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Republic of the Philippines demanding the latter to comply with the rule on mandatory tender
SUPREME COURT offer. Cemco, however, refused.
Manila On 5 August 2004, a Share Purchase Agreement was
THIRD DIVISION executed by ACC and BCI, as sellers, and Cemco, as buyer.
G.R. No. 171815 August 7, 2007 On 12 August 2004, the transaction was consummated and
CEMCO HOLDINGS, INC., Petitioner, closed.
vs. On 19 August 2004, respondent National Life Insurance
NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, Company of the Philippines, Inc. filed a complaint with the SEC
INC., Respondent. asking it to reverse its 27 July 2004 Resolution and to declare the
DECISION purchase agreement of Cemco void and praying that the mandatory
CHICO-NAZARIO, J.: tender offer rule be applied to its UCC shares. Impleaded in the
This Petition for Review under Rule 45 of the Rules of Court complaint were Cemco, UCC, UCHC, BCI and ACC, which were
seeks to reverse and set aside the 24 October 2005 Decision1 and then required by the SEC to file their respective comment on the
the 6 March 2006 Resolution2 of the Court of Appeals in CA-G.R. SP complaint. In their comments, they were uniform in arguing that the
No. 88758 which affirmed the judgment3 dated 14 February 2005 of tender offer rule applied only to a direct acquisition of the shares of
the Securities and Exchange Commission (SEC) finding that the the listed company and did not extend to an indirect acquisition
acquisition of petitioner Cemco Holdings, Inc. (Cemco) of the shares arising from the purchase of the shares of a holding company of the
of stock of Bacnotan Consolidated Industries, Inc. (BCI) and Atlas listed firm.
Cement Corporation (ACC) in Union Cement Holdings Corporation In a Decision dated 14 February 2005, the SEC ruled in favor
(UCHC) was covered by the Mandatory Offer Rule under Section 19 of the respondent by reversing and setting aside its 27 July 2004
of Republic Act No. 8799, otherwise known as the Securities Resolution and directed petitioner Cemco to make a tender offer for
Regulation Code. UCC shares to respondent and other holders of UCC shares similar
The Facts to the class held by UCHC in accordance with Section 9(E), Rule 19
Union Cement Corporation (UCC), a publicly-listed company, of the Securities Regulation Code.
has two principal stockholders UCHC, a non-listed company, with Petitioner filed a petition with the Court of Appeals challenging
shares amounting to 60.51%, and petitioner Cemco with 17.03%. the SECs jurisdiction to take cognizance of respondents complaint
Majority of UCHCs stocks were owned by BCI with 21.31% and and its authority to require Cemco to make a tender offer for UCC
ACC with 29.69%. Cemco, on the other hand, owned 9% of UCHC shares, and arguing that the tender offer rule does not apply, or that
stocks. the SECs re-interpretation of the rule could not be made to
In a disclosure letter dated 5 July 2004, BCI informed the retroactively apply to Cemcos purchase of UCHC shares.
Philippine Stock Exchange (PSE) that it and its subsidiary ACC had The Court of Appeals rendered a decision affirming the ruling
passed resolutions to sell to Cemco BCIs stocks in UCHC of the SEC. It ruled that the SEC has jurisdiction to render the
equivalent to 21.31% and ACCs stocks in UCHC equivalent to questioned decision and, in any event, Cemco was barred by
29.69%. estoppel from questioning the SECs jurisdiction. It, likewise, held
In the PSE Circular for Brokers No. 3146-2004 dated 8 July that the tender offer requirement under the Securities Regulation
2004, it was stated that as a result of petitioner Cemcos acquisition Code and its Implementing Rules applies to Cemcos purchase of
of BCI and ACCs shares in UCHC, petitioners total beneficial UCHC stocks. The decretal portion of the said Decision reads:
ownership, direct and indirect, in UCC has increased by 36% and IN VIEW OF THE FOREGOING, the assailed decision of the
amounted to at least 53% of the shares of UCC, to wit4 : SEC is AFFIRMED, and the preliminary injunction issued by the
Particulars Court LIFTED.5 Percentage
Cemco filed a motion for reconsideration which was denied by
Existing shares of Cemco in UCHC the Court of Appeals. 9%
Hence, the instant petition.
Acquisition by Cemco of BCIs and ACCs shares in UCHC In its memorandum, 51% petitioner Cemco raises the following
issues:
Total stocks of Cemco in UCHC I. 60%
ASSUMING ARGUENDO THAT THE SEC HAS
Percentage of UCHC ownership in UCC JURISDICTION 60%OVER NATIONAL LIFES COMPLAINT
AND THAT THE SECS RE-INTERPRETATION OF THE
Indirect ownership of Cemco in UCC 36%
TENDER OFFER RULE IS CORRECT, WHETHER OR
Direct ownership of Cemco in UCC NOT THAT 17% REINTERPRETATION CAN BE APPLIED
RETROACTIVELY TO CEMCOS PREJUDICE.
Total ownership of Cemco in UCC II. 53%
WHETHER OR NOT THE SEC HAS JURISDICTION
As a consequence of this disclosure, the PSE, in a letter to the
TO ADJUDICATE THE DISPUTE BETWEEN THE
SEC dated 15 July 2004, inquired as to whether the Tender Offer
PARTIES A QUO OR TO RENDER JUDGMENT
Rule under Rule 19 of the Implementing Rules of the Securities
REQUIRING CEMCO TO MAKE A TENDER OFFER FOR
Regulation Code is not applicable to the purchase by petitioner of
UCC SHARES.
the majority of shares of UCC.
III.
In a letter dated 16 July 2004, Director Justina Callangan of the
WHETHER OR NOT CEMCOS PURCHASE OF
SECs Corporate Finance Department responded to the query of the
UCHC SHARES IS SUBJECT TO THE TENDER OFFER
PSE that while it was the stance of the department that the tender
REQUIREMENT.
offer rule was not applicable, the matter must still have to be
IV.
confirmed by the SEC en banc.
WHETHER OR NOT THE SEC DECISION, AS
Thereafter, in a subsequent letter dated 27 July 2004, Director
AFFIRMED BY THE CA DECISION, IS AN INCOMPLETE
Callangan confirmed that the SEC en banc had resolved that the
JUDGMENT WHICH PRODUCED NO EFFECT.6
Cemco transaction was not covered by the tender offer rule.
Simply stated, the following are the issues:
On 28 July 2004, feeling aggrieved by the transaction,
1. Whether or not the SEC has jurisdiction over
respondent National Life Insurance Company of the Philippines,
respondents complaint and to require Cemco to make a
Inc., a minority stockholder of UCC, sent a letter to Cemco
tender offer for respondents UCC shares.
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2. Whether or not the rule on mandatory tender offer the SRC allows a general grant of adjudicative powers to the SEC
applies to the indirect acquisition of shares in a listed which may be implied from or are necessary or incidental to the
company, in this case, the indirect acquisition by Cemco carrying out of its express powers to achieve the objectives and
of 36% of UCC, a publicly-listed company, through its purposes of the SRC. We must bear in mind in interpreting the
purchase of the shares in UCHC, a non-listed company. powers and functions of the SEC that the law has made the SEC
3. Whether or not the questioned ruling of the SEC primarily a regulatory body with the incidental power to conduct
can be applied retroactively to Cemcos transaction which administrative hearings and make decisions. A regulatory body like
was consummated under the authority of the SECs prior the SEC may conduct hearings in the exercise of its regulatory
resolution. powers, and if the case involves violations or conflicts in connection
On the first issue, petitioner Cemco contends that while the with the performance of its regulatory functions, it will have the duty
SEC can take cognizance of respondents complaint on the alleged and authority to resolve the dispute for the best interests of the
violation by petitioner Cemco of the mandatory tender offer public.8
requirement under Section 19 of Republic Act No. 8799, the same For sure, the SEC has the authority to promulgate rules and
statute does not vest the SEC with jurisdiction to adjudicate and regulations, subject to the limitation that the same are consistent
determine the rights and obligations of the parties since, under the with the declared policy of the Code. Among them is the protection
same statute, the SECs authority is purely administrative. Having of the investors and the minimization, if not total elimination, of
been vested with purely administrative authority, the SEC can only fraudulent and manipulative devises. Thus, Subsection 5.1(g) of the
impose administrative sanctions such as the imposition of law provides:
administrative fines, the suspension or revocation of registrations Prepare, approve, amend or repeal rules, regulations and
with the SEC, and the like. Petitioner stresses that there is nothing in orders, and issue opinions and provide guidance on and supervise
the statute which authorizes the SEC to issue orders granting compliance with such rules, regulations and orders.
affirmative reliefs. Since the SECs order commanding it to make a Also, Section 72 of the Securities Regulation Code reads:
tender offer is an affirmative relief fixing the respective rights and 72.1. x x x To effect the provisions and purposes of
obligations of parties, such order is void. this Code, the Commission may issue, amend, and
Petitioner further contends that in the absence of any specific rescind such rules and regulations and orders necessary
grant of jurisdiction by Congress, the SEC cannot, by mere or appropriate, x x x.
administrative regulation, confer on itself that jurisdiction. 72.2. The Commission shall promulgate rules and
Petitioners stance fails to persuade. regulations providing for reporting, disclosure and the
In taking cognizance of respondents complaint against prevention of fraudulent, deceptive or manipulative
petitioner and eventually rendering a judgment which ordered the practices in connection with the purchase by an issuer, by
latter to make a tender offer, the SEC was acting pursuant to Rule tender offer or otherwise, of and equity security of a class
19(13) of the Amended Implementing Rules and Regulations of the issued by it that satisfies the requirements of Subsection
Securities Regulation Code, to wit: 17.2. Such rules and regulations may require such issuer
13. Violation to provide holders of equity securities of such dates with
If there shall be violation of this Rule by pursuing a purchase of such information relating to the reasons for such
equity shares of a public company at threshold amounts without the purchase, the source of funds, the number of shares to be
required tender offer, the Commission, upon complaint, may nullify purchased, the price to be paid for such securities, the
the said acquisition and direct the holding of a tender offer. This method of purchase and such additional information as
shall be without prejudice to the imposition of other sanctions under the Commission deems necessary or appropriate in the
the Code. public interest or for the protection of investors, or which
The foregoing rule emanates from the SECs power and the Commission deems to be material to a determination
authority to regulate, investigate or supervise the activities of by holders whether such security should be sold.
persons to ensure compliance with the Securities Regulation Code, The power conferred upon the SEC to promulgate rules and
more specifically the provision on mandatory tender offer under regulations is a legislative recognition of the complexity and the
Section 19 thereof.7 constantly-fluctuating nature of the market and the impossibility of
Another provision of the statute, which provides the basis of foreseeing all the possible contingencies that cannot be addressed
Rule 19(13) of the Amended Implementing Rules and Regulations of in advance. As enunciated in Victorias Milling Co., Inc. v. Social
the Securities Regulation Code, is Section 5.1(n), viz: Security Commission9 :
[T]he Commission shall have, among others, the following Rules and regulations when promulgated in pursuance of the
powers and functions: procedure or authority conferred upon the administrative agency by
xxxx law, partake of the nature of a statute, and compliance therewith
(n) Exercise such other powers as may be provided by law as may be enforced by a penal sanction provided in the law. This is so
well as those which may be implied from, or which are necessary or because statutes are usually couched in general terms, after
incidental to the carrying out of, the express powers granted the expressing the policy, purposes, objectives, remedies and sanctions
Commission to achieve the objectives and purposes of these laws. intended by the legislature. The details and the manner of carrying
The foregoing provision bestows upon the SEC the general out the law are often times left to the administrative agency
adjudicative power which is implied from the express powers of the entrusted with its enforcement. In this sense, it has been said that
Commission or which is incidental to, or reasonably necessary to rules and regulations are the product of a delegated power to create
carry out, the performance of the administrative duties entrusted to new or additional legal provisions that have the effect of law.
it. As a regulatory agency, it has the incidental power to conduct Moreover, petitioner is barred from questioning the jurisdiction
hearings and render decisions fixing the rights and obligations of the of the SEC. It must be pointed out that petitioner had participated in
parties. In fact, to deprive the SEC of this power would render the all the proceedings before the SEC and had prayed for affirmative
agency inutile, because it would become powerless to regulate and relief. In fact, petitioner defended the jurisdiction of the SEC in its
implement the law. As correctly held by the Court of Appeals: Comment dated 15 September 2004, filed with the SEC wherein it
We are nonetheless convinced that the SEC has the asserted:
competence to render the particular decision it made in this case. A This Honorable Commission is a highly specialized body
definite inference may be drawn from the provisions of the SRC that created for the purpose of administering, overseeing, and managing
the SEC has the authority not only to investigate complaints of the corporate industry, share investment and securities market in the
violations of the tender offer rule, but to adjudicate certain rights and Philippines. By the very nature of its functions, it dedicated to the
obligations of the contending parties and grant appropriate reliefs in study and administration of the corporate and securities laws and
the exercise of its regulatory functions under the SRC. Section 5.1 of has necessarily developed an expertise on the subject. Based on
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said functions, the Honorable Commission is necessarily tasked to acquisition of the non-listed UCHC shares is covered by the
issue rulings with respect to matters involving corporate matters and mandatory tender offer rule.
share acquisitions. Verily when this Honorable Commission This interpretation given by the SEC and the Court of Appeals
rendered the Ruling that " the acquisition of Cemco Holdings of must be sustained.
the majority shares of Union Cement Holdings, Inc., a substantial The rule in this jurisdiction is that the construction given to a
stockholder of a listed company, Union Cement Corporation, is not statute by an administrative agency charged with the interpretation
covered by the mandatory tender offer requirement of the SRC Rule and application of that statute is entitled to great weight by the
19," it was well within its powers and expertise to do so. Such ruling courts, unless such construction is clearly shown to be in sharp
shall be respected, unless there has been an abuse or improvident contrast with the governing law or statute.18 The rationale for this
exercise of authority.10 rule relates not only to the emergence of the multifarious needs of a
Petitioner did not question the jurisdiction of the SEC when it modern or modernizing society and the establishment of diverse
rendered an opinion favorable to it, such as the 27 July 2004 administrative agencies for addressing and satisfying those needs; it
Resolution, where the SEC opined that the Cemco transaction was also relates to accumulation of experience and growth of specialized
not covered by the mandatory tender offer rule. It was only when the capabilities by the administrative agency charged with implementing
case was before the Court of Appeals and after the SEC rendered a particular statute.19
an unfavorable judgment against it that petitioner challenged the The SEC and the Court of Appeals accurately pointed out that
SECs competence. As articulated in Ceroferr Realty Corporation v. the coverage of the mandatory tender offer rule covers not only
Court of Appeals11 : direct acquisition but also indirect acquisition or "any type of
While the lack of jurisdiction of a court may be raised at any acquisition." This is clear from the discussions of the Bicameral
stage of an action, nevertheless, the party raising such question Conference Committee on the Securities Act of 2000, on 17 July
may be estopped if he has actively taken part in the very 2000.
proceedings which he questions and he only objects to the courts SEN. S. OSMEA. Eto ang mangyayari diyan, eh. Somebody
jurisdiction because the judgment or the order subsequently controls 67% of the Company. Of course, he will pay a premium for
rendered is adverse to him. the first 67%. Control yan, eh. Eh, kawawa yung mga maiiwan, ang
On the second issue, petitioner asserts that the mandatory 33% because the value of the stock market could go down, could go
tender offer rule applies only to direct acquisition of shares in the down after that, because there will (p. 41) be no more market. Wala
public company. nang gustong bumenta. Wala nang I mean maraming gustong
This contention is not meritorious. bumenta, walang gustong bumili kung hindi yung majority owner.
Tender offer is a publicly announced intention by a person And they will not buy. They already have 67%. They already have
acting alone or in concert with other persons to acquire equity control. And this protects the minority. And we have had a case in
securities of a public company.12 A public company is defined as a Cebu wherein Ayala A who already owned 40% of Ayala B made an
corporation which is listed on an exchange, or a corporation with offer for another 40% of Ayala B without offering the 20%. Kawawa
assets exceeding P50,000,000.00 and with 200 or more naman yung nakahawak ngayon ng 20%. Ang baba ng share sa
stockholders, at least 200 of them holding not less than 100 shares market. But we did not have a law protecting them at that time.
of such company.13 Stated differently, a tender offer is an offer by CHAIRMAN ROCO. So what is it that you want to achieve?
the acquiring person to stockholders of a public company for them to SEN. S. OSMEA. That if a certain group achieves a certain
tender their shares therein on the terms specified in the amount of ownership in a corporation, yeah, he is obligated to buy
offer.14 Tender offer is in place to protect minority shareholders anybody who wants to sell.
against any scheme that dilutes the share value of their investments. CHAIRMAN ROCO. Pro-rata lang. (p. 42).
It gives the minority shareholders the chance to exit the company xxxx
under reasonable terms, giving them the opportunity to sell their REP. TEODORO. As long as it reaches 30, ayan na. Any type
shares at the same price as those of the majority shareholders.15 of acquisition just as long as it will result in 30 (p.50) reaches
Under Section 19 of Republic Act No. 8799, it is stated: 30, ayan na. Any type of acquisition just as long as it will result in 30,
Tender Offers. 19.1. (a) Any person or group of persons acting general tender, pro-rata.20(Emphasis supplied.)
in concert who intends to acquire at least fifteen percent (15%) of Petitioner counters that the legislators reference to "any type of
any class of any equity security of a listed corporation or of any acquisition" during the deliberations on the Securities Regulation
class of any equity security of a corporation with assets of at least Code does not indicate that congress meant to include the "indirect"
Fifty million pesos (P50,000,000.00) and having two hundred (200) acquisition of shares of a public corporation to be covered by the
or more stockholders with at least one hundred (100) shares each or tender offer rule. Petitioner also avers that it did not directly acquire
who intends to acquire at least thirty percent (30%) of such equity the shares in UCC and the incidental benefit of having acquired the
over a period of twelve (12) months shall make a tender offer to control of the said public company must not be taken against it.
stockholders by filing with the Commission a declaration to that These arguments are not convincing. The legislative intent of
effect; and furnish the issuer, a statement containing such of the Section 19 of the Code is to regulate activities relating to acquisition
information required in Section 17 of this Code as the Commission of control of the listed company and for the purpose of protecting the
may prescribe. Such person or group of persons shall publish all minority stockholders of a listed corporation. Whatever may be the
requests or invitations for tender, or materials making a tender offer method by which control of a public company is obtained, either
or requesting or inviting letters of such a security. Copies of any through the direct purchase of its stocks or through an indirect
additional material soliciting or requesting such tender offers means, mandatory tender offer applies. As appropriately held by the
subsequent to the initial solicitation or request shall contain such Court of Appeals:
information as the Commission may prescribe, and shall be filed The petitioner posits that what it acquired were stocks of UCHC
with the Commission and sent to the issuer not later than the time and not UCC. By happenstance, as a result of the transaction, it
copies of such materials are first published or sent or given to became an indirect owner of UCC. We are constrained, however, to
security holders. construe ownership acquisition to mean both direct and indirect.
Under existing SEC Rules,16 the 15% and 30% threshold What is decisive is the determination of the power of control. The
acquisition of shares under the foregoing provision was increased to legislative intent behind the tender offer rule makes clear that the
thirty-five percent (35%). It is further provided therein that mandatory type of activity intended to be regulated is the acquisition of control
tender offer is still applicable even if the acquisition is less than 35% of the listed company through the purchase of shares. Control may
when the purchase would result in ownership of over 51% of the [be] effected through a direct and indirect acquisition of stock, and
total outstanding equity securities of the public company.17 when this takes place, irrespective of the means, a tender offer must
The SEC and the Court of Appeals ruled that the indirect occur. The bottomline of the law is to give the shareholder of the
acquisition by petitioner of 36% of UCC shares through the
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listed company the opportunity to decide whether or not to sell in pursuant to the procedure provided for under Rule 19(E) of the
connection with a transfer of control. x x x.21 Amended Implementing Rules and Regulations of the Securities
As to the third issue, petitioner stresses that the ruling on Regulation Code for the highest price paid for the beneficial
mandatory tender offer rule by the SEC and the Court of Appeals ownership of UCC shares. The price, on the basis of the SEC
should not have retroactive effect or be made to apply to its decision, is determinable. Moreover, the implementing rules and
purchase of the UCHC shares as it relied in good faith on the letter regulations of the Code are sufficient to inform and guide the parties
dated 27 July 2004 of the SEC which opined that the proposed on how to proceed with the mandatory tender offer.
acquisition of the UCHC shares was not covered by the mandatory WHEREFORE, the Decision and Resolution of the Court of
offer rule. Appeals dated 24 October 2005 and 6 March 2006, respectively,
The argument is not persuasive. affirming the Decision dated 14 February 2005 of the Securities and
The action of the SEC on the PSE request for opinion on the Exchange Commission En Banc, are hereby AFFIRMED. Costs
Cemco transaction cannot be construed as passing merits or giving against petitioner.
approval to the questioned transaction. As aptly pointed out by the SO ORDERED.
respondent, the letter dated 27 July 2004 of the SEC was nothing
but an approval of the draft letter prepared by Director Callanga. Republic of the Philippines
There was no public hearing where interested parties could have SUPREME COURT
been heard. Hence, it was not issued upon a definite and concrete Manila
controversy affecting the legal relations of parties thereby making it
a judgment conclusive on all the parties. Said letter was merely EN BANC
advisory. Jurisprudence has it that an advisory opinion of an agency
may be stricken down if it deviates from the provision of the G.R. No. L-47771 March 11, 1978
statute.22 Since the letter dated 27 July 2004 runs counter to the
Securities Regulation Code, the same may be disregarded as what PEDRO G. PERALTA, petitioner,
the SEC has done in its decision dated 14 February 2005. vs.
Assuming arguendo that the letter dated 27 July 2004 HON. COMMISSION ON ELECTIONS, HON. NATIONAL
constitutes a ruling, the same cannot be utilized to determine the TREASURER, and KILUSANG BAGONG LIPUNAN, respondents.
rights of the parties. What is to be applied in the present case is the
subsequent ruling of the SEC dated 14 February 2005 abandoning G.R. No. L-47803 March 11, 1978
the opinion embodied in the letter dated 27 July 2004. In Serrano v.
National Labor Relations Commission,23 an argument was raised JUAN T. DAVID, petitioner,
similar to the case under consideration. Private respondent therein vs.
argued that the new doctrine pronounced by the Court should only COMMISSION ON ELECTIONS (COMELEC); LEONARDO B.
be applied prospectively. Said postulation was ignored by the Court PEREZ, Chairman-COMELEC; VENANCIO S. DUQUE, FLORES A.
when it ruled: BAYOT, CASIMIRO R. MADARANG, VENANCIO L. YANEZA,
While a judicial interpretation becomes a part of the law as of Commissioners-COMELEC; JAIME LAYA, Budget Commissioner;
the date that law was originally passed, this is subject to the and GREGORIO G. MENDOZA, National Treasurer, respondents.
qualification that when a doctrine of this Court is overruled and a
different view is adopted, and more so when there is a reversal G.R. No. L-47816 March 11, 1978
thereof, the new doctrine should be applied prospectively and
should not apply to parties who relied on the old doctrine and acted YOUTH DEMOCRATIC MOVEMENT, RAMON PAGUIRIGAN,
in good faith. To hold otherwise would be to deprive the law of its and ALFREDO SALAPANTAN, JR., petitioners,
quality of fairness and justice then, if there is no recognition of what vs.
had transpired prior to such adjudication. THE COMMISSION ON ELECTIONS, respondent.
It is apparent that private respondent misconceived the import
of the ruling. The decision in Columbia Pictures does not mean that G.R. No. L-47767 March 11, 1978
if a new rule is laid down in a case, it should not be applied in that
case but that said rule should apply prospectively to cases arising IN THE MATTER OF PETITION FOR THE DECLARATION OF
afterwards. Private respondents view of the principle of prospective CERTAIN PROVISIONS OF THE ELECTION CODE OF 1978 AS
application of new judicial doctrines would turn the judicial function UNCONSTITUTIONAL. GUALBERTO J. DE LA LLANA, petitioner.
into a mere academic exercise with the result that the doctrine laid
down would be no more than a dictum and would deprive the G.R. No. L-47791 March 11, 1978
holding in the case of any force.
Indeed, when the Court formulated the Wenphil doctrine, which B. ASUNCION BUENAFE, petitioner,
we reversed in this case, the Court did not defer application of the vs.
rule laid down imposing a fine on the employer for failure to give COMMISSION ON ELECTIONS, respondent.
notice in a case of dismissal for cause. To the contrary, the new rule
was applied right then and there. x x x. G.R. No. L-47827 March 11, 1978
Lastly, petitioner alleges that the decision of the SEC dated 14
February 2005 is "incomplete and produces no effect." REYNALDO T. FAJARDO, petitioner,
This contention is baseless. vs.
The decretal portion of the SEC decision states: COMMISSION ON ELECTIONS, JAIME LAYA, as the
In view of the foregoing, the letter of the Commission, signed BUDGET COMMISSIONER, GREGORIO G. MENDOZA, as the
by Director Justina F. Callangan, dated July 27, 2004, addressed to NATIONAL TREASURER, KILUSANG BAGONG LIPUNAN, and
the Philippine Stock Exchange is hereby REVERSED and SET LAKAS NG BAYAN, respondents.
ASIDE. Respondent Cemco is hereby directed to make a tender
offer for UCC shares to complainant and other holders of UCC Pedro G. Peralta in his own behalf.
shares similar to the class held by respondent UCHC, at the highest
price it paid for the beneficial ownership in respondent UCC, strictly Nemesio C. Garcia, Jr., Rodrigo H. Melchor, Dante, S. David,
in accordance with SRC Rule 19, Section 9(E).24 Julie David-Feliciano & Juan T. David for petitioner Juan T. David.
A reading of the above ruling of the SEC reveals that the same
is complete. It orders the conduct of a mandatory tender offer
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Raul M. Gonzalez & Associates for petitioners Youth write the name of such political party, group or aggrupation in the
Democractic Movement, et al. space indicated. It shag then be unnecessary for you to write the
names of Candidates you vote for. On the other hand, if you want to
Gualberto J. de la Llana in his own behalf. vote for candidates belonging to different parties, groups or
aggrupations and/or for individual candidates, write in the respective
B. Asuncion Buenafe in his own behalf blank spaces the names of the candidates you vote for and the
names written by you in the respective blank spaces in the ballot
Binay Cueva, Fernandez & Associates for petitioner Reynaldo shall then be considered as validly voted for.
T. Fajardo. xxx xxx xxx
SEC. 155. Rules for the appreciation of ballots. In the
Tolentino Law Office for respondent Kilusang Bagong Lipunan. reading and appreciation of ballots, the committee shall observe the
following rules:
Solicitor General Estelito P. Mendoza, Assistant Solicitor xxx xxx xxx
General Vicente V. Mendoza and Assistant Solicitor General 26. If a voter has written in the proper space of the ballot the
Reynato S. Puno for Commission of Elections (COMELEC). name of a political party, group or aggrupation which has nominated
official candidates, a vote shall be counted for each of the official
candidates of such party, group or aggrupation.
27. If a voter has written in the proper space of the ballot the
ANTONIO, J.: name of a political party, group or aggrupation which has nominated
official candidates and the names of individual candidates belonging
These six (6) consolidated petitions pose for the determination to the ticket of the same political party, group or aggrupation in the
of this Court the constitutionality of specific provisions of the 1978 spaces provided therefor, a vote shall be counted for each of the
Election Code (Presidential Decree No. 1269). official candidates of such party, group or aggrupation and the votes
for the individual candidates written on the ballot shall be considered
I as stray votes.
28. If a voter has written in the proper space of his ballot the
The first issue posed for resolution is: Whether or not the voting name of a political party, group or aggrupation which has nominated
system provided for in Sections 140 and 155, subparagraphs 26 to official candidates and the names of individual candidates not
28, of the 1978 Election Code, granting to the voter the option to belonging to the ticket of the same political party, group or
vote either for individual candidates by filling in the proper spaces in aggrupation in the spaces provided therefor, an of the votes
the ballot the names of candidates he desires to elect, or to vote for indicated in the ballot shall be considered as stray votes and shall
all the candidates of a political party, group or aggrupation by simply not be counted. Provided, however, That if the number of candidates
waiting in the space provided for in the ballot the name of the nominated by the political party, group or aggrupation written by the
political party, group or aggrupation, violates Section 1 of Article IV voter in the ballot is less than the number of seats to be filled in the
and Section 9(1) of article XII-C of the Constitution. election and the voter also writes the names of individual candidates
The specific provisions of the 1978 Election Code which are in the spaces provided therefor not belonging to the ticket of the
assailed as being in violation of the equal protection clause are the political party, group or aggrupation he has written in the ballot, the
following: ballot shall be counted as votes in favor of the candidates of the
SEC. 140. Manner of preparing the ballot. The voter upon political party, group or aggrupation concerned and the individual
receiving his folded ballot shall forthwith proceed to one of the empty candidates whose names were firstly written by the voter in the
voting booths and shall there fill his ballot by writing in the proper spaces provided therefor, until the authorized number of seats is
space for each office the name of the candidate for whom he desires fined.
to vote: Provided, That in the election of regional representatives to The system which allows straight party voting is not unique in
the interim Batasang Pambansa, the voter may choose to vote for the Philippine experience. As early as 1941, the Second National
individual candidates by filling in the proper spaces of the ballot the Assembly of the Philippines enacted Commonwealth Act No. 666,
names of candidates he desires to elect, but if for any reason he entitled "An Act to Provide for the First Election for President and
chooses to vote for all the candidates of a political party, group or Vice-President of the Philippines, Senators, and Members of the
aggrupation, by writing in the space provided for in the ballot the House of Representatives, Under the Constitution and the
name of the political party, group or aggrupation: Provided further, Amendments Thereof." Said Commonwealth Act enabled the voter
That the ballots for the election of regional representatives to the to vote for individual candidates or for a straight party ticket by
interim Batasang Pambansa shall be prepared by the Commission writing either the names of the candidates of his choice or of the
in such manner that the voter may vote for the straight ticket of a political party he favored on designated blank spaces on the ballot. 1
political party, group or aggrupation or for individual candidates, and While the original Election Code, Commonwealth Act No. 357,
for this purpose, the ticket of a regularly organized political party, dated August 22, 1938, did not carry provisions for optional straight
group or aggrupation as certified under oath by their respective party voting, 2 the system was, however, substantially reinstituted in
directorates or duly authorized representatives as wen as Republic Act No. 180, or the Revised Election Code, enacted on
candidates not belonging to any particular political party, group or June 21, 1947. 3 The only im portent difference introduced was that
aggrupation, shall be printed in the upper portion of said ballots in a in appreciating ballots on which the voter had written both the name
manner which does not give undue advantage to any political party, of a political party and the names of candidates not members of said
group or aggrupation or candidate, and there shall also be a column party, Republic Act No. 180 provided that the individual candidates
containing blank spaces for the names of such candidates which whose names were written shall be considered voted for, 4 whereas
spaces are to be filled by the voter who does not desire to vote for a Commonwealth Act No. 666 provided that the vote shall be counted
straight ticket: Provided, finally, That a candidate may be in the in favor of the political party. 5
ticket of only one political party, group or aggrupation; if he is Likewise, it should be noted that in other jurisdictions, ballots
included in the ticket of more than one political party, group or providing for optional straight party voting have been accepted as a
aggrupation presenting different sets of candidates, he shall standard form, in addition to the "office-block" ballots in which all
immediately inform the Commission as to which ticket he chooses to candidates for each office grouped together. Among the different
be included, and if he fails to do so, he shall cease to be considered states of the United States, for example, the following has been
to belong to any ticket. The following notice shall be printed on the observed:
ballot: "If you want to vote for all the official candidates of a political
party, group or aggrupation to the exclusion of all other candidates,
6

The party-column ballot, used in about 30 states, is sometimes Commissioners then count the ballots for each party list and
called the Indiana-type ballot because the Indiana law of 1889 has distribute the total number of seats among the different successful
served as a model for other states. In most states using the party parties. 12 In Italy and West Germany, party voting is likewise in
column ballot, it is possible to vote for the candidates of a single practice, and proportional representation seats are distributed on the
party for all offices by making a single cross in the circle at the head basis of the number of votes received by the successful parties.
of the column containing the party's candidates. In some states, the Petitioners in the cases at bar invoke the constitutional
party emblem is carried at the top of its column, a feature which, in mandate that no person shag be denied the equal protection of the
less literate days, was of some utility in guiding the voter to the right laws (Article IV, Section 1) and the provision that "bona fide
column on the ballot. To vote a split ticket on a party-column ballot candidates for any public office shall be free from any form of
usually requires the recording of a choice for each office, path the harassment or discrimination" (Article XII-C, Section 9[l]). The word
voter will presumably hesitate to follow when he has the alternative "discrmination" in the latter provision should be construed in relation
of making a single crossmark. Professional party workers generally to the equal protection clause and in the manner and degree in
favor the use of the party-column ballot because it encourages which it is taken therein, since said provision "is in line with the
straight ticket voting. ... provision of the Bill of Rights that no 'person shall be denied the
In contrast with the paty-column ballot is the office-block ballot, equal protection of the laws' ". 13
or, as it is sometimes called by virtue of its origin, the The main objection of petitioners against the optional straight
Massachussetts ballot. Names of all candidates, by whatever party party' voting provided for in the Code is that an independent
nominated, for each office are grouped together on the office-block candidate would be discriminated against because by merely writing
ballot, usually with an indication alongside each name of the party on his ballot the name of a political party, a voter would have voted
affiliation. The supposition is that the voter will be compelled to for all the candidates of that party, an advantage which the
consider separately the candidates for each ballot, in contrast with independent candidate does not enjoy. In effect, it discontended that
the encouragement given to straight-ticket voting by the party the candidate who is not a party member is deprived of the equal
column ballot. Pennsylvania uses a variation of the office-block protection of the laws, as provided in Section 1 of Article IV, in
ballot: the candidates are grouped according to office but provision relation to Section 9 of Article XII, of the Constitution.
is made for straight-ticket voting by a single mark. 6 The equal protection clause does not forbid all legal
Election laws providing for the Indiana-type ballot, as classifications. What is proscribes is a classification which is
aforementioned, have been held constitutional as against the arbitrary and unreasonable. It is not violated by a reasonable
contention that they interfere with the freedom and equality of classification based upon substantial distinctions, where the
elections. Thus, in Oughton, et al. v. Black, et al., 7 assailed as classification is germane to the purpose of the law and applies
unconstitutional was a statutory proviso which required that ballots equally to all those belonging to the same class. 14 The equal
should be printed with the following instructions: "To vote a straight protection clause is not infringed by legislation which applies only to
party ticket, mark a cross (x) in the square opposite the name of the those persons falling within a specified class, if it applies alike to all
party of your choice, in the first column. a crossmark in the square persons within such class, and reasonable grounds exist for making
opposite the name of any candidate indicates a vote for that a distinction between those who fall within the class and those who
candidate." do not. 15 There is, of course, no concise or easy answer as to what
It was contended that such provision interferes with the an arbitrary classification is. No definite rule has been or can be laid
freedom and equality of elections, and authorizes a method of voting down on the basis of which such question may be resolved. The
for political parties and not 'or men. It was alleged that the special determination must be made in accordance with the facts presented
privilege given to straight ticket voters and denied to others injured by the particular case. The general rule, which is well-settled by the
appellants, who, as candidates, were opposed by other candidates authorities, is that a classification, to be valid, must rest upon
who can much more easily be voted for. In resolving such question material differences between the persons, activities or things
and declaring the law valid, the Supreme Court of Pennsylvania held included and those excluded.' There must, in other words, be a
that the "free and equal exercises of the elective franchise by every basis for distinction. Furthermore, such classification must be
elector is not impaired by the statute, but simply regulated. The germane and pertinent to the purpose of the law. And, finally, the
regulation is for the convenience of the electors. The constitutionality basis of classification must, in general, be so drawn that those who
of the law is not to be tested by the fact that one voter can cast his stand in substantially the same position with respect to the law are
ballot by making one mark while another may be required to make treated alike. It is, however, conceded that it is almost impossible in
two or more to express his will. When each has been afforded the some matters to foresee and provide for every imaginable and
opportunity and been provided with reasonable facilities to vote, the exceptional case. Exactness in division is impossible and never
Constitution, and lies in the sound discretion of the Legislature." 8 looked for in applying the legal test. All that is required is that there
The Pennsylvania Court further emphasized that elections are must be, in general, some reasonable basis on general lines for the
equal when the vote of every candidate is equal in its influence on division. 16
the result, to the vote of every candidate; when each ballot is as Classification which has some reasonable basis does not
effective as every other ballot. 9 offend the equal protection clause merely because it is not made
To the same effect is the holding in Ritchie v. Richards, which with mathematical nicety. 17
sustained the validity of a statute containing a similar provisional. 10 In the cases at bar, the assailed classification springs from the
At any rate, voting by party has been accepted in various alleged differential treatment afforded to candidates who are party
states as a form of democratic electoral process. In Israel, for members as against those who run as independents. It must be
example, where the election system is one of proportional emphasized in the election law must carry the burden of showing
representation in which each political party presents a list of that it does not rest upon a reasonable basis, but is essentially
candidates to the citizenry, the voter selects a party, not a arbitrary. 18 The factual foundation to demonstrate invalidity must
candidate, and each party is then represented in the Knesset in be established by the litigant challenging its constitutionality. 19
proportion to its strength on the polls. The head of the largest party These principles are predicated upon the presumption in favor of
is asked to form a government. 11 In France, on the other hand, constitutionality.
under the electoral law of October 5, 1946, providing for the This has to be so because of "the fundamental criteria in cases
selection of National Assembly members, a list system of of this nature that all reasonable doubts should be resolved in favor
proportional representation was set up, whereby each electoral area of the constitutionality of a statute. An act of the legislature,
elected several candidates in proportion to its voting strength. The approved by the executive, is presumed to be within constitutional
voter was required to vote only for one party list; he could not split limitations. The responsibility of upholding the Constitution rests not
his vote among several candidates on different party lists, but could on the courts alone but on the legislature as well. The question of
depart from the order of preference set up by the party.
7

the validity of every statute is first determined by the legislative organize discontent and dissatisfaction sufficient to oust the
department of the government itself. 20 government. In either case they perform the function of the
Thus, to justify the nullification of a law, there must be "a clear articulation of the interests and aspirations of a substantial segment
and unequivocal breach of the Constitution, not a doubtful and of the citizenry, usually in ways contended to be promotive of the
argumentative implication." 21 There is practical unanimity among national weal." 24
the courts in the pronouncement "that laws shag not be declared The Constitution establishes a parliamentary system of
invalid unless the conflict with the Constitution is clear beyond a government. Such a system implies the existence of responsible
reasonable doubt. 22 political parties with distinct programmes of government.
We shall now test the validity of petitioners' arguments on the The parliamentary system works best when party distinctions
basis of these principles. are well defined by differences in principle. As observed by a noted
In the challenged provision of the electoral law, unlike the authority on political law, under a parliamentary system; "the
previous block- voting statutes, all the names of the candidates, maintenance and development party system becomes not only
whether of parties, groups or independent candidates, are printed on necessary but indispensable for the enforcement of the idea and the
the ballot. Before he prepares his ballot, the voter will be able to rule of government responsibility and accountability to the people in
read all the names of the candidates. No candidate will receive more the political management of the country." 25 Indeed, the extent to
than one vote, whether he is voted individually or as a candidate of a which political parties can become effective instruments of self-
party group or aggrupation. The voter is free to vote for the government depends, in the final analysis, on the degree of the
individual candidates or to vote by party, group or aggrupation. The citizens' competence in politic and their willingness to contribute
choice is His. No one can compel him to do otherwise. In the case of political resources to the parties.
candidates, the decision on whether to run as an independent It is also contended that the system of optional straight party
candidate or to join a political party, group or aggrupation is left voting is anathema to free, orderly and honest elections or that it
entirely to their discretion. Certainly, before filing his certificate of encourages laziness or political irresponsibility. These are objections
candidacy, a candidate is aware of the advantages under the law that go to the wisdom of the statute. It is well to remember that this
accruing to candidates of a political party or group. If he wishes to Court does not pass upon questions of wisdom or expediency of
avail hihiself of such alleged advantages as an official candidate of a legislation. We have reiterated in a previous case that: "It is ...
party, he is free to do so by joining a political party group or settled ... that only congressional power or competence, not the
aggrupation. In other words, the choice is his. In making his wisdom of the action taken, may be the basis for declaring a statute
decision, it must be assumed that the candidate had carefully invalid." 26 This notwithstanding, We deem it necessary, for the
weighed and considered the relative advantages and disavantages information of everyone concerned, to explain why such fears, in a
of either alternative. So long as the application of the rule depends growing climate of political maturity and social responsibility appear
on his voluntary action or decision, he cannot, after exercising his conjectural.
discretion, claim that he was the victim of discrimination. There are no data to show that the system herein assailed was
In the ordinary course of things, those who join or become the proximate cause of all the frauds in the 1941, 1947 and 1949
members of associations, such as political parties or any other elections. Besides, all procedures or manners of voting are
lawful groups or organizations, necessarily enjoy certain benefits susceptible to fraud. The important thing to consider is that the 1978
and privileges which are incident to, or are consequences of such Election Code is replete with new provisions designed to guarantee
membership. Freedom of association has been enshrined in the the sanctity and secrecy of the people's vote.
Constitution to enable individuals to join others of like persuasion to As demonstrated in the experience of other democratic states,
pursue common objectives and to engage in lawful activities. such a system has its advantages. It may enable deserving young
Membership in associations is considered as an extension of candidates but without adequate financial resources of their own
individual freedom. Effective advocacy of both public and private to win, with party support, in countrywide or regional elections.
views or opinions is undeniably enhanced by group association. Since candidates of a party or group may pool their resources, it will
Freedom to engage in associations for the advancement of beliefs tend to make elections less expensive. As this system of voting
and Ideas is, therefore, an inseparable aspect of the liberty favors the strongly organized parties or groups, it tends to prevent
guaranteed by the fundamental law. Therefore, if, as an incident of the proliferation of political parties or groups. It thus results in the
joining a political party, group or aggrupation, the candidate is given formation of stable and responsible political parties. On the part of
certain privileges, this is constitutionally Permissible. Thus, under the electorate, such a system of voting facilitates the exercise of
the provisions of the previous election laws, only the parties who their right of suffrage. It enables the laborer, the farmer and the voter
polled the largest and the next largest number of votes in the last of ordinary education to vote with greater facility for all the official
preceding presidential elections were entitled to representation in candidates of the party of his choice. It thus broadens the ways and
the Board of Election Inspectors. 23 Independent candidates had no means by which the sovereign will can be expressed.
representation in the Board; and yet it was never contended that the Nor could it be true, as petitioners contend, that a system
independent candidates were denied the equal protection of the which allows straight ticket voting encourages laziness and political
laws. irresponsibility. While there may be those who may be moved to
The official candidates of an organized political party may be vote straight party by reason of lack of interest, nevertheless, there
distinguished from an independent candidate. The former are bound are still those sufficiently interested to cast an intelligent vote. It has
by the party's rules. They owe loyalty to the party, its tenets, its been observed that in a straight ticket the motivated voter is more
policies, its platform and programmes of government. To the likely to organize his ballot in a highly structure pattern. His
electorate, they represent the party, its principles, ideals and motivation may derive from an interest in parties, candidates, or
objectives. This is not true of an independent candidate. If the issues or any combination of those. As observed by a survey
electoral law has bias in favor of political parties, it is because research group: "Motivated straight ticket voting appears to reflect
political parties constitute a basic element of the democractic an intention on the part of the voter to accomplish his political
institutional apparatus. Government derives its strength from the purpose as fully as possible. Such a voter does not scatter his
support, activity or passive, of a coalition of elements of society. In choices casually, he has a political direction in mind and he
modern nines the political party has become the instrument for the implements it through the choice of one party or the other on the
organization of societies. This is predicated on the doctrine that ballot. The more highly motivated he is toward this political objective,
government exists with the consent of the governed. Political parties the less willing he is to dilute his vote by crossing party lines." 27
per. form an "essential function in the management of succession to
power, as well as in the process of obtaining popular consent to the
course of public policy. They amass sufficient support to buttress the
authority of governments; or, on the contrary, they attract or
8

II Batasang Pambansa. T was intended as a preparatory and


experimental step toward the establishment of full parliamentary
The second issue before Us is: Whether or not the provisions government as provided for in the Constitution.
of Sections 11, 12 and 14 of the 1978 Election Code, which
authorize the elections of the members of the interim Batasang Amendment No. 1 provides:
Pambansa by regions, violate Section 2 of Article VIII of the
Constitution which provides that the members of the National 1. There shall be, in lieu of the interim National Assembly, an
Assembly shall be apportioned among the provinces, representative interim Batasang Pambansa, Members of the interim Batasang
districts and cities. Pambansa, which shall not be more than 120, unless otherwise
Assailed as unconstitutional are the following provisions of the provided by law, shall include the incumbent President of the
1978 Election Code: Philippines, representatives elected from the different regions of the
SEC. 11. Composition. The interim Batasang Pambansa nation, those who shall not be less than eighteen years of age
shall be composed of the incumbent President of the Philippines, elected by their respective sectors, and those chosen by the
representatives elected from the different regions of the nation, incumbent President from the Members of the Cabinet. Regional
those who shag not be less than eighteen years of age elected by representatives shall be apportioned among the regions in
their respective sectors, and those chosen by the incumbent accordance with the number of their respective inhabitants and on
President from the members of the Cabinet." the basis of a uniform and progressive ratio, while the sectors shall
SEC. 12. Apportionment of regional representatives. There be determined by law. The number of representatives from each
shall be 160 regional representatives to the interim Batasang region or sector and the manner of their election shall be prescribed
Pambansa apportioned among the thirteen regions of the nation in and regulated by law. (Emphasis supplied.)
accordance with the number of their respective inhabitants and on The provisions of the Above Amendment are clear. Instead of
the basis of a uniform and progressive ratio ... : providing that representation in the interim Batasang Pambansa
xxx xxx xxx shall be by representative districts, it specifically provides that; (1)
The foregoing apportionment shall be not considered a the representatives shall be elected from the different regions of the
precedent in connection with the re-apportionment of representative nation; and (2) the "Regional representatives shall be apportioned
districts for the regular National Assembly under Section 2, Article among the regions in accordance with the number of their respective
VIII and Section 6, Article XVI I of the Constitution. inhabitants and on the basis of a uniform and progressive ratio while
Notwithstanding the foregoing provisions, the number of the sector shall be determined by law. " No mention whatsoever is
regional representative for any region shall not be less than the made of 4 provinces, representative districts and cities". Where the
number of representative districts therein existing at the time of the intent is to relate to the regular National Assembly, the Constitution
ratification of the Constitution. There are also allotted two additional made it clear and manifest, as indicated in Amendment No. 2 of the
seats for regional representatives to Region IV in view of Constitution. 29 It is significant to note that nowhere in the said
inhabitants, such as students, in the region not taken into account in amendment is it provided that the members of the interim Batasang
the 1975 census. Pambansa shall be apportioned among the representative districts,
SEC. 14. Voting by region. Each region shall be in the same manner as the regular National Assembly. The clear
entitled to such number of regional representatives as are allotted to import and intent of the Constitutional Amendment is, therefore, the
it in Section 12 of Article II hereof. All candidates for region election of the representatives from the different regions of the
representatives shall be voted upon at large by the registered voters nation, and such regional representatives shall be alloted or
of their respective regions. The candidates receiving the highest distributed among the regions in accordance with the number of
number of votes from the entire region shall be declared elected. their respective inhabitants and on the basis of a uniform and
The constitutional provision relied upon is Section 2 of Article progressive ratio. Neither does the Amendment provide that the
VIII, which provides: members of the interim Batasang Pambansa "shall be elected by the
SEC. 2. The National Assembly shall be composed of as qualified electors in their respective district for term of six years ..."
many Members as may be provided by law to be apportioned as provided in Section 3[l] of Article VIII of the Constitution. To hold
among the provinces, representative districts and cities in that Section 3[l] of Article VIII is applicable to the interim Batasang
accordance with the number of their respective inhabitants and on Pambansa would lead to the conclusion that the members of the
the basis of a uniform and progressive ratio. Each district shall Batasan shall have a term of six years, which is of course
Comprise, as far as practicable, contiguous, compact, and adjacent inconsistent with its transitory character. That the interim Batasang
territory. Representative districts or provinces already created or Pambansa is a distinct and special body, which, by reason of its
existing at the time of the ratification of this Constitution shag have transitory nature should be governed by specifically formulated
at least one Member each. rules, is apparent from the constitutional amendment which created
In resolving the issue, the provisions of Amendment No. 1 to it. Thus, its membership "shall not be more than 120, unless
the Constitution, which took effect on October 27, 1976, should be otherwise provided by law. " Furthermore, it "shall include the
considered and not, as pointed out by petitioner Juan T. David, incumbent President of the Philippines, representatives elected from
those of Section 2 of Article VIII of the Constitution, which deal with the different regions of the nation, those who shall not be less than
the composition of the regular National Assembly. eighteen years of age elected by their respective sectors, and those
It should be recalled that under the term of the Transitory chosen by the incumbent President from the Members of the
Provisions of the Constitution, 28 the membership of the interim Cabinet." The regular National Assembly, on the other hand, is
National Assembly would consists of the Incumbent President and limited in its membership to representatives to be apportioned
Vice-President, the Senators and the Representatives of the old among the provinces, representative districts and cities. By reason
Congress and the Delegates to the Constitutional Convention who of its provisional character, the interim Batasang Pambansa has to
have opted to serve therein. The Filipino people rejected the be more flexible, both in its representation and the manner of
convening of the interim National Assembly, and for a perfectly election of its members. There is no denying the fact that as wide a
justifiable reason. range of representation as possible is required in order to hasten the
By September of 1976, the consensus had emerged for a nation's return to normalcy. It is for t reason that sectors are given
referendum partaking of the character of a plebiscite which would be adequate representation 30 and are considered as "national
held to establish the solid foundation for the next step towards aggrupations. " Elections of sectoral representatives are specially
normalizing the political process. By the will of the people, as provided for in the 1978 Election Code. 31 It should be emphasized
expressed overwhelmingly in the plebiscite of October 15 and 16, that the regular National Assembly is distinct and different in
1976, Amendments Nos. 1 to 9 were approved, abolishing the composition, powers and manner of elections of its members from
interim National Assembly and creating in its stead an interim the interim Batasang Pambansa is to function during the period of
9

transition while the regular National Assembly is to operate upon the one party system with two factions openly disagreeing on fringe
restoration of normalcy. issues but tacitly united by one common aim: alternate monopoly of
The composition of the interim Batasang Pambansa is indeed power through a pattern of patronage politics." 32 The framers of the
experimental. It is an experiment in size, form and distribution of Constitution examined the weaknesses of the party system and saw
constituencies in the hope of securing a legislature most truly the need "for discarding the old party system as a political farce that
representative of the views of the electorate. It would, therefore, be has been largely responsible for many of the country's ills ...". 33
ludicrous to confine the members of such body within the strictures They envisioned, therefore, a new era in Philippine politics, where
of the representative districts of the regular National Assembly. The elections were to be decided on issues rather than on personalities,
fear of petitioner Juan T. David that several representative districts and where the electoral process was to be free, less expensive
will be deprived of representation misconstrues the concept of government depends on an organized and vigorous citizenry. Such
regional elections. The representatives are to be elected by the can only exist if citizens can increase their effectiveness in politics
voters of the entire region. They will represent the whole region and by modernizing and using political parties to set the general
not merely its integral provinces, districts or cities. Moreover, directions of public policy and to influence the specific decisions of
Section 12 of the Code ensures that there shall be sufficient public institutions that affect their daily lives.
representatives for each region by providing that "the number of It was intended, however, that some of these provisions would
regional representatives for any region shall not be less than the not operate during the interim period. Thus, from the wording of
number of representative districts therein existing at the time of the Section 8, it is obvious that said section is incapable of application
ratification of the Constitution." during the first election because it states that no political party shall
be entitled to accreditation unless in the immediately preceding
III election, it obtained at least the third highest number of votes cast in
the constituency to which it seeks accreditation. That there cannot
The following two issues raised by petitioners are interrelated be any accreditation during the first election under the 1973
and must be jointly discussed herein. They are: Constitution is evident from the sponsorship speech of the
(a) Whether or not the Kilusang Bagong Lipunan (KBL) and proponent of t constitutional provision. 34
the Lakas ng Bayan (LABAN) may be registered and accredited as Although their members are united by common policies and
political parties under Section 8 of Article XII-C of the Constitution, principles of government and apparently impelled by the same
so that their respective candidates for membership in the interim political Ideals, neither the Kilusang Bagong Lipunan (KBL) nor the
Batasang Pambansa may be voted for as a group under the 1978 Lakas ng Bayan (LABAN) professes to be a political party in the
Election Code; and sense of a stable organization with a degree of permanence,
(b) Whether or not members of a political party in the l971 imposing strict discipline among the members, and with a party
elections may run under the ticket sponsored by any other party, platform drafted and ratified in a party convention. It does not follow,
group or aggrupation, considering the provisions of Section 10 of however, that the KBL and LABAN are not political parties, in a
Article XII-C of the Constitution which prohibition candidates for any generic sense, since a political party has been generally defined as
elective public office from changing party affiliation within six months "an association of voters believing in certain principles of
s immediately preceding or following an election government, formed to urge the adoption and execution of such
The resolution of the foregoing issues calls for the principles in governmental affairs through officers of like belief." 35.
determination of the constitutionality of Section 199 of the 1978 Political parties "result from the voluntary association of electors,
Election Code, questioned by petitioners. Said section provides: and do not exist by operation of law. The element of time is not
SEC. 199. Registration of political parties. Pending the essential to the formation of a legal party; it may spring into
promulgation of rules and regulations to govern the registration and existence from the exigencies of a particular election, and with no
accreditation of political parties by the Commission in accordance intention of continuing after the exigency has passed." 36 As a
with Article XII[C] of the Constitution, the registration with the matter of fact, it is only the Kilusang Bagong Lipunan (KBL) and the
Commission previous to 1972 of the Nacionalista Party, Liberal Lakas ng Bayan (LABAN) that have polarized the major differences
Party, Citizens' Party, and other national parties shall be deemed to on vital public issues affecting the nation. And, during t first election
continue and they may, upon notice to the Commission through their in t period of transition when, obviously, no political party can be
respective presidents or duly authorized representatives, amend or accredited, does the Constitution, in Article XII-C, Sections 2[5] and
change their names, constitutions, by-laws, or other organizational 8 limit registration to political parties as strictly understood by
papers, platfor, officers and members, and shag be entitled to withholding it from aggrupations of persons pursuing the same
nominate and support their respective candidates for political Ideals of government as provided in Section 199 of the 1978
representatives in the interim Batasang Pambansa. Similarly, any Election Code? It clearly does not. The listing of political parties
other group of persons pursuing the same political Ideals in appears to have a dual aspect registration and accreditation
government may register with the Commission and be entitled to the Registration is a means by which the government is enabled to
same rights and privileges. supervise and regulate the activities of various elements
Invoked by petitioner are Sections 8 and 10 of Article XII-C of participating in an election.
the Constitution, which provide: It would appear from Section 8 of Article XII-C that the only
SEC. 8. A political party shall be entitled to accreditation by the groups which cannot be registered are: (a) religious groups or sects;
Commission if, in the immediately preceding election, such party has and (b) those political parties or groups who seek "to achieve its
obtained at least the third highest number of votes cast in the goals through violence and subversion". Accreditation is the means
constituency to which it seeks accreditation. No religious sect shall by which the registration requirement is made effective by conferring
be registered as political party, and no political party which seeks to benefits to registered political parties. The condition for
achieve its goals through violence or subversion shall be entitled to accreditation, aside from those mentioned, is that the political party
accreditation. must have obtained, in the immediately preceding election, at least
SEC. 10. No elective public officer may change political party "the third highest number of votes cast in the constituency to which it
affiliation during term of office, and no candidate for any elective seeks accreditation. " The Constitution, however, does not state
public office may change political party affiliation within six months what are the effects of accreditation. There is, therefore, necessity
immediately preceding g or following an election. for legislation. Moreover, to construe the term "political party"
It should be recalled that the object of the afore-quoted restrictively would delimit the supervisory authority of the
provisions of the Constitution was to develop a third party and break Commission on Elections. More specifically, it would exempt
the heretofore dominant hold on the political system by the two aggrupations or other political groups from certain requirements.
major political parties which have been in existence since the birth of Under Section 199, the 1978 Election Code allows the registration of
the republic. These two major parties were considered as "in fact a aggrupations or groups of persons "pursuing the same political
10

Ideals in government"; consequently, they are subjected to the affiliation during term of office. Suppose an elected representative in
regulation of propaganda materials (Sec. 41) and the limitation of the legislature, belonging to one party, shall always vote and side
expenses for candidates (Sec. 52). with another political party. Will he be considered a "turncoat" even if
From another point of view, a narrow construction may he does not formally change party affiliation? Suppose it be decided
discourage the robust exercise of the right of association guaranteed that he is a "turncoat". What sanctions should be adopted? Should
by the Bill of Rights, which at t stage of our political tory appears, he be suspended or ousted from the legislature?
necessary. When one turns to political candidates, the same questions as
The facts that the coming polls will be the first that we shall to what should be considered "political opportunism" or
hold since the proclamation of martial law on September 21, 1972 "turncoatism" will be encountered. But the problem of procedure for
makes it an event of no ordinary significance. "The Filipino society hearing and deciding infringements of the prohibition or the
has outgrown its age of innocence. Today the acts of Filipino determination of the appropriate sanction becomes more acute. Is
politicians must be judged by more mature standards and the test of the sanction to be found in the refusal by the Commission on
national allegiance has become more strict and more demanding, Elections to register the party or group, or in the denial of certificate
even more binding." 37 By t election, we shall inaugurate a new of candidacy, or are there other ways? Should political parties be
stage in our political life, and commence our fateful transition from prevented from "adopting" candidates? Or from forming coalitions?
crisis government to a parliamentary system. All of these are questions of policy, in resolving winch many
immensurable factors have to be considered. The afore-cited
But as President Ferdinand E. Marcos has significantly constitutional provisions are commands to the legislature to enact
observed: laws to carry out the constitutional purpose. They are, therefore,
addressed initially to the lawmaking department of the government.
... this step, I repeat, is no mere restoration of electoral It is not part of the judicial department to deal with such questions
processes and representative government. The coming elections without their authoritative solutions by the legislative department. It
would be a perilous exercise indeed if they would merely return us to may be relevant to emphasize here that the jurisdiction of t Court is
elections and representative institutions as we had known them in "limited to cases and controversies, presented in such form, with
the past, and compromise what had taken us so much time and adverse litigants, that the judicial power is capable of acting upon
effort to construct over the last five years. them, and pronouncing and carrying into effect a judgment between
the parties, and does not extend to the determination of abstract
What we envision in t initiative is the permanence and questions or issues framed for the purpose of invoking the advice of
continuity of the refor that we have launched under the aegis of the court without real parties or a real case." 42
crisis government. We envision in it the full emergence of a new In any event, We cannot perceive how such constitutional
political order that will give life and sustenance to our national vision prohibition could be applied in t first election. Precisely, the
of a new society. And it will have permanence and continuity overriding constitutional purpose is to remove the dominant hold of
because by the grace of suffrage and representative government, the two major political parties and encourage the formation of new
we shag thereby attain a formal mechanism for the exercise of political parties. The intention is not to rebuild old party coalitions but
participation and involvement by our people in nation-building and to define new political means and instruments, within the parties or
national development. 38 beyond them, that will allow the Filipino people to express their
deeper concerns and aspirations through popular government.
It is, therefore, necessary at t stage to encourage the
emergence or growth of political parties that will truly reflect the IV
opinions and aspirations of our people. The right of individuals to
form associations as guaranteed by the fundamental law, includes The fourth issue is: whether or not the forty-five-day period of
the freedom to associate or refrain from association. 39 In accord campaign prescribed in the 1978 Election Code violates the
with t constitutional precept, it is recognized that no man is Constitution because. (a) it was decreed by the President and not by
compelled by law to become a member of a political party, or, after the Commission on Elections as provided by Section 6 of Article XII-
having become such, to remain a member. 40 C; and (b) the period should cover at least ninety (90) days.
Petitioners question the constitutionality of Section 4 of the
The existence of responsible political parties with distinct 1978 Election Code, which provides:
programs of government is essential to the effectiveness of a SEC. 4. Election and campaign periods. The election period
parliamentary system of government. It is in recognition of t fact that shall be fixed by the Commission on Elections in accordance with
Section 199 of the 1978 Election Code allows or sanctions the Section 6, Article XII-C of the Constitution. The period of campaign
registration of groups of persons "pursuing the same political ideals shall not be more than forty- five days immediately preceding the
in government" with the Commission on Elections. Moreover, to election, excluding the day before and the day of the election:
what extent the rights of organized political parties should be Provided, That for the election of representatives to the interim
regulated by law is a matter of public policy to be determined by the Batasang Pambansa, the period of campaign shall commence on
lawmaker a matter which does not concern the courts. 41 February 17, 1978 except that no election campaign or partisan
political activity may be conducted on March 23 and 24, 1978.
T brings us to the next point raised by petitioners, namely, that In support of the allegation of unconstitutionality, petitioners
under Section 10 of Article XII-C of the Constitution, no candidate for rely on Section 6 of Article XII-C of the Constitution, thus:
elective office may change party affiliation within six months SEC. 6. Unless otherwise fixed by the Commission in special
immediately preceding or following an election. In the cases at bar, cases, the election period shall commence ninety days before the
We understand that no candidate voluntarily changed party day of election and shall end thirty days thereafter.
affiliation. On the contrary, the claim that the KBL and the LABAN At the outset, it should be considered that Amendment No. 1
are not political parties" is based partly on the fact that the provides that the "number of representatives from each region and
candidates running under their banners have retained their party the manner of their election shall be prescribed and regulated by law
affiliation. Section 10 is a statement of a basic principle against " (emphasis supplied). Under Amendment No. 5, "the incumbent
political opportunism. To begin with, no legislation has been enacted President shall continue to exercise legislative powers until martial
to implement t constitutional prohibition. Indeed, it is difficult to law shall have been lifted." The power conferred by these
conceive how the courts may apply the prohibition, in all the varied Amendment upon the lawmaker necessarily included the authority to
facts and circutances under which it may be invoked, without the aid prescribe the date and procedure for the holding of such elections. It
of supplementary legislation. For instance, the provision in question should be borne in mind that the forthcoming election for members
states that no elective public officer may change political party in the interim Batasang Pambansa will be a special election during a
11

regime of martial law. It is, therefore, an election in a state of CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG
emergency. The exigencies of the situation require that it be PANGLUNSOD AND THE CITY OF MANILA, respondents.
governed by special rules. At t point, the objective is to hasten the The City Legal Officer for petitioner.
normalization of government and, at the same time, to ensure that Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.).
the nation is not exposed to the same critical proble that Joseph Lopez for Sangguniang Panglunsod of Manila.
necessitated the declaration of martial law. In conferring upon the L.A. Maglaya for Petron Corporation.
incumbent President the authority to determine the date of the
election, those who drafted the Amendments must have realized CRUZ, J.:
that it is only the incumbent President who has the authority and the The principal issue in this case is the constitutionality of
means of obtaining, through the various facilities in the civil and Section 187 of the Local Government Code reading as follows:
military agencies of the government, information on the peace and Procedure For Approval And Effectivity Of
order condition of the country, and to determine the period within Tax Ordinances And Revenue Measures;
which an electoral campaign may be adequately conducted in all the Mandatory Public Hearings. The procedure
regions of the nation. Thus, the 1978 Election Code was formulated for approval of local tax ordinances and revenue
to meet a special need, and t is emphasized by the fact that the measures shall be in accordance with the
Code itself limits its application. 43 provisions of this Code: Provided, That public
Even assuming that it should be the Commission on Elections hearings shall be conducted for the purpose
that should fix the period for campaign, the constitutional mandate is prior to the enactment thereof; Provided, further,
complied with by the fact that the Commission on Elections has That any question on the constitutionality or
adopted and is enforcing the period fixed in Section 4, Article I of the legality of tax ordinances or revenue measures
1978 Election Code. may be raised on appeal within thirty (30) days
At any rate, insofar as objections to the fixing of the campaign from the effectivity thereof to the Secretary of
period for elections in general are concerned, it is apparent that Justice who shall render a decision within sixty
there is a distinction between the ter "election period" and (60) days from the date of receipt of the appeal:
"campaign period". Thus, Section 4, Article I of the 1978 Election Provided, however, That such appeal shall not
Code provides that the "election period shag be fixed by the have the effect of suspending the effectivity of
Commission on Elections in accordance with Section 6, Article XII the ordinance and the accrual and payment of
(C) of the Constitution." The "campaign period", however, has been the tax, fee, or charge levied therein: Provided,
fixed so that "it shall not be more than forty-five days immediately finally, That within thirty (30) days after receipt
preceding the election: Provided, That for the election of of the decision or the lapse of the sixty-day
representatives to the interim Batasang Pambansa, the period of period without the Secretary of Justice acting
campaign shag commence on February 17, 1978 except that no upon the appeal, the aggrieved party may file
election campaign or partisan political activity may be conducted on appropriate proceedings with a court of
March 23 and 24, 1978." The distinction is further made apparent by competent jurisdiction.
the fact that the "election period" under Section 5 of Article XII-C of Pursuant thereto, the Secretary of Justice had, on appeal to
the Constitution extends even beyond the day of the election itself, him of four oil companies and a taxpayer, declared Ordinance No.
while the "campaign period", by reason of its nature and purpose, 7794, otherwise known as the Manila Revenue Code, null and void
must necessarily be before the elections are held. There is, for non-compliance with the prescribed procedure in the enactment
therefore, no conflict with the constitutional provision. of tax ordinances and for containing certain provisions contrary to
At t juncture, it may be relevant to note the efforts of the law and public policy. 1
Commission on Elections to give more substance and meaning to In a petition for certiorari filed by the City of Manila, the
the intent and spirit of the Constitution and the 1978 Election Code Regional Trial Court of Manila revoked the Secretary's resolution
by giving the same practicable opportunities to candidates, groups and sustained the ordinance, holding inter alia that the procedural
or parties involved in the April 7, 1978 interim Batasang Pambansa requirements had been observed. More importantly, it declared
elections. Thus, in Resolution No. 1289, the COMELEC removed Section 187 of the Local Government Code as unconstitutional
the so-called undue advantage which the Nacionalista Party and the because of its vesture in the Secretary of Justice of the power of
Kilusang Bagong Lipunan (KBL) had over the Lakas ng Bayan control over local governments in violation of the policy of local
(LABAN) in ter of authorized election expenses, appointment of autonomy mandated in the Constitution and of the specific provision
election watchers and use of print and broadcast media. T therein conferring on the President of the Philippines only the power
circutance, contrary to the clai of petitioners, shows that the of supervision over local governments. 2
Commission on Elections, as a constitutional body charged with the The present petition would have us reverse that decision. The
enforcement and administration of all laws relative to the conduct of Secretary argues that the annulled Section 187 is constitutional and
elections, and with broad powers, functions and duties under the that the procedural requirements for the enactment of tax
1973 Constitution, can give candidates, irrespective of parties, equal ordinances as specified in the Local Government Code had indeed
opportunities under equal circutances. not been observed.
WHEREFORE, in view of the foregoing, the instant petitions Parenthetically, this petition was originally dismissed by the
are hereby DISMISSED, without costs. Court for non-compliance with Circular 1-88, the Solicitor General
Castro, C.J., Makasiar, Aquino, Concepcion, Jr., Santos, having failed to submit a certified true copy of the challenged
Fernandez, and Guerrero, JJ., concur. decision. 3 However, on motion for reconsideration with the required
certified true copy of the decision attached, the petition was
Republic of the Philippines reinstated in view of the importance of the issues raised therein.
SUPREME COURT We stress at the outset that the lower court had jurisdiction to
Manila consider the constitutionality of Section 187, this authority being
EN BANC embraced in the general definition of the judicial power to determine
what are the valid and binding laws by the criterion of their
G.R. No. 112497 August 4, 1994 conformity to the fundamental law. Specifically, BP 129 vests in the
HON. FRANKLIN M. DRILON, in his capacity as regional trial courts jurisdiction over all civil cases in which the
SECRETARY OF JUSTICE, petitioner, subject of the litigation is incapable of pecuniary estimation, 4 even
vs. as the accused in a criminal action has the right to question in his
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, defense the constitutionality of a law he is charged with violating and
of the proceedings taken against him, particularly as they
12

contravene the Bill of Rights. Moreover, Article X, Section 5(2), of of the act. He has no judgment on this matter except to see to it that
the Constitution vests in the Supreme Court appellate jurisdiction the rules are followed. In the opinion of the Court, Secretary Drilon
over final judgments and orders of lower courts in all cases in which did precisely this, and no more nor less than this, and so performed
the constitutionality or validity of any treaty, international or an act not of control but of mere supervision.
executive agreement, law, presidential decree, proclamation, order, The case of Taule v. Santos 9 cited in the decision has no
instruction, ordinance, or regulation is in question. application here because the jurisdiction claimed by the Secretary of
In the exercise of this jurisdiction, lower courts are advised to Local Governments over election contests in the Katipunan ng Mga
act with the utmost circumspection, bearing in mind the Barangay was held to belong to the Commission on Elections by
consequences of a declaration of unconstitutionality upon the constitutional provision. The conflict was over jurisdiction, not
stability of laws, no less than on the doctrine of separation of supervision or control.
powers. As the questioned act is usually the handiwork of the Significantly, a rule similar to Section 187 appeared in the
legislative or the executive departments, or both, it will be prudent Local Autonomy Act, which provided in its Section 2 as follows:
for such courts, if only out of a becoming modesty, to defer to the A tax ordinance shall go into effect on the
higher judgment of this Court in the consideration of its validity, fifteenth day after its passage, unless the
which is better determined after a thorough deliberation by a ordinance shall provide otherwise: Provided,
collegiate body and with the concurrence of the majority of those however, That the Secretary of Finance shall
who participated in its discussion. 5 have authority to suspend the effectivity of any
It is also emphasized that every court, including this Court, is ordinance within one hundred and twenty days
charged with the duty of a purposeful hesitation before declaring a after receipt by him of a copy thereof, if, in his
law unconstitutional, on the theory that the measure was first opinion, the tax or fee therein levied or imposed
carefully studied by the executive and the legislative departments is unjust, excessive, oppressive, or confiscatory,
and determined by them to be in accordance with the fundamental or when it is contrary to declared national
law before it was finally approved. To doubt is to sustain. The economy policy, and when the said Secretary
presumption of constitutionality can be overcome only by the exercises this authority the effectivity of such
clearest showing that there was indeed an infraction of the ordinance shall be suspended, either in part or
Constitution, and only when such a conclusion is reached by the as a whole, for a period of thirty days within
required majority may the Court pronounce, in the discharge of the which period the local legislative body may
duty it cannot escape, that the challenged act must be struck down. either modify the tax ordinance to meet the
In the case before us, Judge Rodolfo C. Palattao declared objections thereto, or file an appeal with a court
Section 187 of the Local Government Code unconstitutional insofar of competent jurisdiction; otherwise, the tax
as it empowered the Secretary of Justice to review tax ordinances ordinance or the part or parts thereof declared
and, inferentially, to annul them. He cited the familiar distinction suspended, shall be considered as revoked.
between control and supervision, the first being "the power of an Thereafter, the local legislative body may not
officer to alter or modify or set aside what a subordinate officer had reimpose the same tax or fee until such time as
done in the performance of his duties and to substitute the judgment the grounds for the suspension thereof shall
of the former for the latter," while the second is "the power of a have ceased to exist.
superior officer to see to it that lower officers perform their functions That section allowed the Secretary of Finance to suspend the
in accordance with law." 6 His conclusion was that the challenged effectivity of a tax ordinance if, in his opinion, the tax or fee levied
section gave to the Secretary the power of control and not of was unjust, excessive, oppressive or confiscatory. Determination of
supervision only as vested by the Constitution in the President of the these flaws would involve the exercise of judgment or discretion and
Philippines. This was, in his view, a violation not only of Article X, not merely an examination of whether or not the requirements or
specifically Section 4 thereof, 7 and of Section 5 on the taxing limitations of the law had been observed; hence, it would smack of
powers of local governments, 8 and the policy of local autonomy in control rather than mere supervision. That power was never
general. questioned before this Court but, at any rate, the Secretary of
We do not share that view. The lower court was rather hasty in Justice is not given the same latitude under Section 187. All he is
invalidating the provision. permitted to do is ascertain the constitutionality or legality of the tax
Section 187 authorizes the Secretary of Justice to review only measure, without the right to declare that, in his opinion, it is unjust,
the constitutionality or legality of the tax ordinance and, if warranted, excessive, oppressive or confiscatory. He has no discretion on this
to revoke it on either or both of these grounds. When he alters or matter. In fact, Secretary Drilon set aside the Manila Revenue Code
modifies or sets aside a tax ordinance, he is not also permitted to only on two grounds, to with, the inclusion therein of certain ultra
substitute his own judgment for the judgment of the local vires provisions and non-compliance with the prescribed procedure
government that enacted the measure. Secretary Drilon did set in its enactment. These grounds affected the legality, not
aside the Manila Revenue Code, but he did not replace it with his the wisdom or reasonableness, of the tax measure.
own version of what the Code should be. He did not pronounce the The issue of non-compliance with the prescribed procedure in
ordinance unwise or unreasonable as a basis for its annulment. He the enactment of the Manila Revenue Code is another matter.
did not say that in his judgment it was a bad law. What he found only In his resolution, Secretary Drilon declared that there were no
was that it was illegal. All he did in reviewing the said measure was written notices of public hearings on the proposed Manila Revenue
determine if the petitioners were performing their functions in Code that were sent to interested parties as required by Art. 276(b)
accordance with law, that is, with the prescribed procedure for the of the Implementing Rules of the Local Government Code nor were
enactment of tax ordinances and the grant of powers to the city copies of the proposed ordinance published in three successive
government under the Local Government Code. As we see it, that issues of a newspaper of general circulation pursuant to Art. 276(a).
was an act not of control but of mere supervision. No minutes were submitted to show that the obligatory public
An officer in control lays down the rules in the doing of an act. If hearings had been held. Neither were copies of the measure as
they are not followed, he may, in his discretion, order the act undone approved posted in prominent places in the city in accordance with
or re-done by his subordinate or he may even decide to do it Sec. 511(a) of the Local Government Code. Finally, the Manila
himself. Supervision does not cover such authority. The supervisor Revenue Code was not translated into Pilipino or Tagalog and
or superintendent merely sees to it that the rules are followed, but disseminated among the people for their information and guidance,
he himself does not lay down such rules, nor does he have the conformably to Sec. 59(b) of the Code.
discretion to modify or replace them. If the rules are not observed, Judge Palattao found otherwise. He declared that all the
he may order the work done or re-done but only to conform to the procedural requirements had been observed in the enactment of the
prescribed rules. He may not prescribe his own manner for the doing Manila Revenue Code and that the City of Manila had not been able
13

to prove such compliance before the Secretary only because he had held that the moratorium laws suspended the period of prescription.
given it only five days within which to gather and present to him all That was rendered after the Rutter-Esteban decision. It should be
the evidence (consisting of 25 exhibits) later submitted to the trial stated however, in fairness to appellant, that the Montilla decision
court. came down after he had submitted his brief. And in answer to his
To get to the bottom of this question, the Court acceded to the main contention, the following portion is quoted from a resolution of
motion of the respondents and called for the elevation to it of the this Court4
said exhibits. We have carefully examined every one of these 2. Rutter vs. Esteban (93 Phil., 68) may be construed
exhibits and agree with the trial court that the procedural to mean that at the of the decision the Moratorium law
requirements have indeed been observed. Notices of the public could no longer be validly applied because of the
hearings were sent to interested parties as evidenced by Exhibits G- prevailing circumstances. At any rate, although the
1 to 17. The minutes of the hearings are found in Exhibits M, M-1, general rule is that an unconstitutional statute
M-2, and M-3. Exhibits B and C show that the proposed ordinances "confers no right, create no office, affords no
were published in the Balita and the Manila Standard on April 21 protection and justifies no acts performed under it." (11
and 25, 1993, respectively, and the approved ordinance was Am. Jur., pp. 828, 829.)
published in the July 3, 4, 5, 1993 issues of the Manila Standard and there are several instances wherein courts, out of
in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, equity, have relaxed its operation (cf. notes in Cooley's
and Q-3. Constitutional Limitations 8th ed., p. 383 and Notes 53 A.
The only exceptions are the posting of the ordinance as L. R., 273) or qualified its effects "since the actual
approved but this omission does not affect its validity, considering existence of a statute prior to such declaration is an
that its publication in three successive issues of a newspaper of operative fact, and may have consequences which cannot
general circulation will satisfy due process. It has also not been justly be ignored (Chicot County vs. Baster, 308 U. S.,
shown that the text of the ordinance has been translated and 371) and a realistic approach is eroding the general
disseminated, but this requirement applies to the approval of local doctrine (Warring vs. Colpoys, 136 Am. Law Rep., 1025,
development plans and public investment programs of the local 1030).
government unit and not to tax ordinances. Judgment affirmed, without costs.
We make no ruling on the substantive provisions of the Manila
Revenue Code as their validity has not been raised in issue in the
present petition.
WHEREFORE, the judgment is hereby rendered REVERSING
the challenged decision of the Regional Trial Court insofar as it
declared Section 187 of the Local Government Code
unconstitutional but AFFIRMING its finding that the procedural
requirements in the enactment of the Manila Revenue Code have
been observed. No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-9396 August 16, 1956
MANILA MOTOR COMPANY, INC., plaintiff-appellee,
vs.
MANUEL T. FLORES, defendant-appellant.
Delgado, Flores and Macapagal for appellant.
Zafra, Lara, De Leon and Veneracion for appellee.

BENGZON, J.:
In May 1954, Manila Motor Company filed in the Municipal
Court of Manila a complaint to recover from Manuel T. Flores the
amount of P1,047.98 as chattel mortgage installments which fell due
in September 1941. Defendant pleaded prescription: 1941 to 1954.
The complaint was dismissed. On appeal, the Court of First Instance
saw differently, sustaining plaintiff's contention that the moratorium
laws had interrupted the running of the prescriptive period, and that
deducting the time during which said laws were in operation three
years and eight months1 the ten year term had not yet elapsed
when complainant sued for collection in May 1954. Wherefore said
court ordered the return of the case to the municipal judge for trial
on the merits.
Defendant appealed, arguing principally that the moratorium
laws did not have the effect of suspending the period of limitations,
because they were unconstitutional, as declared by this court in
Rutter vs. Esteban, 49 Off. Gaz. (5) 1807. He cites jurisprudence
holding that when a statute is adjudged unconstitutional it is as
inoperative as if it had never been passed, and no rights can be built
upon it.2
Some members expressed doubts as to whether the order of
the lower court was appealable in nature; but we agreed not to
discuss the point, inasmuch as the question submitted by appellant
could speedily be disposed of. InMontilla vs. Pacific Commercial3 we