respondent court is further directed to dismiss with prejudice Civil Case No.
86-37950 for want of jurisdiction over the subject matter thereof. No cost in this
instance.
SO ORDERED. 2
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to
entertain the case and to enjoin the enforcement of the Resolution No. 105, stated as its basis its
conclusion that the Professional Regulation Commission and the Regional Trial Court are co-equal
bodies. Thus it held
That the petitioner Professional Regulatory Commission is at least a co-equal body
with the Regional Trial Court is beyond question, and co-equal bodies have no power
to control each other or interfere with each other's acts. 3
To strenghten its position, the Court of Appeals relied heavily on National Electrification
Administration vs. Mendoza, 4 which cites Pineda vs. Lantin 5 and Philippine Pacific Fishing, Inc. vs.
Luna, 6 where this Court held that a Court of First Instance cannot interfere with the orders of the
Securities and Exchange Commission, the two being co-equal bodies.
After a close scrutiny of the facts and the record of this case,
We rule in favor of the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this
Court ruled that the Court of First Instance could not interfere with the orders of the Securities and
Exchange Commission was that this was so provided for by the law. In Pineda vs. Lantin, We
explained that whenever a party is aggrieved by or disagree with an order or ruling of the Securities
and Exchange Commission, he cannot seek relief from courts of general jurisdiction since under the
Rules of Court and Commonwealth Act No. 83, as amended by Republic Act No. 635, creating and
setting forth the powers and functions of the old Securities and Exchange Commission, his remedy
is to go the Supreme Court on a petition for review. Likewise, in Philippine Pacific Fishing Co., Inc.
vs. Luna, it was stressed that if an order of the Securities and Exchange Commission is erroneous,
the appropriate remedy take is first, within the Commission itself, then, to the Supreme Court as
mandated in Presidential Decree No. 902-A, the law creating the new Securities and Exchange
Commission. Nowhere in the said cases was it held that a Court of First Instance has no jurisdiction
over all other government agencies. On the contrary, the ruling was specifically limited to the
Securities and Exchange Commission.

The respondent court erred when it place the Securities and Exchange Commission and the
Professional Regulation Commsision in the same category. As alraedy mentioned, with respect to
the Securities and Exchange Commission, the laws cited explicitly provide with the procedure that
need be taken when one is aggrieved by its order or ruling. Upon the other hand, there is no law
providing for the next course of action for a party who wants to question a ruling or order of the
Professional Regulation Commission. Unlike Commonwealth Act No. 83 and Presidential Decree
No. 902-A, there is no provision in Presidential Decree No. 223, creating the Professional Regulation
Commission, that orders or resolutions of the Commission are appealable either to the Court of
Appeals or to theSupreme Court. Consequently, Civil Case No. 86-37950, which was filed in order to
enjoin the enforcement of a resolution of the respondent Professional Regulation Commission
alleged to be unconstitutional, should fall within the general jurisdiction of the Court of First Instance,
now the Regional Trial Court. 7
What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is
attached to the Office of the President for general direction and coordination. 8 Well settled in our
jurisprudence is the view that even acts of the Office of the President may be reviewed by the Court of
First Instance (now the Regional Trial Court). In Medalla vs. Sayo, 9 this rule was thoroughly propounded
on, to wit:
In so far as jurisdiction of the Court below to review by certiorari decisions and/or
resolutions of the Civil Service Commission and of the residential Executive
Asssistant is concerned, there should be no question but that the power of judicial
review should be upheld. The following rulings buttress this conclusion:
The objection to a judicial review of a Presidential act arises from a
failure to recognize the most important principle in our system of
government, i.e., the separation of powers into three co-equal
departments, the executives, the legislative and the judicial, each
supreme within its own assigned powers and duties. When a
presidential act is challenged before the courts of justice, it is not to
be implied therefrom that the Executive is being made subject and
subordinate to the courts. The legality of his acts are under judicial
review, not because the Executive is inferior to the courts, but
because the law is above the Chief Executive himself, and the courts
seek only to interpret, apply or implement it (the law). A judicial
review of the President's decision on a case of an employee decided
by the Civil Service Board of Appeals should be viewed in this light
and the bringing of the case to the Courts should be governed by the
same principles as govern the jucucial review of all administrative
acts of all administrative officers. 10
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the
Executive Office"' of the Department of Education and Culture issued Memorandum Order No. 93 under
the authority of then Secretary of Education Juan Manuel. As in this case, a complaint for injunction was
filed with the Court of First Instance of Lanao del Norte because, allegedly, the enforcement of the
circular would impair some contracts already entered into by public school teachers. It was the contention
of petitioner therein that "the Court of First Instance is not empowered to amend, reverse and modify what
is otherwise the clear and explicit provision of the memorandum circular issued by the Executive Office
which has the force and effect of law." In resolving the issue, We held:
... We definitely state that respondent Court lawfully acquired jurisdiction in Civil
Case No. II-240 (8) because the plaintiff therein asked the lower court for relief, in the
form of injunction, in defense of a legal right (freedom to enter into contracts) . . . . .

Hence there is a clear infringement of private respondent's constitutional right to

enter into agreements not contrary to law, which might run the risk of being violated
by the threatened implementation of Executive Office Memorandum Circular No. 93,
dated February 5, 1968, which prohibits, with certain exceptions, cashiers and
disbursing officers from honoring special powers of attorney executed by the payee
employees. The respondent Court is not only right but duty bound to take cognizance
of cases of this nature wherein a constitutional and statutory right is allegedly
infringed by the administrative action of a government office. Courts of first Instance
have original jurisdiction over all civil actions in which the subject of the litigation is
not capable of pecuniary estimation (Sec. 44, Republic Act 296, as
amended). 12 (Emphasis supplied.)
In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the
authority to decide on the validity of a city tax ordinance even after its validity had been contested before
the Secretary of Justice and an opinion thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the
respondent Professional Regulation Commission, should be exempted from the general jurisdiction
of the Regional Trial Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it
is the Court of Appeals which has jurisdiction over the case. The said law provides:
SEC. 9. Jurisdiction. The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided for in
Section 9, paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which resulted from
proceedings wherein the administrative body involved exercised its quasi-judicial functions. In
Black's Law Dictionary, quasi-judicial is defined as a term applied to the action, discretion, etc., of
public administrative officers or bodies required to investigate facts, or ascertain the existence of
facts, hold hearings, and draw conclusions from them, as a basis for their official action, and to
exercise discretion of a judicial nature. To expound thereon, quasi-judicialadjudication would mean a
determination of rights, privileges and duties resulting in a decision or order which applies to a
specific situation . 14 This does not cover rules and regulations of general applicability issued by the
administrative body to implement its purely administrative policies and functions like Resolution No. 105
which was adopted by the respondent PRC as a measure to preserve the integrity of licensure
examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case,
the issue presented was whether or not the Court of First Instance had jurisdiction over a case involving
an order of the Commission on Elections awarding a contract to a private party which originated from an

invitation to bid. The said issue came about because under the laws then in force, final awards,
judgments, decisions or orders of the Commission on Elections fall within the exclusive jurisdiction of the
Supreme Court by way of certiorari. Hence, it has been consistently held that "it is the Supreme Court, not
the Court of First Instance, which has exclusive jurisdiction to review on certiorari final decisions, orders,
or rulings of the Commission on Elections relative to the conduct of elections and the enforcement of
election laws."16

As to whether or not the Court of First Instance had jurisdiction in saidcase, We said:
We are however, far from convinced that an order of the COMELEC awarding a
contract to a private party, as a result of its choice among various proposals
submitted in response to its invitation to bid comes within the purview of a "final
order" which is exclusively and directly appealable to this court on certiorari. What is
contemplated by the term "final orders, rulings and decisions, of the COMELEC
reviewable by certiorari by the Supreme Court as provided by law are those rendered
in actions or proceedings before the COMELEC and taken cognizance of by the said
body in the exercise of its adjudicatory or quasi-judicial powers. (Emphasis supplied.)
xxx xxx xxx
We agree with petitioner's contention that the order of the Commission granting the
award to a bidder is not an order rendered in a legal controversy before it wherein
the parties filed their respective pleadings and presented evidence after which the
questioned order was issued; and that this order of the commission was issued
pursuant to its authority to enter into contracts in relation to election purposes. In
short, the COMELEC resolution awarding the contract in favor of Acme was not
issued pursuant to its quasi-judicial functions but merely as an incident of its inherent
administrative functions over the conduct of elections, and hence, the said resolution
may not be deemed as a "final order reviewable by certiorari by the Supreme
Court. Being non-judicial in character, no contempt order may be imposed by the
COMELEC from said order, and no direct and exclusive appeal by certiorari to this
Tribunal lie from such order. Any question arising from said order may be well taken
in an ordinary civil action before the trial courts. (Emphasis supplied.) 17
One other case that should be mentioned in this regard is Salud vs. Central Bank of the
Philippines. 18 Here, petitioner Central Bank, like respondent in this case, argued that under Section 9,
paragraph 3 of B.P. Blg. 129, orders of the Monetary Board are appealable only to the Intermediate
Appellate Court. Thus:
The Central Bank and its Liquidator also postulate, for the very first time, that the
Monetary Board is among the "quasi-judicial ... boards" whose judgments are within
the exclusive appellate jurisdiction of the IAC; hence, it is only said Court, "to the
exclusion of the Regional Trial Courts," that may review the Monetary Board's
resolutions. 19
Anent the posture of the Central Bank, We made the following pronouncement:
The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over
resolution or orders of the Monetary Board. No law prescribes any mode of appeal
from the Monetary Board to the IAC. 20

In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case
No. 86-37950 and enjoin the respondent PRC from enforcing its resolution.
Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for
all the validity of Resolution No. 105 so as to provide the much awaited relief to those who are and
will be affected by it.
Of course, We realize that the questioned resolution was adopted for a commendable purpose which
is "to preserve the integrity and purity of the licensure examinations." However, its good aim cannot
be a cloak to conceal its constitutional infirmities. On its face, it can be readily seen that it is
unreasonable in that an examinee cannot even attend any review class, briefing, conference or the
like, or receive any hand-out, review material, or any tip from any school, collge or university, or any
review center or the like or any reviewer, lecturer, instructor, official or employee of any of the
aforementioned or similar institutions . ... 21
The unreasonableness is more obvious in that one who is caught committing the prohibited acts
even without any ill motives will be barred from taking future examinations conducted by the
respondent PRC. Furthermore, it is inconceivable how the Commission can manage to have a
watchful eye on each and every examinee during the three days before the examination period.
It is an aixiom 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 the end in view. If shown to bear no reasonable relation to the
purposes for which they are authorized to be issued, then they must be held to be invalid. 22
Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees' right to
liberty guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees
as to how they should prepare themselves for the licensure examinations. They cannot be restrained
from taking all the lawful steps needed to assure the fulfillment of their ambition to become public
accountants. They have every right to make use of their faculties in attaining success in their
endeavors. They should be allowed to enjoy their freedom to acquire useful knowledge that will
promote their personal growth. As defined in a decision of the United States Supreme Court:
The term "liberty" means more than mere freedom from physical restraint or the
bounds of a prison. It means freedom to go where one may choose and to act in
such a manner not inconsistent with the equal rights of others, as his judgment may
dictate for the promotion of his happiness, to pursue such callings and vocations as
may be most suitable to develop his capacities, and giv to them their highest
enjoyment. 23
Another evident objection to Resolution No. 105 is that it violates the academic freedom of the
schools concerned. Respondent PRC cannot interfere with the conduct of review that review schools
and centers believe would best enable their enrolees to meet the standards required before
becoming a full fledged public accountant. Unless the means or methods of instruction are clearly
found to be inefficient, impractical, or riddled with corruption, review schools and centers may not be
stopped from helping out their students. At this juncture, We call attention to Our pronouncement
in Garcia vs. The Faculty Admission Committee, Loyola School of Theology, 24 regarding academic
freedom to wit:
... It would follow then that the school or college itself is possessed of such a right. It
decides for itself its aims and objectives and how best to attain them. It is free from
outside coercion or interference save possibly when the overriding public welfare

calls for some restraint. It has a wide sphere of autonomy certainly extending to the
choice of students. This constitutional provision is not to be construed in a niggardly
manner or in a grudging fashion.
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 dayswhen 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 ride 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. These are all within the powers of the respondent commission as
provided for in Presidential Decree No. 223. But by all means the right and freedom of the
examinees to avail of all legitimate means to prepare for the examinations should not be curtailed.
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of
Appeals in CA-G.R. SP No. 10591 and another judgment is hereby rendered declaring Resolution
No. 105 null and void and of no force and effect for being unconstitutional. This decision is
immediately executory. No costs.
SO ORDERED.
Narvasa and Cruz, JJ., concur.
Grio-Aquino, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-38429 June 30, 1988
CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants,
vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and
the CITY OF BUTUAN, respondents-appellees.
Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.
The City Legal Officer for respondents-appeliees.

GANCAYCO, J.:

At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640
passed by the Municipal Board of the City of Butuan on April 21, 1969, the title and text of which are
reproduced below:
ORDINANCE--640
ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR
CORPORATION ENGAGED IN THE BUSINESS OF SELLING ADMISSION
TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS, GAMES,
CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN BETWEEN
SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR
TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF
THE SAID TICKET
xxx xxx xxx
Be it ordained by the Municipal Board of the City of Butuan in session assembled,
that:
SECTION 1It shall be unlawful for any person, group of persons, entity, or
corporation engaged in the business of selling admission tickets to any movie or
other public exhibitions, games, contests, or other performances to require children
between seven (7) and twelve (12) years of age to pay full payment for admission
tickets intended for adults but should charge only one-half of the value of the said
tickets.
SECTION 2Any person violating the provisions of this Ordinance shall upon
conviction be punished by a fine of not less than TWO HUNDRED PESOS (P200.00)
but not more than SIX HUNDRED PESOS (P600.00) or an imprisonment of not less
than TWO (2) MONTHS or not more than SIX (6) MONTHS or both such firm and
imprisonment in the discretion of the Court.
If the violator be a firm or corporation the penalty shall be imposed upon the
Manager, Agent or Representative of such firm or corporation.
SECTION 3This ordinance shall take effect upon its approval.
Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya and
Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively. Aggrieved by the
effect of Ordinance No. 640, they filed a complaint before the Court of First Instance of Agusan del
Norte and Butuan City docketed as Special Civil Case No. 237 on June 30, 1969 praying, inter alia,
that the subject ordinance be declared unconstitutional and, therefore, void and unenforceable. 1
Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14, 1969 by the court
a quo enjoining the respondent City of Butuan and its officials from enforcing Ordinance No. 640. 3 On
July 29, 1969, respondents filed their answer sustaining the validity of the ordinance. 4
On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the respondent
court rendered its decision, 6 the dispositive part of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor of the
respondents and against the petitioners, as follows:
1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid:
Provided, however, that the fine for a single offense shall not exceed TWO
HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep. Act
No. 523;
2. Dissolving the restraining order issued by this Court; and;
3. Dismissing the complaint, with costs against the petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which was denied in
a resolution of the said court dated November 10, 1973. 9
Hence, this petition.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra
vires and an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board to enact
as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of Butuan, which
states:
Sec. 15. General powers and duties of the Board Except as otherwise provided by
law, and subject to the conditions and limitations thereof, the Municipal Board shall
have the following legislative powers:
xxx xxx xxx
(n) To regulate and fix the amount of the license fees for the following; . . . theaters,
theatrical performances, cinematographs, public exhibitions and all other
performances and places of amusements ...
xxx xxx xxx
Respondent City of Butuan, on the other hand, attempts to justify the enactment of the ordinance by
invoking the general welfare clause embodied in Section 15 (nn) of the cited law, which provides:
(nn) To enact all ordinances it may deem necessary and proper for the sanitation and
safety, the furtherance of the prosperity, and the promotion of the morality, peace,
good order, comfort, convenience, and general welfare of the city and its inhabitants,
and such others as may be necessary to carry into effect and discharge the powers
and duties conferred by this Act, and to fix the penalties for the violation of the
ordinances, which shall not exceed a two hundred peso fine or six months
imprisonment, or both such fine and imprisonment, for a single offense.
We can see from the aforecited Section 15(n) that the power to regulate and fix the amount of
license fees for theaters, theatrical performances, cinematographs, public exhibitions and other

places of amusement has been expressly granted to the City of Butuan under its charter. But the
question which needs to be resolved is this: does this power to regulate include the authority to
interfere in the fixing of prices of admission to these places of exhibition and amusement whether
under its general grant of power or under the general welfare clause as invoked by the City?
This is the first time this Court is confronted with the question of direct interference by the local
government with the operation of theaters, cinematographs and the like to the extent of fixing the
prices of admission to these places. Previous decisions of this Court involved the power to impose
license fees upon businesses of this nature as a corollary to the power of the local government to
regulate them. Ordinances which required moviehouses or theaters to increase the price of their
admission tickets supposedly to cover the license fees have been held to be invalid for these
impositions were considered as not merely license fees but taxes for purposes of revenue and not
regulation which the cities have no power to exact, 10 unless expressly granted by its charter. 11
Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was interpreted to
include the power to control, to govern and to restrain, it would seem that under its power to regulate
places of exhibitions and amusement, the Municipal Board of the City of Butuan could make proper police
regulations as to the mode in which the business shall be exercised.
While in a New York case, 13 an ordinance which regulates the business of selling admission tickets to
public exhibitions or performances by virtue of the power of cities under the General City Law "to maintain
order, enforce the laws, protect property and preserve and care for the safety, health, comfort and
general welfare of the inhabitants of the city and visitors thereto; and for any of said purposes, to regulate
and license occupations" was considered not to be within the scope of any duty or power implied in the
charter. It was held therein that the power of regulation of public exhibitions and places of amusement
within the city granted by the charter does not carry with it any authority to interfere with the price of
admission to such places or the resale of tickets or tokens of admission.
In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other
places of public exhibition are subject to regulation by the municipal council in the exercise of
delegated police power by the local government. 14 Thus, in People v. Chan, 15 an ordinance of the City
of Manila prohibiting first run cinematographs from selling tickets beyond their seating capacity was
upheld as constitutional for being a valid exercise of police power. Still in another case, 16 the validity of
an ordinance of the City of Bacolod prohibiting admission of two or more persons in moviehouses and
other amusement places with the use of only one ticket was sustained as a valid regulatory police
measure not only in the interest of preventing fraud in so far as municipal taxes are concerned but also in
accordance with public health, public safety, and the general welfare.
The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question
under its power to regulate embodied in Section 15(n), now invokes the police power as delegated to
it under the general welfare clause to justify the enactment of said ordinance.
To invoke the exercise of police power, not only must it appear that the interest of the public
generally requires an interference with private rights, but the means adopted must be reasonably
necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. 17 The
legislature may not, under the guise of protecting the public interest, arbitrarily interfere with private
business, or impose unusual and unnecessary restrictions upon lawful occupations. In other words, the
determination as to what is a proper exercise of its police power is not final or conclusive, but is subject to
the supervision of the courts. 18
Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for
being oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the

right of persons to enter into contracts, considering that the theater owners are bound under a
contract with the film owners for just admission prices for general admission, balcony and lodge.
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of Manila, 19 this
Court held:
The authority of municipal corporations to regulate is essentially police power,
Inasmuch as the same generally entails a curtailment of the liberty, the rights and/or
the property of persons, which are protected and even guaranteed by the
Constitution, the exercise of police power is necessarily subject to a qualification,
limitation or restriction demanded by the regard, the respect and the obedience due
to the prescriptions of the fundamental law, particularly those forming part of the
Constitution of Liberty, otherwise known as the Bill of Rights the police power
measure must be reasonable. In other words, individual rights may be adversely
affected by the exercise of police power to the extent only and only to the extent-that may be fairly required by the legitimate demands of public interest or public
welfare.
What is the reason behind the enactment of Ordinance No. 640?
A reading of the minutes of the regular session of the Municipal Board when the ordinance in
question was passed shows that a certain Councilor Calo, the proponent of the measure, had taken
into account the complaints of parents that for them to pay the full price of admission for their
children is too financially burdensome.
The trial court advances the view that "even if the subject ordinance does not spell out its raison
d'etre in all probability the respondents were impelled by the awareness that children are entitled to
share in the joys of their elders, but that considering that, apart from size, children between the ages
of seven and twelve cannot fully grasp the nuance of movies or other public exhibitions, games,
contests or other performances, the admission prices with respect to them ought to be reduced. 19a
We must bear in mind that there must be public necessity which demands the adoption of proper
measures to secure the ends sought to be attained by the enactment of the ordinance, and the large
discretion is necessarily vested in the legislative authority to determine not only what the interests of
the public require, but what measures are necessary for the protection of such interests. 20 The
methods or means used to protect the public health, morals, safety or welfare, must have some relation to
the end in view, for under the guise of the police power, personal rights and those pertaining to private
property will not be permitted to be arbitralily invaded by the legislative department. 21
We agree with petitioners that the ordinance is not justified by any necessity for the public interest.
The police power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. 22 The evident purpose of the ordinance
is to help ease the burden of cost on the part of parents who have to shell out the same amount of money
for the admission of their children, as they would for themselves, A reduction in the price of admission
would mean corresponding savings for the parents; however, the petitioners are the ones made to bear
the cost of these savings. The ordinance does not only make the petitioners suffer the loss of earnings
but it likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out, there will
be difficulty in its implementation because as already experienced by petitioners since the effectivity of
the ordinance, children over 12 years of age tried to pass off their age as below 12 years in order to avail
of the benefit of the ordinance. The ordinance does not provide a safeguard against this undesirable
practice and as such, the respondent City of Butuan now suggests that birth certificates be exhibited by
movie house patrons to prove the age of children. This is, however, not at all practicable. We can see that
the ordinance is clearly unreasonable if not unduly oppressive upon the business of petitioners.

Moreover, there is no discernible relation between the ordinance and the promotion of public health,
safety, morals and the general welfare.

Respondent City of Butuan claims that it was impelled to protect the youth from the pernicious
practice of movie operators and other public exhibitions promoters or the like of demanding equal
price for their admission tickets along with the adults. This practice is allegedly repugnant and
unconscionable to the interest of the City in the furtherance of the prosperity, peace, good order,
comfort, convenience and the general well-being of its inhabitants.
There is nothing pernicious in demanding equal price for both children and adults. The petitioners
are merely conducting their legitimate businesses. The object of every business entrepreneur is to
make a profit out of his venture. There is nothing immoral or injurious in charging the same price for
both children and adults. In fact, no person is under compulsion to purchase a ticket. It is a totally
voluntary act on the part of the purchaser if he buys a ticket to such performances.
Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to lessen
the economic burden of parents whose minor children are lured by the attractive nuisance being
maintained by the petitioners. Respondent further alleges that by charging the full price, the children
are being exploited by movie house operators. We fail to see how the children are exploited if they
pay the full price of admission. They are treated with the same quality of entertainment as the adults.
The supposition of the trial court that because of their age children cannot fully grasp the nuances of
such entertainment as adults do fails to convince Us that the reduction in admission ticket price is
justifiable. In fact, by the very claim of respondent that movies and the like are attractive nuisances,
it is difficult to comprehend why the municipal board passed the subject ordinance. How can the
municipal authorities consider the movies an attractive nuisance and yet encourage parents and
children to patronize them by lowering the price of admission for children? Perhaps, there is some
,truth to the argument of petitioners that Ordinance No. 640 is detrimental to the public good and the
general welfare of society for it encourages children of tender age to frequent the movies, rather
than attend to their studies in school or be in their homes.
Moreover, as a logical consequence of the ordinance, movie house and theater operators will be
discouraged from exhibiting wholesome movies for general patronage, much less children's pictures
if only to avoid compliance with the ordinance and still earn profits for themselves. For after all, these
movie house and theater operators cannot be compelled to exhibit any particular kind of film except
those films which may be dictated by public demand and those which are restricted by censorship
laws. So instead of children being able to share in the joys of their elders as envisioned by the trial
court, there will be a dearth of wholesome and educational movies for them to enjoy.
There are a number of cases decided by the Supreme Court and the various state courts of the
United States which upheld the right of the proprietor of a theater to fix the price of an admission
ticket as against the right of the state to interfere in this regard and which We consider applicable to
the case at bar.
A theater ticket has been described to be either a mere license, revocable at the will of the proprietor
of the theater or it may be evidence of a contract whereby, for a valuable consideration, the
purchaser has acquired the right to enter the theater and observe the performance on condition that
he behaves properly. 23 Such ticket, therefore, represents a right, Positive or conditional, as the case
may be, according to the terms of the original contract of sale. This right is clearly a right of property. The
ticket which represents that right is also, necessarily, a species of property. As such, the owner thereof, in
the absence of any condition to the contrary in the contract by which he obtained it, has the clear right to
dispose of it, to sell it to whom he pleases and at such price as he can obtain. 24 So that an act prohibiting
the sale of tickets to theaters or other places of amusement at more than the regular price was held
invalid as conflicting with the state constitution securing the right of property. 25

In Collister vs. Hayman, 26 it was held:

The defendants were conducting a private business, which, even if clothed with a
public interest, was without a franchise to accommodate the public, and they had the
right to control it, the same as the proprietors of any other business, subject to such
obligations as were placed upon them by statute. Unlike a carrier of passengers, for
instance, with a franchise from the state, and hence under obligation to transport
anyone who applies and to continue the business year in and year out, the
proprietors of a theater can open and close their place at will, and no one can make
a lawful complaint. They can charge what they choose for admission to their theater.
They can limit the number admitted. They can refuse to sell tickets and collect the
price of admission at the door. They can preserve order and enforce quiet while the
performance is going on. They can make it a part of the contract and condition of
admission, by giving due notice and printing the condition in the ticket that no one
shall be admitted under 21 years of age, or that men only or women only shall be
admitted, or that a woman cannot enter unless she is accompanied by a male escort,
and the like. The proprietors, in the control of their business, may regulate the terms
of admission in any reasonable way. If those terms are not satisfactory, no one is
obliged to buy a ticket or make the contract. If the terms are satisfactory, and the
contract is made, the minds of the parties meet upon the condition, and the
purchaser impliedly promises to perform it.
In Tyson and Bro. United Theater Ticket Officers, Inc. vs. Banton, 27 the United States Supreme
Court held:
... And certainly a place of entertainment is in no legal sense a public utility; and quite
as certainly, its activities are not such that their enjoyment can be regarded under
any conditions from the point of view of an emergency.
The interest of the public in theaters and other places of entertainment may be more
nearly, and with better reason, assimilated to the like interest in provision stores and
markets and in the rental of houses and apartments for residence purposes; although
in importance it fails below such an interest in the proportion that food and shelter are
of more moment than amusement or instruction. As we have shown there is no
legislative power to fix the prices of provisions or clothing, or the rental charges for
houses and apartments, in the absence of some controlling emergency; and we are
unable to perceive any dissimilarities of such quality or degree as to justify a different
rule in respect of amusements and entertainment ...
We are in consonance with the foregoing observations and conclusions of American courts. In this
jurisdiction, legislation had been passed controlling the prices of goods commodities and drugs
during periods of emergency,28 limiting the net profits of public utility 29 as well as regulating rentals of
residential apartments for a limited period, 30 as a matter of national policy in the interest of public health
and safety, economic security and the general welfare of the people. And these laws cannot be impugned
as unconstitutional for being violative of the due process clause.
However, the same could not be said of theaters, cinematographs and other exhibitions. In no sense
could these businesses be considered public utilities. The State has not found it appropriate as a
national policy to interfere with the admission prices to these performances. This does not mean
however, that theaters and exhibitions are not affected with public interest even to a certain degree.
Motion pictures have been considered important both as a medium for the communication of Ideas
and expression of the artistic impulse. Their effects on the perceptions by our people of issues and

public officials or public figures as well as the prevailing cultural traits are considerable. 31 People of
all ages flock to movie houses, games and other public exhibitions for recreation and relaxation. The
government realizing their importance has seen it fit to enact censorship laws to regulate the movie
industry.32 Their aesthetic entertainment and even educational values cannot be underestimated. Even
police measures regulating the operation of these businesses have been upheld in order to safeguard
public health and safety.
Nonetheless, as to the question of the subject ordinance being a valid exercise of police power, the
same must be resolved in the negative. While it is true that a business may be regulated, it is equally
true that such regulation must be within the bounds of reason, that is, the regulatory ordinance must
be reasonable, and its provisions cannot be oppressive amounting to an arbitrary interference with
the business or calling subject of regulation. A lawful business or calling may not, under the guise of
regulation, be unreasonably interfered with even by the exercise of police power. 33 A police measure
for the regulation of the conduct, control and operation of a business should not encroach upon the
legitimate and lawful exercise by the citizens of their property rights. 34 The right of the owner to fix a price
at which his property shall be sold or used is an inherent attribute of the property itself and, as such,
within the protection of the due process clause."" Hence, the proprietors of a theater have a right to
manage their property in their own way, to fix what prices of admission they think most for their own
advantage, and that any person who did not approve could stay away. 36
Respondent City of Butuan argues that the presumption is always in favor of the validity of the
ordinance. This maybe the rule but it has already been held that although the presumption is always
in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be
set aside when the invalidity or unreasonableness appears on the face of the ordinance itself or is
established by proper evidence. 37 The exercise of police power by the local government is valid unless
it contravenes the fundamental law of the land, or an act of the legislature, or unless it is against public
policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 38
Ordinance No. 640 clearly invades the personal and property rights of petitioners for even if We
could assume that, on its face, the interference was reasonable, from the foregoing considerations, it
has been fully shown that it is an unwarranted and unlawful curtailment of the property and personal
rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, under the guise
of exercising police power, be upheld as valid.
WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby REVERSED
and SET ASIDE and a new judgment is hereby rendered declaring Ordinance No. 640
unconstitutional and, therefore, null and void. This decision is immediately executory.
SO ORDERED.
Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin, Sarmiento and Grio-Aquino, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-45987

May 5, 1939

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
CAYAT, defendant-appellant.
Sinai Hamada y Cario for appellant.
Office of the Solicitor-General Tuason for appellee.
MORAN, J.:
Prosecuted for violation of Act No. 1639 (secs. 2 and 3), the accused, Cayat, a native of Baguio,
Benguet, Mountain Province, was sentenced by the justice of the peace court of Baguio to pay a fine
of five pesos (P5) or suffer subsidiary imprisonment in case of insolvency. On appeal of the Court of
First Instance, the following information was filed against him:
That on or about the 25th day of January, 1937, in the City of Baguio, Commonwealth of the
Philippines, and within the jurisdiction of this court, the above-named accused, Cayat, being
a member of the non-Christian tribes, did then and there willfully, unlawfully, and illegally
receive, acquire, and have in his possession and under his control or custody, one bottle of
A-1-1 gin, an intoxicating liquor, other than the so-called native wines and liquors which the
members of such tribes have been accustomed themselves to make prior to the passage of
Act No. 1639.
Accused interposed a demurrer which was overruled. At the trial, he admitted all the facts alleged in
the information, but pleaded not guilty to the charge for the reasons adduced in his demurrer and
submitted the case on the pleadings. The trial court found him guilty of the crime charged and
sentenced him to pay a fine of fifty pesos (P50) or supper subsidiary imprisonment in case of
insolvency. The case is now before this court on appeal. Sections 2 and 3 of Act No. 1639 read:
SEC. 2. It shall be unlawful for any native of the Philippine Islands who is a member of a
non-Christian tribe within the meaning of the Act Numbered Thirteen hundred and ninetyseven, to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or
intoxicating liquors of any kind, other than the so-called native wines and liquors which the
members of such tribes have been accustomed themselves to make prior to the passage of
this Act, except as provided in section one hereof; and it shall be the duty of any police
officer or other duly authorized agent of the Insular or any provincial, municipal or township
government to seize and forthwith destroy any such liquors found unlawfully in the
possession of any member of a non-Christian tribe.
SEC. 3. Any person violating the provisions of section one or section two of this Act shall,
upon conviction thereof, be punishable for each offense by a fine of not exceeding two
hundred pesos or by imprisonment for a term not exceeding six months, in the discretion of
the court.
The accused challenges the constitutionality of the Act on the following grounds:
(1) That it is discriminatory and denies the equal protection of the laws;
(2) That it is violative of the due process clause of the Constitution: and.
(3) That it is improper exercise of the police power of the state.

Counsel for the appellant holds out his brief as the "brief for the non-Christian tribes." It is said that
as these less civilized elements of the Filipino population are "jealous of their rights in a democracy,"
any attempt to treat them with discrimination or "mark them as inferior or less capable rate or less
entitled" will meet with their instant challenge. As the constitutionality of the Act here involved is
questioned for purposes thus mentioned, it becomes imperative to examine and resolve the issues
raised in the light of the policy of the government towards the non-Christian tribes adopted and
consistently followed from the Spanish times to the present, more often with sacrifice and tribulation
but always with conscience and humanity.
As early as 1551, the Spanish Government had assumed an unvarying solicitous attitude toward
these inhabitants, and in the different laws of the Indies, their concentration in so-called
"reducciones" (communities) have been persistently attempted with the end in view of according
them the "spiritual and temporal benefits" of civilized life. Throughout the Spanish regime, it had
been regarded by the Spanish Government as a sacred "duty to conscience and humanity" to civilize
these less fortunate people living "in the obscurity of ignorance" and to accord them the "the moral
and material advantages" of community life and the "protection and vigilance afforded them by the
same laws." (Decree of the Governor-General of the Philippines, Jan. 14, 1887.) This policy had not
been deflected from during the American period. President McKinley in his instructions to the
Philippine Commission of April 7, 1900, said:
In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same
course followed by Congress in permitting the tribes of our North American Indians to
maintain their tribal organization and government, and under which many of those tribes are
now living in peace and contentment, surrounded by civilization to which they are unable or
unwilling to conform. Such tribal government should, however, be subjected to wise and firm
regulation; and, without undue or petty interference, constant and active effort should be
exercised to prevent barbarous practices and introduce civilized customs.
Since then and up to the present, the government has been constantly vexed with the problem of
determining "those practicable means of bringing about their advancement in civilization and
material prosperity." (See, Act No. 253.) "Placed in an alternative of either letting them alone or
guiding them in the path of civilization," the present government "has chosen to adopt the latter
measure as one more in accord with humanity and with the national conscience." (Memorandum of
Secretary of the Interior, quoted in Rubi vs. Provincial Board of Mindoro, 39 Phil., 660, 714.) To this
end, their homes and firesides have been brought in contact with civilized communities through a
network of highways and communications; the benefits of public education have to them been
extended; and more lately, even the right of suffrage. And to complement this policy of attraction and
assimilation, the Legislature has passed Act No. 1639 undoubtedly to secure for them the blessings
of peace and harmony; to facilitate, and not to mar, their rapid and steady march to civilization and
culture. It is, therefore, in this light that the Act must be understood and applied.
It is an established principle of constitutional law that the guaranty of the equal protection of the laws
is not equal protection of the laws is not violated by a legislation based on reasonable classification.
And the classification, to be reasonable, (1) must rest on substantial distinctions; (2) must be
germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must
apply equally to all members of the same class. (Borgnisvs. Falk Co., 133 N.W., 209;
Lindsley vs. Natural Carbonic Gas Co., 220 U.S. 61; 55 Law. ed., Rubi vs. Provincial Board of
Mindoro, 39 Phil., 660; People and Hongkong & Shanghai Banking Corporation vs. Vera and Cu
Unjieng, 37 Off. Gaz ., 187.)
Act No. 1639 satisfies these requirements. The classification rests on real and substantial, not
merely imaginary or whimsical, distinctions. It is not based upon "accident of birth or parentage," as

counsel to the appellant asserts, but upon the degree of civilization and culture. "The term 'nonChristian tribes' refers, not to religious belief, but, in a way, to the geographical area, and, more
directly, to natives of the Philippine Islands of a low grade of civilization, usually living in tribal
relationship apart from settled communities." (Rubi vs. Provincial Board of Mindoro, supra.) This
distinction is unquestionably reasonable, for the Act was intended to meet the peculiar conditions
existing in the non-Christian tribes. The exceptional cases of certain members thereof who at
present have reached a position of cultural equality with their Christian brothers, cannot affect the
reasonableness of the classification thus established.
That it is germane to the purposes of law cannot be doubted. The prohibition "to buy, receive, have
in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other
than the so-called native wines and liquors which the members of such tribes have been
accustomed themselves to make prior to the passage of this Act.," is unquestionably designed to
insure peace and order in and among the non-Christian tribes. It has been the sad experience of the
past, as the observations of the lower court disclose, that the free use of highly intoxicating liquors
by the non-Christian tribes have often resulted in lawlessness and crimes, thereby hampering the
efforts of the government to raise their standard of life and civilization.
The law is not limited in its application to conditions existing at the time of its enactment. It is
intended to apply for all times as long as those conditions exist. The Act was not predicated, as
counsel for appellant asserts, upon the assumption that the non-Christians are "impermeable to any
civilizing influence." On the contrary, the Legislature understood that the civilization of a people is a
slow process and that hand in hand with it must go measures of protection and security.
Finally, that the Act applies equally to all members of the class is evident from a perusal thereof.
That it may be unfair in its operation against a certain number non-Christians by reason of their
degree of culture, is not an argument against the equality of its application.
Appellants contends that that provision of the law empowering any police officer or other duly
authorized agent of the government to seize and forthwith destroy any prohibited liquors found
unlawfully in the possession of any member of the non-Christian tribes is violative of the due process
of law provided in the Constitution. But this provision is not involved in the case at bar. Besides, to
constitute due process of law, notice and hearing are not always necessary. This rule is especially
true where much must be left to the discretion of the administrative officials in applying a law to
particular cases. (McGehee, Due Process of Law p. 371, cited with approval in Rubivs. Provincial
Board of Mindoro, supra.) Due process of law means simply: (1) that there shall be a law prescribed
in harmony with the general powers of the legislative department of the government; (2) that it shall
be reasonable in its operation; (3) that it shall be enforced according to the regular methods of
procedure prescribed; and (4) that it shall be applicable alike to all citizens of the state or to all of the
class. (U.S. vs. Ling Su Fan, 10 Phil., 104, affirmed on appeal by the United States Supreme Court,
218 U.S., 302: 54 Law. ed., 1049.) Thus, a person's property may be seized by the government in
payment of taxes without judicial hearing; or property used in violation of law may be confiscated
(U.S. vs. Surla, 20 Phil., 163, 167), or when the property constitutes corpus delicti, as in the instant
case (Moreno vs. Ago Chi, 12 Phil., 439, 442).
Neither is the Act an improper exercise of the police power of the state. It has been said that the
police power is the most insistent and least limitable of all powers of the government. It has been
aptly described as a power co-extensive with self-protection and constitutes the law of overruling
necessity. Any measure intended to promote the health, peace, morals, education and good order of
the people or to increase the industries of the state, develop its resources and add to its wealth and
prosperity (Barbier vs. Connolly, 113 U.S., 27), is a legitimate exercise of the police power, unless

shown to be whimsical or capricious as to unduly interfere with the rights of an individual, the same
must be upheld.
Act No. 1639, as above stated, is designed to promote peace and order in the non-Christian tribes
so as to remove all obstacles to their moral and intellectual growth and, eventually, to hasten their
equalization and unification with the rest of their Christian brothers. Its ultimate purpose can be no
other than to unify the Filipino people with a view to a greater Philippines.
The law, then, does not seek to mark the non-Christian tribes as "an inferior or less capable race."
On the contrary, all measures thus far adopted in the promotion of the public policy towards them
rest upon a recognition of their inherent right to equality in tht enjoyment of those privileges now
enjoyed by their Christian brothers. But as there can be no true equality before the law, if there is, in
fact, no equality in education, the government has endeavored, by appropriate measures, to raise
their culture and civilization and secure for them the benefits of their progress, with the ultimate end
in view of placing them with their Christian brothers on the basis of true equality. It is indeed
gratifying that the non-Christian tribes "far from retrograding, are definitely asserting themselves in a
competitive world," as appellant's attorney impressively avers, and that they are "a virile, up-and coming people eager to take their place in the world's social scheme." As a matter of fact, there are
now lawyers, doctors and other professionals educated in the best institutions here and in America.
Their active participation in the multifarious welfare activities of community life or in the delicate
duties of government is certainly a source of pride and gratification to people of the Philippines. But
whether conditions have so changed as to warrant a partial or complete abrogation of the law, is a
matter which rests exclusively within the prerogative of the National Assembly to determine. In the
constitutional scheme of our government, this court can go no farther than to inquire whether the
Legislature had the power to enact the law. If the power exists, and we hold it does exist, the wisdom
of the policy adopted, and the adequacy under existing conditions of the measures enacted to
forward it, are matters which this court has no authority to pass upon. And, if in the application of the
law, the educated non-Christians shall incidentally suffer, the justification still exists in the allcomprehending principle of salus populi suprema est lex. When the public safety or the public
morals require the discontinuance of a certain practice by certain class of persons, the hand of the
Legislature cannot be stayed from providing for its discontinuance by any incidental inconvenience
which some members of the class may suffer. The private interests of such members must yield to
the paramount interests of the nation (Cf. Boston Beer Co. vs. Mass., 97 U.S., 25; 24 law. ed., 989).
Judgment is affirmed, with costs against appellant.
Avancea, C.J., Villa-Real, Imperial, Diaz, Laurel, and Conception, JJ., concur.