LegMeth Sept 29

NITAFAN VS CIR
G.R. No. 78780 July 23 1987 [Salaries of the members of Judiciary, Tax Exemption]

FACTS:
Nitafan and some others, duly qualified and appointed judges of the RTC, NCR, all with stations in Manila, seek
to prohibit and/or perpetually enjoin the Commissioner of Internal Revenue and the Financial Officer of the
Supreme Court, from making any deduction of withholding taxes from their salaries.

They submit that "any tax withheld from their emoluments or compensation as judicial officers constitutes a
decrease or diminution of their salaries, contrary to the provision of Section 10, Article VIII of the 1987
Constitution mandating that during their continuance in office, their salary shall not be decreased," even as it is
anathema to the Ideal of an independent judiciary envisioned in and by said Constitution."

ISSUE: Whether or not members of the Judiciary are exempt from income taxes.

HELD:
No. The salaries of members of the Judiciary are subject to the general income tax applied to all taxpayers.
Although such intent was somehow and inadvertently not clearly set forth in the final text of the 1987
Constitution, the deliberations of the1986 Constitutional Commission negate the contention that the intent of
the framers is to revert to the original concept of non-diminution of salaries of judicial officers. Justices and
judges are not only the citizens whose income has been reduced in accepting service in government and yet
subject to income tax. Such is true also of Cabinet members and all other employees.
G.R. No. 202242 April 16, 2013
Chavez v. JBC
MENDOZA, J.:

NATURE:
The case is a motion for reconsideration filed by the JBC in a prior decision rendered July 17, 2012 that JBCs
action of allowing more than one member of the congress to represent the JBC to be unconstitutional

FACTS:
- In 1994, instead of having only seven members, an eighth member was added to the JBC as two
representatives from Congress began sitting in the JBC
o One from the House of Representatives and one from the Senate, with each having one-half
(1/2) of a vote
- Then, the JBC En Banc decided to allow the representatives from the Senate and the House of
Representatives one full vote each
o Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr. (respondents)
simultaneously sit in the JBC as representatives of the legislature
- It is this practice that petitioner has questioned in this petition.
o It should mean one representative each from both Houses which comprise the entire
Congress.
- Respondent contends that the phrase a representative of congress refers that both houses of
congress should have one representative each, and that these two houses are permanent and
mandatory components of congress as part of the bicameral system of legislature. Both houses
have their respective powers in performance of their duties. Art VIII Sec 8 of the constitution provides
for the component of the JBC to be 7 members only with only one representative from congress.

ISSUE:
Whether the JBCs practice of having members from the Senate and the House of Representatives making 8
instead of 7 sitting members to be unconstitutional as provided in Art VIII Sec 8 of the constitution.

HELD:
- Yes.
- The practice is unconstitutional;
o The court held that the phrase a representative of congress should be construed as to
having only one representative that would come from either house, not both.
o That the framers of the constitution only intended for one seat of the JBC to be allotted for
the legislative.
- It is evident that the definition of Congress as a bicameral body refers to its primary function in
government to legislate.
- In the passage of laws, the Constitution is explicit in the distinction of the role of each house in the
process. The same holds true in Congress non-legislative powers. An inter-play between the two
houses is necessary in the realization of these powers causing a vivid dichotomy that the Court cannot
simply discount. This, however, cannot be said in the case of JBC representation because no liaison
between the two houses exists in the workings of the JBC. Hence, the term Congress must be taken
to mean the entire legislative department. The Constitution mandates that the JBC be composed of
seven (7) members only.
Manila Prince Hotel v. Government Service Insurance System
G.R. No. 122156, February 3, 1997, 267 SCRA 408

FACTS:
- The Government Service Insurance System (GSIS), pursuant to the privatization program of the
government, decided to sell through public bidding 30% to 51 % of the shares of respondent Manila
Hotel (MHC)
- In a close bidding, only two bidders participated.
o Petitioner Manila Prince, a Filipino Corporation, which offered to buy 51% of the MHC at
P41.58 per share
o and Renong Berhad, a Malaysian Firm, which bid for the same number of shares at P44.00
per share.
- Pending the declaration of Renong Berhad as the winning bidder, petitioner matches the bid price of
P44.00 per share by Renong Berhad.
- Subsequently, petitioner sent a manager's check as bid security to match the bid of Renong Berhad
which respondent GSIS refuse to accept.
- Apprehensive that GSIS has disregarded the tender of the matching bid and that the sale may be
consummated which Renong Berhad, petitioner filed a petition before the Supreme Court.

ISSUE:
WON petitioner should be preferred after it has match the bid offered of Malaysian firm under Section
10(2) of Article 12 of the 1987 Constitution

RULING:

Article 12, Section 10, paragraph 2 of the 1987 Constitution provides that "in the grant of rights, privileges, and
concessions covering the national economy and patrimony, the State shall give preference to qualified
Filipinos."
- It means just that qualified Filipinos shall be preferred.
- When the Constitution speaks of "national patrimony", it refers not only to the natural resources of the
Philippines but also to the cultural heritage of the Filipinos. Manila Hotel has become a landmark- a
living testimonial of Philippine Heritage. While it was restrictively an American Hotel when it first
opened, it immediately evolved to be truly Filipino. Verily, Manila Hotel has become part of our
national economy and patrimony. Respondents further argue that the Constitutional provision is
addressed to the State, not to GSIS which by itself possesses a separate and distinct personality. In
constitutional jurisprudence, the acts of a person distinct from the government are considered "state
action" covered by the Constitution

- (1) when the activity it engages is a public function;

- (2) when the government is so significantly involved with the private actor as to make the
government responsible for his action; and
- (3) when the government has approved or authorized the action.

- Without doubt, the transaction entered into by the GSIS is in fact a transaction of the State and
therefore subject to the constitutional command.
- Therefore, the GSIS is directed to accept the matching bid of petitioner Manila Prince Hotel.
La Bugal-Blaan v. Ramos

The constitutional provision allowing the President to enter into FTAA is a exception to the rule that participation
in the nations natural resources is reserved exclusively to Filipinos. Provision must be construed strictly against
their enjoyment by non-Filipinos.

RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on March
30, 1995, the President signed a Financial and Technical Assistance Agreement (FTAA) with WMCP, a
corporation organized under Philippine laws, covering close to 100,000 hectares of land in South Cotabato,
Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment Secretary Victor
Ramos issued DENR Administrative Order 95-23, which was later repealed by DENR Administrative Order 96-40,
adopted on December 20, 1996.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP be
declared unconstitutional on ground that they allow fully foreign owned corporations like WMCP to exploit,
explore and develop Philippine mineral resources in contravention of Article XII Section 2 paragraphs 2 and 4 of
the Charter.
In January 2001, WMC a publicly listed Australian mining and exploration company sold its whole stake in
WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is owned by Indophil
Resources, an Australian company. DENR approved the transfer and registration of the FTAA in Sagittarius
name but Lepanto Consolidated assailed the same. The latter case is still pending before the Court of Appeals.
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider and
evaluate proposals from foreign owned corporations or foreign investors for contracts or agreements involving
wither technical or financial assistance for large scale exploration, development and utilization of minerals
which upon appropriate recommendation of the (DENR) Secretary, the President may execute with the foreign
proponent. WMCP likewise contended that the annulment of the FTAA would violate a treaty between the
Philippines and Australia which provides for the protection of Australian investments.
ISSUES:
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to
exploit the Philippine mineral resources. 2. Whether or not the FTAA between the government and WMCP is a
service contract that permits fully foreign owned companies to exploit the Philippine mineral resources.

HELD:

First Issue: RA 7942 is Unconstitutional

RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned
corporations to exploit the Philippine natural resources.

Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which states that All lands of the
public domain, waters, minerals, coal, petroleum, and other minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources
are owned by the State. The same section also states that, the exploration and development and utilization
of natural resources shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to
grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural
resources. By such omission, the utilization of inalienable lands of the public domain through
license, concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionairemakes a direct equity investment for the purpose of exploiting
a particular natural resource within a given area. The concession amounts to complete control by
the concessionaire over the countrys natural resource, for it is given exclusive and plenary rights to exploit a
particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase management or other forms of assistance in the
1973 Charter. The present Constitution now allows only technical and financial assistance. The management
and the operation of the mining activities by foreign contractors, the primary feature of the service contracts
was precisely the evil the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that
participation in the nations natural resources is reserved exclusively to Filipinos. Accordingly, such provision
must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is invalid insofar as the
said act authorizes service contracts. Although the statute employs the phrase financial and technical
agreements in accordancewith the 1987 Constitution, its pertinent provisions actually treat these agreements
as service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral
resources just like the foreign contractor in a service contract. By allowing foreign contractors to manage or
operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed beneficial ownership over
the nations mineral resources to these contractors, leaving the State with nothing but bare title thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of
the constitutionally ordained 60-40% capitalization requirement for corporations or associations engaged in the
exploitation, development and utilization of Philippine natural resources.
When parts of a statute are so mutually dependent and connected as conditions, considerations, inducements
or compensations for each other as to warrant a belief that the legislature intended them as a whole, then if
some parts are unconstitutional, all provisions that are thus dependent, conditional or connected, must fail with
them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely technical
or financial assistance to the State for large scale exploration, development and utilization of minerals,
petroleum and other mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the agreement
itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore, exploit,
utilize and dispose of all minerals and by-products that may be produced from the contract area. Section 1.2
of the same agreement provides that EMCP shall provide all financing, technology, management, and
personnel necessary for the Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial
ownership over natural resources that properly belong to the State and are intended for the benefit of its
citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the
fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they
spring must be struck down
De Castro v. JBC

FACTS:

This is a consolidated case which assails the constitutionality of the action of former President Gloria
Macapagal Arroyo by appointing a Chief Justice 7 days after the Presidential election in 2010.

- After the compulsory retirement of former Chief Justice Reynato Puno, the position of Chief Justice
was left vacant
- Section 4 (1), in relation to Section 9, Article VIII of the Constitution states that, "vacancy shall be filled
within ninety days from occurrence thereof,"
o From a "List of nominees prepared by the Judicial Bar Council for every vacancy"
o Furthermore, Section 15, Article VII was also taken into consideration which prohibits the
President or the Acting President from making appointments within two (2) months
immediately before the next Presidential elections and up to the end of his term
Except temporary appointments to executive positions when continued vacancies
therein will prejudice public service or endanger public safety.

- The JBC agreed that the vacant position must be filled and there were five (5) candidates for the
position from the most senior of the Associates of the court and one of them is Associate Justice
Reynato C. Corona who was chosen by the President and was appointed for the position of Chief
Justice.
- Office of the Solicitor General (OSG) contends that the incumbent President may appoint the next
Chief Justice since the Constitution do not apply to the Supreme Court. If the framers of the
Constitution intended the prohibition to apply in the Supreme Court then it should have expressly
stated it in the Constitution.

ISSUE:

WHETHER OR NOT the President can appoint the successor of the Chief Justice..

RULING:

Yes, the President can appoint the successor of Chief Justice as the prohibitions in the Constitution.

If the framers of the Constitution intends that the prohibition shall apply to the appointment of Chief Justice,
then they should have expressly stated it in the Constitution under Section 15 (THE EXECUTIVE DEPARTMENT),
Article VII and Section 4 (1), Article VIII (JUDICIAL DEPARTMENT).

Section 14, Section 15 and Section 16 refers only to the appointments made in the Executive Department.
Planters Product v. Fertiphil Corp.
G.R. No. 166006
March 14, 2008
REYES, R.T., J.

Lessons Applicable: Bet. private and public suit, easier to file public suit, Apply real party in interest test for
private suit and direct injury test for public suit, Validity test varies depending on which inherent power

Laws Applicable:
FACTS:

President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which provided, among
others, for the imposition of a capital recovery component (CRC) on the domestic sale of all grades of
fertilizers which resulted in having Fertiphil paying P 10/bag sold to the Fertilizer and Perticide Authority
(FPA).
FPA remits its collection to Far East Bank and Trust Company who applies to the payment of corporate
debts of Planters Products Inc. (PPI)
After the Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. Upon return of
democracy, Fertiphil demanded a refund but PPI refused. Fertiphil filed a complaint for collection and
damages against FPA and PPI with the RTC on the ground that LOI No. 1465 is unjust, unreaonable
oppressive, invalid and unlawful resulting to denial of due process of law.
FPA answered that it is a valid exercise of the police power of the state in ensuring the stability of the
fertilizing industry in the country and that Fertiphil did NOT sustain damages since the burden imposed fell
on the ultimate consumers.
RTC and CA favored Fertiphil holding that it is an exercise of the power of taxation ad is as such because
it is NOT for public purpose as PPI is a private corporation.

ISSUE:
1. W/N Fertiphil has locus standi
2. W/N LOI No. 1465 is an invalid exercise of the power of taxation rather the police power

Held:
1. Yes. In private suits, locus standi requires a litigant to be a "real party in interest" or party who stands to be
benefited or injured by the judgment in the suit. In public suits, there is the right of the ordinary citizen to
petition the courts to be freed from unlawful government intrusion and illegal official action subject to
the direct injury test or where there must be personal and substantial interest in the case such that he has
sustained or will sustain direct injury as a result. Being a mere procedural technicality, it has also been held that
locus standi may be waived in the public interest such as cases of transcendental importance or with far-
reaching implications whether private or public suit, Fertiphil has locus standi.

2. As a seller, it bore the ultimate burden of paying the levy which made its products more expensive and harm
its business. It is also of paramount public importance since it involves the constitutionality of a tax law and use
of taxes for public purpose.

3. Yes. Police power and the power of taxation are inherent powers of the state but distinct and have different
tests for validity. Police power is the power of the state to enact the legislation that may interfere with personal
liberty on property in order to promote general welfare. While, the power of taxation is the power to levy taxes
as to be used for public purpose. The main purpose of police power is the regulation of a behavior or conduct,
while taxation is revenue generation. The lawful subjects and lawful means tests are used to determine the
validity of a law enacted under the police power. The power of taxation, on the other hand, is circumscribed
by inherent and constitutional limitations.

In this case, it is for purpose of revenue. But it is a robbery for the State to tax the citizen and use the funds
generation for a private purpose. Public purpose does NOT only pertain to those purpose which are
traditionally viewed as essentially governmental function such as building roads and delivery of basic services,
but also includes those purposes designed to promote social justice. Thus, public money may now be used for
the relocation of illegal settlers, low-cost housing and urban or agrarian reform.

Araullo v. Aquino
When President Benigno Aquino III took office, his administration noticed the sluggish growth of the economy.
The World Bank advised that the economy needed a stimulus plan. Budget Secretary Florencio Butch Abad
then came up with a program called the Disbursement Acceleration Program (DAP).
The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the Executive to
realign funds from slow moving projects to priority projects instead of waiting for next years appropriation. So
what happens under the DAP was that if a certain government project is being undertaken slowly by a certain
executive agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds
are declared as savings by the Executive and said funds will then be reallotted to other priority projects. The
DAP program did work to stimulate the economy as economic growth was in fact reported and portion of such
growth was attributed to the DAP (as noted by the Supreme Court).
Other sources of the DAP include the unprogrammed funds from the General Appropriations Act (GAA).
Unprogrammed funds are standby appropriations made by Congress in the GAA.
Meanwhile, in September 2013, Senator Jinggoy Estrada made an expos claiming that he, and other
Senators, received Php50M from the President as an incentive for voting in favor of the impeachment of then
Chief Justice Renato Corona. Secretary Abad claimed that the money was taken from the DAP but was
disbursed upon the request of the Senators.
This apparently opened a can of worms as it turns out that the DAP does not only realign funds within the
Executive. It turns out that some non-Executive projects were also funded; to name a few: Php1.5B for the CPLA
(Cordillera Peoples Liberation Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the
Quezon Province, P50-P100M for certain Senators each, P10B for Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan, and several other
concerned citizens to file various petitions with the Supreme Court questioning the validity of the DAP. Among
their contentions was:
DAP is unconstitutional because it violates the constitutional rule which provides that no money shall be paid
out of the Treasury except in pursuance of an appropriation made by law.
Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation
provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of
Executive Order 292 (power of the President to suspend expenditures and authority to use savings,
respectively).
Issues:
I. Whether or not the DAP violates the principle no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as impoundments by the executive.
III. Whether or not the DAP realignments/transfers are constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program by the
Executive and is not a fund nor is it an appropriation. It is a program for prioritizing government spending. As
such, it did not violate the Constitutional provision cited in Section 29(1), Art. VI of the Constitution. In DAP no
additional funds were withdrawn from the Treasury otherwise, an appropriation made by law would have been
required. Funds, which were already appropriated for by the GAA, were merely being realigned via the DAP.
II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the Presidents power to
refuse to spend appropriations or to retain or deduct appropriations for whatever reason. Impoundment is
actually prohibited by the GAA unless there will be an unmanageable national government budget deficit
(which did not happen). Nevertheless, theres no impoundment in the case at bar because whats involved in
the DAP was the transfer of funds.
III. No, the transfers made through the DAP were unconstitutional. It is true that the President (and even the
heads of the other branches of the government) are allowed by the Constitution to make realignment of funds,
however, such transfer or realignment should only be made within their respective offices. Thus, no cross-
border transfers/augmentations may be allowed. But under the DAP, this was violated because funds
appropriated by the GAA for the Executive were being transferred to the Legislative and other non-Executive
agencies.
Further, transfers within their respective offices also contemplate realignment of funds to an existing project in
the GAA. Under the DAP, even though some projects were within the Executive, these projects are non-existent
insofar as the GAA is concerned because no funds were appropriated to them in the GAA. Although some of
these projects may be legitimate, they are still non-existent under the GAA because they were not provided for
by the GAA. As such, transfer to such projects is unconstitutional and is without legal basis.
On the issue of what are savings
These DAP transfers are not savings contrary to what was being declared by the Executive. Under the
definition of savings in the GAA, savings only occur, among other instances, when there is an excess in the
funding of a certain project once it is completed, finally discontinued, or finally abandoned. The GAA does not
refer to savings as funds withdrawn from a slow moving project. Thus, since the statutory definition of savings
was not complied with under the DAP, there is no basis at all for the transfers. Further, savings should only be
declared at the end of the fiscal year. But under the DAP, funds are already being withdrawn from certain
projects in the middle of the year and then being declared as savings by the Executive particularly by the
DBM.
IV. No. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the
law, such funds may only be used if there is a certification from the National Treasurer to the effect that the
revenue collections have exceeded the revenue targets. In this case, no such certification was secured before
unprogrammed funds were used.
V. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being declared as
unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped stimulate the economy. It
has funded numerous projects. If the Executive is ordered to reverse all actions under the DAP, then it may
cause more harm than good. The DAP effects can no longer be undone. The beneficiaries of the DAP cannot
be asked to return what they received especially so that they relied on the validity of the DAP. However, the
Doctrine of Operative Fact may not be applicable to the authors, implementers, and proponents of the DAP if
it is so found in the appropriate tribunals (civil, criminal, or administrative) that they have not acted in good
faith.