RIZAL MEMORIAL COLLEGES

College of Law
F. Torres St., Davao City

Course Number: Law 110

Title: Legal Technique and Logic

Course Description : This subject teaches a law student how to improve his argumentation skills, ignore appeals to emotions and focus only on the application
of law to facts. It is the ultimate tool of persuasion in the courtroom, when properly applied, it efficiently amplifies the truth and disposes the lie. Most writing and
speaking in the legal profession is based upon logical arguments; a law student cannot read case books like a lawyer until he understands the basics of logical
thinking.

COURSE OUTLINE

History of Logic
I. INTRODUCTION Civil Law vs. Common Law Tradition
The Role of Logic in Law

What is Logic
II. REASONING Propositions and Sentences
Arguments, Premises and Conclusions
A. Basic Concepts More Complex Arguments
B. Analyzing and Recognizing Arguments
Diagramming Arguments Deduction and Induction
C. Problem Solving Validity and Truth
Arguments and Explanations
Three Basic Functions of Language
III. LANGUAGE Discourse Serving Multiple Functions
Forms of Discourse
A. Uses of Language Emotive Words
B. Definition Kinds of Agreement and Disagreement
Emotively Neutral Language
Disputes, Verbal Disputes and Definitions
Kinds of Definition and the Resolution of Disputes
Denotation (Extension) and Connotation (Intension)
Extension, and Denotative Definitions
Intension, and Connotative Definition

Rules for Definition by Genus and Difference

Categorical Propositions and Classes

IV. DEDUCTIVE REASONING Quality, Quantity and Distribution
The Traditional Square of Opposition
A. Categorical Propositions Further Immediate Inferences
B. Categorical Syllogisms Existential Import
C. Arguments in Ordinary Symbolism and Diagrams for Categorical Propositions
Language
D. Symbolic Logic Standard-Form Categorical Syllogisms
E. The Method of Deduction The Formal Nature of Syllogistic Argument
F. Quantification Theory Venn Diagram: Technique for Testing Syllogisms
Six Rules of Categorical Syllogisms

Reducing the Number of Terms in a Syllogistic Argument

Translating Categorical Propositions into Standard Form
Uniform Translation
Enthymemes
Sorites
Disjunctive and Hypothetical Syllogisms
The Dilemma

The Value of Special Symbols

The Symbols for Conjunction, Negation, and Disjunction
Conditional Statements and Material Implication
Argument Forms and Arguments
Statement Forms, Material Equivalence, Logical Equivalence
 The Paradoxes of Material Implication
The Three “Laws of Thought”

Formal Proof of Validity

The Rule of Replacement
Proof of Invalidity
Inconsistency

Singular Propositions
Quantification
Traditional Subject-Predicate Propositions

Proving Validity
Proving Invalidity
Asyllogistic Inference

Inductive Generalizations
V. INDUCTIVE REASONING (Induction by Simple Enumeration)
Analogy and Probable Inference
Analogy
Appraising Analogical Arguments
Refutation by Logical Analogy
Causality
Probability
A1. Fallacies in Categorical Syllogisms
VI. FALLACIES
a. Four Terms
A. What is a Fallacy? b. Undistributed Middle Term
B. Formal Fallacies c. Illicit Major Term
C. Informal (Material) d. Illicit Minor Term
Fallacies e. Negative Premises
D. Avoiding Fallacies f. Particular Premises

B2. Fallacies in Hypothetical Syllogisms

(Modus Ponens and Modus Tollens)
a. Denial of Antecedent
b. Affirmation of Consequent
3. Fallacies in Disjunctive Syllogisms
a. Missing Disjuncts
b. Nonexclusivity

C1. Fallacies of Relevance

a. Argumentum ad Ignorantiam
(Argument from Ignorance)
b. Argumentum ad Misericordiam (Appeal to Pity)
c. Argumentum ad Verecundiam
(Appeal to Inappropriate Authority or Prestige)
d. Argumentum ad Hominem
(Argument against the Man)
i. Abusive
ii. Circumstantial
e. Argumentum ad Populum (Appeal to the
Masses)
f. Argumentum ad Baculum (Appeal to Force)
g. Argumentum ad Antiquitam (Appeal to the Ages)
h. Argumentum ad Terrorem (Appeal to Terror)
i. Irrelevant Conclusion (Ignoratio Elenchi)
j. Tu Quoque (You Yourself Do It)
k. Argumentum ad Nauseam

Fallacies of Presumption
a. Compound (Complex) Question
b. False Cause
i. Non cause pro causa
ii. Post hoc ergo propter hoc
c. Non Sequitur (It Does Not Follow)
d. Begging the Question (Petitio Principii)
e. Accident (Dicto Simpliciter)
 f. Converse Accident (Hasty Generalization)

C3. Fallacies of Ambiguity

a. Equivocation
b. Amphibology
c. Accent
d. Composition
e. Division
f. Vicious Abstraction

Cases :

HARRY STONEHILL VS HON. JOSE DIOKNO, G.R. NO. L-19550, JUNE 19, 1967
LAMBINO VS COMELEC, G.R. NO. 174153, OCTOBER 25, 2006:
EBRALINANG VS THE SUPERINTENDENT OF SCHOOLS OF CEBU G.R. NO. 95770 MARCH 1, 1993
LEGASPI VS. CIVIL SERVICE COMMISSION, G.R. NO. L-72119 MAY 29, 1987
VASQUEZ VS. CA, G.R. NO. 118971 SEPTEMBER 15, 1999
PEOPLE VS. GENOSA [G.R. NO. 135981. JANUARY 15, 2004]
PEOPLE VS. MARIVIC GENOSA, G.R. NO. 135981, JANUARY 15, 2004) VS. HON. JOSE W. DIOKNO, G.R. NO. L-19550, JUNE 19, 1967
WHITE LIGHT VS.CITY OF MANILA,G.R. NO. 122846, JANUARY 20, 2009
VALENTIN L. LEGASPI VS.CIVIL SERVICE COMMISSION, G.R. NO. L-72119 MAY 29, 1987 )
CRUZ VS. DENR SECRETARY AND LA BUGALB’LAAN, GR NO. 127882, DECEMBER 1, 2004
MORALES DEVELOPMENT CO., INC. V. COURT OF APPEALS, ET AL., G.R. NO. L-26572, 28 MARCH 1969
TAVORA V. GAVINA, G.R. NO. L-1257, 30 OCTOBER 1947, INCLUDING RESOLUTION DATED 11 DECEMBER 1947
NIELSON AND CO., INC. V. LEPANTO CONSOLIDATED MINING CO., G.R. NO. L-21601, 17 DECEMBER 1966
SUÑGA, ET AL. V. LACSON, ET AL., G.R. NO. L-26055, 29 APRIL 1968
CASES:MELVIN V. BELEN, A.M. NO. RTJ-08-2119, 30 JUNE 2008
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-19550 June 19, 1967

HARRY S. STONEHILL, ROBERT P. BROOKS, JOHN J. BROOKS and KARL BECK, petitioners,
vs.
HON. JOSE W. DIOKNO, in his capacity as SECRETARY OF JUSTICE; JOSE LUKBAN, in his capacity as Acting Director, National Bureau of
Investigation; SPECIAL PROSECUTORS PEDRO D. CENZON, EFREN I. PLANA and MANUEL VILLAREAL, JR. and ASST. FISCAL MANASES G.
REYES; JUDGE AMADO ROAN, Municipal Court of Manila; JUDGE ROMAN CANSINO, Municipal Court of Manila; JUDGE HERMOGENES CALUAG,
Court of First Instance of Rizal-Quezon City Branch, and JUDGE DAMIAN JIMENEZ, Municipal Court of Quezon City, respondents.

Paredes, Poblador, Cruz and Nazareno and Meer, Meer and Meer and Juan T. David for petitioners.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Pacifico P. de Castro, Assistant Solicitor General Frine C. Zaballero, Solicitor Camilo
D. Quiason and Solicitor C. Padua for respondents.

CONCEPCION, C.J.:

Upon application of the officers of the government named on the margin1 — hereinafter referred to as Respondents-Prosecutors — several judges2 — hereinafter
referred to as Respondents-Judges — issued, on different dates,3 a total of 42 search warrants against petitioners herein4 and/or the corporations of which they
were officers,5 directed to the any peace officer, to search the persons above-named and/or the premises of their offices, warehouses and/or residences, and to
seize and take possession of the following personal property to wit:

Books of accounts, financial records, vouchers, correspondence, receipts, ledgers, journals, portfolios, credit journals, typewriters, and other
documents and/or papers showing all business transactions including disbursements receipts, balance sheets and profit and loss statements and
Bobbins (cigarette wrappers).

as "the subject of the offense; stolen or embezzled and proceeds or fruits of the offense," or "used or intended to be used as the means of committing the
offense," which is described in the applications adverted to above as "violation of Central Bank Laws, Tariff and Customs Laws, Internal Revenue (Code) and the
Revised Penal Code."

Alleging that the aforementioned search warrants are null and void, as contravening the Constitution and the Rules of Court — because, inter alia: (1) they do not
describe with particularity the documents, books and things to be seized; (2) cash money, not mentioned in the warrants, were actually seized; (3) the warrants
were issued to fish evidence against the aforementioned petitioners in deportation cases filed against them; (4) the searches and seizures were made in an
illegal manner; and (5) the documents, papers and cash money seized were not delivered to the courts that issued the warrants, to be disposed of in accordance
with law — on March 20, 1962, said petitioners filed with the Supreme Court this original action for certiorari, prohibition, mandamus and injunction, and prayed
that, pending final disposition of the present case, a writ of preliminary injunction be issued restraining Respondents-Prosecutors, their agents and /or
representatives from using the effects seized as aforementioned or any copies thereof, in the deportation cases already adverted to, and that, in due course,
thereafter, decision be rendered quashing the contested search warrants and declaring the same null and void, and commanding the respondents, their agents
or representatives to return to petitioners herein, in accordance with Section 3, Rule 67, of the Rules of Court, the documents, papers, things and cash moneys
seized or confiscated under the search warrants in question.

In their answer, respondents-prosecutors alleged, 6 (1) that the contested search warrants are valid and have been issued in accordance with law; (2) that the
defects of said warrants, if any, were cured by petitioners' consent; and (3) that, in any event, the effects seized are admissible in evidence against herein
petitioners, regardless of the alleged illegality of the aforementioned searches and seizures.

On March 22, 1962, this Court issued the writ of preliminary injunction prayed for in the petition. However, by resolution dated June 29, 1962, the writ was
partially lifted or dissolved, insofar as the papers, documents and things seized from the offices of the corporations above mentioned are concerned; but, the
injunction was maintained as regards the papers, documents and things found and seized in the residences of petitioners herein.7

Thus, the documents, papers, and things seized under the alleged authority of the warrants in question may be split into two (2) major groups, namely: (a) those
found and seized in the offices of the aforementioned corporations, and (b) those found and seized in the residences of petitioners herein.

As regards the first group, we hold that petitioners herein have no cause of action to assail the legality of the contested warrants and of the seizures made in
pursuance thereof, for the simple reason that said corporations have their respective personalities, separate and distinct from the personality of herein
petitioners, regardless of the amount of shares of stock or of the interest of each of them in said corporations, and whatever the offices they hold therein may
be.8 Indeed, it is well settled that the legality of a seizure can be contested only by the party whose rights have been impaired thereby,9 and that the objection to
an unlawful search and seizure is purely personal and cannot be availed of by third parties. 10 Consequently, petitioners herein may not validly object to the use
in evidence against them of the documents, papers and things seized from the offices and premises of the corporations adverted to above, since the right to
object to the admission of said papers in evidence belongs exclusively to the corporations, to whom the seized effects belong, and may not be invoked by the
corporate officers in proceedings against them in their individual capacity. 11 Indeed, it has been held:

. . . that the Government's action in gaining possession of papers belonging to the corporation did not relate to nor did it affect
the personal defendants. If these papers were unlawfully seized and thereby the constitutional rights of or any one were invaded, they were the
rights of the corporation and not the rights of the other defendants. Next, it is clear that a question of the lawfulness of a seizure can be
raised only by one whose rights have been invaded. Certainly, such a seizure, if unlawful, could not affect the constitutional rights of
defendants whose property had not been seized or the privacy of whose homes had not been disturbed; nor could they claim for themselves the
benefits of the Fourth Amendment, when its violation, if any, was with reference to the rights of another. Remus vs. United States (C.C.A.)291 F.
501, 511. It follows, therefore, that the question of the admissibility of the evidence based on an alleged unlawful search and seizure does not extend
to the personal defendants but embraces only the corporation whose property was taken. . . . (A Guckenheimer & Bros. Co. vs. United States, [1925]
3 F. 2d. 786, 789, Emphasis supplied.)

With respect to the documents, papers and things seized in the residences of petitioners herein, the aforementioned resolution of June 29, 1962, lifted the writ of
preliminary injunction previously issued by this Court, 12 thereby, in effect, restraining herein Respondents-Prosecutors from using them in evidence against
petitioners herein.

In connection with said documents, papers and things, two (2) important questions need be settled, namely: (1) whether the search warrants in question, and the
searches and seizures made under the authority thereof, are valid or not, and (2) if the answer to the preceding question is in the negative, whether said
documents, papers and things may be used in evidence against petitioners herein.1äwphï1.ñët

Petitioners maintain that the aforementioned search warrants are in the nature of general warrants and that accordingly, the seizures effected upon the authority
there of are null and void. In this connection, the Constitution 13provides:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated,
and no warrants shall issue but upon probable cause, to be determined by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to be searched, and the persons or things to be seized.

Two points must be stressed in connection with this constitutional mandate, namely: (1) that no warrant shall issue but upon probable cause, to be determined by
the judge in the manner set forth in said provision; and (2) that the warrant shall particularly describe the things to be seized.

None of these requirements has been complied with in the contested warrants. Indeed, the same were issued upon applications stating that the natural and
juridical person therein named had committed a "violation of Central Ban Laws, Tariff and Customs Laws, Internal Revenue (Code) and Revised Penal Code." In
other words, no specific offense had been alleged in said applications. The averments thereof with respect to the offense committed were abstract. As a
consequence, it was impossible for the judges who issued the warrants to have found the existence of probable cause, for the same presupposes the
introduction of competent proof that the party against whom it is sought has performed particular acts, or committed specific omissions, violating a given provision
of our criminal laws. As a matter of fact, the applications involved in this case do not allege any specific acts performed by herein petitioners. It would be the legal
heresy, of the highest order, to convict anybody of a "violation of Central Bank Laws, Tariff and Customs Laws, Internal Revenue (Code) and Revised Penal
Code," — as alleged in the aforementioned applications — without reference to any determinate provision of said laws or

To uphold the validity of the warrants in question would be to wipe out completely one of the most fundamental rights guaranteed in our Constitution, for it would
place the sanctity of the domicile and the privacy of communication and correspondence at the mercy of the whims caprice or passion of peace officers. This is
precisely the evil sought to be remedied by the constitutional provision above quoted — to outlaw the so-called general warrants. It is not difficult to imagine what
would happen, in times of keen political strife, when the party in power feels that the minority is likely to wrest it, even though by legal means.

Such is the seriousness of the irregularities committed in connection with the disputed search warrants, that this Court deemed it fit to amend Section 3 of Rule
122 of the former Rules of Court 14 by providing in its counterpart, under the Revised Rules of Court 15 that "a search warrant shall not issue but upon probable
cause in connection with one specific offense." Not satisfied with this qualification, the Court added thereto a paragraph, directing that "no search warrant shall
issue for more than one specific offense."

The grave violation of the Constitution made in the application for the contested search warrants was compounded by the description therein made of the effects
to be searched for and seized, to wit:

Books of accounts, financial records, vouchers, journals, correspondence, receipts, ledgers, portfolios, credit journals, typewriters, and other
documents and/or papers showing all business transactions including disbursement receipts, balance sheets and related profit and loss statements.

Thus, the warrants authorized the search for and seizure of records pertaining to all business transactions of petitioners herein, regardless of whether the
transactions were legal or illegal. The warrants sanctioned the seizure of all records of the petitioners and the aforementioned corporations, whatever their
nature, thus openly contravening the explicit command of our Bill of Rights — that the things to be seized be particularly described — as well as tending to defeat
its major objective: the elimination of general warrants.

Relying upon Moncado vs. People's Court (80 Phil. 1), Respondents-Prosecutors maintain that, even if the searches and seizures under consideration were
unconstitutional, the documents, papers and things thus seized are admissible in evidence against petitioners herein. Upon mature deliberation, however, we are
unanimously of the opinion that the position taken in the Moncado case must be abandoned. Said position was in line with the American common law rule, that
the criminal should not be allowed to go free merely "because the constable has blundered," 16 upon the theory that the constitutional prohibition against
unreasonable searches and seizures is protected by means other than the exclusion of evidence unlawfully obtained, 17 such as the common-law action for
damages against the searching officer, against the party who procured the issuance of the search warrant and against those assisting in the execution of an
illegal search, their criminal punishment, resistance, without liability to an unlawful seizure, and such other legal remedies as may be provided by other laws.

However, most common law jurisdictions have already given up this approach and eventually adopted the exclusionary rule, realizing that this is the only practical
means of enforcing the constitutional injunction against unreasonable searches and seizures. In the language of Judge Learned Hand:

As we understand it, the reason for the exclusion of evidence competent as such, which has been unlawfully acquired, is that exclusion is the only
practical way of enforcing the constitutional privilege. In earlier times the action of trespass against the offending official may have been protection
enough; but that is true no longer. Only in case the prosecution which itself controls the seizing officials, knows that it cannot profit by their wrong will
that wrong be repressed.18

In fact, over thirty (30) years before, the Federal Supreme Court had already declared:

If letters and private documents can thus be seized and held and used in evidence against a citizen accused of an offense, the protection of the 4th
Amendment, declaring his rights to be secure against such searches and seizures, is of no value, and, so far as those thus placed are concerned,
might as well be stricken from the Constitution. The efforts of the courts and their officials to bring the guilty to punishment, praiseworthy as they are,
are not to be aided by the sacrifice of those great principles established by years of endeavor and suffering which have resulted in their embodiment
in the fundamental law of the land.19

This view was, not only reiterated, but, also, broadened in subsequent decisions on the same Federal Court. 20After reviewing previous decisions thereon, said
Court held, in Mapp vs. Ohio (supra.):

. . . Today we once again examine the Wolf's constitutional documentation of the right of privacy free from unreasonable state intrusion, and after its
dozen years on our books, are led by it to close the only courtroom door remaining open to evidence secured by official lawlessness in flagrant
abuse of that basic right, reserved to all persons as a specific guarantee against that very same unlawful conduct. We hold that all evidence obtained
by searches and seizures in violation of the Constitution is, by that same authority, inadmissible in a State.

Since the Fourth Amendment's right of privacy has been declared enforceable against the States through the Due Process Clause of the Fourteenth,
it is enforceable against them by the same sanction of exclusion as it used against the Federal Government. Were it otherwise, then just as without
the Weeks rule the assurance against unreasonable federal searches and seizures would be "a form of words," valueless and underserving of
mention in a perpetual charter of inestimable human liberties, so too, without that rule the freedom from state invasions of privacy would be so
ephemeral and so neatly severed from its conceptual nexus with the freedom from all brutish means of coercing evidence as not to permit this
Court's high regard as a freedom "implicit in the concept of ordered liberty." At the time that the Court held in Wolf that the amendment was
applicable to the States through the Due Process Clause, the cases of this Court as we have seen, had steadfastly held that as to federal officers the
Fourth Amendment included the exclusion of the evidence seized in violation of its provisions. Even Wolf "stoutly adhered" to that proposition. The
right to when conceded operatively enforceable against the States, was not susceptible of destruction by avulsion of the sanction upon which its
protection and enjoyment had always been deemed dependent under the Boyd, Weeks and Silverthorne Cases. Therefore, in extending the
substantive protections of due process to all constitutionally unreasonable searches — state or federal — it was logically and constitutionally
necessarily that the exclusion doctrine — an essential part of the right to privacy — be also insisted upon as an essential ingredient of the right newly
recognized by the Wolf Case. In short, the admission of the new constitutional Right by Wolf could not tolerate denial of its most important
constitutional privilege, namely, the exclusion of the evidence which an accused had been forced to give by reason of the unlawful seizure. To hold
otherwise is to grant the right but in reality to withhold its privilege and enjoyment. Only last year the Court itself recognized that the purpose of the
exclusionary rule to "is to deter — to compel respect for the constitutional guaranty in the only effectively available way — by removing the incentive
to disregard it" . . . .

The ignoble shortcut to conviction left open to the State tends to destroy the entire system of constitutional restraints on which the liberties of the
people rest. Having once recognized that the right to privacy embodied in the Fourth Amendment is enforceable against the States, and that the right
to be secure against rude invasions of privacy by state officers is, therefore constitutional in origin, we can no longer permit that right to remain an
empty promise. Because it is enforceable in the same manner and to like effect as other basic rights secured by its Due Process Clause, we can no
longer permit it to be revocable at the whim of any police officer who, in the name of law enforcement itself, chooses to suspend its enjoyment. Our
decision, founded on reason and truth, gives to the individual no more than that which the Constitution guarantees him to the police officer no less
than that to which honest law enforcement is entitled, and, to the courts, that judicial integrity so necessary in the true administration of justice.
(emphasis ours.)

Indeed, the non-exclusionary rule is contrary, not only to the letter, but also, to the spirit of the constitutional injunction against unreasonable searches and
seizures. To be sure, if the applicant for a search warrant has competent evidence to establish probable cause of the commission of a given crime by the party
against whom the warrant is intended, then there is no reason why the applicant should not comply with the requirements of the fundamental law. Upon the other
hand, if he has no such competent evidence, then it is not possible for the Judge to find that there is probable cause, and, hence, no justification for the issuance
of the warrant. The only possible explanation (not justification) for its issuance is the necessity of fishing evidence of the commission of a crime. But, then, this
fishing expedition is indicative of the absence of evidence to establish a probable cause.
Moreover, the theory that the criminal prosecution of those who secure an illegal search warrant and/or make unreasonable searches or seizures would suffice to
protect the constitutional guarantee under consideration, overlooks the fact that violations thereof are, in general, committed By agents of the party in power, for,
certainly, those belonging to the minority could not possibly abuse a power they do not have. Regardless of the handicap under which the minority usually — but,
understandably — finds itself in prosecuting agents of the majority, one must not lose sight of the fact that the psychological and moral effect of the
possibility 21 of securing their conviction, is watered down by the pardoning power of the party for whose benefit the illegality had been committed.

In their Motion for Reconsideration and Amendment of the Resolution of this Court dated June 29, 1962, petitioners allege that Rooms Nos. 81 and 91 of Carmen
Apartments, House No. 2008, Dewey Boulevard, House No. 1436, Colorado Street, and Room No. 304 of the Army-Navy Club, should be included among the
premises considered in said Resolution as residences of herein petitioners, Harry S. Stonehill, Robert P. Brook, John J. Brooks and Karl Beck, respectively, and
that, furthermore, the records, papers and other effects seized in the offices of the corporations above referred to include personal belongings of said petitioners
and other effects under their exclusive possession and control, for the exclusion of which they have a standing under the latest rulings of the federal courts of
federal courts of the United States. 22

We note, however, that petitioners' theory, regarding their alleged possession of and control over the aforementioned records, papers and effects, and the
alleged "personal" nature thereof, has Been Advanced, not in their petition or amended petition herein, but in the Motion for Reconsideration and Amendment of
the Resolution of June 29, 1962. In other words, said theory would appear to be readjustment of that followed in said petitions, to suit the approach intimated in
the Resolution sought to be reconsidered and amended. Then, too, some of the affidavits or copies of alleged affidavits attached to said motion for
reconsideration, or submitted in support thereof, contain either inconsistent allegations, or allegations inconsistent with the theory now advanced by petitioners
herein.

Upon the other hand, we are not satisfied that the allegations of said petitions said motion for reconsideration, and the contents of the aforementioned affidavits
and other papers submitted in support of said motion, have sufficiently established the facts or conditions contemplated in the cases relied upon by the
petitioners; to warrant application of the views therein expressed, should we agree thereto. At any rate, we do not deem it necessary to express our opinion
thereon, it being best to leave the matter open for determination in appropriate cases in the future.

We hold, therefore, that the doctrine adopted in the Moncado case must be, as it is hereby, abandoned; that the warrants for the search of three (3) residences of
herein petitioners, as specified in the Resolution of June 29, 1962, are null and void; that the searches and seizures therein made are illegal; that the writ of
preliminary injunction heretofore issued, in connection with the documents, papers and other effects thus seized in said residences of herein petitioners is hereby
made permanent; that the writs prayed for are granted, insofar as the documents, papers and other effects so seized in the aforementioned residences are
concerned; that the aforementioned motion for Reconsideration and Amendment should be, as it is hereby, denied; and that the petition herein is dismissed and
the writs prayed for denied, as regards the documents, papers and other effects seized in the twenty-nine (29) places, offices and other premises enumerated in
the same Resolution, without special pronouncement as to costs.

It is so ordered.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.

CASTRO, J., concurring and dissenting:

From my analysis of the opinion written by Chief Justice Roberto Concepcion and from the import of the deliberations of the Court on this case, I gather the
following distinct conclusions:

1. All the search warrants served by the National Bureau of Investigation in this case are general warrants and are therefore proscribed by, and in
violation of, paragraph 3 of section 1 of Article III (Bill of Rights) of the Constitution;

2. All the searches and seizures conducted under the authority of the said search warrants were consequently illegal;

3. The non-exclusionary rule enunciated in Moncado vs. People, 80 Phil. 1, should be, and is declared, abandoned;

4. The search warrants served at the three residences of the petitioners are expressly declared null and void the searches and seizures therein
made are expressly declared illegal; and the writ of preliminary injunction heretofore issued against the use of the documents, papers and effect
seized in the said residences is made permanent; and

5. Reasoning that the petitioners have not in their pleadings satisfactorily demonstrated that they have legal standing to move for the suppression of
the documents, papers and effects seized in the places other than the three residences adverted to above, the opinion written by the Chief
Justice refrains from expressly declaring as null and void the such warrants served at such other places and as illegal the searches and seizures
made therein, and leaves "the matter open for determination in appropriate cases in the future."

It is precisely the position taken by the Chief Justice summarized in the immediately preceding paragraph (numbered 5) with which I am not in accord.

I do not share his reluctance or unwillingness to expressly declare, at this time, the nullity of the search warrants served at places other than the three
residences, and the illegibility of the searches and seizures conducted under the authority thereof. In my view even the exacerbating passions and prejudices
inordinately generated by the environmental political and moral developments of this case should not deter this Court from forthrightly laying down the law not
only for this case but as well for future cases and future generations. All the search warrants, without exception, in this case are admittedly general, blanket and
roving warrants and are therefore admittedly and indisputably outlawed by the Constitution; and the searches and seizures made were therefore unlawful. That
the petitioners, let us assume in gratia argumente, have no legal standing to ask for the suppression of the papers, things and effects seized from places other
than their residences, to my mind, cannot in any manner affect, alter or otherwise modify the intrinsic nullity of the search warrants and the intrinsic illegality of the
searches and seizures made thereunder. Whether or not the petitioners possess legal standing the said warrants are void and remain void, and the searches and
seizures were illegal and remain illegal. No inference can be drawn from the words of the Constitution that "legal standing" or the lack of it is a determinant of the
nullity or validity of a search warrant or of the lawfulness or illegality of a search or seizure.

On the question of legal standing, I am of the conviction that, upon the pleadings submitted to this Court the petitioners have the requisite legal standing to move
for the suppression and return of the documents, papers and effects that were seized from places other than their family residences.

Our constitutional provision on searches and seizures was derived almost verbatim from the Fourth Amendment to the United States Constitution. In the many
years of judicial construction and interpretation of the said constitutional provision, our courts have invariably regarded as doctrinal the pronouncement made on
the Fourth Amendment by federal courts, especially the Federal Supreme Court and the Federal Circuit Courts of Appeals.

The U.S. doctrines and pertinent cases on standing to move for the suppression or return of documents, papers and effects which are the fruits of an unlawful
search and seizure, may be summarized as follows; (a) ownership of documents, papers and effects gives "standing;" (b) ownership and/or control or possession
— actual or constructive — of premises searched gives "standing"; and (c) the "aggrieved person" doctrine where the search warrant and the sworn application
for search warrant are "primarily" directed solely and exclusively against the "aggrieved person," gives "standing."

An examination of the search warrants in this case will readily show that, excepting three, all were directed against the petitioners personally. In some of them,
the petitioners were named personally, followed by the designation, "the President and/or General Manager" of the particular corporation. The three warrants
excepted named three corporate defendants. But the "office/house/warehouse/premises" mentioned in the said three warrants were also the same
"office/house/warehouse/premises" declared to be owned by or under the control of the petitioners in all the other search warrants directed against the petitioners
and/or "the President and/or General Manager" of the particular corporation. (see pages 5-24 of Petitioners' Reply of April 2, 1962). The searches and seizures
were to be made, and were actually made, in the "office/house/warehouse/premises" owned by or under the control of the petitioners.

Ownership of matters seized gives "standing."

Ownership of the properties seized alone entitles the petitioners to bring a motion to return and suppress, and gives them standing as persons aggrieved by an
unlawful search and seizure regardless of their location at the time of seizure. Jones vs. United States, 362 U.S. 257, 261 (1960) (narcotics stored in the
apartment of a friend of the defendant); Henzel vs. United States, 296 F. 2d. 650, 652-53 (5th Cir. 1961), (personal and corporate papers of corporation of which
the defendant was president), United States vs. Jeffers, 342 U.S. 48 (1951) (narcotics seized in an apartment not belonging to the defendant); Pielow vs. United
States, 8 F. 2d 492, 493 (9th Cir. 1925) (books seized from the defendant's sister but belonging to the defendant); Cf. Villano vs. United States, 310 F. 2d 680,
683 (10th Cir. 1962) (papers seized in desk neither owned by nor in exclusive possession of the defendant).

In a very recent case (decided by the U.S. Supreme Court on December 12, 1966), it was held that under the constitutional provision against unlawful searches
and seizures, a person places himself or his property within a constitutionally protected area, be it his home or his office, his hotel room or his automobile:

Where the argument falls is in its misapprehension of the fundamental nature and scope of Fourth Amendment protection. What the Fourth
Amendment protects is the security a man relies upon when he places himself or his property within a constitutionally protected area, be it his home
or his office, his hotel room or his automobile. There he is protected from unwarranted governmental intrusion. And when he puts some thing in his
filing cabinet, in his desk drawer, or in his pocket, he has the right to know it will be secure from an unreasonable search or an unreasonable seizure.
So it was that the Fourth Amendment could not tolerate the warrantless search of the hotel room in Jeffers, the purloining of the petitioner's private
papers in Gouled, or the surreptitious electronic surveilance in Silverman. Countless other cases which have come to this Court over the years have
involved a myriad of differing factual contexts in which the protections of the Fourth Amendment have been appropriately invoked. No doubt, the
future will bring countless others. By nothing we say here do we either foresee or foreclose factual situations to which the Fourth Amendment may be
applicable. (Hoffa vs. U.S., 87 S. Ct. 408 (December 12, 1966). See also U.S. vs. Jeffers, 342 U.S. 48, 72 S. Ct. 93 (November 13, 1951).
(Emphasis supplied).

Control of premises searched gives "standing."

Independent of ownership or other personal interest in the records and documents seized, the petitioners have standing to move for return and suppression by
virtue of their proprietary or leasehold interest in many of the premises searched. These proprietary and leasehold interests have been sufficiently set forth in
their motion for reconsideration and need not be recounted here, except to emphasize that the petitioners paid rent, directly or indirectly, for practically all the
premises searched (Room 91, 84 Carmen Apts; Room 304, Army & Navy Club; Premises 2008, Dewey Boulevard; 1436 Colorado Street); maintained personal
offices within the corporate offices (IBMC, USTC); had made improvements or furnished such offices; or had paid for the filing cabinets in which the papers were
stored (Room 204, Army & Navy Club); and individually, or through their respective spouses, owned the controlling stock of the corporations involved. The
petitioners' proprietary interest in most, if not all, of the premises searched therefore independently gives them standing to move for the return and suppression of
the books, papers and affects seized therefrom.
In Jones vs. United States, supra, the U.S. Supreme Court delineated the nature and extent of the interest in the searched premises necessary to maintain a
motion to suppress. After reviewing what it considered to be the unduly technical standard of the then prevailing circuit court decisions, the Supreme Court said
(362 U.S. 266):

We do not lightly depart from this course of decisions by the lower courts. We are persuaded, however, that it is unnecessarily and ill-advised to
import into the law surrounding the constitutional right to be free from unreasonable searches and seizures subtle distinctions, developed and refined
by the common law in evolving the body of private property law which, more than almost any other branch of law, has been shaped by distinctions
whose validity is largely historical. Even in the area from which they derive, due consideration has led to the discarding of those distinctions in the
homeland of the common law. See Occupiers' Liability Act, 1957, 5 and 6 Eliz. 2, c. 31, carrying out Law Reform Committee, Third Report, Cmd.
9305. Distinctions such as those between "lessee", "licensee," "invitee," "guest," often only of gossamer strength, ought not be determinative in
fashioning procedures ultimately referable to constitutional safeguards. See also Chapman vs. United States, 354 U.S. 610, 616-17 (1961).

It has never been held that a person with requisite interest in the premises searched must own the property seized in order to have standing in a motion to return
and suppress. In Alioto vs. United States, 216 F. Supp. 48 (1963), a Bookkeeper for several corporations from whose apartment the corporate records were
seized successfully moved for their return. In United States vs. Antonelli, Fireworks Co., 53 F. Supp. 870, 873 (W D. N. Y. 1943), the corporation's president
successfully moved for the return and suppression is to him of both personal and corporate documents seized from his home during the course of an illegal
search:

The lawful possession by Antonelli of documents and property, "either his own or the corporation's was entitled to protection against unreasonable
search and seizure. Under the circumstances in the case at bar, the search and seizure were unreasonable and unlawful. The motion for the return
of seized article and the suppression of the evidence so obtained should be granted. (Emphasis supplied).

Time was when only a person who had property in interest in either the place searched or the articles seize had the necessary standing to invoke the protection
of the exclusionary rule. But in MacDonald vs. Unite States, 335 U.S. 461 (1948), Justice Robert Jackson joined by Justice Felix Frankfurter, advanced the view
that "even a guest may expect the shelter of the rooftree he is under against criminal intrusion." This view finally became the official view of the U.S. Supreme
Court and was articulated in United States vs. Jeffers, 432 U.S 48 (1951). Nine years later, in 1960, in Jones vs. Unite States, 362 U.S. 257, 267, the U.S.
Supreme Court went a step further. Jones was a mere guest in the apartment unlawfully searched but the Court nonetheless declared that the exclusionary rule
protected him as well. The concept of "person aggrieved by an unlawful search and seizure" was enlarged to include "anyone legitimately on premise where the
search occurs."

Shortly after the U.S. Supreme Court's Jones decision the U.S. Court of Appeals for the Fifth Circuit held that the defendant organizer, sole stockholder and
president of a corporation had standing in a mail fraud prosecution against him to demand the return and suppression of corporate property. Henzel vs. United
States, 296 F 2d 650, 652 (5th Cir. 1961), supra. The court conclude that the defendant had standing on two independent grounds: First —he had a sufficient
interest in the property seized, and second — he had an adequate interest in the premises searched (just like in the case at bar). A postal inspector had
unlawfully searched the corporation' premises and had seized most of the corporation's book and records. Looking to Jones, the court observed:

Jones clearly tells us, therefore, what is not required qualify one as a "person aggrieved by an unlawful search and seizure." It tells us that appellant
should not have been precluded from objecting to the Postal Inspector's search and seizure of the corporation's books and records merely because
the appellant did not show ownership or possession of the books and records or a substantial possessory interest in the invade premises . . . (Henzel
vs. United States, 296 F. 2d at 651). .

Henzel was soon followed by Villano vs. United States, 310 F. 2d 680, 683, (10th Cir. 1962). In Villano, police officers seized two notebooks from a desk in the
defendant's place of employment; the defendant did not claim ownership of either; he asserted that several employees (including himself) used the notebooks.
The Court held that the employee had a protected interest and that there also was an invasion of privacy. Both Henzel and Villano considered also the fact that
the search and seizure were "directed at" the moving defendant. Henzel vs. United States, 296 F. 2d at 682; Villano vs. United States, 310 F. 2d at 683.

In a case in which an attorney closed his law office, placed his files in storage and went to Puerto Rico, the Court of Appeals for the Eighth Circuit recognized his
standing to move to quash as unreasonable search and seizure under the Fourth Amendment of the U.S. Constitution a grand jury subpoena duces
tecum directed to the custodian of his files. The Government contended that the petitioner had no standing because the books and papers were physically in the
possession of the custodian, and because the subpoena was directed against the custodian. The court rejected the contention, holding that

Schwimmer legally had such possession, control and unrelinquished personal rights in the books and papers as not to enable the question of
unreasonable search and seizure to be escaped through the mere procedural device of compelling a third-party naked possessor to produce and
deliver them. Schwimmer vs. United States, 232 F. 2d 855, 861 (8th Cir. 1956).

Aggrieved person doctrine where the search warrant s primarily directed against said person gives "standing."

The latest United States decision squarely in point is United States vs. Birrell, 242 F. Supp. 191 (1965, U.S.D.C. S.D.N.Y.). The defendant had stored with an
attorney certain files and papers, which attorney, by the name of Dunn, was not, at the time of the seizing of the records, Birrell's attorney. * Dunn, in turn, had
stored most of the records at his home in the country and on a farm which, according to Dunn's affidavit, was under his (Dunn's) "control and management." The
papers turned out to be private, personal and business papers together with corporate books and records of certain unnamed corporations in which Birrell did not
even claim ownership. (All of these type records were seized in the case at bar). Nevertheless, the search in Birrell was held invalid by the court which held that
even though Birrell did not own the premises where the records were stored, he had "standing" to move for the return ofall the papers and properties seized. The
court, relying on Jones vs. U.S., supra; U.S. vs. Antonelli Fireworks Co., 53 F. Supp. 870, Aff'd 155 F. 2d 631: Henzel vs. U.S., supra; and Schwimmer vs. U.S.,
supra, pointed out that

It is overwhelmingly established that the searches here in question were directed solely and exclusively against Birrell. The only person suggested in
the papers as having violated the law was Birrell. The first search warrant described the records as having been used "in committing a violation of
Title 18, United States Code, Section 1341, by the use of the mails by one Lowell M. Birrell, . . ." The second search warrant was captioned: "United
States of America vs. Lowell M. Birrell. (p. 198)

Possession (actual or constructive), no less than ownership, gives standing to move to suppress. Such was the rule even before Jones. (p. 199)

If, as thus indicated Birrell had at least constructive possession of the records stored with Dunn, it matters not whether he had any interest in the
premises searched. See also Jeffers v. United States, 88 U.S. Appl. D.C. 58, 187 F. 2d 498 (1950), affirmed 432 U.S. 48, 72 S. Ct. 93, 96 L. Ed. 459
(1951).

The ruling in the Birrell case was reaffirmed on motion for reargument; the United States did not appeal from this decision. The factual situation in Birrell is
strikingly similar to the case of the present petitioners; as in Birrell, many personal and corporate papers were seized from premises not petitioners' family
residences; as in Birrell, the searches were "PRIMARILY DIRECTED SOLETY AND EXCLUSIVELY" against the petitioners. Still both types of documents were
suppressed in Birrell because of the illegal search. In the case at bar, the petitioners connection with the premises raided is much closer than in Birrell.

Thus, the petitioners have full standing to move for the quashing of all the warrants regardless whether these were directed against residences in the narrow
sense of the word, as long as the documents were personal papers of the petitioners or (to the extent that they were corporate papers) were held by them in a
personal capacity or under their personal control.

Prescinding a from the foregoing, this Court, at all events, should order the return to the petitioners all personal and private papers and effects seized, no matter
where these were seized, whether from their residences or corporate offices or any other place or places. The uncontradicted sworn statements of the petitioners
in their, various pleadings submitted to this Court indisputably show that amongst the things seized from the corporate offices and other places
were personal and private papers and effects belonging to the petitioners.

If there should be any categorization of the documents, papers and things which where the objects of the unlawful searches and seizures, I submit that the
grouping should be: (a) personal or private papers of the petitioners were they were unlawfully seized, be it their family residences offices, warehouses and/or
premises owned and/or possessed (actually or constructively) by them as shown in all the search and in the sworn applications filed in securing the void search
warrants and (b) purely corporate papers belonging to corporations. Under such categorization or grouping, the determination of which unlawfully seized papers,
documents and things are personal/private of the petitioners or purely corporate papers will have to be left to the lower courts which issued the void search
warrants in ultimately effecting the suppression and/or return of the said documents.

And as unequivocally indicated by the authorities above cited, the petitioners likewise have clear legal standing to move for the suppression of purely
corporate papers as "President and/or General Manager" of the corporations involved as specifically mentioned in the void search warrants.

Finally, I must articulate my persuasion that although the cases cited in my disquisition were criminal prosecutions, the great clauses of the constitutional
proscription on illegal searches and seizures do not withhold the mantle of their protection from cases not criminal in origin or nature.

EN BANC

RAUL L. LAMBINO and ERICO B. G.R. No. 174153

AUMENTADO, TOGETHER WITH
6,327,952 REGISTERED VOTERS,
Petitioners,
- versus -
THE COMMISSION ON ELECTIONS,
Respondent.
x--------------------------------------------------------x

ALTERNATIVE LAW GROUPS, INC.,

Intervenor.
x ------------------------------------------------------ x

ONEVOICE INC., CHRISTIAN S.

MONSOD, RENE B. AZURIN,
MANUEL L. QUEZON III, BENJAMIN
T. TOLOSA, JR., SUSAN V. OPLE, and
CARLOS P. MEDINA, JR.,
Intervenors.
x------------------------------------------------------ x
ATTY. PETE QUIRINO QUADRA,
Intervenor.
x--------------------------------------------------------x
BAYAN represented by its Chairperson
Dr. Carolina Pagaduan-Araullo, BAYAN MUNA
represented by its Chairperson Dr. Reynaldo
Lesaca, KILUSANG MAYO UNO represented
by its Secretary General Joel Maglunsod, HEAD
represented by its Secretary General Dr. Gene
Alzona Nisperos, ECUMENICAL BISHOPS
FORUM represented by Fr. Dionito Cabillas,
MIGRANTE represented by its Chairperson
Concepcion Bragas-Regalado, GABRIELA
represented by its Secretary General
Emerenciana de Jesus, GABRIELA WOMENS
PARTY represented by Sec. Gen. Cristina Palabay,
ANAKBAYAN represented by Chairperson

Eleanor de Guzman, LEAGUE OF FILIPINO

STUDENTS represented by Chair Vencer
Crisostomo Palabay, JOJO PINEDA of the
League of Concerned Professionals and
Businessmen, DR. DARBY SANTIAGO
of the Solidarity of Health Against Charter
Change, DR. REGINALD PAMUGAS of
Health Action for Human Rights,
Intervenors.
x--------------------------------------------------------x
LORETTA ANN P. ROSALES,
MARIO JOYO AGUJA, and ANA THERESA
HONTIVEROS-BARAQUEL,
Intervenors.
x--------------------------------------------------------x
ARTURO M. DE CASTRO,
Intervenor.
x ------------------------------------------------------- x
TRADE UNION CONGRESS OF THE
PHILIPPINES,
Intervenor.
x---------------------------------------------------------x
LUWALHATI RICASA ANTONINO,
Intervenor.
x ------------------------------------------------------- x
PHILIPPINE CONSTITUTION
ASSOCIATION (PHILCONSA), CONRADO
F. ESTRELLA, TOMAS C. TOLEDO,
MARIANO M. TAJON, FROILAN M.
BACUNGAN, JOAQUIN T. VENUS, JR.,
FORTUNATO P. AGUAS, and AMADO
GAT INCIONG,
Intervenors.
x ------------------------------------------------------- x
RONALD L. ADAMAT, ROLANDO
MANUEL RIVERA, and RUELO BAYA,
Intervenors.
x -------------------------------------------------------- x
PHILIPPINE TRANSPORT AND GENERAL
WORKERS ORGANIZATION (PTGWO)
and MR. VICTORINO F. BALAIS,
Intervenors.
x -------------------------------------------------------- x

SENATE OF THE PHILIPPINES, represented

by its President, MANUEL VILLAR, JR.,
Intervenor.

x ------------------------------------------------------- x
SULONG BAYAN MOVEMENT
 FOUNDATION, INC.,
Intervenor.
x ------------------------------------------------------- x
JOSE ANSELMO I. CADIZ, BYRON D.
BOCAR, MA. TANYA KARINA A. LAT,
ANTONIO L. SALVADOR, and
RANDALL TABAYOYONG,
Intervenors.
x -------------------------------------------------------- x
INTEGRATED BAR OF THE PHILIPPINES,
CEBU CITY AND CEBU PROVINCE
CHAPTERS,
Intervenors.
x --------------------------------------------------------x
SENATE MINORITY LEADER AQUILINO
Q. PIMENTEL, JR. and SENATORS
SERGIO R. OSMEŇA III, JAMBY
MADRIGAL, JINGGOY ESTRADA,
ALFREDO S. LIM and
PANFILO LACSON,
Intervenors.
x -----------------------------------------------------x
JOSEPH EJERCITO ESTRADA and
PWERSA NG MASANG PILIPINO,
Intervenors.
x -----------------------------------------------------x
MAR-LEN ABIGAIL BINAY, G.R. No. 174299
SOFRONIO UNTALAN, JR., and
RENE A.V. SAGUISAG, Present:
Petitioners,
PANGANIBAN, C.J.,
- versus - PUNO,
QUISUMBING,
YNARES-SANTIAGO,
COMMISSION ON ELECTIONS, SANDOVAL-GUTIERREZ,
represented by Chairman BENJAMIN CARPIO,
S. ABALOS, SR., and Commissioners AUSTRIA-MARTINEZ,
RESURRECCION Z. BORRA, CORONA,
FLORENTINO A. TUASON, JR., CARPIO MORALES,
ROMEO A. BRAWNER, CALLEJO, SR.,
RENE V. SARMIENTO, AZCUNA,
NICODEMO T. FERRER, and TINGA,
John Doe and Peter Doe, CHICO-NAZARIO,
Respondents. GARCIA, and VELASCO, JR., JJ.

Promulgated:

October 25, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

These are consolidated petitions on the Resolution dated 31 August 2006 of the Commission on Elections (COMELEC) denying due course to an initiative petition

to amend the 1987 Constitution.

 Antecedent Facts

On 15 February 2006, petitioners in G.R. No. 174153, namely Raul L. Lambino and Erico B. Aumentado (Lambino Group), with other groups[1] and individuals,

commenced gathering signatures for an initiative petition to change the 1987 Constitution. On 25 August 2006, the Lambino Group filed a petition with the

COMELEC to hold a plebiscite that will ratify their initiative petition under Section 5(b) and (c)[2] and Section 7[3] of Republic Act No. 6735 or the

Initiative and Referendum Act (RA 6735).

The Lambino Group alleged that their petition had the support of 6,327,952 individuals constituting at least twelve per centum (12%) of all registered

voters, with each legislative district represented by at least three per centum (3%) of its registered voters. The Lambino Group also claimed that COMELEC election

registrars had verified the signatures of the 6.3 million individuals.

The Lambino Groups initiative petition changes the 1987 Constitution by modifying Sections 1-7 of Article VI (Legislative Department)[4] and Sections

1-4 of Article VII (Executive Department)[5] and by adding Article XVIII entitled Transitory Provisions.[6] These proposed changes will shift the present Bicameral-

Presidential system to a Unicameral-Parliamentary form of government. The Lambino Group prayed that after due publication of their petition, the

COMELEC should submit the following proposition in a plebiscite for the voters ratification:

DO YOU APPROVE THE AMENDMENT OF ARTICLES VI AND VII OF THE 1987 CONSTITUTION, CHANGING THE FORM OF
GOVERNMENT FROM THE PRESENT BICAMERAL-PRESIDENTIAL TO A UNICAMERAL-PARLIAMENTARY SYSTEM, AND
PROVIDING ARTICLE XVIII AS TRANSITORY PROVISIONS FOR THE ORDERLY SHIFT FROM ONE SYSTEM TO THE OTHER?

On 30 August 2006, the Lambino Group filed an Amended Petition with the COMELEC indicating modifications in the proposed Article XVIII (Transitory Provisions)

of theirinitiative.[7]

The Ruling of the COMELEC

On 31 August 2006, the COMELEC issued its Resolution denying due course to the Lambino Groups petition for lack of an enabling law governing initiative

petitions to amend the Constitution. The COMELEC invoked this Courts ruling in Santiago v. Commission on Elections[8] declaring RA 6735 inadequate

to implement the initiative clause on proposals to amend the Constitution.[9]

In G.R. No. 174153, the Lambino Group prays for the issuance of the writs of certiorari and mandamus to set aside the COMELEC Resolution of 31 August 2006

and to compel the COMELEC to give due course to their initiative petition. The Lambino Group contends that the COMELEC committed grave abuse of discretion

in denying due course to their petition since Santiago is not a binding precedent. Alternatively, the Lambino Group claims that Santiago binds only the parties to

that case, and their petition deserves cognizance as an expression of the will of the sovereign people.
In G.R. No. 174299, petitioners (Binay Group) pray that the Court require respondent COMELEC Commissioners to show cause why they should not be

cited in contempt for the COMELECs verification of signatures and for entertaining the Lambino Groups petition despite the permanent injunction in Santiago. The

Court treated the Binay Groups petition as an opposition-in-intervention.

In his Comment to the Lambino Groups petition, the Solicitor General joined causes with the petitioners, urging the Court to grant the petition despite

the Santiago ruling. The Solicitor General proposed that the Court treat RA 6735 and its implementing rules as temporary devises to implement the system of

initiative.

Various groups and individuals sought intervention, filing pleadings supporting or opposing the Lambino Groups petition. The supporting

intervenors[10] uniformly hold the view that the COMELEC committed grave abuse of discretion in relying on Santiago. On the other hand, the opposing

intervenors[11] hold the contrary view and maintain that Santiago is a binding precedent. The opposing intervenors also challenged (1) the Lambino Groups

standing to file the petition; (2) the validity of the signature gathering and verification process; (3) the Lambino Groups compliance with the minimum requirement

for the percentage of voters supporting an initiative petition under Section 2, Article XVII of the 1987 Constitution;[12] (4) the nature of the proposed changes as

revisions and not mere amendments as provided under Section 2, Article XVII of the 1987 Constitution; and (5) the Lambino Groups compliance with the

requirement in Section 10(a) of RA 6735 limiting initiative petitions to only one subject.

The Court heard the parties and intervenors in oral arguments on 26 September 2006. After receiving the parties memoranda, the Court considered the case

submitted for resolution.

The Issues

The petitions raise the following issues:

1. Whether the Lambino Groups initiative petition complies with Section 2, Article XVII of the Constitution on amendments to the Constitution through a

peoples initiative;

2. Whether this Court should revisit its ruling in Santiago declaring RA 6735 incomplete, inadequate or wanting in essential terms and conditions

to implement the initiativeclause on proposals to amend the Constitution; and

3. Whether the COMELEC committed grave abuse of discretion in denying due course to the Lambino Groups petition.

The Ruling of the Court

There is no merit to the petition.

 The Lambino Group miserably failed to comply with the basic requirements of the Constitution for conducting a peoples initiative. Thus, there is even

no need to revisit Santiago, as the present petition warrants dismissal based alone on the Lambino Groups glaring failure to comply with the basic requirements

of the Constitution. For following the Courts ruling in Santiago, no grave abuse of discretion is attributable to the Commision on Elections.

1. The Initiative Petition Does Not Comply with Section 2, Article XVII of the Constitution on Direct Proposal by the People

Section 2, Article XVII of the Constitution is the governing constitutional provision that allows a peoples initiative to propose amendments to the

Constitution. This section states:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people through initiative upon a
petition of at least twelve per centum of the total number of registered voters of which every legislative district must be represented by at
least three per centum of the registered voters therein. x x x x (Emphasis supplied)

The deliberations of the Constitutional Commission vividly explain the meaning of an amendment directly proposed by the people through initiative upon a

petition, thus:

MR. RODRIGO: Let us look at the mechanics. Let us say some voters want to propose a constitutional amendment. Is the draft of the
proposed constitutional amendment ready to be shown to the people when they are asked to sign?

MR. SUAREZ: That can be reasonably assumed, Madam President.

MR. RODRIGO: What does the sponsor mean? The draft is ready and shown to them before they sign. Now, who prepares the draft?

MR. SUAREZ: The people themselves, Madam President.

MR. RODRIGO: No, because before they sign there is already a draft shown to them and they are asked whether or not they want
to propose this constitutional amendment.

MR. SUAREZ: As it is envisioned, any Filipino can prepare that proposal and pass it around for signature.[13] (Emphasis supplied)

Clearly, the framers of the Constitution intended that the draft of the proposed constitutional amendment should be ready and shown to the

people before they sign such proposal. The framers plainly stated that before they sign there is already a draft shown to them. The framers

also envisioned that the people should sign on the proposal itself because the proponents must prepare that proposal and pass it around for signature.

The essence of amendments directly proposed by the people through initiative upon a petition is that the entire proposal on its face is a

petition by the people. This means two essential elements must be present. First, the people must author and thus sign the entire proposal. No agent or

representative can sign on their behalf. Second, as an initiative upon a petition, the proposal must be embodied in a petition.

These essential elements are present only if the full text of the proposed amendments is first shown to the people who express their assent by signing

such complete proposal in a petition. Thus, an amendment is directly proposed by the people through initiative upon a petition only if the people sign on

a petition that contains the full text of the proposed amendments.

The full text of the proposed amendments may be either written on the face of the petition, or attached to it. If so attached, the petition must state the

fact of such attachment. This is an assurance that every one of the several millions of signatories to the petition had seen the full text of the proposed amendments
before signing. Otherwise, it is physically impossible, given the time constraint, to prove that every one of the millions of signatories had seen the full text of the

proposed amendments before signing.

The framers of the Constitution directly borrowed[14] the concept of peoples initiative from the United States where various State constitutions

incorporate an initiative clause. In almost all States[15] which allow initiative petitions, the unbending requirement is that the people must first see the full text

of the proposed amendments before they sign to signify their assent, and that the people must sign on an initiative petition that contains the full text

of the proposed amendments.[16]

The rationale for this requirement has been repeatedly explained in several decisions of various courts. Thus, in Capezzuto v. State Ballot

Commission, the Supreme Court of Massachusetts, affirmed by the First Circuit Court of Appeals, declared:
[A] signature requirement would be meaningless if the person supplying the signature has not first seen what it is that he or
she is signing. Further, and more importantly, loose interpretation of the subscription requirement can pose a significant potential for
fraud. A person permitted to describe orally the contents of an initiative petition to a potential signer, without the signer having actually
examined the petition, could easily mislead the signer by, for example, omitting, downplaying, or even flatly misrepresenting, portions of
the petition that might not be to the signer's liking. This danger seems particularly acute when, in this case, the person giving the
description is the drafter of the petition, who obviously has a vested interest in seeing that it gets the requisite signatures to
qualify for the ballot.[17] (Boldfacing and underscoring supplied)

Likewise, in Kerr v. Bradbury,[18] the Court of Appeals of Oregon explained:

The purposes of full text provisions that apply to amendments by initiative commonly are described in similar terms. x x x (The
purpose of the full text requirement is to provide sufficient information so that registered voters can intelligently evaluate
whether to sign the initiative petition.); x x x (publication of full text of amended constitutional provision required because it is essential
for the elector to have x x x the section which is proposed to be added to or subtracted from. If he is to vote intelligently, he must have this
knowledge. Otherwise in many instances he would be required to vote in the dark.) (Emphasis supplied)

Moreover, an initiative signer must be informed at the time of signing of the nature and effect of that which is proposed and failure to do so is deceptive and

misleading which renders the initiative void.[19]

Section 2, Article XVII of the Constitution does not expressly state that the petition must set forth the full text of the proposed amendments. However,

the deliberations of the framers of our Constitution clearly show that the framers intended to adopt the relevant American jurisprudence on peoples initiative. In

particular, the deliberations of the Constitutional Commission explicitly reveal that the framers intended that the people must first see the full text of the

proposed amendments before they sign, and that the people must sign on a petition containing such full text. Indeed, Section 5(b) of Republic Act No.

6735, the Initiative and Referendum Act that the Lambino Group invokes as valid, requires that the people must sign the petition x x x as signatories.

The proponents of the initiative secure the signatures from the people. The proponents secure the signatures in their private capacity and not as public

officials. The proponents are not disinterested parties who can impartially explain the advantages and disadvantages of the proposed amendments to the

people. The proponents present favorably their proposal to the people and do not present the arguments against their proposal. The proponents, or their supporters,

often pay those who gather the signatures.

 Thus, there is no presumption that the proponents observed the constitutional requirements in gathering the signatures. The proponents bear the

burden of proving that they complied with the constitutional requirements in gathering the signatures - that the petition contained, or incorporated by

attachment, the full text of the proposed amendments.

The Lambino Group did not attach to their present petition with this Court a copy of the paper that the people signed as their initiative petition. The

Lambino Group submitted to this Court a copy of a signature sheet[20] after the oral arguments of 26 September 2006 when they filed their Memorandum on 11

October 2006. The signature sheet with this Court during the oral arguments was the signature sheet attached[21] to the opposition in intervention filed on 7

September 2006 by intervenor Atty. Pete Quirino-Quadra.

The signature sheet attached to Atty. Quadras opposition and the signature sheet attached to the Lambino Groups Memorandum are the same. We

reproduce below the signature sheet in full:

Province: City/Municipality: No. of

Verified
Legislative District: Barangay: Signatures:

PROPOSITION: DO YOU APPROVE OF THE AMENDMENT OF ARTICLES VI AND VII OF THE 1987 CONSTITUTION, CHANGING THE FORM OF
GOVERNMENT FROM THE PRESENT BICAMERAL-PRESIDENTIAL TO A UNICAMERAL-PARLIAMENTARY SYSTEM OF GOVERNMENT, IN ORDER TO
ACHIEVE GREATER EFFICIENCY, SIMPLICITY AND ECONOMY IN GOVERNMENT; AND PROVIDING AN ARTICLE XVIII AS TRANSITORY PROVISIONS
FOR THE ORDERLY SHIFT FROM ONE SYSTEM TO ANOTHER?

I hereby APPROVE the proposed amendment to the 1987 Constitution. My signature herein which shall form part of the petition for initiative to amend the
Constitution signifies my support for the filing thereof.

Precinct Name Address Birthdate Signature Verification

Number Last Name, First Name, M.I. MM/DD/YY
1
2
3
4
5
6
7
8
9
10

_________________ _________________ __________________

Barangay Official Witness Witness
(Print Name and Sign) (Print Name and Sign) (Print Name and Sign)

There is not a single word, phrase, or sentence of text of the Lambino Groups proposed changes in the signature sheet. Neither does the

signature sheet state that the text of the proposed changes is attached to it. Petitioner Atty. Raul Lambino admitted this during the oral arguments before

this Court on 26 September 2006.

 The signature sheet merely asks a question whether the people approve a shift from the Bicameral-Presidential to the Unicameral-Parliamentary

system of government. The signature sheet does not show to the people the draft of the proposed changes before they are asked to sign the signature

sheet. Clearly, the signature sheet is not the petition that the framers of the Constitution envisioned when they formulated the initiative clause in Section 2, Article

XVII of the Constitution.

Petitioner Atty. Lambino, however, explained that during the signature-gathering from February to August 2006, the Lambino Group circulated, together

with the signature sheets, printed copies of the Lambino Groups draft petition which they later filed on 25 August 2006 with the COMELEC. When asked if his

group also circulated the draft of their amended petition filed on 30 August 2006 with the COMELEC, Atty. Lambino initially replied that they circulated

both. However, Atty. Lambino changed his answer and stated that what his group circulated was the draft of the 30 August 2006 amended petition, not the draft of

the 25 August 2006 petition.

The Lambino Group would have this Court believe that they prepared the draft of the 30 August 2006 amended petition almost seven months

earlier in February 2006 when they started gathering signatures. Petitioner Erico B. Aumentados Verification/Certification of the 25 August 2006 petition, as well

as of the 30 August 2006 amended petition, filed with the COMELEC, states as follows:

I have caused the preparation of the foregoing [Amended] Petition in my personal capacity as a registered voter, for and on
behalf of the Union of Local Authorities of the Philippines, as shown by ULAP Resolution No. 2006-02 hereto attached, and as
representative of the mass of signatories hereto. (Emphasis supplied)

The Lambino Group failed to attach a copy of ULAP Resolution No. 2006-02 to the present petition. However, the Official Website of the Union of Local

Authorities of the Philippines[22] has posted the full text of Resolution No. 2006-02, which provides:

RESOLUTION NO. 2006-02

RESOLUTION SUPPORTING THE PROPOSALS OF THE PEOPLES CONSULTATIVE COMMISSION ON CHARTER CHANGE
THROUGH PEOPLES INITIATIVE AND REFERENDUM AS A MODE OF AMENDING THE 1987 CONSTITUTION
WHEREAS, there is a need for the Union of Local Authorities of the Philippines (ULAP) to adopt a common stand on the approach to
support the proposals of the Peoples Consultative Commission on Charter Change;
WHEREAS, ULAP maintains its unqualified support to the agenda of Her Excellency President Gloria Macapagal-Arroyo for constitutional
reforms as embodied in the ULAP Joint Declaration for Constitutional Reforms signed by the members of the ULAP and the majority
coalition of the House of Representatives in Manila Hotel sometime in October 2005;
WHEREAS, the Peoples Consultative Commission on Charter Change created by Her Excellency to recommend amendments to the 1987
Constitution has submitted its final report sometime in December 2005;
 WHEREAS, the ULAP is mindful of the current political developments in Congress which militates against the use of the expeditious form
of amending the 1987 Constitution;
WHEREAS, subject to the ratification of its institutional members and the failure of Congress to amend the Constitution as a constituent
assembly, ULAP has unanimously agreed to pursue the constitutional reform agenda through Peoples Initiative and Referendum without
prejudice to other pragmatic means to pursue the same;
WHEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, THAT ALL THE MEMBER-LEAGUES OF THE UNION OF LOCAL
AUTHORITIES OF THE PHILIPPINES (ULAP) SUPPORT THE PORPOSALS (SIC) OF THE PEOPLES CONSULATATIVE (SIC)
COMMISSION ON CHARTER CHANGE THROUGH PEOPLES INITIATIVE AND REFERENDUM AS A MODE OF AMENDING THE
1987 CONSTITUTION;
DONE, during the ULAP National Executive Board special meeting held on 14 January 2006 at the Century Park
Hotel, Manila.[23] (Underscoring supplied)

ULAP Resolution No. 2006-02 does not authorize petitioner Aumentado to prepare the 25 August 2006 petition, or the 30 August 2006 amended

petition, filed with the COMELEC. ULAP Resolution No. 2006-02 support(s) the porposals (sic) of the Consulatative (sic) Commission on Charter

Change through peoples initiative and referendum as a mode of amending the 1987 Constitution. The proposals of the Consultative Commission[24] are vastly

different from the proposed changes of the Lambino Group in the 25 August 2006 petition or 30 August 2006 amended petition filed with the COMELEC.

For example, the proposed revisions of the Consultative Commission affect all provisions of the existing Constitution, from the Preamble to the

Transitory Provisions.The proposed revisions have profound impact on the Judiciary and the National Patrimony provisions of the existing Constitution, provisions

that the Lambino Groups proposed changes do not touch. The Lambino Groups proposed changes purport to affect only Articles VI and VII of the existing

Constitution, including the introduction of new Transitory Provisions.

The ULAP adopted Resolution No. 2006-02 on 14 January 2006 or more than six months before the filing of the 25 August 2006 petition or the 30 August

2006 amended petition with the COMELEC. However, ULAP Resolution No. 2006-02 does not establish that ULAP or the Lambino Group caused the circulation

of the draft petition, together with the signature sheets, six months before the filing with the COMELEC. On the contrary, ULAP Resolution No. 2006-02 casts grave

doubt on the Lambino Groups claim that they circulated the draft petition together with the signature sheets. ULAP Resolution No. 2006-02 does not refer at all

to the draft petition or to the Lambino Groups proposed changes.

In their Manifestation explaining their amended petition before the COMELEC, the Lambino Group declared:

After the Petition was filed, Petitioners belatedly realized that the proposed amendments alleged in the Petition, more
specifically, paragraph 3 of Section 4 and paragraph 2 of Section 5 of the Transitory Provisions were inaccurately stated and failed to
correctly reflect their proposed amendments.

The Lambino Group did not allege that they were amending the petition because the amended petition was what they had shown to the people during the February

to August 2006 signature-gathering. Instead, the Lambino Group alleged that the petition of 25 August 2006 inaccurately stated and failed to correctly reflect their

proposed amendments.

The Lambino Group never alleged in the 25 August 2006 petition or the 30 August 2006 amended petition with the COMELEC that they circulated printed copies

of the draft petition together with the signature sheets. Likewise, the Lambino Group did not allege in their present petition before this Court that they circulated

printed copies of the draft petition together with the signature sheets. The signature sheets do not also contain any indication that the draft petition is attached to,

or circulated with, the signature sheets.

 It is only in their Consolidated Reply to the Opposition-in-Interventions that the Lambino Group first claimed that they circulated the petition for initiative

filed with the COMELEC, thus:

[T]here is persuasive authority to the effect that (w)here there is not (sic) fraud, a signer who did not read the measure attached to
a referendum petition cannot question his signature on the ground that he did not understand the nature of the act. [82 C.J.S.
S128h. Mo. State v. Sullivan, 224, S.W. 327, 283 Mo. 546.] Thus, the registered voters who signed the signature sheets circulated
together with the petition for initiative filed with the COMELEC below, are presumed to have understood the proposition contained
in the petition. (Emphasis supplied)

The Lambino Groups statement that they circulated to the people the petition for initiative filed with the COMELEC appears an afterthought, made

after the intervenors Integrated Bar of the Philippines (Cebu City Chapter and Cebu Province Chapters) and Atty. Quadra had pointed out that the signature sheets

did not contain the text of the proposed changes. In their Consolidated Reply, the Lambino Group alleged that they circulated the petition for initiative but failed

to mention the amended petition. This contradicts what Atty. Lambino finally stated during the oral arguments that what they circulated was the draft of

the amended petition of 30 August 2006.

The Lambino Group cites as authority Corpus Juris Secundum, stating that a signer who did not read the measure attached to a referendum

petition cannot question his signature on the ground that he did not understand the nature of the act. The Lambino Group quotes an authority that cites a proposed

change attached to the petition signed by the people. Even the authority the Lambino Group quotes requires that the proposed change must be attached to

the petition. The same authority the Lambino Group quotes requires the people to sign on the petition itself.

Indeed, it is basic in American jurisprudence that the proposed amendment must be incorporated with, or attached to, the initiative petition signed by

the people. In the present initiative, the Lambino Groups proposed changes were not incorporated with, or attached to, the signature sheets. The Lambino Groups

citation of Corpus Juris Secundumpulls the rug from under their feet.

It is extremely doubtful that the Lambino Group prepared, printed, circulated, from February to August 2006 during the signature-gathering period, the

draft of the petition or amended petition they filed later with the COMELEC. The Lambino Group are less than candid with this Court in their belated claim that they

printed and circulated, together with the signature sheets, the petition or amended petition. Nevertheless, even assuming the Lambino Group circulated the

amended petition during the signature-gathering period, the Lambino Group admitted circulating only very limited copies of the petition.

During the oral arguments, Atty. Lambino expressly admitted that they printed only 100,000 copies of the draft petition they filed more than

six months later with the COMELEC. Atty. Lambino added that he also asked other supporters to print additional copies of the draft petition but he could not state

with certainty how many additional copies the other supporters printed. Atty. Lambino could only assure this Court of the printing of 100,000 copies because

he himself caused the printing of these 100,000 copies.

Likewise, in the Lambino Groups Memorandum filed on 11 October 2006, the Lambino Group expressly admits that petitioner Lambino initiated

the printing and reproduction of 100,000 copies of the petition for initiative x x x.[25] This admission binds the Lambino Group and establishes beyond
any doubt that the Lambino Group failed to show the full text of the proposed changes to the great majority of the people who signed the signature

sheets.

Thus, of the 6.3 million signatories, only 100,000 signatories could have received with certainty one copy each of the petition, assuming a 100 percent

distribution with no wastage. If Atty. Lambino and company attached one copy of the petition to each signature sheet, only 100,000 signature sheets could have

circulated with the petition. Each signature sheet contains space for ten signatures. Assuming ten people signed each of these 100,000 signature sheets with the

attached petition, the maximum number of people who saw the petition before they signed the signature sheets would not exceed 1,000,000.

With only 100,000 printed copies of the petition, it would be physically impossible for all or a great majority of the 6.3 million signatories to have seen

the petition before they signed the signature sheets. The inescapable conclusion is that the Lambino Group failed to show to the 6.3 million signatories the

full text of the proposed changes. If ever, not more than one million signatories saw the petition before they signed the signature sheets.

In any event, the Lambino Groups signature sheets do not contain the full text of the proposed changes, either on the face of the signature sheets, or

as attachment with an indication in the signature sheet of such attachment. Petitioner Atty. Lambino admitted this during the oral arguments, and this

admission binds the Lambino Group. This fact is also obvious from a mere reading of the signature sheet. This omission is fatal. The failure to so include

the text of the proposed changes in the signature sheets renders the initiative void for non-compliance with the constitutional requirement that the amendment must

be directly proposed by the people through initiative upon a petition. The signature sheet is not the petition envisioned in the initiative clause of the

Constitution.

For sure, the great majority of the 6.3 million people who signed the signature sheets did not see the full text of the proposed changes before

signing. They could not have known the nature and effect of the proposed changes, among which are:

1. The term limits on members of the legislature will be lifted and thus members of Parliament can be re-elected
indefinitely;[26]

2. The interim Parliament can continue to function indefinitely until its members, who are almost all the present members of
Congress, decide to call for new parliamentary elections. Thus, the members of the interim Parliament will determine the
expiration of their own term of office; [27]

3. Within 45 days from the ratification of the proposed changes, the interim Parliament shall convene to propose further
amendments or revisions to the Constitution.[28]

These three specific amendments are not stated or even indicated in the Lambino Groups signature sheets. The people who signed the signature

sheets had no idea that they were proposing these amendments. These three proposed changes are highly controversial. The people could not have inferred or

divined these proposed changes merely from a reading or rereading of the contents of the signature sheets.

During the oral arguments, petitioner Atty. Lambino stated that he and his group assured the people during the signature-gathering that the

elections for the regular Parliament would be held during the 2007 local elections if the proposed changes were ratified before the 2007 local

elections. However, the text of the proposed changesbelies this.

 The proposed Section 5(2), Article XVIII on Transitory Provisions, as found in the amended petition, states:

Section 5(2). The interim Parliament shall provide for the election of the members of Parliament, which shall be
synchronized and held simultaneously with the election of all local government officials. x x x x (Emphasis supplied)

Section 5(2) does not state that the elections for the regular Parliament will be held simultaneously with the 2007 local elections. This section merely requires that

the elections for the regular Parliament shall be held simultaneously with the local elections without specifying the year.

Petitioner Atty. Lambino, who claims to be the principal drafter of the proposed changes, could have easily written the word next before the phrase

election of all local government officials. This would have insured that the elections for the regular Parliament would be held in the next local elections following the

ratification of the proposed changes. However, the absence of the word next allows the interim Parliament to schedule the elections for the regular Parliament

simultaneously with any future local elections.

Thus, the members of the interim Parliament will decide the expiration of their own term of office. This allows incumbent members of the House of

Representatives to hold office beyond their current three-year term of office, and possibly even beyond the five-year term of office of regular members of the

Parliament. Certainly, this is contrary to the representations of Atty. Lambino and his group to the 6.3 million people who signed the signature

sheets. Atty. Lambino and his group deceived the 6.3 million signatories, and even the entire nation.

This lucidly shows the absolute need for the people to sign an initiative petition that contains the full text of the proposed amendments to avoid fraud

or misrepresentation.In the present initiative, the 6.3 million signatories had to rely on the verbal representations of Atty. Lambino and his group because the

signature sheets did not contain the full text of the proposed changes. The result is a grand deception on the 6.3 million signatories who were led to believe that

the proposed changes would require the holding in 2007 of elections for the regular Parliament simultaneously with the local elections.

The Lambino Groups initiative springs another surprise on the people who signed the signature sheets. The proposed changes mandate the interim

Parliament to make further amendments or revisions to the Constitution. The proposed Section 4(4), Article XVIII on Transitory Provisions, provides:

Section 4(4). Within forty-five days from ratification of these amendments, the interim Parliament shall convene to propose
amendments to, or revisions of, this Constitutionconsistent with the principles of local autonomy, decentralization and a strong
bureaucracy. (Emphasis supplied)

During the oral arguments, Atty. Lambino stated that this provision is a surplusage and the Court and the people should simply ignore it. Far from being a surplusage,

this provision invalidates the Lambino Groups initiative.

Section 4(4) is a subject matter totally unrelated to the shift from the Bicameral-Presidential to the Unicameral-Parliamentary system. American jurisprudence on

initiatives outlaws this as logrolling - when the initiative petition incorporates an unrelated subject matter in the same petition. This puts the people in a dilemma

since they can answer only either yes or no to the entire proposition, forcing them to sign a petition that effectively contains two propositions, one of which they

may find unacceptable.

 Under American jurisprudence, the effect of logrolling is to nullify the entire proposition and not only the unrelated subject matter. Thus, in Fine v.

Firestone,[29] the Supreme Court of Florida declared:

Combining multiple propositions into one proposal constitutes logrolling, which, if our judicial responsibility is to
mean anything, we cannot permit. The very broadness of the proposed amendment amounts to logrolling because the electorate cannot
know what it is voting on - the amendments proponents simplistic explanation reveals only the tip of the iceberg. x x x x The ballot must
give the electorate fair notice of the proposed amendment being voted on. x x x x The ballot language in the instant case fails to do
that. The very broadness of the proposal makes it impossible to state what it will affect and effect and violates the requirement that
proposed amendments embrace only one subject. (Emphasis supplied)

Logrolling confuses and even deceives the people. In Yute Air Alaska v. McAlpine,[30] the Supreme Court of Alaska warned against inadvertence,

stealth and fraud in logrolling:

Whenever a bill becomes law through the initiative process, all of the problems that the single-subject rule was enacted to
prevent are exacerbated. There is a greater danger of logrolling, or the deliberate intermingling of issues to increase the likelihood of
an initiatives passage, and there is a greater opportunity for inadvertence, stealth and fraud in the enactment-by-
initiative process. The drafters of an initiative operate independently of any structured or supervised process. They often emphasize
particular provisions of their proposition, while remaining silent on other (more complex or less appealing) provisions, when communicating
to the public. x x x Indeed, initiative promoters typically use simplistic advertising to present their initiative to potential petition-
signers and eventual voters. Many voters will never read the full text of the initiative before the election. More importantly, there is no
process for amending or splitting the several provisions in an initiative proposal. These difficulties clearly distinguish the initiative from the
legislative process. (Emphasis supplied)

Thus, the present initiative appears merely a preliminary step for further amendments or revisions to be undertaken by the interim Parliament as a

constituent assembly. The people who signed the signature sheets could not have known that their signatures would be used to propose an

amendment mandating the interim Parliament to propose furtheramendments or revisions to the Constitution.

Apparently, the Lambino Group inserted the proposed Section 4(4) to compel the interim Parliament to amend or revise again the Constitution within

45 days from ratification of the proposed changes, or before the May 2007 elections. In the absence of the proposed Section 4(4), the interim Parliament has the

discretion whether to amend or revise again the Constitution. With the proposed Section 4(4), the initiative proponents want the interim Parliament mandated to

immediately amend or revise again the Constitution.

However, the signature sheets do not explain the reason for this rush in amending or revising again so soon the Constitution. The signature sheets do

not also explain what specific amendments or revisions the initiative proponents want the interim Parliament to make, and why there is a need for such further

amendments or revisions. The people are again left in the dark to fathom the nature and effect of the proposed changes. Certainly, such an initiative is not

directly proposed by the people because the people do not even know the nature and effect of the proposed changes.

There is another intriguing provision inserted in the Lambino Groups amended petition of 30 August 2006. The proposed Section 4(3) of the Transitory

Provisions states:

Section 4(3). Senators whose term of office ends in 2010 shall be members of Parliament until noon of the thirtieth day of
June 2010.

After 30 June 2010, not one of the present Senators will remain as member of Parliament if the interim Parliament does not schedule elections for the regular

Parliament by 30 June 2010. However, there is no counterpart provision for the present members of the House of Representatives even if their term of office will
all end on 30 June 2007, three years earlier than that of half of the present Senators. Thus, all the present members of the House will remain members of the

interim Parliament after 30 June 2010.

The term of the incumbent President ends on 30 June 2010. Thereafter, the Prime Minister exercises all the powers of the President. If the interim

Parliament does not schedule elections for the regular Parliament by 30 June 2010, the Prime Minister will come only from the present members of the House of

Representatives to the exclusion of the present Senators.

The signature sheets do not explain this discrimination against the Senators. The 6.3 million people who signed the signature sheets could not

have known that their signatures would be used to discriminate against the Senators. They could not have known that their signatures would be used

to limit, after 30 June 2010, the interim Parliaments choice of Prime Minister only to members of the existing House of Representatives.

An initiative that gathers signatures from the people without first showing to the people the full text of the proposed amendments is most likely a deception, and

can operate as a gigantic fraud on the people. That is why the Constitution requires that an initiative must be directly proposed by the people x x x in a

petition - meaning that the people must sign on a petition that contains the full text of the proposed amendments. On so vital an issue as amending the nations

fundamental law, the writing of the text of the proposed amendments cannot be hidden from the people under a general or special power of attorney to unnamed,

faceless, and unelected individuals.

The Constitution entrusts to the people the power to directly propose amendments to the Constitution. This Court trusts the wisdom of the people even if the

members of this Court do not personally know the people who sign the petition. However, this trust emanates from a fundamental assumption: the full text of

the proposed amendment is first shown to the people before they sign the petition, not after they have signed the petition.

In short, the Lambino Groups initiative is void and unconstitutional because it dismally fails to comply with the requirement of Section 2, Article XVII of the

Constitution that the initiative must be directly proposed by the people through initiative upon a petition.

2. The Initiative Violates Section 2, Article XVII of the Constitution Disallowing Revision through Initiatives

A peoples initiative to change the Constitution applies only to an amendment of the Constitution and not to its revision. In contrast, Congress or a

constitutional convention can propose both amendments and revisions to the Constitution. Article XVII of the Constitution provides:

ARTICLE XVII
AMENDMENTS OR REVISIONS

Sec. 1. Any amendment to, or revision of, this Constitution may be proposed by:

(1) The Congress, upon a vote of three-fourths of all its Members, or

(2) A constitutional convention.

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people through initiative x x
x. (Emphasis supplied)
Article XVII of the Constitution speaks of three modes of amending the Constitution. The first mode is through Congress upon three-fourths vote of all its

Members. The second mode is through a constitutional convention. The third mode is through a peoples initiative.

Section 1 of Article XVII, referring to the first and second modes, applies to [A]ny amendment to, or revision of, this Constitution. In contrast, Section 2 of Article

XVII, referring to the third mode, applies only to [A]mendments to this Constitution. This distinction was intentional as shown by the following deliberations of the

Constitutional Commission:

MR. SUAREZ: Thank you, Madam President.

May we respectfully call the attention of the Members of the Commission that pursuant to the mandate given to us last night,
we submitted this afternoon a complete Committee Report No. 7 which embodies the proposed provision governing the matter of initiative.
This is now covered by Section 2 of the complete committee report. With the permission of the Members, may I quote Section 2:

The people may, after five years from the date of the last plebiscite held, directly propose amendments to
this Constitution thru initiative upon petition of at least ten percent of the registered voters.

This completes the blanks appearing in the original Committee Report No. 7. This proposal was suggested on the theory that
this matter of initiative, which came about because of the extraordinary developments this year, has to be separated from the traditional
modes of amending the Constitution as embodied in Section 1. The committee members felt that this system of initiative should be
limited to amendments to the Constitution and should not extend to the revision of the entire Constitution, so we removed it
from the operation of Section 1 of the proposed Article on Amendment or Revision. x x x x

xxxx

MS. AQUINO: [I] am seriously bothered by providing this process of initiative as a separate section in the Article on Amendment. Would
the sponsor be amenable to accepting an amendment in terms of realigning Section 2 as another subparagraph (c) of Section 1, instead
of setting it up as another separate section as if it were a self-executing provision?

MR. SUAREZ: We would be amenable except that, as we clarified a while ago, this process of initiative is limited to the matter of
amendment and should not expand into a revision which contemplates a total overhaul of the Constitution. That was the sense
that was conveyed by the Committee.

MS. AQUINO: In other words, the Committee was attempting to distinguish the coverage of modes (a) and (b) in Section 1 to
include the process of revision; whereas, the process of initiation to amend, which is given to the public, would only apply to
amendments?

MR. SUAREZ: That is right. Those were the terms envisioned in the Committee.

MS. AQUINO: I thank the sponsor; and thank you, Madam President.

xxxx

MR. MAAMBONG: My first question: Commissioner Davide's proposed amendment on line 1 refers to "amendments." Does it not
cover the word "revision" as defined by Commissioner Padilla when he made the distinction between the words "amendments"
and "revision"?

MR. DAVIDE: No, it does not, because "amendments" and "revision" should be covered by Section 1. So insofar as initiative is
concerned, it can only relate to "amendments" not "revision."

MR. MAAMBONG: Thank you.[31] (Emphasis supplied)

There can be no mistake about it. The framers of the Constitution intended, and wrote, a clear distinction between amendment and revision of the Constitution.

The framersintended, and wrote, that only Congress or a constitutional convention may propose revisions to the Constitution. The framers intended, and wrote,

that a peoples initiative may propose only amendments to the Constitution. Where the intent and language of the Constitution clearly withhold from the people the

power to propose revisions to the Constitution, the people cannot propose revisions even as they are empowered to propose amendments.

This has been the consistent ruling of state supreme courts in the United States. Thus, in McFadden v. Jordan,[32] the Supreme Court of California

ruled:
 The initiative power reserved by the people by amendment to the Constitution x x x applies only to the proposing
and the adopting or rejecting of laws and amendments to the Constitution and does not purport to extend to a constitutional
revision. x x x x It is thus clear that a revision of the Constitution may be accomplished only through ratification by the people of a revised
constitution proposed by a convention called for that purpose as outlined hereinabove. Consequently if the scope of the proposed initiative
measure (hereinafter termed the measure) now before us is so broad that if such measure became law a substantial revision of our present
state Constitution would be effected, then the measure may not properly be submitted to the electorate until and unless it is first agreed
upon by a constitutional convention, and the writ sought by petitioner should issue. x x x x (Emphasis supplied)

Likewise, the Supreme Court of Oregon ruled in Holmes v. Appling:[33]

It is well established that when a constitution specifies the manner in which it may be amended or revised, it can be altered
by those who favor amendments, revision, or other change only through the use of one of the specified means. The constitution itself
recognizes that there is a difference between an amendment and a revision; and it is obvious from an examination of the measure here in
question that it is not an amendment as that term is generally understood and as it is used in Article IV, Section 1. The document appears
to be based in large part on the revision of the constitution drafted by the Commission for Constitutional Revision authorized by the 1961
Legislative Assembly, x x x and submitted to the 1963 Legislative Assembly. It failed to receive in the Assembly the two-third's majority
vote of both houses required by Article XVII, Section 2, and hence failed of adoption, x x x.

While differing from that document in material respects, the measure sponsored by the plaintiffs is, nevertheless, a thorough
overhauling of the present constitution x x x.

To call it an amendment is a misnomer.

Whether it be a revision or a new constitution, it is not such a measure as can be submitted to the people through the
initiative. If a revision, it is subject to the requirements of Article XVII, Section 2(1); if a new constitution, it can only be proposed at a
convention called in the manner provided in Article XVII, Section 1. x x x x

Similarly, in this jurisdiction there can be no dispute that a peoples initiative can only propose amendments to the Constitution since the Constitution

itself limits initiatives to amendments. There can be no deviation from the constitutionally prescribed modes of revising the Constitution. A popular clamor, even

one backed by 6.3 million signatures, cannot justify a deviation from the specific modes prescribed in the Constitution itself.

As the Supreme Court of Oklahoma ruled in In re Initiative Petition No. 364:[34]

It is a fundamental principle that a constitution can only be revised or amended in the manner prescribed by the
instrument itself, and that any attempt to revise a constitution in a manner other than the one provided in the instrument is
almost invariably treated as extra-constitutional and revolutionary. x x x x While it is universally conceded that the people are
sovereign and that they have power to adopt a constitution and to change their own work at will, they must, in doing so, act in an orderly
manner and according to the settled principles of constitutional law. And where the people, in adopting a constitution, have prescribed the
method by which the people may alter or amend it, an attempt to change the fundamental law in violation of the self-imposed restrictions,
is unconstitutional. x x x x (Emphasis supplied)

This Court, whose members are sworn to defend and protect the Constitution, cannot shirk from its solemn oath and duty to insure compliance with the clear

command of the Constitution ― that a peoples initiative may only amend, never revise, the Constitution.

The question is, does the Lambino Groups initiative constitute an amendment or revision of the Constitution? If the Lambino Groups initiative constitutes

a revision, then the present petition should be dismissed for being outside the scope of Section 2, Article XVII of the Constitution.

Courts have long recognized the distinction between an amendment and a revision of a constitution. One of the earliest cases that recognized the distinction

described the fundamental difference in this manner:

[T]he very term constitution implies an instrument of a permanent and abiding nature, and the provisions contained therein for its
revision indicate the will of the people that the underlying principles upon which it rests, as well as the substantial entirety of
 the instrument, shall be of a like permanent and abiding nature. On the other hand, the significance of the term amendment implies such
an addition or change within the lines of the original instrument as will effect an improvement, or better carry out the purpose for which it
was framed.[35](Emphasis supplied)

Revision broadly implies a change that alters a basic principle in the constitution, like altering the principle of separation of powers or the system

of checks-and-balances. There is also revision if the change alters the substantial entirety of the constitution, as when the change affects substantial

provisions of the constitution. On the other hand, amendment broadly refers to a change that adds, reduces, or deletes without altering the basic principle

involved. Revision generally affects several provisions of the constitution, while amendment generally affects only the specific provision being amended.

In California where the initiative clause allows amendments but not revisions to the constitution just like in our Constitution, courts have developed

a two-part test: the quantitative test and the qualitative test. The quantitative test asks whether the proposed change is so extensive in its provisions as to change

directly the substantial entirety of the constitution by the deletion or alteration of numerous existing provisions.[36] The court examines only the number of provisions

affected and does not consider the degree of the change.

The qualitative test inquires into the qualitative effects of the proposed change in the constitution. The main inquiry is whether the change will

accomplish such far reaching changes in the nature of our basic governmental plan as to amount to a revision.[37] Whether there is an alteration in the structure of

government is a proper subject of inquiry. Thus, a change in the nature of [the] basic governmental plan includes change in its fundamental framework or the

fundamental powers of its Branches.[38] A change in the nature of the basic governmental plan also includes changes that jeopardize the traditional form of

government and the system of check and balances.[39]

Under both the quantitative and qualitative tests, the Lambino Groups initiative is a revision and not merely an amendment. Quantitatively, the Lambino

Groups proposed changes overhaul two articles - Article VI on the Legislature and Article VII on the Executive - affecting a total of 105 provisions in the entire

Constitution.[40] Qualitatively, the proposed changes alter substantially the basic plan of government, from presidential to parliamentary, and from a bicameral to a

unicameral legislature.

A change in the structure of government is a revision of the Constitution, as when the three great co-equal branches of government in the present Constitution are

reduced into two. This alters the separation of powers in the Constitution. A shift from the present Bicameral-Presidential system to a Unicameral-Parliamentary

system is a revision of the Constitution. Merging the legislative and executive branches is a radical change in the structure of government.

The abolition alone of the Office of the President as the locus of Executive Power alters the separation of powers and thus constitutes a revision of the

Constitution.Likewise, the abolition alone of one chamber of Congress alters the system of checks-and-balances within the legislature and constitutes a revision of

the Constitution.

By any legal test and under any jurisdiction, a shift from a Bicameral-Presidential to a Unicameral-Parliamentary system, involving the abolition of

the Office of the President and the abolition of one chamber of Congress, is beyond doubt a revision, not a mere amendment. On the face alone of the Lambino
Groups proposed changes, it is readily apparent that the changes will radically alter the framework of government as set forth in the Constitution. Father

Joaquin Bernas, S.J., a leading member of the Constitutional Commission, writes:

An amendment envisages an alteration of one or a few specific and separable provisions. The guiding original intention of an
amendment is to improve specific parts or to add new provisions deemed necessary to meet new conditions or to suppress specific portions
that may have become obsolete or that are judged to be dangerous. In revision, however, the guiding original intention and plan contemplates
a re-examination of the entire document, or of provisions of the document which have over-all implications for the entire document, to
determine how and to what extent they should be altered. Thus, for instance a switch from the presidential system to a parliamentary
system would be a revision because of its over-all impact on the entire constitutional structure. So would a switch from a
bicameral system to a unicameral system be because of its effect on other important provisions of the Constitution.[41] (Emphasis
supplied)

In Adams v. Gunter,[42] an initiative petition proposed the amendment of the Florida State constitution to shift from a bicameral to a unicameral

legislature. The issue turned on whether the initiative was defective and unauthorized where [the] proposed amendment would x x x affect several other provisions

of [the] Constitution. The Supreme Court of Florida, striking down the initiative as outside the scope of the initiative clause, ruled as follows:

The proposal here to amend Section 1 of Article III of the 1968 Constitution to provide for a Unicameral Legislature affects
not only many other provisions of the Constitution but provides for a change in the form of the legislative branch of government,
which has been in existence in the United States Congress and in all of the states of the nation, except one, since the earliest days. It
would be difficult to visualize a more revolutionary change. The concept of a House and a Senate is basic in the American form of
government. It would not only radically change the whole pattern of government in this state and tear apart the whole fabric of
the Constitution, but would even affect the physical facilities necessary to carry on government.

xxxx
We conclude with the observation that if such proposed amendment were adopted by the people at the General Election and
if the Legislature at its next session should fail to submit further amendments to revise and clarify the numerous inconsistencies and
conflicts which would result, or if after submission of appropriate amendments the people should refuse to adopt them, simple chaos would
prevail in the government of this State. The same result would obtain from an amendment, for instance, of Section 1 of Article V, to provide
for only a Supreme Court and Circuit Courts-and there could be other examples too numerous to detail. These examples point unerringly
to the answer.

The purpose of the long and arduous work of the hundreds of men and women and many sessions of the Legislature in
bringing about the Constitution of 1968 was to eliminate inconsistencies and conflicts and to give the State a workable, accordant,
homogenous and up-to-date document. All of this could disappear very quickly if we were to hold that it could be amended in the manner
proposed in the initiative petition here.[43] (Emphasis supplied)

The rationale of the Adams decision applies with greater force to the present petition. The Lambino Groups initiative not only seeks a shift from a

bicameral to a unicameral legislature, it also seeks to merge the executive and legislative departments. The initiative in Adams did not even touch the executive

department.

In Adams, the Supreme Court of Florida enumerated 18 sections of the Florida Constitution that would be affected by the shift from a bicameral to a

unicameral legislature.In the Lambino Groups present initiative, no less than 105 provisions of the Constitution would be affected based on the count of

Associate Justice Romeo J. Callejo, Sr.[44]There is no doubt that the Lambino Groups present initiative seeks far more radical changes in the structure of government

than the initiative in Adams.

The Lambino Group theorizes that the difference between amendment and revision is only one of procedure, not of substance. The Lambino Group posits that

when a deliberative body drafts and proposes changes to the Constitution, substantive changes are called revisions because members of the deliberative body
work full-time on the changes. However, the same substantive changes, when proposed through an initiative, are called amendments because the changes are

made by ordinary people who do not make an occupation, profession, or vocation out of such endeavor.

Thus, the Lambino Group makes the following exposition of their theory in their Memorandum:

99. With this distinction in mind, we note that the constitutional provisions expressly provide for both amendment and revision when it
speaks of legislators and constitutional delegates, while the same provisions expressly provide only for amendment when it speaks of the
people. It would seem that the apparent distinction is based on the actual experience of the people, that on one hand the common people
in general are not expected to work full-time on the matter of correcting the constitution because that is not their occupation, profession or
vocation; while on the other hand, the legislators and constitutional convention delegates are expected to work full-time on the same matter
because that is their occupation, profession or vocation. Thus, the difference between the words revision and amendment pertain
only to the process or procedure of coming up with the corrections, for purposes of interpreting the constitutional provisions.

100. Stated otherwise, the difference between amendment and revision cannot reasonably be in the substance or extent of the
correction. x x x x (Underlining in the original; boldfacing supplied)

The Lambino Group in effect argues that if Congress or a constitutional convention had drafted the same proposed changes that the Lambino Group wrote in the

present initiative, the changes would constitute a revision of the Constitution. Thus, the Lambino Group concedes that the proposed changes in the present

initiative constitute a revision if Congress or a constitutional convention had drafted the changes. However, since the Lambino Group as private individuals

drafted the proposed changes, the changes are merely amendments to the Constitution. The Lambino Group trivializes the serious matter of changing the

fundamental law of the land.

The express intent of the framers and the plain language of the Constitution contradict the Lambino Groups theory. Where the intent of the framers and the

language of the Constitution are clear and plainly stated, courts do not deviate from such categorical intent and language.[45] Any theory espousing a construction

contrary to such intent and language deserves scant consideration. More so, if such theory wreaks havoc by creating inconsistencies in the form of government

established in the Constitution. Such a theory, devoid of any jurisprudential mooring and inviting inconsistencies in the Constitution, only exposes the flimsiness of

the Lambino Groups position. Any theory advocating that a proposed change involving a radical structural change in government does not constitute a revision

justly deserves rejection.

The Lambino Group simply recycles a theory that initiative proponents in American jurisdictions have attempted to advance without any

success. In Lowe v. Keisling,[46]the Supreme Court of Oregon rejected this theory, thus:

Mabon argues that Article XVII, section 2, does not apply to changes to the constitution proposed by initiative. His theory is
that Article XVII, section 2 merely provides a procedure by which the legislature can propose a revision of the constitution, but
it does not affect proposed revisions initiated by the people.

Plaintiffs argue that the proposed ballot measure constitutes a wholesale change to the constitution that cannot be enacted
through the initiative process. They assert that the distinctionbetween amendment and revision is determined by reviewing the scope and
subject matter of the proposed enactment, and that revisions are not limited to a formal overhauling of the constitution. They argue that
this ballot measure proposes far reaching changes outside the lines of the original instrument, including profound impacts on existing
fundamental rights and radical restructuring of the government's relationship with a defined group of citizens. Plaintiffs assert that, because
the proposed ballot measure will refashion the most basic principles of Oregon constitutional law, the trial court correctly held that it violated
Article XVII, section 2, and cannot appear on the ballot without the prior approval of the legislature.

We first address Mabon's argument that Article XVII, section 2(1), does not prohibit revisions instituted by initiative. In Holmes
v. Appling, x x x, the Supreme Court concluded that a revision of the constitution may not be accomplished by initiative, because of the
provisions of Article XVII, section 2. After reviewing Article XVII, section1, relating to proposed amendments, the court said:
 From the foregoing it appears that Article IV, Section 1, authorizes the use of the initiative as a means of amending the
Oregon Constitution, but it contains no similar sanction for its use as a means of revising the constitution. x x x x

It then reviewed Article XVII, section 2, relating to revisions, and said: It is the only section of the constitution which provides
the means for constitutional revision and it excludes the idea that an individual, through the initiative, may place such a measure before
the electorate. x x x x

Accordingly, we reject Mabon's argument that Article XVII, section 2, does not apply
to constitutional revisions proposed by initiative. (Emphasis supplied)

Similarly, this Court must reject the Lambino Groups theory which negates the express intent of the framers and the plain language of the Constitution.

We can visualize amendments and revisions as a spectrum, at one end green for amendments and at the other end red for revisions. Towards the

middle of the spectrum, colors fuse and difficulties arise in determining whether there is an amendment or revision. The present initiative is indisputably located at

the far end of the red spectrum where revision begins. The present initiative seeks a radical overhaul of the existing separation of powers among the three co-

equal departments of government, requiring far-reaching amendments in several sections and articles of the Constitution.

Where the proposed change applies only to a specific provision of the Constitution without affecting any other section or article, the change may generally be

considered an amendment and not a revision. For example, a change reducing the voting age from 18 years to 15 years[47] is an amendment and not a

revision. Similarly, a change reducing Filipino ownership of mass media companies from 100 percent to 60 percent is an amendment and not a revision.[48] Also, a

change requiring a college degree as an additional qualification for election to the Presidency is an amendment and not a revision. [49]

The changes in these examples do not entail any modification of sections or articles of the Constitution other than the specific provision being

amended. These changes do not also affect the structure of government or the system of checks-and-balances among or within the three branches. These three

examples are located at the far green end of the spectrum, opposite the far red end where the revision sought by the present petition is located.

However, there can be no fixed rule on whether a change is an amendment or a revision. A change in a single word of one sentence of the Constitution may be a

revision and not an amendment. For example, the substitution of the word republican with monarchic or theocratic in Section 1, Article II [50] of the Constitution

radically overhauls the entire structure of government and the fundamental ideological basis of the Constitution. Thus, each specific change will have to be examined

case-by-case, depending on how it affects other provisions, as well as how it affects the structure of government, the carefully crafted system of checks-and-

balances, and the underlying ideological basis of the existing Constitution.

Since a revision of a constitution affects basic principles, or several provisions of a constitution, a deliberative body with recorded proceedings is

best suited to undertake a revision. A revision requires harmonizing not only several provisions, but also the altered principles with those that remain

unaltered. Thus, constitutions normally authorize deliberative bodies like constituent assemblies or constitutional conventions to undertake revisions. On the other

hand, constitutions allow peoples initiatives, which do not have fixed and identifiable deliberative bodies or recorded proceedings, to undertake only amendments

and not revisions.

In the present initiative, the Lambino Groups proposed Section 2 of the Transitory Provisions states:

Section 2. Upon the expiration of the term of the incumbent President and Vice President, with the exception of Sections 1,
2, 3, 4, 5, 6 and 7 of Article VI of the 1987 Constitution which shall hereby be amended and Sections 18 and 24 which shall be deleted,
all other Sections of Article VI are hereby retained and renumbered sequentially as Section 2, ad seriatim up to 26, unless they are
inconsistent with the Parliamentary system of government, in which case, they shall be amended to conform with a unicameral
parliamentary form of government; x x x x (Emphasis supplied)
The basic rule in statutory construction is that if a later law is irreconcilably inconsistent with a prior law, the later law prevails. This rule also applies to construction

of constitutions. However, the Lambino Groups draft of Section 2 of the Transitory Provisions turns on its head this rule of construction by stating that in case of

such irreconcilable inconsistency, the earlier provision shall be amended to conform with a unicameral parliamentary form of government. The effect is to freeze

the two irreconcilable provisions until the earlier one shall be amended, which requires a future separate constitutional amendment.

Realizing the absurdity of the need for such an amendment, petitioner Atty. Lambino readily conceded during the oral arguments that the requirement of a future

amendment is a surplusage. In short, Atty. Lambino wants to reinstate the rule of statutory construction so that the later provision automatically prevails in case of

irreconcilable inconsistency.However, it is not as simple as that.

The irreconcilable inconsistency envisioned in the proposed Section 2 of the Transitory Provisions is not between a provision in Article VI of the 1987

Constitution and a provision in the proposed changes. The inconsistency is between a provision in Article VI of the 1987 Constitution and the Parliamentary

system of government, and the inconsistency shall be resolved in favor of a unicameral parliamentary form of government.

Now, what unicameral parliamentary form of government do the Lambino Groups proposed changes refer to ― the Bangladeshi, Singaporean,

Israeli, or New Zealandmodels, which are among the few countries with unicameral parliaments? The proposed changes could not possibly refer to the traditional

and well-known parliamentary forms of government ― the British, French, Spanish, German, Italian, Canadian, Australian, or Malaysian models, which have

all bicameral parliaments. Did the people who signed the signature sheets realize that they were adopting the Bangladeshi, Singaporean, Israeli, or New

Zealand parliamentary form of government?

This drives home the point that the peoples initiative is not meant for revisions of the Constitution but only for amendments. A shift from the present

Bicameral-Presidential to a Unicameral-Parliamentary system requires harmonizing several provisions in many articles of the Constitution. Revision of the

Constitution through a peoples initiative will only result in gross absurdities in the Constitution.

In sum, there is no doubt whatsoever that the Lambino Groups initiative is a revision and not an amendment. Thus, the present initiative is void and

unconstitutional because it violates Section 2, Article XVII of the Constitution limiting the scope of a peoples initiative to [A]mendments to this Constitution.

3. A Revisit of Santiago v. COMELEC is Not Necessary

The present petition warrants dismissal for failure to comply with the basic requirements of Section 2, Article XVII of the Constitution on the conduct

and scope of a peoples initiative to amend the Constitution. There is no need to revisit this Courts ruling in Santiago declaring RA 6735 incomplete, inadequate or

wanting in essential terms and conditions to cover the system of initiative to amend the Constitution. An affirmation or reversal of Santiago will not change the

outcome of the present petition. Thus, this Court must decline to revisit Santiago which effectively ruled that RA 6735 does not comply with the requirements of

the Constitution to implement the initiative clause on amendments to the Constitution.

This Court must avoid revisiting a ruling involving the constitutionality of a statute if the case before the Court can be resolved on some other

grounds. Such avoidance is a logical consequence of the well-settled doctrine that courts will not pass upon the constitutionality of a statute if the case can be

resolved on some other grounds.[51]

Nevertheless, even assuming that RA 6735 is valid to implement the constitutional provision on initiatives to amend the Constitution, this will not change the result

here because the present petition violates Section 2, Article XVII of the Constitution. To be a valid initiative, the present initiative must first comply with Section 2,

Article XVII of the Constitution even before complying with RA 6735.

Even then, the present initiative violates Section 5(b) of RA 6735 which requires that the petition for an initiative on the 1987 Constitution must have

at least twelve per centum (12%) of the total number of registered voters as signatories. Section 5(b) of RA 6735 requires that the people must sign the petition x

x x as signatories.

The 6.3 million signatories did not sign the petition of 25 August 2006 or the amended petition of 30 August 2006 filed with the COMELEC. Only Atty.

Lambino, Atty. Demosthenes B. Donato, and Atty. Alberto C. Agra signed the petition and amended petition as counsels for Raul L. Lambino and Erico

B. Aumentado, Petitioners. In the COMELEC, the Lambino Group, claiming to act together with the 6.3 million signatories, merely attached the signature sheets

to the petition and amended petition. Thus, the petition and amended petition filed with the COMELEC did not even comply with the basic requirement of RA 6735

that the Lambino Group claims as valid.

The Lambino Groups logrolling initiative also violates Section 10(a) of RA 6735 stating, No petition embracing more than one (1) subject shall be submitted

to the electorate; x x x. The proposed Section 4(4) of the Transitory Provisions, mandating the interim Parliament to propose further amendments or revisions to

the Constitution, is a subject matter totally unrelated to the shift in the form of government. Since the present initiative embraces more than one subject matter,

RA 6735 prohibits submission of the initiative petition to the electorate. Thus, even if RA 6735 is valid, the Lambino Groups initiative will still fail.

4. The COMELEC Did Not Commit Grave Abuse of Discretion in Dismissing the Lambino Groups Initiative

In dismissing the Lambino Groups initiative petition, the COMELEC en banc merely followed this Courts ruling in Santiago and Peoples Initiative for

Reform, Modernization and Action (PIRMA) v. COMELEC.[52] For following this Courts ruling, no grave abuse of discretion is attributable to the COMELEC. On

this ground alone, the present petition warrants outright dismissal. Thus, this Court should reiterate its unanimous ruling in PIRMA:

The Court ruled, first, by a unanimous vote, that no grave abuse of discretion could be attributed to the public respondent COMELEC
in dismissing the petition filed by PIRMA therein, it appearing that it only complied with the dispositions in the Decisions of this Court in
G.R. No. 127325, promulgated on March 19, 1997, and its Resolution of June 10, 1997.

5. Conclusion

The Constitution, as the fundamental law of the land, deserves the utmost respect and obedience of all the citizens of this nation. No one can trivialize

the Constitution by cavalierly amending or revising it in blatant violation of the clearly specified modes of amendment and revision laid down in the Constitution

itself.

To allow such change in the fundamental law is to set adrift the Constitution in unchartered waters, to be tossed and turned by every dominant political

group of the day. If this Court allows today a cavalier change in the Constitution outside the constitutionally prescribed modes, tomorrow the new dominant political
group that comes will demand its own set of changes in the same cavalier and unconstitutional fashion. A revolving-door constitution does not augur well for the

rule of law in this country.

An overwhelming majority − 16,622,111 voters comprising 76.3 percent of the total votes cast[53] − approved our Constitution in a national plebiscite

held on 11 February 1987. That approval is the unmistakable voice of the people, the full expression of the peoples sovereign will. That approval included

the prescribed modes for amending or revising the Constitution.

No amount of signatures, not even the 6,327,952 million signatures gathered by the Lambino Group, can change our Constitution contrary to the

specific modes that the people, in their sovereign capacity, prescribed when they ratified the Constitution. The alternative is an extra-constitutional change, which

means subverting the peoples sovereign will and discarding the Constitution. This is one act the Court cannot and should never do. As the ultimate guardian

of the Constitution, this Court is sworn to perform its solemn duty to defend and protect the Constitution, which embodies the real sovereign will of the people.

Incantations of peoples voice, peoples sovereign will, or let the people decide cannot override the specific modes of changing the Constitution as prescribed

in the Constitution itself. Otherwise, the Constitution ― the peoples fundamental covenant that provides enduring stability to our society ― becomes easily

susceptible to manipulative changes by political groups gathering signatures through false promises. Then, the Constitution ceases to be the bedrock of the nations

stability.

The Lambino Group claims that their initiative is the peoples voice. However, the Lambino Group unabashedly states in ULAP Resolution No. 2006-

02, in the verification of their petition with the COMELEC, that ULAP maintains its unqualified support to the agenda of Her Excellency President Gloria Macapagal-

Arroyo for constitutional reforms. The Lambino Group thus admits that their peoples initiative is an unqualified support to the agenda of the incumbent President

to change the Constitution. This forewarns the Court to be wary of incantations of peoples voice or sovereign will in the present initiative.

This Court cannot betray its primordial duty to defend and protect the Constitution. The Constitution, which embodies the peoples sovereign will, is the

bible of this Court.This Court exists to defend and protect the Constitution. To allow this constitutionally infirm initiative, propelled by deceptively gathered

signatures, to alter basic principles in the Constitution is to allow a desecration of the Constitution. To allow such alteration and desecration is to lose this

Courts raison d'etre.

WHEREFORE, we DISMISS the petition in G.R. No. 174153.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 95770 March 1, 1993

ROEL EBRALINAG, EMILY EBRALINAG, represented by their parents MR. & MRS. LEONARDO EBRALINAG, JUSTINIANA TANTOG, represented by
her father AMOS TANTOG; JEMILOYAO & JOEL OYAO, represented by their parents MR. & MRS. ELIEZER OYAO; JANETH DIAMOS & JEREMIAS
DIAMOS, represented by parents MR. & MRS. GODOFREDO DIAMOS; SARA OSTIA & JONATHAN OSTIA, represented by their parents MR. & MRS.
FAUTO OSTIA; IRVIN SEQUINO & RENAN SEQUINO, represented by their parents MR. & MRS. LYDIO SEQUINO; NAPTHALE TANACAO, represented
by his parents MR. & MRS. MANUEL TANACAO; PRECILA PINO, represented by her parents MR. & MRS. FELIPE PINO; MARICRIS ALFAR, RUWINA
ALFAR, represented by their parents MR. & MRS. HERMINIGILDO ALFAR; FREDESMINDA ALFAR & GUMERSINDO ALFAR, represented by their
parents ABDON ALFAR; ALBERTO ALFAR & ARISTIO ALFAR, represented by their parents MR. & MRS. GENEROSO ALFAR; MARTINO VILLAR,
represented by his parents MR. & MRS. GENARO VILLAR; PERGEBRIEL GUINITA & CHAREN GUINITA, represented by their parents MR. & MRS.
CESAR GUINITA; ALVIN DOOP, represented by his parents MR. & MRS. LEONIDES DOOP; RHILYN LAUDE, represented by her parents MR. & MRS.
RENE LAUDE; LEOREMINDA MONARES, represented by her parents, MR. & MRS. FLORENCIO MONARES; MERCY MONTECILLO, represented by her
parents MR. & MRS. MANUEL MONTECILLO; ROBERTO TANGAHA, represented by his parent ILUMINADA TANGAHA; EVELYN, MARIA & FLORA
TANGAHA, represented by their parents MR. & MRS. ALBERTO TANGAHA; MAXIMO EBRALINAG, represented by his parents, MR. & MRS. PAQUITO
EBRALINAG; JUTA CUMON, GIDEON CUMON & JONATHAN CUMON, represented by their father RAFAEL CUMON; EVIE LUMAKANG & JUNAR
LUMAKANG, represented by their parents MR. & MRS. LUMAKANG; EMILIO SARSOZO, PAZ AMOR SARSOZO & IGNA MARIE SARSOZO, represented
by their parents MR. & MRS. VIRGILIO SARSOZO; MICHAEL JOSEPH & HENRY JOSEPH, represented by parent ANNIE JOSEPH; EMERSON
TABLASON & MASTERLOU TABLASON, represented by their parent EMERLITO TABLASON, petitioners,
vs.
THE DIVISION SUPERINTENDENT OF SCHOOLS OF CEBU, respondent.

G.R. No. 95887 March 1, 1993

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

Felino M. Ganal for petitioners.

The Solicitor General for respondents.

GRIÑO-AQUINO, J.:

These two special civil actions for certiorari, Mandamus and Prohibition were consolidated because they raise essentially the same issue: whether
school children who are members or a religious sect known as Jehovah's Witnesses may be expelled from school (both public and private), for
refusing, on account of their religious beliefs, to take part in the flag ceremony which includes playing (by a band) or singing the Philippine national
anthem, saluting the Philippine flag and reciting the patriotic pledge.

In G.R. No. 95770 "Roel Ebralinag, et al. vs. Division Superintendent of Schools of Cebu and Manuel F. Biongcog, Cebu District Supervisor," the
petitioners are 43 high school and elementary school students in the towns of Daan Bantayan, Pinamungajan, Carcar, and Taburan Cebu province. All
minors, they are assisted by their parents who belong to the religious group known as Jehovah's Witnesses which claims some 100,000 "baptized
publishers" in the Philippines.
In G.R. No. 95887, "May Amolo, et al. vs. Division Superintendent of Schools of Cebu and Antonio A. Sangutan," the petitioners are 25 high school
and grade school students enrolled in public schools in Asturias, Cebu, whose parents are Jehovah's Witnesses. Both petitions were prepared by the
same counsel, Attorney Felino M. Ganal.

All the petitioners in these two cases were expelled from their classes by the public school authorities in Cebu for refusing to salute the flag, sing the
national anthem and recite the patriotic pledge as required by Republic Act No. 1265 of July 11, 1955, and by Department Order No. 8 dated July 21,
1955 of the Department of Education, Culture and Sports (DECS) making the flag ceremony compulsory in all educational institutions. Republic Act
No. 1265 provides:

Sec. 1. All educational institutions shall henceforth observe daily flag ceremony, which shall be simple and dignified and shall
include the playing or singing of the Philippine National anthem.

Sec. 2. The Secretary of Education is hereby authorized and directed to issue or cause to be issued rules and regulations for
the proper conduct of the flag ceremony herein provided.

Sec. 3. Failure or refusal to observe the flag ceremony provided by this Act and in accordance with rules and regulations
issued by the Secretary of Education, after proper notice and hearing, shall subject the educational institution concerned and
its head to public censure as an administrative punishment which shall be published at least once in a newspaper of general
circulation.

In case of failure to observe for the second time the flag-ceremony provided by this Act, the Secretary of Education, after
proper notice and hearing, shall cause the cancellation of the recognition or permit of the private educational institution
responsible for such failure.

The implementing rules and regulations in Department Order No. 8 provide:

RULES AND REGULATIONS FOR CONDUCTING THE FLAG CEREMONY IN ALL EDUCATIONAL INSTITUTIONS.

1. The Filipino Flag shall be displayed by all educational institutions, public and private, every school day throughout the year.
It shall be raised at sunrise and lowered at sunset. The flag-staff must be straight, slightly and gently tapering at the end, and
of such height as would give the Flag a commanding position in front of the building or within the compound.

2. Every public and private educational institution shall hold a flag-raising ceremony every morning except when it is raining,
in which event the ceremony may be conducted indoors in the best way possible. A retreat shall be held in the afternoon of the
same day. The flag-raising ceremony in the morning shall be conducted in the following manner:

a. Pupils and teachers or students and faculty members who are in school and its premises shall
assemble in formation facing the flag. At command, books shall be put away or held in the left hand
and everybody shall come to attention. Those with hats shall uncover. No one shall enter or leave the
school grounds during the ceremony.

b. The assembly shall sing the Philippine National Anthem accompanied by the school band or without
the accompaniment if it has none; or the anthem may be played by the school band alone. At the first
note of the Anthem, the flag shall be raised briskly. While the flag is being raised, all persons present
shall stand at attention and execute a salute. Boys and men with hats shall salute by placing the hat
over the heart. Those without hat may stand with their arms and hands down and straight at the sides.
Those in military or Boy Scout uniform shall give the salute prescribed by their regulations. The salute
shall be started as the Flag rises, and completed upon last note of the anthem.

c. Immediately following the singing of the Anthem, the assembly shall recite in unison the following
patriotic pledge (English or vernacular version), which may bring the ceremony to a close. This is
required of all public schools and of private schools which are intended for Filipino students or whose
population is predominantly Filipino.

English Version

I love the Philippines.

It is the land of my birth;
It is the home of my people.
It protects me and helps me to be, strong, happy and useful.
In return, I will heed the counsel of my parents;
I will obey the rules of my school;
I will perform the duties of a patriotic, law-abiding citizen;
 I will serve my country unselfishly and faithfully;
I will be a true, Filipino in thought, in word, in deed.

xxx xxx xxx

Jehovah's Witnesses admittedly teach their children not to salute the flag, sing the national anthem, and recite the patriotic pledge for they believe
that those are "acts of worship" or "religious devotion" (p. 10, Rollo) which they "cannot conscientiously give . . . to anyone or anything except God"
(p. 8, Rollo). They feel bound by the Bible's command to "guard ourselves from
idols — 1 John 5:21" (p. 9, Rollo). They consider the flag as an image or idol representing the State (p. 10, Rollo). They think the action of the local
authorities in compelling the flag salute and pledge transcends constitutional limitations on the State's power and invades the sphere of the intellect
and spirit which the Constitution protect against official control (p. 10, Rollo).

This is not the first time that the question, of whether the children of Jehovah's Witnesses may be expelled from school for disobedience of R.A. No.
1265 and Department Order No. 8, series of 1955, has been raised before this Court.

The same issue was raised in 1959 in Gerona, et al. vs. Secretary of Education, et al., 106 Phil. 2 (1959) and Balbuna, et al. vs. Secretary of Education,
110 Phil. 150 (1960). This Court in the Gerona case upheld the expulsion of the students, thus:

The flag is not an image but a symbol of the Republic of the Philippines, an emblem of national sovereignty, of national unity
and cohesion and of freedom and liberty which it and the Constitution guarantee and protect. Under a system of complete
separation of church and state in the government, the flag is utterly devoid of any religious significance. Saluting the flag does
not involve any religious ceremony. The flag salute is no more a religious ceremony than the taking of an oath of office by a
public official or by a candidate for admission to the bar.

In requiring school pupils to participate in the flag salute, the State thru the Secretary of Education is not imposing a religion
or religious belief or a religious test on said students. It is merely enforcing a
non-discriminatory school regulation applicable to all alike whether Christian, Moslem, Protestant or Jehovah's Witness. The
State is merely carrying out the duty imposed upon it by the Constitution which charges it with supervision over and
regulation of all educational institutions, to establish and maintain a complete and adequate system of public education, and
see to it that all schools aim to develop, among other things, civic conscience and teach the duties of citizenship.

The children of Jehovah's Witnesses cannot be exempted from participation in the flag ceremony. They have no valid right to
such exemption. Moreover, exemption to the requirement will disrupt school discipline and demoralize the rest of the school
population which by far constitutes the great majority.

The freedom of religious belief guaranteed by the Constitution does not and cannot mean exemption from or non-compliance
with reasonable and non-discriminatory laws, rules and regulations promulgated by competent authority. (pp. 2-3).

Gerona was reiterated in Balbuna, as follows:

The Secretary of Education was duly authorized by the Legislature thru Republic Act 1265 to promulgate said Department
Order, and its provisions requiring the observance of the flag salute, not being a religious ceremony but an act and profession
of love and allegiance and pledge of loyalty to the fatherland which the flag stands for, does not violate the constitutional
provision on freedom of religion. (Balbuna, et al. vs. Secretary of Education, et al., 110 Phil. 150).

Republic Act No. 1265 and the ruling in Gerona have been incorporated in Section 28, Title VI, Chapter 9 of the Administrative Code of 1987
(Executive Order No. 292) which took effect on September 21, 1988 (one year after its publication in the Official Gazette, Vol. 63, No. 38 of September
21, 1987). Paragraph 5 of Section 28 gives legislative cachet to the ruling in Gerona, thus:

5. Any teacher or student or pupil who refuses to join or participate in the flag ceremony may be dismissed after due
investigation.

However, the petitioners herein have not raised in issue the constitutionality of the above provision of the new Administrative Code of 1987. They
have targeted only Republic Act No. 1265 and the implementing orders of the DECS.

In 1989, the DECS Regional Office in Cebu received complaints about teachers and pupils belonging to the Jehovah's Witnesses, and enrolled in
various public and private schools, who refused to sing the Philippine national anthem, salute the Philippine flag and recite the patriotic pledge.
Division Superintendent of Schools, Susana B. Cabahug of the Cebu Division of DECS, and Dr. Atty. Marcelo M. Bacalso, Assistant Division
Superintendent, recalling this Court's decision in Gerona, issued Division Memorandum No. 108, dated November 17, 1989 (pp. 147-148, Rollo of G.R.
No. 95770) directing District Supervisors, High School Principals and Heads of Private Educational institutions as follows:
 1. Reports reaching this Office disclose that there are a number of teachers, pupils, students, and school employees in public
schools who refuse to salute the Philippine flag or participate in the daily flag ceremony because of some religious belief.

2. Such refusal not only undermines Republic Act No. 1265 and the DECS Department Order No. 8, Series of 1955
(Implementing Rules and Regulations) but also strikes at the heart of the DECS sustained effort to inculcate patriotism and
nationalism.

3. Let it be stressed that any belief that considers the flag as an image is not in any manner whatever a justification for not
saluting the Philippine flag or not participating in flag ceremony. Thus, the Supreme Court of the Philippine says:

The flag is not an image but a symbol of the Republic of the Philippines, an emblem of national
sovereignty, of national unity and cohesion and freedom and liberty which it and the Constitution
guarantee and protect. (Gerona, et al. vs. Sec. of Education, et al., 106 Phil. 11.)

4. As regards the claim for freedom of belief, which an objectionist may advance, the Supreme Court asserts:

But between the freedom of belief and the exercise of said belief, there is quite a stretch of road to
travel. If the exercise of said religious belief clashes with the established institutions of society and
with the law, then the former must yield and give way to the latter. (Gerona, et al. vs. Sec. of Education,
et al., 106 Phil. 11.)

5. Accordingly, teachers and school employees who choose not to participate in the daily flag ceremony or to obey the flag
salute regulation spelled out in Department Order No. 8, Series of 1955, shall be considered removed from the service after
due process.

6. In strong language about pupils and students who do the same the Supreme Court has this to say:

If they choose not to obey the flag salute regulation, they merely lost the benefits of public education
being maintained at the expense of their fellow Citizens, nothing more. According to a popular
expression, they could take it or leave it! Having elected not to comply with the regulation about the
flag salute they forfeited their right to attend public schools. (Gerona, et al. vs. Sec. of Education, et al.,
106 Phil. 15.)

7. School administrators shall therefore submit to this Office a report on those who choose not to participate in flag ceremony
or salute the Philippine flag. (pp. 147-148, Rollo of G.R. No. 95770; Emphasis supplied).

Cebu school officials resorted to a number of ways to persuade the children of Jehovah's Witnesses to obey the memorandum. In the Buenavista
Elementary School, the children were asked to sign an Agreement (Kasabutan) in the Cebuano dialect promising to sing the national anthem, place
their right hand on their breast until the end of the song and recite the pledge of allegiance to the flag (Annex D, p. 46, Rollo of G.R. No. 95770 and p.
48, Rollo of G.R. No. 95887), but they refused to sign the "Kasabutan" (p. 20, Rolloof G.R. No. 95770).

In Tubigmanok Elementary School, the Teacher-In-Charge, Antonio A. Sangutan, met with the Jehovah's Witnesses' parents, as disclosed in his letter
of October 17, 1990, excerpts from which reveal the following:

After two (2) fruitless confrontation meetings with the Jehovah's Witnesses' parents on October 2, 1990 and yesterday due to
their firm stand not to salute the flag of the Republic of the Philippines during Flag Ceremony and other occasions, as
mandated by law specifically Republic Act No. 1265, this Office hereby orders the dropping from the list in the School Register
(BPS Form I) of all teachers, all Jehovah Witness pupils from Grade I up to Grade VI effective today.

xxx xxx xxx

This order is in compliance with Division Memorandum No. 108 s. 1989 dated November 17, 1989 by virtue of Department
Order No. 8 s. 1955 dated July 21, 1955 in accordance with Republic Act No. 1265 and Supreme Court Decision of a case
"Genaro Gerona, et al., Petitioners and Appellants vs. The Honorable Secretary of Education, et al., Respondents and
Appellees' dated August 12, 1959 against their favor. (p. 149, Rollo of G.R. No. 95770.)

In the Daan Bantayan District, the District Supervisor, Manuel F. Biongcog, ordered the "dropping from the rolls" of students who "opted to follow
their religious belief which is against the Flag Salute Law" on the theory that "they forfeited their right to attend public schools." (p. 47, Rollo of G.R.
No. 95770.)
 1st Indorsement
DAANBANTAYAN DISTRICT II
Daanbantayan, Cebu, July 24, 1990.

Respectfully returned to Mrs. Alicia A. Diaz, School In Charge [sic], Agujo Elementary School with the information that this
office is sad to order the dropping of Jeremias Diamos and Jeaneth Diamos, Grades III and IV pupils respectively from the roll
since they opted to follow their religious belief which is against the Flag Salute Law (R.A. 1265) and DECS Order No. 8, series
of 1955, having elected not to comply with the regulation about the flag salute they forfeited their right to attend public schools
(Gerona, et al. vs. Sec. of Education, et al., 106 Philippines 15). However, should they change their mind to respect and follow
the Flag Salute Law they may be re-accepted.

(Sgd.) MANUEL F. BIONGCOG

District Supervisor

(p. 47, Rollo of G.R. No. 95770.)

The expulsion as of October 23, 1990 of the 43 petitioning students of the Daanbantayan National High School, Agujo Elementary School, Calape
Barangay National High School, Pinamungajan Provincial High School, Tabuelan Central School, Canasojan Elementary School, Liboron Elementary
School, Tagaytay Primary School, San Juan Primary School and Northern Central Elementary School of San Fernando, Cebu, upon order of then
Acting Division Superintendent Marcelo Bacalso, prompted some Jehovah's Witnesses in Cebu to appeal to the Secretary of Education Isidro Cariño
but the latter did not answer their letter. (p. 21, Rollo.)

The petition in G.R. No. 95887 was filed by 25 students who were similarly expelled because Dr. Pablo Antopina, who succeeded Susana Cabahug as
Division Superintendent of Schools, would not recall the expulsion orders of his predecessor. Instead, he verbally caused the expulsion of some
more children of Jehovah's Witnesses.

On October 31, 1990, the students and their parents filed these special civil actions for Mandamus, Certiorari and Prohibition alleging that the public
respondents acted without or in excess of their jurisdiction and with grave abuse of discretion — (1) in ordering their expulsion without prior notice
and hearing, hence, in violation of their right to due process, their right to free public education, and their right to freedom of speech, religion and
worship (p. 23, Rollo). The petitioners pray that:

c. Judgment be rendered:

i. declaring null and void the expulsion or dropping from the rolls of herein petitioners from their
respective schools;

ii. prohibiting and enjoining respondent from further barring the petitioners from their classes or
otherwise implementing the expulsion ordered on petitioners; and

iii. compelling the respondent and all persons acting for him to admit and order the re-admission of
petitioners to their respective schools. (p. 41, Rollo.)

and that pending the determination of the merits of these cases, a temporary restraining order be issued enjoining the respondents from enforcing
the expulsion of the petitioners and to re-admit them to their respective classes.

On November 27, 1990, the Court issued a temporary restraining order and a writ of preliminary mandatory injunction commanding the respondents
to immediately re-admit the petitioners to their respective classes until further orders from this Court (p. 57, Rollo).

The Court also ordered the Secretary of Education and Cebu District Supervisor Manuel F. Biongcog to be impleaded as respondents in these cases.

On May 13, 1991, the Solicitor General filed a consolidated comment to the petitions (p. 98, Rollo) defending the expulsion orders issued by the public
respondents on the grounds that:

1. Bizarre religious practices of the Jehovah's Witnesses produce rebellious and anti-social school children and consequently
disloyal and mutant Filipino citizens.

2. There are no new and valid grounds to sustain the charges of the Jehovah's Witnesses that the DECS' rules and regulations
on the flag salute ceremonies are violative of their freedom of religion and worship.

3. The flag salute is devoid of any religious significance; instead, it inculcates respect and love of country, for which the flag
stands.
 4. The State's compelling interests being pursued by the DECS' lawful regulations in question do not warrant exemption of the
school children of the Jehovah's Witnesses from the flag salute ceremonies on the basis of their own self-perceived religious
convictions.

5. The issue is not freedom of speech but enforcement of law and jurisprudence.

6. State's power to regulate repressive and unlawful religious practices justified, besides having scriptural basis.

7. The penalty of expulsion is legal and valid, more so with the enactment of Executive Order No. 292 (The Administrative Code
of 1987).

Our task here is extremely difficult, for the 30-year old decision of this court in Gerona upholding the flag salute law and approving the expulsion of
students who refuse to obey it, is not lightly to be trifled with.

It is somewhat ironic however, that after the Gerona ruling had received legislative cachet by its in corporation in the Administrative Code of 1987, the
present Court believes that the time has come to re-examine it. The idea that one may be compelled to salute the flag, sing the national anthem, and
recite the patriotic pledge, during a flag ceremony on pain of being dismissed from one's job or of being expelled from school, is alien to the
conscience of the present generation of Filipinos who cut their teeth on the Bill of Rights which guarantees their rights to free speech ** and the free
exercise of religious profession and worship (Sec. 5, Article III, 1987 Constitution; Article IV, Section 8, 1973 Constitution; Article III, Section 1[7], 1935
Constitution).

Religious freedom is a fundamental right which is entitled to the highest priority and the amplest protection among human rights, for it involves the
relationship of man to his Creator (Chief Justice Enrique M. Fernando's separate opinion in German vs. Barangan, 135 SCRA 514, 530-531).

The right to religious profession and worship has a two-fold aspect, vis., freedom to believe and freedom to act on one's belief.
The first is absolute as long as the belief is confined within the realm of thought. The second is subject to regulation where the
belief is translated into external acts that affect the public welfare (J. Cruz, Constitutional Law, 1991 Ed., pp. 176-177).

Petitioners stress, however, that while they do not take part in the compulsory flag ceremony, they do not engage in "external acts" or behavior that
would offend their countrymen who believe in expressing their love of country through the observance of the flag ceremony. They quietly stand at
attention during the flag ceremony to show their respect for the right of those who choose to participate in the solemn proceedings (Annex F, Rollo of
G.R. No. 95887, p. 50 and Rollo of G.R. No. 95770, p. 48). Since they do not engage in disruptive behavior, there is no warrant for their expulsion.

The sole justification for a prior restraint or limitation on the exercise of religious freedom (according to the late Chief Justice
Claudio Teehankee in his dissenting opinion in German vs. Barangan, 135 SCRA 514, 517) is the existence of a grave and
present danger of a character both grave and imminent, of a serious evil to public safety, public morals, public health or any
other legitimate public interest, that the State has a right (and duty) to prevent." Absent such a threat to public safety, the
expulsion of the petitioners from the schools is not justified.

The situation that the Court directly predicted in Gerona that:

The flag ceremony will become a thing of the past or perhaps conducted with very few participants, and the time will come
when we would have citizens untaught and uninculcated in and not imbued with reverence for the flag and love of country,
admiration for national heroes, and patriotism — a pathetic, even tragic situation, and all because a small portion of the school
population imposed its will, demanded and was granted an exemption. (Gerona, p. 24.)

has not come to pass. We are not persuaded that by exempting the Jehovah's Witnesses from saluting the flag, singing the national anthem and
reciting the patriotic pledge, this religious group which admittedly comprises a "small portion of the school population" will shake up our part of the
globe and suddenly produce a nation "untaught and uninculcated in and unimbued with reverence for the flag, patriotism, love of country and
admiration for national heroes" (Gerona vs. Sec. of Education, 106 Phil. 2, 24). After all, what the petitioners seek only is exemption from the flag
ceremony, not exclusion from the public schools where they may study the Constitution, the democratic way of life and form of government, and
learn not only the arts, sciences, Philippine history and culture but also receive training for a vocation of profession and be taught the virtues of
"patriotism, respect for human rights, appreciation for national heroes, the rights and duties of citizenship, and moral and spiritual values (Sec. 3[2],
Art. XIV, 1987 Constitution) as part of the curricula. Expelling or banning the petitioners from Philippine schools will bring about the very situation
that this Court had feared in Gerona. Forcing a small religious group, through the iron hand of the law, to participate in a ceremony that violates their
religious beliefs, will hardly be conducive to love of country or respect for dully constituted authorities.

As Mr. Justice Jackson remarked in West Virginia vs. Barnette, 319 U.S. 624 (1943):

. . . To believe that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory
routine is to make an unflattering estimate of the appeal of our institutions to free minds. . . . When they [diversity] are so
harmless to others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to
 things that do not matter much. That would be a mere shadow of freedom. The test of its substance is the right to differ as to
things that touch the heart of the existing order.

Furthermore, let it be noted that coerced unity and loyalty even to the country, . . . — assuming that such unity and loyalty can
be attained through coercion — is not a goal that is constitutionally obtainable at the expense of religious liberty. A desirable
end cannot be promoted by prohibited means. (Meyer vs. Nebraska, 262 U.S. 390, 67 L. ed. 1042, 1046.)

Moreover, the expulsion of members of Jehovah's Witnesses from the schools where they are enrolled will violate their right as Philippine citizens,
under the 1987 Constitution, to receive free education, for it is the duty of the State to "protect and promote the right of all citizens to quality
education . . . and to make such education accessible to all (Sec. 1, Art. XIV).

In Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, 72-75, we upheld the exemption of members of the Iglesia ni Cristo, from the coverage of
a closed shop agreement between their employer and a union because it would violate the teaching of their church not to join any labor group:

. . . It is certain that not every conscience can be accommodated by all the laws of the land; but when general laws conflict with
scruples of conscience, exemptions ought to be granted unless some "compelling state interests" intervenes. (Sherbert vs.
Berner, 374 U.S. 398, 10 L. Ed. 2d 965, 970, 83 S. Ct. 1790.)

We hold that a similar exemption may be accorded to the Jehovah's Witnesses with regard to the observance of the flag ceremony out of respect for
their religious beliefs, however "bizarre" those beliefs may seem to others. Nevertheless, their right not to participate in the flag ceremony does not
give them a right to disrupt such patriotic exercises. Paraphrasing the warning cited by this Court in Non vs. Dames II, 185 SCRA 523, 535, while the
highest regard must be afforded their right to the free exercise of their religion, "this should not be taken to mean that school authorities are
powerless to discipline them" if they should commit breaches of the peace by actions that offend the sensibilities, both religious and patriotic, of
other persons. If they quietly stand at attention during the flag ceremony while their classmates and teachers salute the flag, sing the national anthem
and recite the patriotic pledge, we do not see how such conduct may possibly disturb the peace, or pose "a grave and present danger of a serious
evil to public safety, public morals, public health or any other legitimate public interest that the State has a right (and duty) to prevent (German vs.
Barangan, 135 SCRA 514, 517).

Before we close this decision, it is appropriate to recall the Japanese occupation of our country in 1942-1944 when every Filipino, regardless of
religious persuasion, in fear of the invader, saluted the Japanese flag and bowed before every Japanese soldier. Perhaps, if petitioners had lived
through that dark period of our history, they would not quibble now about saluting the Philippine flag. For when liberation came in 1944 and our own
flag was proudly hoisted aloft again, it was a beautiful sight to behold that made our hearts pound with pride and joy over the newly-regained freedom
and sovereignty of our nation.

Although the Court upholds in this decision the petitioners' right under our Constitution to refuse to salute the Philippine flag on account of their
religious beliefs, we hope, nevertheless, that another foreign invasion of our country will not be necessary in order for our countrymen to appreciate
and cherish the Philippine flag.

WHEREFORE, the petition for certiorari and prohibition is GRANTED. The expulsion orders issued by the public respondents against the petitioners
are hereby ANNULLED AND SET ASIDE. The temporary restraining order which was issued by this Court is hereby made permanent.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-72119 May 29, 1987

VALENTIN L. LEGASPI, petitioner,

vs.
CIVIL SERVICE COMMISSION, respondent.

CORTES, J.:

The fundamental right of the people to information on matters of public concern is invoked in this special civil action for mandamus instituted by petitioner
Valentin L. Legaspi against the Civil Service Commission. The respondent had earlier denied Legaspi's request for information on the civil service eligibilities of
certain persons employed as sanitarians in the Health Department of Cebu City. These government employees, Julian Sibonghanoy and Mariano Agas, had
allegedly represented themselves as civil service eligibles who passed the civil service examinations for sanitarians.
Claiming that his right to be informed of the eligibilities of Julian Sibonghanoy and Mariano Agas, is guaranteed by the Constitution, and that he has no other
plain, speedy and adequate remedy to acquire the information, petitioner prays for the issuance of the extraordinary writ of mandamus to compel the respondent
Commission to disclose said information.

This is not the first tune that the writ of mandamus is sought to enforce the fundamental right to information. The same remedy was resorted to in the case
of Tanada et. al. vs. Tuvera et. al., (G.R. No. L-63915, April 24,1985,136 SCRA 27) wherein the people's right to be informed under the 1973 Constitution (Article
IV, Section 6) was invoked in order to compel the publication in the Official Gazette of various presidential decrees, letters of instructions and other presidential
issuances. Prior to the recognition of the right in said Constitution the statutory right to information provided for in the Land Registration Act (Section 56, Act 496,
as amended) was claimed by a newspaper editor in another mandamus proceeding, this time to demand access to the records of the Register of Deeds for the
purpose of gathering data on real estate transactions involving aliens (Subido vs. Ozaeta, 80 Phil. 383 [1948]).

The constitutional right to information on matters of public concern first gained recognition in the Bill of Rights, Article IV, of the 1973 Constitution, which states:

Sec. 6. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to
documents and papers pertaining to official acts, transactions, or decisions, shall be afforded the citizen subject to such limitations as
may be provided by law.

The foregoing provision has been retained and the right therein provided amplified in Article III, Sec. 7 of the 1987 Constitution with the addition of the phrase,
"as well as to government research data used as basis for policy development." The new provision reads:

The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents,
and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis. for policy
development, shall be afforded the citizen, subject to such stations as may be provided by law.

These constitutional provisions are self-executing. They supply the rules by means of which the right to information may be enjoyed (Cooley, A Treatise on the
Constitutional Limitations 167 [1927]) by guaranteeing the right and mandating the duty to afford access to sources of information. Hence, the fundamental right
therein recognized may be asserted by the people upon the ratification of the constitution without need for any ancillary act of the Legislature. (Id. at, p. 165)
What may be provided for by the Legislature are reasonable conditions and limitations upon the access to be afforded which must, of necessity, be consistent
with the declared State policy of full public disclosure of all transactions involving public interest (Constitution, Art. 11, Sec. 28). However, it cannot be
overemphasized that whatever limitation may be prescribed by the Legislature, the right and the duty under Art. III Sec. 7 have become operative and
enforceable by virtue of the adoption of the New Charter. Therefore, the right may be properly invoked in a mandamus proceeding such as this one.

The Solicitor General interposes procedural objections to Our giving due course to this Petition. He challenges the petitioner's standing to sue upon the ground
that the latter does not possess any clear legal right to be informed of the civil service eligibilities of the government employees concerned. He calls attention to
the alleged failure of the petitioner to show his actual interest in securing this particular information. He further argues that there is no ministerial duty on the part
of the Commission to furnish the petitioner with the information he seeks.

1. To be given due course, a Petition for mandamus must have been instituted by a party aggrieved by the alleged inaction of any tribunal, corporation, board or
person which unlawfully excludes said party from the enjoyment of a legal right. (Ant;-Chinese League of the Philippines vs. Felix, 77 Phil. 1012 [1947]). The
petitioner in every case must therefore be an "aggrieved party" in the sense that he possesses a clear legal right to be enforced and a direct interest in the duty
or act to be performed.

In the case before Us, the respondent takes issue on the personality of the petitioner to bring this suit. It is asserted that, the instant Petition is bereft of any
allegation of Legaspi's actual interest in the civil service eligibilities of Julian Sibonghanoy and Mariano Agas, At most there is a vague reference to an unnamed
client in whose behalf he had allegedly acted when he made inquiries on the subject (Petition, Rollo, p. 3).

But what is clear upon the face of the Petition is that the petitioner has firmly anchored his case upon the right of the people to information on matters of public
concern, which, by its very nature, is a public right. It has been held that:

* * * when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people
are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show that he has
any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws
* * * (Tanada et. al. vs. Tuvera, et. al., G.R. No. L- 63915, April 24, 1985, 136 SCRA 27, 36).

From the foregoing, it becomes apparent that when a mandamus proceeding involves the assertion of a public right, the requirement of personal interest is
satisfied by the mere fact that the petitioner is a citizen, and therefore, part of the general "public" which possesses the right.

The Court had opportunity to define the word "public" in the Subido case, supra, when it held that even those who have no direct or tangible interest in any real
estate transaction are part of the "public" to whom "(a)ll records relating to registered lands in the Office of the Register of Deeds shall be open * * *" (Sec. 56, Act
No. 496, as amended). In the words of the Court:
 * * * "Public" is a comprehensive, all-inclusive term. Properly construed, it embraces every person. To say that only those who have a
present and existing interest of a pecuniary character in the particular information sought are given the right of inspection is to make an
unwarranted distinction. *** (Subido vs. Ozaeta, supra at p. 387).

The petitioner, being a citizen who, as such is clothed with personality to seek redress for the alleged obstruction of the exercise of the public right. We find no
cogent reason to deny his standing to bring the present suit.

2. For every right of the people recognized as fundamental, there lies a corresponding duty on the part of those who govern, to respect and protect that right.
That is the very essence of the Bill of Rights in a constitutional regime. Only governments operating under fundamental rules defining the limits of their power so
as to shield individual rights against its arbitrary exercise can properly claim to be constitutional (Cooley, supra, at p. 5). Without a government's acceptance of
the limitations imposed upon it by the Constitution in order to uphold individual liberties, without an acknowledgment on its part of those duties exacted by the
rights pertaining to the citizens, the Bill of Rights becomes a sophistry, and liberty, the ultimate illusion.

In recognizing the people's right to be informed, both the 1973 Constitution and the New Charter expressly mandate the duty of the State and its agents to afford
access to official records, documents, papers and in addition, government research data used as basis for policy development, subject to such limitations as may
be provided by law. The guarantee has been further enhanced in the New Constitution with the adoption of a policy of full public disclosure, this time "subject to
reasonable conditions prescribed by law," in Article 11, Section 28 thereof, to wit:

Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its
transactions involving public interest. (Art. 11, Sec. 28).

In the Tanada case, supra, the constitutional guarantee was bolstered by what this Court declared as an imperative duty of the government officials concerned to
publish all important legislative acts and resolutions of a public nature as well as all executive orders and proclamations of general applicability. We granted
mandamus in said case, and in the process, We found occasion to expound briefly on the nature of said duty:

* * * That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given
substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves
respondents with no discretion whatsoever as to what must be in included or excluded from such publication. (Tanada v.
Tuvera, supra, at 39). (Emphasis supplied).

The absence of discretion on the part of government agencia es in allowing the examination of public records, specifically, the records in the Office of the
Register of Deeds, is emphasized in Subido vs. Ozaeta, supra:

Except, perhaps when it is clear that the purpose of the examination is unlawful, or sheer, idle curiosity, we do not believe it is the duty
under the law of registration officers to concern themselves with the motives, reasons, and objects of the person seeking access to the
records. It is not their prerogative to see that the information which the records contain is not flaunted before public gaze, or that scandal
is not made of it. If it be wrong to publish the contents of the records, it is the legislature and not the officials having custody thereof
which is called upon to devise a remedy. *** (Subido v. Ozaeta, supra at 388). (Emphasis supplied).

It is clear from the foregoing pronouncements of this Court that government agencies are without discretion in refusing disclosure of, or access to, information of
public concern. This is not to lose sight of the reasonable regulations which may be imposed by said agencies in custody of public records on the manner in
which the right to information may be exercised by the public. In the Subido case, We recognized the authority of the Register of Deeds to regulate the manner in
which persons desiring to do so, may inspect, examine or copy records relating to registered lands. However, the regulations which the Register of Deeds may
promulgate are confined to:

* * * prescribing the manner and hours of examination to the end that damage to or loss of, the records may be avoided, that undue
interference with the duties of the custodian of the books and documents and other employees may be prevented, that the right of other
persons entitled to make inspection may be insured * * * (Subido vs. Ozaeta, 80 Phil. 383, 387)

Applying the Subido ruling by analogy, We recognized a similar authority in a municipal judge, to regulate the manner of inspection by the public of criminal
docket records in the case of Baldoza vs. Dimaano (Adm. Matter No. 1120-MJ, May 5, 1976, 71 SCRA 14). Said administrative case was filed against the
respondent judge for his alleged refusal to allow examination of the criminal docket records in his sala. Upon a finding by the Investigating Judge that the
respondent had allowed the complainant to open and view the subject records, We absolved the respondent. In effect, We have also held that the rules and
conditions imposed by him upon the manner of examining the public records were reasonable.

In both the Subido and the Baldoza cases, We were emphatic in Our statement that the authority to regulate the manner of examining public records does not
carry with it the power to prohibit. A distinction has to be made between the discretion to refuse outright the disclosure of or access to a particular information and
the authority to regulate the manner in which the access is to be afforded. The first is a limitation upon the availability of access to the information sought, which
only the Legislature may impose (Art. III, Sec. 6, 1987 Constitution). The second pertains to the government agency charged with the custody of public records.
Its authority to regulate access is to be exercised solely to the end that damage to, or loss of, public records may be avoided, undue interference with the duties
of said agencies may be prevented, and more importantly, that the exercise of the same constitutional right by other persons shall be assured (Subido vs.
Ozaetal supra).
Thus, while the manner of examining public records may be subject to reasonable regulation by the government agency in custody thereof, the duty to disclose
the information of public concern, and to afford access to public records cannot be discretionary on the part of said agencies. Certainly, its performance cannot
be made contingent upon the discretion of such agencies. Otherwise, the enjoyment of the constitutional right may be rendered nugatory by any whimsical
exercise of agency discretion. The constitutional duty, not being discretionary, its performance may be compelled by a writ of mandamus in a proper case.

But what is a proper case for Mandamus to issue? In the case before Us, the public right to be enforced and the concomitant duty of the State are unequivocably
set forth in the Constitution. The decisive question on the propriety of the issuance of the writ of mandamus in this case is, whether the information sought by the
petitioner is within the ambit of the constitutional guarantee.

3. The incorporation in the Constitution of a guarantee of access to information of public concern is a recognition of the essentiality of the free flow of ideas and
information in a democracy (Baldoza v. Dimaano, Adm. Matter No. 1120-MJ, May 5, 1976, 17 SCRA 14). In the same way that free discussion enables members
of society to cope with the exigencies of their time (Thornhill vs. Alabama, 310 U.S. 88,102 [1939]), access to information of general interest aids the people in
democratic decision-making (87 Harvard Law Review 1505 [1974]) by giving them a better perspective of the vital issues confronting the nation.

But the constitutional guarantee to information on matters of public concern is not absolute. It does not open every door to any and all information. Under the
Constitution, access to official records, papers, etc., are "subject to limitations as may be provided by law" (Art. III, Sec. 7, second sentence). The law may
therefore exempt certain types of information from public scrutiny, such as those affecting national security (Journal No. 90, September 23, 1986, p. 10; and
Journal No. 91, September 24, 1986, p. 32, 1986 Constitutional Commission). It follows that, in every case, the availability of access to a particular public record
must be circumscribed by the nature of the information sought, i.e., (a) being of public concern or one that involves public interest, and, (b) not being exempted
by law from the operation of the constitutional guarantee. The threshold question is, therefore, whether or not the information sought is of public interest or public
concern.

a. This question is first addressed to the government agency having custody of the desired information. However, as already discussed, this does not give the
agency concerned any discretion to grant or deny access. In case of denial of access, the government agency has the burden of showing that the information
requested is not of public concern, or, if it is of public concern, that the same has been exempted by law from the operation of the guarantee. To hold otherwise
will serve to dilute the constitutional right. As aptly observed, ". . . the government is in an advantageous position to marshall and interpret arguments against
release . . ." (87 Harvard Law Review 1511 [1974]). To safeguard the constitutional right, every denial of access by the government agency concerned is subject
to review by the courts, and in the proper case, access may be compelled by a writ of Mandamus.

In determining whether or not a particular information is of public concern there is no rigid test which can be applied. "Public concern" like "public interest" is a
term that eludes exact definition. Both terms embrace a broad spectrum of subjects which the public may want to know, either because these directly affect their
lives, or simply because such matters naturally arouse the interest of an ordinary citizen. In the final analysis, it is for the courts to determine in a case by case
basis whether the matter at issue is of interest or importance, as it relates to or affects the public.

The public concern invoked in the case of Tanada v. Tuvera, supra, was the need for adequate notice to the public of the various laws which are to regulate the
actions and conduct of citizens. In Subido vs. Ozaeta, supra, the public concern deemed covered by the statutory right was the knowledge of those real estate
transactions which some believed to have been registered in violation of the Constitution.

The information sought by the petitioner in this case is the truth of the claim of certain government employees that they are civil service eligibles for the positions
to which they were appointed. The Constitution expressly declares as a State policy that:

Appointments in the civil service shall be made only according to merit and fitness to be determined, as far as practicable, and except as
to positions which are policy determining, primarily confidential or highly technical, by competitive examination. (Art. IX, B, Sec. 2.[2]).

Public office being a public trust, [Const. Art. XI, Sec. 1] it is the legitimate concern of citizens to ensure that government positions requiring civil service eligibility
are occupied only by persons who are eligibles. Public officers are at all times accountable to the people even as to their eligibilities for their respective positions.

b. But then, it is not enough that the information sought is of public interest. For mandamus to lie in a given case, the information must not be among the species
exempted by law from the operation of the constitutional guarantee.

In the instant, case while refusing to confirm or deny the claims of eligibility, the respondent has failed to cite any provision in the Civil Service Law which would
limit the petitioner's right to know who are, and who are not, civil service eligibles. We take judicial notice of the fact that the names of those who pass the civil
service examinations, as in bar examinations and licensure examinations for various professions, are released to the public. Hence, there is nothing secret about
one's civil service eligibility, if actually possessed. Petitioner's request is, therefore, neither unusual nor unreasonable. And when, as in this case, the government
employees concerned claim to be civil service eligibles, the public, through any citizen, has a right to verify their professed eligibilities from the Civil Service
Commission.

The civil service eligibility of a sanitarian being of public concern, and in the absence of express limitations under the law upon access to the register of civil
service eligibles for said position, the duty of the respondent Commission to confirm or deny the civil service eligibility of any person occupying the position
becomes imperative. Mandamus, therefore lies.

WHEREFORE, the Civil Service Commission is ordered to open its register of eligibles for the position of sanitarian, and to confirm or deny, the civil service
eligibility of Julian Sibonghanoy and Mariano Agas, for said position in the Health Department of Cebu City, as requested by the petitioner Valentin L. Legaspi.
Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin and Sarmiento, JJ., concur.

Feliciano, J., is on leave.

EN BANC

[G.R. No. 118971. September 15, 1999]

RODOLFO R. VASQUEZ, petitioner, vs. COURT OF APPEALS, THE REGIONAL TRIAL COURT OF MANILA, BRANCH 40, and THE PEOPLE OF THE
PHILIPPINES, respondents.

DECISION

MENDOZA, J.:

The question for determination in this case is the liability for libel of a citizen who denounces a barangay official for misconduct in office. The Regional Trial
Court of Manila, Branch 40, found petitioner guilty and fined him P1,000.00 on the ground that petitioner failed to prove the truth of the charges and that he was
motivated by vengeance in uttering the defamatory statement. On appeal, the Court of Appeals, in a decision [1] dated February 1, 1995, affirmed. Hence, this
petition for review. The decision appealed from should be reversed.

The facts are not in dispute. Petitioner Rodolfo R. Vasquez is a resident of the Tondo Foreshore Area. Sometime in April 1986, he and some 37 families
from the area went to see then National Housing Authority (NHA) General Manager Lito Atienza regarding their complaint against their Barangay Chairman, Jaime
Olmedo. After their meeting with Atienza and other NHA officials, petitioner and his companions were met and interviewed by newspaper reporters at the NHA
compound concerning their complaint. The next day, April 22, 1986, the following news article[2] appeared in the newspaper Ang Tinig ng Masa:

Nananawagan kahapon kay pangulong Corazon Aquino ang 38 mahihirap na pamilya sa Tondo Foreshore Area na umanoy inagawan ng lupa ng kanilang
barangay chairman sa pakikipagsabwatan sa ilang pinuno ng National Housing Authority sapul 1980.

Sinabi nila na nakipagsabwatan umano si Chairman Jaime Olmedo ng barangay 66, Zone 6, Tondo Foreshore Area, sa mga project manager ng NHA upang
makamkam ang may 14 na lote ng lupa sa naturang lugar.

Binanggit ni Rodolfo R. Vasquez, 40, Tagapagsalita ng (mga) pamilyang apektado, na umaabot lang sa 487.87 metro kuwadrado ang kabuuan ng mga lupa na
kinatitirikan ng mga barung-barung ng 38 pamilya.

Naninirahan na kami sa mga lupang nabanggit sapul 1950 at pinatunayan sa mga survey ng NHA noong nakalipas na taon na may karapatan kami sa mga
lupang ito ng pamahalaan, ani Vasquez.

Pawang lupa ng gobyerno ang mga lupa at ilegal man na patituluhan, nagawa ito ni Olmedo sa pakikipagsabwatan sa mga project manager at legal officers ng
NHA, sabi ni Vasquez.

Sinabi rin ng mga pamilya na protektado ng dating pinuno ng city hall ng Maynila, MHS Minister Conrado Benitez, at ilang pinuno ng pulisya ang barangay
chairman kaya nakalusot ang mga ginawa nitong katiwalian.

Bukod sa pagkamkam ng mga lupaing gobyerno, kasangkot din umano si Olmedo sa mga ilegal na pasugalan sa naturang lugar at maging sa mga nakawan ng
manok.

Sapin-sapin na ang mga kaso na idinulog namin noong nakalipas na mga taon, pero pinawalang saysay ang lahat ng iyon, kabilang na ang tangkang pagpatay
sa akin kaugnay ng pagrereklamo sa pangangamkam ng lupa noong 1984, sabi pa ni Vasquez.

Based on the newspaper article, Olmedo filed a complaint for libel against petitioner alleging that the latters statements cast aspersions on him and damaged
his reputation. After conducting preliminary investigation, the city prosecutor filed the following information in the Regional Trial Court of Manila, Branch 40:

The undersigned accuses RODOLFO R. VASQUEZ of the crime of libel committed as follows:

That on or about April 22, 1986, in the city of Manila, Philippines, the said accused, with malicious intent of impeaching the reputation and character of one Jaime
Olmedo, chairman of Barangay 66, Zone 6 in Tondo, Manila, and with evident intent of exposing him to public hatred, contempt, ridicule, did then and there
willfully, unlawfully, feloniously and maliciously caused the publication of an article entitled 38 Pamilya Inagawan ng Lupa in Ang Tinig ng Masa, a daily
newspaper sold to the public and of general circulation in the Philippines in its April 22, 1986 issue, which portion of the said article reads as follows:
Nananawagan kahapon kay pangulong Corazon Aquino ang 38 mahihirap na pamilya sa Tondo Foreshore Area na umanoy inagawan ng lupa ng kanilang
barangay chairman sa pakikipagsabwatan sa ilang pinuno ng National Housing Authority sapul 1980.

Sinabi nila na nakipagsabwatan umano si Chairman Jaime Olmedo ng barangay 66, Zone 6, Tondo Foreshore Area sa mga project manager ng NHA upang
makamkam ang may 14 na lote ng lupa sa naturang lugar.

x x x Pawang lupa ng gobyerno ang mga lupa at ilegal man na patituluhan, nagawa ito ni Olmedo sa pakikipagsabwatan sa mga project manager at legal officers
ng NHA, sabi ni Vasquez.

Sinabi rin ng mga pamilya na protektado ng dating pinuno ng city hall ng Maynila, MHS Minister Conrado Benitez, at ilang pinuno ng pulisya ang barangay
chairman kaya nakalusot ang mga ginawa nitong katiwalian.

Bukod sa pagkamkam ng mga lupaing gobyerno, kasangkot din umano si Olmedo sa mga ilegal na pasugalan sa naturang lugar at maging sa mga nakawan ng
manok. x x x

with which statements, the said accused meant and intended to convey, as in fact he did mean and convey false and malicious imputations that said Jaime
Olmedo is engaged in landgrabbing and involved in illegal gambling and stealing of chickens at the Tondo Foreshore Area, Tondo, Manila, which statements, as
he well knew, were entirely false and malicious, offensive and derogatory to the good name, character and reputation of said Jaime Olmedo, thereby tending to
impeach, besmirch and destroy the honor, character and reputation of Jaime Olmedo, as in fact, the latter was exposed to dishonor, discredit, public hatred,
contempt and ridicule.

Contrary to law.

Upon being arraigned, petitioner entered a plea of not guilty, whereupon the case was tried. The prosecution presented Barangay Chairman Olmedo and
his neighbor, Florentina Calayag, as witnesses. On the other hand, the defense presented Ciriaco Cabuhat, Nicasio Agustin, Estrelita Felix, Fernando Rodriguez all
residents of the Tondo Foreshore Area and petitioner as its witnesses.

On May 28, 1992, the trial court rendered judgment finding petitioner guilty of libel and sentencing him to pay a fine of P1,000.00. On appeal, the Court of
Appeals affirmed in toto. Hence, this petition for review. Petitioner contends that

I. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT PINPOINTING PETITIONER AS THE SOURCE
OF THE ALLEGED LIBELOUS ARTICLE.

II. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT THAT PETITIONER IMPUTED THE QUESTIONED
ACTS TO COMPLAINANT.

III. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT THAT THE ALLEGED IMPUTATIONS WERE
MADE MALICIOUSLY.

IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT WHICH FAILED TO APPRECIATE PETITIONERS
DEFENSE OF TRUTH.

V. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT THAT ALL THE ELEMENTS OF LIBEL WERE
PROVEN.

We will deal with these contentions in the order in which they are made.

First. Petitioner claims he was unfairly singled out as the source of the statements in the article when any member of the 38 complainant-families could
have been the source of the alleged libelous statements.[3] The reference is to the following portion of the decision of the Court of Appeals:

. . . In his sworn statement, appellant admitted he was the source of the libelous article (Exh. B). He affirmed this fact when he testified in open court as follows:
That his allegation on the act of landgrabbing by Olmedo was based on the alleged report and pronouncements of the NHA representatives (p. 5, tsn, Oct. 18,
1989); that said allegations were made by him before the local press people in the pursuit of fairness and truthfulness and not in bad faith (pp. 8-9, id.); that the
only inaccurate account in the published article of Ang Tinig ng Masa is the reference to the 487.87 sq.m. lot, on which Olmedos residence now stands, attributed
by the reporter as the lot currently occupied by appellants and his fellow complainants (pp. 4-5, tsn, Nov. 15, 1989; pp. 4-5, tsn, January 15, 1990); and that after
the interview, he never expected that his statement would be the cause of the much-publicized libelous article (pp. 4-6, tsn, Nov. 15, 1989).[4]

It is true petitioner did not directly admit that he was the source of the statements in the questioned article. What he said in his sworn statement[5] was that
the contents of the article are true in almost all respects, thus:

9. Tama ang nakalathala sa pahayagang Ang Masa maliban na lang sa tinutukoy na ako at ang mga kasamahang maralitang taga-lungsod ay
nakatira sa humigit kumulang 487.87 square meters sapagkat ang nabanggit na 487.87 square meters ay siyang kinatitirikan ng bahay ni
Barangay Chairman Olmedo kung saan nakaloob ang anim na lote - isang paglabag sa batas o regulasyon ng NHA;

10. Ang ginawa kong pahayag na nailathala sa Ang Masa ay sanhi ng aking nais na maging mabuting mamamayan at upang maituwid ang mga
katiwaliang nagaganap sa Tondo Foreshore Area kung saan ako at sampu ng aking mga kasamang maralitang taga-lungsod ay apektado at
naaapi.
This was likewise what he stated in his testimony in court both on direct[6] and on cross-examination.[7] However, by claiming that what he had told the reporter was
made by him in the performance of a civic duty, petitioner in effect admitted authorship of the article and not only of the statements attributed to him therein, to wit:

Pawang lupa ng gobyerno ang mga lupa at ilegal man na patituluhan, nagawa ito ni Olmedo sa pakikipagsabwatan sa mga project manager at legal officers ng
NHA, sabi ni Vasquez.

....

Sapin-sapin na ang mga kaso na idinulog namin noong nakalipas na mga taon, pero pinawalang saysay ang lahat ng iyon, kabilang na ang tangkang pagpatay
sa akin kaugnay ng pagrereklamo sa pangangamkam ng lupa noong 1984, sabi pa ni Vasquez.

Petitioner cannot claim to have been the source of only a few statements in the article in question and point to the other parties as the source of the rest,
when he admits that he was correctly identified as the spokesperson of the families during the interview.

Second. Petitioner points out that the information did not set out the entire news article as published. In fact, the second statement attributed to petitioner
was not included in the information. But, while the general rule is that the information must set out the particular defamatory words verbatim and as published and
that a statement of their substance is insufficient,[8] United States v. Eguia, 38 Phil. 857 (1918).8 a defect in this regard may be cured by evidence.[9] In this case,
the article was presented in evidence, but petitioner failed to object to its introduction. Instead, he engaged in the trial of the entire article, not only of the portions
quoted in the information, and sought to prove it to be true. In doing so, he waived objection based on the defect in the information. Consequently, he cannot raise
this issue at this late stage.[10]

Third. On the main issue whether petitioner is guilty of libel, petitioner contends that what he said was true and was made with good motives and for
justifiable ends.

To find a person guilty of libel under Art. 353 of the Revised Penal Code, the following elements must be proved: (a) the allegation of a discreditable act or
condition concerning another; (b) publication of the charge; (c) identity of the person defamed; and (d) existence of malice.[11]

An allegation is considered defamatory if it ascribes to a person the commission of a crime, the possession of a vice or defect, real or imaginary, or any act,
omission, condition, status or circumstance which tends to dishonor or discredit or put him in contempt, or which tends to blacken the memory of one who is dead.[12]

There is publication if the material is communicated to a third person.[13] It is not required that the person defamed has read or heard about the libelous
remark. What is material is that a third person has read or heard the libelous statement, for a mans reputation is the estimate in which others hold him, not the
good opinion which he has of himself.[14]

On the other hand, to satisfy the element of identifiability, it must be shown that at least a third person or a stranger was able to identify him as the object
of the defamatory statement.[15]

Finally, malice or ill will must be present. Art. 354 of the Revised Penal Code provides:

Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown, except in the
following cases:

1. A private communication made by any person to another in the performance of any legal, moral or security duty; and

2. A fair and true report, made in good faith, without any comments or remarks, of any judicial, legislative or other official proceedings which are not
of confidential nature, or of any statement, report or speech delivered in said proceedings, or of any other act performed by public officers in
the exercise of their functions.

In this case, there is no doubt that the first three elements are present. The statements that Olmedo, through connivance with NHA officials, was able to
obtain title to several lots in the area and that he was involved in a number of illegal activities (attempted murder, gambling and theft of fighting cocks) were clearly
defamatory. There is no merit in his contention that landgrabbing, as charged in the information, has a technical meaning in law. [16] Such act is so alleged and
proven in this case in the popular sense in which it is understood by ordinary people. As held in United States v. Sotto:[17]

. . . [F]or the purpose of determining the meaning of any publication alleged to be libelous that construction must be adopted which will give to the matter such a
meaning as is natural and obvious in the plain and ordinary sense in which the public would naturally understand what was uttered. The published matter alleged
to be libelous must be construed as a whole. In applying these rules to the language of an alleged libel, the court will disregard any subtle or ingenious
explanation offered by the publisher on being called to account. The whole question being the effect the publication had upon the minds of the readers, and they
not having been assisted by the offered explanation in reading the article, it comes too late to have the effect of removing the sting, if any there be, from the
words used in the publication.

Nor is there any doubt that the defamatory remarks referred to complainant and were published. Petitioner caused the publication of the defamatory remarks
when he made the statements to the reporters who interviewed him.[18]

The question is whether from the fact that the statements were defamatory, malice can be presumed so that it was incumbent upon petitioner to overcome
such presumption. Under Art. 361 of the Revised Penal Code, if the defamatory statement is made against a public official with respect to the discharge of his
official duties and functions and the truth of the allegation is shown, the accused will be entitled to an acquittal even though he does not prove that the imputation
was published with good motives and for justifiable ends.[19]
 In this case, contrary to the findings of the trial court, on which the Court of Appeals relied, petitioner was able to prove the truth of his charges against the
barangay official. His allegation that, through connivance with NHA officials, complainant was able to obtain title to several lots at the Tondo Foreshore Area was
based on the letter[20] of NHA Inspector General Hermogenes Fernandez to petitioners counsel which reads:

09 August 1983

Atty. Rene V. Sarmiento

Free Legal Assistance Group (FLAG)

55 Third Street

New Manila, Quezon City

Dear Atty. Sarmiento:

In connection with your request that you be furnished with a copy of the results of the investigation regarding the complaints of some Tondo residents against
Chairman Jaime Olmedo, we are providing you a summary of the findings based on the investigation conducted by our Office which are as follows:

1. Based on the subdivision plan of Block 260, SB 8, Area III, Jaime Olmedos present structure is constructed on six lots which were awarded before by the
defunct Land Tenure Administration to different persons as follows:

Lot 4 - Juana Buenaventura - 79.76 sq. m.

Lot 6 - Servando Simbulan - 48.50 sq. m.

Lot 7 - Alfredo Vasquez - 78.07 sq. m.

Lot 8 - Martin Gallardo - 78.13 sq. m.

Lot 9 - Daniel Bayan - 70.87 sq. m.

Lot 1 - Fortunato de Jesus - 85.08 sq. m. (OIT No. 7800)

The above-mentioned lots were not yet titled, except for Lot 1. Fortunato de Jesus sold the said lot to a certain Jovita Bercasi, a sister-in-law of Jaime
Olmedo. The other remaining lots were either sold to Mr. Olmedo and/or to his immediate relatives.

Lot 14 is also titled in the name of Mariano Bercasi, father-in-law of Jaime Olmedo, with an area of 47.40 sq. m.

The lot assigned to Chairman Olmedo has a total area of 487.87 sq. m.

2. Block 261, SB 8, Area III

Lot No. 7 is titled in the name of Jaime Olmedo, consisting an area of 151.67 sq. m. A four-door apartment owned by Mr. Olmedo is being rented to uncensused
residents.

3. Block 262, SB 8, Area III

Lot No. 13 is allocated to Delfin Olmedo, nephew of Jaime Olmedo, but this lot is not yet titled.

4. Block 256, SB 5, Area III

Victoria Olmedo, uncensused, is a daughter of Jaime Olmedo. Her structure is erected on a non-titled lot. The adjacent lot is titled in the name of Victoria. It was
issued OCT No. 10217 with an area of 202.23 sq. m. Inside this compound is another structure owned and occupied by Amelia Dofredo, a censused
houseowner. The titled lot of Victoria now has an area of 338.20 sq. m.

For your information.

 (s/t) HERMOGENES C. FERNANDEZ

Inspector General

Public Assistance & Action Office

In addition, petitioner acted on the basis of two memoranda,[21] both dated November 29, 1983, of then NHA General Manager Gaudencio Tobias recommending
the filing of administrative charges against the NHA officials responsible for the alleged irregular consolidation of lots [in Tondo to Jaime and Victoria Olmedo.]

With regard to the other imputations made by petitioner against complainant, it must be noted that what petitioner stated was that various charges (for
attempted murder against petitioner, gambling, theft of fighting cocks) had been filed by the residents against their barangay chairman but these had all been
dismissed. Petitioner was able to show that Olmedos involvement in the theft of fighting cocks was the subject of an affidavit-complaint,[22] dated October 19, 1983,
signed by Fernando Rodriguez and Ben Lareza, former barangay tanods of Barangay 66, Zone 6, Tondo. Likewise, petitioner presented a resolution,[23] dated
March 10, 1988, of the Office of the Special Prosecutor in TBP-87-03694, stating that charges of malversation and corrupt practices had been filed against Olmedo
and nine (9) other barangay officials but the same were dismissed. Indeed, the prosecutions own evidence bears out petitioners statements. The prosecution
presented the resolution[24]in TBP Case No. 84-01854 dismissing the charge of attempted murder filed by petitioner against Jaime Olmedo and his son-in-law,
Jaime Reyes. The allegation concerning this matter is thus true.

It was error for the trial court to hold that petitioner only tried to prove that the complainant [barangay chairman] is guilty of the crimes alluded to; accused,
however, has not proven that the complainant committed the crimes. For that is not what petitioner said as reported in the Ang Tinig ng Masa. The fact that charges
had been filed against the barangay official, not the truth of such charges, was the issue.

In denouncing the barangay chairman in this case, petitioner and the other residents of the Tondo Foreshore Area were not only acting in their self-interest
but engaging in the performance of a civic duty to see to it that public duty is discharged faithfully and well by those on whom such duty is incumbent. The recognition
of this right and duty of every citizen in a democracy is inconsistent with any requirement placing on him the burden of proving that he acted with good motives and
for justifiable ends.

For that matter, even if the defamatory statement is false, no liability can attach if it relates to official conduct, unless the public official concerned proves
that the statement was made with actual malicethat is, with knowledge that it was false or with reckless disregard of whether it was false or not. This is the gist of
the ruling in the landmark case of New York Times v. Sullivan,[25] which this Court has cited with approval in several of its own decisions.[26] This is the rule of actual
malice. In this case, the prosecution failed to prove not only that the charges made by petitioner were false but also that petitioner made them with knowledge of
their falsity or with reckless disregard of whether they were false or not.

A rule placing on the accused the burden of showing the truth of allegations of official misconduct and/or good motives and justifiable ends for making such
allegations would not only be contrary to Art. 361 of the Revised Penal Code. It would, above all, infringe on the constitutionally guaranteed freedom of
expression. Such a rule would deter citizens from performing their duties as members of a self- governing community. Without free speech and assembly,
discussions of our most abiding concerns as a nation would be stifled. As Justice Brandeis has said, public discussion is a political duty and the greatest menace
to freedom is an inert people.[27]

Complainant contends that petitioner was actuated by vengeful political motive rather than by his firm conviction that he and his fellow residents had been
deprived of a property right because of acts attributable to their barangay chairman. The Court of Appeals, sustaining complainants contention, held:

That the said imputations were malicious may be inferred from the facts that appellant and complainant are enemies, hence, accused was motivated by
vengeance in uttering said defamatory statements and that accused is a leader of Ciriaco Cabuhat who was defeated by complainant when they ran for the
position of barangay captain. . . .[28]

As already stated, however, in accordance with Art. 361, if the defamatory matter either constitutes a crime or concerns the performance of official duties, and the
accused proves the truth of his charge, he should be acquitted.[29]

Instead of the claim that petitioner was politically motivated in making the charges against complainant, it would appear that complainant filed this case to
harass petitioner. Art. 360 of the Revised Penal Code provides:

Persons responsible.Any person who shall publish, exhibit, or cause the publication or exhibition of any defamation in writing or by similar means, shall be
responsible for the same.

The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper, magazine or serial publication, shall be responsible for the
defamations contained therein to the same extent as if he were the author thereof. . . .

Yet, in this case, neither the reporter, editor, nor the publisher of the newspaper was charged in court. What was said in an analogous case[30] may be
applied mutatis mutandis to the case at bar:

It is curious that the ones most obviously responsible for the publication of the allegedly offensive news report, namely, the editorial staff and the periodical itself,
were not at all impleaded. The charge was leveled against the petitioner and, curiouser still, his clients who have nothing to do with the editorial policies of the
newspaper. There is here a manifest effort to persecute and intimidate the petitioner for his temerity in accusing the ASAC agents who apparently enjoyed
special privilegesand perhaps also immunitiesduring those oppressive times. The non-inclusion of the periodicals was a transparent hypocrisy, an ostensibly
pious if not at all convincing pretense of respect for freedom of expression that was in fact one of the most desecrated liberties during the past despotism.[31]

WHEREFORE, the decision of the Court of Appeals is REVERSED and the petitioner is ACQUITTED of the crime charged.
 SO ORDERED.

EN BANC

[G.R. No. 135981. January 15, 2004]

PEOPLE OF THE PHILIPPINES, appellee, vs. MARIVIC GENOSA, appellant.

DECISION

PANGANIBAN, J.:

Admitting she killed her husband, appellant anchors her prayer for acquittal on a novel theory -- the battered woman syndrome (BWS), which allegedly
constitutes self-defense. Under the proven facts, however, she is not entitled to complete exoneration because there was no unlawful aggression -- no immediate
and unexpected attack on her by her batterer-husband at the time she shot him.

Absent unlawful aggression, there can be no self-defense, complete or incomplete.

But all is not lost. The severe beatings repeatedly inflicted on appellant constituted a form of cumulative provocation that broke down her psychological
resistance and self-control. This psychological paralysis she suffered diminished her will power, thereby entitling her to the mitigating factor under paragraphs 9
and 10 of Article 13 of the Revised Penal Code.

In addition, appellant should also be credited with the extenuating circumstance of having acted upon an impulse so powerful as to have naturally produced
passion and obfuscation. The acute battering she suffered that fatal night in the hands of her batterer-spouse, in spite of the fact that she was eight months pregnant
with their child, overwhelmed her and put her in the aforesaid emotional and mental state, which overcame her reason and impelled her to vindicate her life and
her unborn childs.

Considering the presence of these two mitigating circumstances arising from BWS, as well as the benefits of the Indeterminate Sentence Law, she may
now apply for and be released from custody on parole, because she has already served the minimum period of her penalty while under detention during the
pendency of this case.

The Case

For automatic review before this Court is the September 25, 1998 Decision[1] of the Regional Trial Court (RTC) of Ormoc City (Branch 35) in Criminal Case
No. 5016-0, finding Marivic Genosa guilty beyond reasonable doubt of parricide. The decretal portion of the Decision reads:

WHEREFORE, after all the foregoing being duly considered, the Court finds the accused, Marivic Genosa y Isidro, GUILTY beyond reasonable doubt of the crime
of Parricide as provided under Article 246 of the Revised Penal Code as restored by Sec. 5, RA No. 7659, and after finding treachery as a generic aggravating
circumstance and none of mitigating circumstance, hereby sentences the accused with the penalty of DEATH.

The Court likewise penalizes the accused to pay the heirs of the deceased the sum of fifty thousand pesos (P50,000.00), Philippine currency as indemnity and
another sum of fifty thousand pesos (P50,000.00), Philippine currency as moral damages.[2]

The Information[3] charged appellant with parricide as follows:

That on or about the 15th day of November 1995, at Barangay Bilwang, Municipality of Isabel, Province of Leyte, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, with intent to kill, with treachery and evident premeditation, did then and there wilfully, unlawfully and feloniously
attack, assault, hit and wound one BEN GENOSA, her legitimate husband, with the use of a hard deadly weapon, which the accused had provided herself for the
purpose, [causing] the following wounds, to wit:

Cadaveric spasm.

Body on the 2nd stage of decomposition.

Face, black, blownup & swollen w/ evident post-mortem lividity. Eyes protruding from its sockets and tongue slightly protrudes out of the mouth.

Fracture, open, depressed, circular located at the occipital bone of the head, resulting [in] laceration of the brain, spontaneous rupture of the blood
vessels on the posterior surface of the brain, laceration of the dura and meningeal vessels producing severe intracranial hemorrhage.

Blisters at both extrem[i]ties, anterior chest, posterior chest, trunk w/ shedding of the epidermis.

Abdomen distended w/ gas. Trunk bloated.

 which caused his death.[4]

With the assistance of her counsel,[5] appellant pleaded not guilty during her arraignment on March 3, 1997.[6] In due course, she was tried for and convicted
of parricide.

The Facts

Version of the Prosecution

The Office of the Solicitor General (OSG) summarizes the prosecutions version of the facts in this wise:

Appellant and Ben Genosa were united in marriage on November 19, 1983 in Ormoc City. Thereafter, they lived with the parents of Ben in their house at Isabel,
Leyte. For a time, Bens younger brother, Alex, and his wife lived with them too. Sometime in 1995, however, appellant and Ben rented from Steban Matiga a house
at Barangay Bilwang, Isabel, Leyte where they lived with their two children, namely: John Marben and Earl Pierre.

On November 15, 1995, Ben and Arturo Basobas went to a cockfight after receiving their salary. They each had two (2) bottles of beer before heading home. Arturo
would pass Bens house before reaching his. When they arrived at the house of Ben, he found out that appellant had gone to Isabel, Leyte to look for him. Ben
went inside his house, while Arturo went to a store across it, waiting until 9:00 in the evening for the masiao runner to place a bet. Arturo did not see appellant
arrive but on his way home passing the side of the Genosas rented house, he heard her say I wont hesitate to kill you to which Ben replied Why kill me when I am
innocent? That was the last time Arturo saw Ben alive. Arturo also noticed that since then, the Genosas rented house appeared uninhabited and was always
closed.

On November 16, 1995, appellant asked Erlinda Paderog, her close friend and neighbor living about fifty (50) meters from her house, to look after her pig because
she was going to Cebu for a pregnancy check-up. Appellant likewise asked Erlinda to sell her motorcycle to their neighbor Ronnie Dayandayan who unfortunately
had no money to buy it.

That same day, about 12:15 in the afternoon, Joseph Valida was waiting for a bus going to Ormoc when he saw appellant going out of their house with her two
kids in tow, each one carrying a bag, locking the gate and taking her children to the waiting area where he was. Joseph lived about fifty (50) meters behind the
Genosas rented house. Joseph, appellant and her children rode the same bus to Ormoc. They had no conversation as Joseph noticed that appellant did not want
to talk to him.

On November 18, 1995, the neighbors of Steban Matiga told him about the foul odor emanating from his house being rented by Ben and appellant. Steban went
there to find out the cause of the stench but the house was locked from the inside. Since he did not have a duplicate key with him, Steban destroyed the gate
padlock with a borrowed steel saw. He was able to get inside through the kitchen door but only after destroying a window to reach a hook that locked it. Alone,
Steban went inside the unlocked bedroom where the offensive smell was coming from. There, he saw the lifeless body of Ben lying on his side on the bed covered
with a blanket. He was only in his briefs with injuries at the back of his head. Seeing this, Steban went out of the house and sent word to the mother of Ben about
his sons misfortune. Later that day, Iluminada Genosa, the mother of Ben, identified the dead body as that of [her] son.

Meanwhile, in the morning of the same day, SPO3 Leo Acodesin, then assigned at the police station at Isabel, Leyte, received a report regarding the foul smell at
the Genosas rented house. Together with SPO1 Millares, SPO1 Colon, and Dr. Refelina Cerillo, SPO3 Acodesin proceeded to the house and went inside the
bedroom where they found the dead body of Ben lying on his side wrapped with a bedsheet. There was blood at the nape of Ben who only had his briefs on. SPO3
Acodesin found in one corner at the side of an aparador a metal pipe about two (2) meters from where Ben was, leaning against a wall. The metal pipe measured
three (3) feet and six (6) inches long with a diameter of one and half (1 1/2) inches. It had an open end without a stop valve with a red stain at one end. The
bedroom was not in disarray.

About 10:00 that same morning, the cadaver of Ben, because of its stench, had to be taken outside at the back of the house before the postmortem examination
was conducted by Dr. Cerillo in the presence of the police. A municipal health officer at Isabel, Leyte responsible for medico-legal cases, Dr. Cerillo found that Ben
had been dead for two to three days and his body was already decomposing. The postmortem examination of Dr. Cerillo yielded the findings quoted in the
Information for parricide later filed against appellant. She concluded that the cause of Bens death was cardiopulmonary arrest secondary to severe intracranial
hemorrhage due to a depressed fracture of the occipital [bone].

Appellant admitted killing Ben. She testified that going home after work on November 15, 1995, she got worried that her husband who was not home yet might
have gone gambling since it was a payday. With her cousin Ecel Arao, appellant went to look for Ben at the marketplace and taverns at Isabel, Leyte but did not
find him there. They found Ben drunk upon their return at the Genosas house. Ecel went home despite appellants request for her to sleep in their house.

Then, Ben purportedly nagged appellant for following him, even challenging her to a fight. She allegedly ignored him and instead attended to their children who
were doing their homework. Apparently disappointed with her reaction, Ben switched off the light and, with the use of a chopping knife, cut the television antenna
or wire to keep her from watching television. According to appellant, Ben was about to attack her so she ran to the bedroom, but he got hold of her hands and
whirled her around. She fell on the side of the bed and screamed for help. Ben left. At this point, appellant packed his clothes because she wanted him to leave.
Seeing his packed clothes upon his return home, Ben allegedly flew into a rage, dragged appellant outside of the bedroom towards a drawer holding her by the
neck, and told her You might as well be killed so nobody would nag me. Appellant testified that she was aware that there was a gun inside the drawer but since
Ben did not have the key to it, he got a three-inch long blade cutter from his wallet. She however, smashed the arm of Ben with a pipe, causing him to drop the
blade and his wallet. Appellant then smashed Ben at his nape with the pipe as he was about to pick up the blade and his wallet. She thereafter ran inside the
bedroom.
Appellant, however, insisted that she ended the life of her husband by shooting him. She supposedly distorted the drawer where the gun was and shot Ben. He did
not die on the spot, though, but in the bedroom.[7] (Citations omitted)

Version of the Defense

Appellant relates her version of the facts in this manner:

1. Marivic and Ben Genosa were allegedly married on November 19, 1983. Prior to her marriage, Marivic had graduated from San Carlos, Cebu City, obtaining a
degree of Bachelor of Science in Business Administration, and was working, at the time of her husbands death, as a Secretary to the Port Managers in Ormoc City.
The couple had three (3) children: John Marben, Earl Pierre and Marie Bianca.

2. Marivic and Ben had known each other since elementary school; they were neighbors in Bilwang; they were classmates; and they were third degree cousins.
Both sets of parents were against their relationship, but Ben was persistent and tried to stop other suitors from courting her. Their closeness developed as he was
her constant partner at fiestas.

3. After their marriage, they lived first in the home of Bens parents, together with Bens brother, Alex, in Isabel, Leyte. In the first year of marriage, Marivic and Ben
lived happily. But apparently, soon thereafter, the couple would quarrel often and their fights would become violent.

4. Bens brother, Alex, testified for the prosecution that he could not remember when Ben and Marivic married. He said that when Ben and Marivic
quarreled, generally when Ben would come home drunk, Marivic would inflict injuries on him. He said that in one incident in 1993 he saw Marivic holding a kitchen
knife after Ben had shouted for help as his left hand was covered with blood. Marivic left the house but after a week, she returned apparently having asked for
Bens forgiveness. In another incident in May 22, 1994, early morning, Alex and his father apparently rushed to Bens aid again and saw blood from Bens forehead
and Marivic holding an empty bottle. Ben and Marivic reconciled after Marivic had apparently again asked for Bens forgiveness.

Mrs. Iluminada Genosa, Marivics mother-in-law, testified too, saying that Ben and Marivic married in 1986 or 1985 more or less here in Fatima, Ormoc City. She
said as the marriage went along, Marivic became already very demanding. Mrs. Iluminada Genosa said that after the birth of Marivics two sons, there were three
(3) misunderstandings. The first was when Marivic stabbed Ben with a table knife through his left arm; the second incident was on November 15, 1994, when
Marivic struck Ben on the forehead using a sharp instrument until the eye was also affected. It was wounded and also the ear and her husband went to Ben to
help; and the third incident was in 1995 when the couple had already transferred to the house in Bilwang and she saw that Bens hand was plastered as the bone
cracked.

Both mother and son claimed they brought Ben to a Pasar clinic for medical intervention.

5. Arturo Basobas, a co-worker of Ben, testified that on November 15, 1995 After we collected our salary, we went to the cock-fighting place of ISCO. They stayed
there for three (3) hours, after which they went to Uniloks and drank beer allegedly only two (2) bottles each. After drinking they bought barbeque and went to the
Genosa residence. Marivic was not there. He stayed a while talking with Ben, after which he went across the road to wait for the runner and the usher of the masiao
game because during that time, the hearing on masiao numbers was rampant. I was waiting for the ushers and runners so that I can place my bet. On his way
home at about 9:00 in the evening, he heard the Genosas arguing. They were quarreling loudly. Outside their house was one Fredo who is used by Ben to feed
his fighting cocks. Basobas testimony on the root of the quarrel, conveniently overheard by him was Marivic saying I will never hesitate to kill you, whilst Ben replied
Why kill me when I am innocent. Basobas thought they were joking.

He did not hear them quarreling while he was across the road from the Genosa residence. Basobas admitted that he and Ben were always at the cockpits every
Saturday and Sunday. He claims that he once told Ben before when he was stricken with a bottle by Marivic Genosa that he should leave her and that Ben would
always take her back after she would leave him so many times.

Basobas could not remember when Marivic had hit Ben, but it was a long time that they had been quarreling. He said Ben even had a wound on the right forehead.
He had known the couple for only one (1) year.

6. Marivic testified that after the first year of marriage, Ben became cruel to her and was a habitual drinker. She said he provoked her, he would slap her, sometimes
he would pin her down on the bed, and sometimes beat her.

These incidents happened several times and she would often run home to her parents, but Ben would follow her and seek her out, promising to change and would
ask for her forgiveness. She said after she would be beaten, she would seek medical help from Dr. Dino Caing, Dr. Lucero and Dra. Cerillo. These doctors would
enter the injuries inflicted upon her by Ben into their reports. Marivic said Ben would beat her or quarrel with her every time he was drunk, at least three times a
week.

7. In her defense, witnesses who were not so closely related to Marivic, testified as to the abuse and violence she received at the hands of Ben.

7.1. Mr. Joe Barrientos, a fisherman, who was a [neighbor] of the Genosas, testified that on November 15, 1995, he overheard a quarrel between Ben and Marivic.
Marivic was shouting for help and through the open jalousies, he saw the spouses grappling with each other. Ben had Marivic in a choke hold. He did not do
anything, but had come voluntarily to testify. (Please note this was the same night as that testified to by Arturo Busabos.[8])
7.2. Mr. Junnie Barrientos, also a fisherman, and the brother of Mr. Joe Barrientos, testified that he heard his neighbor Marivic shouting on the night of November
15, 1995. He peeped through the window of his hut which is located beside the Genosa house and saw the spouses grappling with each other then Ben Genosa
was holding with his both hands the neck of the accused, Marivic Genosa. He said after a while, Marivic was able to extricate he[r]self and enter the room of the
children. After that, he went back to work as he was to go fishing that evening. He returned at 8:00 the next morning. (Again, please note that this was the same
night as that testified to by Arturo Basobas).

7.3. Mr. Teodoro Sarabia was a former neighbor of the Genosas while they were living in Isabel, Leyte. His house was located about fifty (50) meters from theirs.
Marivic is his niece and he knew them to be living together for 13 or 14 years. He said the couple was always quarreling. Marivic confided in him that Ben would
pawn items and then would use the money to gamble. One time, he went to their house and they were quarreling. Ben was so angry, but would be pacified if
somebody would come. He testified that while Ben was alive he used to gamble and when he became drunk, he would go to our house and he will say, Teody
because that was what he used to call me, mokimas ta, which means lets go and look for a whore. Mr. Sarabia further testified that Ben would box his wife and I
would see bruises and one time she ran to me, I noticed a wound (the witness pointed to his right breast) as according to her a knife was stricken to her. Mr.
Sarabia also said that once he saw Ben had been injured too. He said he voluntarily testified only that morning.

7.4. Miss Ecel Arano, an 18-year old student, who is a cousin of Marivic, testified that in the afternoon of November 15, 1995, Marivic went to her house and asked
her help to look for Ben. They searched in the market place, several taverns and some other places, but could not find him. She accompanied Marivic home.
Marivic wanted her to sleep with her in the Genosa house because she might be battered by her husband. When they got to the Genosa house at about 7:00 in
the evening, Miss Arano said that her husband was already there and was drunk. Miss Arano knew he was drunk because of his staggering walking and I can also
detect his face. Marivic entered the house and she heard them quarrel noisily. (Again, please note that this is the same night as that testified to by Arturo Basobas)
Miss Arano testified that this was not the first time Marivic had asked her to sleep in the house as Marivic would be afraid every time her husband would come
home drunk. At one time when she did sleep over, she was awakened at 10:00 in the evening when Ben arrived because the couple were very noisy in the sala
and I had heard something was broken like a vase. She said Marivic ran into her room and they locked the door. When Ben couldnt get in he got a chair and a
knife and showed us the knife through the window grill and he scared us. She said that Marivic shouted for help, but no one came. On cross-examination, she said
that when she left Marivics house on November 15, 1995, the couple were still quarreling.

7.5. Dr. Dino Caing, a physician testified that he and Marivic were co-employees at PHILPHOS, Isabel, Leyte. Marivic was his patient many times and had also
received treatment from other doctors. Dr. Caing testified that from July 6, 1989 until November 9, 1995, there were six (6) episodes of physical injuries inflicted
upon Marivic. These injuries were reported in his Out-Patient Chart at the PHILPHOS Hospital. The prosecution admitted the qualifications of Dr. Caing and
considered him an expert witness.

xxxxxxxxx

Dr. Caings clinical history of the tension headache and hypertention of Marivic on twenty-three (23) separate occasions was marked at Exhibits 2 and 2-B. The
OPD Chart of Marivic at the Philphos Clinic which reflected all the consultations made by Marivic and the six (6) incidents of physical injuries reported was marked
as Exhibit 3.

On cross-examination, Dr. Caing said that he is not a psychiatrist, he could not say whether the injuries were directly related to the crime committed. He said it is
only a psychiatrist who is qualified to examine the psychological make-up of the patient, whether she is capable of committing a crime or not.

7.6 Mr. Panfilo Tero, the barangay captain in the place where the Genosas resided, testified that about two (2) months before Ben died, Marivic went to his office
past 8:00 in the evening. She sought his help to settle or confront the Genosa couple who were experiencing family troubles. He told Marivic to return in the
morning, but he did not hear from her again and assumed that they might have settled with each other or they might have forgiven with each other.

xxxxxxxxx

Marivic said she did not provoke her husband when she got home that night it was her husband who began the provocation. Marivic said she was frightened that
her husband would hurt her and she wanted to make sure she would deliver her baby safely. In fact, Marivic had to be admitted later at the Rizal Medical Centre
as she was suffering from eclampsia and hypertension, and the baby was born prematurely on December 1, 1995.

Marivic testified that during her marriage she had tried to leave her husband at least five (5) times, but that Ben would always follow her and they would reconcile.
Marivic said that the reason why Ben was violent and abusive towards her that night was because he was crazy about his recent girlfriend, Lulu x x x Rubillos.

On cross-examination, Marivic insisted she shot Ben with a gun; she said that he died in the bedroom; that their quarrels could be heard by anyone passing their
house; that Basobas lied in his testimony; that she left for Manila the next day, November 16, 1995; that she did not bother anyone in Manila, rented herself a room,
and got herself a job as a field researcher under the alias Marvelous Isidro; she did not tell anyone that she was leaving Leyte, she just wanted to have a safe
delivery of her baby; and that she was arrested in San Pablo, Laguna.

Answering questions from the Court, Marivic said that she threw the gun away; that she did not know what happened to the pipe she used to smash him once; that
she was wounded by Ben on her wrist with the bolo; and that two (2) hours after she was whirled by Ben, he kicked her ass and dragged her towards the drawer
when he saw that she had packed his things.

9. The body of Ben Genosa was found on November 18, 1995 after an investigation was made of the foul odor emitting from the Genosa residence. This fact was
testified to by all the prosecution witnesses and some defense witnesses during the trial.
 10. Dra. Refelina Y. Cerillo, a physician, was the Municipal Health Officer of Isabel, Leyte at the time of the incident, and among her responsibilities as such was
to take charge of all medico-legal cases, such as the examination of cadavers and the autopsy of cadavers. Dra. Cerillo is not a forensic pathologist. She merely
took the medical board exams and passed in 1986. She was called by the police to go to the Genosa residence and when she got there, she saw some police
officer and neighbor around. She saw Ben Genosa, covered by a blanket, lying in a semi-prone position with his back to the door. He was wearing only a brief.

xxxxxxxxx

Dra. Cerillo said that there is only one injury and that is the injury involving the skeletal area of the head which she described as a fracture. And that based on her
examination, Ben had been dead 2 or 3 days. Dra. Cerillo did not testify as to what caused his death.

Dra. Cerillo was not cross-examined by defense counsel.

11. The Information, dated November 14, 1996, filed against Marivic Genosa charged her with the crime of PARRICIDE committed with intent to kill, with treachery
and evidence premeditation, x x x wilfully, unlawfully and feloniously attack, assault, hit and wound x x x her legitimate husband, with the use of a hard deadly
weapon x x x which caused his death.

12. Trial took place on 7 and 14 April 1997, 14 May 1997, 21 July 1997, 17, 22 and 23 September 1997, 12 November 1997, 15 and 16 December 1997, 22 May
1998, and 5 and 6 August 1998.

13. On 23 September 1998, or only fifty (50) days from the day of the last trial date, the Hon. Fortunito L. Madrona, Presiding Judge, RTC-Branch 35, Ormoc City,
rendered a JUDGMENT finding Marivic guilty beyond reasonable doubt of the crime of parricide, and further found treachery as an aggravating circumstance, thus
sentencing her to the ultimate penalty of DEATH.

14. The case was elevated to this Honorable Court upon automatic review and, under date of 24 January 2000, Marivics trial lawyer, Atty. Gil Marvel P. Tabucanon,
filed a Motion to Withdraw as counsel, attaching thereto, as a precautionary measure, two (2) drafts of Appellants Briefs he had prepared for Marivic which, for
reasons of her own, were not conformed to by her.

The Honorable Court allowed the withdrawal of Atty. Tabucanon and permitted the entry of appearance of undersigned counsel.

15. Without the knowledge of counsel, Marivic Genosa wrote a letter dated 20 January 2000, to the Chief Justice, coursing the same through Atty. Teresita G.
Dimaisip, Deputy Clerk of Court of Chief Judicial Records Office, wherein she submitted her Brief without counsels to the Court.

This letter was stamp-received by the Honorable Court on 4 February 2000.

16. In the meantime, under date of 17 February 2000, and stamp-received by the Honorable Court on 19 February 2000, undersigned counsel filed an URGENT
OMNIBUS MOTION praying that the Honorable Court allow the exhumation of Ben Genosa and the re-examination of the cause of his death; allow the examination
of Marivic Genosa by qualified psychologists and psychiatrists to determine her state of mind at the time she killed her husband; and finally, to allow a partial re-
opening of the case a quo to take the testimony of said psychologists and psychiatrists.

Attached to the URGENT OMNIBUS MOTION was a letter of Dr. Raquel Fortun, then the only qualified forensic pathologist in the country, who opined that the
description of the death wound (as culled from the post-mortem findings, Exhibit A) is more akin to a gunshot wound than a beating with a lead pipe.

17. In a RESOLUTION dated 29 September 2000, the Honorable Court partly granted Marivics URGENT OMNIBUS MOTION and remanded the case to the trial
court for the reception of expert psychological and/or psychiatric opinion on the battered woman syndrome plea, within ninety (90) days from notice, and, thereafter
to forthwith report to this Court the proceedings taken, together with the copies of the TSN and relevant documentary evidence, if any, submitted.

18. On 15 January 2001, Dra. Natividad A. Dayan appeared and testified before the Hon. Fortunito L. Madrona, RTC-Branch 35, Ormoc City.

Immediately before Dra. Dayan was sworn, the Court a quo asked if she had interviewed Marivic Genosa. Dra. Dayan informed the Court that interviews were
done at the Penal Institution in 1999, but that the clinical interviews and psychological assessment were done at her clinic.

Dra. Dayan testified that she has been a clinical psychologist for twenty (20) years with her own private clinic and connected presently to the De La Salle University
as a professor. Before this, she was the Head of the Psychology Department of the Assumption College; a member of the faculty of Psychology at the Ateneo de
Manila University and St. Josephs College; and was the counseling psychologist of the National Defense College. She has an AB in Psychology from the University
of the Philippines, a Master of Arts in Clinical [Counseling], Psychology from the Ateneo, and a PhD from the U.P. She was the past president of the Psychological
Association of the Philippines and is a member of the American Psychological Association. She is the secretary of the International Council of Psychologists from
about 68 countries; a member of the Forensic Psychology Association; and a member of the ASEAN [Counseling] Association. She is actively involved with the
Philippine Judicial Academy, recently lecturing on the socio-demographic and psychological profile of families involved in domestic violence and nullity cases. She
was with the Davide Commission doing research about Military Psychology. She has written a book entitled Energy Global Psychology (together with Drs. Allan
Tan and Allan Bernardo). The Genosa case is the first time she has testified as an expert on battered women as this is the first case of that nature.
Dra. Dayan testified that for the research she conducted, on the socio-demographic and psychological profile of families involved in domestic violence, and nullity
cases, she looked at about 500 cases over a period of ten (10) years and discovered that there are lots of variables that cause all of this marital conflicts, from
domestic violence to infidelity, to psychiatric disorder.

Dra. Dayan described domestic violence to comprise of a lot of incidents of psychological abuse, verbal abuse, and emotional abuse to physical abuse and also
sexual abuse.

xxxxxxxxx

Dra. Dayan testified that in her studies, the battered woman usually has a very low opinion of herself. She has a self-defeating and self-sacrificing characteristics.
x x x they usually think very lowly of themselves and so when the violence would happen, they usually think that they provoke it, that they were the one who
precipitated the violence, they provoke their spouse to be physically, verbally and even sexually abusive to them. Dra. Dayan said that usually a battered x x x
comes from a dysfunctional family or from broken homes.

Dra. Dayan said that the batterer, just like the battered woman, also has a very low opinion of himself. But then emerges to have superiority complex and it comes
out as being very arrogant, very hostile, very aggressive and very angry. They also had (sic) a very low tolerance for frustrations. A lot of times they are involved
in vices like gambling, drinking and drugs. And they become violent. The batterer also usually comes from a dysfunctional family which over-pampers them and
makes them feel entitled to do anything. Also, they see often how their parents abused each other so there is a lot of modeling of aggression in the family.

Dra. Dayan testified that there are a lot of reasons why a battered woman does not leave her husband: poverty, self-blame and guilt that she provoked the violence,
the cycle itself which makes her hope her husband will change, the belief in her obligations to keep the family intact at all costs for the sake of the children.

xxxxxxxxx

Dra. Dayan said that abused wives react differently to the violence: some leave the house, or lock themselves in another room, or sometimes try to fight back
triggering physical violence on both of them. She said that in a normal marital relationship, abuses also happen, but these are not consistent, not chronic, are not
happening day in [and] day out. In an abnormal marital relationship, the abuse occurs day in and day out, is long lasting and even would cause hospitalization on
the victim and even death on the victim.

xxxxxxxxx

Dra. Dayan said that as a result of the battery of psychological tests she administered, it was her opinion that Marivic fits the profile of a battered woman because
inspite of her feeling of self-confidence which we can see at times there are really feeling (sic) of loss, such feelings of humiliation which she sees herself as
damaged and as a broken person. And at the same time she still has the imprint of all the abuses that she had experienced in the past.

xxxxxxxxx

Dra. Dayan said Marivic thought of herself as a loving wife and did not even consider filing for nullity or legal separation inspite of the abuses. It was at the time of
the tragedy that Marivic then thought of herself as a victim.

xxxxxxxxx

19. On 9 February 2001, Dr. Alfredo Pajarillo, a physician, who has since passed away, appeared and testified before RTC-Branch 35, Ormoc City.

Dr. Pajarillo was a Diplomate of the Philippine Board of Psychiatry; a Fellow of the Philippine Board of Psychiatry and a Fellow of the Philippine Psychiatry
Association. He was in the practice of psychiatry for thirty-eight (38) years. Prior to being in private practice, he was connected with the Veterans Memorial Medical
Centre where he gained his training on psychiatry and neurology. After that, he was called to active duty in the Armed Forces of the Philippines, assigned to the V.
Luna Medical Center for twenty six (26) years. Prior to his retirement from government service, he obtained the rank of Brigadier General. He obtained his medical
degree from the University of Santo Tomas. He was also a member of the World Association of Military Surgeons; the Quezon City Medical Society; the Cagayan
Medical Society; and the Philippine Association of Military Surgeons.

He authored The Comparative Analysis of Nervous Breakdown in the Philippine Military Academy from the Period 1954 1978 which was presented twice in
international congresses. He also authored The Mental Health of the Armed Forces of the Philippines 2000, which was likewise published internationally and locally.
He had a medical textbook published on the use of Prasepam on a Parke-Davis grant; was the first to use Enanthate (siquiline), on an E.R. Squibb grant; and he
published the use of the drug Zopiclom in 1985-86.

Dr. Pajarillo explained that psychiatry deals with the functional disorder of the mind and neurology deals with the ailment of the brain and spinal cord enlarged.
Psychology, on the other hand, is a bachelor degree and a doctorate degree; while one has to finish medicine to become a specialist in psychiatry.

Even only in his 7th year as a resident in V. Luna Medical Centre, Dr. Pajarillo had already encountered a suit involving violent family relations, and testified in a
case in 1964. In the Armed Forces of the Philippines, violent family disputes abound, and he has seen probably ten to twenty thousand cases. In those days, the
primordial intention of therapy was reconciliation. As a result of his experience with domestic violence cases, he became a consultant of the Battered Woman Office
in Quezon City under Atty. Nenita Deproza.

As such consultant, he had seen around forty (40) cases of severe domestic violence, where there is physical abuse: such as slapping, pushing, verbal abuse,
battering and boxing a woman even to an unconscious state such that the woman is sometimes confined. The affliction of Post-Traumatic Stress Disorder depends
on the vulnerability of the victim. Dr. Pajarillo said that if the victim is not very healthy, perhaps one episode of violence may induce the disorder; if the psychological
stamina and physiologic constitutional stamina of the victim is stronger, it will take more repetitive trauma to precipitate the post-traumatic stress disorder and this
x x x is very dangerous.

In psychiatry, the post-traumatic stress disorder is incorporated under the anxiety neurosis or neurologic anxcietism. It is produced by overwhelming brutality,
trauma.

xxxxxxxxx

Dr. Pajarillo explained that with neurotic anxiety, the victim relives the beating or trauma as if it were real, although she is not actually being beaten at that time.
She thinks of nothing but the suffering.

xxxxxxxxx

A woman who suffers battery has a tendency to become neurotic, her emotional tone is unstable, and she is irritable and restless. She tends to become hard-
headed and persistent. She has higher sensitivity and her self-world is damaged.

Dr. Pajarillo said that an abnormal family background relates to an individuals illness, such as the deprivation of the continuous care and love of the parents. As
to the batterer, he normally internalizes what is around him within the environment. And it becomes his own personality. He is very competitive; he is aiming high
all the time; he is so macho; he shows his strong faade but in it there are doubts in himself and prone to act without thinking.

xxxxxxxxx

Dr. Pajarillo emphasized that even though without the presence of the precipator (sic) or the one who administered the battering, that re-experiencing of the trauma
occurred (sic) because the individual cannot control it. It will just come up in her mind or in his mind.

xxxxxxxxx

Dr. Pajarillo said that a woman suffering post traumatic stress disorder try to defend themselves, and primarily with knives. Usually pointed weapons or any weapon
that is available in the immediate surrounding or in a hospital x x x because that abound in the household. He said a victim resorts to weapons when she has
reached the lowest rock bottom of her life and there is no other recourse left on her but to act decisively.

xxxxxxxxx

Dr. Pajarillo testified that he met Marivic Genosa in his office in an interview he conducted for two (2) hours and seventeen (17) minutes. He used the psychological
evaluation and social case studies as a help in forming his diagnosis. He came out with a Psychiatric Report, dated 22 January 2001.

xxxxxxxxx

On cross-examination by the private prosecutor, Dr. Pajarillo said that at the time she killed her husband Marivicc mental condition was that she was re-experiencing
the trauma. He said that we are trying to explain scientifically that the re-experiencing of the trauma is not controlled by Marivic. It will just come in flashes and
probably at that point in time that things happened when the re-experiencing of the trauma flashed in her mind. At the time he interviewed Marivic she was more
subdued, she was not super alert anymore x x x she is mentally stress (sic) because of the predicament she is involved.

xxxxxxxxx

20. No rebuttal evidence or testimony was presented by either the private or the public prosecutor. Thus, in accord with the Resolution of this Honorable Court,
the records of the partially re-opened trial a quo were elevated.[9]

Ruling of the Trial Court

Finding the proffered theory of self-defense untenable, the RTC gave credence to the prosecution evidence that appellant had killed the deceased while he
was in bed sleeping. Further, the trial court appreciated the generic aggravating circumstance of treachery, because Ben Genosa was supposedly defenseless
when he was killed -- lying in bed asleep when Marivic smashed him with a pipe at the back of his head.

The capital penalty having been imposed, the case was elevated to this Court for automatic review.

Supervening Circumstances
 On February 19, 2000, appellant filed an Urgent Omnibus Motion praying that this Court allow (1) the exhumation of Ben Genosa and the reexamination of
the cause of his death; (2) the examination of appellant by qualified psychologists and psychiatrists to determine her state of mind at the time she had killed her
spouse; and (3) the inclusion of the said experts reports in the records of the case for purposes of the automatic review or, in the alternative, a partial reopening of
the case for the lower court to admit the experts testimonies.

On September 29, 2000, this Court issued a Resolution granting in part appellants Motion, remanding the case to the trial court for the reception of expert
psychological and/or psychiatric opinion on the battered woman syndrome plea; and requiring the lower court to report thereafter to this Court the proceedings
taken as well as to submit copies of the TSN and additional evidence, if any.

Acting on the Courts Resolution, the trial judge authorized the examination of Marivic by two clinical psychologists, Drs. Natividad Dayan[10] and Alfredo
Pajarillo,[11] supposedly experts on domestic violence. Their testimonies, along with their documentary evidence, were then presented to and admitted by the lower
court before finally being submitted to this Court to form part of the records of the case.[12]

The Issues

Appellant assigns the following alleged errors of the trial court for this Courts consideration:

1. The trial court gravely erred in promulgating an obviously hasty decision without reflecting on the evidence adduced as to self-defense.

2. The trial court gravely erred in finding as a fact that Ben and Marivic Genosa were legally married and that she was therefore liable for parricide.

3. The trial court gravely erred finding the cause of death to be by beating with a pipe.

4. The trial court gravely erred in ignoring and disregarding evidence adduced from impartial and unbiased witnesses that Ben Genosa was a drunk, a gambler, a
womanizer and wife-beater; and further gravely erred in concluding that Ben Genosa was a battered husband.

5. The trial court gravely erred in not requiring testimony from the children of Marivic Genosa.

6. The trial court gravely erred in concluding that Marivics flight to Manila and her subsequent apologies were indicia of guilt, instead of a clear attempt to save the
life of her unborn child.

7. The trial court gravely erred in concluding that there was an aggravating circumstance of treachery.

8. The trial court gravely erred in refusing to re-evaluate the traditional elements in determining the existence of self-defense and defense of foetus in this case,
thereby erroneously convicting Marivic Genosa of the crime of parricide and condemning her to the ultimate penalty of death.[13]

In the main, the following are the essential legal issues: (1) whether appellant acted in self-defense and in defense of her fetus; and (2) whether treachery
attended the killing of Ben Genosa.

The Courts Ruling

The appeal is partly meritorious.

Collateral Factual Issues

The first six assigned errors raised by appellant are factual in nature, if not collateral to the resolution of the principal issues. As consistently held by this
Court, the findings of the trial court on the credibility of witnesses and their testimonies are entitled to a high degree of respect and will not be disturbed on appeal
in the absence of any showing that the trial judge gravely abused his discretion or overlooked, misunderstood or misapplied material facts or circumstances of
weight and substance that could affect the outcome of the case.[14]

In appellants first six assigned items, we find no grave abuse of discretion, reversible error or misappreciation of material facts that would reverse or modify
the trial courts disposition of the case. In any event, we will now briefly dispose of these alleged errors of the trial court.

First, we do not agree that the lower court promulgated an obviously hasty decision without reflecting on the evidence adduced as to self-defense. We note
that in his 17-page Decision, Judge Fortunito L. Madrona summarized the testimonies of both the prosecution and the defense witnesses and -- on the basis of
those and of the documentary evidence on record -- made his evaluation, findings and conclusions. He wrote a 3-page discourse assessing the testimony and the
self-defense theory of the accused. While she, or even this Court, may not agree with the trial judges conclusions, we cannot peremptorily conclude, absent
substantial evidence, that he failed to reflect on the evidence presented.

Neither do we find the appealed Decision to have been made in an obviously hasty manner. The Information had been filed with the lower court on November
14, 1996. Thereafter, trial began and at least 13 hearings were held for over a year. It took the trial judge about two months from the conclusion of trial to promulgate
his judgment. That he conducted the trial and resolved the case with dispatch should not be taken against him, much less used to condemn him for being unduly
hasty. If at all, the dispatch with which he handled the case should be lauded. In any case, we find his actions in substantial compliance with his constitutional
obligation.[15]
 Second, the lower court did not err in finding as a fact that Ben Genosa and appellant had been legally married, despite the non-presentation of their
marriage contract. In People v. Malabago,[16] this Court held:

The key element in parricide is the relationship of the offender with the victim. In the case of parricide of a spouse, the best proof of the relationship between the
accused and the deceased is the marriage certificate. In the absence of a marriage certificate, however, oral evidence of the fact of marriage may be considered
by the trial court if such proof is not objected to.

Two of the prosecution witnesses -- namely, the mother and the brother of appellants deceased spouse -- attested in court that Ben had been married to
Marivic.[17] The defense raised no objection to these testimonies. Moreover, during her direct examination, appellant herself made a judicial admission of her
marriage to Ben.[18] Axiomatic is the rule that a judicial admission is conclusive upon the party making it, except only when there is a showing that (1) the admission
was made through a palpable mistake, or (2) no admission was in fact made.[19] Other than merely attacking the non-presentation of the marriage contract, the
defense offered no proof that the admission made by appellant in court as to the fact of her marriage to the deceased was made through a palpable mistake.

Third, under the circumstances of this case, the specific or direct cause of Bens death -- whether by a gunshot or by beating with a pipe -- has no legal
consequence. As the Court elucidated in its September 29, 2000 Resolution, [c]onsidering that the appellant has admitted the fact of killing her husband and the
acts of hitting his nape with a metal pipe and of shooting him at the back of his head, the Court believes that exhumation is unnecessary, if not immaterial, to
determine which of said acts actually caused the victims death. Determining which of these admitted acts caused the death is not dispositive of the guilt or defense
of appellant.

Fourth, we cannot fault the trial court for not fully appreciating evidence that Ben was a drunk, gambler, womanizer and wife-beater. Until this case came to us for
automatic review, appellant had not raised the novel defense of battered woman syndrome, for which such evidence may have been relevant. Her theory of self-defense was
then the crucial issue before the trial court. As will be discussed shortly, the legal requisites of self-defense under prevailing jurisprudence ostensibly appear inconsistent with
the surrounding facts that led to the death of the victim. Hence, his personal character, especially his past behavior, did not constitute vital evidence at the time.

Fifth, the trial court surely committed no error in not requiring testimony from appellants children. As correctly elucidated by the solicitor general, all criminal
actions are prosecuted under the direction and control of the public prosecutor, in whom lies the discretion to determine which witnesses and evidence are necessary
to present.[20] As the former further points out, neither the trial court nor the prosecution prevented appellant from presenting her children as witnesses. Thus, she
cannot now fault the lower court for not requiring them to testify.

Finally, merely collateral or corroborative is the matter of whether the flight of Marivic to Manila and her subsequent apologies to her brother-in-law are
indicia of her guilt or are attempts to save the life of her unborn child. Any reversible error as to the trial courts appreciation of these circumstances has little bearing
on the final resolution of the case.

First Legal Issue:

Self-Defense and Defense of a Fetus

Appellant admits killing Ben Genosa but, to avoid criminal liability, invokes self-defense and/or defense of her unborn child. When the accused admits killing
the victim, it is incumbent upon her to prove any claimed justifying circumstance by clear and convincing evidence.[21] Well-settled is the rule that in criminal cases,
self-defense (and similarly, defense of a stranger or third person) shifts the burden of proof from the prosecution to the defense.[22]

The Battered Woman Syndrome

In claiming self-defense, appellant raises the novel theory of the battered woman syndrome. While new in Philippine jurisprudence, the concept has been
recognized in foreign jurisdictions as a form of self-defense or, at the least, incomplete self-defense.[23] By appreciating evidence that a victim or defendant is
afflicted with the syndrome, foreign courts convey their understanding of the justifiably fearful state of mind of a person who has been cyclically abused and
controlled over a period of time.[24]

A battered woman has been defined as a woman who is repeatedly subjected to any forceful physical or psychological behavior by a man in order to coerce
her to do something he wants her to do without concern for her rights. Battered women include wives or women in any form of intimate relationship with men.
Furthermore, in order to be classified as a battered woman, the couple must go through the battering cycle at least twice. Any woman may find herself in an abusive
relationship with a man once. If it occurs a second time, and she remains in the situation, she is defined as a battered woman.[25]

Battered women exhibit common personality traits, such as low self-esteem, traditional beliefs about the home, the family and the female sex role; emotional
dependence upon the dominant male; the tendency to accept responsibility for the batterers actions; and false hopes that the relationship will improve.[26]

More graphically, the battered woman syndrome is characterized by the so-called cycle of violence,[27] which has three phases: (1) the tension-building
phase; (2) the acute battering incident; and (3) the tranquil, loving (or, at least, nonviolent) phase.[28]

During the tension-building phase, minor battering occurs -- it could be verbal or slight physical abuse or another form of hostile behavior. The woman
usually tries to pacify the batterer through a show of kind, nurturing behavior; or by simply staying out of his way. What actually happens is that she allows herself
to be abused in ways that, to her, are comparatively minor. All she wants is to prevent the escalation of the violence exhibited by the batterer. This wish, however,
proves to be double-edged, because her placatory and passive behavior legitimizes his belief that he has the right to abuse her in the first place.

However, the techniques adopted by the woman in her effort to placate him are not usually successful, and the verbal and/or physical abuse worsens. Each
partner senses the imminent loss of control and the growing tension and despair. Exhausted from the persistent stress, the battered woman soon withdraws
emotionally. But the more she becomes emotionally unavailable, the more the batterer becomes angry, oppressive and abusive. Often, at some unpredictable
point, the violence spirals out of control and leads to an acute battering incident.[29]

The acute battering incident is said to be characterized by brutality, destructiveness and, sometimes, death. The battered woman deems this incident as
unpredictable, yet also inevitable. During this phase, she has no control; only the batterer may put an end to the violence. Its nature can be as unpredictable as the
time of its explosion, and so are his reasons for ending it. The battered woman usually realizes that she cannot reason with him, and that resistance would only
exacerbate her condition.

At this stage, she has a sense of detachment from the attack and the terrible pain, although she may later clearly remember every detail. Her apparent
passivity in the face of acute violence may be rationalized thus: the batterer is almost always much stronger physically, and she knows from her past painful
experience that it is futile to fight back. Acute battering incidents are often very savage and out of control, such that innocent bystanders or intervenors are likely to
get hurt.[30]

The final phase of the cycle of violence begins when the acute battering incident ends. During this tranquil period, the couple experience profound relief.
On the one hand, the batterer may show a tender and nurturing behavior towards his partner. He knows that he has been viciously cruel and tries to make up for
it, begging for her forgiveness and promising never to beat her again. On the other hand, the battered woman also tries to convince herself that the battery will
never happen again; that her partner will change for the better; and that this good, gentle and caring man is the real person whom she loves.

A battered woman usually believes that she is the sole anchor of the emotional stability of the batterer. Sensing his isolation and despair, she feels
responsible for his well-being. The truth, though, is that the chances of his reforming, or seeking or receiving professional help, are very slim, especially if she
remains with him. Generally, only after she leaves him does he seek professional help as a way of getting her back. Yet, it is in this phase of remorseful reconciliation
that she is most thoroughly tormented psychologically.

The illusion of absolute interdependency is well-entrenched in a battered womans psyche. In this phase, she and her batterer are indeed emotionally
dependent on each other -- she for his nurturant behavior, he for her forgiveness. Underneath this miserable cycle of tension, violence and forgiveness, each
partner may believe that it is better to die than to be separated. Neither one may really feel independent, capable of functioning without the other.[31]

History of Abuse
in the Present Case

To show the history of violence inflicted upon appellant, the defense presented several witnesses. She herself described her heart-rending experience as
follows:

ATTY. TABUCANON

Q How did you describe your marriage with Ben Genosa?

A In the first year, I lived with him happily but in the subsequent year he was cruel to me and a behavior of habitual drinker.

Q You said that in the subsequent year of your marriage, your husband was abusive to you and cruel. In what way was this abusive and cruelty
manifested to you?

A He always provoke me in everything, he always slap me and sometimes he pinned me down on the bed and sometimes beat me.

Q How many times did this happen?

A Several times already.

Q What did you do when these things happen to you?

A I went away to my mother and I ran to my father and we separate each other.

Q What was the action of Ben Genosa towards you leaving home?

A He is following me, after that he sought after me.

Q What will happen when he follow you?

A He said he changed, he asked for forgiveness and I was convinced and after that I go to him and he said sorry.

Q During those times that you were the recipient of such cruelty and abusive behavior by your husband, were you able to see a doctor?

A Yes, sir.

Q Who are these doctors?

A The company physician, Dr. Dino Caing, Dr. Lucero and Dra. Cerillo.

xxxxxxxxx

Q You said that you saw a doctor in relation to your injuries?

A Yes, sir.

Q Who inflicted these injuries?

A Of course my husband.

Q You mean Ben Genosa?

 A Yes, sir.

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[Court] /to the witness

Q How frequent was the alleged cruelty that you said?

A Everytime he got drunk.

Q No, from the time that you said the cruelty or the infliction of injury inflicted on your occurred, after your marriage, from that time on, how
frequent was the occurrence?

A Everytime he got drunk.

Q Is it daily, weekly, monthly or how many times in a month or in a week?

A Three times a week.

Q Do you mean three times a week he would beat you?

A Not necessarily that he would beat me but sometimes he will just quarrel me. [32]

Referring to his Out-Patient Chart[33] on Marivic Genosa at the Philphos Hospital, Dr. Dino D. Caing bolstered her foregoing testimony on chronic battery in
this manner:

Q So, do you have a summary of those six (6) incidents which are found in the chart of your clinic?

A Yes, sir.

Q Who prepared the list of six (6) incidents, Doctor?

A I did.

Q Will you please read the physical findings together with the dates for the record.

A 1. May 12, 1990 - physical findings are as follows: Hematoma (R) lower eyelid and redness of eye. Attending physician: Dr. Lucero;

2. March 10, 1992 - Contusion-Hematoma (L) lower arbital area, pain and contusion (R) breast. Attending physician: Dr. Canora;

3. March 26, 1993 - Abrasion, Furuncle (L) Axilla;

4. August 1, 1994 - Pain, mastitis (L) breast, 2 to trauma. Attending physician: Dr. Caing;

5. April 17, 1995 - Trauma, tenderness (R) Shoulder. Attending physician: Dr. Canora; and

6. June 5, 1995 - Swelling Abrasion (L) leg, multiple contusion Pregnancy. Attending physician: Dr. Canora.

Q Among the findings, there were two (2) incidents wherein you were the attending physician, is that correct?

A Yes, sir.

Q Did you actually physical examine the accused?

A Yes, sir.

Q Now, going to your finding no. 3 where you were the one who attended the patient. What do you mean by abrasion furuncle left axilla?

A Abrasion is a skin wound usually when it comes in contact with something rough substance if force is applied.

Q What is meant by furuncle axilla?

A It is secondary of the light infection over the abrasion.

Q What is meant by pain mastitis secondary to trauma?

A So, in this 4th episode of physical injuries there is an inflammation of left breast. So, [pain] meaning there is tenderness. When your breast is
traumatized, there is tenderness pain.

Q So, these are objective physical injuries. Doctor?

xxxxxxxxx

Q Were you able to talk with the patient?

A Yes, sir.
Q What did she tell you?

A As a doctor-patient relationship, we need to know the cause of these injuries. And she told me that it was done to her by her husband.

Q You mean, Ben Genosa?

A Yes, sir.

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ATTY. TABUCANON:

Q By the way Doctor, were you able to physical examine the accused sometime in the month of November, 1995 when this incident happened?

A As per record, yes.

Q What was the date?

A It was on November 6, 1995.

Q So, did you actually see the accused physically?

A Yes, sir.

Q On November 6, 1995, will you please tell this Honorable Court, was the patient pregnant?

A Yes, sir.

Q Being a doctor, can you more engage at what stage of pregnancy was she?

A Eight (8) months pregnant.

Q So in other words, it was an advance stage of pregnancy?

A Yes, sir.

Q What was your November 6, 1995 examination, was it an examination about her pregnancy or for some other findings?

A No, she was admitted for hypertension headache which complicates her pregnancy.

Q When you said admitted, meaning she was confined?

A Yes, sir.

Q For how many days?

A One day.

Q Where?

A At PHILPHOS Hospital.

xxxxxxxxx

Q Lets go back to the clinical history of Marivic Genosa. You said that you were able to examine her personally on November 6, 1995 and she
was 8 months pregnant.

What is this all about?

A Because she has this problem of tension headache secondary to hypertension and I think I have a record here, also the same period from 1989
to 1995, she had a consultation for twenty-three (23) times.

Q For what?

A Tension headache.

Q Can we say that specially during the latter consultation, that the patient had hypertension?

A The patient definitely had hypertension. It was refractory to our treatment. She does not response when the medication was given to her,
because tension headache is more or less stress related and emotional in nature.

Q What did you deduce of tension headache when you said is emotional in nature?

A From what I deduced as part of our physical examination of the patient is the family history in line of giving the root cause of what is causing this
disease. So, from the moment you ask to the patient all comes from the domestic problem.
 Q You mean problem in her household?

A Probably.

Q Can family trouble cause elevation of blood pressure, Doctor?

A Yes, if it is emotionally related and stressful it can cause increases in hypertension which is unfortunately does not response to the medication.

Q In November 6, 1995, the date of the incident, did you take the blood pressure of the accused?

A On November 6, 1995 consultation, the blood pressure was 180/120.

Q Is this considered hypertension?

A Yes, sir, severe.

Q Considering that she was 8 months pregnant, you mean this is dangerous level of blood pressure?

A It was dangerous to the child or to the fetus. [34]

Another defense witness, Teodoro Sarabia, a former neighbor of the Genosas in Isabel, Leyte, testified that he had seen the couple quarreling several
times; and that on some occasions Marivic would run to him with bruises, confiding that the injuries were inflicted upon her by Ben. [35]

Ecel Arano also testified[36] that for a number of times she had been asked by Marivic to sleep at the Genosa house, because the latter feared that Ben
would come home drunk and hurt her. On one occasion that Ecel did sleep over, she was awakened about ten oclock at night, because the couple were very noisy
and I heard something was broken like a vase. Then Marivic came running into Ecels room and locked the door. Ben showed up by the window grill atop a chair,
scaring them with a knife.

On the afternoon of November 15, 1995, Marivic again asked her help -- this time to find Ben -- but they were unable to. They returned to the Genosa home,
where they found him already drunk. Again afraid that he might hurt her, Marivic asked her to sleep at their house. Seeing his state of drunkenness, Ecel hesitated;
and when she heard the couple start arguing, she decided to leave.

On that same night that culminated in the death of Ben Genosa, at least three other witnesses saw or heard the couple quarreling.[37] Marivic relates in
detail the following backdrop of the fateful night when life was snuffed out of him, showing in the process a vivid picture of his cruelty towards her:

ATTY. TABUCANON:

Q Please tell this Court, can you recall the incident in November 15, 1995 in the evening?

A Whole morning and in the afternoon, I was in the office working then after office hours, I boarded the service bus and went to Bilwang. When I
reached Bilwang, I immediately asked my son, where was his father, then my second child said, he was not home yet. I was worried
because that was payday, I was anticipating that he was gambling. So while waiting for him, my eldest son arrived from school, I prepared
dinner for my children.

Q This is evening of November 15, 1995?

A Yes, sir.

Q What time did Ben Genosa arrive?

A When he arrived, I was not there, I was in Isabel looking for him.

Q So when he arrived you were in Isabel looking for him?

A Yes, sir.

Q Did you come back to your house?

A Yes, sir.

Q By the way, where was your conjugal residence situated this time?

A Bilwang.

Q Is this your house or you are renting?

A Renting.

Q What time were you able to come back in your residence at Bilwang?

A I went back around almost 8:00 oclock.

Q What happened when you arrived in your residence?

A When I arrived home with my cousin Ecel whom I requested to sleep with me at that time because I had fears that he was again drunk and I
was worried that he would again beat me so I requested my cousin to sleep with me, but she resisted because she had fears that the same
thing will happen again last year.
Q Who was this cousin of yours who you requested to sleep with you?

A Ecel Arao, the one who testified.

Q Did Ecel sleep with you in your house on that evening?

A No, because she expressed fears, she said her father would not allow her because of Ben.

Q During this period November 15, 1995, were you pregnant?

A Yes, 8 months.

Q How advance was your pregnancy?

A Eight (8) months.

Q Was the baby subsequently born?

A Yes, sir.

Q Whats the name of the baby you were carrying at that time?

A Marie Bianca.

Q What time were you able to meet personally your husband?

A Yes, sir.

Q What time?

A When I arrived home, he was there already in his usual behavior.

Q Will you tell this Court what was his disposition?

A He was drunk again, he was yelling in his usual unruly behavior.

Q What was he yelling all about?

A His usual attitude when he got drunk.

Q You said that when you arrived, he was drunk and yelling at you? What else did he do if any?

A He is nagging at me for following him and he dared me to quarrel him.

Q What was the cause of his nagging or quarreling at you if you know?

A He was angry at me because I was following x x x him, looking for him. I was just worried he might be overly drunk and he would beat me again.

Q You said that he was yelling at you, what else, did he do to you if any?

A He was nagging at me at that time and I just ignore him because I want to avoid trouble for fear that he will beat me again. Perhaps he was
disappointed because I just ignore him of his provocation and he switch off the light and I said to him, why did you switch off the light when
the children were there. At that time I was also attending to my children who were doing their assignments. He was angry with me for not
answering his challenge, so he went to the kitchen and [got] a bolo and cut the antenna wire to stop me from watching television.

Q What did he do with the bolo?

A He cut the antenna wire to keep me from watching T.V.

Q What else happened after he cut the wire?

A He switch off the light and the children were shouting because they were scared and he was already holding the bolo.

Q How do you described this bolo?

A 1 1/2 feet.

Q What was the bolo used for usually?

A For chopping meat.

Q You said the children were scared, what else happened as Ben was carrying that bolo?

A He was about to attack me so I run to the room.

Q What do you mean that he was about to attack you?

A When I attempt to run he held my hands and he whirled me and I fell to the bedside.
Q So when he whirled you, what happened to you?

A I screamed for help and then he left.

Q You said earlier that he whirled you and you fell on the bedside?

A Yes, sir.

Q You screamed for help and he left, do you know where he was going?

A Outside perhaps to drink more.

Q When he left what did you do in that particular time?

A I packed all his clothes.

Q What was your reason in packing his clothes?

A I wanted him to leave us.

Q During this time, where were your children, what were their reactions?

A After a couple of hours, he went back again and he got angry with me for packing his clothes, then he dragged me again of the bedroom holding
my neck.

Q You said that when Ben came back to your house, he dragged you? How did he drag you?

COURT INTERPRETER:

The witness demonstrated to the Court by using her right hand flexed forcibly in her front neck)

A And he dragged me towards the door backward.

ATTY. TABUCANON:

Q Where did he bring you?

A Outside the bedroom and he wanted to get something and then he kept on shouting at me that you might as well be killed so there will be
nobody to nag me.

Q So you said that he dragged you towards the drawer?

A Yes, sir.

Q What is there in the drawer?

A I was aware that it was a gun.

COURT INTERPRETER:

(At this juncture the witness started crying).

ATTY. TABUCANON:

Q Were you actually brought to the drawer?

A Yes, sir.

Q What happened when you were brought to that drawer?

A He dragged me towards the drawer and he was about to open the drawer but he could not open it because he did not have the key then he
pulled his wallet which contained a blade about 3 inches long and I was aware that he was going to kill me and I smashed his arm and
then the wallet and the blade fell. The one he used to open the drawer I saw, it was a pipe about that long, and when he was about to pick-
up the wallet and the blade, I smashed him then I ran to the other room, and on that very moment everything on my mind was to pity on
myself, then the feeling I had on that very moment was the same when I was admitted in PHILPHOS Clinic, I was about to vomit.

COURT INTERPRETER:

(The witness at this juncture is crying intensely).

xxxxxxxxx

ATTY. TABUCANON:

Q Talking of drawer, is this drawer outside your room?

A Outside.
 Q In what part of the house?

A Dining.

Q Where were the children during that time?

A My children were already asleep.

Q You mean they were inside the room?

A Yes, sir.

Q You said that he dropped the blade, for the record will you please describe this blade about 3 inches long, how does it look like?

A Three (3) inches long and 1/2 inch wide.

Q Is it a flexible blade?

A Its a cutter.

Q How do you describe the blade, is it sharp both edges?

A Yes, because he once used it to me.

Q How did he do it?

A He wanted to cut my throat.

Q With the same blade?

A Yes, sir, that was the object used when he intimidate me. [38]

In addition, Dra. Natividad Dayan was called by the RTC to testify as an expert witness to assist it in understanding the psyche of a battered person. She
had met with Marivic Genosa for five sessions totaling about seventeen hours. Based on their talks, the former briefly related the latters ordeal to the court a quo as
follows:

Q: What can you say, that you found Marivic as a battered wife? Could you in laymans term describe to this Court what her life was like as said to
you?

A: What I remember happened then was it was more than ten years, that she was suffering emotional anguish. There were a lot of instances of
abuses, to emotional abuse, to verbal abuse and to physical abuse. The husband had a very meager income, she was the one who was
practically the bread earner of the family. The husband was involved in a lot of vices, going out with barkadas, drinking, even womanizing
being involved in cockfight and going home very angry and which will trigger a lot of physical abuse. She also had the experience a lot of
taunting from the husband for the reason that the husband even accused her of infidelity, the husband was saying that the child she was
carrying was not his own. So she was very angry, she was at the same time very depressed because she was also aware, almost like
living in purgatory or even hell when it was happening day in and day out. [39]

In cross-examining Dra. Dayan, the public prosecutor not merely elicited, but wittingly or unwittingly put forward, additional supporting evidence as shown
below:

Q In your first encounter with the appellant in this case in 1999, where you talked to her about three hours, what was the most relevant information
did you gather?

A The most relevant information was the tragedy that happened. The most important information were escalating abuses that she had
experienced during her marital life.

Q Before you met her in 1999 for three hours, we presume that you already knew of the facts of the case or at least you have substantial
knowledge of the facts of the case?

A I believe I had an idea of the case, but I do not know whether I can consider them as substantial.

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Q Did you gather an information from Marivic that on the side of her husband they were fond of battering their wives?

A I also heard that from her?

Q You heard that from her?

A Yes, sir.

Q Did you ask for a complete example who are the relatives of her husband that were fond of battering their wives?

A What I remember that there were brothers of her husband who are also battering their wives.
 Q Did she not inform you that there was an instance that she stayed in a hotel in Ormoc where her husband followed her and battered [her]
several times in that room?

A She told me about that.

Q Did she inform you in what hotel in Ormoc?

A Sir, I could not remember but I was told that she was battered in that room.

Q Several times in that room?

A Yes, sir. What I remember was that there is no problem about being battered, it really happened.

Q Being an expert witness, our jurisprudence is not complete on saying this matter. I think that is the first time that we have this in the Philippines,
what is your opinion?

A Sir, my opinion is, she is really a battered wife and in this kind happened, it was really a self-defense. I also believe that there had been
provocation and I also believe that she became a disordered person. She had to suffer anxiety reaction because of all the battering that
happened and so she became an abnormal person who had lost shes not during the time and that is why it happened because of all the
physical battering, emotional battering, all the psychological abuses that she had experienced from her husband.

Q I do believe that she is a battered wife. Was she extremely battered?

A Sir, it is an extreme form of battering. Yes.[40]

Parenthetically, the credibility of appellant was demonstrated as follows:

Q And you also said that you administered [the] objective personality test, what x x x [is this] all about?

A The objective personality test is the Millon Clinical Multiaxial Inventory. The purpose of that test is to find out about the lying prone[ne]ss of the
person.

Q What do you mean by that?

A Meaning, am I dealing with a client who is telling me the truth, or is she someone who can exaggerate or x x x [will] tell a lie[?]

Q And what did you discover on the basis of this objective personality test?

A She was a person who passed the honesty test. Meaning she is a person that I can trust. That the data that Im gathering from her are the
truth.[41]

The other expert witness presented by the defense, Dr. Alfredo Pajarillo, testified on his Psychiatric Report, [42] which was based on his interview and
examination of Marivic Genosa. The Report said that during the first three years of her marriage to Ben, everything looked good -- the atmosphere was fine, normal
and happy -- until Ben started to be attracted to other girls and was also enticed in[to] gambling[,] especially cockfighting. x x x. At the same time Ben was often
joining his barkada in drinking sprees.

The drinking sprees of Ben greatly changed the attitude he showed toward his family, particularly to his wife. The Report continued: At first, it was verbal
and emotional abuses but as time passed, he became physically abusive. Marivic claimed that the viciousness of her husband was progressive every time he got
drunk. It was a painful ordeal Marivic had to anticipate whenever she suspected that her husband went for a drinking [spree]. They had been married for twelve
years[;] and practically more than eight years, she was battered and maltreated relentlessly and mercilessly by her husband whenever he was drunk.

Marivic sought the help of her mother-in-law, but her efforts were in vain. Further quoting from the Report, [s]he also sought the advice and help of close
relatives and well-meaning friends in spite of her feeling ashamed of what was happening to her. But incessant battering became more and more frequent and
more severe. x x x.[43]

From the totality of evidence presented, there is indeed no doubt in the Courts mind that Appellant Marivic Genosa was a severely abused person.

Effect of Battery on Appellant

Because of the recurring cycles of violence experienced by the abused woman, her state of mind metamorphoses. In determining her state of mind, we
cannot rely merely on the judgment of an ordinary, reasonable person who is evaluating the events immediately surrounding the incident. A Canadian court has
aptly pointed out that expert evidence on the psychological effect of battering on wives and common law partners are both relevant and necessary. How can the
mental state of the appellant be appreciated without it? The average member of the public may ask: Why would a woman put up with this kind of treatment? Why
should she continue to live with such a man? How could she love a partner who beat her to the point of requiring hospitalization? We would expect the woman to
pack her bags and go. Where is her self-respect? Why does she not cut loose and make a new life for herself? Such is the reaction of the average person confronted
with the so-called battered wife syndrome.[44]

To understand the syndrome properly, however, ones viewpoint should not be drawn from that of an ordinary, reasonable person. What goes on in the mind
of a person who has been subjected to repeated, severe beatings may not be consistent with -- nay, comprehensible to -- those who have not been through a
similar experience. Expert opinion is essential to clarify and refute common myths and misconceptions about battered women.[45]

The theory of BWS formulated by Lenore Walker, as well as her research on domestic violence, has had a significant impact in the United States and the
United Kingdom on the treatment and prosecution of cases, in which a battered woman is charged with the killing of her violent partner. The psychologist explains
that the cyclical nature of the violence inflicted upon the battered woman immobilizes the latters ability to act decisively in her own interests, making her feel trapped
in the relationship with no means of escape.[46] In her years of research, Dr. Walker found that the abuse often escalates at the point of separation and battered
women are in greater danger of dying then.[47]

Corroborating these research findings, Dra. Dayan said that the battered woman usually has a very low opinion of herself. She has x x x self-defeating and
self-sacrificing characteristics. x x x [W]hen the violence would happen, they usually think that they provoke[d] it, that they were the one[s] who precipitated the
violence[; that] they provoke[d] their spouse to be physically, verbally and even sexually abusive to them.[48]

According to Dra. Dayan, there are a lot of reasons why a battered woman does not readily leave an abusive partner -- poverty, self-blame and guilt arising
from the latters belief that she provoked the violence, that she has an obligation to keep the family intact at all cost for the sake of their children, and that she is the
only hope for her spouse to change.[49]

The testimony of another expert witness, Dr. Pajarillo, is also helpful. He had previously testified in suits involving violent family relations, having evaluated
probably ten to twenty thousand violent family disputes within the Armed Forces of the Philippines, wherein such cases abounded. As a result of his experience
with domestic violence cases, he became a consultant of the Battered Woman Office in Quezon City. As such, he got involved in about forty (40) cases of severe
domestic violence, in which the physical abuse on the woman would sometimes even lead to her loss of consciousness.[50]

Dr. Pajarillo explained that overwhelming brutality, trauma could result in posttraumatic stress disorder, a form of anxiety neurosis or neurologic
anxietism.[51] After being repeatedly and severely abused, battered persons may believe that they are essentially helpless, lacking power to change their situation.
x x x [A]cute battering incidents can have the effect of stimulating the development of coping responses to the trauma at the expense of the victims ability to muster
an active response to try to escape further trauma. Furthermore, x x x the victim ceases to believe that anything she can do will have a predictable positive effect.[52]

A study[53] conducted by Martin Seligman, a psychologist at the University of Pennsylvania, found that even if a person has control over a situation, but
believes that she does not, she will be more likely to respond to that situation with coping responses rather than trying to escape. He said that it was the cognitive
aspect -- the individuals thoughts -- that proved all-important. He referred to this phenomenon as learned helplessness. [T]he truth or facts of a situation turn out to
be less important than the individuals set of beliefs or perceptions concerning the situation. Battered women dont attempt to leave the battering situation, even
when it may seem to outsiders that escape is possible, because they cannot predict their own safety; they believe that nothing they or anyone else does will alter
their terrible circumstances.[54]

Thus, just as the battered woman believes that she is somehow responsible for the violent behavior of her partner, she also believes that he is capable of
killing her, and that there is no escape.[55] Battered women feel unsafe, suffer from pervasive anxiety, and usually fail to leave the relationship.[56] Unless a shelter
is available, she stays with her husband, not only because she typically lacks a means of self-support, but also because she fears that if she leaves she would be
found and hurt even more.[57]

In the instant case, we meticulously scoured the records for specific evidence establishing that appellant, due to the repeated abuse she had suffered from
her spouse over a long period of time, became afflicted with the battered woman syndrome. We, however, failed to find sufficient evidence that would support such
a conclusion. More specifically, we failed to find ample evidence that would confirm the presence of the essential characteristics of BWS.

The defense fell short of proving all three phases of the cycle of violence supposedly characterizing the relationship of Ben and Marivic Genosa. No doubt
there were acute battering incidents. In relating to the court a quo how the fatal incident that led to the death of Ben started, Marivic perfectly described the tension-
building phase of the cycle. She was able to explain in adequate detail the typical characteristics of this stage. However, that single incident does not prove the
existence of the syndrome. In other words, she failed to prove that in at least another battering episode in the past, she had gone through a similar pattern.

How did the tension between the partners usually arise or build up prior to acute battering? How did Marivic normally respond to Bens relatively minor
abuses? What means did she employ to try to prevent the situation from developing into the next (more violent) stage?

Neither did appellant proffer sufficient evidence in regard to the third phase of the cycle. She simply mentioned that she would usually run away to her
mothers or fathers house;[58] that Ben would seek her out, ask for her forgiveness and promise to change; and that believing his words, she would return to their
common abode.

Did she ever feel that she provoked the violent incidents between her and her spouse? Did she believe that she was the only hope for Ben to reform? And
that she was the sole support of his emotional stability and well-being? Conversely, how dependent was she on him? Did she feel helpless and trapped in their
relationship? Did both of them regard death as preferable to separation?

In sum, the defense failed to elicit from appellant herself her factual experiences and thoughts that would clearly and fully demonstrate the essential
characteristics of the syndrome.

The Court appreciates the ratiocinations given by the expert witnesses for the defense. Indeed, they were able to explain fully, albeit merely theoretically
and scientifically, how the personality of the battered woman usually evolved or deteriorated as a result of repeated and severe beatings inflicted upon her by her
partner or spouse. They corroborated each others testimonies, which were culled from their numerous studies of hundreds of actual cases. However, they failed
to present in court the factual experiences and thoughts that appellant had related to them -- if at all -- based on which they concluded that she had BWS.

We emphasize that in criminal cases, all the elements of a modifying circumstance must be proven in order to be appreciated. To repeat, the records lack
supporting evidence that would establish all the essentials of the battered woman syndrome as manifested specifically in the case of the Genosas.

BWS as Self-Defense

In any event, the existence of the syndrome in a relationship does not in itself establish the legal right of the woman to kill her abusive partner. Evidence
must still be considered in the context of self-defense.[59]

From the expert opinions discussed earlier, the Court reckons further that crucial to the BWS defense is the state of mind of the battered woman at the time
of the offense[60] -- she must have actually feared imminent harm from her batterer and honestly believed in the need to kill him in order to save her life.
 Settled in our jurisprudence, however, is the rule that the one who resorts to self-defense must face a real threat on ones life; and the peril sought to be
avoided must be imminent and actual, not merely imaginary.[61] Thus, the Revised Penal Code provides the following requisites and effect of self-defense:[62]

Art. 11. Justifying circumstances. -- The following do not incur any criminal liability:

1. Anyone who acts in defense of his person or rights, provided that the following circumstances concur;

First. Unlawful aggression;

Second. Reasonable necessity of the means employed to prevent or repel it;
Third. Lack of sufficient provocation on the part of the person defending himself.

Unlawful aggression is the most essential element of self-defense.[63] It presupposes actual, sudden and unexpected attack -- or an imminent danger thereof
-- on the life or safety of a person.[64] In the present case, however, according to the testimony of Marivic herself, there was a sufficient time interval between the
unlawful aggression of Ben and her fatal attack upon him. She had already been able to withdraw from his violent behavior and escape to their childrens bedroom.
During that time, he apparently ceased his attack and went to bed. The reality or even the imminence of the danger he posed had ended altogether. He was no
longer in a position that presented an actual threat on her life or safety.

Had Ben still been awaiting Marivic when she came out of their childrens bedroom -- and based on past violent incidents, there was a great probability that
he would still have pursued her and inflicted graver harm -- then, the imminence of the real threat upon her life would not have ceased yet. Where the brutalized
person is already suffering from BWS, further evidence of actual physical assault at the time of the killing is not required. Incidents of domestic battery usually have
a predictable pattern. To require the battered person to await an obvious, deadly attack before she can defend her life would amount to sentencing her to murder
by installment.[65] Still, impending danger (based on the conduct of the victim in previous battering episodes) prior to the defendants use of deadly force must be
shown. Threatening behavior or communication can satisfy the required imminence of danger.[66] Considering such circumstances and the existence of BWS, self-
defense may be appreciated.

We reiterate the principle that aggression, if not continuous, does not warrant self-defense.[67] In the absence of such aggression, there can be no self-
defense -- complete or incomplete -- on the part of the victim.[68] Thus, Marivics killing of Ben was not completely justified under the circumstances.

Mitigating Circumstances Present

In any event, all is not lost for appellant. While she did not raise any other modifying circumstances that would alter her penalty, we deem it proper to
evaluate and appreciate in her favor circumstances that mitigate her criminal liability. It is a hornbook doctrine that an appeal in a criminal case opens it wholly for
review on any issue, including that which has not been raised by the parties.[69]

From several psychological tests she had administered to Marivic, Dra. Dayan, in her Psychological Evaluation Report dated November 29, 2000, opined
as follows:

This is a classic case of a Battered Woman Syndrome. The repeated battering Marivic experienced with her husband constitutes a form of [cumulative] provocation
which broke down her psychological resistance and natural self-control. It is very clear that she developed heightened sensitivity to sight of impending danger her
husband posed continuously. Marivic truly experienced at the hands of her abuser husband a state of psychological paralysis which can only be ended by an act
of violence on her part. [70]

Dr. Pajarillo corroborates the findings of Dra. Dayan. He explained that the effect of repetitious pain taking, repetitious battering, [and] repetitious
maltreatment as well as the severity and the prolonged administration of the battering is posttraumatic stress disorder.[71] Expounding thereon, he said:

Q What causes the trauma, Mr. Witness?

A What causes the trauma is probably the repetitious battering. Second, the severity of the battering. Third, the prolonged administration of
battering or the prolonged commission of the battering and the psychological and constitutional stamina of the victim and another one is
the public and social support available to the victim. If nobody is interceding, the more she will go to that disorder....

xxxxxxxxx

Q You referred a while ago to severity. What are the qualifications in terms of severity of the postraumatic stress disorder, Dr. Pajarillo?

A The severity is the most severe continuously to trig[g]er this post[t]raumatic stress disorder is injury to the head, banging of the head like that. It
is usually the very very severe stimulus that precipitate this post[t]raumatic stress disorder. Others are suffocating the victim like holding a
pillow on the face, strangulating the individual, suffocating the individual, and boxing the individual. In this situation therefore, the victim is
heightened to painful stimulus, like for example she is pregnant, she is very susceptible because the woman will not only protect herself,
she is also to protect the fetus. So the anxiety is heightened to the end [sic] degree.

Q But in terms of the gravity of the disorder, Mr. Witness, how do you classify?

A We classify the disorder as [acute], or chronic or delayed or [a]typical.

Q Can you please describe this pre[-]classification you called delayed or [atypical]?
 A The acute is the one that usually require only one battering and the individual will manifest now a severe emotional instability, higher irritability
remorse, restlessness, and fear and probably in most [acute] cases the first thing will be happened to the individual will be thinking of
suicide.

Q And in chronic cases, Mr. Witness?

A The chronic cases is this repetitious battering, repetitious maltreatment, any prolonged, it is longer than six (6) months. The [acute] is only the
first day to six (6) months. After this six (6) months you become chronic. It is stated in the book specifically that after six (6) months is
chronic. The [a]typical one is the repetitious battering but the individual who is abnormal and then become normal. This is how you get
neurosis from neurotic personality of these cases of post[t]raumatic stress disorder. [72]

Answering the questions propounded by the trial judge, the expert witness clarified further:

Q But just the same[,] neurosis especially on battered woman syndrome x x x affects x x x his or her mental capacity?

A Yes, your Honor.

Q As you were saying[,] it x x x obfuscated her rationality?

A Of course obfuscated.[73]

In sum, the cyclical nature and the severity of the violence inflicted upon appellant resulted in cumulative provocation which broke down her psychological
resistance and natural self-control, psychological paralysis, and difficulty in concentrating or impairment of memory.

Based on the explanations of the expert witnesses, such manifestations were analogous to an illness that diminished the exercise by appellant of her will
power without, however, depriving her of consciousness of her acts. There was, thus, a resulting diminution of her freedom of action, intelligence or intent. Pursuant
to paragraphs 9[74] and 10[75] of Article 13 of the Revised Penal Code, this circumstance should be taken in her favor and considered as a mitigating factor. [76]

In addition, we also find in favor of appellant the extenuating circumstance of having acted upon an impulse so powerful as to have naturally produced
passion and obfuscation. It has been held that this state of mind is present when a crime is committed as a result of an uncontrollable burst of passion provoked
by prior unjust or improper acts or by a legitimate stimulus so powerful as to overcome reason.[77] To appreciate this circumstance, the following requisites should
concur: (1) there is an act, both unlawful and sufficient to produce such a condition of mind; and (2) this act is not far removed from the commission of the crime
by a considerable length of time, during which the accused might recover her normal equanimity.[78]

Here, an acute battering incident, wherein Ben Genosa was the unlawful aggressor, preceded his being killed by Marivic. He had further threatened to kill
her while dragging her by the neck towards a cabinet in which he had kept a gun. It should also be recalled that she was eight months pregnant at the time. The
attempt on her life was likewise on that of her fetus.[79]His abusive and violent acts, an aggression which was directed at the lives of both Marivic and her unborn
child, naturally produced passion and obfuscation overcoming her reason. Even though she was able to retreat to a separate room, her emotional and mental state
continued. According to her, she felt her blood pressure rise; she was filled with feelings of self-pity and of fear that she and her baby were about to die. In a fit of
indignation, she pried open the cabinet drawer where Ben kept a gun, then she took the weapon and used it to shoot him.

The confluence of these events brings us to the conclusion that there was no considerable period of time within which Marivic could have recovered her
normal equanimity. Helpful is Dr. Pajarillos testimony[80] that with neurotic anxiety -- a psychological effect on a victim of overwhelming brutality [or] trauma -- the
victim relives the beating or trauma as if it were real, although she is not actually being beaten at the time. She cannot control re-experiencing the whole thing, the
most vicious and the trauma that she suffered. She thinks of nothing but the suffering. Such reliving which is beyond the control of a person under similar
circumstances, must have been what Marivic experienced during the brief time interval and prevented her from recovering her normal equanimity. Accordingly, she
should further be credited with the mitigating circumstance of passion and obfuscation.

It should be clarified that these two circumstances -- psychological paralysis as well as passion and obfuscation -- did not arise from the same set of facts.

On the one hand, the first circumstance arose from the cyclical nature and the severity of the battery inflicted by the batterer-spouse upon appellant. That
is, the repeated beatings over a period of time resulted in her psychological paralysis, which was analogous to an illness diminishing the exercise of her will power
without depriving her of consciousness of her acts.

The second circumstance, on the other hand, resulted from the violent aggression he had inflicted on her prior to the killing. That the incident occurred when
she was eight months pregnant with their child was deemed by her as an attempt not only on her life, but likewise on that of their unborn child. Such perception
naturally produced passion and obfuscation on her part.

Second Legal Issue:

Treachery

There is treachery when one commits any of the crimes against persons by employing means, methods or forms in the execution thereof without risk to
oneself arising from the defense that the offended party might make.[81] In order to qualify an act as treacherous, the circumstances invoked must be proven as
indubitably as the killing itself; they cannot be deduced from mere inferences, or conjectures, which have no place in the appreciation of evidence.[82] Because of
the gravity of the resulting offense, treachery must be proved as conclusively as the killing itself.[83]

Ruling that treachery was present in the instant case, the trial court imposed the penalty of death upon appellant. It inferred this qualifying circumstances
merely from the fact that the lifeless body of Ben had been found lying in bed with an open, depressed, circular fracture located at the back of his head. As to
exactly how and when he had been fatally attacked, however, the prosecution failed to establish indubitably. Only the following testimony of appellant leads us to
the events surrounding his death:

Q You said that when Ben came back to your house, he dragged you? How did he drag you?
COURT:

The witness demonstrated to the Court by using her right hand flexed forcibly in her front neck)

A And he dragged me towards the door backward.

ATTY. TABUCANON:

Q Where did he bring you?

A Outside the bedroom and he wanted to get something and then he kept on shouting at me that you might as well be killed so there will be
nobody to nag me

Q So you said that he dragged you towards the drawer?

A Yes, sir.

Q What is there in the drawer?

A I was aware that it was a gun.

COURT INTERPRETER

(At this juncture the witness started crying)

ATTY. TABUCANON:

Q Were you actually brought to the drawer?

A Yes, sir.

Q What happened when you were brought to that drawer?

A He dragged me towards the drawer and he was about to open the drawer but he could not open it because he did not have the key then he
pulled his wallet which contained a blade about 3 inches long and I was aware that he was going to kill me and I smashed his arm and
then the wallet and the blade fell. The one he used to open the drawer I saw, it was a pipe about that long, and when he was about to pick-
up the wallet and the blade, I smashed him then I ran to the other room, and on that very moment everything on my mind was to pity on
myself, then the feeling I had on that very moment was the same when I was admitted in PHILPHOS Clinic, I was about to vomit.

COURT INTERPRETER

(The witness at this juncture is crying intensely).

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Q You said that he dropped the blade, for the record will you please describe this blade about 3 inches long, how does it look like?

A Three (3) inches long and inch wide.

Q It is a flexible blade?

A Its a cutter.

Q How do you describe the blade, is it sharp both edges?

A Yes, because he once used it to me.

Q How did he do it?

A He wanted to cut my throat.

Q With the same blade?

A Yes, sir, that was the object used when he intimidate me.

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ATTY. TABUCANON:

Q You said that this blade fell from his grip, is it correct?

A Yes, because I smashed him.

Q What happened?

A Ben tried to pick-up the wallet and the blade, I pick-up the pipe and I smashed him and I ran to the other room.
 Q What else happened?

A When I was in the other room, I felt the same thing like what happened before when I was admitted in PHILPHOS Clinic, I was about to vomit. I
know my blood pressure was raised. I was frightened I was about to die because of my blood pressure.

COURT INTERPRETER:

(Upon the answer of the witness getting the pipe and smashed him, the witness at the same time pointed at the back of her neck or the nape).

ATTY. TABUCANON:

Q You said you went to the room, what else happened?

A Considering all the physical sufferings that Ive been through with him, I took pity on myself and I felt I was about to die also because of my blood
pressure and the baby, so I got that gun and I shot him.

COURT

/to Atty. Tabucanon

Q You shot him?

A Yes, I distorted the drawer.[84]

The above testimony is insufficient to establish the presence of treachery. There is no showing of the victims position relative to appellants at the time of
the shooting. Besides, equally axiomatic is the rule that when a killing is preceded by an argument or a quarrel, treachery cannot be appreciated as a qualifying
circumstance, because the deceased may be said to have been forewarned and to have anticipated aggression from the assailant.[85]

Moreover, in order to appreciate alevosia, the method of assault adopted by the aggressor must have been consciously and deliberately chosen for the
specific purpose of accomplishing the unlawful act without risk from any defense that might be put up by the party attacked. [86] There is no showing, though, that
the present appellant intentionally chose a specific means of successfully attacking her husband without any risk to herself from any retaliatory act that he might
make. To the contrary, it appears that the thought of using the gun occurred to her only at about the same moment when she decided to kill her batterer-spouse.
In the absence of any convincing proof that she consciously and deliberately employed the method by which she committed the crime in order to ensure its
execution, this Court resolves the doubt in her favor.[87]

Proper Penalty

The penalty for parricide imposed by Article 246 of the Revised Penal Code is reclusion perpetua to death. Since two mitigating circumstances and no
aggravating circumstance have been found to have attended the commission of the offense, the penalty shall be lowered by one (1) degree, pursuant to Article 64
of paragraph 5[88] of the same Code.[89] The penalty of reclusion temporal in its medium period is imposable, considering that two mitigating circumstances are to
be taken into account in reducing the penalty by one degree, and no other modifying circumstances were shown to have attended the commission of the
offense.[90] Under the Indeterminate Sentence Law, the minimum of the penalty shall be within the range of that which is next lower in degree -- prision mayor --
and the maximum shall be within the range of the medium period of reclusion temporal.

Considering all the circumstances of the instant case, we deem it just and proper to impose the penalty of prision mayor in its minimum period, or six (6)
years and one (1) day in prison as minimum; to reclusion temporal in its medium period, or 14 years 8 months and 1 day as maximum. Noting that appellant has
already served the minimum period, she may now apply for and be released from detention on parole.[91]

Epilogue

Being a novel concept in our jurisprudence, the battered woman syndrome was neither easy nor simple to analyze and recognize vis--vis the given set of
facts in the present case. The Court agonized on how to apply the theory as a modern-day reality. It took great effort beyond the normal manner in which decisions
are made -- on the basis of existing law and jurisprudence applicable to the proven facts. To give a just and proper resolution of the case, it endeavored to take a
good look at studies conducted here and abroad in order to understand the intricacies of the syndrome and the distinct personality of the chronically abused person.
Certainly, the Court has learned much. And definitely, the solicitor general and appellants counsel, Atty. Katrina Legarda, have helped it in such learning process.

While our hearts empathize with recurrently battered persons, we can only work within the limits of law, jurisprudence and given facts. We cannot make or
invent them. Neither can we amend the Revised Penal Code. Only Congress, in its wisdom, may do so.

The Court, however, is not discounting the possibility of self-defense arising from the battered woman syndrome. We now sum up our main points. First,
each of the phases of the cycle of violence must be proven to have characterized at least two battering episodes between the appellant and her intimate
partner. Second, the final acute battering episode preceding the killing of the batterer must have produced in the battered persons mind an actual fear of an
imminent harm from her batterer and an honest belief that she needed to use force in order to save her life. Third, at the time of the killing, the batterer must have
posed probable -- not necessarily immediate and actual -- grave harm to the accused, based on the history of violence perpetrated by the former against the latter.
Taken altogether, these circumstances could satisfy the requisites of self-defense. Under the existing facts of the present case, however, not all of these elements
were duly established.

WHEREFORE, the conviction of Appellant Marivic Genosa for parricide is hereby AFFIRMED. However, there being two (2) mitigating circumstances and
no aggravating circumstance attending her commission of the offense, her penalty is REDUCED to six (6) years and one (1) day of prision mayor as minimum; to
14 years, 8 months and 1 day of reclusion temporal as maximum.
 Inasmuch as appellant has been detained for more than the minimum penalty hereby imposed upon her, the director of the Bureau of Corrections may
immediately RELEASE her from custody upon due determination that she is eligible for parole, unless she is being held for some other lawful cause. Costs de
oficio.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-19550 June 19, 1967

HARRY S. STONEHILL, ROBERT P. BROOKS, JOHN J. BROOKS and KARL BECK, petitioners,
vs.
HON. JOSE W. DIOKNO, in his capacity as SECRETARY OF JUSTICE; JOSE LUKBAN, in his capacity as Acting Director, National Bureau of
Investigation; SPECIAL PROSECUTORS PEDRO D. CENZON, EFREN I. PLANA and MANUEL VILLAREAL, JR. and ASST. FISCAL MANASES G.
REYES; JUDGE AMADO ROAN, Municipal Court of Manila; JUDGE ROMAN CANSINO, Municipal Court of Manila; JUDGE HERMOGENES CALUAG,
Court of First Instance of Rizal-Quezon City Branch, and JUDGE DAMIAN JIMENEZ, Municipal Court of Quezon City, respondents.

Paredes, Poblador, Cruz and Nazareno and Meer, Meer and Meer and Juan T. David for petitioners.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Pacifico P. de Castro, Assistant Solicitor General Frine C. Zaballero, Solicitor Camilo
D. Quiason and Solicitor C. Padua for respondents.

CONCEPCION, C.J.:

Upon application of the officers of the government named on the margin1 — hereinafter referred to as Respondents-Prosecutors — several judges2 — hereinafter
referred to as Respondents-Judges — issued, on different dates,3 a total of 42 search warrants against petitioners herein4 and/or the corporations of which they
were officers,5 directed to the any peace officer, to search the persons above-named and/or the premises of their offices, warehouses and/or residences, and to
seize and take possession of the following personal property to wit:

Books of accounts, financial records, vouchers, correspondence, receipts, ledgers, journals, portfolios, credit journals, typewriters, and other
documents and/or papers showing all business transactions including disbursements receipts, balance sheets and profit and loss statements and
Bobbins (cigarette wrappers).

as "the subject of the offense; stolen or embezzled and proceeds or fruits of the offense," or "used or intended to be used as the means of committing the
offense," which is described in the applications adverted to above as "violation of Central Bank Laws, Tariff and Customs Laws, Internal Revenue (Code) and the
Revised Penal Code."

Alleging that the aforementioned search warrants are null and void, as contravening the Constitution and the Rules of Court — because, inter alia: (1) they do not
describe with particularity the documents, books and things to be seized; (2) cash money, not mentioned in the warrants, were actually seized; (3) the warrants
were issued to fish evidence against the aforementioned petitioners in deportation cases filed against them; (4) the searches and seizures were made in an
illegal manner; and (5) the documents, papers and cash money seized were not delivered to the courts that issued the warrants, to be disposed of in accordance
with law — on March 20, 1962, said petitioners filed with the Supreme Court this original action for certiorari, prohibition, mandamus and injunction, and prayed
that, pending final disposition of the present case, a writ of preliminary injunction be issued restraining Respondents-Prosecutors, their agents and /or
representatives from using the effects seized as aforementioned or any copies thereof, in the deportation cases already adverted to, and that, in due course,
thereafter, decision be rendered quashing the contested search warrants and declaring the same null and void, and commanding the respondents, their agents
or representatives to return to petitioners herein, in accordance with Section 3, Rule 67, of the Rules of Court, the documents, papers, things and cash moneys
seized or confiscated under the search warrants in question.

In their answer, respondents-prosecutors alleged, 6 (1) that the contested search warrants are valid and have been issued in accordance with law; (2) that the
defects of said warrants, if any, were cured by petitioners' consent; and (3) that, in any event, the effects seized are admissible in evidence against herein
petitioners, regardless of the alleged illegality of the aforementioned searches and seizures.

On March 22, 1962, this Court issued the writ of preliminary injunction prayed for in the petition. However, by resolution dated June 29, 1962, the writ was
partially lifted or dissolved, insofar as the papers, documents and things seized from the offices of the corporations above mentioned are concerned; but, the
injunction was maintained as regards the papers, documents and things found and seized in the residences of petitioners herein.7
Thus, the documents, papers, and things seized under the alleged authority of the warrants in question may be split into two (2) major groups, namely: (a) those
found and seized in the offices of the aforementioned corporations, and (b) those found and seized in the residences of petitioners herein.

As regards the first group, we hold that petitioners herein have no cause of action to assail the legality of the contested warrants and of the seizures made in
pursuance thereof, for the simple reason that said corporations have their respective personalities, separate and distinct from the personality of herein
petitioners, regardless of the amount of shares of stock or of the interest of each of them in said corporations, and whatever the offices they hold therein may
be.8 Indeed, it is well settled that the legality of a seizure can be contested only by the party whose rights have been impaired thereby,9 and that the objection to
an unlawful search and seizure is purely personal and cannot be availed of by third parties. 10 Consequently, petitioners herein may not validly object to the use
in evidence against them of the documents, papers and things seized from the offices and premises of the corporations adverted to above, since the right to
object to the admission of said papers in evidence belongs exclusively to the corporations, to whom the seized effects belong, and may not be invoked by the
corporate officers in proceedings against them in their individual capacity. 11 Indeed, it has been held:

. . . that the Government's action in gaining possession of papers belonging to the corporation did not relate to nor did it affect
the personal defendants. If these papers were unlawfully seized and thereby the constitutional rights of or any one were invaded, they were the
rights of the corporation and not the rights of the other defendants. Next, it is clear that a question of the lawfulness of a seizure can be
raised only by one whose rights have been invaded. Certainly, such a seizure, if unlawful, could not affect the constitutional rights of
defendants whose property had not been seized or the privacy of whose homes had not been disturbed; nor could they claim for themselves the
benefits of the Fourth Amendment, when its violation, if any, was with reference to the rights of another. Remus vs. United States (C.C.A.)291 F.
501, 511. It follows, therefore, that the question of the admissibility of the evidence based on an alleged unlawful search and seizure does not extend
to the personal defendants but embraces only the corporation whose property was taken. . . . (A Guckenheimer & Bros. Co. vs. United States, [1925]
3 F. 2d. 786, 789, Emphasis supplied.)

With respect to the documents, papers and things seized in the residences of petitioners herein, the aforementioned resolution of June 29, 1962, lifted the writ of
preliminary injunction previously issued by this Court, 12 thereby, in effect, restraining herein Respondents-Prosecutors from using them in evidence against
petitioners herein.

In connection with said documents, papers and things, two (2) important questions need be settled, namely: (1) whether the search warrants in question, and the
searches and seizures made under the authority thereof, are valid or not, and (2) if the answer to the preceding question is in the negative, whether said
documents, papers and things may be used in evidence against petitioners herein.1äwphï1.ñët

Petitioners maintain that the aforementioned search warrants are in the nature of general warrants and that accordingly, the seizures effected upon the authority
there of are null and void. In this connection, the Constitution 13provides:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated,
and no warrants shall issue but upon probable cause, to be determined by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to be searched, and the persons or things to be seized.

Two points must be stressed in connection with this constitutional mandate, namely: (1) that no warrant shall issue but upon probable cause, to be determined by
the judge in the manner set forth in said provision; and (2) that the warrant shall particularly describe the things to be seized.

None of these requirements has been complied with in the contested warrants. Indeed, the same were issued upon applications stating that the natural and
juridical person therein named had committed a "violation of Central Ban Laws, Tariff and Customs Laws, Internal Revenue (Code) and Revised Penal Code." In
other words, no specific offense had been alleged in said applications. The averments thereof with respect to the offense committed were abstract. As a
consequence, it was impossible for the judges who issued the warrants to have found the existence of probable cause, for the same presupposes the
introduction of competent proof that the party against whom it is sought has performed particular acts, or committed specific omissions, violating a given provision
of our criminal laws. As a matter of fact, the applications involved in this case do not allege any specific acts performed by herein petitioners. It would be the legal
heresy, of the highest order, to convict anybody of a "violation of Central Bank Laws, Tariff and Customs Laws, Internal Revenue (Code) and Revised Penal
Code," — as alleged in the aforementioned applications — without reference to any determinate provision of said laws or

To uphold the validity of the warrants in question would be to wipe out completely one of the most fundamental rights guaranteed in our Constitution, for it would
place the sanctity of the domicile and the privacy of communication and correspondence at the mercy of the whims caprice or passion of peace officers. This is
precisely the evil sought to be remedied by the constitutional provision above quoted — to outlaw the so-called general warrants. It is not difficult to imagine what
would happen, in times of keen political strife, when the party in power feels that the minority is likely to wrest it, even though by legal means.

Such is the seriousness of the irregularities committed in connection with the disputed search warrants, that this Court deemed it fit to amend Section 3 of Rule
122 of the former Rules of Court 14 by providing in its counterpart, under the Revised Rules of Court 15 that "a search warrant shall not issue but upon probable
cause in connection with one specific offense." Not satisfied with this qualification, the Court added thereto a paragraph, directing that "no search warrant shall
issue for more than one specific offense."

The grave violation of the Constitution made in the application for the contested search warrants was compounded by the description therein made of the effects
to be searched for and seized, to wit:

Books of accounts, financial records, vouchers, journals, correspondence, receipts, ledgers, portfolios, credit journals, typewriters, and other
documents and/or papers showing all business transactions including disbursement receipts, balance sheets and related profit and loss statements.
Thus, the warrants authorized the search for and seizure of records pertaining to all business transactions of petitioners herein, regardless of whether the
transactions were legal or illegal. The warrants sanctioned the seizure of all records of the petitioners and the aforementioned corporations, whatever their
nature, thus openly contravening the explicit command of our Bill of Rights — that the things to be seized be particularly described — as well as tending to defeat
its major objective: the elimination of general warrants.

Relying upon Moncado vs. People's Court (80 Phil. 1), Respondents-Prosecutors maintain that, even if the searches and seizures under consideration were
unconstitutional, the documents, papers and things thus seized are admissible in evidence against petitioners herein. Upon mature deliberation, however, we are
unanimously of the opinion that the position taken in the Moncado case must be abandoned. Said position was in line with the American common law rule, that
the criminal should not be allowed to go free merely "because the constable has blundered," 16 upon the theory that the constitutional prohibition against
unreasonable searches and seizures is protected by means other than the exclusion of evidence unlawfully obtained, 17 such as the common-law action for
damages against the searching officer, against the party who procured the issuance of the search warrant and against those assisting in the execution of an
illegal search, their criminal punishment, resistance, without liability to an unlawful seizure, and such other legal remedies as may be provided by other laws.

However, most common law jurisdictions have already given up this approach and eventually adopted the exclusionary rule, realizing that this is the only practical
means of enforcing the constitutional injunction against unreasonable searches and seizures. In the language of Judge Learned Hand:

As we understand it, the reason for the exclusion of evidence competent as such, which has been unlawfully acquired, is that exclusion is the only
practical way of enforcing the constitutional privilege. In earlier times the action of trespass against the offending official may have been protection
enough; but that is true no longer. Only in case the prosecution which itself controls the seizing officials, knows that it cannot profit by their wrong will
that wrong be repressed.18

In fact, over thirty (30) years before, the Federal Supreme Court had already declared:

If letters and private documents can thus be seized and held and used in evidence against a citizen accused of an offense, the protection of the 4th
Amendment, declaring his rights to be secure against such searches and seizures, is of no value, and, so far as those thus placed are concerned,
might as well be stricken from the Constitution. The efforts of the courts and their officials to bring the guilty to punishment, praiseworthy as they are,
are not to be aided by the sacrifice of those great principles established by years of endeavor and suffering which have resulted in their embodiment
in the fundamental law of the land.19

This view was, not only reiterated, but, also, broadened in subsequent decisions on the same Federal Court. 20After reviewing previous decisions thereon, said
Court held, in Mapp vs. Ohio (supra.):

. . . Today we once again examine the Wolf's constitutional documentation of the right of privacy free from unreasonable state intrusion, and after its
dozen years on our books, are led by it to close the only courtroom door remaining open to evidence secured by official lawlessness in flagrant
abuse of that basic right, reserved to all persons as a specific guarantee against that very same unlawful conduct. We hold that all evidence obtained
by searches and seizures in violation of the Constitution is, by that same authority, inadmissible in a State.

Since the Fourth Amendment's right of privacy has been declared enforceable against the States through the Due Process Clause of the Fourteenth,
it is enforceable against them by the same sanction of exclusion as it used against the Federal Government. Were it otherwise, then just as without
the Weeks rule the assurance against unreasonable federal searches and seizures would be "a form of words," valueless and underserving of
mention in a perpetual charter of inestimable human liberties, so too, without that rule the freedom from state invasions of privacy would be so
ephemeral and so neatly severed from its conceptual nexus with the freedom from all brutish means of coercing evidence as not to permit this
Court's high regard as a freedom "implicit in the concept of ordered liberty." At the time that the Court held in Wolf that the amendment was
applicable to the States through the Due Process Clause, the cases of this Court as we have seen, had steadfastly held that as to federal officers the
Fourth Amendment included the exclusion of the evidence seized in violation of its provisions. Even Wolf "stoutly adhered" to that proposition. The
right to when conceded operatively enforceable against the States, was not susceptible of destruction by avulsion of the sanction upon which its
protection and enjoyment had always been deemed dependent under the Boyd, Weeks and Silverthorne Cases. Therefore, in extending the
substantive protections of due process to all constitutionally unreasonable searches — state or federal — it was logically and constitutionally
necessarily that the exclusion doctrine — an essential part of the right to privacy — be also insisted upon as an essential ingredient of the right newly
recognized by the Wolf Case. In short, the admission of the new constitutional Right by Wolf could not tolerate denial of its most important
constitutional privilege, namely, the exclusion of the evidence which an accused had been forced to give by reason of the unlawful seizure. To hold
otherwise is to grant the right but in reality to withhold its privilege and enjoyment. Only last year the Court itself recognized that the purpose of the
exclusionary rule to "is to deter — to compel respect for the constitutional guaranty in the only effectively available way — by removing the incentive
to disregard it" . . . .

The ignoble shortcut to conviction left open to the State tends to destroy the entire system of constitutional restraints on which the liberties of the
people rest. Having once recognized that the right to privacy embodied in the Fourth Amendment is enforceable against the States, and that the right
to be secure against rude invasions of privacy by state officers is, therefore constitutional in origin, we can no longer permit that right to remain an
empty promise. Because it is enforceable in the same manner and to like effect as other basic rights secured by its Due Process Clause, we can no
longer permit it to be revocable at the whim of any police officer who, in the name of law enforcement itself, chooses to suspend its enjoyment. Our
decision, founded on reason and truth, gives to the individual no more than that which the Constitution guarantees him to the police officer no less
than that to which honest law enforcement is entitled, and, to the courts, that judicial integrity so necessary in the true administration of justice.
(emphasis ours.)
Indeed, the non-exclusionary rule is contrary, not only to the letter, but also, to the spirit of the constitutional injunction against unreasonable searches and
seizures. To be sure, if the applicant for a search warrant has competent evidence to establish probable cause of the commission of a given crime by the party
against whom the warrant is intended, then there is no reason why the applicant should not comply with the requirements of the fundamental law. Upon the other
hand, if he has no such competent evidence, then it is not possible for the Judge to find that there is probable cause, and, hence, no justification for the issuance
of the warrant. The only possible explanation (not justification) for its issuance is the necessity of fishing evidence of the commission of a crime. But, then, this
fishing expedition is indicative of the absence of evidence to establish a probable cause.

Moreover, the theory that the criminal prosecution of those who secure an illegal search warrant and/or make unreasonable searches or seizures would suffice to
protect the constitutional guarantee under consideration, overlooks the fact that violations thereof are, in general, committed By agents of the party in power, for,
certainly, those belonging to the minority could not possibly abuse a power they do not have. Regardless of the handicap under which the minority usually — but,
understandably — finds itself in prosecuting agents of the majority, one must not lose sight of the fact that the psychological and moral effect of the
possibility 21 of securing their conviction, is watered down by the pardoning power of the party for whose benefit the illegality had been committed.

In their Motion for Reconsideration and Amendment of the Resolution of this Court dated June 29, 1962, petitioners allege that Rooms Nos. 81 and 91 of Carmen
Apartments, House No. 2008, Dewey Boulevard, House No. 1436, Colorado Street, and Room No. 304 of the Army-Navy Club, should be included among the
premises considered in said Resolution as residences of herein petitioners, Harry S. Stonehill, Robert P. Brook, John J. Brooks and Karl Beck, respectively, and
that, furthermore, the records, papers and other effects seized in the offices of the corporations above referred to include personal belongings of said petitioners
and other effects under their exclusive possession and control, for the exclusion of which they have a standing under the latest rulings of the federal courts of
federal courts of the United States. 22

We note, however, that petitioners' theory, regarding their alleged possession of and control over the aforementioned records, papers and effects, and the
alleged "personal" nature thereof, has Been Advanced, not in their petition or amended petition herein, but in the Motion for Reconsideration and Amendment of
the Resolution of June 29, 1962. In other words, said theory would appear to be readjustment of that followed in said petitions, to suit the approach intimated in
the Resolution sought to be reconsidered and amended. Then, too, some of the affidavits or copies of alleged affidavits attached to said motion for
reconsideration, or submitted in support thereof, contain either inconsistent allegations, or allegations inconsistent with the theory now advanced by petitioners
herein.

Upon the other hand, we are not satisfied that the allegations of said petitions said motion for reconsideration, and the contents of the aforementioned affidavits
and other papers submitted in support of said motion, have sufficiently established the facts or conditions contemplated in the cases relied upon by the
petitioners; to warrant application of the views therein expressed, should we agree thereto. At any rate, we do not deem it necessary to express our opinion
thereon, it being best to leave the matter open for determination in appropriate cases in the future.

We hold, therefore, that the doctrine adopted in the Moncado case must be, as it is hereby, abandoned; that the warrants for the search of three (3) residences of
herein petitioners, as specified in the Resolution of June 29, 1962, are null and void; that the searches and seizures therein made are illegal; that the writ of
preliminary injunction heretofore issued, in connection with the documents, papers and other effects thus seized in said residences of herein petitioners is hereby
made permanent; that the writs prayed for are granted, insofar as the documents, papers and other effects so seized in the aforementioned residences are
concerned; that the aforementioned motion for Reconsideration and Amendment should be, as it is hereby, denied; and that the petition herein is dismissed and
the writs prayed for denied, as regards the documents, papers and other effects seized in the twenty-nine (29) places, offices and other premises enumerated in
the same Resolution, without special pronouncement as to costs.

It is so ordered.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA TOURIST & DEVELOPMENT CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM, Respondent.

DECISION

Tinga, J.:

With another city ordinance of Manila also principally involving the tourist district as subject, the Court is confronted anew with the incessant clash between
government power and individual liberty in tandem with the archetypal tension between law and morality.
In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city ordinance barring the operation of motels and inns, among other establishments,
within the Ermita-Malate area. The petition at bar assails a similarly-motivated city ordinance that prohibits those same establishments from offering short-time
admission, as well as pro-rated or "wash up" rates for such abbreviated stays. Our earlier decision tested the city ordinance against our sacred constitutional
rights to liberty, due process and equal protection of law. The same parameters apply to the present petition.

This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which seeks the reversal of the Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of
Appeals, challenges the validity of Manila City Ordinance No. 7774 entitled, "An Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and
Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and Similar Establishments in the City of Manila" (the Ordinance).

I.

The facts are as follows:

On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the Ordinance.4 The Ordinance is reproduced in full, hereunder:

SECTION 1. Declaration of Policy. It is hereby the declared policy of the City Government to protect the best interest, health and welfare, and the morality of its
constituents in general and the youth in particular.

SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short time admission in hotels, motels, lodging houses, pension houses and similar
establishments in the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-up rate or other similarly concocted terms, are hereby prohibited in hotels,
motels, inns, lodging houses, pension houses and similar establishments in the City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and charging of room rate for less than twelve (12) hours at any given time or the
renting out of rooms more than twice a day or any other term that may be concocted by owners or managers of said establishments but would mean the same or
would bear the same meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate any provision of this ordinance shall upon conviction thereof be punished by a fine of Five
Thousand (₱5,000.00) Pesos or imprisonment for a period of not exceeding one (1) year or both such fine and imprisonment at the discretion of the court;
Provided, That in case of [a] juridical person, the president, the manager, or the persons in charge of the operation thereof shall be liable: Provided, further, That
in case of subsequent conviction for the same offense, the business license of the guilty party shall automatically be cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances not consistent with or contrary to this measure or any portion hereof are hereby deemed
repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.

Enacted by the city Council of Manila at its regular session today, November 10, 1992.

Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a complaint for declaratory relief with prayer for a writ of preliminary
injunction and/or temporary restraining order ( TRO)5 with the Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein respondent City of
Manila (the City) represented by Mayor Lim.6 MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional. MTDC claimed that as owner and operator of the Victoria Court in Malate, Manila it was authorized by Presidential Decree
(P.D.) No. 259 to admit customers on a short time basis as well as to charge customers wash up rates for stays of only three hours.

On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation (TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed
a motion to intervene and to admit attached complaint-in-intervention7 on the ground that the Ordinance directly affects their business interests as operators of
drive-in-hotels and motels in Manila.8 The three companies are components of the Anito Group of Companies which owns and operates several hotels and
motels in Metro Manila.9

On December 23, 1992, the RTC granted the motion to intervene.10 The RTC also notified the Solicitor General of the proceedings pursuant to then Rule 64,
Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw as plaintiff.11

On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The RTC issued a TRO on January 14, 1993, directing the City to cease and desist from
enforcing the Ordinance.13 The City filed an Answer dated January 22, 1993 alleging that the Ordinance is a legitimate exercise of police power.14

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to desist from the enforcement of the Ordinance.15 A month later, on March
8, 1993, the Solicitor General filed his Comment arguing that the Ordinance is constitutional.
During the pre-trial conference, the WLC, TC and STDC agreed to submit the case for decision without trial as the case involved a purely legal question. 16 On
October 20, 1993, the RTC rendered a decision declaring the Ordinance null and void. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of Manila is hereby declared null and void.

Accordingly, the preliminary injunction heretofor issued is hereby made permanent.

SO ORDERED.17

The RTC noted that the ordinance "strikes at the personal liberty of the individual guaranteed and jealously guarded by the Constitution."18 Reference was made
to the provisions of the Constitution encouraging private enterprises and the incentive to needed investment, as well as the right to operate economic enterprises.
Finally, from the observation that the illicit relationships the Ordinance sought to dissuade could nonetheless be consummated by simply paying for a 12-hour
stay, the RTC likened the law to the ordinance annulled in Ynot v. Intermediate Appellate Court,19 where the legitimate purpose of preventing indiscriminate
slaughter of carabaos was sought to be effected through an inter-province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on certiorari with the Supreme Court.20 The petition was docketed as G.R. No. 112471. However in a resolution dated
January 26, 1994, the Court treated the petition as a petition for certiorari and referred the petition to the Court of Appeals.21

Before the Court of Appeals, the City asserted that the Ordinance is a valid exercise of police power pursuant to Section 458 (4)(iv) of the Local Government
Code which confers on cities, among other local government units, the power:

[To] regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses and other
similar establishments, including tourist guides and transports.22

The Ordinance, it is argued, is also a valid exercise of the power of the City under Article III, Section 18(kk) of the Revised Manila Charter, thus:

"to enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the prosperity and the promotion of the morality,
peace, good order, comfort, convenience and general welfare of the city and its inhabitants, and such others as be necessary to carry into effect and discharge
the powers and duties conferred by this Chapter; and to fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment for a single offense.23

Petitioners argued that the Ordinance is unconstitutional and void since it violates the right to privacy and the freedom of movement; it is an invalid exercise of
police power; and it is an unreasonable and oppressive interference in their business.

The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of the Ordinance.24 First, it held that the Ordinance did not violate the
right to privacy or the freedom of movement, as it only penalizes the owners or operators of establishments that admit individuals for short time stays. Second,
the virtually limitless reach of police power is only constrained by having a lawful object obtained through a lawful method. The lawful objective of the Ordinance
is satisfied since it aims to curb immoral activities. There is a lawful method since the establishments are still allowed to operate. Third, the adverse effect on the
establishments is justified by the well-being of its constituents in general. Finally, as held in Ermita-Malate Motel Operators Association v. City Mayor of
Manila, liberty is regulated by law.

TC, WLC and STDC come to this Court via petition for review on certiorari.25 In their petition and Memorandum, petitioners in essence repeat the assertions they
made before the Court of Appeals. They contend that the assailed Ordinance is an invalid exercise of police power.

II.

We must address the threshold issue of petitioners’ standing. Petitioners allege that as owners of establishments offering "wash-up" rates, their business is being
unlawfully interfered with by the Ordinance. However, petitioners also allege that the equal protection rights of their clients are also being interfered with. Thus,
the crux of the matter is whether or not these establishments have the requisite standing to plead for protection of their patrons' equal protection rights.

Standing or locus standi is the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that
party's participation in the case. More importantly, the doctrine of standing is built on the principle of separation of powers,26 sparing as it does unnecessary
interference or invalidation by the judicial branch of the actions rendered by its co-equal branches of government.

The requirement of standing is a core component of the judicial system derived directly from the Constitution.27 The constitutional component of standing doctrine
incorporates concepts which concededly are not susceptible of precise definition.28 In this jurisdiction, the extancy of "a direct and personal interest" presents the
most obvious cause, as well as the standard test for a petitioner's standing.29 In a similar vein, the United States Supreme Court reviewed and elaborated on the
meaning of the three constitutional standing requirements of injury, causation, and redressability in Allen v. Wright.30

Nonetheless, the general rules on standing admit of several exceptions such as the overbreadth doctrine, taxpayer suits, third party standing and, especially in
the Philippines, the doctrine of transcendental importance.31
For this particular set of facts, the concept of third party standing as an exception and the overbreadth doctrine are appropriate. In Powers v. Ohio,32 the United
States Supreme Court wrote that: "We have recognized the right of litigants to bring actions on behalf of third parties, provided three important criteria are
satisfied: the litigant must have suffered an ‘injury-in-fact,’ thus giving him or her a "sufficiently concrete interest" in the outcome of the issue in dispute; the litigant
must have a close relation to the third party; and there must exist some hindrance to the third party's ability to protect his or her own interests."33 Herein, it is clear
that the business interests of the petitioners are likewise injured by the Ordinance. They rely on the patronage of their customers for their continued viability
which appears to be threatened by the enforcement of the Ordinance. The relative silence in constitutional litigation of such special interest groups in our nation
such as the American Civil Liberties Union in the United States may also be construed as a hindrance for customers to bring suit.34

American jurisprudence is replete with examples where parties-in-interest were allowed standing to advocate or invoke the fundamental due process or equal
protection claims of other persons or classes of persons injured by state action. In Griswold v. Connecticut,35 the United States Supreme Court held that
physicians had standing to challenge a reproductive health statute that would penalize them as accessories as well as to plead the constitutional protections
available to their patients. The Court held that:

"The rights of husband and wife, pressed here, are likely to be diluted or adversely affected unless those rights are considered in a suit involving those who have
this kind of confidential relation to them."36

An even more analogous example may be found in Craig v. Boren,37 wherein the United States Supreme Court held that a licensed beverage vendor has
standing to raise the equal protection claim of a male customer challenging a statutory scheme prohibiting the sale of beer to males under the age of 21 and to
females under the age of 18. The United States High Court explained that the vendors had standing "by acting as advocates of the rights of third parties who
seek access to their market or function."38

Assuming arguendo that petitioners do not have a relationship with their patrons for the former to assert the rights of the latter, the overbreadth doctrine comes
into play. In overbreadth analysis, challengers to government action are in effect permitted to raise the rights of third parties. Generally applied to statutes
infringing on the freedom of speech, the overbreadth doctrine applies when a statute needlessly restrains even constitutionally guaranteed rights.39 In this case,
the petitioners claim that the Ordinance makes a sweeping intrusion into the right to liberty of their clients. We can see that based on the allegations in the
petition, the Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional rights of their clients to patronize their establishments for a "wash-rate" time frame.

III.

To students of jurisprudence, the facts of this case will recall to mind not only the recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and
Motel Operations Association, Inc., v. Hon. City Mayor of Manila.40Ermita-Malate concerned the City ordinance requiring patrons to fill up a prescribed form
stating personal information such as name, gender, nationality, age, address and occupation before they could be admitted to a motel, hotel or lodging house.
This earlier ordinance was precisely enacted to minimize certain practices deemed harmful to public morals. A purpose similar to the annulled ordinance in City
of Manila which sought a blanket ban on motels, inns and similar establishments in the Ermita-Malate area. However, the constitutionality of the ordinance
in Ermita-Malate was sustained by the Court.

The common thread that runs through those decisions and the case at bar goes beyond the singularity of the localities covered under the respective ordinances.
All three ordinances were enacted with a view of regulating public morals including particular illicit activity in transient lodging establishments. This could be
described as the middle case, wherein there is no wholesale ban on motels and hotels but the services offered by these establishments have been severely
restricted. At its core, this is another case about the extent to which the State can intrude into and regulate the lives of its citizens.

The test of a valid ordinance is well established. A long line of decisions including City of Manila has held that for an ordinance to be valid, it must not only be
within the corporate powers of the local government unit to enact and pass according to the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory;
(4) must not prohibit but may regulate trade; (5) must be general and consistent with public policy; and (6) must not be unreasonable.41

The Ordinance prohibits two specific and distinct business practices, namely wash rate admissions and renting out a room more than twice a day. The ban is
evidently sought to be rooted in the police power as conferred on local government units by the Local Government Code through such implements as the general
welfare clause.

A.

Police power, while incapable of an exact definition, has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response as the conditions warrant.42 Police power is based upon the concept of necessity of the State and its
corresponding right to protect itself and its people.43 Police power has been used as justification for numerous and varied actions by the State. These range from
the regulation of dance halls,44 movie theaters,45 gas stations46 and cockpits.47 The awesome scope of police power is best demonstrated by the fact that in its
hundred or so years of presence in our nation’s legal system, its use has rarely been denied.

The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered establishments for illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and certainly fall within the ambit of the police power of the State. Yet the desirability of these ends do not sanctify any
and all means for their achievement. Those means must align with the Constitution, and our emerging sophisticated analysis of its guarantees to the people. The
Bill of Rights stands as a rebuke to the seductive theory of Macchiavelli, and, sometimes even, the political majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due process or equal protection questions, the courts are naturally inhibited by a
due deference to the co-equal branches of government as they exercise their political functions. But when we are compelled to nullify executive or legislative
actions, yet another form of caution emerges. If the Court were animated by the same passing fancies or turbulent emotions that motivate many political
decisions, judicial integrity is compromised by any perception that the judiciary is merely the third political branch of government. We derive our respect and good
standing in the annals of history by acting as judicious and neutral arbiters of the rule of law, and there is no surer way to that end than through the development
of rigorous and sophisticated legal standards through which the courts analyze the most fundamental and far-reaching constitutional questions of the day.

B.

The primary constitutional question that confronts us is one of due process, as guaranteed under Section 1, Article III of the Constitution. Due process evades a
precise definition.48 The purpose of the guaranty is to prevent arbitrary governmental encroachment against the life, liberty and property of individuals. The due
process guaranty serves as a protection against arbitrary regulation or seizure. Even corporations and partnerships are protected by the guaranty insofar as their
property is concerned.

The due process guaranty has traditionally been interpreted as imposing two related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures that the government must follow before it deprives a person of life, liberty, or
property.49 Procedural due process concerns itself with government action adhering to the established process when it makes an intrusion into the private
sphere. Examples range from the form of notice given to the level of formality of a hearing.

If due process were confined solely to its procedural aspects, there would arise absurd situation of arbitrary government action, provided the proper formalities
are followed. Substantive due process completes the protection envisioned by the due process clause. It inquires whether the government has sufficient
justification for depriving a person of life, liberty, or property.50

The question of substantive due process, moreso than most other fields of law, has reflected dynamism in progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power, traditionally awesome as it may be, is now confronted with a more rigorous level of analysis before it can be
upheld. The vitality though of constitutional due process has not been predicated on the frequency with which it has been utilized to achieve a liberal result for,
after all, the libertarian ends should sometimes yield to the prerogatives of the State. Instead, the due process clause has acquired potency because of the
sophisticated methodology that has emerged to determine the proper metes and bounds for its application.

C.

The general test of the validity of an ordinance on substantive due process grounds is best tested when assessed with the evolved footnote 4 test laid down by
the U.S. Supreme Court in U.S. v. Carolene Products.51 Footnote 4 of the Carolene Products case acknowledged that the judiciary would defer to the legislature
unless there is a discrimination against a "discrete and insular" minority or infringement of a "fundamental right."52 Consequently, two standards of judicial review
were established: strict scrutiny for laws dealing with freedom of the mind or restricting the political process, and the rational basis standard of review for
economic legislation.

A third standard, denominated as heightened or immediate scrutiny, was later adopted by the U.S. Supreme Court for evaluating classifications based on
gender53 and legitimacy.54 Immediate scrutiny was adopted by the U.S. Supreme Court in Craig,55 after the Court declined to do so in Reed v. Reed.56 While the
test may have first been articulated in equal protection analysis, it has in the United States since been applied in all substantive due process cases as well.

We ourselves have often applied the rational basis test mainly in analysis of equal protection challenges.57 Using the rational basis examination, laws or
ordinances are upheld if they rationally further a legitimate governmental interest.58 Under intermediate review, governmental interest is extensively examined
and the availability of less restrictive measures is considered.59 Applying strict scrutiny, the focus is on the presence of compelling, rather than substantial,
governmental interest and on the absence of less restrictive means for achieving that interest.

In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard for determining the quality and the amount of governmental interest
brought to justify the regulation of fundamental freedoms.60 Strict scrutiny is used today to test the validity of laws dealing with the regulation of speech, gender,
or race as well as other fundamental rights as expansion from its earlier applications to equal protection.61 The United States Supreme Court has expanded the
scope of strict scrutiny to protect fundamental rights such as suffrage,62 judicial access63and interstate travel.64

If we were to take the myopic view that an Ordinance should be analyzed strictly as to its effect only on the petitioners at bar, then it would seem that the only
restraint imposed by the law which we are capacitated to act upon is the injury to property sustained by the petitioners, an injury that would warrant the
application of the most deferential standard – the rational basis test. Yet as earlier stated, we recognize the capacity of the petitioners to invoke as well the
constitutional rights of their patrons – those persons who would be deprived of availing short time access or wash-up rates to the lodging establishments in
question.

Viewed cynically, one might say that the infringed rights of these customers were are trivial since they seem shorn of political consequence. Concededly, these
are not the sort of cherished rights that, when proscribed, would impel the people to tear up their cedulas. Still, the Bill of Rights does not shelter gravitas alone.
Indeed, it is those "trivial" yet fundamental freedoms – which the people reflexively exercise any day without the impairing awareness of their constitutional
consequence – that accurately reflect the degree of liberty enjoyed by the people. Liberty, as integrally incorporated as a fundamental right in the Constitution, is
not a Ten Commandments-style enumeration of what may or what may not be done; but rather an atmosphere of freedom where the people do not feel labored
under a Big Brother presence as they interact with each other, their society and nature, in a manner innately understood by them as inherent, without doing harm
or injury to others.

D.

The rights at stake herein fall within the same fundamental rights to liberty which we upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most
primordial of rights, thus:

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist and the right to be free from arbitrary restraint or servitude.
The term cannot be dwarfed into mere freedom from physical restraint of the person of the citizen, but is deemed to embrace the right of man to enjoy the
facilities with which he has been endowed by his Creator, subject only to such restraint as are necessary for the common welfare."[65] In accordance with this
case, the rights of the citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; and to
pursue any avocation are all deemed embraced in the concept of liberty.[66]

The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to clarify the meaning of "liberty." It said:

While the Court has not attempted to define with exactness the liberty . . . guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not merely
freedom from bodily restraint but also the right of the individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to
marry, establish a home and bring up children, to worship God according to the dictates of his own conscience, and generally to enjoy those privileges long
recognized . . . as essential to the orderly pursuit of happiness by free men. In a Constitution for a free people, there can be no doubt that the meaning of "liberty"
must be broad indeed.67 [Citations omitted]

It cannot be denied that the primary animus behind the ordinance is the curtailment of sexual behavior. The City asserts before this Court that the subject
establishments "have gained notoriety as venue of ‘prostitution, adultery and fornications’ in Manila since they ‘provide the necessary atmosphere for clandestine
entry, presence and exit and thus became the ‘ideal haven for prostitutes and thrill-seekers.’"68 Whether or not this depiction of a mise-en-scene of vice is
accurate, it cannot be denied that legitimate sexual behavior among willing married or consenting single adults which is constitutionally protected 69 will be
curtailed as well, as it was in the City of Manila case. Our holding therein retains significance for our purposes:

The concept of liberty compels respect for the individual whose claim to privacy and interference demands respect. As the case of Morfe v. Mutuc, borrowing the
words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are indefeasible; indeed, they are so fundamental that they are
the basis on which his civic obligations are built. He cannot abandon the consequences of his isolation, which are, broadly speaking, that his experience is
private, and the will built out of that experience personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set by the will of others,
he ceases to be a master of himself. I cannot believe that a man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen.70

We cannot discount other legitimate activities which the Ordinance would proscribe or impair. There are very legitimate uses for a wash rate or renting the room
out for more than twice a day. Entire families are known to choose pass the time in a motel or hotel whilst the power is momentarily out in their homes. In transit
passengers who wish to wash up and rest between trips have a legitimate purpose for abbreviated stays in motels or hotels. Indeed any person or groups of
persons in need of comfortable private spaces for a span of a few hours with purposes other than having sex or using illegal drugs can legitimately look to staying
in a motel or hotel as a convenient alternative.

E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and the petitioners of lucrative business ties in with another
constitutional requisite for the legitimacy of the Ordinance as a police power measure. It must appear that the interests of the public generally, as distinguished
from those of a particular class, require an interference with private rights and the means must be reasonably necessary for the accomplishment of the purpose
and not unduly oppressive of private rights.71 It must also be evident that no other alternative for the accomplishment of the purpose less intrusive of private rights
can work. More importantly, a reasonable relation must exist between the purposes of the measure and the means employed for its accomplishment, for even
under the guise of protecting the public interest, personal rights and those pertaining to private property will not be permitted to be arbitrarily invaded.72

Lacking a concurrence of these requisites, the police measure shall be struck down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review when life, liberty or property is affected.73 However, this is not in any way meant to take it away from the
vastness of State police power whose exercise enjoys the presumption of validity.74

Similar to the Comelec resolution requiring newspapers to donate advertising space to candidates, this Ordinance is a blunt and heavy instrument.75 The
Ordinance makes no distinction between places frequented by patrons engaged in illicit activities and patrons engaged in legitimate actions. Thus it prevents
legitimate use of places where illicit activities are rare or even unheard of. A plain reading of section 3 of the Ordinance shows it makes no classification of places
of lodging, thus deems them all susceptible to illicit patronage and subject them without exception to the unjustified prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its longtime home,76 and it is skeptical of those who wish to depict our
capital city – the Pearl of the Orient – as a modern-day Sodom or Gomorrah for the Third World set. Those still steeped in Nick Joaquin-dreams of the grandeur
of Old Manila will have to accept that Manila like all evolving big cities, will have its problems. Urban decay is a fact of mega cities such as Manila, and vice is a
common problem confronted by the modern metropolis wherever in the world. The solution to such perceived decay is not to prevent legitimate businesses from
offering a legitimate product. Rather, cities revive themselves by offering incentives for new businesses to sprout up thus attracting the dynamism of individuals
that would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in fact be diminished simply by applying existing laws. Less intrusive
measures such as curbing the proliferation of prostitutes and drug dealers through active police work would be more effective in easing the situation. So would
the strict enforcement of existing laws and regulations penalizing prostitution and drug use. These measures would have minimal intrusion on the businesses of
the petitioners and other legitimate merchants. Further, it is apparent that the Ordinance can easily be circumvented by merely paying the whole day rate without
any hindrance to those engaged in illicit activities. Moreover, drug dealers and prostitutes can in fact collect "wash rates" from their clientele by charging their
customers a portion of the rent for motel rooms and even apartments.

IV.

We reiterate that individual rights may be adversely affected only to the extent that may fairly be required by the legitimate demands of public interest or public
welfare. The State is a leviathan that must be restrained from needlessly intruding into the lives of its citizens. However well-intentioned the Ordinance may be, it
is in effect an arbitrary and whimsical intrusion into the rights of the establishments as well as their patrons. The Ordinance needlessly restrains the operation of
the businesses of the petitioners as well as restricting the rights of their patrons without sufficient justification. The Ordinance rashly equates wash rates and
renting out a room more than twice a day with immorality without accommodating innocuous intentions.

The promotion of public welfare and a sense of morality among citizens deserves the full endorsement of the judiciary provided that such measures do not
trample rights this Court is sworn to protect.77 The notion that the promotion of public morality is a function of the State is as old as Aristotle.78 The advancement
of moral relativism as a school of philosophy does not de-legitimize the role of morality in law, even if it may foster wider debate on which particular behavior to
penalize. It is conceivable that a society with relatively little shared morality among its citizens could be functional so long as the pursuit of sharply variant moral
perspectives yields an adequate accommodation of different interests.79

To be candid about it, the oft-quoted American maxim that "you cannot legislate morality" is ultimately illegitimate as a matter of law, since as explained by
Calabresi, that phrase is more accurately interpreted as meaning that efforts to legislate morality will fail if they are widely at variance with public attitudes about
right and wrong.80 Our penal laws, for one, are founded on age-old moral traditions, and as long as there are widely accepted distinctions between right and
wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen not only the acceptance of the right-wrong distinction, but also the advent of fundamental liberties as
the key to the enjoyment of life to the fullest. Our democracy is distinguished from non-free societies not with any more extensive elaboration on our part of what
is moral and immoral, but from our recognition that the individual liberty to make the choices in our lives is innate, and protected by the State. Independent and
fair-minded judges themselves are under a moral duty to uphold the Constitution as the embodiment of the rule of law, by reason of their expression of consent to
do so when they take the oath of office, and because they are entrusted by the people to uphold the law.81

Even as the implementation of moral norms remains an indispensable complement to governance, that prerogative is hardly absolute, especially in the face of
the norms of due process of liberty. And while the tension may often be left to the courts to relieve, it is possible for the government to avoid the constitutional
conflict by employing more judicious, less drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 9,
is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No pronouncement as to costs.

SO ORDERED.

G.R. No. 127882 December 1, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG MIGUEL M. LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO
BENNAGEN; JAIME TADEO; RENATO R. CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON H.
DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P.
TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M. DADING; Represented by His Father ANTONIO
L. DADING; ROMY M. LAGARO, Represented by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG, Represented by His Father MIGUEL
M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T. MIGUEL; ALDEMAR L. SAL, Represented by His Father DANNY M. SAL;
DAISY RECARSE, Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR; MARIO L. MANGCAL; ALDEN S.
TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F. LEONEN; JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR.,
Represented by Their Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents JOSE VILLAMOR and ELIZABETH PUA-
VILLAMOR; ANA GININA R. TALJA, Represented by Her Father MARIO JOSE B. TALJA; SHARMAINE R. CUNANAN, Represented by Her Father
ALFREDO M. CUNANAN; ANTONIO JOSE A. VITUG III, Represented by His Mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, Represented by His
Father MANUEL E. NARVADEZ JR.; ROSERIO MARALAG LINGATING, Represented by Her Father RIO OLIMPIO A. LINGATING; MARIO JOSE B.
TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE; Sr. SUSAN O. BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE L.
NEQUINTO;1 ROSE LILIA S. ROMANO; ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA, Represented by His Father
ELPIDIO V. PERIA;2 GREEN FORUM PHILIPPINES; GREEN FORUM WESTERN VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER
(ELAC); KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN); 3 PARTNERSHIP FOR AGRARIAN
REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE DEVELOPMENT OF HUMAN RESOURCES IN
THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL BUREAU (WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI);
UPLAND DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN); and
LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR); HORACIO RAMOS, Director, Mines and Geosciences
Bureau (MGB-DENR); RUBEN TORRES, Executive Secretary; and WMC (PHILIPPINES), INC.,4 respondents.

RESOLUTION

PANGANIBAN, J.:

All mineral resources are owned by the State. Their exploration, development and utilization (EDU) must always be subject to the full control and supervision of
the State. More specifically, given the inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the help of foreign
companies in all relevant matters -- especially financial and technical assistance -- provided that, at all times, the State maintains its right of full control. The
foreign assistor or contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it may be given reasonable management,
operational, marketing, audit and other prerogatives to protect its investments and to enable the business to succeed.

Full control is not anathematic to day-to-day management by the contractor, provided that the State retains the power to direct overall strategy; and to set aside,
reverse or modify plans and actions of the contractor. The idea of full control is similar to that which is exercised by the board of directors of a private corporation:
the performance of managerial, operational, financial, marketing and other functions may be delegated to subordinate officers or given to contractual entities, but
the board retains full residual control of the business.

Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear: the President. Indeed, the
Chief Executive is the official constitutionally mandated to "enter into agreements with foreign owned corporations." On the other hand, Congress may review the
action of the President once it is notified of "every contract entered into in accordance with this [constitutional] provision within thirty days from its execution." In
contrast to this express mandate of the President and Congress in the EDU of natural resources, Article XII of the Constitution is silent on the role of the judiciary.
However, should the President and/or Congress gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise their residual duty
under Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of this presidential power of control over the EDU of our natural
resources.

The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests. Rather,
it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign investments and
expertise, as well as to secure for our people and our posterity the blessings of prosperity and peace.

On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -- insofar as
they relate to financial and technical agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA).5

Background

The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine Mining Act of
1995); (2) its Implementing Rules and Regulations (DENR Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30, 1995,6 executed by the
government with Western Mining Corporation (Philippines), Inc. (WMCP).7

On January 27, 2004, the Court en banc promulgated its Decision8 granting the Petition and declaring the unconstitutionality of certain provisions of RA 7942,
DAO 96-40, as well as of the entire FTAA executed between the government and WMCP, mainly on the finding that FTAAs are service contracts prohibited by
the 1987 Constitution.

The Decision struck down the subject FTAA for being similar to service contracts,9 which, though permitted under the 1973 Constitution,10 were subsequently
denounced for being antithetical to the principle of sovereignty over our natural resources, because they allowed foreign control over the exploitation of our
natural resources, to the prejudice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service contracts for, inter alia, vesting in the foreign
contractor exclusive management and control of the enterprise, including operation of the field in the event petroleum was discovered; control of production,
expansion and development; nearly unfettered control over the disposition and sale of the products discovered/extracted; effective ownership of the natural
resource at the point of extraction; and beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution (Section 2 of Article XII)
effectively banned such service contracts.

Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March 9, 2004, the Court required petitioners to comment thereon.
In the Resolution of June 8, 2004, it set the case for Oral Argument on June 29, 2004.

After hearing the opposing sides, the Court required the parties to submit their respective Memoranda in amplification of their arguments. In a Resolution issued
later the same day, June 29, 2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office of the Solicitor General (OSG)
on behalf of public respondents. The OSG said that it was not interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the
Philippines, Inc. (CMP) and was in fact joining and adopting the latter's Motion for Reconsideration.

Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents, and private respondent, dwelling at length on the three issues
discussed below. Later, WMCP submitted its Reply Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a Compliance submitting
copies of more FTAAs entered into by the government.

Three Issues Identified by the Court

During the Oral Argument, the Court identified the three issues to be resolved in the present controversy, as follows:

1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent of Sagittarius' equity is owned by Filipinos and/or Filipino-
owned corporations while 40 percent is owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of the FTAA
from WMCP to Sagittarius?

2. Assuming that the case has been rendered moot, would it still be proper to resolve the constitutionality of the assailed provisions of the Mining Law, DAO 96-
40 and the WMCP FTAA?

3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial Assistancecontained in paragraph 4 of Section 2 of Article
XII of the Constitution?

Should the Motion for Reconsideration Be Granted?

Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons discussed below. The foregoing three issues identified by the
Court shall now be taken up seriatim.

First Issue:

Mootness

In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the majority Decision agreed with petitioners' contention that the
subject FTAA had been executed in violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs entered into by the
government with foreign-owned corporations are limited by the fourth paragraph of the said provision to agreements involving only technical or financial
assistance for large-scale exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore, the foreign contractor is allegedly
permitted by the FTAA in question to fully manage and control the mining operations and, therefore, to acquire "beneficial ownership" of our mineral resources.

The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on January 23, 2001, WMC had sold all its shares in WMCP to
Sagittarius Mines, Inc., 60 percent of whose equity was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred from WMCP to
Sagittarius.11 The ponencia declared that the instant case had not been rendered moot by the transfer and registration of the FTAA to a Filipino-owned
corporation, and that the validity of the said transfer remained in dispute and awaited final judicial determination.12Patently therefore, the Decision is anchored on
the assumption that WMCP had remained a foreign corporation.

The crux of this issue of mootness is the fact that WMCP, at the time it entered into the FTAA, happened to be wholly owned by WMC Resources International
Pty., Ltd. (WMC), which in turn was a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major Australian mining and
exploration company.

The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation. Had the FTAA been originally issued to a Filipino-owned
corporation, there would have been no constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a Filipino corporation can
be likened to the sale of land to a foreigner who subsequently acquires Filipino citizenship, or who later resells the same land to a Filipino citizen. The
conveyance would be validated, as the property in question would no longer be owned by a disqualified vendee.

And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer possible for the Court to declare it unconstitutional. The case
pending in the Court of Appeals is a dispute between two Filipino companies (Sagittarius and Lepanto), both claiming the right to purchase the foreign shares in
WMCP. So, regardless of which side eventually wins, the FTAA would still be in the hands of a qualified Filipino company. Considering that there is no longer any
justiciable controversy, the plea to nullify the Mining Law has become a virtual petition for declaratory relief, over which this Court has no original jurisdiction.

In their Final Memorandum, however, petitioners argue that the case has not become moot, considering the invalidity of the alleged sale of the shares in WMCP
from WMC to Sagittarius, and of the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA in question. And even
assuming that the said transfers were valid, there still exists an actual case predicated on the invalidity of RA 7942 and its Implementing Rules and Regulations
(DAO 96-40). Presently, we shall discuss petitioners' objections to the transfer of both the shares and the FTAA. We shall take up the alleged invalidity of RA
7942 and DAO 96-40 later on in the discussion of the third issue.

No Transgression of the Constitution

by the Transfer of the WMCP Shares

Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius violates the fourth paragraph of Section 2 of Article XII of the
Constitution; second, that it is contrary to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and should therefore be the
subject of a case in which its validity may properly be litigated.

On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the government to enter into FTAAs only with foreign-owned
corporations. Petitioners insist that the first paragraph of this constitutional provision limits the participation of Filipino corporations in the exploration,
development and utilization of natural resources to only three species of contracts -- production sharing, co-production and joint venture -- to the exclusion of all
other arrangements or variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by Sagittarius. In short, petitioners claim
that a Filipino corporation is not allowed by the Constitution to enter into an FTAA with the government.

However, a textual analysis of the first paragraph of Section 2 of Article XII does not support petitioners' argument. The pertinent part of the said provision
states: "Sec. 2. x x x The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State may
directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. x x x." Nowhere in the provision is there any express limitation or restriction
insofar as arrangements other than the three aforementioned contractual schemes are concerned.

Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to believe that the framers of the Constitution, a majority of
whom were obviously concerned with furthering the development and utilization of the country's natural resources, could have wanted to restrict Filipino
participation in that area. This point is clear, especially in the light of the overarching constitutional principle of giving preference and priority to Filipinos and
Filipino corporations in the development of our natural resources.

Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino corporations from holding and implementing an FTAA actually
exists, nevertheless, such provision would apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMC's equity stake in WMCP to
Sagittarius. Otherwise, an unreasonable curtailment of property rights without due process of law would ensue. Petitioners' argument must therefore fail.

FTAA Not Intended

Solely for Foreign Corporation

Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to apply solely to a foreign corporation, as can allegedly be seen
from the provisions therein. They manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply only to a foreign contractor:
Section 12, which provides for international commercial arbitration under the auspices of the International Chamber of Commerce, after local remedies are
exhausted. This provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and assumed by a Filipino corporation like
Sagittarius, in which event the said provision should simply be disregarded as a superfluity.

No Need for a Separate

Litigation of the Sale of Shares

Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the need to litigate it in a separate case. Section 40 of RA 7942
(the Mining Law) allegedly requires the President's prior approval of a transfer.

A re-reading of the said provision, however, leads to a different conclusion. "Sec. 40. Assignment/Transfer -- A financial or technical assistance agreement may
be assigned or transferred, in whole or in part, to a qualified person subject to the prior approval of the President: Provided, That the President shall notify
Congress of every financial or technical assistance agreement assigned or converted in accordance with this provision within thirty (30) days from the date of the
approval thereof."
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer of shares of stock in WMCP. Moreover, when the transferee
of an FTAA is another foreign corporation, there is a logical application of the requirement of prior approval by the President of the Republic and notification to
Congress in the event of assignment or transfer of an FTAA. In this situation, such approval and notification are appropriate safeguards, considering that the new
contractor is the subject of a foreign government.

On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need for such safeguard is not critical; hence, the lack of prior
approval and notification may not be deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is entirely absent in this
instance. As pointed out by private respondent in its Memorandum,13 the issue of approval is the subject of one of the cases brought by Lepanto against
Sagittarius in GR No. 162331. That case involved the review of the Decision of the Court of Appeals dated November 21, 2003 in CA-GR SP No. 74161, which
affirmed the DENR Order dated December 31, 2001 and the Decision of the Office of the President dated July 23, 2002, both approving the assignment of the
WMCP FTAA to Sagittarius.

Petitioners also question the sale price and the financial capacity of the transferee. According to the Deed of Absolute Sale dated January 23, 2001, executed
between WMC and Sagittarius, the price of the WMCP shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of 56:1. Sagittarius had
an authorized capital stock of P250 million and a paid up capital of P60 million. Therefore, at the time of approval of the sale by the DENR, the debt-to-equity
ratio of the transferee was over 9:1 -- hardly ideal for an FTAA contractor, according to petitioners.

However, private respondents counter that the Deed of Sale specifically provides that the payment of the purchase price would take place only after Sagittarius'
commencement of commercial production from mining operations, if at all. Consequently, under the circumstances, we believe it would not be reasonable to
conclude, as petitioners did, that the transferee's high debt-to-equity ratio per se necessarily carried negative implications for the enterprise; and it would certainly
be improper to invalidate the sale on that basis, as petitioners propose.

FTAA Not Void,

Thus Transferrable

To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and, hence cannot be transferred; and that its transfer does not
operate to cure the constitutional infirmity that is inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the void contract.

While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the MR) did ratiocinate that this Court had declared the FTAA to
be void because, at the time it was executed with WMCP, the latter was a fully foreign-owned corporation, in which the former vested full control and
management with respect to the exploration, development and utilization of mineral resources, contrary to the provisions of paragraph 4 of Section 2 of Article XII
of the Constitution. And since the FTAA was per se void, no valid right could be transferred; neither could it be ratified, so petitioners conclude.

Petitioners have assumed as fact that which has yet to be established. First and foremost, the Decision of this Court declaring the FTAA void has not yet become
final. That was precisely the reason the Court still heard Oral Argument in this case. Second, the FTAA does not vest in the foreign corporation full control and
supervision over the exploration, development and utilization of mineral resources, to the exclusion of the government. This point will be dealt with in greater
detail below; but for now, suffice it to say that a perusal of the FTAA provisions will prove that the government has effective overall direction and control of the
mining operations, including marketing and product pricing, and that the contractor's work programs and budgets are subject to its review and approval or
disapproval.

As will be detailed later on, the government does not have to micro-manage the mining operations and dip its hands into the day-to-day management of the
enterprise in order to be considered as having overall control and direction. Besides, for practical and pragmatic reasons, there is a need for government
agencies to delegate certain aspects of the management work to the contractor. Thus the basis for declaring the FTAA void still has to be revisited, reexamined
and reconsidered.

Petitioners sniff at the citation of Chavez v. Public Estates Authority,14 and Halili v. CA,15 claiming that the doctrines in these cases are wholly inapplicable to the
instant case.

Chavez clearly teaches: "Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells the land to a Filipino, the
invalidity of the first transfer is corrected by the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires Philippine
citizenship, the sale is validated since the purpose of the constitutional ban to limit land ownership to Filipinos has been achieved. In short, the law disregards the
constitutional disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or the buyer himself becomes a qualified
party."16

In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land) was not what was assailed for alleged unconstitutionality.
Rather, it was the transaction that was assailed; hence subsequent compliance with constitutional provisions would cure its infirmity. In contrast, in the instant
case it is the FTAA itself, the object of the transfer, that is being assailed as invalid and unconstitutional. So, petitioners claim that the subsequent transfer of a
void FTAA to a Filipino corporation would not cure the defect.

Petitioners are confusing themselves. The present Petition has been filed, precisely because the grantee of the FTAA was a wholly owned subsidiary of a foreign
corporation. It cannot be gainsaid that anyone would have asserted that the same FTAA was void if it had at the outset been issued to a Filipino corporation. The
FTAA, therefore, is not per se defective or unconstitutional. It was questioned only because it had been issued to an allegedly non-qualified, foreign-owned
corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino was re-conveyed to a qualified vendee and the original
transaction was thereby cured. Paraphrasing Halili, the same rationale applies to the instant case: assuming arguendo the invalidity of its prior grant to a foreign
corporation, the disputed FTAA -- being now held by a Filipino corporation -- can no longer be assailed; the objective of the constitutional provision -- to keep the
exploration, development and utilization of our natural resources in Filipino hands -- has been served.

More accurately speaking, the present situation is one degree better than that obtaining in Halili, in which the original sale to a non-Filipino was clearly and
indisputably violative of the constitutional prohibition and thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the then foreign-
owned WMCP was not illegal, void or unconstitutional at the time. The matter had to be brought to court, precisely for adjudication as to whether the FTAA and
the Mining Law had indeed violated the Constitution. Since, up to this point, the decision of this Court declaring the FTAA void has yet to become final, to all
intents and purposes, the FTAA must be deemed valid and constitutional.17

At bottom, we find completely outlandish petitioners' contention that an FTAA could be entered into by the government only with a foreign corporation, never with
a Filipino enterprise. Indeed, the nationalistic provisions of the Constitution are all anchored on the protection of Filipino interests. How petitioners can now argue
that foreigners have the exclusive right to FTAAs totally overturns the entire basis of the Petition -- preference for the Filipino in the exploration, development and
utilization of our natural resources. It does not take deep knowledge of law and logic to understand that what the Constitution grants to foreigners should be
equally available to Filipinos.

Second Issue:

Whether the Court Can Still Decide the Case,

Even Assuming It Is Moot

All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even assuming it to be moot.

Petitioners stress the following points. First, while a case becomes moot and academic when "there is no more actual controversy between the parties or no
useful purpose can be served in passing upon the merits,"18 what is at issue in the instant case is not only the validity of the WMCP FTAA, but also the
constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts of private respondent cannot operate to cure the law of its alleged
unconstitutionality or to divest this Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty to declare invalid any law
that offends the Constitution.

Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995 conform to constitutional strictures (assuming that, at present,
it does not); that public respondents will continue to implement and enforce the statute until this Court rules otherwise; and that the said law continues to be the
source of legal authority in accepting, processing and approving numerous applications for mining rights.

Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the Mines and Geosciences Bureau (MGB), with an aggregate area
of 2,064,908.65 hectares -- spread over Luzon, the Visayas and Mindanao19 -- applied for. It may be a bit far-fetched to assert, as petitioners do, that each and
every FTAA that was entered into under the provisions of the Mining Act "invites potential litigation" for as long as the constitutional issues are not resolved with
finality. Nevertheless, we must concede that there exists the distinct possibility that one or more of the future FTAAs will be the subject of yet another suit
grounded on constitutional issues.

But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry, which is even now scaring away foreign investments. Attesting
to this climate of anxiety is the fact that the Chamber of Mines of the Philippines saw the urgent need to intervene in the case and to present its position during
the Oral Argument; and that Secretary General Romulo Neri of the National Economic Development Authority (NEDA) requested this Court to allow him to speak,
during that Oral Argument, on the economic consequences of the Decision of January 27, 2004.20

We are convinced. We now agree that the Court must recognize the exceptional character of the situation and the paramount public interest involved, as well as
the necessity for a ruling to put an end to the uncertainties plaguing the mining industry and the affected communities as a result of doubts cast upon the
constitutionality and validity of the Mining Act, the subject FTAA and future FTAAs, and the need to avert a multiplicity of suits. Paraphrasing Gonzales v.
Commission on Elections,21 it is evident that strong reasons of public policy demand that the constitutionality issue be resolved now.22

In further support of the immediate resolution of the constitutionality issue, public respondents cite Acop v. Guingona,23 to the effect that the courts will decide a
question -- otherwise moot and academic -- if it is "capable of repetition, yet evading review."24 Public respondents ask the Court to avoid a situation in which the
constitutionality issue may again arise with respect to another FTAA, the resolution of which may not be achieved until after it has become too late for our mining
industry to grow out of its infancy. They also recall Salonga v. Cruz Paño,25 in which this Court declared that "(t)he Court also has the duty to formulate guiding
and controlling constitutional principles, precepts, doctrines or rules. It has the symbolic function of educating the bench and bar on the extent of protection given
by constitutional guarantees. x x x."

The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his dissent to the Decision that there was no more justiciable
controversy and the plea to nullify the Mining Law has become a virtual petition for declaratory relief.26 The entry of the Chamber of Mines of the Philippines, Inc.,
however, has put into focus the seriousness of the allegations of unconstitutionality of RA 7942 and DAO 96-40 which converts the case to one for prohibition27 in
the enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of Section 2 of Article XII of the Constitution is contravened by RA
7942 and DAO 96-40, not whether it was violated by specific acts implementing RA 7942 and DAO 96-40. "[W]hen an act of the legislative department is
seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court. By the mere enactment of the questioned law or the
approval of the challenged action, the dispute is said to have ripened into a judicial controversy even without any other overt act."28 This ruling can be traced
from Tañada v. Angara,29 in which the Court said:

"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute.

xxxxxxxxx

"As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold
the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency,
instrumentality or department of the government."30

Additionally, the entry of CMP into this case has also effectively forestalled any possible objections arising from the standing or legal interest of the original
parties.

For all the foregoing reasons, we believe that the Court should proceed to a resolution of the constitutional issues in this case.

Third Issue:

The Proper Interpretation of the Constitutional Phrase

"Agreements Involving Either Technical or Financial Assistance"

The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article XII of the 1987 Constitution. In order to appreciate its context,
Section 2 is reproduced in full:

"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of
the State. The State may directly undertake such activities, or it may enter into co-production, joint venture or production-sharing agreements with
Filipino citizens or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may
be the measure and limit of the grant.

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

"The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish-workers in rivers, lakes, bays and lagoons.

"The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote
the development and use of local scientific and technical resources.

"The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution." 31

No Restriction of Meaning by
a Verba Legis Interpretation

To interpret the foregoing provision, petitioners adamantly assert that the language of the Constitution should prevail; that the primary method of interpreting it is
to seek the ordinary meaning of the words used in its provisions. They rely on rulings of this Court, such as the following:

"The fundamental principle in constitutional construction however is that the primary source from which to ascertain constitutional intent or purpose is
the language of the provision itself. The presumption is that the words in which the constitutional provisions are couched express the objective
sought to be attained. In other words, verba legis prevails. Only when the meaning of the words used is unclear and equivocal should resort be made
to extraneous aids of construction and interpretation, such as the proceedings of the Constitutional Commission or Convention to shed light on and
ascertain the true intent or purpose of the provision being construed."32
Very recently, in Francisco v. The House of Representatives,33 this Court indeed had the occasion to reiterate the well-settled principles of constitutional
construction:

"First, verba legis, that is, wherever possible, the words used in the Constitution must be given their ordinary meaning except where technical terms
are employed. x x x.

xxxxxxxxx

"Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should be interpreted in accordance with the intent of its
framers. x x x.

xxxxxxxxx

"Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole."34

For ease of reference and in consonance with verba legis, we reconstruct and stratify the aforequoted Section 2 as follows:

1. All natural resources are owned by the State. Except for agricultural lands, natural resources cannot be alienated by the State.

2. The exploration, development and utilization (EDU) of natural resources shall be under the full control and supervision of the State.

3. The State may undertake these EDU activities through either of the following:

(a) By itself directly and solely

(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with Filipino citizens or corporations, at least 60 percent
of the capital of which is owned by such citizens

4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino citizens.

5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may enter into "agreements with foreign-owned corporations
involving either technical or financial assistance according to the general terms and conditions provided by law x x x."

Note that in all the three foregoing mining activities -- exploration, development and utilization -- the State may undertake such EDU activities by itself or in
tandem with Filipinos or Filipino corporations, except in two instances: first, in small-scale utilization of natural resources, which Filipinos may be allowed by law
to undertake; and second, in large-scale EDU of minerals, petroleum and mineral oils, which may be undertaken by the State via "agreementswith foreign-owned
corporations involving either technical or financial assistance" as provided by law.

Petitioners claim that the phrase "agreements x x x involving either technical or financial assistance" simply means technical assistance or financial assistance
agreements, nothing more and nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of paragraph 4 quoted above leads to
the inescapable conclusion that what a foreign-owned corporation may enter into with the government is merely an agreement for eitherfinancial or technical
assistance only, for the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils; such a limitation, they argue, excludes
foreign management and operation of a mining enterprise.35

This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the Constitution reserving to Filipino citizens and corporations the
use and enjoyment of the country's natural resources. They maintain that this Court's Decision36 of January 27, 2004 correctly declared the WMCP FTAA, along
with pertinent provisions of RA 7942, void for allowing a foreign contractor to have direct and exclusive management of a mining enterprise. Allowing such a
privilege not only runs counter to the "full control and supervision" that the State is constitutionally mandated to exercise over the exploration, development and
utilization of the country's natural resources; doing so also vests in the foreign company "beneficial ownership" of our mineral resources. It will be recalled that the
Decision of January 27, 2004 zeroed in on "management or other forms of assistance" or other activities associated with the "service contracts" of the martial law
regime, since "the management or operation of mining activities by foreign contractors, which is the primary feature of service contracts, was precisely the evil
that the drafters of the 1987 Constitution sought to eradicate."

On the other hand, the intervenor37 and public respondents argue that the FTAA allowed by paragraph 4 is not merely an agreement for supplying limited and
specific financial or technical services to the State. Rather, such FTAA is a comprehensive agreement for the foreign-owned corporation's integrated exploration,
development and utilization of mineral, petroleum or other mineral oils on a large-scale basis. The agreement, therefore, authorizes the foreign contractor's
rendition of a whole range of integrated and comprehensive services, ranging from the discovery to the development, utilization and production of minerals or
petroleum products.

We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia. First,
the drafters' choice of words -- their use of the phrase agreements x x x involving either technical or financial assistance -- does not indicate the intent
to exclude other modes of assistance. The drafters opted to use involving when they could have simply said agreements for financial or technical
assistance, if that was their intention to begin with. In this case, the limitation would be very clear and no further debate would ensue.

In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of assistance or activities having to do with, otherwise
related to or compatible with financial or technical assistance. The word "involving" as used in this context has three connotations that can be differentiated
thus: one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing," "requiring," "implying" or "necessitating"; and three, "including,"
"containing" or "comprising."38

Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving," when understood in the sense of "including," as in including
technical or financial assistance, necessarily implies that there are activities other than those that are being included. In other words, if an
agreement includes technical or financial assistance, there is apart from such assistance -- something else already in, and covered or may be covered by, the
said agreement.

In short, it allows for the possibility that matters, other than those explicitly mentioned, could be made part of the agreement. Thus, we are now led to the
conclusion that the use of the word "involving" implies that these agreements with foreign corporations are not limited to mere financial or technical assistance.
The difference in sense becomes very apparent when we juxtapose "agreements for technical or financial assistance" against "agreements including technical
or financial assistance." This much is unalterably clear in a verba legis approach.

Second, if the real intention of the drafters was to confine foreign corporations to financial or technical assistance and nothing more, their language would have
certainly been so unmistakably restrictive and stringent as to leave no doubt in anyone's mind about their true intent. For example, they would have used the
sentence foreign corporations are absolutely prohibited from involvement in the management or operation of mining or similar ventures or words of similar
import. A search for such stringent wording yields negative results. Thus, we come to the inevitable conclusion that there was a conscious and deliberate
decision to avoid the use of restrictive wording that bespeaks an intent not to use the expression "agreements x x x involving either technical or
financial assistance" in an exclusionary and limiting manner.

Deletion of "Service Contracts" to

Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se

Third, we do not see how a verba legis approach leads to the conclusion that "the management or operation of mining activities by foreign contractors, which is
the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate." Nowhere in the above-quoted
Section can be discerned the objective to keep out of foreign hands the management or operation of mining activities or the plan to eradicate service contracts as
these were understood in the 1973 Constitution. Still, petitioners maintain that the deletion or omission from the 1987 Constitution of the term "service contracts"
found in the 1973 Constitution sufficiently proves the drafters' intent to exclude foreigners from the management of the affected enterprises.

To our mind, however, such intent cannot be definitively and conclusively established from the mere failure to carry the same expression or term over to the new
Constitution, absent a more specific, explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign participation in the
management of mining operations, as previously allowed by the earlier Constitutions) is nothing short of bringing about a momentous sea change in the
economic and developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our government. We cannot imagine such a radical
shift being undertaken by our government, to the great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new Constitution. There has to be a much more definite and even
unarguable basis for such a drastic reversal of policies.

Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners, suffers from certain internal logical inconsistencies that
generate ambiguities in the understanding of the provision. As the intervenor pointed out, there has never been any constitutional or statutory provision that
reserved to Filipino citizens or corporations, at least 60 percent of which is Filipino-owned, the rendition of financial or technical assistance to companies
engaged in mining or the development of any other natural resource. The taking out of foreign-currency or peso-denominated loans or any other kind of financial
assistance, as well as the rendition of technical assistance -- whether to the State or to any other entity in the Philippines -- has never been restricted in favor of
Filipino citizens or corporations having a certain minimum percentage of Filipino equity. Such a restriction would certainly be preposterous and unnecessary. As a
matter of fact, financial, and even technical assistance, regardless of the nationality of its source, would be welcomed in the mining industry anytime with open
arms, on account of the dearth of local capital and the need to continually update technological know-how and improve technical skills.

There was therefore no need for a constitutional provision specifically allowing foreign-owned corporations to render financial or technical assistance, whether in
respect of mining or some other resource development or commercial activity in the Philippines. The last point needs to be emphasized: if merely financial or
technical assistance agreements are allowed, there would be no need to limit them to large-scale mining operations, as there would be far greater
need for them in the smaller-scale mining activities (and even in non-mining areas). Obviously, the provision in question was intended to refer to
agreements other than those for mere financial or technical assistance.

In like manner, there would be no need to require the President of the Republic to report to Congress, if only financial or technical assistance agreements are
involved. Such agreements are in the nature of foreign loans that -- pursuant to Section 20 of Article VII39 of the 1987 Constitution -- the President may contract or
guarantee, merely with the prior concurrence of the Monetary Board. In turn, the Board is required to report to Congress within thirty days from the end of every
quarter of the calendar year, not thirty days after the agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial, or technical assistance, what is the point of requiring that they be based on
real contributions to the economic growth and general welfare of the country? For instance, how is one to measure and assess the "real contributions" to the
"economic growth" and "general welfare" of the country that may ensue from a foreign-currency loan agreement or a technical-assistance agreement for, say, the
refurbishing of an existing power generating plant for a mining operation somewhere in Mindanao? Such a criterion would make more sense when applied to a
major business investment in a principal sector of the industry.

The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not to be understood as one limited only to foreign loans (or other
forms of financial support) and to technical assistance. There is definitely more to it than that. These are provisions permitting participation by foreign
companies; requiring the President's report to Congress; and using, as yardstick, contributions based on economic growth and general welfare.
These were neither accidentally inserted into the Constitution nor carelessly cobbled together by the drafters in lip service to shallow
nationalism. The provisions patently have significance and usefulness in a context that allows agreements with foreign companies to include more than mere
financial or technical assistance.

Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and limited financial service or technical assistance by a foreign
company. This argument begs the question "To whom or for whom would it be rendered"? or Who is being assisted? If the answer is "The State," then it
necessarily implies that the State itself is the one directly and solely undertaking the large-scale exploration, development and utilization of a mineral resource, so
it follows that the State must itself bear the liability and cost of repaying the financing sourced from the foreign lender and/or of paying compensation to the
foreign entity rendering technical assistance.

However, it is of common knowledge, and of judicial notice as well, that the government is and has for many many years been financially strapped, to the point
that even the most essential services have suffered serious curtailments -- education and health care, for instance, not to mention judicial services -- have had to
make do with inadequate budgetary allocations. Thus, government has had to resort to build-operate-transfer and similar arrangements with the private sector, in
order to get vital infrastructure projects built without any governmental outlay.

The very recent brouhaha over the gargantuan "fiscal crisis" or "budget deficit" merely confirms what the ordinary citizen has suspected all along. After the reality
check, one will have to admit the implausibility of a direct undertaking -- by the State itself -- of large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils. Such an undertaking entails not only humongous capital requirements, but also the attendant risk of never finding and
developing economically viable quantities of minerals, petroleum and other mineral oils.40

It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of only financial or technical assistance to the government was
deliberately crafted by the drafters of the Constitution, who were all well aware of the capital-intensive and technology-oriented nature of large-scale mineral or
petroleum extraction and the country's deficiency in precisely those areas.41 To say so would be tantamount to asserting that the provision was purposely
designed to ladle the large-scale development and utilization of mineral, petroleum and related resources with impossible conditions; and to remain forever and
permanently "reserved" for future generations of Filipinos.

A More Reasonable Look

at the Charter's Plain Language

Sixth, we shall now look closer at the plain language of the Charter and examining the logical inferences. The drafters chose to emphasize and
highlight agreements x x x involving either technical or financial assistance in relation to foreign corporations' participation in large-scale EDU. The inclusion of
this clause on "technical or financial assistance" recognizes the fact that foreign business entities and multinational corporations are the ones with the resources
and know-how to provide technical and/or financial assistance of the magnitude and type required for large-scale exploration, development and utilization of
these resources.

The drafters -- whose ranks included many academicians, economists, businessmen, lawyers, politicians and government officials -- were not unfamiliar with the
practices of foreign corporations and multinationals.

Neither were they so naïve as to believe that these entities would provide "assistance" without conditionalities or some quid pro quo. Definitely, as business
persons well know and as a matter of judicial notice, this matter is not just a question of signing a promissory note or executing a technology transfer agreement.
Foreign corporations usually require that they be given a say in the management, for instance, of day-to-day operations of the joint venture. They would demand
the appointment of their own men as, for example, operations managers, technical experts, quality control heads, internal auditors or comptrollers. Furthermore,
they would probably require seats on the Board of Directors -- all these to ensure the success of the enterprise and the repayment of the loans and other financial
assistance and to make certain that the funding and the technology they supply would not go to waste. Ultimately, they would also want to protect their business
reputation and bottom lines.42

In short, the drafters will have to be credited with enough pragmatism and savvy to know that these foreign entities will not enter into such "agreements involving
assistance" without requiring arrangements for the protection of their investments, gains and benefits.

Thus, by specifying such "agreements involving assistance," the drafters necessarily gave implied assent to everything that these agreements necessarily
entailed; or that could reasonably be deemed necessary to make them tenable and effective, including management authority with respect to the day-to-day
operations of the enterprise and measures for the protection of the interests of the foreign corporation, PROVIDED THAT Philippine sovereignty over natural
resources and full control over the enterprise undertaking the EDU activities remain firmly in the State.
Petitioners' Theory Deflated by the
Absence of Closing-Out Rules or Guidelines

Seventh and final point regarding the plain-language approach, one of the practical difficulties that results from it is the fact that there is nothing by way of
transitory provisions that would serve to confirm the theory that the omission of the term "service contract" from the 1987 Constitution signaled the demise of
service contracts.

The framers knew at the time they were deliberating that there were various service contracts extant and in force and effect, including those in the petroleum
industry. Many of these service contracts were long-term (25 years) and had several more years to run. If they had meant to ban service contracts altogether,
they would have had to provide for the termination or pretermination of the existing contracts. Accordingly, they would have supplied the specifics and
the when and how of effecting the extinguishment of these existing contracts (or at least the mechanics for determining them); and of putting in place the means
to address the just claims of the contractors for compensation for their investments, lost opportunities, and so on, if not for the recovery thereof.

If the framers had intended to put an end to service contracts, they would have at least left specific instructions to Congress to deal with these closing-out issues,
perhaps by way of general guidelines and a timeline within which to carry them out. The following are some extant examples of such transitory guidelines set
forth in Article XVIII of our Constitution:

"Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this Constitution shall have five years from its ratification to
comply on a graduated and proportionate basis with the minimum Filipino ownership requirement therein.

xxxxxxxxx

"Section 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning
military bases, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate
and, when the Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and
recognized as a treaty by the other contracting State.

"Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-
gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as
certified by the President, the Congress may extend such period.

A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen
properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial
action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall
be commenced within six months from the issuance thereof.

The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided." 43]

It is inconceivable that the drafters of the Constitution would leave such an important matter -- an expression of sovereignty as it were -- indefinitely hanging in
the air in a formless and ineffective state. Indeed, the complete absence of even a general framework only serves to further deflate petitioners' theory, like a
child's balloon losing its air.

Under the circumstances, the logical inconsistencies resulting from petitioners' literal and purely verba legisapproach to paragraph 4 of Section 2 of Article XII
compel a resort to other aids to interpretation.

Petitioners' Posture Also Negated

by Ratio Legis Et Anima

Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to supply the deficiencies of the plain-language approach, there is a
need for recourse to the proceedings of the 1986 Constitutional Commission. There is a need for ratio legis et anima.

Service Contracts Not

"Deconstitutionalized"

Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom) conclusively show that they discussed agreements involving
either technical or financial assistance in the same breadth as service contracts and used the terms interchangeably. The following exchange between
Commissioner Jamir (sponsor of the provision) and Commissioner Suarez irrefutably proves that the "agreements involving technical or financial assistance"
were none other than service contracts.

THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.

 MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my amendment by substitution reads: THE PRESIDENT
MAY ENTER INTO AGREEMENTS WITH FOREIGN-OWNED CORPORATIONS INVOLVING EITHER TECHNICAL OR FINANCIAL ASSISTANCE
FOR LARGE-SCALE EXPLORATION, DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES ACCORDING TO THE TERMS AND
CONDITIONS PROVIDED BY LAW.

MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the background.

MR. JAMIR. Thank you.

THE PRESIDENT. Commissioner Suarez is recognized.

MR. SUAREZ. Thank you, Madam President.

Will Commissioner Jamir answer a few clarificatory questions?

MR. JAMIR. Yes, Madam President.

MR. SUAREZ. This particular portion of the section has reference to what was popularly known before as service contracts, among other things,
is that correct?

MR. JAMIR. Yes, Madam President.

MR. SUAREZ. As it is formulated, the President may enter into service contracts but subject to the guidelines that may be promulgated by
Congress?

MR. JAMIR. That is correct.

MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the President, not upon Congress?

MR. JAMIR. That is also correct, Madam President.

MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made strictly in accordance with guidelines prescribed by
Congress?

MR. JAMIR. That is also correct.

MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers situations of the same nature?

MR. JAMIR. That is 100 percent correct.

MR. SUAREZ. I thank the Commissioner.

MR. JAMIR. Thank you very much.44

The following exchange leaves no doubt that the commissioners knew exactly what they were dealing with: service contracts.

THE PRESIDENT. Commissioner Gascon is recognized.

MR. GASCON. Commissioner Jamir had proposed an amendment with regard to special service contractswhich was accepted by the Committee.
Since the Committee has accepted it, I would like to ask some questions.

THE PRESIDENT. Commissioner Gascon may proceed.

MR. GASCON. As it is proposed now, such service contracts will be entered into by the President with the guidelines of a general law on service
contract to be enacted by Congress. Is that correct?

MR. VILLEGAS. The Commissioner is right, Madam President.

MR. GASCON. According to the original proposal, if the President were to enter into a particular agreement, he would need the concurrence of
Congress. Now that it has been changed by the proposal of Commissioner Jamir in that Congress will set the general law to which the President
shall comply, the President will, therefore, not need the concurrence of Congress every time he enters into service contracts. Is that correct?

MR. VILLEGAS. That is right.

MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to my proposed amendment, so I would like to object and
present my proposed amendment to the body.

xxxxxxxxx

MR. GASCON. Yes, it will be up to the body.

I feel that the general law to be set by Congress as regard service contract agreements which the President will enter into might be too general or
since we do not know the content yet of such a law, it might be that certain agreements will be detrimental to the interest of the Filipinos. This is in
direct contrast to my proposal which provides that there be effective constraints in the implementation of service contracts.

So instead of a general law to be passed by Congress to serve as a guideline to the President when entering into service contract agreements, I
propose that every service contract entered into by the President would need the concurrence of Congress, so as to assure the Filipinos of their
interests with regard to the issue in Section 3 on all lands of the public domain. My alternative amendment, which we will discuss later, reads: THAT
THE PRESIDENT SHALL ENTER INTO SUCH AGREEMENTS ONLY WITH THE CONCURRENCE OF TWO-THIRDS VOTE OF ALL THE
MEMBERS OF CONGRESS SITTING SEPARATELY.

xxxxxxxxx

MR. BENGZON. The reason we made that shift is that we realized the original proposal could breed corruption. By the way, this is not just confined
to service contracts but also to financial assistance. If we are going to make every single contract subject to the concurrence of Congress –
which, according to the Commissioner's amendment is the concurrence of two-thirds of Congress voting separately – then (1) there is a very great
chance that each contract will be different from another; and (2) there is a great temptation that it would breed corruption because of the great
lobbying that is going to happen. And we do not want to subject our legislature to that.

Now, to answer the Commissioner's apprehension, by "general law," we do not mean statements of motherhood. Congress can build all the
restrictions that it wishes into that general law so that every contract entered into by the President under that specific area will have to be uniform.
The President has no choice but to follow all the guidelines that will be provided by law.

MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a general law as to how much constraints there will be in
it. And to my mind, although the Committee's contention that the regular concurrence from Congress would subject Congress to extensive lobbying, I
think that is a risk we will have to take since Congress is a body of representatives of the people whose membership will be changing regularly as
there will be changing circumstances every time certain agreements are made. It would be best then to keep in tab and attuned to the interest of the
Filipino people, whenever the President enters into any agreement with regard to such an important matter as technical or financial assistance for
large-scale exploration, development and utilization of natural resources or service contracts, the people's elected representatives should be
on top of it.

xxxxxxxxx

MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner Gascon needs a few minutes, I can fill up the remaining
time while he completes his proposed amendment. I just wanted to ask Commissioner Jamir whether he would entertain a minor amendment to his
amendment, and it reads as follows: THE PRESIDENT SHALL SUBSEQUENTLY NOTIFY CONGRESS OF EVERY SERVICE
CONTRACT ENTERED INTO IN ACCORDANCE WITH THE GENERAL LAW. I think the reason is, if I may state it briefly, as Commissioner
Bengzon said, Congress can always change the general law later on to conform to new perceptions of standards that should be built into service
contracts. But the only way Congress can do this is if there were a notification requirement from the Office of the President that such service
contracts had been entered into, subject then to the scrutiny of the Members of Congress. This pertains to a situation where the service
contracts are already entered into, and all that this amendment seeks is the reporting requirement from the Office of the President. Will
Commissioner Jamir entertain that?

MR. JAMIR. I will gladly do so, if it is still within my power.

MR. VILLEGAS. Yes, the Committee accepts the amendment.

xxxxxxxxx

SR. TAN. Madam President, may I ask a question?

 THE PRESIDENT. Commissioner Tan is recognized.

SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the past service contracts under Mr. Marcos
is the general law to be enacted by the legislature and the notification of Congress by the President? That is the only difference, is it not?

MR. VILLEGAS. That is right.

SR. TAN. So those are the safeguards.

MR. VILLEGAS. Yes. There was no law at all governing service contracts before.

SR. TAN. Thank you, Madam President.45

More Than Mere Financial

and Technical Assistance
Entailed by the Agreements

The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently demonstrate that the drafters knew that the agreements with foreign
corporations were going to entail not mere technical or financial assistance but, rather, foreign investment in and management of an enterprise involved in large-
scale exploration, development and utilization of minerals, petroleum, and other mineral oils.

THE PRESIDENT. Commissioner Nolledo is recognized.

MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to speak for only two minutes in favor of the amendment of
Commissioner Gascon.

THE PRESIDENT. Commissioner Nolledo may proceed.

MR. NOLLEDO. With due respect to the members of the Committee and Commissioner Jamir, I am in favor of the objection of Commissioner
Gascon.

Madam President, I was one of those who refused to sign the 1973 Constitution, and one of the reasons is that there were many
provisions in the Transitory Provisions therein that favored aliens. I was shocked when I read a provision authorizing service
contracts while we, in this Constitutional Commission, provided for Filipino control of the economy. We are, therefore, providing for
exceptional instances where aliens may circumvent Filipino control of our economy. And one way of circumventing the rule in favor of
Filipino control of the economy is to recognize service contracts.

As far as I am concerned, if I should have my own way, I am for the complete deletion of this provision. However, we are presenting a
compromise in the sense that we are requiring a two-thirds vote of all the Members of Congress as a safeguard. I think we should not
mistrust the future Members of Congress by saying that the purpose of this provision is to avoid corruption. We cannot claim that they
are less patriotic than we are. I think the Members of this Commission should know that entering into service contracts is an exception
to the rule on protection of natural resources for the interest of the nation, and therefore, being an exception it should be subject,
whenever possible, to stringent rules. It seems to me that we are liberalizing the rules in favor of aliens.

I say these things with a heavy heart, Madam President. I do not claim to be a nationalist, but I love my country. Although we need
investments, we must adopt safeguards that are truly reflective of the sentiments of the people and not mere cosmetic safeguards as
they now appear in the Jamir amendment. (Applause)

Thank you, Madam President.46

Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates the limitations of the scope of such service contracts -- they are
valid only in regard to minerals, petroleum and other mineral oils, not to all natural resources.

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment and also to the Ople amendment. I propose to delete
"NATURAL RESOURCES" and substitute it with the following: MINERALS, PETROLEUM AND OTHER MINERAL OILS. On the Ople amendment, I
propose to add: THE NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY DAYS FROM THE EXECUTION OF THE SERVICE
CONTRACT.
 THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu of "NATURAL RESOURCES"?

MR. VILLEGAS. Could Commissioner Davide explain that?

MR. DAVIDE. Madam President, with the use of "NATURAL RESOURCES" here, it would necessarily include all lands of the public domain, our
marine resources, forests, parks and so on. So we would like to limit the scope of these service contracts to those areas really where these may be
needed, the exploitation, development and exploration of minerals, petroleum and other mineral oils. And so, we believe that we should really, if we
want to grant service contracts at all, limit the same to only those particular areas where Filipino capital may not be sufficient, and not to all
natural resources.

MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner made those enumerations and specifications, I suppose
he deliberately did not include "agricultural land"?

MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are into which service contracts may enter. So, beyond the
reach of any service contract will be lands of the public domain, timberlands, forests, marine resources, fauna and flora, wildlife and national
parks.47

After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions, Commissioner Davide made the following statement, which is
very relevant to our quest:

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum and mineral oils. The Commission has just approved the
possible foreign entry into the development, exploration and utilization of these minerals, petroleum and other mineral oils by virtue of the Jamir
amendment. I voted in favor of the Jamir amendment because it will eventually give way to vesting in exclusively Filipino citizens and corporations
wholly owned by Filipino citizens the right to utilize the other natural resources. This means that as a matter of policy, natural resources should be
utilized and exploited only by Filipino citizens or corporations wholly owned by such citizens. But by virtue of the Jamir amendment, since we feel
that Filipino capital may not be enough for the development and utilization of minerals, petroleum and other mineral oils, the President can enter
into service contracts with foreign corporations precisely for the development and utilization of such resources. And so, there is nothing to fear that
we will stagnate in the development of minerals, petroleum and mineral oils because we now allow service contracts. x x x."48

The foregoing are mere fragments of the framers' lengthy discussions of the provision dealing with agreements x x x involving either technical or financial
assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the ConCom were actually
debating about the martial-law-era service contracts for which they were crafting appropriate safeguards.

In the voting that led to the approval of Article XII by the ConCom, the explanations given by Commissioners Gascon, Garcia and Tadeo indicated that they had
voted to reject this provision on account of their objections to the "constitutionalization" of the "service contract" concept.

Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and not
guided only by a general law to be promulgated by Congress."49 Mr. Garcia explained, "Service contracts are given constitutional legitimization in Sec. 3, even
when they have been proven to be inimical to the interests of the nation, providing, as they do, the legal loophole for the exploitation of our natural resources for
the benefit of foreign interests."50 Likewise, Mr. Tadeo cited inter alia the fact that service contracts continued to subsist, enabling foreign interests to benefit from
our natural resources.51 It was hardly likely that these gentlemen would have objected so strenuously, had the provision called for mere technical or
financial assistance and nothing more.

The deliberations of the ConCom and some commissioners' explanation of their votes leave no room for doubt that the service contract concept precisely
underpinned the commissioners' understanding of the "agreements involving either technical or financial assistance."

Summation of the
Concom Deliberations

At this point, we sum up the matters established, based on a careful reading of the ConCom deliberations, as follows:

· In their deliberations on what was to become paragraph 4, the framers used the term service contracts in referring to agreements x x x involving
either technical or financial assistance.

· They spoke of service contracts as the concept was understood in the 1973 Constitution.

· It was obvious from their discussions that they were not about to ban or eradicate service contracts.
 · Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or minimize the abuses prevalent during the marital law
regime. In brief, they were going to permit service contracts with foreign corporations as contractors, but with safety measures to prevent abuses, as
an exception to the general norm established in the first paragraph of Section 2 of Article XII. This provision reserves or limits to Filipino citizens --
and corporations at least 60 percent of which is owned by such citizens -- the exploration, development and utilization of natural resources.

· This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for foreign investments in the EDU of minerals and
petroleum resources.

· The framers for the most part debated about the sort of safeguards that would be considered adequate and reasonable. But some of them, having
more "radical" leanings, wanted to ban service contracts altogether; for them, the provision would permit aliens to exploit and benefit from the
nation's natural resources, which they felt should be reserved only for Filipinos.

· In the explanation of their votes, the individual commissioners were heard by the entire body. They sounded off their individual opinions, openly
enunciated their philosophies, and supported or attacked the provisions with fervor. Everyone's viewpoint was heard.

· In the final voting, the Article on the National Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign corporations
as an exception to the general norm in paragraph 1 of Section 2 of the same article -- was resoundingly approved by a vote of 32 to 7, with 2
abstentions.

Agreements Involving Technical

or Financial Assistance Are

Service Contracts With Safeguards

From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or financial assistance, referred to in paragraph 4, are in
fact service contracts. But unlike those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the one hand; and on the
other, the government as principal or "owner" of the works. In the new service contracts, the foreign contractors provide capital, technology and technical know-
how, and managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and the government, through its agencies (DENR,
MGB), actively exercises control and supervision over the entire operation.

Such service contracts may be entered into only with respect to minerals, petroleum and other mineral oils. The grant thereof is subject to several safeguards,
among which are these requirements:

(1) The service contract shall be crafted in accordance with a general law that will set standard or uniform terms, conditions and requirements,
presumably to attain a certain uniformity in provisions and avoid the possible insertion of terms disadvantageous to the country.

(2) The President shall be the signatory for the government because, supposedly before an agreement is presented to the President for signature, it
will have been vetted several times over at different levels to ensure that it conforms to law and can withstand public scrutiny.

(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that branch of government an opportunity to look
over the agreement and interpose timely objections, if any.

Use of the Record of the

ConCom to Ascertain Intent

At this juncture, we shall address, rather than gloss over, the use of the "framers' intent" approach, and the criticism hurled by petitioners who quote a ruling of
this Court:

"While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional convention in order to arrive at the reason and
purpose of the resulting Constitution, resort thereto may be had only when other guides fail as said proceedings are powerless to vary the terms of
the Constitution when the meaning is clear. Debates in the constitutional convention 'are of value as showing the views of the individual members,
and as indicating the reason for their votes, but they give us no light as to the views of the large majority who did not talk, much less the mass of our
fellow citizens whose votes at the polls gave that instrument the force of fundamental law. We think it safer to construe the constitution from what
appears upon its face.' The proper interpretation therefore depends more on how it was understood by the people adopting it than in the framers'
understanding thereof."52

The notion that the deliberations reflect only the views of those members who spoke out and not the views of the majority who remained silent should be clarified.
We must never forget that those who spoke out were heard by those who remained silent and did not react. If the latter were silent because they happened not to
be present at the time, they are presumed to have read the minutes and kept abreast of the deliberations. By remaining silent, they are deemed to have signified
their assent to and/or conformity with at least some of the views propounded or their lack of objections thereto. It was incumbent upon them, as representatives
of the entire Filipino people, to follow the deliberations closely and to speak their minds on the matter if they did not see eye to eye with the proponents of the
draft provisions.

In any event, each and every one of the commissioners had the opportunity to speak out and to vote on the matter. Moreover, the individual explanations of votes
are on record, and they show where each delegate stood on the issues. In sum, we cannot completely denigrate the value or usefulness of the record of
the ConCom, simply because certain members chose not to speak out.

It is contended that the deliberations therein did not necessarily reflect the thinking of the voting population that participated in the referendum and ratified the
Constitution. Verily, whether we like it or not, it is a bit too much to assume that every one of those who voted to ratify the proposed Charter did so only after
carefully reading and mulling over it, provision by provision.

Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to read the draft Charter actually understood the import of its
provisions, much less analyzed it vis-à-vis the previous Constitutions. We believe that in reality, a good percentage of those who voted in favor of it did so more
out of faith and trust. For them, it was the product of the hard work and careful deliberation of a group of intelligent, dedicated and trustworthy men and women of
integrity and conviction, whose love of country and fidelity to duty could not be questioned.

In short, a large proportion of the voters voted "yes" because the drafters, or a majority of them, endorsed the proposed Constitution. What this fact translates to
is the inescapable conclusion that many of the voters in the referendum did not form their own isolated judgment about the draft Charter, much less about
particular provisions therein. They only relied or fell back and acted upon the favorable endorsement or recommendation of the framers as a group. In other
words, by voting yes, they may be deemed to have signified their voluntary adoption of the understanding and interpretation of the delegates with respect to the
proposed Charter and its particular provisions. "If it's good enough for them, it's good enough for me;" or, in many instances, "If it's good enough for President
Cory Aquino, it's good enough for me."

And even for those who voted based on their own individual assessment of the proposed Charter, there is no evidence available to indicate that their assessment
or understanding of its provisions was in fact different from that of the drafters. This unwritten assumption seems to be petitioners' as well. For all we know, this
segment of voters must have read and understood the provisions of the Constitution in the same way the framers had, an assumption that would account for the
favorable votes.

Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a group were supposed to represent the entire Filipino people.
Thus, we cannot but regard their views as being very much indicative of the thinking of the people with respect to the matters deliberated upon and to the Charter
as a whole.

It is therefore reasonable and unavoidable to make the following conclusion, based on the above arguments. As written by the framers and ratified
and adopted by the people, the Constitution allows the continued use of service contracts with foreign corporations -- as contractors who would
invest in and operate and manage extractive enterprises, subject to the full control and supervision of the State -- sans the abuses of the past regime.
The purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large scale for the immediate and tangible benefit of the
Filipino people.

In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact now hold a view different from that of the Decision, which
had these findings: (a) paragraph 4 of Section 2 of Article XII limits foreign involvement in the local mining industry to agreements strictly for either financial or
technical assistance only; (b) the same paragraph precludes agreements that grant to foreign corporations the management of local mining operations, as such
agreements are purportedly in the nature of service contracts as these were understood under the 1973 Constitution; (c) these service contracts were
supposedly "de-constitutionalized" and proscribed by the omission of the term service contracts from the 1987 Constitution; (d) since the WMCP FTAA contains
provisions permitting the foreign contractor to manage the concern, the said FTAA is invalid for being a prohibited service contract; and (e) provisions of RA 7942
and DAO 96-40, which likewise grant managerial authority to the foreign contractor, are also invalid and unconstitutional.

Ultimate Test: State's "Control"

Determinative of Constitutionality

But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a possible collision of constitutional provisions. On the one hand,
paragraph 1 of Section 2 of Article XII explicitly mandates the State to exercise "full control and supervision" over the exploration, development and utilization of
natural resources. On the other hand, paragraph 4 permits safeguarded service contracts with foreign contractors. Normally, pursuant thereto, the contractors
exercise management prerogatives over the mining operations and the enterprise as a whole. There is thus a legitimate ground to be concerned that either the
State's full control and supervision may rule out any exercise of management authority by the foreign contractor; or, the other way around, allowing the foreign
contractor full management prerogatives may ultimately negate the State's full control and supervision.

Ut Magis Valeat
Quam Pereat

Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam pereat -- every part of the Constitution is to be given effect,
and the Constitution is to be read and understood as a harmonious whole. Thus, "full control and supervision" by the State must be understood as one that does
not preclude the legitimate exercise of management prerogatives by the foreign contractor. Before any further discussion, we must stress the primacy and
supremacy of the principle of sovereignty and State control and supervision over all aspects of exploration, development and utilization of the country's natural
resources, as mandated in the first paragraph of Section 2 of Article XII.

But in the next breadth we have to point out that "full control and supervision" cannot be taken literally to mean that the State controls and supervises everything
involved, down to the minutest details, and makes all decisions required in the mining operations. This strained concept of control and supervision over the
mining enterprise would render impossible the legitimate exercise by the contractors of a reasonable degree of management prerogative and authority necessary
and indispensable to their proper functioning.

For one thing, such an interpretation would discourage foreign entry into large-scale exploration, development and utilization activities; and result in the
unmitigated stagnation of this sector, to the detriment of our nation's development. This scenario renders paragraph 4 inoperative and useless. And as
respondents have correctly pointed out, the government does not have to micro-manage the mining operations and dip its hands into the day-to-day affairs of the
enterprise in order for it to be considered as having full control and supervision.

The concept of control53 adopted in Section 2 of Article XII must be taken to mean less than dictatorial, all-encompassing control; but nevertheless sufficient to
give the State the power to direct, restrain, regulate and govern the affairs of the extractive enterprises. Control by the State may be on a macro level, through
the establishment of policies, guidelines, regulations, industry standards and similar measures that would enable the government to control the conduct of affairs
in various enterprises and restrain activities deemed not desirable or beneficial.

The end in view is ensuring that these enterprises contribute to the economic development and general welfare of the country, conserve the environment, and
uplift the well-being of the affected local communities. Such a concept of control would be compatible with permitting the foreign contractor sufficient and
reasonable management authority over the enterprise it invested in, in order to ensure that it is operating efficiently and profitably, to protect its investments and
to enable it to succeed.

The question to be answered, then, is whether RA 7942 and its Implementing Rules enable the government to exercise that degree of control
sufficient to direct and regulate the conduct of affairs of individual enterprises and restrain undesirable activities.

On the resolution of these questions will depend the validity and constitutionality of certain provisions of the Philippine Mining Act of 1995 (RA 7942) and its
Implementing Rules and Regulations (DAO 96-40), as well as the WMCP FTAA.

Indeed, petitioners charge54 that RA 7942, as well as its Implementing Rules and Regulations, makes it possible for FTAA contracts to cede full control and
management of mining enterprises over to fully foreign-owned corporations, with the result that the State is allegedly reduced to a passive regulator dependent
on submitted plans and reports, with weak review and audit powers. The State does not supposedly act as the owner of the natural resources for and on behalf
of the Filipino people; it practically has little effective say in the decisions made by the enterprise. Petitioners then conclude that the law, the implementing
regulations, and the WMCP FTAA cede "beneficial ownership" of the mineral resources to the foreign contractor.

A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims. Paraphrasing the Constitution, Section 4 of the statute
clearly affirms the State's control thus:

"Sec. 4. Ownership of Mineral Resources. – Mineral resources are owned by the State and the exploration, development, utilization and processing
thereof shall be under its full control and supervision. The State may directly undertake such activities or it may enter into mineral agreements with
contractors.

"The State shall recognize and protect the rights of the indigenous cultural communities to their ancestral lands as provided for by the Constitution."

The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:

"Sec. 2. Declaration of Policy. All mineral resources in public and private lands within the territory and exclusive economic zone of the Republic of the
Philippines are owned by the State. It shall be the responsibility of the State to promote their rational exploration, development, utilization and
conservation through the combined efforts of the Government and private sector in order to enhance national growth in a way that effectively
safeguards the environment and protects the rights of affected communities."

Sufficient Control Over Mining

Operations Vested in the State
by RA 7942 and DAO 96-40

RA 7942 provides for the State's control and supervision over mining operations. The following provisions thereof establish the mechanism of inspection and
visitorial rights over mining operations and institute reportorial requirements in this manner:

1. Sec. 8 which provides for the DENR's power of over-all supervision and periodic review for "the conservation, management, development and
proper use of the State's mineral resources";
 2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise "direct charge in the administration and
disposition of mineral resources", and empowers the MGB to "monitor the compliance by the contractor of the terms and conditions of the mineral
agreements", "confiscate surety and performance bonds", and deputize whenever necessary any member or unit of the Phil. National Police,
barangay, duly registered non-governmental organization (NGO) or any qualified person to police mining activities;

3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections of all installations, whether surface or underground",
utilized in mining operations.

4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:

"(g) Mining operations shall be conducted in accordance with the provisions of the Act and its IRR.

"(h) Work programs and minimum expenditures commitments.

xxxxxxxxx

"(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities to protect the environment and restore or
rehabilitate mined-out areas.

"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant data for its mining operation, and
that books of accounts and records shall be open for inspection by the government. x x x.

"(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and conditions.

"(n) x x x x x x x x x

"(o) Such other terms and conditions consistent with the Constitution and with this Act as the Secretary may deem to be for the best
interest of the State and the welfare of the Filipino people."

The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56 (g), (h), (l), (m) and (n) of the
Implementing Rules, DAO 96-40.

Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government's control over mining enterprises:

· The contractor is to relinquish to the government those portions of the contract area not needed for mining operations and not covered by any
declaration of mining feasibility (Section 35-e, RA 7942; Section 60, DAO 96-40).

· The contractor must comply with the provisions pertaining to mine safety, health and environmental protection (Chapter XI, RA 7942; Chapters XV
and XVI, DAO 96-40).

· For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).

· An FTAA contractor is obliged to open its books of accounts and records for inspection by the government (Section 56-m, DAO 96-40).

· An FTAA contractor has to dispose of the minerals and by-products at the highest market price and register with the MGB a copy of the sales
agreement (Section 56-n, DAO 96-40).

· MGB is mandated to monitor the contractor's compliance with the terms and conditions of the FTAA; and to deputize, when necessary, any
member or unit of the Philippine National Police, the barangay or a DENR-accredited nongovernmental organization to police mining activities
(Section 7-d and -f, DAO 96-40).

· An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA 7942; Section 66, DAO 96-40).

· A mining project under an FTAA cannot proceed to the construction/development/utilization stage, unless its Declaration of Mining Project
Feasibility has been approved by government (Section 24, RA 7942).

· The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without submission of the following documents:

1. Approved mining project feasibility study (Section 53-d, DAO 96-40)

 2. Approved three-year work program (Section 53-a-4, DAO 96-40)

3. Environmental compliance certificate (Section 70, RA 7942)

4. Approved environmental protection and enhancement program (Section 69, RA 7942)

5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section 27, RA 7160)

6. Free and prior informed consent by the indigenous peoples concerned, including payment of royalties through a Memorandum of
Agreement (Section 16, RA 7942; Section 59, RA 8371)

· The FTAA contractor is obliged to assist in the development of its mining community, promotion of the general welfare of its inhabitants, and
development of science and mining technology (Section 57, RA 7942).

· The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the case may be; per Section 270, DAO 96-40),
pertaining to the following:

1. Exploration

2. Drilling

3. Mineral resources and reserves

4. Energy consumption

5. Production

6. Sales and marketing

7. Employment

8. Payment of taxes, royalties, fees and other Government Shares

9. Mine safety, health and environment

10. Land use

11. Social development

12. Explosives consumption

· An FTAA pertaining to areas within government reservations cannot be granted without a written clearance from the government agencies
concerned (Section 19, RA 7942; Section 54, DAO 96-40).

· An FTAA contractor is required to post a financial guarantee bond in favor of the government in an amount equivalent to its expenditures
obligations for any particular year. This requirement is apart from the representations and warranties of the contractor that it has access to all the
financing, managerial and technical expertise and technology necessary to carry out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).

· Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an environmental report on the rehabilitation of the
mined-out area and/or mine waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2); annual reports of the mining
operations and records of geologic accounting (Section 56-m); annual progress reports and final report of exploration activities (Section 56-2).

· Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the following: a safety and health program (Section 144);
an environmental work program (Section 168); an annual environmental protection and enhancement program (Section 171).

The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA contractor by the statute and regulations easily overturns
petitioners' contention. The setup under RA 7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on submitted plans
and reports. On the contrary, the government agencies concerned are empowered to approve or disapprove -- hence, to influence, direct and change -- the
various work programs and the corresponding minimum expenditure commitments for each of the exploration, development and utilization phases of the mining
enterprise.

Once these plans and reports are approved, the contractor is bound to comply with its commitments therein. Figures for mineral production and sales are
regularly monitored and subjected to government review, in order to ensure that the products and by-products are disposed of at the best prices possible; even
copies of sales agreements have to be submitted to and registered with MGB. And the contractor is mandated to open its books of accounts and records for
scrutiny, so as to enable the State to determine if the government share has been fully paid.

The State may likewise compel the contractor's compliance with mandatory requirements on mine safety, health and environmental protection, and the use of
anti-pollution technology and facilities. Moreover, the contractor is also obligated to assist in the development of the mining community and to pay royalties to the
indigenous peoples concerned.

Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or noncompliance with statutes or regulations. This general, all-
around, multipurpose sanction is no trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a
mining project.

Overall, considering the provisions of the statute and the regulations just discussed, we believe that the State definitely possesses the means by which it can
have the ultimate word in the operation of the enterprise, set directions and objectives, and detect deviations and noncompliance by the contractor; likewise, it
has the capability to enforce compliance and to impose sanctions, should the occasion therefor arise.

In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the contrary, it will have to follow the government
line if it wants to stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of control and
supervision over the conduct of mining operations.

Section 3(aq) of RA 7942

Not Unconstitutional

An objection has been expressed that Section 3(aq)55 of RA 7942 -- which allows a foreign contractor to apply for and hold an exploration permit -- is
unconstitutional. The reasoning is that Section 2 of Article XII of the Constitution does not allow foreign-owned corporations to undertake mining operations
directly. They may act only as contractors of the State under an FTAA; and the State, as the party directly undertaking exploitation of its natural resources, must
hold through the government all exploration permits and similar authorizations. Hence, Section 3(aq), in permitting foreign-owned corporations to hold exploration
permits, is unconstitutional.

The objection, however, is not well-founded. While the Constitution mandates the State to exercise full control and supervision over the exploitation of mineral
resources, nowhere does it require the government to hold all exploration permits and similar authorizations. In fact, there is no prohibition at all against foreign or
local corporations or contractors holding exploration permits. The reason is not hard to see.

Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right to conduct exploration for all minerals in specified
areas. Such a permit does not amount to an authorization to extract and carry off the mineral resources that may be discovered. This phase involves nothing but
expenditures for exploring the contract area and locating the mineral bodies. As no extraction is involved, there are no revenues or incomes to speak of. In short,
the exploration permit is an authorization for the grantee to spend its own funds on exploration programs that are pre-approved by the government, without any
right to recover anything should no minerals in commercial quantities be discovered. The State risks nothing and loses nothing by granting these permits to local
or foreign firms; in fact, it stands to gain in the form of data generated by the exploration activities.

Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial viability of a mining area may, within the term of the permit, file
with the MGB a declaration of mining project feasibility accompanied by a work program for development. The approval of the mining project feasibility and
compliance with other requirements of RA 7942 vests in the grantee the exclusive right to an MPSA or any other mineral agreement, or to an FTAA.

Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production agreement, or an FTAA over the permit area, and the application
shall be approved if the permit grantee meets the necessary qualifications and the terms and conditions of any such agreement. Therefore, the contractor will be
in a position to extract minerals and earn revenues only when the MPSA or another mineral agreement, or an FTAA, is granted. At that point, the contractor's
rights and obligations will be covered by an FTAA or a mineral agreement.

But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or prospective contractor) cannot yet be deemed to have entered
into any contract or agreement with the State, and the grantee would definitely need to have some document or instrument as evidence of its right to conduct
exploration works within the specified area. This need is met by the exploration permit issued pursuant to Sections 3(aq), 20 and 23 of RA 7942.

In brief, the exploration permit serves a practical and legitimate purpose in that it protects the interests and preserves the rights of the exploration
permit grantee (the would-be contractor) -- foreign or local -- during the period of time that it is spending heavily on exploration works, without yet
being able to earn revenues to recoup any of its investments and expenditures. Minus this permit and the protection it affords, the exploration works and
expenditures may end up benefiting only claim-jumpers. Such a possibility tends to discourage investors and contractors. Thus, Section 3(aq) of RA 7942 may
not be deemed unconstitutional.
The Terms of the WMCP FTAA

A Deference to State Control

A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and supervision:

1. The contractor is obligated to account for the value of production and sale of minerals (Clause 1.4).

2. The contractor's work program, activities and budgets must be approved by/on behalf of the State (Clause 2.1).

3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).

4. Approval by the State is necessary for incorporating lands into the FTAA contract area (Clause 4.3-c).

5. The Bureau of Forest Development is vested with discretion in regard to approving the inclusion of forest reserves as part of the FTAA contract
area (Clause 4.5).

6. The contractor is obliged to relinquish periodically parts of the contract area not needed for exploration and development (Clause 4.6).

7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause 4.6-b).

8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).

9. The contractor is required to obtain State approval of its work programs for the succeeding two-year periods, containing the proposed work
activities and expenditures budget related to exploration (Clause 5.1).

10. The contractor is required to obtain State approval for its proposed expenditures for exploration activities (Clause 5.2).

11. The contractor is required to submit an annual report on geological, geophysical, geochemical and other information relating to its explorations
within the FTAA area (Clause 5.3-a).

12. The contractor is to submit within six months after expiration of exploration period a final report on all its findings in the contract area (Clause 5.3-
b).

13. The contractor, after conducting feasibility studies, shall submit a declaration of mining feasibility, along with a description of the area to be
developed and mined, a description of the proposed mining operations and the technology to be employed, and a proposed work program for the
development phase, for approval by the DENR secretary (Clause 5.4).

14. The contractor is obliged to complete the development of the mine, including construction of the production facilities, within the period stated in
the approved work program (Clause 6.1).

15. The contractor is obligated to submit for approval of the DENR secretary a work program covering each period of three fiscal years (Clause 6.2).

16. The contractor is to submit reports to the DENR secretary on the production, ore reserves, work accomplished and work in progress, profile of its
work force and management staff, and other technical information (Clause 6.3).

17. Any expansions, modifications, improvements and replacements of mining facilities shall be subject to the approval of the secretary (Clause 6.4).

18. The State has control with respect to the amount of funds that the contractor may borrow within the Philippines (Clause 7.2).

19. The State has supervisory power with respect to technical, financial and marketing issues (Clause 10.1-a).

20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within ten years of recovering specified expenditures, unless not
so required by subsequent legislation (Clause 10.1).

21. The State has the right to terminate the FTAA for the contractor's unremedied substantial breach thereof (Clause 13.2);
 22. The State's approval is needed for any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause 14.1).

We should elaborate a little on the work programs and budgets, and what they mean with respect to the State's ability to exercise full control and effective
supervision over the enterprise. For instance, throughout the initial five-year exploration and feasibility phase of the project, the contractor is mandated by Clause
5.1 of the WMCP FTAA to submit a series of work programs (copy furnished the director of MGB) to the DENR secretary for approval. The programs will detail
the contractor's proposed exploration activities and budget covering each subsequent period of two fiscal years.

In other words, the concerned government officials will be informed beforehand of the proposed exploration activities and expenditures of the contractor for each
succeeding two-year period, with the right to approve/disapprove them or require changes or adjustments therein if deemed necessary.

Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration activities during the first contract year of the exploration
period was fixed at not less than P24 million; and then for the succeeding years, the amount shall be as agreed between the DENR secretary and the contractor
prior to the commencement of each subsequent fiscal year. If no such agreement is arrived upon, the previous year's expenditure commitment shall apply.

This provision alone grants the government through the DENR secretary a very big say in the exploration phase of the project. This fact is not something to be
taken lightly, considering that the government has absolutely no contribution to the exploration expenditures or work activities and yet is given veto power over
such a critical aspect of the project. We cannot but construe as very significant such a degree of control over the project and, resultantly, over the mining
enterprise itself.

Following its exploration activities or feasibility studies, if the contractor believes that any part of the contract area is likely to contain an economic mineral
resource, it shall submit to the DENR secretary a declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description of the area
delineated for development and production, a description of the proposed mining operations including the technology to be used, a work program for
development, an environmental impact statement, and a description of the contributions to the economic and general welfare of the country to be generated by
the mining operations (pursuant to Clause 5.5).

The work program for development is subject to the approval of the DENR secretary. Upon its approval, the contractor must comply with it and complete the
development of the mine, including the construction of production facilities and installation of machinery and equipment, within the period provided in the
approved work program for development (per Clause 6.1).

Thus, notably, the development phase of the project is likewise subject to the control and supervision of the government. It cannot be emphasized enough that
the proper and timely construction and deployment of the production facilities and the development of the mine are of pivotal significance to the success of the
mining venture. Any missteps here will potentially be very costly to remedy. Hence, the submission of the work program for development to the DENR secretary
for approval is particularly noteworthy, considering that so many millions of dollars worth of investments -- courtesy of the contractor -- are made to depend on
the State's consideration and action.

Throughout the operating period, the contractor is required to submit to the DENR secretary for approval, copy furnished the director of MGB, work programs
covering each period of three fiscal years (per Clause 6.2). During the same period (per Clause 6.3), the contractor is mandated to submit various quarterly and
annual reports to the DENR secretary, copy furnished the director of MGB, on the tonnages of production in terms of ores and concentrates, with corresponding
grades, values and destinations; reports of sales; total ore reserves, total tonnage of ores, work accomplished and work in progress (installations and facilities
related to mining operations), investments made or committed, and so on and so forth.

Under Section VIII, during the period of mining operations, the contractor is also required to submit to the DENR secretary (copy furnished the director of MGB)
the work program and corresponding budget for the contract area, describing the mining operations that are proposed to be carried out during the period
covered. The secretary is, of course, entitled to grant or deny approval of any work program or budget and/or propose revisions thereto. Once the
program/budget has been approved, the contractor shall comply therewith.

In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of control and a grant of beneficial ownership of mineral
resources to the contractor in question, bestow upon the State more than adequate control and supervision over the activities of the contractor and the
enterprise.

No Surrender of Control
Under the WMCP FTAA

Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say, amount to a relinquishment of control by the State, since it
"cannot truly impose its own discretion" in respect of the submitted work programs.

"8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or variation thereofsubmitted by the Contractor unless within
sixty (60) days after submission by the Contractor the Secretary gives notice declining such approval or proposing a revision of certain features and
specifying its reasons therefor ('the Rejection Notice').

8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor to agree on amendments to the Work Programme or
Budget. If the Secretary and the Contractor fail to agree on the proposed revision within 30 days from delivery of the Rejection Notice then the Work
 Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved, so as not to unnecessarily delay the performance
of the Agreement.

8.4. x x x x x x x x x

8.5. So far as is practicable, the Contractor shall comply with any approved Work Programme and Budget. It is recognized by the Secretary and the
Contractor that the details of any Work Programmes or Budgets may require changes in the light of changing circumstances. The Contractor may
make such changes without approval of the Secretary provided they do not change the general objective of any Work Programme, nor entail a
downward variance of more than twenty per centum (20percent) of the relevant Budget. All other variations to an approved Work Programme or
Budget shall be submitted for approval of the Secretary."

From the provisions quoted above, petitioners generalize by asserting that the government does not participate in making critical decisions regarding the
operations of the mining firm. Furthermore, while the State can require the submission of work programs and budgets, the decision of the contractor will still
prevail, if the parties have a difference of opinion with regard to matters affecting operations and management.

We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For instance, Clause 8.2 merely provides a mechanism for
preventing the business or mining operations from grinding to a complete halt as a result of possibly over-long and unjustified delays in the government's
handling, processing and approval of submitted work programs and budgets. Anyway, the provision does give the DENR secretary more than sufficient time (60
days) to react to submitted work programs and budgets. It cannot be supposed that proper grounds for objecting thereto, if any exist, cannot be discovered within
a period of two months.

On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a disagreement over the submitted work program or budget arises
between the State and the contractor and results in a stalemate or impasse, in order that there will be no unreasonably long delays in the performance of the
works.

These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that the government will inexorably be aggrieved if and when
these temporary remedies come into play. First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the State as well as the
contractor. Second, who is to say that the work program or budget proposed by the contractor and deemed approved under Clause 8.3 would not be the better or
more reasonable or more effective alternative? The contractor, being the "insider," as it were, may be said to be in a better position than the State -- an outsider
looking in -- to determine what work program or budget would be appropriate, more effective, or more suitable under the circumstances.

All things considered, we take exception to the characterization of the DENR secretary as a subservient nonentity whom the contractor can overrule at will, on
account of Clause 8.3. And neither is it true that under the same clause, the DENR secretary has no authority whatsoever to disapprove the work program. As
Respondent WMCP reasoned in its Reply-Memorandum, the State -- despite Clause 8.3 -- still has control over the contract area and it may, as sovereign
authority, prohibit work thereon until the dispute is resolved. And ultimately, the State may terminate the agreement, pursuant to Clause 13.2 of the same FTAA,
citing substantial breach thereof. Hence, it clearly retains full and effective control of the exploitation of the mineral resources.

On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given that no one can accurately forecast under all circumstances,
or predict how situations may change. Hence, while approved work programs and budgets are to be followed and complied with as far as practicable, there may
be instances in which changes will have to be effected, and effected rapidly, since events may take shape and unfold with suddenness and urgency. Thus,
Clause 8.5 allows the contractor to move ahead and make changes without the express or implicit approval of the DENR secretary. Such changes are, however,
subject to certain conditions that will serve to limit or restrict the variance and prevent the contractor from straying very far from what has been approved.

Clause 8.5 provides the contractor a certain amount of flexibility to meet unexpected situations, while still guaranteeing that the approved work programs and
budgets are not abandoned altogether. Clause 8.5 does not constitute proof that the State has relinquished control. And ultimately, should there be disagreement
with the actions taken by the contractor in this instance as well as under Clause 8.3 discussed above, the DENR secretary may resort to cancellation/termination
of the FTAA as the ultimate sanction.

Discretion to Select Contract

Area Not an Abdication of Control

Next, petitioners complain that the contractor has full discretion to select -- and the government has no say whatsoever as to -- the parts of the contract area to
be relinquished pursuant to Clause 4.6 of the WMCP FTAA.56This clause, however, does not constitute abdication of control. Rather, it is a mere
acknowledgment of the fact that the contractor will have determined, after appropriate exploration works, which portions of the contract area do not contain
minerals in commercial quantities sufficient to justify developing the same and ought therefore to be relinquished. The State cannot just substitute its judgment for
that of the contractor and dictate upon the latter which areas to give up.

Moreover, we can be certain that the contractor's self-interest will propel proper and efficient relinquishment. According to private respondent,57 a mining
company tries to relinquish as much non-mineral areas as soon as possible, because the annual occupation fees paid to the government are based on the total
hectarage of the contract area, net of the areas relinquished. Thus, the larger the remaining area, the heftier the amount of occupation fees to be paid by the
contractor. Accordingly, relinquishment is not an issue, given that the contractor will not want to pay the annual occupation fees on the non-mineral parts of its
contract area. Neither will it want to relinquish promising sites, which other contractors may subsequently pick up.
Government Not a Subcontractor

Petitioners further maintain that the contractor can compel the government to exercise its power of eminent domain to acquire surface areas within the contract
area for the contractor's use. Clause 10.2 (e) of the WMCP FTAA provides that the government agrees that the contractor shall "(e) have the right to require the
Government at the Contractor's own cost, to purchase or acquire surface areas for and on behalf of the Contractor at such price and terms as may be acceptable
to the contractor. At the termination of this Agreement such areas shall be sold by public auction or tender and the Contractor shall be entitled to reimbursement
of the costs of acquisition and maintenance, adjusted for inflation, from the proceeds of sale."

According to petitioners, "government becomes a subcontractor to the contractor" and may, on account of this provision, be compelled "to make use of its power
of eminent domain, not for public purposes but on behalf of a private party, i.e., the contractor." Moreover, the power of the courts to determine the amount
corresponding to the constitutional requirement of just compensation has allegedly also been contracted away by the government, on account of the latter's
commitment that the acquisition shall be at such terms as may be acceptable to the contractor.

However, private respondent has proffered a logical explanation for the provision.58 Section 10.2(e) contemplates a situation applicable to foreign-owned
corporations. WMCP, at the time of the execution of the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As contractor, it has at
some future date to construct the infrastructure -- the mine processing plant, the camp site, the tailings dam, and other infrastructure -- needed for the large-scale
mining operations. It will then have to identify and pinpoint, within the FTAA contract area, the particular surface areas with favorable topography deemed ideal
for such infrastructure and will need to acquire the surface rights. The State owns the mineral deposits in the earth, and is also qualified to own land.

Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own land, identifies to the government the specific surface areas
within the FTAA contract area to be acquired for the mine infrastructure. The government then acquires ownership of the surface land areas on behalf of the
contractor, in order to enable the latter to proceed to fully implement the FTAA.

The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it, after termination of the FTAA, to be reimbursed from proceeds
of the sale of the surface areas, which the government will dispose of through public bidding. It should be noted that this provision will not be applicable to
Sagittarius as the present FTAA contractor, since it is a Filipino corporation qualified to own and hold land. As such, it may therefore freely negotiate with the
surface rights owners and acquire the surface property in its own right.

Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the rationale for the said provision. That provision does not call
for the exercise of the power of eminent domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified party to acquire the
surface rights on behalf of a foreign-owned contractor.

Rather than having the foreign contractor act through a dummy corporation, having the State do the purchasing is a better alternative. This will at least cause the
government to be aware of such transaction/s and foster transparency in the contractor's dealings with the local property owners. The government, then, will not
act as a subcontractor of the contractor; rather, it will facilitate the transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.

Absence of Provision
Requiring Sale at Posted
Prices Not Problematic

The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the contractor to sell the mineral products at posted or market
prices is not a problem. Apart from Clause 1.4 of the FTAA obligating the contractor to account for the total value of mineral production and the sale of minerals,
we can also look to Section 35 of RA 7942, which incorporates into all FTAAs certain terms, conditions and warranties, including the following:

"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant data for its mining operation, and that books of
accounts and records shall be open for inspection by the government.x x x

(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous terms and conditions."

For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of the minerals and by-products at the highest market price and
to register with the MGB a copy of the sales agreement. After all, the provisions of prevailing statutes as well as rules and regulations are deemed written into
contracts.

Contractor's Right to Mortgage

Not Objectionable Per Se

Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and encumber not only its rights and interests in the FTAA and the
infrastructure and improvements introduced, but also the mineral products extracted. Private respondents do not touch on this matter, but we believe that this
provision may have to do with the conditions imposed by the creditor-banks of the then foreign contractor WMCP to secure the lendings made or to be made to
the latter. Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on encumbrances of goods produced that can easily be sold and
converted into cash that can be applied to the repayment of loans. Banks even lend on the security of accounts receivable that are collectible within 90 days.59
It is not uncommon to find that a debtor corporation has executed deeds of assignment "by way of security" over the production for the next twelve months and/or
the proceeds of the sale thereof -- or the corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds may include authorizing
the creditors to sell the products themselves and to collect the sales proceeds and/or the accounts receivable.

Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any case, as will be explained below, even if it is allowed to mortgage
or encumber the mineral end-products themselves, the contractor is not freed of its obligation to pay the government its basic and additional shares in the net
mining revenue, which is the essential thing to consider.

In brief, the alarum raised over the contractor's right to mortgage the minerals is simply unwarranted. Just the same, the contractor must account for the value of
mineral production and the sales proceeds therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty percent share in the net
mining revenues of the contractor. The latter's right to mortgage the minerals does not negate the State's right to receive its share of net mining revenues.

Shareholders Free to Sell Their Stocks

Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority "to change its equity structure at any time." This provision may seem somewhat
unusual, but considering that WMCP then was 100 percent foreign-owned, any change would mean that such percentage would either stay unaltered or be
decreased in favor of Filipino ownership. Moreover, the foreign-held shares may change hands freely. Such eventuality is as it should be.

We believe it is not necessary for government to attempt to limit or restrict the freedom of the shareholders in the contractor to freely transfer, dispose of or
encumber their shareholdings, consonant with the unfettered exercise of their business judgment and discretion. Rather, what is critical is that, regardless of the
identity, nationality and percentage ownership of the various shareholders of the contractor -- and regardless of whether these shareholders decide to take the
company public, float bonds and other fixed-income instruments, or allow the creditor-banks to take an equity position in the company -- the foreign-owned
contractor is always in a position to render the services required under the FTAA, under the direction and control of the government.

Contractor's Right to Ask

For Amendment Not Absolute

With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government to allow amendments to the FTAA if required by banks and
other financial institutions as part of the conditions for new lendings. However, we do not find anything wrong with Clause 10.4(e), which only states that "if the
Contractor seeks to obtain financing contemplated herein from banks or other financial institutions, (the Government shall) cooperate with the Contractor in such
efforts provided that such financing arrangements will in no event reduce the Contractor's obligations or the Government's rights
hereunder." The colatilla obviously safeguards the State's interests; if breached, it will give the government cause to object to the proposed amendments.

On the other hand, Clause 10.4(i) provides that "the Government shall favourably consider any request from [the] Contractor for amendments of this Agreement
which are necessary in order for the Contractor to successfully obtain the financing." Petitioners see in this provision a complete renunciation of control. We
disagree.

The proviso does not say that the government shall grant any request for amendment. Clause 10.4(i) only obliges the State to favorably consider any such
request, which is not at all unreasonable, as it is not equivalent to saying that the government must automatically consent to it. This provision should be read
together with the rest of the FTAA provisions instituting government control and supervision over the mining enterprise. The clause should not be given an
interpretation that enables the contractor to wiggle out of the restrictions imposed upon it by merely suggesting that certain amendments are requested by the
lenders.

Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA are indispensable, as they enable the contractor to obtain
the needed financing; that without such contract changes, the funders would absolutely refuse to extend the loan; that there are no other sources of financing
available to the contractor (a very unlikely scenario); and that without the needed financing, the execution of the work programs will not proceed. But the bottom
line is, in the exercise of its power of control, the government has the final say on whether to approve or disapprove such requested amendments to the FTAA. In
short, approval thereof is not mandatory on the part of the government.

In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions sufficiently overturns petitioners' litany of objections to and
criticisms of the State's alleged lack of control.

Financial Benefits Not

Surrendered to the Contractor

One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned in the Decision that beneficial ownership of the mineral
resources had been conveyed to the contractor. This finding was based on the underlying assumption, common to the said provisions, that the foreign contractor
manages the mineral resources in the same way that foreign contractors in service contracts used to. "By allowing foreign contractors to manage or operate all
the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral
resources to these contractors, leaving the State with nothing but bare title thereto."60 As the WMCP FTAA contained similar provisions deemed by the ponente to
be abhorrent to the Constitution, the Decision struck down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable of being enforced in the courts at the suit of the beneficial
owner.61 Black's Law Dictionary indicates that the term is used in two senses: first, to indicate the interest of a beneficiary in trust property (also called "equitable
ownership"); and second, to refer to the power of a corporate shareholder to buy or sell the shares, though the shareholder is not registered in the corporation's
books as the owner.62 Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of all the benefits and privileges of ownership,
as against possession of the bare title to property.

An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP ownership, beneficial or otherwise, of the mining property it is
to develop, the minerals to be produced, or the proceeds of their sale, which can be legally asserted and enforced as against the State.

As public respondents correctly point out, any interest the contractor may have in the proceeds of the mining operation is merely the equivalent of the
consideration the government has undertaken to pay for its services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no different.
The contractor commits to perform certain services for the government in respect of the mining operation, and in turn it is to be compensated out of the net
mining revenues generated from the sale of mineral products. What would be objectionable is a contractual provision that unduly benefits the contractor far in
excess of the service rendered or value delivered, if any, in exchange therefor.

A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor DAO 99-56 can be said to convey beneficial ownership of any
mineral resource or product to any foreign FTAA contractor.

Equitable Sharing
of Financial Benefits

On the contrary, DAO 99-56, entitled "Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance Agreements" aims to ensure an equitable
sharing of the benefits derived from mineral resources. These benefits are to be equitably shared among the government (national and local), the FTAA
contractor, and the affected communities. The purpose is to ensure sustainable mineral resources development; and a fair, equitable, competitive and stable
investment regime for the large-scale exploration, development and commercial utilization of minerals. The general framework or concept followed in crafting the
fiscal regime of the FTAA is based on the principle that the government expects real contributions to the economic growth and general welfare of the country,
while the contractor expects a reasonable return on its investments in the project.63

Specifically, under the fiscal regime, the government's expectation is, inter alia, the receipt of its share from the taxes and fees normally paid by a mining
enterprise. On the other hand, the FTAA contractor is granted by the government certain fiscal and non-fiscal incentives64 to help support the former's cash flow
during the most critical phase (cost recovery) and to make the Philippines competitive with other mineral-producing countries. After the contractor has recovered
its initial investment, it will pay all the normal taxes and fees comprising the basic share of the government, plus an additional share for the government based on
the options and formulae set forth in DAO 99-56.

The said DAO spells out the financial benefits the government will receive from an FTAA, referred to as "the Government Share," composed of a basic
government share and an additional government share.

The basic government share is comprised of all direct taxes, fees and royalties, as well as other payments made by the contractor during the term of the FTAA.
These are amounts paid directly to (i) the national government (through the Bureau of Internal Revenue, Bureau of Customs, Mines & Geosciences Bureau and
other national government agencies imposing taxes or fees), (ii) the local government units where the mining activity is conducted, and (iii) persons and
communities directly affected by the mining project. The major taxes and other payments constituting the basic government share are enumerated below: 65

Payments to the National Government:

· Excise tax on minerals - 2 percent of the gross output of mining operations

· Contractor' income tax - maximum of 32 percent of taxable income for corporations

· Customs duties and fees on imported capital equipment -the rate is set by the Tariff and Customs Code (3-7 percent for chemicals; 3-
10 percent for explosives; 3-15 percent for mechanical and electrical equipment; and 3-10 percent for vehicles, aircraft and vessels

· VAT on imported equipment, goods and services – 10 percent of value

· Royalties due the government on minerals extracted from mineral reservations, if applicable – 5 percent of the actual market value of
the minerals produced

· Documentary stamp tax - the rate depends on the type of transaction

· Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares

· Withholding tax on interest payments on foreign loans -15 percent of the amount of interest
 · Withholding tax on dividend payments to foreign stockholders – 15 percent of the dividend

· Wharfage and port fees

· Licensing fees (for example, radio permit, firearms permit, professional fees)

· Other national taxes and fees.

Payments to Local Governments:

· Local business tax - a maximum of 2 percent of gross sales or receipts (the rate varies among local government units)

· Real property tax - 2 percent of the fair market value of the property, based on an assessment level set by the local government

· Special education levy - 1 percent of the basis used for the real property tax

· Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if located in a mineral reservation

· Community tax - maximum of PhP10,500 per year

· All other local government taxes, fees and imposts as of the effective date of the FTAA - the rate and the type depend on the local
government

Other Payments:

· Royalty to indigenous cultural communities, if any – 1 percent of gross output from mining operations

· Special allowance - payment to claim owners and surface rights holders

Apart from the basic share, an additional government share is also collected from the FTAA contractor in accordance with the second paragraph of Section 81
of RA 7942, which provides that the government share shall be comprised of, among other things, certain taxes, duties and fees. The subject proviso reads:

"The Government share in a financial or technical assistance agreement shall consist of, among other things, the contractor's corporate income tax, excise tax,
special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholder in
case of a foreign national, and all such other taxes, duties and fees as provided for under existing laws." (Bold types supplied.)

The government, through the DENR and the MGB, has interpreted the insertion of the phrase among other things as signifying that the government is entitled to
an "additional government share" to be paid by the contractor apart from the "basic share," in order to attain a fifty-fifty sharing of net benefits from mining.

The additional government share is computed by using one of three options or schemes presented in DAO 99-56: (1) a fifty-fifty sharing in the cumulative
present value of cash flows; (2) the share based on excess profits; and (3) the sharing based on the cumulative net mining revenue. The particular formula to be
applied will be selected by the contractor, with a written notice to the government prior to the commencement of the development and construction phase of the
mining project.66

Proceeds from the government shares arising from an FTAA contract are distributed to and received by the different levels of government in the following
proportions:

National Government 50 percent

Provincial Government 10 percent

Municipal Government 20 percent

Affected Barangays 20 percent

The portion of revenues remaining after the deduction of the basic and additional government shares is what goes to the contractor.
Government's Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees

In connection with the foregoing discussion on the basic and additional government shares, it is pertinent at this juncture to mention the criticism leveled at the
second paragraph of Section 81 of RA 7942, quoted earlier. The said proviso has been denounced, because, allegedly, the State's share in FTAAs with foreign
contractors has been limited to taxes, fees and duties only; in effect, the State has been deprived of a share in the after-tax income of the enterprise. In the face
of this allegation, one has to consider that the law does not define the term among other things; and the Office of the Solicitor General, in its Motion for
Reconsideration, appears to have erroneously claimed that the phrase refers to indirect taxes.

The law provides no definition of the term among other things, for the reason that Congress deliberately avoided setting unnecessary limitations as to what may
constitute compensation to the State for the exploitation and use of mineral resources. But the inclusion of that phrase clearly and unmistakably reveals
the legislative intent to have the State collect more than just the usual taxes, duties and fees. Certainly, there is nothing in that phrase -- or in the second
paragraph of Section 81 -- that would suggest that such phrase should be interpreted as referring only to taxes, duties, fees and the like.

Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among other things in the second paragraph of Section 81,67 the DENR
structured and formulated in DAO 99-56 the said additional government share. Such a share was to consist not of taxes, but of a share in the earnings or
cash flows of the mining enterprise. The additional government share was to be paid by the contractor on top of the basic share, so as to achieve a fifty-fifty
sharing -- between the government and the contractor -- of net benefits from mining. In the Ramos-DeVera paper, the explanation of the three options or
formulas68 -- presented in DAO 99-56 for the computation of the additional government share -- serves to debunk the claim that the government's take from an
FTAA consists solely of taxes, fees and duties.

Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data -- failed to fully replicate or echo the pertinent elucidation in the
Ramos-DeVera paper regarding the three schemes or options for computing the additional government share presented in DAO 99-56. Had due care been taken
by the OSG, the Court would have been duly apprised of the real nature and particulars of the additional share.

But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more abstruse mathematical jargon employed in DAO 99-56, the
OSG omitted any mention of the three options. Instead, the OSG skipped to a side discussion of the effect of indirect taxes, which had nothing at all to do with
the additional government share, to begin with. Unfortunately, this move created the wrong impression, pointed out in Justice Antonio T. Carpio's Opinion, that
the OSG had taken the position that the additional government share consisted of indirect taxes.

In any event, what is quite evident is the fact that the additional government share, as formulated, has nothing to do with taxes -- direct or indirect -- or with
duties, fees or charges. To repeat, it is over and above the basic government share composed of taxes and duties. Simply put, the additional share may be (a) an
amount that will result in a 50-50 sharing of the cumulative present value of the cash flows69 of the enterprise; (b) an amount equivalent to 25 percent of
the additional or excess profits of the enterprise, reckoned against a benchmark return on investments; or (c) an amount that will result in a fifty-fifty sharing of the
cumulative net mining revenue from the end of the recovery period up to the taxable year in question. The contractor is required to select one of the three options
or formulae for computing the additional share, an option it will apply to all of its mining operations.

As used above, "net mining revenue" is defined as the gross output from mining operations for a calendar year, less deductible expenses (inclusive of taxes,
duties and fees). Such revenue would roughly be equivalent to "taxable income" or income before income tax. Definitely, as compared with, say, calculating
the additional government share on the basis of net income (after income tax), the net mining revenue is a better and much more reasonable basis for such
computation, as it gives a truer picture of the profitability of the company.

To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and de Vera also performed some quantifications of the
government share via a financial modeling of each of the three options discussed above. They found that the government would get the highest share from the
option that is based on the net mining revenue, as compared with the other two options, considering only the basic and the additional shares; and that, even
though production rate decreases, the government share will actually increase when the net mining revenue and the additional profit-based options are used.

Furthermore, it should be noted that the three options or formulae do not yet take into account the indirect taxes70and other financial contributions71 of mining
projects. These indirect taxes and other contributions are real and actual benefits enjoyed by the Filipino people and/or government. Now, if some of the
quantifiable items are taken into account in the computations, the financial modeling would show that the total government share increases to 60 percent or
higher -- in one instance, as much as 77 percent and even 89 percent -- of the net present value of total benefits from the project. As noted in the Ramos-DeVera
paper, these results are not at all shabby, considering that the contractor puts in all the capital requirements and assumes all the risks, without the government
having to contribute or risk anything.

Despite the foregoing explanation, Justice Carpio still insisted during the Court's deliberations that the phrase among other things refers only to taxes, duties and
fees. We are bewildered by his position. On the one hand, he condemns the Mining Law for allegedly limiting the government's benefits only to taxes, duties and
fees; and on the other, he refuses to allow the State to benefit from the correct and proper interpretation of the DENR/MGB. To remove all doubts then, we hold
that the State's share is not limited to taxes, duties and fees only and that the DENR/MGB interpretation of the phrase among other things is correct. Definitely,
this DENR/MGB interpretation is not only legally sound, but also greatly advantageous to the government.

One last point on the subject. The legislature acted judiciously in not defining the terms among other things and, instead, leaving it to the agencies concerned to
devise and develop the various modes of arriving at a reasonable and fair amount for the additional government share. As can be seen from DAO 99-56, the
agencies concerned did an admirable job of conceiving and developing not just one formula, but three different formulae for arriving at the additional government
share. Each of these options is quite fair and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives or schemes for a possible improvement
of the fiscal regime for FTAAs are also being studied by the government.

Besides, not locking into a fixed definition of the term among other things will ultimately be more beneficial to the government, as it will have that innate flexibility
to adjust to and cope with rapidly changing circumstances, particularly those in the international markets. Such flexibility is especially significant for the
government in terms of helping our mining enterprises remain competitive in world markets despite challenging and shifting economic scenarios.

In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors under RA 7942, the government's share is limited to
taxes, fees and duties. Consequently, we find the attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.

Collections Not Made Uncertain

by the Third Paragraph of Section 81

The third or last paragraph of Section 8172 provides that the government share in FTAAs shall be collected when the contractor shall have recovered its pre-
operating expenses and exploration and development expenditures. The objection has been advanced that, on account of the proviso, the collection of the
State's share is not even certain, as there is no time limit in RA 7942 for this grace period or recovery period.

We believe that Congress did not set any time limit for the grace period, preferring to leave it to the concerned agencies, which are, on account of their technical
expertise and training, in a better position to determine the appropriate durations for such recovery periods. After all, these recovery periods are determined, to a
great extent, by technical and technological factors peculiar to the mining industry. Besides, with developments and advances in technology and in the
geosciences, we cannot discount the possibility of shorter recovery periods. At any rate, the concerned agencies have not been remiss in this area. The 1995
and 1996 Implementing Rules and Regulations of RA 7942 specify that the period of recovery, reckoned from the date of commercial operation, shall be for a
period not exceeding five years, or until the date of actual recovery, whichever comes earlier.

Approval of Pre-Operating
Expenses Required by RA 7942

Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating, exploration and development expenses of the foreign contractors,
who are in effect given unfettered discretion to determine the amounts of such expenses. Supposedly, nothing prevents the contractors from recording such
expenses in amounts equal to the mining revenues anticipated for the first 10 or 15 years of commercial production, with the result that the share of the State will
be zero for the first 10 or 15 years. Moreover, under the circumstances, the government would be unable to say when it would start to receive its share under the
FTAA.

We believe that the argument is based on incorrect information as well as speculation. Obviously, certain crucial provisions in the Mining Law were overlooked.
Section 23, dealing with the rights and obligations of the exploration permit grantee, states: "The permittee shall undertake exploration work on the area as
specified by its permit based on an approved work program." The next proviso reads: "Any expenditure in excess of the yearly budget of the approved work
program may be carried forward and credited to the succeeding years covering the duration of the permit. x x x." (underscoring supplied)

Clearly, even at the stage of application for an exploration permit, the applicant is required to submit -- for approval by the government -- a proposed work
program for exploration, containing a yearly budget of proposed expenditures. The State has the opportunity to pass upon (and approve or reject) such proposed
expenditures, with the foreknowledge that -- if approved -- these will subsequently be recorded as pre-operating expenses that the contractor will have to recoup
over the grace period. That is not all.

Under Section 24, an exploration permit holder who determines the commercial viability of a project covering a mining area may, within the term of the permit, file
with the Mines and Geosciences Bureau a declaration of mining project feasibility. This declaration is to be accompanied by a work program for development for
the Bureau's approval, the necessary prelude for entering into an FTAA, a mineral production sharing agreement (MPSA), or some other mineral agreement. At
this stage, too, the government obviously has the opportunity to approve or reject the proposed work program and budgeted expenditures for development
works on the project. Such expenditures will ultimately become the pre-operating and development costs that will have to be recovered by the contractor.

Naturally, with the submission of approved work programs and budgets for the exploration and the development/construction phases, the government will be able
to scrutinize and approve or reject such expenditures. It will be well-informed as to the amounts of pre-operating and other expenses that the contractor may
legitimately recover and the approximate period of time needed to effect such a recovery. There is therefore no way the contractor can just randomly post any
amount of pre-operating expenses and expect to recover the same.

The aforecited provisions on approved work programs and budgets have counterparts in Section 35, which deals with the terms and conditions exclusively
applicable to FTAAs. The said provision requires certain terms and conditions to be incorporated into FTAAs; among them, "a firm commitment x x x of an
amount corresponding to the expenditure obligation that will be invested in the contract area" and "representations and warranties x x x to timely deploy
these [financing, managerial and technical expertise and technological] resources under its supervision pursuant to the periodic work programs and related
budgets x x x," as well as "work programs and minimum expenditures commitments." (underscoring supplied)

Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the proposed expenditures under an FTAA and approve or reject
them. It has access to all the information it may need in order to determine in advance the amounts of pre-operating and developmental expenses that will have
to be recovered by the contractor and the amount of time needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in any manner unconstitutional.

No Deprivation of Beneficial Rights

It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed above), Sections 80, 84 and 112 of RA 7942 also operate to
deprive the State of beneficial rights of ownership over mineral resources; and give them away for free to private business enterprises (including foreign owned
corporations). Likewise, the said provisions have been construed as constituting, together with Section 81, an ingenious attempt to resurrect the old and
discredited system of "license, concession or lease."

Specifically, Section 80 is condemned for limiting the State's share in a mineral production-sharing agreement (MPSA) to just the excise tax on the mineral
product. Under Section 151(A) of the Tax Code, such tax is only 2 percent of the market value of the gross output of the minerals. The colatilla in Section 84, the
portion considered offensive to the Constitution, reiterates the same limitation made in Section 80.73

It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and have no application to FTAAs. These particular statutory
provisions do not come within the issues that were defined and delineated by this Court during the Oral Argument -- particularly the third issue, which pertained
exclusively to FTAAs. Neither did the parties argue upon them in their pleadings. Hence, this Court cannot make any pronouncement in this case regarding the
constitutionality of Sections 80 and 84 without violating the fundamental rules of due process. Indeed, the two provisos will have to await another case specifically
placing them in issue.

On the other hand, Section 11274 is disparaged for allegedly reverting FTAAs and all mineral agreements to the old and discredited "license, concession or lease"
system. This Section states in relevant part that "the provisions of Chapter XIV [which includes Sections 80 to 82] on government share in mineral production-
sharing agreement x x x shall immediately govern and apply to a mining lessee or contractor." (underscoring supplied) This provision is construed as signifying
that the 2 percent excise tax which, pursuant to Section 80, comprises the government share in MPSAs shall now also constitute the government share in FTAAs
-- as well as in co-production agreements and joint venture agreements -- to the exclusion of revenues of any other nature or from any other source.

Apart from the fact that Section 112 likewise does not come within the issues delineated by this Court during the Oral Argument, and was never touched upon by
the parties in their pleadings, it must also be noted that the criticism hurled against this Section is rooted in unwarranted conclusions made without considering
other relevant provisions in the statute. Whether Section 112 may properly apply to co-production or joint venture agreements, the fact of the matter is that it
cannot be made to apply to FTAAs.

First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied to them at all is the fact that it happens to use the word
"contractor." Hence, it is a bit of a stretch to insist that it covers FTAAs as well. Second, mineral agreements, of which there are three types -- MPSAs, co-
production agreements, and joint venture agreements -- are covered by Chapter V of RA 7942. On the other hand, FTAAs are covered by and in fact are the
subject of Chapter VI, an entirely different chapter altogether. The law obviously intends to treat them as a breed apart from mineral agreements, since Section
35 (found in Chapter VI) creates a long list of specific terms, conditions, commitments, representations and warranties -- which have not been made applicable to
mineral agreements -- to be incorporated into FTAAs.

Third, under Section 39, the FTAA contractor is given the option to "downgrade" -- to convert the FTAA into a mineral agreement at any time during the term if
the economic viability of the contract area is inadequate to sustain large-scale mining operations. Thus, there is no reason to think that the law through Section
112 intends to exact from FTAA contractors merely the same government share (a 2 percent excise tax) that it apparently demands from contractors under the
three forms of mineral agreements. In brief, Section 112 does not apply to FTAAs.

Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court must rule now on the constitutionality of Sections 80, 84 and 112,
allegedly because the WMCP FTAA contains a provision which grants the contractor unbridled and "automatic" authority to convert the FTAA into an MPSA; and
should such conversion happen, the State would be prejudiced since its share would be limited to the 2 percent excise tax. Justice Carpio adds that there are five
MPSAs already signed just awaiting the judgment of this Court on respondents' and intervenor's Motions for Reconsideration. We hold however that, at this point,
this argument is based on pure speculation. The Court cannot rule on mere surmises and hypothetical assumptions, without firm factual anchor. We repeat: basic
due process requires that we hear the parties who have a real legal interest in the MPSAs (i.e. the parties who executed them) before these MPSAs can be
reviewed, or worse, struck down by the Court. Anything less than that requirement would be arbitrary and capricious.

In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor must comply with the law, particularly Section 39 of RA
7942; inter alia, it must convincingly show that the "economic viability of the contract is found to be inadequate to justify large-scale mining operations;" second, it
must contend with the President's exercise of the power of State control over the EDU of natural resources; and third, it will have to risk a possible declaration of
the unconstitutionality (in a proper case) of Sections 80, 84 and 112.

The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an FTAA has already been executed and entered into, and is
presumably being implemented, when the contractor "discovers" that the mineral ore reserves in the contract area are not sufficient to justify large-scale mining,
and thus the contractor requests the conversion of the FTAA into an MPSA. The contractor in effect needs to explain why, despite its exploration activities,
including the conduct of various geologic and other scientific tests and procedures in the contract area, it was unable to determine correctly the mineral ore
reserves and the economic viability of the area. The contractor must explain why, after conducting such exploration activities, it decided to file a declaration of
mining feasibility, and to apply for an FTAA, thereby leading the State to believe that the area could sustain large-scale mining. The contractor must justify fully
why its earlier findings, based on scientific procedures, tests and data, turned out to be wrong, or were way off. It must likewise prove that its new findings, also
based on scientific tests and procedures, are correct. Right away, this puts the contractor's technical capabilities and expertise into serious doubt. We wonder if
anyone would relish being in this situation. The State could even question and challenge the contractor's qualification and competence to continue the activity
under an MPSA.

All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on considerations of due process -- cannot rule upon them
here. Anyway, if later on these Sections are declared unconstitutional, such declaration will not affect the other portions since they are clearly
separable from the rest.

Our Mineral Resources Not

Given Away for Free by RA 7942

Nevertheless, if only to disabuse our minds, we should address the contention that our mineral resources are effectively given away for free by the law (RA 7942)
in general and by Sections 80, 81, 84 and 112 in particular.

Foreign contractors do not just waltz into town one day and leave the next, taking away mineral resources without paying anything. In order to get at the minerals,
they have to invest huge sums of money (tens or hundreds of millions of dollars) in exploration works first. If the exploration proves unsuccessful, all the cash
spent thereon will not be returned to the foreign investors; rather, those funds will have been infused into the local economy, to remain there permanently. The
benefits therefrom cannot be simply ignored. And assuming that the foreign contractors are successful in finding ore bodies that are viable for commercial
exploitation, they do not just pluck out the minerals and cart them off. They have first to build camp sites and roadways; dig mine shafts and connecting tunnels;
prepare tailing ponds, storage areas and vehicle depots; install their machinery and equipment, generator sets, pumps, water tanks and sewer systems, and so
on.

In short, they need to expend a great deal more of their funds for facilities, equipment and supplies, fuel, salaries of local labor and technical staff, and other
operating expenses. In the meantime, they also have to pay taxes,75 duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility, development
and construction phases together add up to as many as eleven years.76 The contractors have to continually shell out funds for the duration of over a decade,
before they can commence commercial production from which they would eventually derive revenues. All that money translates into a lot of "pump-priming" for
the local economy.

Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still, that eventuality will happen only after they shall have first put
out the cash and fueled the economy. Moreover, in the process of recouping their investments and costs, the foreign contractors do not actually pull out the
money from the economy. Rather, they recover or recoup their investments out of actual commercial production by not paying a portion of the basic government
share corresponding to national taxes, along with the additional government share, for a period of not more than five years77 counted from the commencement of
commercial production.

It must be noted that there can be no recovery without commencing actual commercial production. In the meantime that the contractors are recouping costs, they
need to continue operating; in order to do so, they have to disburse money to meet their various needs. In short, money is continually infused into the economy.

The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign contractors are allowed to recover their investments and costs, the
end result is that they practically get the minerals for free, which leaves the Filipino people none the better for it.

All Businesses Entitled

to Cost Recovery

Let it be put on record that not only foreign contractors, but all businessmen and all business entities in general, have to recoup their investments and costs. That
is one of the first things a student learns in business school. Regardless of its nationality, and whether or not a business entity has a five-year cost recovery
period, it will -- must -- have to recoup its investments, one way or another. This is just common business sense. Recovery of investments is absolutely
indispensable for business survival; and business survival ensures soundness of the economy, which is critical and contributory to the general welfare of the
people. Even government corporations must recoup their investments in order to survive and continue in operation. And, as the preceding discussion has shown,
there is no business that gets ahead or earns profits without any cost to it.

It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily accessible or transformable into usable and negotiable
currency without the intervention of the credible mining companies. Those untapped mineral resources, hidden beneath tons of earth and rock, may as well not
be there for all the good they do us right now. They have first to be extracted and converted into marketable form, and the country needs the foreign contractor's
funds, technology and know-how for that.

After about eleven years of pre-operation and another five years for cost recovery, the foreign contractors will have just broken even. Is it likely that they would at
that point stop their operations and leave? Certainly not. They have yet to make profits. Thus, for the remainder of the contract term, they must strive to maintain
profitability. During this period, they pay the whole of the basic government share and the additional government share which, taken together with indirect taxes
and other contributions, amount to approximately 60 percent or more of the entire financial benefits generated by the mining venture.

In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a lot of hard cash to even begin to do what they do. And what
they do in this country ultimately benefits the local economy, grows businesses, generates employment, and creates infrastructure, as discussed above. Hence,
we definitely disagree with the sweeping claim that no FTAA under Section 81 will ever make any real contribution to the growth of the economy or to the general
welfare of the country. This is not a plea for foreign contractors. Rather, this is a question of focusing the judicial spotlight squarely on all the pertinent facts as
they bear upon the issue at hand, in order to avoid leaping precipitately to ill-conceived conclusions not solidly grounded upon fact.

Repatriation of After-Tax Income

Another objection points to the alleged failure of the Mining Law to ensure real contributions to the economic growth and general welfare of the country, as
mandated by Section 2 of Article XII of the Constitution. Pursuant to Section 81 of the law, the entire after-tax income arising from the exploitation of mineral
resources owned by the State supposedly belongs to the foreign contractors, which will naturally repatriate the said after-tax income to their home countries,
thereby resulting in no real contribution to the economic growth of this country. Clearly, this contention is premised on erroneous assumptions.

First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted the second paragraph of Section 81 of RA 7942 to mean that
the government is entitled to an additional share, to be computed based on any one of the following factors: net mining revenues, the present value of the cash
flows, or excess profits reckoned against a benchmark rate of return on investments. So it is not correct to say that all of the after-tax income will accrue to the
foreign FTAA contractor, as the government effectively receives a significant portion thereof.

Second, the foreign contractors can hardly "repatriate the entire after-tax income to their home countries." Even a bit of knowledge of corporate finance will show
that it will be impossible to maintain a business as a "going concern" if the entire "net profit" earned in any particular year will be taken out and repatriated. The
"net income" figure reflected in the bottom line is a mere accounting figure not necessarily corresponding to cash in the bank, or other quick assets. In order to
produce and set aside cash in an amount equivalent to the bottom line figure, one may need to sell off assets or immediately collect receivables or liquidate
short-term investments; but doing so may very likely disrupt normal business operations.

In terms of cash flows, the funds corresponding to the net income as of a particular point in time are actually in usein the normal course of business operations.
Pulling out such net income disrupts the cash flows and cash position of the enterprise and, depending on the amount being taken out, could seriously cripple or
endanger the normal operations and financial health of the business enterprise. In short, no sane business person, concerned with maintaining the mining
enterprise as a going concern and keeping a foothold in its market, can afford to repatriate the entire after-tax income to the home country.

The State's Receipt of Sixty

Percent of an FTAA Contractor's
After-Tax Income Not Mandatory

We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the State must receive at least 60 percent of the after-tax income
from the exploitation of its mineral resources. This share is the equivalent of the constitutional requirement that at least 60 percent of the capital, and hence 60
percent of the income, of mining companies should remain in Filipino hands.

First, we fail to see how we can properly conclude that the Constitution mandates the State to extract at least 60 percent of the after-tax income from a mining
company run by a foreign contractor. The argument is that the Charter requires the State's partner in a co-production agreement, joint venture agreement or
MPSA to be a Filipino corporation (at least 60 percent owned by Filipino citizens).

We question the logic of this reasoning, premised on a supposedly parallel or analogous situation. We are, after all, dealing with an essentially different equation,
one that involves different elements. The Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all situations at all times
and in all circumstances.If ever such was the intention of the framers, they would have spelt it out in black and white. Verba legis will serve to dispel
unwarranted and untenable conclusions.

Second, if we would bother to do the math, we might better appreciate the impact (and reasonableness) of what we are demanding of the foreign contractor. Let
us use a simplified illustration. Let us base it on gross revenues of, say, P500. After deducting operating expenses, but prior to income tax, suppose a mining firm
makes a taxable incomeof P100. A corporate income tax of 32 percent results in P32 of taxable income going to the government, leaving the mining firm
with P68. Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the mining firm.

At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100 of taxable income, leaving the mining firm with only P27.20.
But that is not all. The government has also taken 2 percent excise tax "off the top," equivalent to another P10. Under the minimum 60 percent proposal, the
government nets around P82.80 (not counting other taxes, duties, fees and charges) from a taxable income of P100 (assuming gross revenues of P500, for
purposes of illustration). On the other hand, the foreign contractor, which provided all the capital, equipment and labor, and took all the entrepreneurial risks -
- receives P27.20. One cannot but wonder whether such a distribution is even remotely equitable and reasonable, considering the nature of the mining business.
The amount of P82.80 out of P100.00 is really a lot – it does not matter that we call part of it excise tax or income tax, and another portion thereof income from
exploitation of mineral resources. Some might think it wonderful to be able to take the lion's share of the benefits. But we have to ask ourselves if we are really
serious in attracting the investments that are the indispensable and key element in generating the monetary benefits of which we wish to take the lion's
share. Fairness is a credo not only in law, but also in business.

Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining business. The reason happens to be the fact that in
petroleum operations, the bulk of expenditures is in exploration, but once the contractor has found and tapped into the deposit, subsequent investments and
expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the work entailed is just a matter of piping, transporting and storing. Not so in
mineral mining. The ore body does not pop out on its own. Even after it has been located, the contractor must continually invest in machineries and expend funds
to dig and build tunnels in order to access and extract the minerals from underneath hundreds of tons of earth and rock.
As already stated, the numerous intrinsic differences involved in their respective operations and requirements, cost structures and investment needs render it
highly inappropriate to use petroleum operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of the distinctly
different situations and stubbornly insist on the "minimum 60 percent."

The Mining and the Oil Industries

Different From Each Other

To stress, there is no independent showing that the taking of at least a 60 percent share in the after-tax income of a mining company operated by a foreign
contractor is fair and reasonable under most if not all circumstances. The fact that some petroleum companies like Shell acceded to such percentage of
sharing does not ipso facto mean that it is per se reasonable and applicable to non-petroleum situations (that is, mining companies) as well. We can take judicial
notice of the fact that there are, after all, numerous intrinsic differences involved in their respective operations and equipment or technological requirements,
costs structures and capital investment needs, and product pricing and markets.

There is no showing, for instance, that mining companies can readily cope with a 60 percent government share in the same way petroleum companies apparently
can. What we have is a suggestion to enforce the 60 percent quota on the basis of a disjointed analogy. The only factor common to the two disparate situations is
the extraction of natural resources.

Indeed, we should take note of the fact that Congress made a distinction between mining firms and petroleum companies. In Republic Act No. 7729 -- "An Act
Reducing the Excise Tax Rates on Metallic and Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section 151(a) of the National Internal
Revenue Code, as amended" -- the lawmakers fixed the excise tax rate on metallic and non-metallic minerals at two percent of the actual market value of the
annual gross output at the time of removal. However, in the case of petroleum, the lawmakers set the excise tax rate for the first taxable sale at fifteen percent of
the fair international market price thereof.

There must have been a very sound reason that impelled Congress to impose two very dissimilar excise tax rate. We cannot assume, without proof, that our
honorable legislators acted arbitrarily, capriciously and whimsically in this instance. We cannot just ignore the reality of two distinctly different situations and
stubbornly insist on going "minimum 60 percent."

To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net revenues does not necessarily imply that mining contracts
should likewise yield a minimum of 60 percent for the State. Jumping to that erroneous conclusion is like comparing apples with oranges. The exploration,
development and utilization of gas and oil are simply different from those of mineral resources.

To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial quantities is struck and the wells are put in place, the risk is relatively
over and black gold simply flows out continuously with comparativelyless need for fresh investments and technology.

On the other hand, even if minerals are found in viable quantities, there is still need for continuous fresh capital and expertise to dig the mineral ores from the
mines. Just because deposits of mineral ores are found in one area is no guarantee that an equal amount can be found in the adjacent areas. There are simply
continuing risks and need for more capital, expertise and industry all the time.

Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the mineral industry. As mines are explored and extracted, vast
employment is created, roads and other infrastructure are built, and other multiplier effects arise. On the other hand, once oil wells start producing, there is less
need for employment. Roads and other public works need not be constructed continuously. In fine, there is no basis for saying that government revenues from
the oil industry and from the mineral industries are to be identical all the time.

Fourth, to our mind, the proffered "minimum 60 percent" suggestion tends to limit the flexibility and tie the hands of government, ultimately hampering the
country's competitiveness in the international market, to the detriment of the Filipino people. This "you-have-to-give-us-60-percent-of-after-tax-income-or-we-
don't-do- business-with-you" approach is quite perilous. True, this situation may not seem too unpalatable to the foreign contractor during good years, when
international market prices are up and the mining firm manages to keep its costs in check. However, under unfavorable economic and business conditions, with
costs spiraling skywards and minerals prices plummeting, a mining firm may consider itself lucky to make just minimal profits.

The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the mining venture, scare away potential investors, and thereby
further worsen the already dismal economic scenario. Moreover, such an unbending or unyielding policy prevents the government from responding appropriately
to changing economic conditions and shifting market forces. This inflexibility further renders our country less attractive as an investment option compared with
other countries.

And fifth, for this Court to decree imperiously that the government's share should be not less than 60 percent of the after-tax income of FTAA contractors at all
times is nothing short of dictating upon the government. The result, ironically, is that the State ends up losing control. To avoid compromising the State's full
control and supervision over the exploitation of mineral resources, this Court must back off from insisting upon a "minimum 60 percent" rule. It is sufficient that
the State has the power and means, should it so decide, to get a 60 percent share (or more) in the contractor's net mining revenues or after-tax income, or
whatever other basis the government may decide to use in reckoning its share. It is not necessary for it to do so in every case, regardless of circumstances.

In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to deal, negotiate and transact with contractors and third parties as
it sees fit; and upon terms that it ascertains to be most favorable or most acceptable under the circumstances, even if it means agreeing to less than 60 percent.
Nothing must prevent the State from agreeing to a share less than that, should it be deemed fit; otherwise the State will be deprived of full control over mineral
exploitation that the Charter has vested in it.

To stress again, there is simply no constitutional or legal provision fixing the minimum share of the government in an FTAA at 60 percent of the net profit. For
this Court to decree such minimum is to wade into judicial legislation, and thereby inordinately impinge on the control power of the State. Let it be clear: the Court
is not against the grant of more benefits to the State; in fact, the more the better. If during the FTAA negotiations, the President can secure 60 percent,78 or even
90 percent, then all the better for our people. But, if under the peculiar circumstances of a specific contract, the President could secure only 50 percent or 55
percent, so be it. Needless to say, the President will have to report (and be responsible for) the specific FTAA to Congress, and eventually to the people.

Finally, if it should later be found that the share agreed to is grossly disadvantageous to the government, the officials responsible for entering into such a contract
on its behalf will have to answer to the courts for their malfeasance. And the contract provision voided. But this Court would abuse its own authority should it
force the government's hand to adopt the 60 percent demand of some of our esteemed colleagues.

Capital and Expertise Provided,

Yet All Risks Assumed by Contractor

Here, we will repeat what has not been emphasized and appreciated enough: the fact that the contractor in an FTAA provides all the needed capital, technical
and managerial expertise, and technology required to undertake the project.

In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very outset, to make capital investments of up to US$50 million in
that single mining project. WMCP claims to have already poured in well over P800 million into the country as of February 1998, with more in the pipeline. These
resources, valued in the tens or hundreds of millions of dollars, are invested in a mining project that provides no assurance whatsoever that any part of the
investment will be ultimately recouped.

At the same time, the contractor must comply with legally imposed environmental standards and the social obligations, for which it also commits to make
significant expenditures of funds. Throughout, the contractor assumes all the risks79 of the business, as mentioned earlier. These risks are indeed very high,
considering that the rate of success in exploration is extremely low. The probability of finding any mineral or petroleum in commercially viable quantities is
estimated to be about 1:1,000 only. On that slim chance rides the contractor's hope of recouping investments and generating profits. And when the contractor
has recouped its initial investments in the project, the government share increases to sixty percent of net benefits -- without the State ever being in peril of
incurring costs, expenses and losses.

And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify development -- the contractor would already have spent
several million pesos for exploration works, before arriving at the point in which it can make that determination and decide to cut its losses. In fact, during
the first year alone of the exploration period, the contractor was already committed to spend not less than P24 million. The FTAA therefore clearly ensures
benefits for the local economy, courtesy of the contractor.

All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino people; it certainly cannot be said to convey beneficial
ownership of our mineral resources to foreign contractors.

Deductions Allowed by the

WMCP FTAA Reasonable

Petitioners question whether the State's weak control might render the sharing arrangements ineffective. They cite the so-called "suspicious" deductions allowed
by the WMCP FTAA in arriving at the net mining revenue, which is the basis for computing the government share. The WMCP FTAA, for instance, allows
expenditures for "development within and outside the Contract Area relating to the Mining Operations,"80 "consulting fees incurred both inside and outside the
Philippines for work related directly to the Mining Operations,"81 and "the establishment and administration of field offices including administrative overheads
incurred within and outside the Philippines which are properly allocatable to the Mining Operations and reasonably related to the performance of the Contractor's
obligations and exercise of its rights under this Agreement."82

It is quite well known, however, that mining companies do perform some marketing activities abroad in respect of selling their mineral products and by-products.
Hence, it would not be improper to allow the deduction of reasonable consulting fees incurred abroad, as well as administrative expenses and overheads related
to marketing offices also located abroad -- provided that these deductions are directly related or properly allocatable to the mining operations and reasonably
related to the performance of the contractor's obligations and exercise of its rights. In any event, more facts are needed. Until we see how these provisions
actually operate, mere "suspicions" will not suffice to propel this Court into taking action.

Section 7.9 of the WMCP FTAA

Invalid and Disadvantageous

Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with Section 7.9 of the WMCP FTAA. While Section 7.7 gives the
government a 60 percent share in the net mining revenues of WMCP from the commencement of commercial production, Section 7.9 deprives the government of
part or all of the said 60 percent. Under the latter provision, should WMCP's foreign shareholders -- who originally owned 100 percent of the equity -- sell 60
percent or more of its outstanding capital stock to a Filipino citizen or corporation, the State loses its right to receive its 60 percent share in net mining revenues
under Section 7.7.
Section 7.9 provides:

The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be reduced by 1percent of Net Mining Revenues
for every 1percent ownership interest in the Contractor (i.e., WMCP) held by a Qualified Entity.83

Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9 without any offsetting compensation to the State. Thus, in reality,
the State has no vested right to receive any income from the FTAA for the exploitation of its mineral resources. Worse, it would seem that what is given to the
State in Section 7.7 is by mere tolerance of WMCP's foreign stockholders, who can at any time cut off the government's entire 60 percent share. They can do so
by simply selling 60 percent of WMCP's outstanding capital stock to a Philippine citizen or corporation. Moreover, the proceeds of such sale will of course accrue
to the foreign stockholders of WMCP, not to the State.

The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-owned and 40 percent foreign-owned will still trigger the
operation of Section 7.9. Effectively, the State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and foreign stockholders will own
beneficially up to 64 percent of WMCP, consisting of the remaining 40 percent foreign equity therein, plus the 24 percent pro-rata share in the buyer-
corporation.84

In fact, the January 23, 2001 sale by WMCP's foreign stockholder of the entire outstanding equity in WMCP to Sagittarius Mines, Inc. -- a domestic corporation at
least 60 percent Filipino owned -- may be deemed to have automatically triggered the operation of Section 7.9, without need of further action by any party, and
removed the State's right to receive the 60 percent share in net mining revenues.

At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining revenues of WMCP without any offset or compensation
whatsoever. It is possible that the inclusion of the offending provision was initially prompted by the desire to provide some form of incentive for the principal
foreign stockholder in WMCP to eventually reduce its equity position and ultimately divest in favor of Filipino citizens and corporations. However, as finally
structured, Section 7.9 has the deleterious effect of depriving government of the entire 60 percent share in WMCP's net mining revenues, without any form of
compensation whatsoever. Such an outcome is completely unacceptable.

The whole point of developing the nation's natural resources is to benefit the Filipino people, future generations included. And the State as sovereign and
custodian of the nation's natural wealth is mandated to protect, conserve, preserve and develop that part of the national patrimony for their benefit. Hence, the
Charter lays great emphasis on "real contributions to the economic growth and general welfare of the country"85 as essential guiding principles to be kept in mind
when negotiating the terms and conditions of FTAAs.

Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal, negotiate and transact with contractors and third parties as it
sees fit, and upon terms that it ascertains to be most favorable or most acceptable under the circumstances, even if that should mean agreeing to less than 60
percent; (2) that it is not necessary for the State to extract a 60 percent share in every case and regardless of circumstances; and (3) that should the State be
prevented from agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full control over mineral exploitation that the Charter has vested
in it.

That full control is obviously not an end in itself; it exists and subsists precisely because of the need to serve and protect the national interest. In this instance,
national interest finds particular application in the protection of the national patrimony and the development and exploitation of the country's mineral resources for
the benefit of the Filipino people and the enhancement of economic growth and the general welfare of the country. Undoubtedly, such full control can be
misused and abused, as we now witness.

Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues (provided for in Section 7.7) without anything in exchange.
Moreover, this outcome constitutes unjust enrichment on the part of the local and foreign stockholders of WMCP. By their mere divestment of up to 60 percent
equity in WMCP in favor of Filipino citizens and/or corporations, the local and foreign stockholders get a windfall. Their share in the net mining revenues of
WMCP is automatically increased, without their having to pay the government anything for it. In short, the provision in question is without a doubt grossly
disadvantageous to the government, detrimental to the interests of the Filipino people, and violative of public policy.

Moreover, it has been reiterated in numerous decisions86 that the parties to a contract may establish any agreements, terms and conditions that they deem
convenient; but these should not be contrary to law, morals, good customs, public order or public policy.87 Being precisely violative of anti-graft provisions and
contrary to public policy, Section 7.9 must therefore be stricken off as invalid.

Whether the government officials concerned acceded to that provision by sheer mistake or with full awareness of the ill consequences, is of no moment. It is
hornbook doctrine that the principle of estoppel does not operate against the government for the act of its agents,88 and that it is never estopped by any mistake
or error on their part.89 It is therefore possible and proper to rectify the situation at this time. Moreover, we may also say that the FTAA in question does not
involve mere contractual rights; being impressed as it is with public interest, the contractual provisions and stipulations must yield to the common good and the
national interest.

Since the offending provision is very much separable90 from Section 7.7 and the rest of the FTAA, the deletion of Section 7.9 can be done without affecting or
requiring the invalidation of the WMCP FTAA itself. Such a deletion will preserve for the government its due share of the benefits. This way, the mandates of the
Constitution are complied with and the interests of the government fully protected, while the business operations of the contractor are not needlessly disrupted.
Section 7.8(e) of the WMCP FTAA
Also Invalid and Disadvantageous

Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:

"7.8 The Government Share shall be deemed to include all of the following sums:

"(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise tax, corporate income tax, customs duty,
sales tax, value added tax, occupation and regulatory fees, Government controlled price stabilization schemes, any other form of
Government backed schemes, any tax on dividend payments by the Contractor or its Affiliates in respect of revenues from the Mining
Operations and any tax on interest on domestic and foreign loans or other financial arrangements or accommodations, including loans
extended to the Contractor by its stockholders;

"(b) any payments to local and regional government, including taxes, fees, levies, costs, imposts, duties, royalties, occupation and
regulatory fees and infrastructure contributions;

"(c) any payments to landowners, surface rights holders, occupiers, indigenous people or Claimowners;

"(d) costs and expenses of fulfilling the Contractor's obligations to contribute to national development in accordance with Clause 10.1(i)
(1) and 10.1(i) (2);

"(e) an amount equivalent to whatever benefits that may be extended in the future by the Government to the Contractor or to financial or
technical assistance agreement contractors in general;

"(f) all of the foregoing items which have not previously been offset against the Government Share in an earlier Fiscal Year, adjusted for
inflation." (underscoring supplied)

Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the government for the benefit of the contractor in building roads
leading to the mine site should still be deductible from the State's share in net mining revenues. Allowing this deduction results in benefiting the contractor twice
over. It constitutes unjust enrichment on the part of the contractor at the expense of the government, since the latter is effectively being made to pay twice for the
same item.91 For being grossly disadvantageous and prejudicial to the government and contrary to public policy, Section 7.8(e) is undoubtedly invalid and must
be declared to be without effect. Fortunately, this provision can also easily be stricken off without affecting the rest of the FTAA.

Nothing Left Over

After Deductions?

In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous items of deduction from the State's 60 percent share. After
taking these into account, will the State ever receive anything for its ownership of the mineral resources?

We are confident that under normal circumstances, the answer will be yes. If we examine the various items of "deduction" listed in Section 7.8 of the WMCP
FTAA, we will find that they correspond closely to the components or elements of the basic government share established in DAO 99-56, as discussed in the
earlier part of this Opinion.

Likewise, the balance of the government's 60 percent share -- after netting out the items of deduction listed in Section 7.8 --corresponds closely to the additional
government share provided for in DAO 99-56 which, we once again stress, has nothing at all to do with indirect taxes. The Ramos-DeVera paper92 concisely
presents the fiscal contribution of an FTAA under DAO 99-56 in this equation:

Receipts from an FTAA = basic gov't share + add'l gov't share

Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the following formulation:

Government's 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of the FTAA + balance of Gov't share, payable 4 months
from the end of the fiscal year

It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that under DAO 99-56, with the "balance of government share
payable 4 months from end of fiscal year" being the equivalent of the additional government share computed in accordance with the "net-mining-revenue-
based option" under DAO 99-56, as discussed above. As we have emphasized earlier, we find each of the three options for computing the additional
government share -- as presented in DAO 99-56 -- to be sound and reasonable.

We therefore conclude that there is nothing inherently wrong in the fiscal regime of the WMCP FTAA, and certainly nothing to warrant the invalidation
of the FTAA in its entirety.
Section 3.3 of the WMCP
FTAA Constitutional

Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the term of FTAAs. The provision in question reads:

"3.3 This Agreement shall be renewed by the Government for a further period of twenty-five (25) years under the same terms and conditions
provided that the Contractor lodges a request for renewal with the Government not less than sixty (60) days prior to the expiry of the initial term of
this Agreement and provided that the Contractor is not in breach of any of the requirements of this Agreement."

Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which states:

"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of
the State. The State may directly undertake such activities, or it may enter into co-production, joint venture or production-sharing agreements with
Filipino citizens or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.

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

"The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish-workers in rivers, lakes, bays and lagoons.

"The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by
law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the
development and use of local scientific and technical resources.

"The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution."93

We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the above provision is found within paragraph 1 of Section 2 of
Article XII, which refers to mineral agreements -- co-production agreements, joint venture agreements and mineral production-sharing agreements -- which the
government may enter into with Filipino citizens and corporations, at least 60 percent owned by Filipino citizens. The word "such" clearly refers to these three
mineral agreements -- CPAs, JVAs and MPSAs -- not to FTAAs.

Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution. It will be noted that there are no term limitations provided for
in the said paragraphs dealing with FTAAs. This shows that FTAAs are sui generis, in a class of their own. This omission was obviously a deliberate move on the
part of the framers. They probably realized that FTAAs would be different in many ways from MPSAs, JVAs and CPAs. The reason the framers did not fix term
limitations applicable to FTAAs is that they preferred to leave the matter to the discretion of the legislature and/or the agencies involved in implementing the laws
pertaining to FTAAs, in order to give the latter enough flexibility and elbow room to meet changing circumstances.

Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years. Thereafter, a few more years would be gobbled up in start-up
operations. It may take fifteen years before an FTAA contractor can start earning profits. And thus, the period of 25 years may really be short for an FTAA.
Consider too that in this kind of agreement, the contractor assumes all entrepreneurial risks. If no commercial quantities of minerals are found, the contractor
bears all financial losses. To compensate for this long gestation period and extra business risks, it would not be totally unreasonable to allow it to continue EDU
activities for another twenty five years.

In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel the government to renew the WMCP FTAA for another 25
years and deprives the State of any say on whether to renew the contract.

While we agree that Section 3.3 could have been worded so as to prevent it from favoring the contractor, this provision does not violate any constitutional limits,
since the said term limitation does not apply at all to FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law is being violated thereby.
It is certainly not illegal for the government to waive its option to refuse the renewal of a commercial contract.

Verily, the government did not have to agree to Section 3.3. It could have said "No" to the stipulation, but it did not. It appears that, in the process of negotiations,
the other contracting party was able to convince the government to agree to the renewal terms. Under the circumstances, it does not seem proper for this Court
to intervene and step in to undo what might have perhaps been a possible miscalculation on the part of the State. If government believes that it is or will be
aggrieved by the effects of Section 3.3, the remedy is the renegotiation of the provision in order to provide the State the option to not renew the FTAA.
Financial Benefits for Foreigners
Not Forbidden by the Constitution

Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that the Constitution somehow forbids foreign-owned corporations
from deriving financial benefits from the development of our natural or mineral resources.

The Constitution has never prohibited foreign corporations from acquiring and enjoying "beneficial interest" in the development of Philippine natural resources.
The State itself need not directly undertake exploration, development, and utilization activities. Alternatively, the Constitution authorizes the government to enter
into joint venture agreements (JVAs), co-production agreements (CPAs) and mineral production sharing agreements (MPSAs) with contractors who are Filipino
citizens or corporations that are at least 60 percent Filipino-owned. They may do the actual "dirty work" -- the mining operations.

In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or corporate non-Filipino stakeholders obviously participate in the beneficial
interest derived from the development and utilization of our natural resources. They may receive by way of dividends, up to 40 percent of the contractor's
earnings from the mining project. Likewise, they may have a say in the decisions of the board of directors, since they are entitled to representation therein to the
extent of their equity participation, which the Constitution permits to be up to 40 percent of the contractor's equity. Hence, the non-Filipino stakeholders may in
that manner also participate in the management of the contractor's natural resource development work. All of this is permitted by our Constitution, for any natural
resource, and without limitation even in regard to the magnitude of the mining project or operations (see paragraph 1 of Section 2 of Article XII).

It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the idea of foreign individuals and entities having or enjoying
"beneficial interest" in -- and participating in the management of operations relative to -- the exploration, development and utilization of our natural resources.

FTAA More Advantageous

Than Other Schemes
Like CPA, JVA and MPSA

A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous proposition for the government as compared with other
agreements permitted by the Constitution. In a CPA that the government enters into with one or more contractors, the government shall provide inputs to the
mining operations other than the mineral resource itself.94

In a JVA, a JV company is organized by the government and the contractor, with both parties having equity shares (investments); and the contractor is granted
the exclusive right to conduct mining operations and to extract minerals found in the area.95 On the other hand, in an MPSA, the government grants the contractor
the exclusive right to conduct mining operations within the contract area and shares in the gross output; and the contractor provides the necessary financing,
technology, management and manpower.

The point being made here is that, in two of the three types of agreements under consideration, the government has to ante up some risk capital for the
enterprise. In other words, government funds (public moneys) are withdrawn from other possible uses, put to work in the venture and placed at risk in case the
venture fails. This notwithstanding, management and control of the operations of the enterprise are -- in all three arrangements -- in the hands of the contractor,
with the government being mainly a silent partner. The three types of agreement mentioned above apply to any natural resource, without limitation and
regardless of the size or magnitude of the project or operations.

In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII, the FTAA is limited to large-scale projects and only for
minerals, petroleum and other mineral oils. Here, the Constitution removes the 40 percent cap on foreign ownership and allows the foreign corporation to own up
to 100 percent of the equity. Filipino capital may not be sufficient on account of the size of the project, so the foreign entity may have to ante up all the risk
capital.

Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In respect of the particular FTAA granted to it, WMCP (then
100 percent foreign owned) was responsible, as contractor, for providing the entire equity, including all the inputs for the project. It was to bear 100 percent of the
risk of loss if the project failed, but its maximum potential "beneficial interest" consisted only of 40 percent of the net beneficial interest, because the other 60
percent is the share of the government, which will never be exposed to any risk of loss whatsoever.

In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day management of the mining operations. Still such management is
subject to the overall control and supervision of the State in terms of regular reporting, approvals of work programs and budgets, and so on.

So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and benefits derived or to be derived from a CPA, a JVA or an
MPSA vis-à-vis those pertaining to an FTAA. It may not be realistically asserted that the foreign grantee of an FTAA is being unduly favored or benefited as
compared with a foreign stakeholder in a corporation holding a CPA, a JVA or an MPSA. Seen the other way around, the government is definitely better off with
an FTAA than a CPA, a JVA or an MPSA.

Developmental Policy on the Mining Industry

During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to consider whether mining as an industry and economic
activity deserved to be accorded priority, preference and government support as against, say, agriculture and other activities in which Filipinos and the
Philippines may have an "economic advantage." For instance, a recent US study96 reportedly examined the economic performance of all local US counties that
were dependent on mining and 20 percent of whose labor earnings between 1970 and 2000 came from mining enterprises.

The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita income grew about 30 percent less in mining-dependent
communities in the 1980s and 25 percent less for the entire period 1980 to 2000; the level of per capita income was also lower. Therefore, given the slower rate
of growth, the gap between these and other local counties increased.

Petitioners invite attention to the OXFAM America Report's warning to developing nations that mining brings with it serious economic problems, including
increased regional inequality, unemployment and poverty. They also cite the final report97 of the Extractive Industries Review project commissioned by the World
Bank (the WB-EIR Report), which warns of environmental degradation, social disruption, conflict, and uneven sharing of benefits with local communities that bear
the negative social and environmental impact. The Report suggests that countries need to decide on the best way to exploit their natural resources, in order to
maximize the value added from the development of their resources and ensure that they are on the path to sustainable development once the resources run out.

Whatever priority or preference may be given to mining vis-à-vis other economic or non-economic activities is a question of policy that the President and
Congress will have to address; it is not for this Court to decide. This Court declares what the Constitution and the laws say, interprets only when necessary, and
refrains from delving into matters of policy.

Suffice it to say that the State control accorded by the Constitution over mining activities assures a proper balancing of interests. More pointedly, such control will
enable the President to demand the best mining practices and the use of the best available technologies to protect the environment and to rehabilitate mined-out
areas. Indeed, under the Mining Law, the government can ensure the protection of the environment during and after mining. It can likewise provide for the
mechanisms to protect the rights of indigenous communities, and thereby mold a more socially-responsive, culturally-sensitive and sustainable mining industry.

Early on during the launching of the Presidential Mineral Industry Environmental Awards on February 6, 1997, then President Fidel V. Ramos captured the
essence of balanced and sustainable mining in these words:

"Long term, high profit mining translates into higher revenues for government, more decent jobs for the population, more raw materials to feed the
engines of downstream and allied industries, and improved chances of human resource and countryside development by creating self-reliant
communities away from urban centers.

xxxxxxxxx

"Against a fragile and finite environment, it is sustainability that holds the key. In sustainable mining, we take a middle ground where both production
and protection goals are balanced, and where parties-in-interest come to terms."

Neither has the present leadership been remiss in addressing the concerns of sustainable mining operations. Recently, on January 16, 2004 and April 20, 2004,
President Gloria Macapagal Arroyo issued Executive Orders Nos. 270 and 270-A, respectively, "to promote responsible mineral resources exploration,
development and utilization, in order to enhance economic growth, in a manner that adheres to the principles of sustainable development and with due regard for
justice and equity, sensitivity to the culture of the Filipino people and respect for Philippine sovereignty." 98

REFUTATION OF DISSENTS

The Court will now take up a number of other specific points raised in the dissents of Justices Carpio and Morales.

1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of Western Mining Corporation (WMC) and former president of the
Australian Mining Industry Council, who spearheaded the vociferous opposition to the filing by aboriginal peoples of native title claims against mining companies
in Australia in the aftermath of the landmark Mabo decision by the Australian High Court. According to sources quoted by our esteemed colleague, Morgan was
also a racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered derogatory remarks belittling the aboriginal culture and race.

An unwritten caveat of this introduction is that this Court should be careful not to permit the entry of the likes of Hugh Morgan and his hordes of alleged racist-
bigots at WMC. With all due respect, such scare tactics should have no place in the discussion of this case. We are deliberating on the constitutionality of RA
7942, DAO 96-40 and the FTAA originally granted to WMCP, which had been transferred to Sagittarius Mining, a Filipino corporation. We are not discussing the
apparition of white Anglo-Saxon racists/bigots massing at our gates.

2. On the proper interpretation of the phrase agreements involving either technical or financial assistance, Justice Morales points out that at times we
"conveniently omitted" the use of the disjunctive either…or, which according to her denotes restriction; hence the phrase must be deemed to connote restriction
and limitation.

But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either technical or financial assistance would, strictly speaking,
literally mean that a foreign contractor may provide only one or the other, but not both. And if both technical and financial assistance were required for a project,
the State would have to deal with at least two different foreign contractors -- one for financial and the other for technical assistance. And following on that, a
foreign contractor, though very much qualified to provide both kinds of assistance, would nevertheless be prohibited from providing one kind as soon as it shall
have agreed to provide the other.
But if the Court should follow this restrictive and literal construction, can we really find two (or more) contractors who are willing to participate in one single project
-- one to provide the "financial assistance" only and the other the "technical assistance" exclusively; it would be excellent if these two or more contractors happen
to be willing and are able to cooperate and work closely together on the same project (even if they are otherwise competitors). And it would be superb if no
conflicts would arise between or among them in the entire course of the contract. But what are the chances things will turn out this way in the real world? To think
that the framers deliberately imposed this kind of restriction is to say that they were either exceedingly optimistic, or incredibly naïve. This begs the question --
What laudable objective or purpose could possibly be served by such strict and restrictive literal interpretation?

3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or property right which merits protection by the due process clause
of the Constitution, but merely a license or privilege which may be validly revoked, rescinded or withdrawn by executive action whenever dictated by public
interest or public welfare.

Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The latter cases dealt specifically with timber licenses
only. Oposa allegedly reiterated that a license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority,
federal, state or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested right; nor is it
taxation. Thus this Court held that the granting of license does not create irrevocable rights, neither is it property or property rights.

Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are also involved in this situation? We do not think so. A grantee
of a timber license, permit or license agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to get at the logs. In a
logging concession, the investment of the licensee is not as substantial as the investment of a large-scale mining contractor. If a timber license were revoked, the
licensee packs up its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly the trails leading to the logging site.

In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars) into the ground, so to speak, for exploration activities, for
development of the mine site and infrastructure, and for the actual excavation and extraction of minerals, including the extensive tunneling work to reach the ore
body. The cancellation of the mining contract will utterly deprive the contractor of its investments (i.e., prevent recovery of investments), most of which cannot be
pulled out.

To say that an FTAA is just like a mere timber license or permit and does not involve contract or property rights which merit protection by the due process clause
of the Constitution, and may therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at the very least, it is downright
dismissive of the property rights of businesspersons and corporate entities that have investments in the mining industry, whose investments, operations and
expenditures do contribute to the general welfare of the people, the coffers of government, and the strength of the economy. Such a pronouncement will surely
discourage investments (local and foreign) which are critically needed to fuel the engine of economic growth and move this country out of the rut of poverty. In
sum, Oposa is not applicable.

4. Justice Morales adverts to the supposedly "clear intention" of the framers of the Constitution to reserve our natural resources exclusively for the Filipino
people. She then quoted from the records of the ConCom deliberations a passage in which then Commissioner Davide explained his vote, arguing in the process
that aliens ought not be allowed to participate in the enjoyment of our natural resources. One passage does not suffice to capture the tenor or substance of the
entire extensive deliberations of the commissioners, or to reveal the clear intention of the framers as a group. A re-reading of the entire deliberations (quoted
here earlier) is necessary if we are to understand the true intent of the framers.

5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or delay in the exploration, development or utilization of the
nation's natural resources is merely secondary to the protection and preservation of their ownership of the natural resources, so says Justice Morales, citing
Aruego. If it is true that the framers of the 1987 Constitution did not care much about alleviating the retardation or delay in the development and utilization of our
natural resources, why did they bother to write paragraph 4 at all? Were they merely paying lip service to large-scale exploration, development and utilization?
They could have just completely ignored the subject matter and left it to be dealt with through a future constitutional amendment. But we have to harmonize every
part of the Constitution and to interpret each provision in a manner that would give life and meaning to it and to the rest of the provisions. It is obvious that a literal
interpretation of paragraph 4 will render it utterly inutile and inoperative.

6. According to Justice Morales, the deliberations of the Constitutional Commission do not support our contention that the framers, by specifying such
agreements involving financial or technical assistance, necessarily gave implied assent to everything that these agreements implicitly entailed, or that could
reasonably be deemed necessary to make them tenable and effective, including management authority in the day-to-day operations. As proof thereof, she
quotes one single passage from the ConCom deliberations, consisting of an exchange among Commissioners Tingson, Garcia and Monsod.

However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm. Christian Monsod was quoted as saying: "xxx I think we
have to make a distinction that it is not really realistic to say that we will borrow on our own terms. Maybe we can say that we inherited unjust loans, and we
would like to repay these on terms that are not prejudicial to our own growth. But the general statement that we should only borrow on our own terms is a bit
unrealistic." Comm. Monsod is one who knew whereof he spoke.

7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is after completion of the exploration phase and just before
undertaking the development and construction phase, on account of the fact that the requirement for a minimum investment of $50 million is applicable only
during the development, construction and utilization phase, but not during the exploration phase, when the foreign contractor need merely comply with minimum
ground expenditures. Thus by converting, the foreign contractor maximizes its profits by avoiding its obligation to make the minimum investment of $50 million.

This argument forgets that the foreign contractor is in the game precisely to make money. In order to come anywhere near profitability, the contractor must first
extract and sell the mineral ore. In order to do that, it must also develop and construct the mining facilities, set up its machineries and equipment and dig the
tunnels to get to the deposit. The contractor is thus compelled to expend funds in order to make profits. If it decides to cut back on investments and expenditures,
it will necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount of profits it can make from the mining operations. In
fact, at certain less-than-optimal levels of operation, the stream of revenues generated may not even be enough to cover variable expenses, let alone overhead
expenses; this is a dismal situation anyone would want to avoid. In order to make money, one has to spend money. This truism applies to the mining industry as
well.

8. Mortgaging the minerals to secure a foreign FTAA contractor's obligations is anomalous, according to Justice Morales since the contractor was from the
beginning obliged to provide all financing needed for the mining operations. However, the mortgaging of minerals by the contractor does not necessarily signify
that the contractor is unable to provide all financing required for the project, or that it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of manufactured goods and goods in inventory, and the assignment of receivables,
is an ordinary requirement of banks, even in the case of clients with more than sufficient financial resources. And nowadays, even the richest and best managed
corporations make use of bank credit facilities -- it does not necessarily signify that they do not have the financial resources or are unable to provide the financing
on their own; it is just a manner of maximizing the use of their funds.

9. Does the contractor in reality acquire the surface rights "for free," by virtue of the fact that it is entitled to reimbursement for the costs of acquisition and
maintenance, adjusted for inflation? We think not. The "reimbursement" is possible only at the end of the term of the contract, when the surface rights will no
longer be needed, and the land previously acquired will have to be disposed of, in which case the contractor gets reimbursement from the sales proceeds. The
contractor has to pay out the acquisition price for the land. That money will belong to the seller of the land. Only if and when the land is finally sold off will the
contractor get any reimbursement. In other words, the contractor will have been cash-out for the entire duration of the term of the contract -- 25 or 50 years,
depending. If we calculate the cost of money at say 12 percent per annum, that is the cost or opportunity loss to the contractor, in addition to the amount of the
acquisition price. 12 percent per annum for 50 years is 600 percent; this, without any compounding yet. The cost of money is therefore at least 600 percent of the
original acquisition cost; it is in addition to the acquisition cost. "For free"? Not by a long shot.

10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the State of land for the contractor is just to enable the contractor
to establish its mine site, build its facilities, establish a tailings pond, set up its machinery and equipment, and dig mine shafts and tunnels, etc. It is impossible
that the surface requirement will aggregate 5,000 hectares. Much of the operations will consist of the tunneling and digging underground, which will not require
possessing or using any land surface. 5,000 hectares is way too much for the needs of a mining operator. It simply will not spend its cash to acquire property that
it will not need; the cash may be better employed for the actual mining operations, to yield a profit.

11. Justice Carpio claims that the phrase among other things (found in the second paragraph of Section 81 of the Mining Act) is being incorrectly treated as a
delegation of legislative power to the DENR secretary to issue DAO 99-56 and prescribe the formulae therein on the State's share from mining operations. He
adds that the phrase among other things was not intended as a delegation of legislative power to the DENR secretary, much less could it be deemed a valid
delegation of legislative power, since there is nothing in the second paragraph of Section 81 which can be said to grant any delegated legislative power to the
DENR secretary. And even if there were, such delegation would be void, for lack of any standards by which the delegated power shall be exercised.

While there is nothing in the second paragraph of Section 81 which can directly be construed as a delegation of legislative power to the DENR secretary, it does
not mean that DAO 99-56 is invalid per se, or that the secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we stated earlier in our
Prologue, "Who or what organ of government actually exercises this power of control on behalf of the State? The Constitution is crystal clear: the President.
Indeed, the Chief Executive is the official constitutionally mandated to 'enter into agreements with foreign owned corporations.' On the other hand, Congress may
review the action of the President once it is notified of 'every contract entered into in accordance with this [constitutional] provision within thirty days from its
execution.'"It is the President who is constitutionally mandated to enter into FTAAs with foreign corporations, and in doing so, it is within the President's
prerogative to specify certain terms and conditions of the FTAAs, for example, the fiscal regime of FTAAs -- i.e., the sharing of the net mining revenues
between the contractor and the State.

Being the President's alter ego with respect to the control and supervision of the mining industry, the DENR secretary, acting for the President, is necessarily
clothed with the requisite authority and power to draw up guidelines delineating certain terms and conditions, and specifying therein the terms of sharing of
benefits from mining, to be applicable to FTAAs in general. It is important to remember that DAO 99-56 has been in existence for almost six years, and has not
been amended or revoked by the President.

The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The legislature did not delegate the power to determine the nature, extent
and composition of the items that would come under the phrase among other things. The legislature's power pertains to the imposition of taxes, duties and fees.
This power was not delegated to the DENR secretary. But the power to negotiate and enter into FTAAs was withheld from Congress, and reserved for the
President. In determining the sharing of mining benefits, i.e., in specifying what the phrase among other things include, the President (through the secretary
acting in his/her behalf) was not determining the amount or rate of taxes, duties and fees, but rather the amount of INCOME to be derived from minerals to be
extracted and sold, income which belongs to the State as owner of the mineral resources. We may say that, in the second paragraph of Section 81, the
legislature in a sense intruded partially into the President's sphere of authority when the former provided that

"The Government share in financial or technical assistance agreement shall consist of, among other things, the contractor's corporate income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws." (Italics supplied)

But it did not usurp the President's authority since the provision merely included the enumerated items as part of the government share, without foreclosing or in
any way preventing (as in fact Congress could not validly prevent) the President from determining what constitutes the State's compensation derived from
FTAAs. In this case, the President in effect directed the inclusion or addition of "other things," viz., INCOME for the owner of the resources, in the government's
share, while adopting the items enumerated by Congress as part of the government share also.
12. Justice Carpio's insistence on applying the ejusdem generis rule of statutory construction to the phrase among other things is therefore useless, and must fall
by the wayside. There is no point trying to construe that phrase in relation to the enumeration of taxes, duties and fees found in paragraph 2 of Section 81,
precisely because "the constitutional power to prescribe the sharing of mining income between the State and mining companies,"to quote Justice
Carpio pursuant to an FTAA is constitutionally lodged with the President, not with Congress. It thus makes no sense to persist in giving the phrase among
other things a restricted meaning referring only to taxes, duties and fees.

13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-56 any time even without the approval of the President, and
the secretary is the sole authority to determine the amount of consideration that the State shall receive in an FTAA, because Section 5 of the DAO states
that "xxx any amendment of an FTAA other than the provision on fiscal regime shall require the negotiation with the Negotiation Panel and the recommendation
of the Secretary for approval of the President xxx". Allegedly, because of that provision, if an amendment in the FTAA involves non-fiscal matters, the
amendment requires approval of the President, but if the amendment involves a change in the fiscal regime, the DENR secretary has the final authority, and
approval of the President may be dispensed with; hence the secretary is more powerful than the President.

We believe there is some distortion resulting from the quoted provision being taken out of context. Section 5 of DAO 99-56 reads as follows:

"Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this Administrative Order shall remain valid and be recognized by
the Government: Provided, That should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent (LOI) to the Secretary thru the
Director. Provided, further, That if the Contractor desires to amend the fiscal regime of its FTAA, it may do so by seeking for the amendment of its
FTAA's whole fiscal regime by adopting the fiscal regime provided hereof: Provided, finally, That any amendment of an FTAA other than the
provision on fiscal regime shall require the negotiation with the Negotiating Panel and the recommendation of the Secretary for approval of the
President of the Republic of the Philippines." (underscoring supplied)

It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is actually preceded by a phrase that requires a contractor
desiring to amend the fiscal regime of its FTAA, to amend the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in that manner, and in no
other. Obviously, since DAO 99-56 was issued by the secretary under the authority and with the presumed approval of the President, the amendment
of an FTAA by merely adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need not have the express clearance of the
President anymore. It is as if the same had been pre-approved. We cannot fathom the complaint that that makes the secretary more powerful than the
President, or that the former is trying to hide things from the President or Congress.

14. Based on the first sentence of Section 5 of DAO 99-56, which states "[A]ll FTAAs approved prior to the effectivity of this Administrative Order shall remain
valid and be recognized by the Government", Justice Carpio concludes that said Administrative Order allegedly exempts FTAAs approved prior to its effectivity --
like the WMCP FTAA -- from having to pay the State any share from their mining income, apart from taxes, duties and fees.

We disagree. What we see in black and white is the statement that the FTAAs approved before the DAO came into effect are to continue to be valid and will be
recognized by the State. Nothing is said about their fiscal regimes. Certainly, there is no basis to claim that the contractors under said FTAAs were being
exempted from paying the government a share in their mining incomes.

For the record, the WMCP FTAA is NOT and has never been exempt from paying the government share. The WMCP FTAA has its own fiscal regime --
Section 7.7 -- which gives the government a 60 percent share in the net mining revenues of WMCP from the commencement of commercial
production.

For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP FTAA has a consideration. Hence, we find quite out of place
Justice Carpio's statement that ironically, DAO 99-56, the very authority cited to support the claim that the WMCP FTAA has a consideration, does not apply to
the WMCP FTAA. By its own express terms, DAO 99-56 does not apply to FTAAs executed before the issuance of DAO 99-56, like the WMCP FTAA. The
majority's position has allegedly no leg to stand on since even DAO 99-56, assuming it is valid, cannot save the WMCP FTAA from want of consideration. Even
assuming arguendo that DAO 99-56 does not apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its own fiscal regime, found in Section 7.7 thereof.
Hence, there is no such thing as "want of consideration" here.

Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP FTAA, which grant a sham consideration to the State, are void.
Since the majority agrees that the WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid contract. The Decision should
declare the WMCP FTAA void for want of consideration unless it treats the contract as an MPSA under Section 80. Indeed the only recourse of WMCP to save
the validity of its contract is to convert it into an MPSA.

To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly disadvantageous to government and detrimental to the interests of the
Filipino people, as well as violative of public policy, and must therefore be stricken off as invalid. Since the offending provisions are very much separable from
Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and 7.8(e) can be done without affecting or requiring the invalidation of the WMCP FTAA itself,
and such deletion will preserve for government its due share of the 60 percent benefits. Therefore, the WMCP FTAA is NOT bereft of a valid
consideration (assuming for the nonce that indeed this is the "consideration" of the FTAA).

SUMMATION

To conclude, a summary of the key points discussed above is now in order.

The Meaning of "Agreements Involving
Either Technical or Financial Assistance"

Applying familiar principles of constitutional construction to the phrase agreements involving either technical or financial assistance, the framers' choice of words
does not indicate the intent to exclude other modes of assistance, but rather implies that there are other things being included or possibly being made part of the
agreement, apart from financial or technical assistance. The drafters avoided the use of restrictive and stringent phraseology; a verba legis scrutiny of Section 2
of Article XII of the Constitution discloses not even a hint of a desire to prohibit foreign involvement in the management or operation of mining activities, or
to eradicate service contracts. Such moves would necessarily imply an underlying drastic shift in fundamental economic and developmental policies of the State.
That change requires a much more definite and irrefutable basis than mere omission of the words "service contract" from the new Constitution.

Furthermore, a literal and restrictive interpretation of this paragraph leads to logical inconsistencies. A constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance in respect of mining or any other commercial activity was clearly unnecessary; the provision was meant to
refer to more than mere financial or technical assistance.

Also, if paragraph 4 permits only agreements for financial or technical assistance, there would be no point in requiring that they be "based on real contributions to
the economic growth and general welfare of the country." And considering that there were various long-term service contracts still in force and effect at the time
the new Charter was being drafted, the absence of any transitory provisions to govern the termination and closing-out of the then existing service contracts
strongly militates against the theory that the mere omission of "service contracts" signaled their prohibition by the new Constitution.

Resort to the deliberations of the Constitutional Commission is therefore unavoidable, and a careful scrutiny thereof conclusively shows that the ConCom
members discussed agreements involving either technical or financial assistance in the same sense as service contracts and used the terms interchangeably.
The drafters in fact knew that the agreements with foreign corporations were going to entail not mere technical or financial assistance but, rather, foreign
investment in and management of an enterprise for large-scale exploration, development and utilization of minerals.

The framers spoke about service contracts as the concept was understood in the 1973 Constitution. It is obvious from their discussions that they did not intend to
ban or eradicate service contracts. Instead, they were intent on crafting provisions to put in place safeguards that would eliminate or minimize the abuses
prevalent during the martial law regime. In brief, they were going to permit service contracts with foreign corporations as contractors, but with safety
measures to prevent abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article XII, which reserves or limits
to Filipino citizens and corporations at least 60 percent owned by such citizens the exploration, development and utilization of mineral or petroleum
resources. This was prompted by the perceived insufficiency of Filipino capital and the felt need for foreign expertise in the EDU of mineral resources.

Despite strong opposition from some ConCom members during the final voting, the Article on the National Economy and Patrimony -- including paragraph 4
allowing service contracts with foreign corporations as an exception to the general norm in paragraph 1 of Section 2 of the same Article -- was resoundingly and
overwhelmingly approved.

The drafters, many of whom were economists, academicians, lawyers, businesspersons and politicians knew that foreign entities will not enter into agreements
involving assistance without requiring measures of protection to ensure the success of the venture and repayment of their investments, loans and other financial
assistance, and ultimately to protect the business reputation of the foreign corporations. The drafters, by specifying such agreements involving assistance,
necessarily gave implied assent to everything that these agreements entailed or that could reasonably be deemed necessary to make them tenable and effective
-- including management authority with respect to the day-to-day operations of the enterprise, and measures for the protection of the interests of the foreign
corporation, at least to the extent that they are consistent with Philippine sovereignty over natural resources, the constitutional requirement of State control, and
beneficial ownership of natural resources remaining vested in the State.

From the foregoing, it is clear that agreements involving either technical or financial assistance referred to in paragraph 4 are in fact service contracts, but such
new service contracts are between foreign corporations acting as contractors on the one hand, and on the other hand government as principal or "owner" (of the
works), whereby the foreign contractor provides the capital, technology and technical know-how, and managerial expertise in the creation and operation of the
large-scale mining/extractive enterprise, and government through its agencies (DENR, MGB) actively exercises full control and supervision over the entire
enterprise.

Such service contracts may be entered into only with respect to minerals, petroleum and other mineral oils. The grant of such service contracts is subject to
several safeguards, among them: (1) that the service contract be crafted in accordance with a general law setting standard or uniform terms, conditions and
requirements; (2) the President be the signatory for the government; and (3) the President report the executed agreement to Congress within thirty days.

Ultimate Test: Full State Control

To repeat, the primacy of the principle of the State's sovereign ownership of all mineral resources, and its full control and supervision over all aspects of
exploration, development and utilization of natural resources must be upheld. But "full control and supervision" cannot be taken literally to mean that the State
controls and supervises everything down to the minutest details and makes all required actions, as this would render impossible the legitimate exercise by the
contractor of a reasonable degree of management prerogative and authority, indispensable to the proper functioning of the mining enterprise. Also, government
need not micro-manage mining operations and day-to-day affairs of the enterprise in order to be considered as exercising full control and supervision.

Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control sufficient to enable the State to direct, restrain, regulate and govern the
affairs of the extractive enterprises. Control by the State may be on a macro level, through the establishment of policies, guidelines, regulations, industry
standards and similar measures that would enable government to regulate the conduct of affairs in various enterprises, and restrain activities deemed not
desirable or beneficial, with the end in view of ensuring that these enterprises contribute to the economic development and general welfare of the country,
conserve the environment, and uplift the well-being of the local affected communities. Such a degree of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it has invested in, to ensure efficient and profitable operation.

Government Granted Full Control

by RA 7942 and DAO 96-40

Baseless are petitioners' sweeping claims that RA 7942 and its Implementing Rules and Regulations make it possible for FTAA contracts to cede full control and
management of mining enterprises over to fully foreign owned corporations. Equally wobbly is the assertion that the State is reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers and little say in the decision-making of the enterprise, for which reasons
"beneficial ownership" of the mineral resources is allegedly ceded to the foreign contractor.

As discussed hereinabove, the State's full control and supervision over mining operations are ensured through the following provisions in RA 7942: Sections 8, 9,
16, 19, 24, 35[(b), (e), (f), (g), (h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and Chapters XI and XVII; as well as the following provisions of DAO 96-40:
Sections7[(d) and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66, 144, 168, 171 and 270, and also Chapters XV, XVI and XXIV.

Through the foregoing provisions, the government agencies concerned are empowered to approve or disapprove -- hence, in a position to influence, direct, and
change -- the various work programs and the corresponding minimum expenditure commitments for each of the exploration, development and utilization phases
of the enterprise. Once they have been approved, the contractor's compliance with its commitments therein will be monitored. Figures for mineral production and
sales are regularly monitored and subjected to government review, to ensure that the products and by-products are disposed of at the best prices; copies of sales
agreements have to be submitted to and registered with MGB.

The contractor is mandated to open its books of accounts and records for scrutiny, to enable the State to determine that the government share has been fully
paid. The State may likewise compel compliance by the contractor with mandatory requirements on mine safety, health and environmental protection, and the
use of anti-pollution technology and facilities. The contractor is also obligated to assist the development of the mining community, and pay royalties to the
indigenous peoples concerned. And violation of any of the FTAA's terms and conditions, and/or non-compliance with statutes or regulations, may be penalized by
cancellation of the FTAA. Such sanction is significant to a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a mining
project.

Overall, the State definitely has a pivotal say in the operation of the individual enterprises, and can set directions and objectives, detect deviations and non-
compliances by the contractor, and enforce compliance and impose sanctions should the occasion arise. Hence, RA 7942 and DAO 96-40 vest in government
more than a sufficient degree of control and supervision over the conduct of mining operations.

Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign contractor to apply for and hold an exploration permit. During the
exploration phase, the permit grantee (and prospective contractor) is spending and investing heavily in exploration activities without yet being able to extract
minerals and generate revenues. The exploration permit issued under Sections 3(aq), 20 and 23 of RA 7942, which allows exploration but not extraction, serves
to protect the interests and rights of the exploration permit grantee (and would-be contractor), foreign or local. Otherwise, the exploration works already
conducted, and expenditures already made, may end up only benefiting claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.

WMCP FTAA Likewise Gives the

State Full Control and Supervision

The WMCP FTAA obligates the contractor to account for the value of production and sale of minerals (Clause 1.4); requires that the contractor's work program,
activities and budgets be approved by the State (Clause 2.1); gives the DENR secretary power to extend the exploration period (Clause 3.2-a); requires approval
by the State for incorporation of lands into the contract area (Clause 4.3-c); requires Bureau of Forest Development approval for inclusion of forest reserves as
part of the FTAA contract area (Clause 4.5); obligates the contractor to periodically relinquish parts of the contract area not needed for exploration and
development (Clause 4.6); requires submission of a declaration of mining feasibility for approval by the State (Clause 4.6-b); obligates the contractor to report to
the State the results of its exploration activities (Clause 4.9); requires the contractor to obtain State approval for its work programs for the succeeding two year
periods, containing the proposed work activities and expenditures budget related to exploration (Clause 5.1); requires the contractor to obtain State approval for
its proposed expenditures for exploration activities (Clause 5.2); requires the contractor to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a); requires the contractor to submit within six months after expiration of exploration
period a final report on all its findings in the contract area (Clause 5.3-b); requires the contractor after conducting feasibility studies to submit a declaration of
mining feasibility, along with a description of the area to be developed and mined, a description of the proposed mining operations and the technology to be
employed, and the proposed work program for the development phase, for approval by the DENR secretary (Clause 5.4); obligates the contractor to complete the
development of the mine, including construction of the production facilities, within the period stated in the approved work program (Clause 6.1); requires the
contractor to submit for approval a work program covering each period of three fiscal years (Clause 6.2); requires the contractor to submit reports to the secretary
on the production, ore reserves, work accomplished and work in progress, profile of its work force and management staff, and other technical information (Clause
6.3); subjects any expansions, modifications, improvements and replacements of mining facilities to the approval of the secretary (Clause 6.4); subjects to State
control the amount of funds that the contractor may borrow within the Philippines (Clause 7.2); subjects to State supervisory power any technical, financial and
marketing issues (Clause 10.1-a); obligates the contractor to ensure 60 percent Filipino equity in the contractor within ten years of recovering specified
expenditures unless not so required by subsequent legislation (Clause 10.1); gives the State the right to terminate the FTAA for unremedied substantial breach
thereof by the contractor (Clause 13.2); requires State approval for any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause
14.1).
In short, the aforementioned provisions of the WMCP FTAA, far from constituting a surrender of control and a grant of beneficial ownership of mineral resources
to the contractor in question, vest the State with control and supervision over practically all aspects of the operations of the FTAA contractor, including the
charging of pre-operating and operating expenses, and the disposition of mineral products.

There is likewise no relinquishment of control on account of specific provisions of the WMCP FTAA. Clause 8.2 provides a mechanism to prevent the mining
operations from grinding to a complete halt as a result of possible delays of more than 60 days in the government's processing and approval of submitted work
programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution in case a disagreement between the State and the contractor (over the
proposed work program or budget submitted by the contractor) should result in a deadlock or impasse, to avoid unreasonably long delays in the performance of
the works.

The State, despite Clause 8.3, still has control over the contract area, and it may, as sovereign authority, prohibit work thereon until the dispute is resolved, or it
may terminate the FTAA, citing substantial breach thereof. Hence, the State clearly retains full and effective control.

Clause 8.5, which allows the contractor to make changes to approved work programs and budgets without the prior approval of the DENR secretary, subject to
certain limitations with respect to the variance/s, merely provides the contractor a certain amount of flexibility to meet unexpected situations, while still
guaranteeing that the approved work programs and budgets are not abandoned altogether. And if the secretary disagrees with the actions taken by the
contractor in this instance, he may also resort to cancellation/termination of the FTAA as the ultimate sanction.

Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the contract area to be relinquished. The State is not in a position to substitute its
judgment for that of the contractor, who knows exactly which portions of the contract area do not contain minerals in commercial quantities and should be
relinquished. Also, since the annual occupation fees paid to government are based on the total hectarage of the contract area, net of the areas relinquished, the
contractor's self-interest will assure proper and efficient relinquishment.

Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel government to use its power of eminent domain. It contemplates a situation in
which the contractor is a foreign-owned corporation, hence, not qualified to own land. The contractor identifies the surface areas needed for it to construct the
infrastructure for mining operations, and the State then acquires the surface rights on behalf of the former. The provision does not call for the exercise of the
power of eminent domain (or determination of just compensation); it seeks to avoid a violation of the anti-dummy law.

Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and encumber the mineral products extracted may have been a result of conditions
imposed by creditor-banks to secure the loan obligations of WMCP. Banks lend also upon the security of encumbrances on goods produced, which can be easily
sold and converted into cash and applied to the repayment of loans. Thus, Clause 10.2(l) is not something out of the ordinary. Neither is it objectionable, because
even though the contractor is allowed to mortgage or encumber the mineral end-products themselves, the contractor is not thereby relieved of its obligation to
pay the government its basic and additional shares in the net mining revenue. The contractor's ability to mortgage the minerals does not negate the State's right
to receive its share of net mining revenues.

Clause 10.2(k) which gives the contractor authority "to change its equity structure at any time," means that WMCP, which was then 100 percent foreign owned,
could permit Filipino equity ownership. Moreover, what is important is that the contractor, regardless of its ownership, is always in a position to render the
services required under the FTAA, under the direction and control of the government.

Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required by banks and other financial institutions as part of the conditions of new
lendings. There is nothing objectionable here, since Clause 10.4(e) also provides that such financing arrangements should in no event reduce the contractor's
obligations or the government's rights under the FTAA. Clause 10.4(i) provides that government shall "favourably consider" any request for amendments of this
agreement necessary for the contractor to successfully obtain financing. There is no renunciation of control, as the proviso does not say that government shall
automatically grant any such request. Also, it is up to the contractor to prove the need for the requested changes. The government always has the final say on
whether to approve or disapprove such requests.

In fine, the FTAA provisions do not reduce or abdicate State control.

No Surrender of Financial Benefits

The second paragraph of Section 81 of RA 7942 has been denounced for allegedly limiting the State's share in FTAAs with foreign contractors to just taxes, fees
and duties, and depriving the State of a share in the after-tax income of the enterprise. However, the inclusion of the phrase "among other things" in the second
paragraph of Section 81 clearly and unmistakably reveals the legislative intent to have the State collect more than just the usual taxes, duties and fees.

Thus, DAO 99-56, the "Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance Agreements," spells out the financial benefits government
will receive from an FTAA, as consisting of not only a basic government share, comprised of all direct taxes, fees and royalties, as well as other payments
made by the contractor during the term of the FTAA, but also an additional government share, being a share in the earnings or cash flows of the mining
enterprise, so as to achieve a fifty-fifty sharing of net benefits from mining between the government and the contractor.

The additional government share is computed using one of three (3) options or schemes detailed in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative
present value of cash flows; (2) the excess profit-related additional government share; and (3) the additional sharing based on the cumulative net mining
revenue. Whichever option or computation is used, the additional government share has nothing to do with taxes, duties, fees or charges. The portion of
revenues remaining after the deduction of the basic and additional government shares is what goes to the contractor.
The basic government share and the additional government share do not yet take into account the indirect taxes and other financial contributions of mining
projects, which are real and actual benefits enjoyed by the Filipino people; if these are taken into account, total government share increases to 60 percent or
higher (as much as 77 percent, and 89 percent in one instance) of the net present value of total benefits from the project.

The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the payment of the government share in FTAAs until after the contractor shall have
recovered its pre-operating expenses, exploration and development expenditures. Allegedly, the collection of the State's share is rendered uncertain, as there is
no time limit in RA 7942 for this grace period or recovery period. But although RA 7942 did not limit the grace period, the concerned agencies (DENR and MGB)
in formulating the 1995 and 1996 Implementing Rules and Regulations provided that the period of recovery, reckoned from the date of commercial operation,
shall be for a period not exceeding five years, or until the date of actual recovery, whichever comes earlier.

And since RA 7942 allegedly does not require government approval for the pre-operating, exploration and development expenses of the foreign contractors, it is
feared that such expenses could be bloated to wipe out mining revenues anticipated for 10 years, with the result that the State's share is zero for the first 10
years. However, the argument is based on incorrect information.

Under Section 23 of RA 7942, the applicant for exploration permit is required to submit a proposed work program for exploration, containing a yearly budget of
proposed expenditures, which the State passes upon and either approves or rejects; if approved, the same will subsequently be recorded as pre-operating
expenses that the contractor will have to recoup over the grace period.

Under Section 24, when an exploration permittee files with the MGB a declaration of mining project feasibility, it must submit a work program for development,
with corresponding budget, for approval by the Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again, government has
the opportunity to approve or reject the proposed work program and budgeted expenditures for development works, which will become the pre-operating and
development costs that will have to be recovered. Government is able to know ahead of time the amounts of pre-operating and other expenses to be recovered,
and the approximate period of time needed therefor. The aforecited provisions have counterparts in Section 35, which deals with the terms and conditions
exclusively applicable to FTAAs. In sum, the third or last paragraph of Section 81 of RA 7942 cannot be deemed defective.

Section 80 of RA 7942 allegedly limits the State's share in a mineral production-sharing agreement (MPSA) to just the excise tax on the mineral product, i.e., only
2 percent of market value of the minerals. The colatilla in Section 84 reiterates the same limitation in Section 80. However, these two provisions pertain only
to MPSAs, and have no application to FTAAs. These particular provisions do not come within the issues defined by this Court. Hence, on due process
grounds, no pronouncement can be made in this case in respect of the constitutionality of Sections 80 and 84.

Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old "license, concession or lease" system, because it allegedly effectively
reduces the government share in FTAAs to just the 2 percent excise tax which pursuant to Section 80 comprises the government share in MPSAs. However,
Section 112 likewise does not come within the issues delineated by this Court, and was never touched upon by the parties in their pleadings. Moreover, Section
112 may not properly apply to FTAAs. The mining law obviously meant to treat FTAAs as a breed apart from mineral agreements. There is absolutely no basis to
believe that the law intends to exact from FTAA contractors merely the same government share (i.e., the 2 percent excise tax) that it apparently demands from
contractors under the three forms of mineral agreements.

While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they cannot be ruled upon here. In any event, they are separable; thus,
a later finding of nullity will not affect the rest of RA 7942.

In fine, the challenged provisions of RA 7942 cannot be said to surrender financial benefits from an FTAA to the foreign contractors.

Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor, the State must receive at least 60 percent of the after-tax income from
the exploitation of its mineral resources, and that such share is the equivalent of the constitutional requirement that at least 60 percent of the capital, and hence
60 percent of the income, of mining companies should remain in Filipino hands. Even if the State is entitled to a 60 percent share from other mineral agreements
(CPA, JVA and MPSA), that would not create a parallel or analogous situation for FTAAs. We are dealing with an essentially different equation. Here we have the
old apples and oranges syndrome.

The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all situations, regardless of circumstances. There is no indication of such an
intention on the part of the framers. Moreover, the terms and conditions of petroleum FTAAs cannot serve as standards for mineral mining FTAAs, because the
technical and operational requirements, cost structures and investment needs of off-shore petroleum exploration and drilling companies do not have
the remotest resemblance to those of on-shore mining companies.

To take the position that government's share must be not less than 60 percent of after-tax income of FTAA contractors is nothing short of this Court dictating
upon the government. The State resultantly ends up losing control. To avoid compromising the State's full control and supervision over the exploitation of mineral
resources, there must be no attempt to impose a "minimum 60 percent" rule. It is sufficient that the State has the power and means, should it so decide, to get a
60 percent share (or greater); and it is not necessary that the State does so in every case.

Invalid Provisions of the WMCP FTAA

Section 7.9 of the WMCP FTAA clearly renders illusory the State's 60 percent share of WMCP's revenues. Under Section 7.9, should WMCP's foreign
stockholders (who originally owned 100 percent of the equity) sell 60 percent or more of their equity to a Filipino citizen or corporation, the State loses its right to
receive its share in net mining revenues under Section 7.7, without any offsetting compensation to the State. And what is given to the State in Section 7.7 is by
mere tolerance of WMCP's foreign stockholders, who can at any time cut off the government's entire share by simply selling 60 percent of WMCP's equity to a
Philippine citizen or corporation.

In fact, the sale by WMCP's foreign stockholder on January 23, 2001 of the entire outstanding equity in WMCP to Sagittarius Mines, Inc., a domestic corporation
at least 60 percent Filipino owned, can be deemed to have automatically triggered the operation of Section 7.9 and removed the State's right to receive its 60
percent share. Section 7.9 of the WMCP FTAA has effectively given away the State's share without anything in exchange.

Moreover, it constitutes unjust enrichment on the part of the local and foreign stockholders in WMCP, because by the mere act of divestment, the local and
foreign stockholders get a windfall, as their share in the net mining revenues of WMCP is automatically increased, without having to pay anything for it.

Being grossly disadvantageous to government and detrimental to the Filipino people, as well as violative of public policy, Section 7.9 must therefore be stricken
off as invalid. The FTAA in question does not involve mere contractual rights but, being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest. Since the offending provision is very much separable from the rest of the FTAA, the deletion
of Section 7.9 can be done without affecting or requiring the invalidation of the entire WMCP FTAA itself.

Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent by government for the benefit of the contractor to be deductible from the
State's share in net mining revenues, it results in benefiting the contractor twice over. This constitutes unjust enrichment on the part of the contractor, at the
expense of government. For being grossly disadvantageous and prejudicial to government and contrary to public policy, Section 7.8(e) must also be declared
without effect. It may likewise be stricken off without affecting the rest of the FTAA.

EPILOGUE

AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the Court upon the key principle that the State must exercise full control and
supervision over the exploration, development and utilization of mineral resources.

The crux of the controversy is the amount of discretion to be accorded the Executive Department, particularly the President of the Republic, in respect of
negotiations over the terms of FTAAs, particularly when it comes to the government share of financial benefits from FTAAs. The Court believes that it is not
unconstitutional to allow a wide degree of discretion to the Chief Executive, given the nature and complexity of such agreements, the humongous amounts of
capital and financing required for large-scale mining operations, the complicated technology needed, and the intricacies of international trade, coupled with the
State's need to maintain flexibility in its dealings, in order to preserve and enhance our country's competitiveness in world markets.

We are all, in one way or another, sorely affected by the recently reported scandals involving corruption in high places, duplicity in the negotiation of multi-billion
peso government contracts, huge payoffs to government officials, and other malfeasances; and perhaps, there is the desire to see some measures put in place
to prevent further abuse. However, dictating upon the President what minimum share to get from an FTAA is not the solution.It sets a bad precedent
since such a move institutionalizes the very reduction if not deprivation of the State's control. The remedy may be worse than the problem it was meant to
address. In any event, provisions in such future agreements which may be suspected to be grossly disadvantageous or detrimental to government may be
challenged in court, and the culprits haled before the bar of justice.

Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate branches of government, this Court must restrain itself from
intruding into policy matters and must allow the President and Congress maximum discretion in using the resources of our country and in securing the assistance
of foreign groups to eradicate the grinding poverty of our people and answer their cry for viable employment opportunities in the country.

"The judiciary is loath to interfere with the due exercise by coequal branches of government of their official functions."99 As aptly spelled out seven decades ago
by Justice George Malcolm, "Just as the Supreme Court, as the guardian of constitutional rights, should not sanction usurpations by any other department of
government, so should it as strictly confine its own sphere of influence to the powers expressly or by implication conferred on it by the Organic Act."100 Let the
development of the mining industry be the responsibility of the political branches of government. And let not this Court interfere inordinately and unnecessarily.

The Constitution of the Philippines is the supreme law of the land. It is the repository of all the aspirations and hopes of all the people. We fully sympathize with
the plight of Petitioner La Bugal B'laan and other tribal groups, and commend their efforts to uplift their communities. However, we cannot justify the invalidation
of an otherwise constitutional statute along with its implementing rules, or the nullification of an otherwise legal and binding FTAA contract.

We must never forget that it is not only our less privileged brethren in tribal and cultural communities who deserve the attention of this Court; rather, all parties
concerned -- including the State itself, the contractor (whether Filipino or foreign), and the vast majority of our citizens -- equally deserve the protection of the law
and of this Court. To stress, the benefits to be derived by the State from mining activities must ultimately serve the great majority of our fellow citizens. They have
as much right and interest in the proper and well-ordered development and utilization of the country's mineral resources as the petitioners.

Whether we consider the near term or take the longer view, we cannot overemphasize the need for an appropriate balancing of interests and needs -- the
need to develop our stagnating mining industry and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx. PhP47.04 trillion)
worth of mineral wealth lying hidden in the ground, in order to jumpstart our floundering economy on the one hand, and on the other, the need to enhance our
nationalistic aspirations, protect our indigenous communities, and prevent irreversible ecological damage.

This Court cannot but be mindful that any decision rendered in this case will ultimately impact not only the cultural communities which lodged the instant Petition,
and not only the larger community of the Filipino people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices of fuel, food, and
essential commodities and services, the shrinking value of the local currency, and a government hamstrung in its delivery of basic services by a severe lack of
resources, but also countless future generations of Filipinos.

For this latter group of Filipinos yet to be born, their eventual access to education, health care and basic services, their overall level of well-being, the very shape
of their lives are even now being determined and affected partly by the policies and directions being adopted and implemented by government today. And in part
by the this Resolution rendered by this Court today.

Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a select group of people living in the areas locally affected by
mining activities, but the entire Filipino nation, present and future, to whom the mineral wealth really belong. This Court has therefore weighed carefully the rights
and interests of all concerned, and decided for the greater good of the greatest number. JUSTICE FOR ALL, not just for some; JUSTICE FOR THE PRESENT
AND THE FUTURE, not just for the here and now.

WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for Reconsideration; to REVERSE and SET ASIDE this Court's
January 27, 2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine
Mining Law), (2) its Implementing Rules and Regulations contained in DENR Administrative Order (DAO) No. 9640 -- insofar as they relate to financial and
technical assistance agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Financial and Technical Assistance
Agreement (FTAA) dated March 30, 1995 executed by the government and Western Mining Corporation Philippines Inc. (WMCP), except Sections 7.8 and 7.9 of
the subject FTAA which are hereby INVALIDATED for being contrary to public policy and for being grossly disadvantageous to the government.

SO ORDERED.

Davide Jr., C.J., Sandoval-Gutierrez, Austria-Martinez, and Garcia, JJ., concur.

Puno, J., in the result and votes to invalidate sections 3.3; 7.8 and 7.9 of the WMC FTAA.
Quisumbing, J., in the result.
Ynares-Santiago, J., joins dissenting opinion of J. Antonio Carpio & J. Conchita C. Morales.
Carpio, and Carpio-Morales, JJ., see dissenting opinion.
Corona, J., certifies he voted affirmatively with the majority and he was allowed to do so although he is on leave.
Callejo, Sr., J., concurs to the dissenting opinion of J. Carpio.
Azcuna, J., took no part-same reason.
Tinga, and Chico-Nazario, JJ., concur with a separate opinion.

CONCURRING OPINION

CHICO-NAZARIO, J.:

I concur in the well-reasoned ponencia of my esteemed colleague Mr. Justice Artemio V. Panganiban. I feel obligated, however, to add the following
observations:

I. RE "FULL CONTROL AND SUPERVISION"

With all due respect, I believe that the issue of unconstitutionality of Republic Act No. 7942, its implementing rules, and the Financial Assistance Agreement
between the Philippine Government and WMPC (Philippines) Inc. (WMPC FTAA) executed pursuant to Rep. Act No. 7942 hinges, to a large extent, on the
interpretation of the phrase in Section 2, Article XII of the 1987 Constitution, which states:

(T)he exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. x x x. (Emphasis
supplied)

Construing said phrase vis-à-vis the entire provision, it appears from the deliberations in the Constitutional Commission that the term "control" does not have the
meaning it ordinarily has in political law which is the power of a superior to substitute his judgment for that of an inferior.1 Thus –

MR. NOLLEDO: Suppose a judicial entity is given the power to exploit natural resources and, of course, there are decisions made by the governing
board of that judicial entity, can the state change the decisions of the governing board of that entity based on the words "full control".

MR. VILLEGAS: If it is within the context of the contract, I think the State cannot violate the laws of the land.2

Moreover, "full control and supervision" does not mean that foreign stockholders cannot be legally elected as members of the board of a corporation doing
business under, say, a co-production, joint venture or profit-sharing agreement, 40% of whose capital is foreign owned. Otherwise, and as Commissioner Romulo
declared, it would be unfair to the foreign stockholder3 and, per Commissioner Padilla, "refusing them a voice in management would make a co-production, joint
venture and production sharing illusory."4
It is apparently for the foregoing reasons that there was a disapproval of the amendment proposed by Commissioner, now Mr. Chief Justice Davide, that the
governing and managing bodies of such corporations shall be vested exclusively in citizens of the Philippines5 so that control of all corporations involved in the
business of utilizing our natural resources would always be in Filipino hands.

The disapproval must be juxtaposed with the fact that a provision substantially similar to the proposed Davide amendment was approved with regard to
educational institutions, viz:

Section 4 (2). Educational institutions, other than those established by religious groups and mission boards, shall be owned solely by citizens of the
Philippines or corporations or associations at least sixty per centum of the capital of which is owned by such citizens. The Congress may, however,
require increased Filipino equity participation in all educational institutions.

The control and administration of educational institutions shall be vested in citizens of the Philippines. (Emphasis supplied)

From the foregoing, it can be clearly inferred that it was NOT the intention of the framers of the Constitution to deprive governing boards of domestic corporations
with non-Filipino members, the right to control and administer the corporation that explores, develops and utilizes natural resources insofar as agreements with
the State for co-production, joint venture and production-sharing are concerned, otherwise the Davide amendment would have been approved and, like the
prohibition in above-quoted Section 4(2), Article XIV, control and supervision of all business involved in the exploration and development of mineral resources
would have been left solely in Filipino hands.

Accordingly, to the extent that the corporate board governs and manages the operations for the exploration and use of natural resources, to that extent the "full
control and supervision" thereof by the State is diminished.

In effect, therefore, when the State enters into such agreements as provided in the Constitution, it allows itself to surrender part of its sovereign right to full control
and supervision of said activities, the State having the right to partly surrender the exercise of sovereign powers under the doctrine of auto-limitation.6

If foreigners (under joint ventures etc.) have a say in the management of the business of utilizing natural resources as corporate directors of domestic
corporations, there is no justification for holding that foreign corporations who put in considerably large amounts of money under agreements involving either
technical or financial assistance for large scale exploration, development and utilization of minerals, petroleum and other mineral oils are prohibited from
managing such business.

Indeed, to say that the Constitution requires the State to have full and total control and supervision of the exploration, development and utilization of minerals
when undertaken in a large scale under agreements with foreign corporations involving huge amounts of money is to divorce oneself from reality. As Mr. Justice
Panganiban said, no firm would invest funds in such enterprise unless it has a say in the management of the business.

To paraphrase this Court in one of its landmark cases, the fundamental law does not intend an impossible undertaking.7 It must therefore be presumed that the
Constitution did not at all intend an interpretation of Section 2, Article XII which deprives the foreign corporation engaged in large scale mining activities a
measure of control in the management and operation of such activities, and in said manner, remove from the realm of the possible the enterprise the Constitution
envisions thereunder.

This brings me to the final point raised by my esteemed colleague, Mme. Justice Conchita Carpio Morales, that it is of no moment that the declaration of Rep. Act
No. 7942 may discourage foreign assistance and/or retard or delay the exploration, development or utilization of the nation's natural resources as the Filipino
people, as early as the 1935 Constitution, have determined such matters as secondary to the protection and preservation of their ownership of these natural
resources. With due respect, I find such proposition not legally justifiable as it looks backward to the justification in the 1935 Constitution instead of forward under
the 1987 Constitution which expressly allows foreign participation in the exploration, development or utilization of the nation's marine wealth to allow the State to
take advantage of foreign funding or technical assistance. As long as the means employed by such foreign assistance result in real contributions to the economic
growth of our country and enhance the general welfare of our people, the development of our mineral resources by and through foreign corporations, such
FTAAs are not unconstitutional.

II. RE: REQUIREMENT THAT FTAAs MUST BE "BASED

ON REAL CONTRIBUTIONS TO THE ECONOMIC GROWTH
AND GENERAL WELFARE OF THE COUNTRY"

The policy behind Rep. Act No. 7942 is to promote the "rational exploration, development, utilization and conservation" of the State-owned mineral resources
"through the combined efforts of government and the private sector in order to enhance national growth in a way that effectively safe-guards the environment and
protect the rights of affected communities".8 This policy, with reference specifically to FTAAs, is in keeping with the constitutional precept that FTAAs must be
based on real contributions to the economic growth and general welfare of the country. As has been said, "a statute derives its vitality from the purpose for which
it is enacted and to construe it in a manner that disregards or defeats such purpose is to nullify or destroy the law." 9 In this regard, much has been said about the
alleged unconstitutionality of Section 81 of Rep. Act No. 7942 as it allegedly allows for the waiver of the State's right to receive income from the exploitation of its
mineral resources as it limits the State's share in FTAAs with foreign contractors to taxes, duties and fees. For clarity, the provision states –

SEC. 81. Government Share in Other Mineral Agreements. -- The share of the Government in co-production and joint-venture agreements shall be
negotiated by the Government and the contractor taking into consideration the: (a) capital investment of the project, (b) risks involved, (c)
contribution of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing between the Government and the
 contractor. The Government shall also be entitled to compensations for its other contributions which shall be agreed upon by the parties, and shall
consist, among other things, the contractor's income tax, excise tax, special allowance, withholding tax due from the contractor's foreign
stockholders, arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national, and all such other taxes,
duties and fees as provided for under existing laws.

The Government share in financial or technical assistance agreement shall consist of, among other things,the contractor's corporate income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of foreign national and all such other taxes, duties and fees as provided for under existing laws.

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance
agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive. (Emphasis supplied)

The controversy revolves around the proper interpretation of "among other things" stated in the second paragraph of Section 81. Mr. Justice Carpio is of the
opinion that "among other things" could only mean "among other taxes", referring to the unnamed "other taxes, duties, and fees as provided for under existing
laws" contained in the last clause of Section 81, paragraph 2. If such were the correct interpretation, then truly, the provision is unconstitutional as a sharing
based only on taxes cannot be considered as contributing to the economic growth and general welfare of the country. I am bothered, however, by the
interpretation that the phrase "among other things" refers to "and all such other taxes, duties and fees as provided for under existing laws" since it would render
the former phrase superfluous. In other words, there would have been no need to include the phrase "among other things" if all it means is "all other taxes" since
the latter is already expressly stated in the provision. As it is a truism that all terms/phrases used in a statute has relevance to the object of the law, then I find the
view of Mr. Justice Panganiban – that "all other things" means "additional government share" in the form of "earnings or cash flow of the mining enterprise" as
interpreted by the DENR -- more compelling. Besides, such an interpretation would affirm the constitutionality of the provision which would then be in keeping
with the rudimentary principle that a law shall not be declared invalid unless the conflict with the Constitution is clear beyond reasonable doubt.10 To justify
nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative implication.11

Finally, I wish to stress that it would appear that the constitutional mandate that large-scale mining activities under FTAAs must be based on real contributions to
the economic growth and general welfare of the country is both a standard for the statute required to implement subject provision as well as the vehicle for the
exercise of the State's resultant residual control and supervision of the mining activities.

In all FTAAs, the State is deemed to reserve its right to control the end to be achieved so that real contributions to the economy can be realized and, in the final
analysis, the business will redound to the general welfare of the country.

However, the question of whether or not the FTAA will, in fact, redound to the general welfare of the public involves a "judgment call" by our policy makers who
are answerable to our people during the appropriate electoral exercises and are not subject to judicial pronouncements based on grave abuse of discretion.12

For the foregoing reasons, I vote to grant the motion for reconsideration.

DISSENTING OPINION

CARPIO, J.:

I dissent and vote to deny respondents' motions for reconsideration. I find that Section 3(aq), Section 39, Section 80, the second paragraph of Section 81, the
proviso in Section 84, and the first proviso in Section 112 of Republic Act No. 79421 ("RA 7942") violate Section 2, Article XII of the 1987 Constitution and are
therefore unconstitutional.

In essence, these provisions of RA 7942 waive the State's ownership rights under the Constitution over mineral resources. These provisions
also abdicate the State's constitutional duty to control and supervise fully the exploitation of mineral resources.

A. The Threshold Issue for Resolution

Petitioners claim that respondent Department of Environment and Natural Resources Secretary Victor O. Ramos, in issuing the rules to implement RA 7942,
gravely abused his discretion amounting to lack or excess of jurisdiction. Petitioners assert that RA 7942 is unconstitutional for the following reasons:

1. RA 7942 "allows fully foreign owned corporations to explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2,
paragraph 4, Article XII of the Constitution";

2. RA 7942 "allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation's marine wealth contrary to Section 2,
paragraph 2 of Article XII of the Constitution";

3. RA 7942 "violates Section 1, Article III of the Constitution";

 4. RA 7942 "allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral resources
contrary to Article XII of the Constitution";

5. RA 7942 "allows the inequitable sharing of wealth contrary to Section 1, paragraph 1, and Section 2, paragraph 4, Article XII of the
Constitution."2 (Emphasis supplied)

Petitioners also assail the validity of the Financial and Technical Assistance Agreement between the Philippine Government and WMCP (Philippines), Inc. dated
2 March 19953 ("WMCP FTAA") for violation of Section 2, Article XII of the 1987 Constitution.

The issues that petitioners raise boil down to whether RA 7942 and the WMCP FTAA violate Section 2, Article XII of the 1987 Constitution.

B. The Constitutional Declaration and Mandate

Section 2, Article XII of the 1987 Constitution4 provides as follows:

All x x x minerals, x x x petroleum, and other mineral oils, x x x and other natural resources are owned by the State. x x x The exploration,
development, and utilization of natural resources shall be under the full control and supervision of the State. x x x. (Emphasis supplied)

Two basic principles flow from this constitutional provision. First, the Constitution vests in the State ownership of all mineral resources. Second, the
Constitution mandates the State to exercise full control and supervisionover the exploitation of mineral resources.

The first principle reiterates the Regalian doctrine, which established State ownership of natural resources since the arrival of the Spaniards in the Philippines in
the 16th century. The 1935, 1973 and 1987 Constitutions incorporate the Regalian doctrine.5 The State, as owner of the nation's natural resources, exercises the
attributes of ownership over its natural resources.6 An important attribute of ownership is the right to receive the income from any commercial exploitation of
the natural resources.7

The second principle insures that the benefits of State ownership of natural resources accrue to the Filipino people. The framers of the 1987 Constitution
introduced the second principle to avoid the adverse effects of the "license, concession or lease" 8 system of exploitation under the 1935 and 1973
Constitutions.9 The "license, concession or lease" system enriched the private concessionaires who controlled the exploitation of natural resources. However, the
"license, concession or lease" system left the Filipino people impoverished, starkly exemplified by the nation's denuded forests whose exploitation did not benefit
the Filipino people.

The framers of the 1987 Constitution clearly intended to abandon the "license, concession or lease" system prevailing under the 1935 and 1973 Constitutions.
This exchange in the deliberations of the Constitutional Commission reveals this clear intent:

MR. DAVIDE: Thank you, Mr. Vice-President. I would like to seek some clarifications.

MR. VILLEGAS: Yes.

MR. DAVIDE: Under the proposal, I notice that except for the lands of the public domain, all the other natural resources cannot be alienated and in
respect to lands of the public domain, private corporations with the required ownership by Filipino citizens can only lease the same. Necessarily,
insofar as other natural resources are concerned, it would only be the State which can exploit, develop, explore and utilize the same.
However, the State may enter into a joint venture, co-production or production-sharing. Is that not correct?

MR. VILLEGAS: Yes.

MR. DAVIDE: Consequently, henceforth upon the approval of this Constitution, no timber or forest concessions, permits or authorization
can be exclusively granted to any citizen of the Philippines nor to any corporation qualified to acquire lands of the public domain?

MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer is "yes."

MR. DAVIDE: So, what will happen now to licenses or concessions earlier granted by the Philippine government to private corporations or to Filipino
citizens? Would they be deemed repealed?

MR. VILLEGAS: This is not applied retroactively. They will be respected.10 (Emphasis supplied)

To carry out this intent, the 1987 Constitution uses a different phraseology from that used in the 1935 and 1973 Constitutions. The previous Constitutions used
the phrase "license, concession or lease" in referring to exploitation of natural resources. The 1987 Constitution uses the phrase "co-production, joint venture or
production-sharing agreements," with "full control and supervision" by the State. The change in language was a clear rejection of the old system of "license,
concession or lease."
The 1935 and 1973 Constitutions also used the words "belong to" in stating the Regalian doctrine, thus declaring that natural resources "belong to the State."
The 1987 Constitution uses the word "owned," thus prescribing that natural resources are "owned" by the State. In using the word "owned," the 1987 Constitution
emphasizes the attributes of ownership, among which is the right to the income of the property owned.11

The State as owner of the natural resources must receive income from the exploitation of its natural resources. The payment of taxes, fees and charges,
derived from the taxing or police power of the State, is not a substitute.The State is duty bound to secure for the Filipino people a fair share of the income
from any exploitation of the nation's precious and exhaustible natural resources. As explained succinctly by a textbook writer:

Under the former licensing, concession, or lease schemes, the government benefited from such activities only through fees, charges and
taxes. Such benefits were very minimal compared with the enormous profits reaped by the licensees, concessionaires or lessees who had control
over the particular resources over which they had been given exclusive right to exploit. Moreover, some of them disregarded the conservation of
natural resources. With the new role, the State will be able to obtain a greater share in the profits. It can also actively husband our natural resources
and engage in development programs that will be beneficial to the nation.12 (Emphasis supplied)

Thus, the 1987 Constitution commands the State to exercise full control and supervision over the exploitation of natural resources to insure that the State
receives its fair share of the income. In Miners Association of the Philippines v. Hon. Factoran, Jr., et al.,13 the Court ruled that "the old system of
exploration, development and utilization of natural resources through 'license, concession or lease' x x x has been disallowed by Article XII, Section 2
of the 1987 Constitution." The Court explained:

Upon the effectivity of the 1987 Constitution on February 2, 1987, the State assumed a more dynamic role in the exploration, development
and utilization of the natural resources of the country. Article XII, Section 2 of the said Charter explicitly ordains that the exploration,
development and utilization of natural resources shall be under the full control and supervision of the State. Consonant therewith, the exploration,
development and utilization of natural resources may be undertaken by means of direct act of the State, or it may opt to enter into co-production,
joint venture, or production-sharing agreements, or it may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. (Emphasis
supplied)

The old system of "license, concession or lease" which merely gave the State a pittance in the form of taxes, fees and charges is now buried in history. Any
attempt to resurrect it is unconstitutional and deserves outright rejection by this Court.

The Constitution prohibits the alienation of all natural resources except agricultural lands.14 The Constitution, however, allows the State to exploit commercially its
natural resources and sell the marketable products from such exploitation. This the State may do through a co-production, joint venture or production-sharing
arrangement with companies at least 60% Filipino owned. The necessary implication is that the State, as owner of the natural resources, must receive a fair
share of the income from such commercial operation. The State may receive its share of the net income in cash or in kind.

The State may also directly exploit its natural resources in either of two ways. The State may set up its own company to engage in the exploitation of natural
resources. Alternatively, the State may enter into a financial or technical assistance agreement ("FTAA") with private companies who act as contractors of the
State. The State may seek from such contractors either financial or technical assistance, or both, depending on the State's own needs. Under an FTAA, the
contractor, foreign or local, manages the contracted work or operations to the extent of its financial or technical contribution, subject to the State's control and
supervision.

Except in large-scale exploitation of certain minerals, the State's contractors must be 60% Filipino owned companies. The State pays such contractors, for their
technical services or financial assistance, a share of the income from the exploitation of the natural resources. The State retains the remainder of the income
after paying the Filipino owned contractor.

In large-scale exploitation of minerals, petroleum and other mineral oils, the Constitution allows the State to contract with "foreign-owned corporations" under
an FTAA. This is still a direct exploitation by the State but using a foreign instead of a local contractor. However, the Constitution requires that the participation
of foreign contractors must make a real contribution to the national economy and the general welfare. The State pays the foreign contractor, for its technical
services or financial assistance, a share of the income from the exploitation of the minerals, petroleum or other mineral oils. The State retains the rest of the
income after paying the foreign contractor.

Whether the FTAA contractor is local or foreign, the State must retain its fair share of the income from the exploitation of the natural resources that it owns. To
insure it retains its fair share of the income, the State must exercise full control and supervision over the exploitation of its natural resources. And whether the
FTAA contractor is local or foreign, the State is directly undertaking the exploitation of its natural resources, with the FTAA contractor providing technical
services or financing to the State. Since the State is directly undertaking the exploitation, all exploration permits and similar authorizations are in the name
of the Philippine Government, which then authorizes the contractor to act on its behalf.

The State exercises full control and supervision over the mining operations in the Philippines of the foreign contractor. However, the State does not exercise
control and supervision over the foreign contractor itself or its board of directors. The State does not also exercise any control or supervision over the foreign
contractor's mining operations in other countries, or even its non-mining operations in the Philippines. There is no conflict of power between the State and the
foreign contractor's board of directors. By entering into an FTAA, the foreign contractor, through its board of directors, agrees to manage the contracted work or
operations to the extent of its financial or technical contribution subject to the State's control and supervision.
No government should contract with a corporation, local or foreign, to exploit commercially the nation's natural resources without the State receiving any income
as owner of the natural resources. Natural resources are non-renewable and exhaustible assets of the State. Certainly, no government in its right mind should
give away for free its natural resources to private business enterprises, local or foreign, amidst widespread poverty among its people.

In sum, two basic constitutional principles govern the exploitation of natural resources in the country. First, the State owns the country's natural resources and
must benefit as owner from any exploitation of its natural resources. Second, to insure that it receives its fair share as owner of the natural resources, the State
must exercise full control and supervision over the exploitation of its natural resources.

We shall subject RA 7942 to constitutional scrutiny based on these two basic principles.

C. Waiver of Beneficial Rights from Ownership of Mineral Resources

RA 7942 contains five provisions which waive the State's right to receive income from the exploitation of its mineral resources. These provisions are Sections
39, 80, 81, 84 and 112:

Section 39. Option to Convert into a Mineral Agreement. — The contractor has the option to convert the financial or technical assistance
agreement to a mineral agreement at any time during the term of the agreement, if the economic viability of the contract area is found to
be inadequate to justify large-scale mining operations, after proper notice to the Secretary as provided for under the implementing rules and
regulations: Provided, That the mineral agreement shall only be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation, partnership, association, or cooperative. Upon
compliance with this requirement by the contractor, the Secretary shall approve the conversion and execute the mineral production-
sharing agreement.

Section 80. Government Share in Mineral Production Sharing Agreement. — The total government share in a mineral production sharing
agreement shall be the excise tax on mineral products as provided in Republic Act No. 7729, amending Section 151(a) of the National Internal
Revenue Code, as amended.

Section 81. Government Share in Other Mineral Agreements. — The share of the Government in co-production and joint-venture agreements shall
be negotiated by the Government and the contractor taking into consideration the: (a) capital investment of the project, (b) risks involved, (c)
contribution of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing between the Government and the
contractor. The Government shall also be entitled to compensation for its other contributions which shall be agreed upon by the parties, and shall
consist, among other things, the contractor's income tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders
arising from dividend or interest payments to the said foreign stockholders, in case of a foreign national, and all such other taxes, duties and fees as
provided for under existing laws.

The Government share in financial or technical assistance agreement shall consist of, among other things, the contractor's corporate
income tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest
payments to the said foreign stockholder in case of a foreign national and all such other taxes, duties and fees as provided for under
existing laws.

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical
assistance agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive.

Section 84. Excise Tax on Mineral Products. — The contractor shall be liable to pay the excise tax on mineral products as provided for under Section
151 of the National Internal Revenue Code: Provided, however, That with respect to a mineral production sharing agreement, the excise tax
on mineral products shall be the government share under said agreement.

Section 112. Non-impairment of Existing Mining/Quarrying Rights. - All valid and existing mining lease contracts, permits/licenses, leases pending
renewal, mineral production–sharing agreements granted under Executive Order No. 279, at the date of effectivity of this Act, shall remain valid x x
x Provided, That the provisions of Chapter XIV15 on government share in mineral production-sharing agreement x x x shall immediately
govern and apply to a mining lessee or contractor unless the mining lessee or contractor indicates his intention to the Secretary, in writing, not to
avail of said provisions: x x x.

(Emphasis supplied)

Section 80 of RA 7942 limits to the excise tax the State's share in a mineral production-sharing agreement ("MPSA"). Section 80 expressly states that the
excise tax on mineral products shall constitute the "total government share in a mineral production sharing agreement." Under Section 151(A) of the Tax
Code, this excise tax on metallic and non-metallic minerals is only 2% of the market value, as follows:

Section 151. Mineral Products. —

 (A) Rates of Tax. — There shall be levied, assessed and collected on minerals, mineral products and quarry resources, excise tax as follows:

(1) On coal and coke, a tax of Ten pesos (P10.00) per metric ton;

(2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on the actual market value of the gross output thereof at the
time of removal, in the case of those locally extracted or produced; or the value used by the Bureau of Customs in determining tariff and customs
duties, net of excise tax and value-added tax, in the case of importation.

xxx

(3) On all metallic minerals, a tax based on the actual market value of the gross output thereof at the time of removal, in the case of those locally
extracted or produced; or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax,
in the case of importation, in accordance with the following schedule:

(a) Copper and other metallic minerals:

(i) On the first three (3) years upon the effectivity of Republic Act No. 7729, one percent (1%);

(ii) On the fourth and the fifth years, one and a half percent (1½%); and

(iii) On the sixth year and thereafter, two percent (2%).

(b) Gold and chromite, two percent (2%).

x x x. (Emphasis supplied)

Section 80 of RA 7942 does not allow the State to receive any income as owner of the mineral resources.The proviso in Section 84 of RA 7942 reiterates
this when it states that "the excise tax on mineral products shall be the government share under said agreement."16 The State receives only an excise tax
flowing from its taxing power, not from its ownership of the mineral resources. The excise tax is imposed not only on mineral products, but also on alcohol,
tobacco and automobiles17 produced by companies that do not exploit natural resources owned by the State. The excise tax is not payment for the exploitation of
the State's natural resources, but payment for the "privilege of engaging in business."18 Clearly, under Section 80 of RA 7942, the State does not receive as
owner of the mineral resources any income from the exploitation of its mineral resources.

The second paragraph of Section 81 of RA 7942 also limits the State's share in FTAAs with foreign contractors to taxes, duties and fees. Section 81 of RA 7942
provides that the State's share in FTAAs with foreign contractors –

shall consist of, among other things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from the contractor's
foreign stockholders arising from dividend or interest payments to the said foreign stockholder in case of a foreign national and all such other taxes,
duties and fees as provided for under existing laws. (Emphasis supplied)

RA 7942 does not explain the phrase "among other things." The Solicitor General states correctly that the phrase refers to taxes.19 The phrase is an ejusdem
generis phrase, and means "among other taxes, duties and fees" since the items specifically enumerated are all taxes, duties and fees. The last phrase "all such
other taxes, duties and fees as provided for under existing laws" at the end of the sentence clarifies further that the phrase "among other things" refers to taxes,
duties and fees.

The second paragraph of Section 81 does not require the Government and the foreign FTAA contractor to negotiate the State's share. In contrast, the first
paragraph of Section 81 expressly provides that the "share of the Government in co-production and joint-venture agreements shall be negotiated by the
Government and the contractor" which is 60% Filipino owned.

In a co-production or joint venture agreement, the Government contributes other inputs or equity in addition to its mineral resources.20 Thus, the first paragraph of
Section 81 requires the Government and the 60% Filipino owned company to negotiate the State's share. However, in an FTAA with a foreign contractor under
the second paragraph of Section 81, the Government's contribution is only the mineral resources. Section 81 does not require the Government and the foreign
contractor to negotiate the State's share from the net proceeds because there is no share for the State. Section 81 does not recognize the State's
contribution of mineral resources as worthy of any share of the net proceeds from the mining operations.

Thus, in FTAAs with foreign contractors under RA 7942, the State's share is limited to taxes, fees and duties. The taxes include "withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments." All these taxes, fees and duties are imposed pursuant to the State's taxing
power. The tax on income, including dividend and interest income, is imposed on all taxpayers whether or not they are stockholders of mining companies. These
taxes, fees and duties are not contractual payments to the State as owner of the mineral resources but are mandatory exactions based on the taxing power of the
State.
Section 112 of RA 7942 is another provision that violates Section 2, Article XII of the 1987 Constitution. Section 112 "immediately" reverts all mineral
agreements to the old and discredited "license, concession or lease" system outlawed by the 1987 Constitution. Section 112 states that "the provisions of
Chapter XIV21 on government share in mineral production-sharing agreement x x x shall immediately govern and apply to a mining lessee or
contractor." The contractor, local or foreign, will now pay only the "government share in a mineral production-sharing agreement" under RA 7942. Section
80 of RA 7942, which specifically governs MPSAs, limits the "government share" solely to the excise tax on mineral products - 2% on metallic and
non-metallic minerals and 3% on indigenous petroleum.

In allowing the payment of the excise tax as the only share of the government in any mineral agreement, whether co-production, joint venture or production-
sharing, Section 112 of RA 7942 reinstates the old "license, concession or lease" system where the State receives only minimal taxes, duties and fees. This
clearly violates Section 2, Article XII of the Constitution and is therefore unconstitutional. Section 112 of RA 7942 is a sweeping negation of the clear letter and
intent of the 1987 Constitution that the exploitation of the State's natural resources must benefit primarily the Filipino people.

Of course, Section 112 gives contractors the option not to avail of the benefit of Section 112. This is in the guise that the enactment of RA 7942 shall not impair
pre-existing mining rights, as the heading of Section 112 states. It is doubtful, however, if any contractor of sound mind would refuse to receive 100% rather than
only 40% of the net proceeds from the exploitation of minerals under the FTAA.

Another provision that violates Section 2, Article XII of the Constitution is Section 39 of RA 7942. Section 39 grants the foreign contractor the option to convert
the FTAA into a "mineral production-sharing agreement" if the foreign contractor finds that the mineral deposits do not justify large-scale mining operations.
Section 39 of RA 7942 operates to deprive the State of income from the mining operations and limits the State to the excise tax on mineral products.

Section 39 grants the foreign contractor the option to revert to the "license, concession or lease" system which the 1987 Constitution has banned. The only
requirement for the exercise of the option is for the foreign contractor to divest 60% of its equity to a Philippine citizen or to a corporation 60% Filipino owned.
Section 39 states, "Upon compliance with this requirement by the contractor, the Secretary shall approve the conversion and execute the mineral
production-sharing agreement." The foreign contractor only needs to give "proper notice to the Secretary as provided for under the implementing rules and
regulations" if the contractor finds the contract area not viable for large-scale mining. Thus, Section 39 of RA 7942 is unconstitutional.

Sections 39, 80, 81, 84 and 112 of RA 7942 operate to deprive the State of the beneficial rights arising from its ownership of mineral resources. What Section 2,
Article XII of the 1987 Constitution vests in absolute ownership to the State, Sections 80, 81, 84 and 112 of RA 7942 take away and give for free to private
business enterprises, including foreign-owned companies.

The legislature has discretion whether to tax a business or product. If the legislature chooses to tax a business or product, it is free to determine the rate or
amount of the tax, provided it is not confiscatory.22 The legislature has the discretion to impose merely a 2% excise tax on mineral products. Courts cannot
inquire into the wisdom of the amount of such tax, no matter how meager it may be. This discretion of the legislature emanates from the State's taxing power, a
power vested solely in the legislature.

However, the legislature has no power to waive for free the benefits accruing to the State from its ownership of mineral resources. Absent considerations of
social justice, the legislature has no power to give away for free what forms part of the national patrimony of the State. Any surrender by the legislature of the
nation's mineral resources, especially to foreign private enterprises, is repugnant to the concept of national patrimony. Mineral resources form part of the national
patrimony under Article XII (National Economy and Patrimony) of the 1987 Constitution.

Under the last paragraph of Section 81, the collection of the State's so-called "share" (consisting of taxes) in FTAAs with foreign contractors is not even certain.
This paragraph provides that the State's "share x x x shall commence after the financial or technical assistance agreement contractor has fully recovered its pre-
operating expenses, exploration, and development expenditures." There is no time limit in RA 7942 for this grace period when the collection of the State's "share"
does not run.23

RA 7942 itself does not require government approval for the pre-operating, exploration and development expenses of the foreign contractor. The determination of
the amount of pre-operating, exploration and development expenses is left solely to the discretion of the foreign contractor. Nothing prevents the foreign
contractor from recording pre-operating, exploration and development expenses equal to the mining revenues it anticipates for the first 10 years. If that happens,
the State's share is ZERO for the first 10 years.

The Government cannot tell the Filipino people when the State will start to receive its "share" (consisting of taxes) in mining revenues under the FTAA. The
Executive Department cannot correct these deficiencies in RA 7942 through remedial implementing rules. The correction involves substantive legislation, not
merely filling in the implementing details of the law.

Taxes, fees and duties cannot constitute payment for the State's share as owner of the mineral resources. This was the mode of payment used under the old
system of "license, concession or lease" which the 1987 Constitution abrogated. Obviously, Sections 80, 81, 84 and 112 of RA 7942 constitute an ingenious
attempt to resurrect the old and discredited system, which the 1987 Constitution has now outlawed. Under the 1987 Constitution, the State must receive
its fair share as owner of the mineral resources, separate from taxes, fees and duties paid by taxpayers. The legislature may waive taxes, fees and duties, but it
cannot waive the State's share in mining operations.

Any law waiving for free the State's right to the benefits arising from its ownership of mineral resources is unconstitutional. Such law negates Section 2, Article XII
of the 1987 Constitution vesting ownership of mineral resources in the State. Such law will not contribute to "economic growth and the general welfare of the
country" as required in the fourth paragraph of Section 2. Thus, in waiving the State's income from the exploitation of mineral resources, Section 80, the second
paragraph of Section 81, the proviso in Section 84, and Section 112 of RA 7942 violate the Constitution and are therefore void.
D. Abdication of the State's Duty to Control and Supervise
Fully the Exploitation of Mineral Resources

The 1987 Constitution commands the State to exercise "full control and supervision" over the exploitation of natural resources. The purpose of this mandatory
directive is to insure that the State receives its fair share in the exploitation of natural resources. The framers of the Constitution were determined to avoid the
disastrous mistakes of the past. Under the old system of "license, concession or lease," the State gave full control to the concessionaires who enriched
themselves while paying the State minimal taxes, fees and charges.

Under the 1987 Constitution, for a co-production, joint venture or production-sharing agreement to be valid the State must exercise full control and supervision
over the mining operations. This means that the State should approve all capital and operating expenses in the exploitation of the natural resources. Approval of
capital expenses determines how much capital is recoverable by the mining contractor. Approval of operating expenses determines the reasonable amounts
deductible from the annual income from mining operations. Such approvals are essential because the net income from mining operations, which is the basis of
the State's share, depends on the allowable amount of capital and operating expenses. There is approval of capital and operating expenses when the State
approves them, or if the State disapproves them and a dispute arises, when their final allowance is subject to arbitration.

The provisions of RA 7942 on MPSAs and FTAAs do not give the State any control and supervision over mining operations. The reason is obvious. The State's
so-called "share" in a mineral production-sharing agreement under Section 80 is limited solely to the excise tax on mineral products. This excise tax is based on
the market value of the mineral product determined without reference to the capital or operating expenses of the mining contractor.

Likewise, the State's "share" in an FTAA under Section 81 has no relation to the capital or operating expenses of the foreign contractor. The State's "share"
constitutes the same excise tax on mineral products, in addition to other direct and indirect taxes. The basis of the excise tax is the selling price of the mineral
product. Hence, there is no reason for the State to approve or disapprove the capital or operating expenses of the mining contractor. Consequently, RA 7942
does not give the State any control and supervision over mining operations contrary to the express command of the Constitution. This makes Section 80, the
second paragraph of Section 81, the proviso in Section 84, and Section 112 of RA 7942 unconstitutional.

E. RA 7942 Will Not Contribute to Economic

Growth or General Welfare of the Country

The fourth paragraph of Section 2, Article XII of the 1987 Constitution requires that FTAAs with foreign contractors must make "real contributions to the
economic growth and general welfare of the country." Under Section 81 of RA 7942, all the net proceeds arising from the exploitation of mineral resources
accrue to the foreign contractor even if the State owns the mineral resources. The foreign contractor will naturally repatriate the entire after-tax net proceeds to its
home country. Sections 94(a) and 94(b) of RA 7942 guarantee the foreign contractor the right to repatriate its after-tax net proceeds, as well as its entire capital
investment, after the termination of its mining operations in the country.24

Clearly, no FTAA under Section 81 will ever make any real contribution to the growth of the economy or to the general welfare of the country. The foreign
contractor, after it ceases to operate in the country, can even remit to its home country the scrap value of its capital equipment. Thus, the second paragraph of
Section 81 of RA 7942 is unconstitutional for failure to meet the constitutional requirement that the FTAA with a foreign contractor should make a real contribution
to the national economy and general welfare.

F. Example of FTAA that Complies with Section 2, Article XII of the 1987 Constitution

The Solicitor General warns that declaring unconstitutional RA 7942 or its provisions will endanger the Philippine Government's contract with the foreign
contractor extracting petroleum in Malampaya, Palawan.25 On the contrary, the FTAA with the foreign petroleum contractor meets the essential constitutional
requirements since the State receives a fair share of the income from the petroleum operations. The State also exercises control and supervision over the
exploitation of the petroleum. The petroleum FTAA provides enough safeguards to insure that the petroleum operations will make a real contribution to the
national economy and general welfare.

The Service Contract dated 11 December 1990 between the Philippine Government as the first party, and Occidental Philippines, Inc. and Shell Exploration B.V.
as the second party26 ("Occidental-Shell FTAA"), covering offshore exploitation of petroleum in Northwest Palawan, contains the following provisions:

a. There is express recognition that the "conduct of Petroleum Operations shall be under the full control and supervision of the Office of
Energy Affairs,"27 now Department of Energy ("DOE"), and that the "CONTRACTOR shall undertake and execute the Petroleum Operations
contemplated hereunder under the full control and supervision of the OFFICE OF ENERGY AFFAIRS;" 28

b. The State receives 60% of the net proceeds from the petroleum operations, while the foreign contractor receives the remaining 40%;29

c. The DOE has a right to inspect and audit every year the foreign contractor's books and accounts relating to the petroleum operations, and object
in writing to any expense (operating and capital expenses)30within 60 days from completion of the audit, and if there is no amicable
settlement, the dispute goes to arbitration;31

d. The operating expenses in any year cannot exceed 70% of the gross proceeds from the sale of petroleum in the same year, and any excess may
be carried over in succeeding years;32
 e. The Bureau of Internal Revenue ("BIR") can inspect and examine all the accounts, books and records of the foreign contractor relating to the
petroleum operations upon 24 hours written notice;33

f. The petroleum output is sold at posted or market prices;34

g. The foreign contractor pays the 32% Philippine corporate income tax on its 40% share of the net proceeds, including withholding tax on dividends
or remittances of profits.35 (Emphasis supplied)

The Occidental-Shell FTAA gives the State its fair share of the income from the petroleum operations of the foreign contractor. There is no question that the State
receives its rightful share, amounting to 60% of the net proceeds,in recognition of its ownership of the petroleum resources. In addition, Occidental-Shell's
40% share in the net proceeds is subject to the 32% Philippine income tax. The Occidental-Shell FTAA also gives the State, through the DOE and BIR, full
control and supervision over the petroleum operations of the foreign contractor. The foreign contractor can recover only the capital and operating expenses
approved by the DOE or by the arbitral panel.36 The Occidental-Shell FTAA also contains other safeguards to protect the interest of the State as owner of the
petroleum resources. While the foreign contractor manages the contracted work or operations to the extent of its financial or technical contribution, there are
sufficient safeguards in the FTAA to insure compliance with the constitutional requirements. The terms of the Occidental-Shell FTAA are fair to the State and to
Occidental-Shell.

In FTAAs with a foreign contractor, the State must receive at least 60% percent of the net proceeds from the exploitation of its mineral resources. This share is
the equivalent of the constitutional requirement that at least 60% of the capital, and hence 60% of the income, of mining companies should remain in Filipino
hands. Intervenor CMP and even respondent WMCP agree that the State has a 60% interest in the mining operations under an FTAA with a foreign
contractor. Intervenor CMP asserts that the Philippine Government "stands in the place of the 60% Filipino-owned company."37 Intervenor CMP also states
that "the contractor will get 40% of the financial benefits,"38 admitting that the State, which is the owner of the mineral resources, will retain the remaining
60% of the net proceeds.

Respondent WMCP likewise admits that the 60%-40% "sharing ratio between the Philippine Government and the Contractor is also in accordance with
the 60%-40% equity requirement for Filipino-owned corporations."39 Respondent WMCP even adds that the 60%-40% sharing ratio is "in line with the
intent behind Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily from the exploration, development, and
utilization of the Philippines' natural resources."40 If the State has a 60% interest in the mining operations under an FTAA, then it must retain at least 60% of
the net proceeds.

Otherwise, there is no sense exploiting the State's natural resources if all or a major part of the profits are remitted abroad, precluding any real contribution to the
national economy or the general welfare. The constitutional requirement of full control and supervision necessarily means that the State must receive the
income that corresponds to the party exercising full control, and this logically means a majority of the income.

The Occidental-Shell FTAA satisfies these constitutional requirements because the State receives 60% of the net proceeds and exercises full control and
supervision of the petroleum operations. The State's right to receive 60% of the net proceeds and its exercise of full control and supervision are the essential
constitutional requirements for the validity of any FTAA. The name given to the contract is immaterial – whether a "Service Contract" or any other name -
provided these two essential constitutional requirements are present. Thus, the designation of the Occidental-Shell FTAA as a "Service Contract" is
inconsequential since the two essential constitutional requirements for the validity of the contract as an FTAA are present.

With the State's right to receive 60% of the net proceeds, coupled with its control and supervision, the petroleum operations in the Occidental-Shell FTAA are
legally and in fact 60% owned and controlled by Filipinos. Indeed, the State is directly undertaking the petroleum exploitation with Occidental-Shell as the
foreign contractor. The Occidental-Shell FTAA does not provide for the issuance of exploration permits to Occidental-Shell precisely because the State itself is
directly undertaking the petroleum exploitation.

Section 3(aq) of RA 7942 allows the foreign contractor to hold the exploration permit under the FTAA. However, Section 2, Article XII of the 1987 Constitution
does not allow foreign owned corporations to undertake directly mining operations. Foreign owned corporations can only act as contractors of the State under the
FTAA, which is one method for the State to undertake directly the exploitation of its natural resources. The State, as the party directly undertaking the exploitation
of its natural resources, must hold through the Government all exploration permits and similar authorizations. Section 3(aq) of RA 7942, in allowing foreign owned
corporations to hold exploration permits, is unconstitutional.

The Occidental-Shell FTAA, involving a far riskier offshore venture than land-based mining operations, is a modelfor emulation if foreign contractors want to
comply with the constitutional requirements. Section 112 of RA 7942, however, negates the benefits of the State from the Occidental-Shell FTAA.

Occidental-Shell can invoke Section 112 of RA 7942 and deny the State its 60% share of the net proceeds from the exploitation of petroleum. Section 112 allows
the foreign contractor to pay only the "government share in a mineral production-sharing agreement" under RA 7942. Section 80 of RA 7942 on MPSAs
limits the "government share" solely to the excise tax – 2% on metallic and non-metallic mineral products and 3% on petroleum. Section 112 of RA 7942 is
unconstitutional since it is contrary to Section 2, Article XII of the 1987 Constitution.

G. The WMCP FTAA Violates Section 2, Article XII of the 1987 Constitution

The WMCP FTAA41 ostensibly gives the State 60% share of the net mining revenue. In reality, this 60% share is illusory. Section 7.7 of the WMCP FTAA
provides that:
 From the Commencement of Commercial Production, the Contractor shall pay a government share of sixty per centum (60%) of Net Mining
Revenues, calculated in accordance with the following provisions (the Government Share). The Contractor shall be entitled to retain the balance of
all revenues from the Mining Operations. (Emphasis supplied)

However, under Section 7.9 of the WMCP FTAA, if WMCP's foreign stockholders sell 60% of their equity to a Philippine citizen or corporation, the State loses its
right to receive its 60% share of the net mining revenues under Section 7.7. Thus, Section 7.9 provides:

The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be reduced by 1% of Net Mining
Revenues for every 1% ownership interest in the Contractor held by a Qualified Entity. (Emphasis supplied)

What Section 7.7 gives to the State, Section 7.9 takes away without any offsetting compensation to the State. In reality, the State has no vested right to receive
any income from the exploitation of its mineral resources. What the WMCP FTAA gives to the State in Section 7.7 is merely by tolerance of WMCP's
foreign stockholders, who can at anytime cut off the State's entire 60% share by selling 60% of WMCP's equity to a Philippine citizen or
corporation.42 The proceeds of such sale do not accrue to the State but belong entirely to the foreign stockholders of WMCP.

Section 2.1 of the WMCP FTAA defines a "Qualified Entity" to include a corporation 60% Filipino owned and 40% foreign owned. 43 WMCP's foreign stockholders
can sell 60% of WMCP's equity to such corporation and the sale will still trigger the operation of Section 7.9 of the WMCP FTAA. Thus, the State will receive
ZERO percent of the income but the foreign stockholders will own beneficially 64% of WMCP, consisting of their remaining 40% equity and 24% pro-rata share in
the buyer-corporation. WMCP will then invoke Section 39 of RA 7942 allowing it to convert the FTAA into an MPSA, thus subjecting WMCP to pay only 2%
excise tax on mineral products in lieu of sharing its mining income with the State. This violates Section 2, Article XII of the 1987 Constitution requiring that only
corporations "at least sixty per centum of whose capital is owned by such citizens" can enter into co-production, joint venture or production-sharing agreements
with the State.

The State, as owner of the mineral resources, must receive a fair share of the income from any commercial exploitation of its mineral resources. Mineral
resources form part of the national patrimony, and so are the net proceeds from such resources. The Legislature or Executive Department cannot waive the
State's right to receive a fair share of the income from such mineral resources.

The intervenor Chamber of Mines of the Philippines ("CMP") admits that under an FTAA with a foreign contractor, the Philippine Government "stands in the
place of the 60% Filipino owned company" and hence must retain 60% of the net proceeds. Thus, intervenor CMP concedes that:

x x x In other words, in the FTAA situation, the Government stands in the place of the 60% Filipino-owned company, and the 100% foreign-
owned contractor company takes all the risks of failure to find a commercially viable large-scale ore body or oil deposit, for which the contractor will
get 40% of the financial benefits.44 (Emphasis supplied)

For this reason, intervenor CMP asserts that the "contractor's stipulated share under the WMCP FTAA is limited to a maximum of 40% of the net
production."45 Intervenor CMP further insists that "60% of its (contractor's) net returns from mining, if any, will go to the Government under the WMCP
FTAA."46Intervenor CMP, however, fails to consider that the Government's 60% share is illusory because under Section 7.9 of the WMCP FTAA the foreign
stockholders of WMCP can reduce at any time to ZERO percent the Government's share.

If WMCP's foreign stockholders do not immediately sell 60% of WMCP's equity to a Philippine citizen or corporation, the State in the meantime receives its 60%
share. However, under Section 7.10 of the WMCP FTAA, the State shall receive its share "after the offsetting of the items referred to in Clauses 7.8 and
7.9," namely:

7.8. The Government Share shall be deemed to include all of the following sums:

(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise tax, corporate income tax, customs duty,
sales tax, value added tax, occupation and regulatory fees, Government controlled price stabilization schemes, any other form of
Government backed schemes, any tax on dividend payments by the Contractor or its Affiliates in respect of revenues from the Mining
Operations and any tax on interest on domestic and foreign loans or other financial arrangements or accommodation, including loans
extended to the Contractor by its stockholders;

(b) any payments to local and regional government, including taxes, fees, levies, costs, imposts, duties, royalties, occupation and
regulatory fees and infrastructure contributions;

(c) any payments to landowners, surface rights holders, occupiers, indigenous people or Claim-owners;

(d) costs and expenses of fulfilling the Contractor's obligations to contribute to national development in accordance with Clause
10.1(i)(1) and 10.1(i)(2);

(e) an amount equivalent to whatever benefits that may be extended in the future by the Government to the Contractor or to financial or
technical assistance agreement contractors in general;
 (f) all of the foregoing items which have not previously been offset against the Government Share in an earlier Fiscal year, adjusted for
inflation.

7.9. The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be reduced by 1% of Net Mining Revenues for
every 1% ownership interest in the Contractor held by a Qualified Entity.

It makes no sense why under Section 7.8(e) money spent by the Government for the benefit of the contractor, like building roads leading to the mine site, is
deductible from the State's 60% share of the Net Mining Revenues. Unless of course the purpose is solely to reduce further the State's share regardless of any
reason. In any event, the numerous deductions from the State's 60% share make one wonder if the State will ever receive anything for its ownership of the
mineral resources. Even assuming the State will receive something, the foreign stockholders of WMCP can at anytime take it away by selling 60% of WMCP's
equity to a Philippine citizen or corporation.

In short, the State does not have any right to any share in the net income from the mining operations under the WMCP FTAA. The stipulated 60% share of the
Government is illusory. The State is left to collect only the 2% excise tax as its sole share from the mining operations.

Indeed, on 23 January 2001, WMCP's foreign stockholders sold 100% of WMCP's equity to Sagittarius Mines, Inc., a domestic corporation 60% Filipino owned
and 40% foreign owned.47 This sale automatically triggered the operation of Section 7.9 of the WMCP FTAA reducing the State's share in the Net Mining
Revenues to ZERO percent without any offsetting compensation to the State. Thus, as of now, the State has no right under the WMCP FTAA to receive any
share in the mining revenues of the contractor, even though the State owns the mineral resources being exploited under the WMCP FTAA.

Intervenor CMP anchors its arguments on the erroneous interpretation that the WMCP FTAA gives the State 60% of the net income of the foreign contractor.
Thus, intervenor CMP states that "60% of its (WMCP's) net returns from mining, if any, will go to the Government under the WMCP FTAA."48 This basic error in
interpretation leads intervenor CMP to erroneous conclusions of law and fact.

Like intervenor CMP, respondent WMCP also maintains that under the WMCP FTAA, the State is "guaranteed" a 60% share of the foreign contractor's Net
Mining Revenues. Respondent WMCP contends, after quoting Section 7.7 of the WMCP FTAA, that:

In other words, the State is guaranteed a sixty per centum (60%) share of the Mining Revenues, or 60% of the actual fruits of the endeavor.
This is in line with the intent behind Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily from the
exploration, development, and utilization of the Philippines' natural resources.

Incidentally, this sharing ratio between the Philippine Government and the Contractor is also in accordance with the 60%-40% equity
requirement for Filipino-owned corporations in Paragraph 1 of Section 2 of Article XII.49 (Italics and underscoring in the original)

This so-called "guarantee" is a sham. Respondent WMCP gravely misleads this Court. Section 7.9 of the WMCP FTAA provides that the State's share "shall be
reduced by 1% of Net Mining Revenues for every 1% ownership interest in the Contractor held by a Qualified Entity." This reduction is without any
offsetting compensation to the State and constitutes a waiver of the State's share to WMCP's foreign stockholders. The Executive Department cannot give away
for free, especially to foreigners, what forms part of the national patrimony. This negates the constitutionally mandated State ownership of mineral resources for
the benefit of the Filipino people.

WMCP's stockholders may also invoke Section 112 of RA 7942 allowing a mining contractor to pay the State's share in accordance with Section 80 of RA 7942.
WMCP will end up paying only the 2% excise tax to the Philippine Government for the exploitation of the mineral resources the State owns. In short, the old
and discredited system of "license, concession or lease" will govern the WMCP FTAA.

The WMCP FTAA is also emphatic in stating that WMCP shall have exclusive right to exploit, utilize, process and dispose of all mineral products produced
under the WMCP FTAA. Section 1.3 of the WMCP FTAA provides:

The Contractor shall have the exclusive right to explore, exploit, utilise, process and dispose of all Mineral products and by-products thereof that may
be derived or produced from the Contract Area but shall not, by virtue only of this Agreement, acquire any title to lands encompassed within the
Contract Area.

Under the WMCP FTAA, the contractor has exclusive right to exploit, utilize and process the mineral resources to the exclusion of third parties and even the
Philippine Government. Since WMCP's right is exclusive, the Government has no participation in approving the operating expenses of the foreign contractor
relating to the exploitation, utilization, and processing of mineral resources. The Government will have to accept whatever operating expenses the contractor
decides to incur in exploiting, utilizing and processing mineral resources.

Under the WMCP FTAA, the contractor has exclusive right to dispose of the minerals recovered in the mining operations. This means that the contractor can
sell the minerals to any buyer, local or foreign, at the price and terms the contractor chooses without any intervention from the State. There is no requirement in
the WMCP FTAA that the contractor must sell the minerals at posted or market prices. The contractor has the sole right to "mortgage, charge or encumber" the
"Minerals produced from the Mining Operations."50

Section 8.3 of the WMCP FTAA also makes a sham of the DENR Secretary's authority to approve the foreign contractor's Work Program. Section 8.3 provides:
 If the Secretary gives a Rejection Notice the Parties shall promptly meet and endeavour to agree on amendments to the Work Program or budget. If
the Secretary and the Contractor fail to agree on the proposed revision within 30 days from delivery of the Rejection Notice then the Work
Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved, so as not to unnecessarily delay the
performance of the Agreement. (Emphasis supplied)

The DENR Secretary is the representative of the State which owns the mineral resources. The DENR Secretary implements the mining laws, including RA 7942.
Section 8.3, however, treats the DENR Secretary like a subservient non-entity whom the contractor can overrule at will. Under Section 8.3 of the WMCP FTAA,
the DENR Secretary has no authority whatsoever to disapprove the Work Program. This is not what the Constitution means by full control and supervision by the
State of mining operations.

Section 10.4(i) of the WMCP FTAA compels the Philippine Government to agree to any request by the foreign contractor to amend the WMCP FTAA to
satisfy the conditions of creditors of the contractor. Thus, Section 10.4(i) states:

(i) the Government shall favourably consider any request, from Contractor for amendments of this Agreement which are necessary in
order for the Contractor to successfully obtain the financing;

x x x. (Emphasis supplied)

This provision requires the Government to favorably consider any request from the contractor - which means that the Government must render a response
favorable to the contractor. In effect, the contractor has the right to amend the WMCP FTAA even against the will of the Philippine Government just so the
contractor can borrow money from banks.

True, the preceding Section 10.4(e) of the WMCP FTAA provides that "such financing arrangements will in no event reduce the Contractor's obligations or the
Government's rights." However, Section 10.4(i) binds the Government to agree to any future amendment requested by the foreign contractor even if the
Government does not agree with the wisdom of the amendment. This provision is contrary to the State's full control and supervision in the exploitation of mineral
resources.

Clearly, under the WMCP FTAA the State has no full control and supervision over the mining operations of the contractor. Provisions in the WMCP FTAA that
grant the State full control and supervision are negated by other provisions that take away such control and supervision.

The WMCP FTAA also violates the constitutional limits on the term of an FTAA. Section 2, Article XII of the 1987 Constitution limits the term of a mineral
agreement to "a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may
be provided by law." The original term cannot exceed 25 years, and at the end of such term, either the Government or the contracting party may decide not to
renew the mineral agreement. However, both the Government and the contracting party may also decide to renew the agreement, in which case the renewal
cannot exceed another 25 years. What is essential is that either party has the option to renew or not to renew the mineral agreement at the end of the original
term.

However, Section 3.3 of the WMCP FTAA binds the Philippine Government to an ironclad 50-year term. Section 3.3 compels the Government to renew the
FTAA for another 25 years after the original 25-year term expires.Thus, Section 3.3 states:

This Agreement shall be renewed by the Government for a further period of twenty-five (25) years under the same terms and
conditions provided that the Contractor lodges a request for a renewal with the Government not less than sixty (60) days prior to the expiry of
the initial term of this Agreement and provided that the Contractor is not in breach of any of the requirements of this Agreement. (Emphasis supplied)

Under Section 3.3, the contractor has the option to renew or not to renew the agreement. The Government has no such option and must renew the agreement
once the contractor makes a request for renewal. Section 3.3 violates the constitutional limits because it binds the Government to a 50-year FTAA at the sole
option of the contractor.

H. Arguments of the Solicitor General and the NEDA Secretary

The Solicitor General states that the "basic share" of the State in FTAAs involving large-scale exploitation of minerals, petroleum and other mineral oils –

x x x consists of all direct taxes, fees and royalties, as well as other payments made by the Contractor during the term of the FTAA. The amounts are
paid to the (i) national government, (ii) local governments, and (iii) persons directly affected by the mining project. Some of the major taxes paid are
as follows Section 3(g) of DAO-99-56:

A. Payments to National Government

· Excise tax on minerals – 2% of gross output of mining operations

· Contractor's income tax – 32% of taxable income for corporation

 · Customs duties and fees - rate is set by Tariff and Customs Code

· VAT on imported equipment, goods and services - 10% of value

· Royalty on minerals extracted from mineral reservations, if applicable – 5% of the actual market value of the minerals produced

· Documentary stamp tax – rate depends on the type of transaction

· Capital gains tax on traded stocks – 5 to 10% of the value

· Tax on interest payments on foreign loans – 15% of the interest

· Tax on foreign stockholders dividends - 15% of the dividend

· Wharfage and port fees

· Licensing fees (e.g., radio permit, firearms permit, professional fees)

B. Payments to Local Governments

· Local business tax - maximum of 2% of gross sale or receipt

· Real property tax - 2% of the fair market value of property based on an assessment level set by the local government

· Local business tax - maximum of 2% of gross sale or receipt

· Special education levy - 1% of the basis used in real property tax

· Occupation tax - 50 pesos per hectare per year; 100 pesos per hectare per year if located in a mineral concession

· Community tax - 10,500 pesos maximum per year

· Other local taxes and fees - rate and type depends on the local government

C. Other Payments

· Royalty to indigenous cultural communities, if any - not less than 1% of the gross output from mining operations

· Special allowance – payment to claim owners or surface right owners

The Solicitor General argues that the phrase "among other things" in the second paragraph of Section 81 of RA 7942 means that the State "is entitled to
an additional government share to be paid by the Contractor." The Solicitor General explains:

An additional government share is collected from an FTAA contractor to fulfill the intent of Section 81 of RA No. 7942, to wit:

Sec. 81. The Government share in an FTAA shall consist of, among other things, the Contractor's corporate income tax, excise tax,
special allowance, withholding tax due from the Contractor's foreign stockholders arising from dividends or interest payments to the said
foreign stockholders in case of a foreign-owned corporation and all such other taxes, duties and fees as provided for in existing laws.
(Underscoring supplied)

The phrase "among other things" indicates that the Government is entitled to an additional share to be paid by the Contractor, aside from the basic
share in order to achieve the fifty-fifty sharing of net benefits from mining.

By including indirect taxes and other financial contributions in the form of fuel tax; employees' payroll and fringe benefits; various
withholding taxes on royalties to land owners and claim owners, and employees' income; value added tax on local goods, equipment,
supplies and services; and expenditures for social infrastructures in the mine site (hospitals, schools, etc.) and development of host and
 neighboring communities, geosciences and mining technology, the government share will be in the range of 60% or more of the total
financial benefits. (Bold and underscoring in the original)

The Solicitor General enumerates this "additional government share" as "indirect taxes and other financial contributions in the form of fuel tax; employees'
payroll and fringe benefits; various withholding taxes on royalties to land owners and claim owners, and employees' income; value added tax on local
goods, equipment, supplies and services; x x x." The Solicitor General's argument merely confirms that under Section 81 of RA 7942 the State only receives
taxes, duties and fees under the FTAA. The State does not receive, as owner of the mineral resources, any income from the mining operations of the contractor.

In short, the "basic share" of the State consists of direct taxes by the national and local governments. The "additional share" of the State consists of indirect
taxes including even fringe benefits to employees and compensation to private surface right owners. Direct and indirect taxes, however, are impositions
by the taxing authority, a burden borne by all taxpayers whether or not they exploit the State's mineral resources. Fringe benefits of employees are compensation
for services rendered under an employer-employee relationship. Compensation to surface right owners is payment for the damage suffered by private
landowners arising from the mining operations. All these direct and indirect taxes, as well as other expenses of the contractor, do not constitute payment
for the share of the State as owner of the mineral resources.

Clearly, the so-called "share" of the State consists only of direct and indirect taxes, as well as other operating expenses not even payable to the State. The
Solicitor General in effect concedes that under the second paragraph of Section 81, the State does not receive any share of the net proceeds from the mining
operations of the FTAA contractor. Despite this, the Solicitor General insists that the State remains the owner of the mineral resources and exercises full control
over the mining operations of the FTAA contractor. The Solicitor General has redefined the civil law concept of ownership,51 by giving the owner full control in the
exploitation of the property he owns but denying him the fruits or income from such exploitation. The only satisfaction of the owner is that the FTAA contractor
pays taxes to the Government.

However, even this psychological satisfaction is dubious. Under the third paragraph of Section 81 of RA 7942, the "collection of Government share in financial
and technical assistance agreement shall commence after the financial and technical assistance agreement contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures, inclusive." This provision does not defer the collection of the State's "share," but prevents the accrual of
the State's "share" until the contractor has fully recovered all its pre-operating, exploration and development expenditures. This provision exempts for an
undefined period the contractor from all existing taxes that are part of the Government's so-called "share" under Section 81.52 The Solicitor General has
interpreted these taxes to include "other national taxes and fees" as well as "other local taxes and fees."

Secretary Romulo L. Neri of the National Economic and Development Authority ("NEDA") has warned this Court of the supposed dire repercussions to the
nation's long-term economic growth if this Court declares the assailed provisions of RA 7942 unconstitutional.53 Under the Constitution, the NEDA is the
"independent (economic) planning agency of the government."54 However, in this case the NEDA Secretary has joined the chorus of the foreign chambers of
commerce to uphold the validity of RA 7942 as essential to entice foreign investors to exploit the nation's mineral resources.

We cannot fault the foreign chambers of commerce for driving a hard bargain to maximize the profits of foreign investors. We are, however, saddened that the
NEDA Secretary is willing to give away for free to foreign investors the State's share of the income from its ownership of mineral resources. If the NEDA
Secretary owns the mineral resources instead of the State, will he allow the foreign contractor to exploit his mineral resources for free, the only obligation of the
foreign contractor being to pay taxes to the Government?

Secretary Neri claims that the potential tax collection from the mining industry alone is P57 billion as against the present collection of P2 billion. Secretary Neri
adds that the potential tax collection from incremental activities linked to mining is another P100 billion, thus putting the total potential tax collection from
mining and related industries at P157 billion.55 Secretary Neri also estimates the "potential mining wealth in the Philippines" at P47 trillion or US$840
billion, 15 times our total foreign debt of US$56 billion.56

If all that the State will receive from its P47 trillion potential mineral wealth is the P157 billion in direct and indirect taxes, then the State will truly receive only a
pittance. The P157 billion in taxes constitute a mere .33% or a third of 1% of the total mineral wealth of P47 trillion. Even if the P157 billion is collected
annually over 25 years, the original term of an FTAA, the total tax collection will amount to only P3.92 trillion, or a mere 8.35% of the total mineral wealth. The
rest of the country's mineral wealth will flow out of the country if foreign contractors exploit our mineral resources under FTAAs pursuant to RA 7942.

Secretary Neri also warns that foreign investors who have acquired local cement factories in the last ten years will find their investments illegal if the Court
declares unconstitutional the assailed provisions of RA 7942.57 Such specious arguments deserve scant consideration. Cement manufacturing is not a
nationalized activity. Hence, foreigners can own 100% of cement companies in this country. When the foreign investors acquired the local cement factories, they
spun off the quarry operations into separate companies 60% owned by Filipino citizens. The foreign investors knew the constitutional requirements of holding
quarry permits.

Besides, the quarrying requirement of cement companies is just a simple surface mining of limestone. Such activity does not constitute large-scale exploitation of
mineral resources. It definitely cannot qualify for FTAAs with foreign contractors under the fourth paragraph of Section 2, Article XII of the Constitution. Obviously,
only a company at least 60% Filipino owned can engage in such mining activity.

The offshore Occidental-Shell FTAA shows that even in riskier ventures involving far more capital investments, the State can negotiate and secure at least 60%
of the net proceeds from the exploitation of mineral resources. Foreign contractors like Occidental-Shell are willing to pay the State 60% of the net proceeds from
petroleum operations, in addition to paying the Government the 32% corporate income tax on its 40% share of the net proceeds. Even intervenor CMP and
respondent WMCP agree that the State has a 60% interest in mining operations under an FTAA. I simply cannot fathom why the NEDA Secretary is willing
to accept a ZERO percent share in the income from the exploitation of inland mineral resources.
FTAAs like the WMCP FTAA, which gives the State an illusory 60% share of the net proceeds from mining revenues, will only impoverish further the Filipino
people. The nation's potential mineral wealth of P47 trillion will contribute to economic development only if the bulk of the wealth remains in the country, not if
remitted abroad by foreign contractors.

I. Refutation of Arguments of Majority Opinion

The majority opinion advances the following arguments:

1. DENR Department Administrative Order No. 56-99 ("DAO 56-99") is the basis for determining the State's share in the mining income of the foreign
FTAA contractor. The DENR Secretary issued DAO 56-99 pursuant to the phrase "among other things" in Section 81 of RA 7942. The majority
opinion claims that the phrase "among other things" "clearly and unmistakably reveals the legislative intent to have the State collect more
than just the usual taxes, duties and fees." The majority opinion anchors on the phrase "among other things" its argument that RA 7942 allows
the State to collect a share in the mining income of the foreign FTAA contractor, in addition to taxes, duties and fees. Thus, on the phrase "among
other things" depends whether the State and the Filipino people are entitled under RA 7942 to share in the vast mineral wealth of the
nation, estimated by NEDA at P47 trillion or US$840 billion.

2. FTAAs, like the WMCP FTAA, are not subject to the term limit in Section 2, Article XII of the 1987 Constitution. In short, while co-production,
joint venture and production-sharing agreements cannot exceed 25 years, renewable for another 25 years, as provided in Section 2, Article XII of the
1987 Constitution, the WMCP FTAA is not governed by the constitutional limitation. The majority opinion states that the "constitutional term
limitations do not apply to FTAAs." Thus, the majority opinion upholds the validity of Section 3.3 of the WMCP FTAA providing for a 50-year term
at the sole option of WMCP.

3. Section 112 of RA 7942, placing "all valid and existing" mining agreements under the fiscal regime prescribed in Section 80 of RA 7942, does
not apply to FTAAs. Thus, the majority opinion states, "[W]hether Section 112 may properly apply to co-production or joint venture
agreements, the fact of the matter is that it cannot be made to apply to FTAAs."

4. Foreign FTAA contractors and even foreign corporations can hold exploration permits, despite Section 2, Article XII of the 1987 Constitution
reserving to Philippine citizens and to corporations 60% Filipino owned the "exploration, development and utilization of natural resources." Thus,
the majority opinion states that "there is no prohibition at all against foreign or local corporations or contractors holding exploration
permits."

5. The Constitution does not require that the State's share in FTAAs or other mineral agreements should be at least 60% of the net mining revenues.
Thus, the majority opinion states that "the Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all situations at
all times and in all circumstances."

I respond to the arguments of the majority opinion.

1. DAO 99-56 as Basis for Government's Share in FTAAs

The main thrust of my separate opinion is that mineral agreements under RA 7942, whether FTAAs under Section 81 or MPSAs under Section 80, do not allow
the State to receive any share from the income of mining companies. The State can collect only taxes, duties and fees from mining companies.

The majority opinion, however, points to the phrase "among other things" in the second paragraph of Section 81 as the authority of the State to collect in
FTAAs a share in the mining income separate from taxes, duties and fees. The majority opinion can point to no other provision in RA 7942 allowing the State to
collect any share. The majority opinion admits that limiting the State's share in any mineral agreement to taxes, duties and fees is unconstitutional. Thus, the
majority opinion's case rises or falls on whether the phrase "among other things" allows the State to collect from FTAA contractors any income in
addition to taxes, duties and fees.

In the case of MPSAs, the majority opinion cannot point to any provision in RA 7942 allowing the State to collect any share in MPSAs separate from taxes,
duties and fees. The language of Section 80 is so crystal clear – "the total government share in a mineral production sharing agreement shall be the
excise tax on mineral products" - that there is no dispute whatsoever about it. The majority opinion merely states that the constitutionality of Section 80 is not
in issue in the present case. Section 81, the constitutionality of which the majority opinion admits is in issue here, is intertwined with Sections 39, 80, 84 and 112.
Resolving the constitutionality of Section 81 necessarily involves a determination of the constitutionality of Sections 39, 80, 84 and 112.

The WMCP FTAA, the constitutionality of which is certainly in issue, is governed not only by Section 81 but also by Sections 39, 80 and 112. The reason is that
the WMCP FTAA is a reversible contract that gives WMCP the absolute option at anytime to convert the FTAA into an MPSA. In short, the WMCP FTAA is like
a single coin with two sides - one an FTAA and the other an MPSA.

a. The Integrated Intent, Plan and Structure of RA 7942

The clear intent of RA 7942 is to limit the State's share from mining operations to taxes, duties and fees, unless the State contributes equity in addition to the
mineral resources. RA 7942 does not recognize the mere contribution of mineral resources as entitling the State to receive a share in the net mining revenues
separate from taxes, duties and fees. Thus, Section 80 expressly states that the "total government share in a mineral production sharing agreement shall
be the excise tax on mineral products." Section 84 reiterates this by stating that "with respect to mineral production sharing agreement, the excise tax
on mineral products shall be the government share under said agreement." The only share of the State in an MPSA is the excise tax. Ironically, Sections 80
and 84 disallow the State from sharing in the production or income, even as the contract itself is called a mineral production sharing agreement.

In co-production and joint venture agreements, where the State contributes equity in addition to the mineral resources, the first paragraph of Section 81 expressly
requires that "the share of the government x x x shall be negotiated by the Government and the contractor." However, in FTAAs where the State
contributes only its mineral resources, the second paragraph of Section 81 states –

The Government share in financial or technical assistance agreement shall consist of, among other things, the contractor's corporate income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.

All the items enumerated in the second paragraph of Section 81 as comprising the "Government share" refer totaxes, duties and fees. The phrase "all such
other taxes, duties and fees as provided for under existing laws" makes this clear.

Section 112 places "all valid and existing mining" agreements "at the date of effectivity" of RA 7942 under the fiscal regime prescribed in Section 80.
Section 112 expressly states that the "government share in mineral production sharing agreement x x x shall immediately govern and apply to a mining
lessee or contractor."Section 112 provides:

Section 112. Non-impairment of Existing Mining/Quarrying Rights. — All valid and existing mining lease contracts, permits/licenses, leases
pending renewal, mineral production-sharing agreements granted under Executive Order No. 279, at the date of effectivity of this Act, shall
remain valid, shall not be impaired, and shall be recognized by the Government: Provided, That the provisions of Chapter XIV on government
share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said
provisions: Provided, further, That no renewal of mining lease contracts shall be made after the expiration of its term: Provided, finally, That such
leases, production-sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its
implementing rules and regulations. (Emphasis supplied)

Thus, Section 112 requires "all" FTAAs and MPSAs, as of the date of effectivity of RA 7942, to pay only the excise tax - 2% on metallic and non-metallic
minerals and 3% on petroleum58 - instead of the stipulated mining income sharing, if any, in their respective FTAAs or MPSAs.

This means that Section 112 applies even to the Occidental-Shell FTAA, which was executed before the enactment of RA 7942. This reduces the
State's share in the Malampaya gas extraction from 60% of net proceeds to 3% of the market price of the gas as provided in Section 80 of RA 7942 in
relation to Section 151 of the National Internal Revenue Code. This is disastrous to the national economy because Malampaya under the original
Occidental-Shell FTAA generates annually some US$0.5 billion to the National Treasury.

Section 112 applies to all agreements executed "under Executive Order No. 279." The WMCP FTAA expressly states in its Section 1.1, "This Agreement is a
Financial & Technical Assistance Agreement entered into pursuant to Executive Order No. 279." Thus, Section 112 applies to the WMCP FTAA.

Section 39 of RA 7942 grants the FTAA contractor the "option to convert" the FTAA into an MPSA "at any time during the term" of the FTAA if the contract
areas are not economically viable for large-scale mining. Once the contractor reduces its foreign equity to not more than 40%, the Secretary "shall approve the
conversion and execute the mineral production sharing agreement. Thus, Section 39 provides:

Section 39. Option to Convert into a Mineral Agreement. — The contractor has the option to convert the financial or technical assistance
agreement to a mineral agreement at any time during the term of the agreement, if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, after proper notice to the Secretary as provided for under the implementing rules and regulations:
Provided, That the mineral agreement shall only be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation, partnership, association, or cooperative. Upon compliance
with this requirement by the contractor, the Secretary shall approve the conversion and execute the mineral production-sharing agreement. (Emphasis
supplied)

The only requirement in the second paragraph of Section 39 is that the FTAA contractor shall reduce its foreign equity to 40%. The second paragraph
states, "Upon compliance with this requirement, the Secretary shall approve the conversion and execute the mineral production sharing agreement."
The determination of the economic viability of the contract area for large-scale mining, which is left to the foreign contractor with "proper notice" only to the DENR
Secretary, is not even made a condition for the conversion.

Under Section 3(aq) of RA 7942, the foreign contractor holds the exploration permit and conducts the physical exploration. The foreign contractor controls the
release of the technical data on the mineral resources. The foreign contractor can easily justify the non-viability of the contract area for large-scale mining. The
Philippine Government will have to depend on the foreign contractor for technical data on whether the contract area is viable for large-scale
mining. Obviously, such a situation gives the foreign contractor actual control in determining whether the contract area is viable for large-scale mining.
The conversion from an FTAA into an MPSA is solely at the will of the foreign contractor because the contractor can choose at any time to sell 60% of its equity
to a Philippine citizen. The price or consideration for the sale of the contractor's 60% equity does not go to the State but to the foreign stockholders of the
contractor. Under Section 80 of RA 7942, once the FTAA is converted into an MPSA the only share of the State is the 2% excise tax on mineral products. Thus,
under RA 7942 the FTAA contractor has the absolute option to pay the State only the 2% excise tax, despite any other stipulated consideration in the
FTAA.

Clearly, Sections 3(aq), 39, 80, 81, 84 and 112 are tightly integrated under a single intent, plan and structure: unless the State contributes equity in addition to the
mineral resources, the State shall receive only taxes, duties and fees. The State's contribution of mineral resources is not sufficient to entitle the State to receive
any income from the mining operations separate from taxes, duties and fees.

b. The Meaning of the Phrase "Among Other Things"

As far as the State and the Filipino people are concerned, the most important part of an FTAA is the consideration: how much will the State receive from the
exploitation of its non-renewable and exhaustible mineral resources?

Section 81 of RA 7942 does not require the foreign FTAA contractor to pay the State any share from the mining income apart from taxes, duties and fees. The
second paragraph of Section 81, just like Section 80, only allows the State to collect taxes, duties and fees as the State's share from the mining operations. The
intent of RA 7942 is that the State cannot share in the income from mining operations, separate from taxes, duties and fees, based only on the mineral resources
that the State contributes to the mining operations.

This is also the position of the Solicitor General – that the State's share under Section 81 refers only to direct and indirect taxes. Thus, the Solicitor General
agrees that Section 81 does not allow the State to collect any share from the mining income separate from taxes, duties and fees. The majority opinion
agrees that Section 81 is unconstitutional if it does not require the foreign FTAA contractor to pay the State any share of the net mining income apart from taxes,
duties and fees.

However, the majority opinion says that the phrase "among other things" in Section 81 is the authority to require the FTAA contractor to pay a consideration
separate from taxes, duties and fees. The majority opinion cites the phrase "among other things" as the source of power of the DENR Secretary to adopt
DAO 56-9959prescribing the formulae on the State's share from mining operations separate from taxes, duties and fees.

In short, the majority opinion says that the phrase "among other things" is a delegation of legislative power to the DENR Secretary to adopt the formulae on the
share of the State from mining operations. The issue now is whether the phrase "among other things" in the second paragraph of Section 81 is intended
as a delegation of legislative power to the DENR Secretary. If so, the issue turns on whether it is a valid delegation of legislative power. I reproduce
again the second paragraph of Section 81 for easy reference:

The Government share in financial or technical assistance agreement shall consist of, among other things,the contractor's corporate income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the
said foreign stockholder in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws. (Emphasis
supplied)

Section 81 of RA 7942 does not delegate any legislative power to the DENR Secretary to adopt the formulae in determining the share of the State. There is
absolutely no language in the second paragraph of Section 81 granting the DENR Secretary any delegated legislative power. Thus, the DENR Secretary
acted without authority or jurisdiction in issuing DAO 56-99 based on a supposed delegated power in the second paragraph of Section 81. This makes DAO 56-
99 void.

Even assuming, for the sake of argument, that there is language in Section 81 delegating legislative power to the DENR Secretary to adopt the formulae in DAO
56-99, such delegation is void. Section 81 has no standards by which the delegated power shall be exercised. There is no specification on the minimum or
maximum share that the State must receive from mining operations under FTAAs. No parameters on the extent of the delegated power to the DENR Secretary
are found in Section 81. Neither were such parameters ever discussed even remotely by Congress when it enacted RA 7942.

In sharp contrast, the first paragraph of the same Section 81, in prescribing the State's share in co-production and joint venture agreements, expressly
specifies the standards in determining the State's share as follows: "(a) capital investment of the project, (b) risks involved, (c) contribution of the project to the
economy, and (d) other factors that will provide for a fair and equitable sharing between the Government and the contractor." The reason for the absence of
similar standards in the succeeding paragraph of Section 81 in determining the State's share in FTAAs is obvious - the State's share in FTAAs is limited solely to
taxes, duties and fees. Thus, such standards are inapplicable and irrelevant.

The majority opinion now makes the formulae in DAO 56-99 the heart and soul of RA 7942 because the formulae supposedly determine the consideration of the
FTAA. The consideration is the most important part of the FTAA as far as the State and Filipino people are concerned. The formulae in DAO 56-99 derive life
solely from the phrase "among other things." DAO 56-99 itself states that it is issued "[P]ursuant to Section 81 and other pertinent provisions of Republic Act
No. 7942." Without the phrase "among other things," the majority opinion could not point to any other provision in RA 7942 to support the existence of the
formulae in DAO 56-99.
Thus, the phrase "among other things" determines whether the FTAA has the third element of a valid contract – the commercial value or consideration that the
State will receive. The majority opinion in effect says that Congress made the wealth and even the future prosperity of the nation to depend on the
phrase "among other things."

The DENR Secretary can change the formulae in DAO 56-99 any time even without the approval of the President or Congress. The DENR Secretary is the sole
authority to determine the amount of consideration that the State shall receive in an FTAA. Section 5 of DAO 56-99 states:

x x x any amendment of an FTAA other than the provision on fiscal regime shall require the negotiation with the Negotiation Panel and the
recommendation of the Secretary for approval of the President of the Republic of the Philippines. (Emphasis supplied)

Under Section 5, if the amendment in the FTAA involves non-fiscal matters, the amendment requires the approval of the President. However, if the amendment
involves a change in the fiscal regime –referring to the consideration of the FTAA - the DENR Secretary has the final authority and approval of the President is
not required. This makes the DENR Secretary more powerful than the President.

Section 5 of DAO 56-99 violates paragraphs 4 and 5 of Section 2, Article XII of the 1987 Constitution mandating that the President shall approve all FTAAs and
send copies of all approved FTAAs to Congress. The consideration of the FTAA is the most important part of the FTAA as far as the State and the Filipino people
are concerned. The DENR Secretary, in issuing DAO 56-99, has arrogated to himself the power to approve FTAAs, a power vested by the Constitution
solely in the President. By not even informing the President of changes in the fiscal regime and thus preventing such changes from reaching Congress, DAO
56-99 even seeks to hide changes in the fiscal regime from Congress. By its provisions alone, DAO 56-99 is clearly unconstitutional and void.

Section 5 of DAO 56-99 also states that "[A]ll FTAAs approved prior to the effectivity of this Administrative Order shall remain valid and be recognized by the
Government." This means that the fiscal regime of an FTAA executed prior to the effectivity of DAO 56-99 "shall remain valid and be recognized." If the earlier
FTAA provides for a fiscal regime different from DAO 56-99, then the fiscal regime in the earlier FTAA shall prevail. In effect, DAO 56-99 exempts an FTAA
approved prior to its effectivity from paying the State the share prescribed in the formulae under DAO 56-99 if the earlier FTAA provides for a different fiscal
regime. Such is the case of the WMCP FTAA.

Based on the majority opinion's position that the 1987 Constitution requires payment in addition to taxes, duties and fees, this makes DAO 56-99 unconstitutional
and void. DAO 56-99 does not require prior FTAAs to pay the State the share prescribed in the formulae under DAO 56-99 even if the consideration in the prior
FTAAs is limited only to taxes, duties and fees. DAO 56-99 recognizes such payment of taxes, duties and fees as a "valid" consideration. Certainly, the DENR
Secretary has no authority to exempt foreign FTAA contractors from a constitutional requirement. Not even Congress or the President can do so.

Ironically, DAO 56-99, the very authority the majority opinion cites to support its claim that the WMCP FTAA has a consideration, does not apply to the WMCP
FTAA. By its own express terms, DAO 56-99 does not apply to FTAAs executed before the issuance of DAO 56-99, like the WMCP FTAA. The majority
opinion's position has no leg to stand on since even DAO 56-99, assuming it is valid, cannot save the WMCP FTAA from want of consideration.

The formulae prescribed in DAO 56-99 are totally alien to the phrase "among other things." There is no relationship whatsoever between the phrase "among
other things" and the highly esoteric formulae prescribed in DAO 56-99. No one in this Court can assure the Filipino people that the formulae in DAO 56-99 will
guarantee the State 60%, or 30% or even 10% of the net proceeds from the mining operations. And yet the majority opinion trumpets DAO 56-99 as the savior of
Section 81 from certain constitutional infirmity.

The majority opinion gives the stamp of approval and legitimacy on DAO 56-99. This assumes that the majority understand fully the formulae in DAO 56-99. Can
the majority tell the Court and the Filipino people the minimum share that the State will receive under the formulae in DAO 56-99? The formulae in DAO 56-99
are fuzzy since they do not guarantee the minimum share of the State, unlike the clear and specific income sharing provisions in the Occidental-Shell FTAA
or in the case of Consolidated Mines, Inc. v. Court of Tax Appeals.60

The Solicitor General asserts that the phrase "among other things" refers to indirect taxes, an interpretation that contradicts the DENR Secretary's
interpretation under DAO 56-99. The Solicitor General is correct. The ejusdem generis rule of statutory interpretation applies squarely to the phrase "among
other things."

In Philippine Bank of Communications v. Court of Appeals,61 the Court held:

Under the rule of ejusdem generis, where a description of things of a particular class or kind is 'accompanied by words of a generic character, the
generic words will usually be limited to things of a kindred nature with those particularly enumerated x x x.'

In Grapilon v. Municipal Council of Cigara,62 the Court construed the general word "absence" in the phrase "absence, suspension or other temporary disability
of the mayor" in Section 2195 of the Revised Administrative Code as "on the same level as 'suspension' and 'other forms of temporary disability'." The Court
quoted with approval the following Opinion of the Secretary of Interior:

The phrase 'other temporary disability' found in section 2195 of the Code, follows the words 'absence' and 'suspension' and is used as a modifier of
the two preceding words, under the principle of statutory construction known as ejusdem generis.
In City of Manila v. Entote,63 the Court ruled that broad expressions such as "and all others" or "any others" or "other matters," when accompanied by an
enumeration of items of the same kind or class, "are usually to be restricted to persons or things of the same kind or class with those specifically named" in the
enumeration. Thus, the Court held:

In our jurisdiction, this Court in Ollada vs. Court of Tax Appeals, et al. applied the rule of "ejusdem generis" to construe the purview of a general
phrase "other matters" appearing after an enumeration of specific cases decided by the Collector of Internal Revenue and appealable to the Court
of Tax Appeals found in section 7, paragraph 1, of Republic Act No. 1125, and it held that in order that a matter may come under said general
clause, it is necessary that it belongs to the same kind or class of cases therein specifically enumerated. (Emphasis supplied)

The four requisites of the ejusdem generis rule64 are present in the phrase "among other things" as appearing in Section 81 of RA 7942. First, the general
phrase "among other things" is accompanied by an enumeration of specific items, namely, "the contractor's corporate income tax, excise tax, special
allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholder in case of a
foreign national and all such other taxes, duties and fees as provided for under existing laws." Second, all the items enumerated are of the same kind or class
- they are all taxes, duties and fees. Third, the enumeration of the specific items is not exhaustive because "all such other taxes, duties and fees" are included.
Thus, the enumeration of specific items is merely illustrative. Fourth, there is no indication of legislative intent to give the general phrase "among other things" a
broader meaning. On the contrary, the legislative intent of RA 7942 is to limit the State's share from mining operations to taxes, duties and fees.

In short, the phrase "among other things" refers to taxes, duties and fees. The phrase "among other things" is even followed at the end of the sentence by
the phrase "and all such other taxes, duties, and fees," reinforcing even more the restriction of the phrase "among other things" to taxes, duties and fees.
The function of the phrase "and such other taxes, duties and fees" is to clarify that the taxes enumerated are not exhaustive but merely illustrative.

c. Formulae in DAO 56-99 a Mere Creation of DENR

The majority opinion praises the DENR for "conceiving and developing" the formulae in DAO 56-99. Thus, the majority opinion states:

As can be seen from DAO 56-99, the agencies concerned did an admirable job of conceiving and developing not just one formula, but three
different formulas for arriving at the additional government share. (Emphasis supplied)

Indeed, we credit the DENR for conceiving and developing on their own the formulae in DAO 56-99. The formulae are the creation of DENR, not of
Congress.

The DENR conceived and developed the formulae to save Section 81 not only from constitutional infirmity, but also from blatantly depriving the State and Filipino
people from any share in the income of mining companies. However, the DENR's admittedly "admirable job" cannot amend Section 81 of RA 7942. The DENR
has no legislative power to correct constitutional infirmities in RA 7942. The DENR does not also possess the constitutional power to prescribe the sharing of
mining income between the State and mining companies, the act the DENR attempts to do in adopting DAO 56-99.

d. DAO 56-99 is an Exercise in Futility

Even assuming arguendo the majority opinion is correct that the phrase "among other things" constitutes sufficient legal basis to issue DAO 56-99, the FTAA
contractor can still prevent the State from collecting any share of the mining income. By invoking Section 39 of RA 7942 giving the foreign FTAA contractor the
option to convert the FTAA into an MPSA, the FTAA contractor can easily place itself outside the scope of DAO 56-99 which expressly applies only to
FTAAs.

Also, by invoking Section 112, the foreign contractor need not even convert its FTAA into a mineral production agreement to place its contract under Section 80
and outside of Section 81. Section 112 automatically and immediately places all FTAAs under the fiscal regime applicable to MPSAs, forcing the State to collect
only the 2% excise tax. Thus, DAO 56-99 is an exercise in futility. This now compels the Court to resolve the constitutionality of Sections 39 and 112 of RA 7942
in the present case.

e. Congress Prescribes the Terms and Conditions of FTAAs.

In a last-ditch attempt to justify the constitutionality of DAO 56-99, the majority opinion now claims that the President has the prerogative to prescribe the
terms and conditions of FTAAs, including the fiscal regime of FTAAs. The majority opinion states:

x x x It is the President who is constitutionally mandated to enter into FTAAs with foreign corporations, and in doing so, it is within the President's
prerogative to specify certain terms and conditions of the FTAAs, for example, the fiscal regime of FTAAs - i.e., the sharing of the net revenues
between the contractor and the State. (Emphasis in the original; underscoring supplied)

The majority opinion is re-writing the 1987 Constitution and even RA 7942. Paragraph 4, Section 2, Article XII of the 1987 Constitution expressly provides:

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided
by law, x x x. (Emphasis supplied)
Clearly, the 1987 Constitution mandates that the President may enter into FTAAs only "according to the general terms and conditions provided by law."
There is no doubt whatsoever that it is Congress that prescribes the terms and conditions of FTAAs, not the President as the majority opinion claims. The 1987
Constitution mandates the President to comply with the terms and conditions prescribed by Congress for FTAAs.

Indeed, RA 7942 stipulates the terms and conditions for FTAAs. Section 35 of RA 7942 provides that the "following terms, conditions, and warranties shall
be incorporated in the financial or technical assistance agreement to wit: x x x." Section 38 of RA 7942 expressly limits an FTAA to a "term not exceeding
twenty-five (25) years,"which is one of the issues in the present case.

The majority opinion claims that the President has the power to prescribe "the fiscal regime of FTAAs – i.e., the sharing of the net mining revenues
between the contractor and the State." This claim of the majority opinion renders the entire Chapter XIV of RA 7942 an act of usurpation by Congress of
Presidential power. Chapter XIV – entitled "Government Share" - prescribes the fiscal regimes of MPSAs and FTAAs. The constitutionality of Sections 80
and 81 of Chapter XIV - whether the fiscal regimes prescribed in these sections of RA 7942 comply with the 1987 Constitution - is the threshold issue in this
case.

The majority opinion seeks to uphold the constitutionality of Section 81 of RA 7942, an act of Congress prescribing the fiscal regime of FTAAs. If it is the
President who has the constitutional authority to prescribe the fiscal regime of FTAAs, then Section 81 is unconstitutional for being a usurpation by Congress of a
Presidential power. The majority opinion not only re-writes the 1987 Constitution, it also contradicts itself.

That is not all. By claiming that the President has the prerogative to prescribe the fiscal regime of FTAAs, the majority opinion contradicts its basic theory that
DAO 56-99 draws life from the phrase "among other things" in Section 81 of RA 7942. Apparently, the majority opinion is no longer confident of its position that
DAO 56-99 draws life from the phrase "among other things." The majority opinion now invokes a non-existent Presidential power that directly collides with the
express constitutional power of Congress to prescribe the "general terms and conditions" of FTAAs.

f. Sections 80 and 84 of RA 7942 are Void on their Face

Definitely, Section 80 of RA 7942 is constitutionally infirm even based on the reasoning of the majority opinion. The majority opinion agrees that the 1987
Constitution requires the mining contractor to pay the State "more than just the usual taxes, duties and fees." Under Section 80, the excise tax – 2% for
metallic and non-metallic minerals and 3% for petroleum - is the only and total share of the State from mining operations. Section 80 provides:

Section 80. Government Share in Mineral Production Sharing Agreement. — The total government share in a mineral production sharing
agreement shall be the excise tax on mineral products as provided in Republic Act No. 7729, amending Section 151(a) of the National Internal
Revenue Code, as amended. (Emphasis supplied)

Section 80 has no ifs or buts. Section 84 even reiterates Section 80 that "with respect to a mineral production sharing agreement, the excise tax on
mineral products shall be the government share under said agreement." There is no ejusdem generis phrase like "among other things" in Section 80 that
the majority opinion can cling on to save it from constitutional infirmity. DAO 56-99, the magic wand of the majority opinion, expressly applies only to FTAAs and
not to MPSAs. By any legal yardstick, even by the arguments of the majority opinion, Sections 80 and 84 are void and unconstitutional.

g. Necessity of Resolving Constitutionality of Sections 39, 80 and 84

The majority opinion states that the constitutionality of Sections 80 and 84 of RA 7942 is not in issue in the present case. The majority opinion forgets that
petitioners have assailed the constitutionality of RA 7942 and the WMCP FTAA for violation of Section 2, Article XII of the 1987 Constitution. Petitioner
specifically assails the "inequitable sharing of wealth" in the WMCP FTAA, which petitioners assert is "contrary to Section 1, paragraph 1, and
Section 2, paragraph 4, Article XII of the Constitution."

Section 9.1 of the WMCP FTAA grants WMCP the absolute option, by mere notice to the DENR Secretary, to convert the FTAA into an MPSA under Section 80.
The "sharing of wealth" in Section 80 is "inequitable" and "contrary to x x x Section 2, paragraph 4, Article XII of the Constitution" because the State will only
collect the 2% excise tax in an MPSA. Such a pittance of a sharing will not make any "real contributions to the economic growth and general welfare of the
country" as required in paragraph 4, Section 2, Article XII of the 1987 Constitution.

Section 39 of RA 7942 also grants foreign FTAA contractors the option, by mere notice to the DENR Secretary, to convert their FTAAs into MPSAs under Section
80. Necessarily, the constitutionality of the WMCP FTAA must be resolved in conjunction with Section 80 of RA 7942.

The WMCP FTAA is like a coin with two sides, one side is an FTAA, and the other an MPSA. By mere notice to the DENR Secretary, WMCP can convert the
contract from an FTAA to an MPSA, a copy of which, complete with all terms and conditions, is annexed to the WMCP FTAA.65 The DENR Secretary has
no option but to sign the annexed MPSA. There are only two conditions to WMCP's exercise of this option: the reduction of foreign equity in WMCP to 40%, and
notice to the DENR Secretary. The first condition is already fulfilled since all the equity of WMCP is now owned by a corporation 60% Filipino owned. The notice
to the DENR Secretary is solely at the will of WMCP.

What this Court is staring at right now is a dual contract - an FTAA which, by mere notice to the DENR Secretary, immediately becomes an MPSA. The majority
opinion agrees that the provisions of the WMCP FTAA, which grant a sham consideration to the State, are void. Since the majority opinion agrees that the
WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid contract. The majority opinion should declare the
WMCP FTAA void for want of consideration unless the majority opinion treats the contract as an MPSA under Section 80. Indeed, the only recourse of
WMCP to save the validity of its contract is to convert it into an MPSA.

Thus, with the absence of consideration in the WMCP FTAA, what is actually before this Court is an MPSA. This squarely puts in issue whether an MPSA is
constitutional if the only consideration or payment to the State is the 2% excise tax as provided in Section 80 of RA 7942.

The basic constitutional infirmity of the WMCP FTAA is the absence of a fair consideration to the State as owner of the mineral resources. Petitioners call this the
"inequitable sharing of wealth." The constitutionality of the consideration for the WMCP FTAA cannot be resolved without determining the validity of both Sections
80 and 81 of RA 7942 because the consideration for the WMCP FTAA is anchored on both Sections 80 and 81.

The majority opinion refuses to face the issue of whether the WMCP contract can validly rely on Section 80 for its consideration. If this issue is not resolved now,
then the WMCP FTAA has no consideration. The majority opinion admits that the consideration in the WMCP FTAA granting the State 60% share in the mining
revenues is a sham and thus void ab initio.

Strangely, the majority opinion claims that the share of the State in the mining revenues is not the principal consideration of the FTAA. The majority opinion
claims that the principal consideration of the FTAA is the "development" of the minerals by the foreign contractor. The foreign contractor can bring equipment to
the mine site, tunnel the mines, and construct underground rails to bring the minerals to the surface - in short develop the mines. What will the State and the
Filipino people benefit from such activities unless they receive a share of the mining proceeds? After the minerals are exhausted, those equipment, tunnels and
rails would be dilapidated and even obsolete. Besides, those equipment belong to the foreign contractor even after the expiration of the FTAA.

Plainly, even a businessman with limited experience will not agree that the principal consideration in an FTAA, as far as the State and Filipino people are
concerned, is the development of the mines. It is obvious why the majority opinion will not accept that the principal consideration is the share of the State in the
mining proceeds. Otherwise, the majority opinion will have to admit that the WMCP FTAA lacks the third element of a valid contract - the consideration. This will
compel the majority opinion to admit that the WMCP FTAA is void ab initio.

The only way for the majority opinion to save the WMCP FTAA from nullity is to treat it as an MPSA and thus apply Section 80 of RA 7942. This puts in issue the
constitutionality of Section 80. The majority opinion, however, refuses to treat the WMCP FTAA as an MPSA. Thus, the WMCP FTAA still lacks a valid
consideration. However, the majority opinion insists that the WMCP FTAA is valid.

If the majority opinion puts the constitutionality of Section 80 in issue, the majority opinion will have to declare Section 80 unconstitutional. The majority opinion
agrees that the 1987 Constitution requires the State to collect "more than the usual taxes, duties and fees." Section 80 indisputably limits the State to collect only
the excise tax and nothing more.

The equivocal stance of the majority opinion will not put an end to this litigation. Once WMCP converts its FTAA into an MPSA to avoid paying "more than the
usual taxes, duties and fees," petitioners will immediately question the validity of WMCP's MPSA as well as the constitutionality of Section 80. The case will end
up again in this Court on the same issue of whether there is a valid consideration for such MPSA, which necessarily involves a determination of the
constitutionality of Section 80. Clearly, this Court has no recourse but to decide now the constitutionality of Section 80.

As the Solicitor General reported in his Compliance dated 20 October 2004, the DENR has signed five MPSAs with different parties.66 These five MPSAs
uniformly contain the following provision:

Share of the Government - The Government Share shall be the excise tax on mineral products at the time of removal and at the rate
provided for in Republic Act No. 7729 amending Section 151(a) of the National Internal Revenue Code, as amended, as well as other taxes,
duties, and fees levied by existing laws. (Emphasis supplied)

If the constitutionality of Section 80 is not resolved now, these five MPSAs, including the WMCP FTAA once converted into an MPSA, will remain in limbo. There
will be no implementation of these MPSAs until the Court finally resolves this constitutional issue.

Even if evaded now, the constitutionality of Section 80 will certainly resurface, resulting in a repeat of this litigation, most probably even between the same
parties. To avoid unnecessary delay, this Court must rule now on the constitutionality of Section 80 of RA 7942.

2. The Constitutional Term Limit Applies to FTAAs

Section 3.3 of the WMCP FTAA provides a fixed contract term of 50 years at the option of WMCP. Thus, Section 3.3 provides:

This Agreement shall be renewed by the Government for a further period of twenty-five (25) years under the same terms and
conditions provided that the Contractor lodges a request for a renewal with the Government not less than sixty (60) days prior to the expiry of the
initial term of this Agreement and provided that the Contractor is not in breach of any of the requirements of this Agreement. (Emphasis supplied)

This provision grants WMCP the absolute right to extend the first 25-year term of the FTAA to another 25-year term upon mere lodging of a request or
notice to the Philippine Government. WMCP has the absolute right to extend the term of the FTAA to 50 years and all that the Government can do is to
acquiesce to the wish of WMCP.
Section 3.3 of the WMCP FTAA is void because it violates Section 2, Article XII of the 1987 Constitution, the first paragraph of which provides:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall
not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The
State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens,
or corporations or associations at least sixty per centumof whose capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may
be the measure and limit of the grant. (Emphasis supplied)

The majority opinion, however, makes the startling assertion that FTAAs are not covered by the term limit under Section 2, Article XII of the 1987 Constitution.
The majority opinion states:

I believe that the constitutional term limits do not apply to FTAAs. The reason is that the above provision is found within paragraph 1 of
Section 2 of Article XII, which refers to mineral agreements – co-production agreements, joint venture agreements and mineral production
sharing agreements - which the government may enter into with Filipino citizens and corporations, at least 60 percent owned by Filipino citizens.
(Emphasis supplied)

If the term limit does not apply to FTAAs because the term limit is found in the first paragraph of Section 2, then the other limitations in the same first paragraph
of Section 2 do not also apply to FTAAs. These limitations are three: first, that the State owns the natural resources; second, except for agricultural lands, natural
resources shall not be alienated; third, the State shall exercise full control and supervision in the exploitation of natural resources. Under the majority opinion's
interpretation, these three limitations will no longer apply to FTAAs, leading to patently absurd results. The majority opinion will also contradict its own
admission that even in FTAAs the State must exercise full control and supervision in the exploitation of natural resources.

Section 2, Article XII of the 1987 Constitution is a consolidation of Sections 8 and 9, Article XIV of the 1973 Constitution, which state:

Section 8. All lands of public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and
other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, or resettlement
lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than development of water power, in which cases, beneficial use may be the measure and the limit of the grant.

Section 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to
citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital which is owned by such citizens. The Batasang
Pambansa, in the national interest, may allow such citizens, corporations or associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any foreign person or entity for the exploration, or utilization of any of the natural resources. Existing
valid and binding service contracts for financial, technical, management, or other forms of assistance are hereby recognized as such.

Section 9, Article XIV of the 1973 Constitution, a one-paragraph section, contained the provision reserving the exploration, development and utilization of
natural resources to Philippine citizens or corporations 60% Filipino owned as well as the provision on FTAAs. The provision on the 25-year term limit
was found in the preceding Section 8 of Article XIV. If the 25-year term limit under the 1973 Constitution did not apply to FTAAs, then it should not also have
applied to non-FTAA mining contracts, an interpretation that is obviously wrong. Thus, the term limit in Section 8, Article XIV of the 1973 Constitution necessarily
applied to both non-FTAA mining contracts and FTAAs in Section 9.

What the framers of the 1987 Constitution did was to consolidate Sections 8 and 9, Article XIV of the 1973 Constitution into one section, the present Section 2,
Article XII of the 1987 Constitution. The consolidation necessitated re-arranging the sentences and paragraphs without any intention of destroying their unity and
coherence. Certainly, the consolidation did not mean that the FTAAs are no longer subject to the 25-year term limit. If anything, the consolidation merely
strengthened the need, following the rules of statutory construction, to read and interpret together all the paragraphs, and even the sentences, of Section 2,
Article XII of the 1987 Constitution.

In his book The 1987 Constitution of the Republic of the Philippines: A Commentary, Father Joaquin G. Bernas, S.J., who was a leading member of the
1986 Constitutional Commission, discussed the limitations on the exploitation of natural resources. Father Bernas states:

4. Other limitations

Agreements for the exploitation of the natural resources can have a life of only twenty-five years. This twenty-five year limit dates back to the
1935 Constitution and is considered to be a "reasonable time to attract capital, local and foreign, and to enable them to recover their investment
and make a profit. The twenty-five year limit on the exploitation of natural resources is not applicable to "water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power." In these cases, "beneficial use may be the measure and the limit of the
grant." But in the case of water rights for water power, the twenty-five year limit is applicable."67 (Emphasis supplied)
The 1935, 1973 and 1987 Constitutions all limit the exploitation of natural resources to 25-year terms. They also limit franchises for public utilities, leases of
alienable lands of public domain, and water rights for power development to 25-year terms. If a different term is intended, the Constitution expressly says so as in
water rights for uses other than power development. Under the 1973 and 1987 Constitutions, there is no separate term for FTAAs other than the 25-year term for
the exploitation of natural resources.

The WMCP FTAA draws life from Executive Order No. 279 issued on 25 July 1987 by then President Corazon C. Aquino when she still exercised legislative
powers. Section 1.1 of the WMCP FTAA expressly states, "This Agreement is a Financial & Technical Assistance Agreement entered into pursuant to
Executive Order No. 279." Section 7 of Executive Order No. 279 provides:

Section 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations,
or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue in force and effect. (Emphasis supplied)

Section 40 of Presidential Decree No. 463 ("PD 463"), as amended by Presidential Decree No. 1385, provides:

Section 40. Issuance of Mining Lease Contracts - x x x After the mining claim has been verified as to its mineral contents and its actual location on
the ground as determined through reports submitted to the Director, the Secretary shall approve and issue the corresponding mining lease
contract, which shall be for a period not exceeding twenty-five (25) years, renewable upon the expiration thereof for another period not
exceeding twenty-five (25) years under such terms and conditions as provided by law. (Emphasis supplied)

Thus, at the time of execution of the WMCP FTAA, statutory law limited the term of all mining contracts to 25-year terms. PD 463 merely implemented the
mandate of the 1973 Constitution on the 25-year term limit, which is the same 25-year term limit in the 1987 Constitution. Under Section 7 of Executive Order
No. 279, Section 40 of PD 463 limiting mining contracts to a 25-year term applies to the WMCP FTAA. Therefore, Section 3.3 of the WMCP FTAA
providing for a 50-year term is void.

Then President Aquino also issued Executive Order No. 211 on 10 July 1987, a bare 17 days before issuing Executive Order No. 279. Section 3 of Executive
Order No. 211 states:

Section 3. The processing, evaluation and approval of all mining applications, declarations of locations, operating agreements and service contracts
as provided for in Section 2 above, shall be governed by Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations: Provided, However, that the privileges granted as well as the terms and conditions thereof shall be
subject to any and all modifications or alterations which Congress may adopt pursuant to Section 2, Article XII of the 1987
Constitution. (Emphasis supplied)

Section 3 of Executive Order No. 211 applies to the WMCP FTAA which was executed on 22 March 1995, more than seven years after the issuance of Executive
Order No. 211. Subsequently, Congress enacted RA 7942 to prescribe new terms and conditions for all mineral agreements. RA 7942 took effect on 9 April
1995.

RA 7942 governs the WMCP FTAA because Executive Order No. 211 expressly makes mining agreements like the WMCP FTAA subject to "any and all
modifications or alterations which Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution." Section 38 of RA 7942 provides for a
25-year term limit specifically for FTAAs, thus:

Section 38. Term of Financial or Technical Assistance Agreement. — A financial or technical assistance agreement shall have a term not
exceeding twenty-five (25) years to start from the execution thereof, renewable for not more than twenty-five (25) years under such terms
and conditions as may be provided by law. (Emphasis supplied)

Thus, the 25-year term limit specifically for FTAAs in Section 38 of RA 7942 applies to the WMCP FTAA. Again, Section 3.3 of the WMCP FTAA providing for a
50-year term is void.

What is clear from the foregoing is that the 25-year statutory term limit on mining contracts is merely an implementation of the 25-year constitutional term limit,
whether under the 1935, 1973 or 1987 Constitutions. The majority opinion's assertion that the 25-year term in the first paragraph of Section 2, Article XII of the
1987 Constitutions does not apply to FTAAs is obviously wrong.

3. Section 112 of RA 7942 Applies to the WMCP FTAA

The majority opinion insists that Section 112 of RA 7942 does not apply to the WMCP FTAA. Section 112 provides:

Section 112. Non-impairment of Existing Mining/Quarrying Rights. — All valid and existing mining lease contracts, permits/licenses, leases
pending renewal, mineral production-sharing agreements granted under Executive Order No. 279, at the date of effectivity of this Act, shall
remain valid, shall not be impaired, and shall be recognized by the Government: Provided, That the provisions of Chapter XIV on government
share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said
provisions: Provided, further, That no renewal of mining lease contracts shall be made after the expiration of its term: Provided, finally, That such
 leases, production-sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its
implementing rules and regulations. (Emphasis supplied)

Section 112 "immediately" applies the fiscal regime under Section 80 on "mineral production sharing agreement" to "all valid and existing mining" contracts,
including those "granted under Executive Order No. 279." If Section 112 applies to the WMCP FTAA, then the WMCP FTAA is subject only to the 2%
excise tax under Section 80 as the "total share" of the Philippine Government.

The majority opinion states, "Whether Section 112 may properly apply to co-production or joint venture agreements, the fact of the matter is that it
cannot be made to apply to FTAAs." This position of the majority opinion is understandable. If Section 112 applies to FTAAs, the majority opinion would have
to rule on the constitutionality of Section 80 of RA 7942. The majority opinion already agrees that the 1987 Constitution requires the FTAA contractor to pay the
State "more than the usual taxes, duties and fees." If Section 112 applies to FTAAs, the majority opinion would have no choice but declare unconstitutional
Section 80.

Thus, the majority opinion insists that Section 112 "cannot be made to apply to FTAAs." This insistence of the majority opinion collides with the very clear
and plain language of Section 112 of RA 7942 and Section 1.1 of the WMCP FTAA. This insistence of the majority opinion will lead to absurd results.

First, Section 112 of RA 7942 speaks of "all valid and existing mining" contracts. The phrase "all valid and existing mining" contracts means
the entire or total mining contracts in existence "at the date of effectivity" of RA 7942 without exception. The word "all" negates any exception. This certainly
includes the WMCP FTAA, unless the majority opinion concedes that the WMCP FTAA is not a mining contract, or if it is, that it is not a valid contract.

Second, the last proviso of Section 112 itself expressly states that "financial or technical assistance agreementsshall comply with the applicable
provisions of this Act and its implementing rules and regulations." There is no shadow of doubt whatsoever that Section 112, by its own plain, clear and
indisputable language, commands that FTAAs shall comply with RA 7942. I truly cannot fathom how the majority opinion can assert that Section 112 cannot
apply to FTAAs.

Third, Section 112 expressly refers to Chapters XIV and XVI of RA 7942. Chapter XIV refers to the "Government Share" and covers Sections 80, 81 and 82 of
RA 7942. Section 81, as the majority opinion concedes, applies to FTAAs. Chapter XVI refers to "Incentives" and covers Section 90 to 94 of RA 7942.
Section 90 states that the "contractors in mineral agreements, and financial technical and assistance agreements shall be entitled to the fiscal and non-fiscal
incentives as provided under Executive Order No. 226 x x x." Clearly, Section 112 applies to FTAAs.

Fourth, Section 1.1 of the WMCP FTAA expressly states, "This Agreement is a Financial & Technical Assistance Agreement entered into pursuant to
Executive Order No. 279." Section 112 states in unequivocal language that "all valid and existing" agreements "granted under Executive Order No. 279" are
immediately placed under the fiscal regime of MPSAs. In short, mining agreements granted under Executive Order No. 279 are expressly among the
agreements included in Section 112 and placed under the fiscal regime prescribed in Section 80. There is no doubt whatsoever that Section 112 applies to the
WMCP FTAA which was "entered into pursuant to Executive Order No. 279."

Fifth, Section 3 of Executive Order No. 211 expressly subjects all mining contracts executed by the Executive Department to the terms and conditions of new
mining laws that Congress might enact in the future. Thus, Section 3 of Executive Order No. 211 states:

Section 3. The processing, evaluation and approval of all mining applications, declarations of locations, operating agreements and service contracts
as provided for in Section 2 above, shall be governed by Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations: Provided, However, that the privileges granted as well as the terms and conditions thereof shall be
subject to any and all modifications or alterations which Congress may adopt pursuant to Section 2, Article XII of the 1987
Constitution. (Emphasis supplied)

There is no dispute that Executive Order No. 211, issued prior to the execution of the WMCP FTAA, applies to the WMCP FTAA. There is also no dispute that
RA 7942 took effect after the issuance of Executive Order No. 211 and after the execution of the WMCP FTAA. Therefore, Section 112 of RA 7942 applies
specifically to the WMCP FTAA.

Indeed, it is plain to see why Section 112 of RA 7942 applies to FTAAs, like the WMCP FTAA, that were executed prior to the enactment of RA 7942. Section
112 is found in Chapter XX of RA 7942 on "Transitory and Miscellaneous Provisions." The title of Section 112 refers to the "[N]on-impairment of Existing Mining
Quarrying Rights." RA 7942 is the general law governing all kinds of mineral agreements, including FTAAs. In fact, Chapter VI of RA 7942, covering nine
sections, deals exclusively on FTAAs. The fiscal regime in FTAAs executed prior to the enactment of RA 7942 may differ from the fiscal regime prescribed in
RA 7942. Hence, Section 112 provides the transitory provisions to resolve differences in the fiscal regimes, ostensibly to avoid impairment of contract obligations.
Clearly, Section 112 applies to FTAAs.

There are no ifs or buts in Section 112. The plain, simple and clear language of Section 112 makes FTAAs, like the WMCP FTAA, subject to Section 112. We
repeat the express words of Section 112 -

(1) "All valid and existing mining lease contracts x x x mineral production-sharing agreements granted under Executive Order No. 279, at
the date of effectivity of this Act x x x."
 (2) the "x x x government share in mineral production- sharing agreement x x x shall immediately govern and apply to a mining lessee or
contractor x x x."

(3) "financial or technical assistance agreements shall comply with the applicable provisions of this Act and its implementing rules and
regulations."

With such clear and unequivocal language, how can the majority opinion blithely state that Section 112 "cannot be made to apply to FTAAs"? It defies
common sense, simple logic and plain English to assert that Section 112 does not apply to FTAAs. It defies the fundamental rule of statutory construction as
repeated again and again in jurisprudence:

Time and time again, it has been repeatedly declared by this Court that where the law speaks in clear and categorical language, there is no room for
interpretation. There is only room for application.68

For nothing is better settled than that the first and fundamental duty of courts is to apply the law as they find it, not as they like it to be. Fidelity to
such a task precludes construction or interpretation, unless application is impossible or inadequate without it.69

Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the court has no choice but to see to it that its mandate
is obeyed.70

If Section 112 of RA 7942 does not apply to FTAAs as the majority opinion asserts, what will govern FTAAs executed before the enactment of RA
7942, like the WMCP FTAA? Section 112 expressly addresses FTAAs executed before the enactment of RA 7942, requiring these earlier FTAAs to comply with
the provisions of RA 7942 and its implementing rules. Executive Order No. 211, issued seven years before the execution of the WMCP FTAA, requires all FTAAs
subsequently executed to comply with the terms and conditions of any future mining law that Congress may enact. That law is RA 7942 which took effect after
the execution of the WMCP FTAA.

The majority opinion allows the WMCP FTAA to become sui generis, an FTAA outside the scope of RA 7942 which expressly governs "all" mining agreements,
whether MPSAs or FTAAs. This means that the WMCP FTAA is not even governed by Section 81 of RA 7942 and its phrase "among other things," which the
majority opinion claims is the authority to subject the WMCP FTAA to the payment of consideration that is "more than the usual taxes, duties and fees."

This makes the majority opinion's position self-contradictory and inutile. The majority opinion claims that the WMCP FTAA is subject to the phrase "among other
things" in Section 81. At the same time, the majority opinion asserts that Section 112, which requires earlier FTAAs to comply with Section 81 and other
provisions of RA 7942, does not apply to the WMCP FTAA. The majority opinion is caught in a web of self-contradictions.

This exemption by the majority opinion of the WMCP FTAA from Section 112 is judicial class legislation.Why is the WMCP FTAA so special that the
majority opinion wants it exempted from Section 112 of RA 7942? Why are only "all" other FTAAs subject to the terms and conditions of RA 7942 and not the
WMCP FTAA?

4. Foreign Corporations and Contractors Cannot Hold Exploration Permits

The majority opinion states that "there is no prohibition at all against foreign or local corporations or contractors holding exploration permits." This is
another assertion of the majority opinion that directly collides with the plain language of the 1987 Constitution.

Section 2, Article XII of the 1987 Constitution expressly reserves to Philippine citizens and corporations 60% Filipino owned the "exploration, development and
utilization of natural resources." The majority opinion rationalizes its assertion in this manner:

Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right to conduct exploration for minerals
in specified areas. Such a permit does not amount to an authorization to extract and carry off the mineral resources that may be
discovered. x x x. (Italics in original)

The issue is not whether an exploration permit allows a foreign contractor or corporation to extract mineral resources, for apparently by its language alone a mere
exploration permit does not. There is no dispute that an exploration permit merely means authority to explore, not to extract. The issue is whether the issuance of
an exploration permit to a foreign contractor violates the constitutional limitation that only Philippine citizens or corporations 60% Filipino owned can engage in
the "exploration x x x of natural resources."

The plain language of Section 2, Article XII of the 1987 Constitution clearly limits to Philippine citizens or to corporations 60% Filipino owned the right to engage
in the "exploration x x x of natural resources." To engage in "exploration" is simply to explore, not to develop, utilize or extract. To engage in
exploration one must secure an exploration permit. The mere issuance of the exploration permit is the authority to engage in the exploration of natural
resources.

This activity of exploration, which requires an exploration permit, is a reserved activity not allowed to foreign contractors or foreign corporations. Foreign
contractors and foreign corporations cannot secure exploration permits because they cannot engage in the exploration of natural resources. If, as the majority
opinion asserts, foreign contractors or foreign corporations can secure and hold exploration permits, then they can engage in the "exploration x x x of natural
resources." This violates Section 2, Article XII of the 1987 Constitution.

Consequently, Section 3(aq) of RA 7942, which provides that "a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of
granting an exploration permit," is void and unconstitutional.

However, the State may directly undertake to explore, develop and utilize the natural resources. To do this the State may contract a foreign corporation to
conduct the physical act of exploration in the State's behalf, as in an FTAA. In such a case, the foreign FTAA contractor is merely an agent of the State which
holds the right to explore. No exploration permit is given to the foreign contractor because it is the State that is directly undertaking the exploration,
development and utilization of the natural resources.

The requirement reserving "exploration x x x of natural resources" to Philippine citizens or to corporations 60% Filipino owned is not a matter of constitutional
whim. The State cannot allow foreign corporations, except as contractual agents under the full control and supervision of the State, to explore our natural
resources because information derived from such exploration may have national security implications.

If a Chinese company from the People's Republic of China is allowed to explore for oil and gas in the Spratlys, the technical information obtained by the Chinese
company may only bolster the resolve of the Chinese Government to hold on to their occupied reefs in the Spratlys despite these reefs being within the Exclusive
Economic Zone of the Philippines. Certainly, we cannot expect the Chinese company to disclose to the Philippine Government the important technical data
obtained from such exploration.

In Africa, foreign mining companies who have explored the mineral resources of certain countries shift their support back and forth between government and
rebel forces depending on who can give them better terms in exploiting the mineral resources. Technical data obtained from mineral exploration have triggered or
fueled wars and rebellions in many countries. The right to explore mineral resources is not a trivial matter as the majority opinion would want us to believe.

Even if the foreign companies come from countries with no territorial dispute with the Philippines, can we expect them to disclose fully to the Philippine
Government all the technical data they obtain on our mineral resources? These foreign companies know that the Philippine Government will use the very same
data in negotiating from them a higher share of the mining revenues. Why will the foreign companies give to the Philippine Government technical data justifying a
higher share for the Philippine Government and a lower share for the foreign companies? The framers of the 1935, 1973 and 1986 Constitutions were acutely
aware of this problem. That is why the 1987 Constitution not only reserves the "exploration x x x of natural resources" to Philippine citizens and to
corporations 60% Filipino owned, it also now requires the State to exercise "full control and supervision" over the "exploration x xx of natural resources."

5. The State is Entitled to 60% Share in the Net Mining Revenues

The majority opinion claims that the Constitution does not require that the State's share in FTAAs or other mineral agreements should be at least 60% of the net
mining revenues. Thus, the majority opinion states that "the Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all
situations at all times and in all circumstances."

The majority opinion makes this claim despite the express admission by intervenor CMP and respondent WMCP that the State, as owner of the natural
resources, is entitled to 60% of the net mining revenues. The intervenor CMP admits that under an FTAA, the Philippine Government "stands in the place of
the 60% Filipino owned company" and hence must retain 60% of the net income. Thus, intervenor CMP concedes that:

x x x In other words, in the FTAA situation, the Government stands in the place of the 60% Filipino-owned company, and the 100% foreign-
owned contractor company takes all the risks of failure to find a commercially viable large-scale ore body or oil deposit, for which the contractor will
get 40% of the financial benefits.71 (Emphasis supplied)

As applied to the WMCP FTAA, intervenor CMP asserts that the "contractor's stipulated share under the WMCP FTAA is limited to a maximum of 40% of
the net production."72 Intervenor CMP further insists that "60% of its (contractor's) net returns from mining, if any, will go to the Government under the
WMCP FTAA."73

Like intervenor CMP, respondent WMCP also maintains that under an FTAA, the State is "guaranteed" a 60% share of the foreign contractor's Net Mining
Revenues. Respondent WMCP admits that:

In other words, the State is guaranteed a sixty per centum (60%) share of the Mining Revenues, or 60% of the actual fruits of the endeavor.
This is in line with the intent behind Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily from the
exploration, development, and utilization of the Philippines' natural resources.

Incidentally, this sharing ratio between the Philippine Government and the Contractor is also in accordance with the 60%-40% equity
requirement for Filipino-owned corporations in Paragraph 1 of Section 2 of Article XII.74 (Emphasis supplied)

In short, the entire mining industry, as represented by intervenor CMP, is willing to pay the State a share equivalent to 60% of the net mining revenues. Even
the foreign contractor WMCP agrees to pay the State 60% of its net mining revenues, albeit dishonestly.
However, the majority opinion refuses to accept that the State is entitled to what the entire mining industry is willing to pay the State. Incredibly, the majority
opinion claims that "there is no independent showing that the taking of at least 60 percent share in the after-tax income of a mining company operated
by a foreign contractor is fair and reasonable under most if not all circumstances." Despite the willingness of the entire mining industry to pay the State a
60% share without exception, the majority opinion insists that such sharing is not fair and reasonable to the mining industry "under most if not all
circumstances." What is the basis of the majority opinion in saying this when the entire mining industry already admits, concedes and accepts that the State is
entitled, without exception, to 60% of the net mining revenues?

Oddly, the majority opinion cites only the personal experience of the ponente, who had previously "been engaged in private business for many years." The
majority opinion even states, in insisting that the State should receive less than 60% share, that "[F]airness is a credo not only in law, but also in business."
The majority opinion cannot be more popish than the Pope. The majority opinion ponente's business judgment cannot supplant the unanimous business
judgment of the entire mining industry, as manifested by intervenor CMP before this Court. What is obvious is that it is not fair to deprive the Filipino people,
many of whom live in hand to mouth existence, of what is legally their share of the national patrimony, in light of the willingness of the entire mining industry to
pay the Filipino people their rightful share.

The majority opinion gives a "simplified illustration" to show that the State does not deserve a 60% share of the net proceeds from mining revenues. The majority
opinion states:

x x x Let us base it on gross revenues of, say, P500. After deducting operating expenses, but prior to income tax, suppose a mining makes a taxable
income of P100. A corporate income tax of 32 percent results in P32 of taxable income going to the government, leaving the mining firm with P68.
Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the mining firm.

The majority opinion's "simplified illustration" is indeed too simplified because it does not even consider the exploration, development and capital expenses. The
majority opinion's "simplified illustration" deducts from gross revenues only "operating expenses." This is an egregious error that makes this "simplified
illustration" misleading. Exploration, development and other capital expenses constitute a huge part of the deductions from gross revenues. In the early years of
commercial production, the exploration, development and capital expenses, if not subject to a cap or limitation, can wipe out the gross revenues.

The majority opinion's operating expenses are not even taken from mining industry rates. One can even zero out the taxable income by simply jacking up the
operating expenses. A "simplified illustration" of an income statement of an operating mining company, omitting the deduction of amortized capital expenses,
serves no purpose whatsoever. What is important is the return on the investment of the foreign contractor. The absolute amount that goes to the contractor may
be smaller than what goes to the State. However, the amount that goes to the contractor may be a hundred times its investment. This can only be determined if
the capital expenditures of the contractor are taken into account.

Under an FTAA, the State is directly undertaking the exploitation of mineral resources. The net proceeds are not subject to income tax since there is no separate
taxable entity. The State is an entity but not a taxable corporate entity. The State does not pay income tax to itself, and even if it does, it is just a book entry since
it is the payor and payee at the same time. Only the 40% share of the FTAA contractor is subject to the 32% corporate income tax. On this score alone, the
majority opinion's "simplified illustration" is wrong.

Intervenor CMP and respondent WMCP are correct in anchoring on Section 2, Article XII of the 1987 Constitution their admission that the State is entitled to 60%
of the net mining revenues. Their common position is based on the Constitution, existing laws and industry practice.

First, the State owns the mineral resources. To the owner of the mineral resources belongs the income from any exploitation of the mineral resources. The
owner may share its income with the contractor as compensation to the contractor, which is an agent of the owner. The industry practice is the owner receives an
equal or larger share of the income as against the share of the contractor or agent.

In the Occidental-Shell FTAA covering Malampaya, where the contractor contributed all the capital and technology, the State receives 60% of the net proceeds.
In addition, Occidental-Shell's 40% share is subject to the 32% Philippine income tax. Occidental-Shell's US$2 billion investment75 in Malampaya is by far the
single biggest foreign investment in the Philippines. The offshore Malampaya gas extraction is also by far more capital intensive and riskier than land-based
mineral extraction. Over the 20-year life of the natural gas reserves, the State will receive US$8-10 billion76 from its share in the Occidental-Shell FTAA.

In Consolidated Mines, Inc. v. Court of Tax Appeals,77 a case decided under the 1973 Constitution, Consolidated Mines, the concessionaire of the
mines, shared equally the net mining income with Benguet Consolidated Mines, the mining operator or contractor. Thus, as quoted in Consolidated Mines, the
agreement between the concessionaire and operator stated:

X. After Benguet has been fully reimbursed for its expenditures, advances and disbursements as aforesaid the net profits from the operation shall be
divided between Benguet and Consolidated share and share alike, it being understood however, that the net profits as the term is used in this
agreement shall be computed by deducting from gross income all operating expenses and all disbursements of any nature whatsoever as may be
made in order to carry out the terms of this agreement. (Emphasis supplied)

Incidentally, in Consolidated Mines the State did not receive any share in the net mining income because of the "license, concession or lease" system under the
1935 and 1973 Constitutions. The State and the Filipino people received only taxes, duties and fees.

Second, the State exercises "full control and supervision" over the exploitation of mineral resources. "Full control" as used in the Constitution means more
than ordinary majority control. In corporate practice, ordinary control of a corporation means a simple majority control, or at least 50% plus one of the total
voting stock. In contrast, full or total control means two-thirds of the voting stock, which enables the owner of the two-thirds equity to amend any provision in
the charter of the corporation. However, since foreigners can own up to 40% of the equity of mining companies, "full control" cannot exceed the control
corresponding to the State's 60% equity. Thus, the State's share in the net proceeds of mining companies should correspond to its 60% interest and control in
mining companies.

Third, Section 2, Article XII of the 1987 Constitution requires that the FTAA must make "real contributions to the economic growth and general welfare of
the country." As respondent WMCP aptly admits, "the intent behind Section 2 of Article XII (is) that the Filipino people, as represented by the State,
(shall) benefit primarily from the exploration, development, and utilization of the Philippines' natural resources." For the Filipino people to
benefit primarily from the exploitation of natural resources, and for FTAAs to make real contributions to the national economy, the majority of the net
proceeds from mining operations must accrue to the State.

Fourth, the 1987 Constitution ordains the State to "conserve and develop our patrimony." The nation's mineral resources are part of our national patrimony.
The State can "conserve" our mineral resources only if the majority of the net proceeds from the exploitation of mineral resources accrue to the State.

In sum, only the majority opinion refuses to accept that the State has a right to receive at least 60% of the net proceeds from mining operations. The principal
parties involved in this case do not object that the State shall receive such share. The entire mining industry and respondent WMCP admit that the State is
entitled to a 60% share of the net proceeds. The State, represented by the Government, will certainly not object to such share.

More than anything else, the intent and language of the 1987 Constitution require that the State receive the bulk of the income from mining operations. Only
Congress, through a law, may allow a share lesser than 60% if certain compelling conditions are present. Congress may authorize the President to make such
determination subject to standards and limitations that Congress shall prescribe.

The majority opinion wants to give the President the absolute discretion to determine the State's share from mining revenues. The President will be hard put
accepting anything less than 60% of the net proceeds. If the President accepts less than 60%, the President is open to a charge of entering into a manifestly and
grossly disadvantageous contract to the Government because the entire mining industry, including WMCP, has already agreed to pay 60% of the net proceeds to
the State. The only way to avoid this is for Congress to enact a law providing for the conditions when the State may receive less than 60% of the net proceeds.

Conclusion

Let us assume that one of the Justices of this Court is the owner of mineral resources – say gold reserves. A foreigner offers to extract the gold and pay for all
development, capital and operating expenses. How much will the good Justice demand as his or her share of the gold extracted by the foreigner? If the Justice
follows the Malampaya precedent, he or she will demand a 60% share of the net proceeds. If the Justice follows the manifestation of intervenor CMP and
respondent WMCP before this Court, he or she will also demand a 60% share in the net proceeds. If the Justice follows the Consolidated Mines precedent, he
or she will demand no less than 50% of the net proceeds. In either case, the 2% excise tax on the gold extracted is part of the operating expenses to be paid by
the foreigner but deducted from the gross proceeds.

Now, under the Regalian doctrine the State, not the Justice, owns the gold reserves. How much should the State demand from the foreigner as the State's share
of the gold that is extracted? If we follow Sections 39, 80, 81, 84 and 112 of RA 7942, the State will receive only 2% excise tax as its "total share" from
the gold that is extracted.

Is this fair to the State and the Filipino people, many of whom live below the poverty line? Is this what the 1987 Constitution mandates when it says that (a) the
State must conserve and develop the nation's patrimony, (b) the State owns all the natural resources, (c) the State must exercise full control and supervision over
the exploitation of its natural resources, and (d) FTAAs must make real contributions to the national economy and the general welfare?

How this Court decides the present case will determine largely whether our country will remain poor, or whether we can progress as a nation. Based on NEDA's
estimates, the total mineral wealth of the nation is P47 trillion, or US$840 billion. This is 15 times more than our US$56 billion foreign debt. Can this Court in
conscience agree that the State will receive only 2% of the P47 trillion mineral wealth of the nation?

In Miners Association, this Court ruled that the 1987 Constitution has abandoned the old system of "license, concession or lease" and instead installed full
State control and supervision over the exploitation of natural resources. No amount of dire warnings or media publicity should intimidate this Court into
resurrecting the old and discredited system that has caused the denudation of almost all of the nation's virgin forests without any visible benefit to the Filipino
people.

The framers of the 1987 Constitution have wisely instituted the new system to prevent a repeat of the denudation of our forestlands that did not even make any
real contribution to the economic growth of the nation. This Court must do its solemn duty to uphold the intent and letter of the Constitution and, in the words of
the Preamble of the 1987 Constitution, "conserve and develop our patrimony" for the benefit of the Filipino people.

This Court cannot trivialize the Filipino people's right to be the primary beneficiary of the nation's mineral resources by ruling that the phrase "among other
things" is sufficient to insure that FTAAs will "make real contributions to the economic growth and general welfare of the country." This Court cannot tell
the Filipino people that the phrase "among other things" is sufficient to "preserve and develop the national patrimony." This Court cannot tell the Filipino
people that the phrase "among other things" means that they will receive the bulk of mining revenues.
This Court cannot tell the Filipino people that Congress deliberately used the phrase "among other things" to guarantee that the Filipino people will receive their
equitable share from mining revenues of foreign contractors. This Court cannot tell the Filipino people that with the phrase "among other things," this Court has
protected the national interest as mandated by the 1987 Constitution.

I therefore vote to deny the motions for reconsideration. I vote to declare unconstitutional Section 3(aq), Section 39, Section 80, the second paragraph of Section
81, the proviso in Section 84, and the first proviso in Section 112 of RA 7942 for violation of Section 2, Article XII of the 1987 Constitution. In issuing the rules to
implement these void provisions of RA 7942, DENR Secretary Victor O. Ramos gravely abused his discretion amounting to lack or excess of jurisdiction.

I also vote to declare unconstitutional the present WMCP FTAA for violation of the same Section 2, Article XII of the 1987 Constitution. However, WMCP may
negotiate with the Philippine Government for a new mineral agreement covering the same area consistent with this Decision.

DISSENTING OPINION

CARPIO MORALES, J.:

Regrettably, a majority of the members of this Court has voted to reverse its January 27, 2004 Decision in La Bugal-B'Laan Tribal Association, Inc. v. Ramos1 by
which it declared certain provisions2 of the Mining Act of 19953 on Financial or Technical Assistance Agreements (FTAAs), the related provisions of Department
of Environment and Natural Resources Administrative Order 96-40 (DAO No. 96-40), and the March 22, 1995 Financial and Technical Assistance Agreement
(FTAA) executed between the Government of the Republic of the Philippines and WMC Philippines, Inc. (WMCP) in violation of Section 2, Article XII of the
Constitution.

Because I find that: (1) the "agreements … involving either technical or financial assistance" contemplated by the fourth paragraph of Section 2, Article XII of the
1987 Constitution are distinct and dissimilar from the "service contracts" under the 1973 Constitution; and (2) these certain provisions of the Mining Act, its
implementing rules, and the WMCP FTAA unconstitutionally convey beneficial ownership and control over Philippine mineral and petroleum resources to foreign
contractors, I most respectfully dissent.

Antecedents

By motion, private respondent WMCP seeks a reconsideration of this Court's Decision, it arguing essentially that FTAAs are the same as service contracts which
were sanctioned under the 1973 Constitution.

By Resolution of June 22, 2004, this Court, upon motion,4 impleaded Philippine Chamber of Mines (PCM), as respondent-in-intervention. Intervenor PCM argues
that the "agreements" referred to in paragraph 4 of Section 2, Article XII of the Constitution were intended to involve or include the "service contracts" provided
for in the 1973 Constitution.

The parties were, on June 29, 2004, heard on oral arguments during which two major issues were tackled: first, the proper interpretation of the phrase
"agreements… involving either technical or financial assistance" in Section 2, Article XII of the Constitution, and second, mootness.

Thereafter, the parties submitted their respective memoranda, as required by Resolution of this Court. However, despite the verbal request of Associate Justice
Artemio V. Panganiban during the oral arguments,5 intervenor PCM failed to submit along with its memorandum any documents to establish international mining
practices, particularly in developing countries.

Issues for Resolution

The majority opinion holds that the resolution of the Motions for Reconsideration in this case should be confined to the issues taken up during the oral arguments
on June 29, 2004. These were: (1) the proper interpretation of the phrase "agreements… involving either technical or financial assistance" in Section 2, Article XII
of the Constitution, and (2) mootness.

It further holds that the issue of whether the Mining Act and the WMCP FTAA are manifestly disadvantageous to the government could not be passed upon
because the same was supposedly not raised in the original petition.

These rulings, while well intentioned, cannot be accepted.

First, there is no rule of procedure, whether in Rule 52 or elsewhere, which restricts the resolution of a case to the issues taken up in the oral arguments. The
reason is obvious. The issues for resolution in any given case are determined by the conflicting arguments of the parties as set forth in their pleadings. On the
other hand, the matters to be taken up in an oral argument may be limited, by order of the court, to only such points as the court may deem necessary. Thus,
Section 1 of Rule 49 provides:
 Section 1. When allowed. – At its own instance or upon motion of a party, the court may hear the parties in oral argument on the merits of a case,
or on any material incident in connection therewith.

The oral argument shall be limited to such matters as the court may specify in its order or resolution(Emphasis supplied)

A narrow delimitation of matters to be taken up during oral argument is a matter of practical necessity since often not all the relevant issues can be thoroughly
discussed without unduly imposing on the time of the Court. However, unlike a pre-trial order,6 the delimitation does not control or limit the issues to be resolved.
These issues may be subject matter of the parties' memoranda, as in this case.

Second, as noted in the Decision,7 the issue of whether the Mining Act and the WMCP FTAA afford the State a just share in the proceeds of its natural resources
was in fact raised by the petitioners, viz:

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that
it allows fully foreign owned corporations to explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4,
Article XII of the Constitution;

II

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that
it allows the taking of private property without the determination of public use and for just compensation;

III

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that
it violates Sec. 1, Art. III of the Constitution;

IV

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that
it allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of
Article XII of the Constitution;

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that
it allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral resources contrary to Article
XII of the Constitution;

VI

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being
unconstitutional in that it allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,]
[Article XII] of the Constitution;

VII

x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the President of the Republic of
the Philippines and Western Mining Corporation Philippines Inc. because the same is illegal and unconstitutional.8 (Emphasis and underscoring
supplied)

Indeed, this Court expressly passed upon this issue in the Decision when it held that:

With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. Although the
statute employs the phrase "financial and technical agreements" in accordance with the 1987 Constitution, it actually treats these agreements as
service contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.9 (Emphasis and underscoring
supplied)
Moreover, the issue of whether the State is deprived of its just share in the proceeds from mining was touched upon by the parties in their memoranda. Thus,
respondent WMCP argues that:

Section 10.2 (a) of the COLUMBIO FTAA does not prohibit the State from partaking of the fruits of the exploration. In fact, Section 7.7 of the COLUMBIO
FTAA provides:

"7.7 Government Share

From the Commencement of Commercial Production, the Contractor shall pay a government share of sixty per centum (60%) of Net
Mining Revenues, calculated in accordance with the following provisions (the "Government Share"). The Contractor shall be entitled to
retain the balance of all revenues from the Mining Operations."

In other words, the State is guaranteed a sixty per centum (60%) share of the Net Mining Revenues, or 60% of the actual fruits of the endeavor. This
is in line with the intent behind Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily from the
exploration, development, and utilization of the Philippines' natural resources. 10 (Emphasis and underscoring supplied)

while the petitioners, for their part, claim:

For instance, government share is computed on the basis of net mining revenue. Net mining revenue is gross mining revenue less, among others,
deductible expenses. Some of the allowable deductions from the base amount to be used to compute government share are
suspicious. The WMCP FTAA contract, for instance, allows expenditures for development "outside the Contract Area," consulting fees for work
done "outside the Philippines," and the "establishment and administration of field offices including administrative overheads incurred within and
outside the Philippines."

xxx

One mischief inherent in past service contracts was the practice of transfer pricing. UNCTAD defines this as the "pricing of transfers of goods,
services and other assets within a TNC network." If government does not control the exploration, development and utilization of natural
resources, then the intra-transnational corporation pricing of expenditures may not become transparent. 11 (Emphasis supplied; footnotes
omitted)

In fine, the majority opinion skirts an issue raised in the original Petition for Prohibition and Mandamus, passed upon in its Decision of January 27, 2004 and
argued by the parties in the present Motion for Reconsideration.

Instead, I find that the myriad arguments raised by the parties may be grouped according to two broad categories: first, the arguments pertaining to the
constitutionality of FTAA provisions of the Mining Act; and second, those pertaining to the validity of the WMCP FTAA. Within these categories, the following
issues are submitted for resolution: (1) whether in invalidating certain provisions of the Mining Act a non-justiciable political question is passed upon; (2) whether
the FTAAs contemplated in Section 2, Article XII of the 1987 Constitution are identical to, or inclusive of, the "service contracts" provided for in the 1973
Constitution; (3) whether the declaration of the unconstitutionality of certain provisions of the Mining Act should be reconsidered; (4) whether the question of
validity of the WMCP FTAA was rendered moot before the promulgation of the Decision; and (5) whether the decision to declare the WMCP FTAA
unconstitutional and void should be reconsidered.

Following the foregoing framework of analysis, I now proceed to resolve the issues raised in the motion for reconsideration.

Constitutionality of the Philippine Mining Act of 1995

The issues presented constitute

justiciable questions.

Contrary to the posture of respondent WMCP, this Court did not tread on a political question in rendering its Decision of January 27, 2004.

The Constitution delineates the parameters of the powers of the legislative, the executive and the judiciary.12Whether the first and second great departments of
government exceeded those parameters is the function of the third.13 Thus, the Constitution defines judicial power to include "the duty… to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government."14

Judicial power does not extend to political questions, which are concerned with issues dependent upon the wisdom, not the legality, of a particular
measure.15 The reason is that, under our system of government, policy issues are within the domain of the political branches of government and of the people
themselves as the repository of all state power.16 In short, the judiciary does not settle policy issues.17
The distinction between a truly political question and an ostensible one lies in the answer to the question of whether there are constitutionally imposed limits on
powers or functions conferred upon political bodies.18 If there are constitutionally imposed limits, then the issue is justiciable, and a court is duty-bound to
examine whether the branch or instrumentality of the government properly acted within those limits.19

Respondent WMCP argues that the "exploration, development, and utilization of natural resources are matters of policy, in other words, political matters or
questions," over which this Court has no jurisdiction.

Respondent is mistaken. The questions involved in this case are not political. The provisions of paragraph 4, Section 2 of Article XII of the Constitution, including
the phrase "agreements… involving either technical or financial assistance," incorporate limitations20 on the scope of such agreements or FTAAs. Consequently,
they constitute limitations on the powers of the legislative to determine their terms, as well as the powers of the Executive to enter into them. In its Decision, this
Court found that, by enacting the objectionable portions of the Mining Act and in entering into the subject FTAA, the Congress and the President went beyond the
constitutionally delimited scope of such agreements and thereby transgressed the boundaries of their constitutional powers.

The "agreements" contemplated in paragraph 4, Section 2,

Article XII of the Constitution are distinct and dissimilar from the old "service contracts."

The majority and respondents share a common thesis: that the fourth paragraph of Sec. 2, Article XII contemplates not only financial or technical assistance but,
just like the service contracts which were allowed under the 1973 Constitution, management assistance as well.

The constitutional provision in dispute reads:

Art. XII

National Economy and Patrimony

xxx

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervisionof the State. The State may directly undertake such activities or it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such
terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.

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

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-
scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and
conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements,
the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its
execution. (Emphasis and underscoring supplied)

Its counterpart provision in Article XIV of the 1973 Constitution authorized "service contracts" as follows:

Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to
citizens, or to corporations or associations at least sixty per centum of which is owned by such citizens. The Batasang Pambansa, in the national
interest, may allow such citizens, corporations or associations to enter into service contracts for financial, technical, management, or
other forms of assistance with any person or entity for the exploration, development, exploration, or utilization of any of the natural
resources. Existing valid and binding service contracts for financial, technical, management, or other forms of assistance are hereby recognized as
such. (Emphasis and underscoring supplied)

Respondent WMCP contends that the fourth paragraph of Section 2 is an exception to the rule that participation in the country's natural resources is reserved to
Filipinos.21 It hastens to add, however, that the word "may" therein is permissive not restrictive;22 and that consistent with the provision's permissive nature, the
word "involving" therein should be construed to mean "to include," such that the assistance by foreign corporations should not be confined to technical or
financial, but also to management forms.23 And it notes that the Constitution used "involving" instead of such restrictive terms as "solely," "only," or "limited to." 24

To the Office of the Solicitor General (OSG), the intent behind the fourth paragraph is to prevent the practice under the 1973 Constitution of allowing foreigners to
circumvent the capitalization requirement,25 as well as to address the absence of a governing law that led to the abuse of service contracts.26 The phrase
"technical or financial" is merely for emphasis, the OSG adds, that it is descriptive, not definitive, of the forms of assistance that the State needs and which
foreign corporations may provide in the large-scale exploration, development and utilization of the specified resources.27 Furthermore, the OSG contends that the
denomination of the subject FTAA as a "financial and technical assistance agreement" is a misnomer and should more properly be called "agreements for large-
scale exploration, development, and utilization of minerals, petroleum, and other mineral oils." 28 It argues that the President has broad discretion to enter
into any agreement, regardless of the scope of assistance, with foreign corporations.29 Driving its point, the OSG poses: If the framers of the Constitution
intended to limit the service of foreign corporations to "passive assistance," such as simple loan agreements, why confine them to large-scale ventures?30 Why
does the Constitution require that such agreements be based on real contributions to economic growth and general welfare of the country?31 Why the condition in
the last paragraph of Section 2 that the President report to Congress?32 Finally, the OSG asserts that these requirements would be superfluous if the assistance
to be rendered were merely technical or financial.33 And that it would make more sense if the phrase "agreements… involving technical or financial assistance"
were construed to mean the same concept as the service contracts under the 1973 Constitution.

The OSG's contentions are complemented by intervenor PCM which maintains that the FTAA "is an agreement for [the] rendition of a whole range of services of
an integrated and comprehensive character, ranging from discovery through development and utilization and production of minerals or petroleum by the foreign-
owned corporation."34 In fine, intervenor posits that the change in phraseology in the 1987 Constitution does not relate to the substance of the
agreement,35 otherwise, the State itself would be compelled to conduct the exploration, development and utilization of natural resources, ventures that it is ill-
equipped to undertake.36

Primary Concepts in Article XII of the Constitution

Before passing upon the foregoing arguments and for better clarity, it may be helpful to first examine the concepts of (a) "beneficial ownership," (b) "full control
and supervision," and (c) "real contributions to the economic growth and general welfare of the country" which are at the heart of Section 2, Article XII of the
Constitution.

Beneficial Ownership

Beneficial ownership, as the plain meaning of the words implies, refers to the right to the gains, rewards and advantages generated by the property.37

The concept is not new, but in fact is well entrenched in the law of trusts.38 Thus, while the trustee holds the legal title to or ownership of the property entrusted to
him, he is nevertheless not the beneficial owner. Rather, he holds and administers the property for the benefit of another, called the beneficiary or the cestui que
trust. Hence, the profits realized from the administration and management of the property by the trustee, who is the "naked owner," less any lawful fees due to
the latter, accrue to the cestui que trust, who is the "beneficial" or "equitable" owner.39

The foregoing concepts are directly applicable to the statement in Section 2, Article XII of the Constitution that "[a]ll lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned
by the State."

The words "owned" and "State" should both be understood on two levels. "Owned" or "ownership" refers to both the legal title to and the beneficial ownership of
the natural resources. Similarly, "State" should be understood as denoting both the body politic making up the Republic of the Philippines, i.e., the Filipino people,
as well as the Government which represents them and acts on their behalf.

Thus, the phrase "natural resources are owned by the State" simultaneously vests the legal title to the nation's natural resources in the Government, and the
beneficial ownership of these resources in the sovereign Filipino people, from whom all governmental authority emanates.40

On this point, petitioners and respondent WMCP appear to be in rare agreement. Thus, petitioners, in their Memorandum state:

xxx With respect to exploration, development and utilization of mineral resources, the State should not merely be concerned about passing laws. It is
expected that it holds these natural resources covered in Article XII, Section 2 in dominium and in trust for [the] Filipino
people.41 (Emphasis and underscoring supplied; italics in the original)

Respondent WMCP is even more emphatic:

The Regalian Doctrine, as embodied under the Constitution, is a recognition that sovereignty resides in the Filipino people, and the prime duty of
government or the State is to serve and protect the people. Thus, the ownership of natural resources by the State under Section 2, Article XII
of the Constitution is actually a beneficial trust in favor of the Filipino people.

Stated differently, it is the Filipino people who own the nation's natural resources, and the State is merely the guardian-in-
trust therof.42 (Emphasis and underscoring supplied; italics in the original; citations omitted)
Clearly, in the exploration, development and utilization of the nation's natural resources, the Government is in a position analogous to a trustee, holding title to
and managing these resources for the benefit of the Filipino people, including future generations.43 As the trustee of the sovereign, the Government has a
fiduciary duty to ensure that the gains, rewards and advantages generated by the Philippines' natural resources accrue to the benefit of the Filipino people.
Corollary to this, the Government cannot, without violating its sacred trust, enter into any agreement or arrangement which effectively deprives the Filipino people
of their beneficial ownership of these resources – e.g., when it enters into an agreement whereby the vast majority of the resources, or the profit generated from
the resources, is bargained away in favor of a foreign entity.

Full Control and Supervision

In the context of its role as trustee, the Government's "full control and supervision" over the exploration, development and utilization of the nation's natural
resources, in its most basic and fundamental sense, is accomplished by maintaining a position whereby it can carry out its fiduciary duty to protect the beneficial
interest of its cestui que trust in these resources.

Significantly, Section 2, Article XII of the Constitution provides that the Government may undertake the exploration, development and utilization of these
resources by itself or together with a third party.44 In the first case, where no third party is involved, the Government's "full control and supervision" over the
resources is easily achieved. In the second case, where the third party may naturally be expected to seek participation in the operation of the venture and ask for
compensation in proportion to its contribution(s), the Government must still maintain a position vis-à-vis its third party partner whereby it can adequately protect
the interest of the Filipino people, who are the beneficial owners of the resources.

By way of concrete example, the Government may enter into a joint venture agreement45 with a third party to explore, develop or utilize certain natural resources
through a jointly owned corporation, wherein the government has the controlling interest. Under this arrangement, the Government would clearly be in a position
to protect the interest of the beneficial owners of the natural resources.

In the alternative, as suggested by the OSG,46 the Government may be allowed one or more directors (holding nominal shares) on the governing board and
executive committee(s) of the private corporation contracted to undertake mining activities in behalf of the government. Depending on the by-laws of the private
corporation, strategic representation of the Government in its governing board and executive committee(s) may afford sufficient protection to the interest of the
people.

However, Section 2, Article XII of the Constitution does not limit the options available to the Government, when dealing with prospective mining partners, to joint
ventures or representation in the contractor's board of directors. To be sure, the provision states that the Government may enter into "co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations," or, for large scale exploration, development and utilization,
"agreements with foreign-owned corporations involving either technical or financial assistance." But whatever form the agreement entered into by the
Government and its third party partner(s) may take, the same must contain, as an absolute minimum, provisions that ensure that the Government
can effectively perform its fiduciary duty to safeguard the beneficial interest of the Filipino people in their natural resources, as mandated by the Constitution.

Real Contributions to the Economy

and the General Welfare of the Country

Section 2, Article XII likewise requires that "agreements … involving financial or technical assistance" be "based on real contributions to the economic
growth and general welfare of the country." This provision articulates the value which the Constitution places on natural resources, and recognizes their
potential benefits. It likewise acknowledges the fact that the impact of mining operations is not confined to the economy but, perhaps to a greater extent, affects
Philippine society as a whole as well.

"Minerals, petroleum and other mineral oils," are part of the non-renewable wealth of the Filipino people. By pursuing large scale exploration, development and
utilization of these resources, the State would be allowing the consumption or exhaustion of these resources, and thus deprive future Filipino generations the
enjoyment thereof. Mining – especially large-scale mining – often results in the displacement of local residents. Its negative effects on the environment are well-
documented.47

Thus, for benefits from the exploration, development and utilization of these resources to be real, they must yield profits over and above 1) the capital and
operating costs incurred, 2) the resulting damage to the environment, and 3) the social costs to the people who are immediately and adversely affected thereby.

Moreover, the State must ensure that the real benefits from the utilization of these resources are sufficient to offset the corresponding loss of these resources to
future generations. Real benefits are intergenerational benefits because the motherland's natural resources are the birthright not only of the present generation
of Filipinos but of future generations as well.48

The requirement of real benefit is applicable even when the exploration, development and utilization are being undertaken directly by the Government or with the
aid of Filipinos or Filipino corporations. But it takes on greater significance when a foreign entity is involved. In the latter instance, the foreign entity would
naturally expect to be compensated for its assistance. In that event, it is inescapable that a foreigner would be benefiting from an activity (i.e. mining) which also
results in numerous, serious and long term harmful consequences to the environment and to Philippine society.

Moreover, as recognized by the 1935 Constitutional Convention, foreign involvement in the exploitation of Philippine natural resources has serious implications
on national security. As recounted by delegate Jose Aruego:
 The nationalization of the natural resources was also intended as an instrument of national defense. The Convention felt that to permit foreigners
to own or control the natural resources would be to weaken the national defense. It would be making possible the gradual extension of
foreign influence into our politics, thereby increasing the possibility of foreign control. xxx

Not only these. The nationalization of the natural resources, it was believed, would prevent making the Philippines a source of international
conflicts with the consequent danger to its internal security and independence. For unless the natural resources were nationalized, with the
nationals of foreign countries having the opportunity to own or control them, conflicts of interest among them might arise inviting danger to the safety
and independence of the nation.49 (Emphasis supplied)

Significantly, and contrary to the posture of the OSG, it is immaterial whether the foreign involvement takes the form of "active" participation in the mining concern
or "passive" assistance such as a foreign mining loan or the licensing of mining technology. Whether the foreign involvement is passive or active, the fact
remains that the foreigner will expect to be compensated and, as a necessary consequence, a fraction of the gains, rewards and advantages generated by
Philippine natural resources will be diverted to foreign hands even as the long term pernicious "side effects" of the mining activity will be borne solely by the
Filipino people.

Under such circumstances, the Executive, in determining whether or not to avail of the assistance of a foreign corporation in the large scale exploration,
development and utilization of Philippine natural resources, must carefully weigh the costs and benefits if it is to faithfully discharge its fiduciary duty to protect the
beneficial interest of the Filipino people in these resources.

These same considerations likewise explain why the last paragraph of Section 2 mandates that the President "notify the Congress of every contract entered into
in accordance with this provision, within thirty days from its execution." The Constitution requires that the Legislative branch, which is perceived to be more
broadly representative of the people and therefore more immediately sensitive to their concerns, be given a timely opportunity to scrutinize and evaluate the
Executive's decision.

With these concepts in mind, I now turn to what I believe to be the proper interpretation of "agreements… involving either technical or financial assistance" in
paragraph 4 of Section 2, Article XII of the Constitution.

Construction of paragraph 4, Section 2,

Article XII of the Constitution

The suggestion that the avoidance of the term "service contracts" in the fourth paragraph is to prevent the circumvention, prevalent under the 1973 Constitution,
of the 60-40 capital requirement does not persuade, it being too narrow an interpretation of that provision. If that were the only purpose in the change of
phraseology, this Court reiterates, there would have been no need to replace the term "service contracts" with "agreements… involving either technical or
financial assistance."

The loophole in the 1973 Constitution that sanctioned dummyism is easily plugged by the provision in the present Constitution that the President, not Congress
or the Batasan Pambansa (under the 1973 Constitution), may enter into either technical or financial agreements with foreign corporations. The framers then
could have easily employed the more traditional term "service contracts" in designating the agreements contemplated, and thus obviated confusion, especially
since the term was employed by the legal system then prevailing50 and had a settled acceptation.

The other proffered raison d'être of the fourth paragraph, i.e. to address the absence of a governing law that led to the abuse of service contracts, is equally
unpersuasive. In truth, there were a host of laws governing service contracts pertaining to various natural resources, as this Court noted when it traced the
history of Section 2, Article XII in its Decision.51

Respondent WMCP nevertheless correctly states that the fourth paragraph establishes an exception to the rule limiting the exploration, development and
utilization of the nation's natural resources to Filipinos. As an exception, however, it is illogical to deduce that the provision should be interpreted liberally,
not restrictively. It bears repeating that the provision, being an exception, should be strictly construed against foreign participation.

In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is an exception to the rule that
participation in the nation's natural resources is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very restrictive." Commissioner Nolledo also remarked
that "entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation and,
therefore, being an exception, it should be subject, whenever possible, to stringent rules." Indeed, exceptions should be strictly but
reasonably construed; they extend only so far as their language fairly warrants and all doubts should be resolved in favor of the general provision
rather than the exception.52 (Emphasis and underscoring supplied; citations omitted).

That the fourth paragraph employs the word "may" does not make it non-restrictive. Indeed, "may" does make the provision permissive, but only as opposed to
mandatory,53 and operates to confer discretion upon a party.54 Thus, as used in the fourth paragraph, "may" provides the President with the option to enter into
FTAAs. It is, however, not incumbent upon the President to do so for, as owner of the natural resources, the "State [itself] may directly undertake such
activities."55 If the President opts to exercise the prerogative to enter into FTAAs, the agreement must conform to the restrictions laid down by Section 2, including
the scope of the assistance, which must be limited to financial or technical forms.
"May" in the fourth paragraph, therefore, should be understood in the same sense as it is used in the first paragraph, that is, that the State "may enter into…
agreements with Filipino citizens, or corporations or association at least sixty per centum of whose capital is owned by such citizens."

The majority, however, opines that the "agreements involving either technical or financial assistance" referred to in paragraph 4 of Section 2 of Article XII of the
1987 Constitution are indeed service contracts. In support of this conclusion, the majority maintains that the use of the phrase "agreements… involving either
technical or financial assistance" does not indicate the intent to exclude other modes of assistance because the use of the word "involving" signifies the
possibility of the inclusion of other forms of assistance or activities. And it proffers that the word "involving" has three connotations that can be differentiated as
follows: (1) the sense of concerning, having to do with, or affecting; (2) entailing, requiring, implying or necessitating; (3) including, containing or comprising.
None of these three connotations, it is contended, convey a sense of exclusivity. Thus, it concludes that had the framers intended to exclude other forms of
assistance, they would have simply said "agreements for technical or financial assistance" as opposed to "agreements including technical or financial
assistance."

To interpret the term "involving" in the fourth paragraph to mean "including," as the majority contends, would run counter to the restrictive spirit of the provision.
Notably, the 1987 Constitution uses "involving" not "including." As admitted in the majority opinion, the word "involve" may also mean concerning, having to do
with or affecting. Following the majority opinion's own methodology of substitution, "agreements… involving either technical or financial assistance" means
"agreements…concerning either technical or financial assistance." And the word "concerning" according to Webster's Third New International Dictionary means
"regarding", "respecting" or "about." To reiterate, these terms indicate exclusivity. More tellingly, the 1987 Constitution not only deleted the term "management" in
the 1973 Constitution, but also the catch-all phrase "or other forms of assistance,"56 thus reinforcing the exclusivity of "either technical or financial
assistance."

That the fourth paragraph does not employ the terms "solely," "only," or "limited to" to qualify "either technical or financial assistance" does not detract from the
provision's restrictive nature. Moreover, the majority opinion's illustration conveniently omits "either… or." As Senior Associate Justice Reynato S. Puno pointed
out during the oral arguments, the use of the disjunctive "either… or" denotes restriction.57

According to the Penguin Dictionary, the word "either" may be used as (1) an adjective or (2) a pronoun or (3) a conjunction or (4) an adverb. As an adjective, the
word "either" means (1) any one of two; one or the other; or (2) one and the other; each. As a pronoun, the word "either" means the one or the other. As
a conjunction, the word "either" is used before two or more sentence elements of the same class or function joined usually by "or" to indicate what
immediately follows is the first of two or more alternatives. Lastly, as an adverb, "either" is used for emphasis after a negative or implied negation (i.e. for
that matter or likewise). The traditional rule holds that "either" should be used only to refer to one of two items and that "any" is required when more than two
items are involved.58 However, modern English usage has relaxed this rule when "either" is used as a conjunction.59 Thus, the word "either" may indicate the
choice between two or more possibilities.

"Either" in paragraph 4, section 2, Article XII, is clearly used as a conjunction, joining two (and only two) concepts – financial and technical. The use of the word
"either" clearly limits the President to only two possibilities, financial and technical assistance. Other forms of assistance are plainly not allowed, since only the
words "financial and technical" follow the word "either."

In accordance with the intent of the provision, "agreements… involving either technical or financial" is deemed restrictive and not just descriptive. It is a condition,
a limitation, not a mere description.

The OSG's suggestion that the President may enter into "any" agreement, the scope of which may go beyond technical or financial assistance, with a foreign-
owned corporation, does not impress. The first paragraph of Section 2 limits contracts with Filipino citizens or corporations to co-production, joint venture or
production-sharing agreements. To subscribe to the OSG's theory would allow foreign-owned corporations participation in the country's natural resources equal
to, perhaps even greater than, that of Filipino citizens or corporations.

The OSG cites the Separate Opinion of Justice Jose C. Vitug, now retired, who proposed that, on the premise that the State itself may undertake the exploration,
development and utilization of natural resources, a foreign-owned corporation may engage in such activities in behalf of the State:

The Constitution has not prohibited the State from itself exploring, developing, or utilizing the country's natural resources, and, for this purpose, it
may, I submit, enter into the necessary agreements with individuals or entities in the pursuit of a feasible operation.

The fundamental law is deemed written in every contract. The FTAA entered into by the government and WMCP recognizes this vital principle. Thus,
two of the agreement's clauses provide:

"WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in Article XII, Section 2 that all lands of the public domain,
waters, minerals, coal, petroleum, and other natural resources are owned by the State, and that the exploration, development and
utilization of natural resources shall be under the full control and supervision of the State; and

"WHEREAS, the Constitution further provides that the Government may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large scale exploration, development and utilization of minerals."

The assailed contract or its provisions must then be read in conformity with abovementioned constitutional mandate. Hence, Section 10.2(a) of the
FTAA, for instance, which states that "the Contractor shall have the exclusive right to explore for, exploit, utilize, process, market, export and dispose
of all minerals and products and by-products thereof that may be derived or produced from the Contract Area and to otherwise conduct Mining
 Operations in the Contract Area in accordance with the terms and conditions hereof," must be taken to mean that the foregoing rights are to be
exercised by WMCP for and in behalf of the State and that WMCP, as the Contractor, would be bound to carry out the terms and conditions of the
agreement acting for and in behalf of the State. In exchange for the financial and technical assistance, inclusive of its services, the Contractor enjoys
an exclusivity of the contract and a corresponding compensation therefor.60 (Underscoring supplied).

This proposition must be rejected since it sanctions the circumvention, if not outright violation, of the fourth paragraph by allowing foreign corporations to render
more than technical or financial assistance on the pretext that it is an agent of the State. Quando aliquid prohibitur ex directo, prohibitur et per obliquum. What is
prohibited directly is prohibited indirectly.61 Further, the proposition lends itself to mischievous consequences. If followed to its logical conclusion, nothing would
stop the State from engaging the services of a foreign corporation to undertake in its behalf the exploration, development and utilization of all other natural
resources, not just "minerals, petroleum and mineral oils," even on a small scale, not just "large-scale."

The present Constitution restricts foreign involvement to large-scale activities because the idea is to limit the participation of foreign corporations only to areas
where they are needed.

MS. QUESADA. Going back to Section 3, the section suggests that:

The exploration, development, and utilization of natural resources … may be directly undertaken by the State, or it may enter into co-production, joint
venture or production-sharing agreement with … corporations or associations at least sixty percent of whose voting stock or controlling interest is
owned by such citizens.

Lines 25 to 30 on the other hand, suggest that in the large-scale exploration, development and utilization of natural resources, the President with the
concurrence of Congress may enter into agreements with foreign-owned corporations even for technical or financial assistance.

I wonder if this first part of Section 3 contradicts the second part. I am raising this point for fear that foreign investors will use their
enormous capital resources to facilitate the actual exploitation or exploration, development and effective disposition of our natural
resources to the detriment of Filipino investors. I am not saying that we should not consider borrowing money from foreign sources. What
I refer to is that foreign interest should be allowed to participate only to the extent that they lend us money and give us technical
assistance with the appropriate government permit. In this way, we can insure the enjoyment of our natural resources by out people.

MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to participate. It is only technical or
financial assistance – they do not own anything – but on conditions that have to be determined by law with the concurrence of Congress. So, it is
very restrictive.

If the Commissioner will remember, this removes the possibility for service contracts which we said yesterday were avenues used in the
previous regime to go around the 60-40 requirement.62 (Emphasis and underscoring supplied)

The intent is to allow Filipinos to benefit from Filipino resources.

MR. DAVIDE. May I be allowed to explain the proposal?

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

MR. DAVIDE. It will not take me three minutes.

The Commission had just approved the Preamble. In the Preamble we clearly sated there that the Filipino people are sovereign and that one of the
objectives for the creation or establishment of a government is to conserve and develop the national patrimony. The implication is that the national
patrimony or our natural resources are exclusively reserved for the Filipino people. No alien must be allowed to enjoy, exploit and develop
our natural resources. As a matter of fact, that principle proceeds from the fact that our natural resources are gifts from God to the
Filipino people and it would be a breach of that special blessing from God if we will allow aliens to exploit our natural resources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the aliencorporations but only for them to ren
der financial or technical assistance. It is not for them to enjoyour natural resources. Madam President, our natural resources are depleting;
our population is increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources, there will be no
more natural resources for the next generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy
to a certain extent the exploitation of our natural resources, and we became victims of foreign dominance and control. The aliens are interested in
coming to the Philippines because they would like to enjoy the bounty of nature exclusively intended for the Filipinos by God.

And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to preserve and develop the national patrimony
for the sovereign Filipino people and for the generations to come," we must at this time decide once and for all that our natural resources must be
reserved only to Filipino citizens.

Thank you.63 (Emphasis and underscoring supplied)

The intent loses all significance if foreign-owned corporations are likewise allowed to participate even in small or medium-scale ventures.

Thus, in keeping with the clear intent and rationale of the Constitution, financial or technical assistance by foreign corporations are allowable only where there is
no Filipino or Filipino-owned corporation (including corporations at least 60% of the capital of which are owned by Filipinos) which can provide the same or similar
assistance.

To reiterate, the over-arching letter and intent of the Constitution is to reserve the exploration, development and utilization of natural resources to Filipinos.

The justification for foreign involvement in the exploration, development and utilization of natural resources was that Filipino nationals or corporations may not
possess the necessary capital, technical knowledge or technology to mount a large scale undertaking. In the words of the "Draft of the 1986 U.P. Law
Constitution Project" (U.P. Law Draft) which was taken into consideration during the deliberation of the CONCOM:64

Under the proposed provision, only technical assistance or financial assistance agreements may be entered into, and only for large-scale
activities. These are contract forms which recognize and assert our sovereignty and ownership over natural resources since the foreign
entity is just a pure contractor and not a beneficial owner of our economic resources. The proposal recognizes the need for capital and
technology to develop our natural resources without sacrificing our sovereignty and control over such resources 65 x x x (Emphasis and
underscoring supplied)

Thus, the contention that Section 2, Article XII allows for any agreement for assistance by a foreign corporation "so long as such assistance requires specialized
knowledge or skills, and are related to the exploration, development and utilization of mineral resources" is erroneous.66

Where a foreign corporation does not offer financial or technological assistance beyond the capabilities of its Philippine counterparts, an FTAA with such a
corporation would be highly questionable. Similarly, where the scope of the undertaking does not qualify as "large scale," an FTAA with a foreign corporation is
equally suspect.

"Agreements" in Section 2, Article XII

do not include "service contracts."

This Court's ruling in the Decision under reconsideration that the agreements involving either technical or financial assistance contemplated by the 1987
Constitution are different and dissimilar from the service contracts under the 1973 Constitution must thus be affirmed. That there is this difference, as noted in the
Decision, is gathered from the change in phraseology.67 There was no need to employ strongly prohibitory language, like that found in the Bill of Rights.68 For the
framers to expressly prohibit "management and other forms of assistance" would be redundant inasmuch as the elimination of such phrase serves the same
purpose. The deletion is simply too significant to ignore and speaks just as profoundly – it is an outright rejection.

It bears noting that the fourth paragraph does not employ the same language adopted in the first paragraph, which specifically denominates the agreements that
the State may enter into with Filipinos or Filipino-owned corporations. The fourth paragraph does not state "The President may also enter into co-production,
joint venture, or production-sharing agreements with foreign-owned corporations for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils…." On the other hand, the fourth paragraph cannot be construed as a grant of boundless discretion to the President to enter
into any agreement regardless of the scope of assistance because it would result in a bias against Filipino citizens and corporations.

On this point, the following observations from the U.P. Law Draft on the odious and objectionable features of service contracts bear restating:

5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the 1973 Constitution as amended. This
1973 provision shattered the framework of nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the
Constitution"). Through the service contract, the 1973 Constitution had legitimized that which was prohibited under the 1935 constitution—
the exploitation of the country's natural resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy Law
were recognized as legitimate arrangements. Service contracts lodge exclusive management and control of the enterprise to the service
contractor, not unlike the old concession regime where the concessionaire had complete control over the country's natural resources,
having been given exclusive and plenary rights to exploit a particular resource and, in effect, having been assured of ownership of that
resource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles"). Service contracts, hence, are antithetical to the
principle of sovereignty over our natural resources, as well as the constitutional provision on nationalization or Filipinization of the exploitation of our
natural resources.69 (Emphasis supplied)

Furthermore, Professor Pacifico A. Agabin, a member of the working group of the U.P. Law Constitution Project and now counsel for intervenor PCM, stated in
his position paper:

Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership over our natural
resources. That is the only way we can exercise effective control over ournatural resources.

This should not mean complete isolation of the country's natural resources from foreign investment. Other contract forms which
are less derogatory to our sovereignty and control over natural resources – like technical assistance agreements, financial assistance
[agreements], co-production agreements, joint ventures, production-sharing [agreements] – could still be utilized and adopted without violating
constitutional provisions. In other words, we can adopt contract forms which recognize and assert our sovereignty and ownership over natural
 resources, and where the entity is just a pure contractor instead of the beneficial owner of our economic resources. 70 (Emphasis & underscoring
supplied),

indicating that the proposed financial or technical assistance agreements are contract forms different from the 1973 Constitution service contracts.

Thus the phrase "agreements with foreign-owned corporations involving either technical or financial assistance" in Section 2, Article XII of the Constitution must
be interpreted as restricting foreign involvement in the exploration, development and utilization of natural resources to large scale undertakings requiring
foreign financial or technicalassistance and not, as alleged by respondents, inclusive of any possible agreement under the sun.

The majority however argues that the deletion or omission from the 1987 Constitution of the term "service contracts" found in the 1973 Constitution does not
sufficiently prove the drafters' intent to exclude foreigners from management since such intent cannot be definitively and conclusively established. This argument
overlooks three basic principles of statutory construction.

First, casus omisus pro omisso habendus est.71 As recently as 2001 in Commission on Audit of the Province of Cebu v. Province of Cebu,72 this Court held that a
person, object or thing omitted from an enumeration must be held to have been omitted intentionally.73 That there is a difference between technical or financial
assistance contemplated by the 1987 Constitution and the service contracts under the 1973 Constitution is gathered from the omission of the phrase
"management or other forms of assistance."

As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on National Economy and Patrimony. If the
CONCOM intended to retain the concept of service contracts under the 1973 Constitution, it would have simply adopted the old terminology ("service
contracts") instead of employing new and unfamiliar terms ("agreements…involving either technical or financial assistance.") Such a difference
between the language of a provision in a revised constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose. If, as respondents suggest, the concept of "technical or financial assistance" agreements is identical to that
of "service contracts," the CONCOM would not have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the
first to a mere euphemism for the second render the change in phraseology meaningless.74 (Emphasis and underscoring supplied; citation omitted)

Second, expressio unius est exclusion alterius.75 The express mention of one person, thing, act, or consequence excludes all others.76

Third and lastly, expressium facit cessare tacitum.77 What is expressed puts an end to that which is implied.78 Since the constitutional provision, by its terms, is
expressly limited to financial or technical agreements, it may not, by interpretation or construction, be extended to other forms of assistance.

These three principles of statutory construction, derived from the well-settled principle of verba legis, proceed from the premise that the Constitutional
Commission would not have made specific enumerations in the provision if it had the intention not to restrict its meaning and confine its terms to those expressly
mentioned. And this Court may not, in the guise of interpretation, enlarge the scope of a constitutional provision and include therein situations not provided nor
intended by the framers. To do so would be to do violence to the very language of the Constitution, the same Constitution which this Court has sworn to uphold.

The majority counters, however, that service contracts were not de-constitutionalized since the deliberations of the members of the Constitutional Commission
conclusively show that they discussed agreements involving either technical or financial assistance in the same breath as service contracts and used the terms
interchangeably. This argument merely echoes that of private respondent WMCP which had already been addressed in this Court's Decision of January 27,
2004, (the Decision) viz:

While certain commissioners may have mentioned the term "service contracts" during the CONCOM deliberations, they may not have been
necessarily referring to the concept of service contracts under the 1973 Constitution. As noted earlier "service contracts" is a term that assumes
different meanings to different people. The commissioners may have been using the term loosely, and not in its technical and legal sense,
to refer, in general, to agreements concerning natural resources entered into by the Government with foreign corporations. These loose
statements do not necessarily translate to the adoption of the 1973 Constitution provision allowing service contracts.

It is true that, as shown in the earlier quoted portions of the proceedings in [the] CONCOM, in response to Sr. Tan's question, Commissioner Villegas
commented that, other than congressional notification, the only difference between "future" and "past" "service contracts" is the requirement of a
general law as there were no laws previously authorizing the same.79 However, such remark is far outweighed by his more categorical
statement in his exchange with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the
nation's natural resources – which was exactly what service contracts did – except to provide "technical or financial assistance."

In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the present charter prohibits service contracts.
Commissioner Gascon was not totally averse to foreign participation, but favored stricter restrictions in the form of majority congressional
concurrence. On the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and their objections may
be interpreted as votes against any foreign participation in our natural resources whatsoever.80(Emphasis and underscoring supplied; citations
omitted)

In fact, the opinion of Commissioner Nolledo in his textbook which is cited in this Court's January 27, 2004 Decision should leave no doubt as to the intention of
the framers to eliminate service contracts altogether.
 Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign investors (fully alien-owned) can NOT participate
in Filipino enterprises except to provide: (1) Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale
enterprises.

The intention of this provision, as well as other provisions on foreign investments, is to prevent the practice (prevalent in the Marcos government) of
skirting the 60/40 equation using the cover of service contracts.81

Next, the majority opinion asserts that if the framers had meant to ban service contracts altogether, they would have provided for the termination or pre-
termination of the existing service contracts.

There was no need for a constitutional provision to govern the termination or pre-termination of existing service contracts since the intention of the framers was to
apply the rule banning service contracts prospectively.

MR. DAVIDE. Under the proposal, I notice that except for the lands of the public domain, all other natural resources cannot be alienated and in
respect to lands of the public domain, private corporations with the required ownership by Filipino citizens can only lease the same. Necessarily,
insofar as other natural resources are concerned, it would only be the State which can exploit, develop, explore and utilize the same. However, the
State may enter into a joint venture, coproduction (sic) or production-sharing. Is that not correct?

MR. VILLEGAS. Yes.

MR. DAVIDE. Consequently, henceforth upon the approval of this Constitution, no timber or forest concessions, permits or authorization can be
exclusively granted to any citizen of the Philippines nor to any corporation qualified to acquire lands of the public domain?

MR. VILLEGAS. Would Commissioner Monsod like to comment on that? I think his answer is "yes."

MR. DAVIDE. So, what will happen now to licenses or concessions earlier granted by the Philippine government to private corporations or to Filipino
citizens? Would they be deemed repealed?

MR. VILLEGAS. This is not applied retroactively. They will be respected.

MR. DAVIDE. In effect, they will be deemed repealed?

MR. VILLEGAS. No.82 (Emphasis and underscoring supplied)

Besides, a service contract is only a license or privilege, not a contract or property right which merits protection by the due process clause of the Constitution.
Thus in the landmark case of Oposa v. Factoran, Jr,83 this Court held:

xx
x Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not acontract, property or a property right prote
cted by the due process clause of the Constitution. In Tan vs. Director of Forestry, this Court held:

"x x x A timber license is an instrument by which the State regulates the utilization and disposition of forest resources to the end that public welfare is
promoted. A timber license is not a contract within the purview of the due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this case.

'A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal,
state, or municipal, granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a
vested right; nor is it taxation' Thus, this Court held that the granting of license does not create irrevocable rights, neither is it
property or property rights."

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co, Inc. vs. Deputy Executive Secretary:

"x x x Timber licenses, permits and license agreements are the principal instruments by which the State regulates the utilization and disposition of
forest resources to the end that public welfare is promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State
to qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products
therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Thus,
they are not deemed contracts within the purview of the due process clause."

Since timber licenses are not contracts, the non-impairment clause which reads:
 "SEC 10. No law impairing, the obligation of contracts shall be passed."

cannot be invoked.

In the second place, even if it is to be assumed that the same are contracts, the instant case does not involve a law or even an executive issuance declaring the
cancellation or modification of existing timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting further that a law has
actually been passed mandating cancellations or modifications, the same cannot still be stigmatized as a violation of the non-impairment clause. This is because
by its very nature and purpose, such a law could have only been passed in the exercise of the police power of the state for the purpose of advancing the right of
the people to a balanced and healthful ecology, promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler Corp., this Court stated:

"The freedom of contract, under our system of government, is not meant to be absolute. The same is understood to be subject to reasonable
legislative regulation aimed at the promotion of public health, moral, safety and welfare. In other words, the constitutional guaranty of non-
impairment of obligations of contract is limited by the exercise of the police power of the State, in the interest of public health, safety,
moral and general welfare."

The reason for this is emphatically set forth in Nebia vs. New York quoted in Philippine American Life Insurance Co. vs. Auditor General, to wit:

"Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The
general rule is that both shall be free of governmental interference. But neither property rights nor contract rights are absolute; for government
cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally
fundamental with the private right is that of the public to regulate it in the common interest."

In short, the non-impairment clause must yield to the police power of the state.84 (Emphasis and underscoring supplied; citations omitted)

The majority however argues that Oposa is not applicable since the investment in a logging concession is not as substantial an investment as that of a large
scale mining contractor. Such a contention is patently absurd. Taken to its logical conclusion, the majority would have this Court exempt firms in highly capital
intensive industries from the exercise of police power simply to protect their investment. That would mean that the legislature would, for example, be powerless to
revoke or amend legislative franchises of public utilities, such as power and telecommunications firms, which no doubt require huge sums of capital.

The majority opinion then proffers that the framers of the Constitution were pragmatic enough to know that foreign entities would not enter into such agreements
without requiring arrangements for the protection of their investments, gains, and benefits or other forms of conditionalities. It goes on to argue that "by specifying
such 'agreements involving assistance,' the framers of the Constitution necessarily gave implied assent to everything that these agreements necessarily entailed;
or that could reasonably be deemed necessary to make them tenable and effective, including management authority with respect to the day-to-day operations of
the enterprise and measures for the protection of the interests of the foreign corporation."

The deliberations of the Constitutional Commission, however, do not support the immediately foregoing contentions.

MR. TINGSON. Within the purview of what the Gentleman is saying, would he welcome friendly foreigners to lend us their technical expertise in
helping develop our country?

MR. GARCIA. Part 2 of this proposal, Filipino control of the economy, in fact, says that the entry of foreign capital, technology and business
enterprises into the national economy shall be effectively regulated to ensure the protection of the interest of our people.

In other words, we welcome them but on our own terms. This is very similar to our position on loans. We welcome loans as long as they
are paid on our own terms, on our ability to pay, not on their terms.For example, the case of Peru is instructive. They decided first to develop
and grow, and were willing to pay only 10 percent of their foreign exchange earnings. That, I think, is a very commendable position given the
economic situation of a country such as Peru. The Philippines is a similar case, especially when we realize that the foreign debt was made by a
government that was bankrupt in its desire to serve the people.

MR. MONSOD. Mr. Vice-President, I think we have to make a distinction that it is not really realistic to say that we will borrow on our own terms.
Maybe we can say that we inherited unjust loans, and we would like to repay these on terms that are not prejudicial to our own growth. But the
general statement that we should only borrow on our own terms is a bit unrealistic.

MR. GARCIA. Excuse me. The point I am trying to make is that we do not have to borrow. If we have to borrow, it must be on our terms. In
other words, banks do not lend out of the goodness of their hearts. Banks lend to make a profit.

MR. TINGSON. Mr. Vice-President, I think the trouble in our country is that we have forgotten the scriptural injunction that the borrower
becomes a slave to the lender. That is the trouble with our country; we have borrowed and borrowed but we forget that we become slaves
to those who lend us.85 (Emphasis and underscoring supplied)

By public respondent's information, "[t]he potential mining wealth in the Philippines is estimated at $840 billion or P47 trillion or 10 times our annual GDP, and 15
times our total foreign debt of $56 billion. Globally, the Philippines ranks third in gold, fourth in copper, fifth in nickel and sixth in chromite."86 With such high
concentration of valuable minerals coupled with the Filipino people's willingness to protect and preserve ownership of their natural resources at the expense of
retarding or postponing the exploration, development, and utilization of these resources, the Philippines clearly has the superior bargaining position and should
be able to dictate its terms. No foreign entity should be able to bully the Philippines and intimidate the Government into conceding to certain conditions
incompatible with the Constitution.

Extent of foreign corporation's

participation in the management of an FTAA

Foreign-owned corporations, however, are not precluded from a limited participation in the management of the exploration, development and utilization of natural
resources.

Some degree of participation by the contractor in management, to assure the proper application of its investment and/or to facilitate the technical assistance and
transfer of technology may be unavoidable and not necessarily undesirable. Thus, there is merit in respondent WMCP's contention, to which even petitioners
conceded during the oral arguments, that a foreign-owned corporation is not prevented from having limited participation in the management assistance or
participation so long as it is incidental to the financial or technical assistance being rendered:

JUSTICE PANGANIBAN:

Alright. Going back to verba legis, you say that the FTAA's are limited to financial or technical assistance only.

ATTY. LEONEN:

Either financial or technical assistance, yes your Honor.

ATTY. LEONEN:

Full management, your Honor.

JUSTICE PANGANIBAN:

Full management is excluded.

ATTY. LEONEN:

Yes your Honor.

JUSTICE PANGANIBAN:

But incidental management to protect the financial or technical assistance should be allowed.

ATTY. LEONEN:

If a mining company would get the technical expertise to bring in drilling rig your Honor, and that is the sole contract, then we
cannot imagine a situation were it is not the technicians that we will do the actual drilling your Honor, but for the entire
contract area your Honor as it is now in the FTAA then I think that would be different.

JUSTICE PANGANIBAN:

Yes I agree. In other words, the words financial or technical may include parts of management, isn't it? Its reasonable in other
words if I may re state it, it's reasonable to expect that entities,foreign entities who don't know anything about this country, well that
is an exaggeration, who know not too much about this country, would not just extend money, period. They would want to have a say a
little bit of say management and sometimes even in auditing of the company, isn't it reasonable to expect.

ATTY. LEONEN:

I would qualify my answer your Honor with management of what your Honor. It means if it's for development and utilization of the
minerals.

JUSTICE PANGANIBAN:
 No.

ATTY. LEONEN:

Yes your Honor, but if it's management of sub-contracted activity like a symposium then that would be all right your Honor. Mining
companies do symposiums also.

JUSTICE PANGANIBAN:

Management to protect their own investments, whether it be technical or financial.

ATTY. LEONEN:

Their investment, your Honor, which cannot be the entire mining operation from my perspective, your Honor.

JUSTICE PANGANIBAN:

Yes I agree because there is the Constitutional provision of control and supervision, full control and supervision to the State.

ATTY. LEONEN:

And Filipino corporations your Honor.

JUSTICE PANGANIBAN:

Or even Filipino corporation, the full control and supervision is still with the State.

ATTY. LEONEN:

Yes your Honor.

JUSTICE PANGANIBAN:

Even with Filipino citizens being the contractors, full control and supervision is still with the State.

ATTY. LEONEN:

Yes, your Honor.

JUSTICE PANGANIBAN:

In all these contract full control and supervision is with the State.

ATTY. LEONEN:

Yes your Honor and we can only hope that the State is responsive to the people we represent.

xxx

JUSTICE PANGANIBAN:

Yes, yes. Can it also not be said reading that the Constitution that the safeguards on contracts with foreigners was left by the
Constitutional Commission or by Constitution itself to Congress to craft out.

ATTY. LEONEN:
 I can accept your Honor that there was a province of power that was given to Congress, but it was delimited by the fact, that they
removed the word management and other arrangement and put the words either financial and technical.

JUSTICE PANGANIBAN:

Yes but you just admitted earlier that these two words would also include some form of management or other things to protect
the investment or the technology being put by the foreign company.

ATTY. LEONEN:

Yes your Honor for so long as it's not the entire.

JUSTICE PANGANIBAN:

Yes, yes provided the State does not lose control and supervision, isn't it?

ATTY. LEONEN:

Yes your Honor.87 (Emphasis and underscoring supplied)

Thus, the degree of the foreign corporation's participation in the management of the mining concern is co-extensive with and strictly limited to the degree of
financial or technical assistance extended. The scope of the assistance defines the limits of the participation in management.

However, to whatever extent the foreign corporation's incidental participation in the management of the mining concern may be, full control and supervision,
sufficient to protect the interest of the Filipino people, over all aspects of mining operations must be retained by the Government. While this does not
necessarily mean that the Government must assume the role of a back seat driver, actively second guessing every decision made by the foreign corporation, it
does mean that sufficient safeguards must be incorporated into the FTAA to insure that the people's beneficial interest in their natural resources are protected at
all times.

Moreover, the foreign contractor's limited participation in management, as the Court held in its Decision, should not effectively grant foreign-owned
corporations beneficial ownership over the natural resources.

The opinion, submitted by the OSG, of Bernardo M. Villegas, who was a Member of the Constitutional Commission and Chair of its Committee on National
Economy and Patrimony, is not inconsistent with the foregoing conclusion. Commissioner Villegas opined:

The phrase "service contracts" contained in the 1973 Constitution was deleted in the 1987 Constitution because there was the general perception
among the Concom members that it was used during the Marcos regime as an instrument to circumvent the 60-40 limit in favor of Filipino ownership.
There was also the impression that the inclusion of the word "management" in the description of the service contract concept in the 1973
Constitution was tantamount to ownership by the foreign partner.

The majority of the Concom members, however, recognized the vital need of the Philippine economy for foreign capital and technology in the
exploitation of natural resources to benefit Filipinos, especially the poor in the countryside where the mining sites are located. For this reason, the
majority voted for "agreements involving financial or technical assistance" or FTAA.

I maintain that the majority who voted Yes to this FTAA provision realized that an FTAA involved more than borrowing money and/or buying
technology from foreigners. If an FTAA involved only a loan and/or purchase of technology, there would not have been a need for a constitutional
provision because existing laws in the Philippines more than adequately regulate these transactions.

It can be deducted from the various comments of both those who voted Yes and No to the FTAA provision that an FTAA also involves the
participation in management of the foreign partner. What was then assumed in 1986 is now even clearer in the way business organizations have
evolved in the last decade or so under the modern concept of good governance. There are numerous stakeholders in a business other than the
stockholders or equity owners who participate actively in the management of a business enterprise. Not only do creditors and suppliers demand
representation in boards of directors. There are also other so-called independent directors who actively participate in management.

In summary, the word "management" was deleted from the description of the FTAA because some CONCOM delegates identified
management with beneficial ownership. In order not to prolong the debate, those in favor of the FTAA provision agreed not to include the word
management. But from what has been discussed above, it was clear in the minds of those who voted YES that the FTAA included more than just
a loan and/or purchase of technology from foreigners but necessarily allowed the active participation of the foreign partners in the
management of the enterprise engaged in the exploitation of natural resources.88 (Emphasis supplied).
Under no circumstances should the execution of an FTAA be tantamount to the grant of a roving commission whereby a foreign contractor is given blanket and
unfettered discretion to do whatever it deems necessary – denude watersheds, divert sources of water, drive communities from their homes – in pursuit of its
pecuniary goals.

Nor should the scope of an FTAA be broadened to include "managerial assistance." As discussed extensively in the Decision,89 "managerial assistance" – a
euphemism by which full control and beneficial ownership of natural resources were vested in foreigners – is part and parcel of the martial law era "service
contracts" and the old "concession regime" which the 1987 Constitution has consigned to the dust bin of history.

The elimination of the phrase "service contracts" effectuates another purpose. Intervenor PCM agrees that the Constitution tries to veer away from the old
concession system,90 which vested foreign-owned corporations control and beneficial ownership over Philippine natural resources. Hence, the 1987 Constitution
also deleted the provision in the 1935 and 1973 Constitutions authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation,
development, or utilization of natural resources.91

Prof. Agabin had no flattering words for the concession system, which he described in his position paper as follows:

Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within
a given area. Thus, the concession amounts to a complete control by the concessionaire over the country's natural resource, for it is
given exclusive and plenary rights to exploit a particular resource and is in effect assured ownership of that resource at the point of
extraction. In consideration for the right to exploit a natural resource, the concessionaire either pays rent or royalty which is a fixed percentage of
the gross proceeds. But looking beyond the legal significance of the concession regime, we can see that there are functional implications which
give the concessionaire great economic power arising from its exclusive equity holding. This includes, first, appropriation of the returns of
the undertaking, subject to a modest royalty; second, exclusive management of the project; third, control of production of the natural
resource, such as volume of production, expansion, research and development; and fourth, exclusive responsibility for downstream
operations, like processing, marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the natural
resource being exploited, it has been shorn of all elements of control over such natural resource because of the exclusive nature of the
contractual regime of the concession. The concession system, investing as it does ownership of natural resources, constitutes a consistent
inconsistency with the principle embodied in our Constitution that natural resources belong to the State and shall not be alienated, not to mention the
fact that the concession was the bedrock of the colonial system in the exploitation of natural resources.92 (Underscoring in the original)

Vestiges of the concession system endured in the service contract regime, including the vesting on the contractor of the management of the enterprise, as well
as the control of production and other matters, such as expansion and development. 93 Also, while title to the resource discovered was nominally in the name of
the government, the contractor had almost unfettered control over its disposition and sale.94

The salutary intent of the 1987 Constitution notwithstanding, these stubborn features of the concession system persist in the Mining Act of 1995. The statute
allows a foreign-owned corporation to carry out mining operations,95which includes the conduct of exploration,96 development97 and utilization98 of the
resources.99 The same law grants foreign contractors auxiliary mining rights, i.e., timber rights,100 water rights,101 the right to possess explosives,102 easement
rights,103 and entry into private lands and concession areas.104 These are the very same rights granted under the old concession and service contract
systems.

The majority opinion proposes two alternative standards of Government control over FTAA operations. Thus, in the opening paragraphs it states:

Full control is not anathema to day-to-day management by the contractor, provided that the State retains the power to direct overall
strategy; and to set aside, reverse, or modify plans and actions of the contractor. The idea of full control is similar to that which is
exercised by the board of directors of a private corporation x x x (Emphasis and underscoring supplied)

However, the majority opinion subsequently substantially reduces the scope of its definition of "control" in this wise:

The concept of control adopted in Section 2 of Article XII must be taken to mean less than dictatorial, all-encompassing control; but nevertheless
sufficient to give the State the power to direct, restrain, regulate and govern the affairs of the extractive enterprises. Control by the State
may be on a macro level, through the establishment of policies, guidelines, regulations, industry standards and similar measures that
would enable the government to control the conduct of affairs in various enterprises and restrain activities deemed not desirable or
beneficial. (Emphasis and underscoring supplied; citations omitted; italics in the original)

This second definition is apparently analogous to regulatory control which the Government is automatically presumed to exercise over all business activities by
virtue of the Police Power. This definition of the "full control and supervision" mandated by Section 2, Article XII of the Constitution strikes a discordant and
unconvincing chord as it gives no effect to the mandated "full" character of the State's control but merely places it at par with any other business activity or
industry regulated by the Government.

But even under this second and more limited concept of regulatory control, the provisions of the Mining Act pertaining to FTAAs do not pass the test of
constitutionality.

To be sure, the majority opinion cites a litany of documents, plans, reports and records which the foreign FTAA contractor is obliged to submit or make available
under the Mining Act and DAO 96-40. However, the mere fact that the Act requires the submission of work programs and minimum expenditure
commitments105 does not provide adequate protection. These were also required under the old concession 106 and service contract107 systems, but did not serve
to place full control and supervision of the country's natural resources in the hands of the Government.

Conspicuously absent from the Mining Act are effective means by which the Government can protect the beneficial interest of the Filipino people in the
exploration, development and utilization of their resources. It appears from the provisions of the Mining Act that the Government, once it has determined that a
foreign corporation is eligible for an FTAA and enters into such an agreement, has very little say in the corporation's actual operations.

Thus, when pressed to identify the mechanism by which the Government can administratively compel compliance with the foregoing requirements as well as the
other terms and conditions of the Mining Act, DAO 96-40 and DAO 99-56, the majority can only point to the cancellation of the agreement(s) and/or the incentives
concerned under Section 95 to 99 of the Mining Act:108

CHAPTER XVII

Ground for Cancellation, Revocation, and Termination

SECTION 95. Late or Non-filing of Requirements. — Failure of the permittee or contractor to comply with any of the requirements provided in this Act
or in its implementing rules and regulations, without a valid reason, shall be sufficient ground for the suspension of any permit or agreement provided
under this Act.

SECTION 96. Violation of the Terms and Conditions of Permit or Agreements. — Violation of the terms and conditions of the permits or agreements
shall be a sufficient ground for cancellation of the same.

SECTION 97. Non-payment of Taxes and Fees. — Failure to pay taxes and fees due the Government for two (2) consecutive years shall cause the
cancellation of the exploration permit, mineral agreement, financial or technical assistance agreement and other agreements and the re-opening of
the area subject thereof to new applicants.

SECTION 98. Suspension or Cancellation of Tax Incentives and Credits. — Failure to abide by the terms and conditions of tax incentives and credits
shall cause the suspension or cancellation of said incentives and credits.

SECTION 99. Falsehood or Omission of Facts in the Statement — All statements made in the exploration permit, mining agreement and financial or
technical assistance agreement shall be considered as conditions and essential parts thereof and any falsehood in said statements or omission of
facts therein which may alter, change or affect substantially the facts set forth in said statements may cause the revocation and termination of the
exploration permit, mining agreement and financial or technical assistance agreement.

An examination of the foregoing fails to impress. For instance, how does cancellation of the FTAA under Section 97 for nonpayment of taxes and fees
(comprising the "basic share" of the government) for two consecutive years facilitate the collection of the unpaid taxes and fees? How does it preserve and
protect the beneficial interest of the Filipino people? For that matter, how does the DENR administratively compel compliance with the anti-pollution and other
requirements?109 If minerals are found to have been sold overseas at less than the most advantageous market prices, how does the DENR obtain satisfaction
from the offending foreign FTAA contractor for the difference?

In sum, the enforcement provisions of the Mining Act and its Implementing Rules are scarcely effective, and, worse, perceptibly less than the analogous
provisions of other Government Regulatory Agencies.

For instance, the Bangko Sentral Ng Pilipinas, the Central Monetary Authority mandated by the Constitution to exercise supervision (but not full control and
supervision) over banks,110 is empowered to (1) appoint a conservator with such powers as shall be deemed necessary to take charge of the assets, liabilities
and management of a bank or quasi-bank;111 (2) under certain well defined conditions, summarily and without need for prior hearing forbid a bank from doing
business in the Philippines and appoint the Philippine Deposit Insurance Corporation as receiver;112 and (3) impose a number of administrative sanctions such as
(a) fines not to exceed P30,000 per day for each violation, (b) suspension of a bank's rediscounting privileges, (c) suspension of lending or foreign exchange
operations or authority to accept new deposits or make new investments, (d) suspension of interbank clearing privileges, and (e) revocation of quasi-banking
license.113

Similarly, to give effect to the Constitutional mandate to afford full protection to labor,114 the Labor Code115 grants the Secretary of Labor the power to (1) issue
compliance orders to give effect to the labor standards provisions of the Code;116 and (2) enjoin an intended or impending strike or lockout by assuming
jurisdiction over a labor dispute in an industry determined to be indispensable to the national interest.117

Under the Tax Code, the Commissioner of Internal Revenue has the power to (1) temporarily suspend the business operations of a taxpayer found to have
committed certain specified violations;118 (2) order the constructive distraint of the property of a taxpayer;119 and (3) impose the summary remedies of distraint of
personal property and or levy on real property for nonpayment of taxes.120

In comparison, the Mining Act and its Implementing Rules conspicuously fail to provide the DENR with anything remotely analogous to the foregoing regulatory
and enforcement powers of other government agencies.
In fine, the provisions of the Mining Act and its Implementing Rules give scarcely more than lip service to the constitutional mandate for the State to
exercise full control and supervision over the exploration, development and utilization of Philippine Natural Resources. Evaluated as a whole and in
comparison with other government agencies, the provisions of the Mining Act and its Implementing Rules fail to meet even the reduced standard of
effective regulatory control over mining operations. In effect, they abdicate control over mining operations in favor of the foreign FTAA contractor.
For this reason, the provisions of the Mining Act, insofar as they pertain to FTAA contracts, must be declared unconstitutional and void.

The majority opinion vigorously asserts that it is the Chief Executive who exercises the power of control on behalf of the State.

This only begs the question. How does President effectively enforce the terms and conditions of an FTAA? What specific powers are subsumed within the
constitutionally mandated "power of control?" On these particular matters the majority opinion, like the Mining Act, is silent.

Provisions of the Mining Act pertaining to FTAAs

void for conveying beneficial ownership of
Philippine mineral resources to foreign contractors

An examination of the Mining Act reveals that the law grants the lion's share of the proceeds of the mining operation to the foreign corporation. Thus the second
and third paragraphs of Section 81 of the law provide:

SECTION 81. Government Share in Other Mineral Agreements. — x x x

The Government share in financial or technical assistance agreement shall consist of, among other things, the contractor's corporate income
tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the
said foreign stockholder in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance
agreement contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive. (Emphasis
supplied)

Under the foregoing provisions, the Government does not receive a share in the proceeds of the mining operation. All it receives are taxes and fees from
the foreign corporation, just as in the old concession121 and service contract122 regimes. The collection of taxes and fees cannot be considered a return on the
resources mined corresponding to beneficial ownership of the Filipino people. Taxes are collected under the State's power to generate funds to finance the
needs of the citizenry and to advance the common weal.123 They are not a return on investment or property. Similarly, fees are imposed under the police power
primarily for purposes of regulation.124Again, they do not correspond to a return on investment or property.

Even more galling is the stipulation in the above-quoted third paragraph that the Government's share (composed only of taxes and fees) shall not be collected
until after the foreign corporation has "fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive." In one breath this
provision virtually guarantees the foreigner a return on his investment while simultaneously leaving the Government's (and People's) share to chance.

It is, therefore, clearly evident that the foregoing provisions of the Mining Act effectively transfer the beneficial ownership over the resources covered by the
agreement to a foreigner, in contravention of the letter and spirit of the Constitution.

Consequently, the assailed Decision inescapably concluded that:

The underlying assumption in all these provisions is that the foreign contractor manages the mineral resources, just like the foreign contractor in a
service contract.125

The Mining Act gives the foreign-owned corporation virtually complete control, not mere "incidental" participation in management, over the entire
operations.

The law is thus at its core a retention of the concession system. It still grants beneficial ownership of the natural resources to the foreign contractor
and does little to affirm the State's ownership over them, and its supervision and control over their exploration, development and utilization.

While agreeing that the Constitution vests the beneficial ownership of Philippine minerals with the Filipino people, entitling them to gains, rewards and
advantages generated by these minerals, the majority opinion nevertheless maintains that the Mining Act, as implemented by DENR Administrative Order 99-
56126 (DAO 99-56), is constitutional as, so it claims, it does not "convey beneficial ownership of any mineral resource or product to any foreign FTAA contractor."
The majority opinion adds that the State's share, as expounded by DAO 99-56, amounts to "real contributions to the economic growth and general welfare of the
country," at the same time allowing the contractor to recover "a reasonable return on its investments in the project."

Under DAO 99-56, the "government's share" in an FTAA is divided into (1) a "basic government share" composed of a number of taxes and fees127 and (2) an
"additional government share"128 computed according to one of three possible methods – (a) a 50-50 sharing in the cumulative present value of cash flows,129 (b)
a profit related additional government share130 or (c) an additional share based on the cumulative net mining revenue131 – at the option of the contractor.
Thus, the majority opinion claims that the total government share, equal to the sum of the "basic government share" and the "additional government share," will
achieve "a fifty-fifty sharing – between the government and the contractor – of net benefits from mining."

This claim is misleading and meaningless for two reasons:

First, as priorly discussed, the taxes and fees which make up the government's "basic share" cannot be considered a return on the resources mined
corresponding to the beneficial ownership of the Filipino people. Again, they do not correspond to a return on investment or property.

Second, and more importantly, the provisions of the Mining Act effectively allow the foreign contractor to circumvent all the provisions of DAO 99-56,
including its intended "50-50 sharing" of the net benefits from mining, and reduce government's total share to as low as TWO percent (2%) of the
value of the minerals mined.

The foreign contractor can do this because Section 39 of the Mining Act allows it to convert its FTAA into a Mineral Production-Sharing Agreement (MPSA) by
the simple expedient of reducing its equity in the corporation undertaking the FTAA to 40%:

SECTION 39. Option to Convert into a Mineral Agreement. — The contractor has the option to convert the financial or technical assistance
agreement to a mineral agreement at any time during the term of the agreement, if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, after proper notice to the Secretary as provided for under the implementing rules and regulations:
Provided, That the mineral agreement shall only be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation, partnership, association, or
cooperative. Upon compliance with this requirement by the contractor, the Secretary shall approve the conversion and execute the mineral
production-sharing agreement.(Emphasis and underscoring supplied)

And under Section 80 of the Mining Act, in connection with Section 151(a) of the National Internal Revenue Code 132(Tax Code), the TOTAL GOVERNMENT
SHARE in an MPSA is ONLY TWO PERCENT (2%) of the value of the minerals. Section 80 of the Mining Act provides:

SECTION 80. Government Share in Mineral Production Sharing Agreement. — The total government share in a mineral production sharing
agreement shall be the excise tax on mineral products as provided inRepublic Act No. 7729, amending Section 151(a) of the National
Internal Revenue Code, as amended. (Emphasis supplied)

While Section 151(a) of the Tax Code reads:

Sec. 151. Mineral Products. — (a) Rates of Tax. — There shall be levied, assessed and collected on mineral, mineral products and quarry
resources, excise tax as follows:

(1) On coal and coke, a tax of ten pesos (P10.00) per metric ton.

(2) On non-metallic minerals and quarry resources, a tax of two percent (2%) based on the actual market value of the annual gross output
thereof at the time of removal, in the case of those locally extracted or produced; or the value used by the Bureau of Customs in determining tariff
and customs duties, net of excise tax and value-added tax, in the case of importation.

(3) On all metallic minerals, a tax based on the actual market value of the gross output thereof at the time of removal, in the case of those locally
extracted or produced; or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax,
in the case of importation, in accordance with the following schedule:

(a) Copper and other metallic minerals:

(i) On the first three (3) years upon the effectivity of this Act, one percent (1%);

(ii) On the fourth and fifth year, one and a half percent (1 1/2%); and

(iii) On the sixth year and thereafter, two percent (2%)

(b) Gold and chromite, two percent (2%)

(4) On indigenous petroleum, a tax of fifteen percent (15%) of the fair international market price thereof, on the first taxable sale, such tax to be paid
by the buyer or purchaser within 15 days from the date of actual or constructive delivery to the said buyer or purchaser. The phrase 'first taxable
sale, barter, exchange or similar transaction' means the transfer of indigenous petroleum in its original state to a first taxable transferee. The fair
international market price shall be determined in consultation with an appropriate government agency.
 For the purpose of this subsection, 'indigenous petroleum' shall include locally extracted mineral oil, hydrocarbon gas, bitumen, crude asphalt,
mineral gas and all other similar or naturally associated substances with the exception of coal, peat, bituminous shale and/or stratified mineral
deposits. (Emphasis supplied)

By taking advantage of the foregoing provisions and selling 60% of its equity to a Filipino corporation (such as any of the members of respondent-in-intervention
Philippine Chamber of Mines) a foreign contractor can easily reduce the total government's share (held in trust for the benefit of the Filipino People) in the
minerals mined to a paltry 2% while maintaining a 40% beneficial interest in the same.

What is more, if the Filipino corporation acquiring the foreign contractor's stake is itself 60% Filipino-owned and 40% foreign-owned (a "60-40" Filipino
corporation such as Sagittarius Mines, the putative purchaser of WMC's 100% equity in WMCP), then the total beneficial interest of foreigners in the mineral
output of the mining concern would constitute a majority of 64% 133 while the beneficial ownership of Filipinos would, at most,134 amount to 36% – 34% for the
Filipino stockholders of the 60-40 Filipino corporation and 2% for the Government (in trust for the Filipino People).

The foregoing scheme, provided for in the Mining Act itself, is no different and indeed is virtually identical to that embodied in Section 7.9 of the WMCP
FTAA which the majority opinion itself found to be "without a doubt grossly disadvantageous to the government, detrimental to the interests of the
Filipino people, and violative of public policy:"

x x x While Section 7.7 gives the government a 60 percent share in the net mining revenues of WMCP from the commencement of commercial
production; Section 7.9 deprives the government of part or all of the said 60 percent. Under the latter provision, should WMCP's foreign
shareholders – who originally owned 100 percent of the equity – sell 60 percent or more of its outstanding capital stock to a Filipino citizen or
corporation, the State loses its right to receive its 60 percent share in net mining revenues under Section 7.7.

Section 7.9 provides

The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be reduced by 1percent of Net Mining Revenues
for every 1percent ownership interest in the Contractor (i.e., WMCP) held by a Qualified Entity.

Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9 without any offsetting compensation to the
State. Thus, in reality, the State has no vested right to receive any income from the FTAA for the exploration of its mineral resources.
Worse, it would seem that what is given to the State in Section 7.7 is by mere tolerance of WMCP's foreign stockholders, who can at any
time cut off the government's entire 60 percent share. They can do so by simply selling 60 percent of WMCP's outstanding stock to a
Philippine citizen or corporation. Moreover, the proceeds of such sale will of course accrue to the foreign stockholders of WMCP, not to
the State.

The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-owned and 40 percent foreign-owned will still trigger
the operation of Section 7.9. Effectively, the State will lose its right to receive all 60 percent of the net mining revenues of WMCP;
and foreign stockholders will own beneficially up to 64 percent of WMCP, consisting of the remaining 40percent foreign equity therein,
plus the 24 percent pro-rata share in the buyer-corporation.

xxx

At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining revenues of WMCP without any offset or
compensation whatsoever. It is possible that the inclusion of the offending provision was initially prompted by the desire to provide some
form of incentive for the principal foreign stockholder in WMCP to eventually reduce its equity position and ultimately divest itself thereof
in favor of Filipino citizens and corporations. However, as finally structured, Section 7.9 has the deleterious effect of depriving government
of the entire 60 percent share in WMCP's net mining revenues, without any form of compensation whatsoever. Such an outcome is
completely unacceptable.

The whole point of developing the nation's natural resources is to benefit the Filipino people, future generations included. And the State as sovereign
and custodian of the nation's natural wealth is mandated to protect, conserve, preserve and develop that part of the national patrimony for their
benefit. Hence, the Charter lays great emphasis on "real contributions to the economic growth and general welfare of the country" [Footnote 75 of
the Dissent omitted] as essential guiding principles to be kept in mind when negotiating the terms and conditions of FTAAs.

xxx

Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues (provided for in Section 7.7) without anything in
exchange. Moreover, this outcome constitutes unjust enrichment on the part of local and foreign stockholders of WMCP. By their mere
divestment of up to 60 percent equity in WMCP in favor of Filipino citizens and/or corporations, the local and foreign stockholders get a windfall.
Their share in the net mining revenues of WMCP is automatically increased, without their having to pay the government anything for it. In short, the
provision in question is without a doubt grossly disadvantageous to the government, detrimental to the interests of the Filipino people,
and violative of public policy. (Emphasis supplied; italics and underscoring in the original; footnotes omitted)
The foregoing disquisition is directly applicable to the provisions of the Mining Act. By selling 60% of its outstanding equity to a 60% Filipino-owned and 40%
foreign-owned corporation, the foreign contractor can readily convert its FTAA into an MPSA. Effectively, the State's share in the net benefits from mining
will be automatically and drastically reduced from the theoretical 50% anticipated under DAO 99-56 to merely 2%. What is given to the State by
Section 81 and DAO 99-56 is all but eliminated by Sections 39 and 80. At the same time, foreign stockholders will beneficially own up to 64% of the
mining concern, consisting of the remaining 40% foreign equity therein plus the 24% pro-rata share in the buyer-corporation.

It is possible that, like Section 7.9 of the WMCP FTAA, Section 39 of the Mining Act was intended to provide some form of incentive for the foreign FTAA
contractor to eventually reduce its equity position and ultimately divest itself thereof in favor of Filipino citizens and corporations. However, the net effect is to
allow the Filipino people to be robbed of their just share in Philippine mineral resources. Such an outcome is completely unacceptable and cannot be
sanctioned by this Court.

By this simple conversion, which may be availed of at any time, the local and foreign stockholders will obtain a windfall at the expense of the Government, which
is the trustee of the Filipino people. The share of these stockholders in the net mining revenues from Philippine resources will be automatically increased without
their having to pay the government anything in exchange.

On this basis alone, and despite whatever other differences of opinion might exist, the majority must concede that the provisions of the Mining Act are
grossly disadvantageous to the government, detrimental to the interests of the Filipino people, and violative of Section 2, Article XII of the
Constitution.

En passant, it is significant to note that Section 39 of the Mining Act allows an FTAA holder to covert its agreement to an MPSA "at any time during the term of
the agreement."

As any reasonable person with a modicum of business experience can readily determine, the optimal time for the foreign contractor to convert its FTAA into an
MPSA is after the completion of the exploration phase and just before undertaking the development, construction and utilization phase. This is because under
Section 56 (a) of DAO 40-96, the requirement for a minimum investment of Fifty Million U.S. Dollars (US$ 50,000,000.00)135 is only applicable during the
development, construction and utilization phase and NOT during the exploration phase where the foreign contractor need only comply with the stipulated
minimum ground expenditures:

SECTION 56. Terms and Conditions of an FTAA. — The following terms, conditions and warranties shall be incorporated in the FTAA, namely:

a. A firm commitment, in the form of a sworn statement during the existence of the Agreement, that the Contractor shall comply with minimum
ground expenditures during the exploration and pre-feasibility periods as follows:

Year US $/Hectare

12

22

38

48

5 18

6 23

and a minimum investment of Fifty Million US Dollars ($50,000,000.00) or its Philippine Peso equivalent in the case of Filipino Contractor
for infrastructure and development in the contract area. If a Temporary/Special Exploration Permit has been issued prior to the approval of an
FTAA, the exploration expenditures incurred shall form part of the expenditures during the first year of the exploration period of the FTAA.

In the event that the Contractor exceeds the minimum expenditure requirement in any one (1) year, the amount in excess may be carried forward
and deducted from the minimum expenditure required in the subsequent year. In case the minimum ground expenditure commitment for a given year
is not met for justifiable reasons as determined by the Bureau/concerned Regional Office, the unexpended amount may be spent on the subsequent
year(s) of the exploration period. (Emphasis supplied)

By converting its FTAA to an MPSA just before undertaking development, construction and utilization activities, a foreign contractor further maximizes its profits
by avoiding its obligation to make a minimum investment of US$ 50,000,000.00. Assuming an exploration term of 6 years, it will have paid out only a little over
US$ 2.4 million136 in minimum ground expenditures.
Clearly, under the terms and provisions of the Mining Act, even the promised influx of tens of millions of dollars in direct foreign investments is
merely hypothetical and ultimately illusory.

Grant of Exploration Permits to Foreign

Corporations is Unconstitutional

The majority is also convinced that Section 3(aq) of the Mining Act, defining foreign corporations as a qualified entity for the purposes of granting exploration
permits, is "not unconstitutional."

The questioned provision reads:

SECTION 3. Definition of Terms. — As used in and for purposes of this Act, the following terms, whether in singular or plural, shall mean:

xxx

(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative
organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development
and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines: Provided,
That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration
permit, financial or technical assistance agreement or mineral processing permit. (Emphasis supplied)

In support of its contention that the above-quoted provision does not offend against the Constitution, the majority opinion states that: (1) "there is no prohibition at
all against foreign or local corporations or contractors holding exploration permits;" and (2) an "exploration permit serves a practical and legitimate purpose in that
it protects the interests and preserves the rights of the exploration permit grantee x x x during the period of time that it is spending heavily on exploration works,
without yet being able to earn revenues x x x."

The majority opinion also characterizes an exploration permit as "an authorization for the grantee to spend its funds on exploration programs that are pre-
approved by the government." And it comments that "[t]he State risks nothing and loses nothing by granting these permits" to foreign firms.

These contentions fail for two obvious reasons.

First, setting aside for the moment all disagreements pertaining to the construction of Section 2, Article XII of the Constitution, the following, at the very least, may
be said to have been conclusively determined by this Court: (1) the only constitutionally sanctioned method by which a foreign entity may participate in the
natural resources of the Philippines is by virtue of paragraph 4 of Section 2, Article XII of the Constitution; (2) said provision requires that an agreement be
entered into (3) between the President and the foreign corporation (4) for the large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils (5) according to the general terms and conditions provided by law, (6) based on real contributions to the economic growth and general
welfare of the country; (7) such agreements will promote the development and use of local scientific and technical resources; and (8) the President shall notify
the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

However, by the majority opinion's express admission, the grant of an exploration permit does not even contemplate the entry into an agreement between the
State and the applicant foreign corporation since "prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or prospective
contractor) cannot yet be deemed to have entered into any contract or agreement with the State."

Consequently, the grant of an exploration permit – which is not an agreement – cannot possibly be construed as being favorably sanctioned by paragraph 4 of
Section 2, Article XII of the Constitution which refers to "agreements … involving either financial or technical assistance." Not falling within the exception
embodied in paragraph 4 of Section 2, Article XII of the Constitution, the grant of such a permit to a foreign corporation is prohibited and the proviso providing for
such grant in Section 3 (aq) of the Mining Act is void for being unconstitutional.

Second, given the foregoing discussion on the circumvention of the State's share in an FTAA, it is clearly evident that to allow the grant of exploration permits to
foreign corporations is to allow the whole-sale circumvention of the entire system of FTAAs mandated by the Constitution.

For Chapter IV of the Mining Act on Exploration Permits grants to the permit holder, including foreign corporations, the principal rights conferred on an FTAA
contractor during the exploration phase, including (1) the right to enter, occupy and explore the permit area under Section 23,137 and (2) the exclusive right to an
MPSA or other mineral agreements or FTAAs upon the filing of a Declaration of Mining Project Feasibility under Sections 23 and 24; 138 but requires none of the
obligations of an FTAA – not even the obligation under Section 56 of DAO 40-96 to pay the minimum ground expenditures during the exploration and feasibility
period.139

Thus, all that a foreign mining company need do to further maximize its profits and further reduce the Government's revenue from mining operations is to apply
for an exploration permit and content itself with the "smaller" permit area of 400 meridional blocks onshore (which itself is not small considering that it is
equivalent to 32,400 hectares or 324,000,000 square meters).140 It is not obligated to pay any minimum ground expenditures during the exploration period.
Should it discover minerals in commercial quantities, it can circumvent the Fiscal Regime in DAO 99-56 by divesting 60% of its equity in favor of a Philippine
corporation and opting to enter into an MPSA. By doing so it automatically reduces the Government's TOTAL SHARE to merely 2% of value of the minerals
mined by operation of Section 81.

And if the Philippine corporation to which it divested its 60% foreign equity is itself a 60-40 Philippine Corporation, then the beneficial interest of foreigners in the
minerals mined would be a minimum of 64%.

In light of the foregoing, Section 3 (aq), in so far as it allows the granting of exploration permits to foreign corporations, is patently unconstitutional, hence, null
and void.

II

Invalidity of the WMCP FTAA Sale of foreign

interest in WMCP to a Filipino corporation
did not render the case moot and academic.

Respondent WMCP, now renamed Tampakan Mineral Resources Corporation, submits that the case has been rendered moot since "[e]xcept for the nominal
shares of directors, 100% of TMRC's share are now owned by Sagittarius Mines, which is a Filipino-owned corporation. More than 60% of the equity of
Sagittarius is owned by Filipinos or Filipino-owned corporations."141 This Court initially reserved judgment on this issue.142

Petitioner invokes by analogy the rule that where land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to one, the
infirmity in the original transaction is considered cured and the title of the transferee is rendered valid, citing Halili v. Court of Appeals.143 The rationale for this rule
is that if the ban on aliens from acquiring lands is to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by Filipino citizens.144

Respondent WMCP's analogy is fallacious. Whether the legal title to the corporate vehicle holding the FTAA has been transferred from a foreigner to a Filipino is
irrelevant. What is relevant is whether a foreigner has improperly and illegally obtained an FTAA and has therefore benefited from the exploration, development
or utilization of Philippine natural resources in a manner contrary to the provisions of the Constitution.

As above-stated the doctrine enunciated in Halili is based on the premise that the purpose of the Constitution in prohibiting alien ownership of agricultural land is
to retain the ownership or legal title of the land in the hands of Filipinos. This purpose is not identical or even analogous to that in Section 2, Article XII of the
Constitution. As priorly discussed, the primary purpose of the provisions on National Patrimony is to preserve to the Filipino people the beneficial ownership of
their natural resources – i.e. the right to the gains, rewards and advantages generated by their natural resources. Except under the terms of Section 2, Article XII,
foreigners are prohibited from involving themselves in the exploration, development or utilization of these resources, much less from profiting from them.

Divestment by a foreigner of an illegally acquired right to mine Philippine resources does not alter the illegal character of the right being divested or sold. Indeed,
such divestment or sale is obviously a method by which the foreigner may derive pecuniary benefit from his unlawful act since he receives payment for his
illegally acquired interest in the country's natural resources.

To rule otherwise would be to condone, even to invite, foreign entities to obtain Philippine mining interests in violation of the Constitution with the assurance that
they can escape liability and at the same time make a tidy sum by later selling these interests to Filipinos. This is nothing less than allowing foreign speculation in
Philippine natural resources. Worse, there is the very real possibility that these foreign entities may intentionally inflate the value of their illegally–acquired mineral
rights to the detriment of their Filipino purchasers as the past Bre-X scandal145 and recent Shell oil reserve controversy146 vividly illustrate.

To allow a foreigner to profit from illegally obtained mining rights or FTAAs subverts and circumvents the letter and intent of Article XII of the Constitution. It
facilitates rather than prevents the rape and plunder of the nation's natural resources by unscrupulous neo-colonial entities. It thwarts, rather than achieves, the
purpose of the fundamental law.

As applied to the facts of this case, respondent WMCP, in essence, claims that now that the operation and management of the WMCP FTAA is in the hands of a
Filipino company, no serious question as to the FTAA's validity need arise.

On the contrary, this very fact – that WMC has sold its 100% interest in WMCP to a Filipino company for US$10,000,000.00 – directly leads to some very serious
questions concerning the WMCP FTAA and its validity. First, if a Filipino corporation is capable of undertaking the terms of the FTAA, why was an agreement
with a foreign owned corporation entered into in the first place? Second, does not the fact that, as alleged by petitioners147 and admitted by respondent
WMCP,148 Sagittarius, WMCP's putative new owner, is capitalized at less than half the purchase price 149 of WMC's shares in WMCP, a strong indication that
Sagittarius is merely acting as the dummy of WMC? Third, if indeed WMCP has, to date, spent US$40,000,000.00 in the implementation of the FTAA, as it
claims,150 why did WMC sell 100% of its shares in WMCP for only US$10,000,000.00? Finally, considering that, as emphasized by WMCP, 151 "payment of the
purchase price by Sagittarius to WMC will come only after the commencement of commercial production," hasn't WMC effectively acquired a beneficial interest in
any minerals mined in the FTAA area to the extent of US$10,000,000.00? If so, is the acquisition of such a beneficial interest by a foreign corporation permitted
under our Constitution?
Succinctly put, the question remains: What is the validity of the FTAA by which WMC, a fully foreign owned corporation, has acquired a more than half
billion peso152 interest in Philippine mineral resources located in a contract area of 99,387 (alleged to have later been reduced to 30,000)153 hectares of land
spread across the four provinces of South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato?

Clearly then, the issues of this case have not been rendered moot by the sale of WMC's 100% interest in WMCP to a Filipino corporation, whether the latter be
Sagittarius or Lepanto. If the FTAA is held to be valid under the Constitution, then the sale is valid and, more importantly, WMC's US$10,000,000.00 interest in
Philippine mineral deposit, arising as it did from the sale and its prior 100% ownership of WMCP, is likewise valid. However, if the FTAA is held to be invalid, then
neither WMC's interest nor the sale which gave rise to said interest is valid for no foreigner may profit from the natural resources of the Republic of the
Philippines in a manner contrary to the terms of the Philippine Constitution. If held unconstitutional, the WMCP FTAA is void ab initio for being contrary to
the fundamental law and no rights may arise from it, either in favor of WMC or its Filipino transferee.

Evidently, the transfer of the shares in WMCP from WMC Resources International Pty. Ltd. (WMC), a foreign-owned corporation, to a Filipino-owned one,
whether Sagittarius or Lepanto, now presently engaged in a dispute over said shares,154 did not "cure" the FTAA nor moot the petition at bar. On the contrary, it is
the Decision in this case that rendered those pending cases moot for the invalidation of the FTAA leaves Sagittarius and Lepanto with nothing to dispute.

Terms of the WMCP FTAA are

contrary to the Constitution and
render said FTAA null and void.

The WMCP FTAA is clearly contrary to the agreements provided for in Section 2, Article XII of the Constitution. In the Decision under reconsideration, this Court
observed:

Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and dispose of all Minerals products and by-
products thereof that may be produced from the Contract Area." The FTAA also imbues WMCP with the following rights:

(b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilized during the Development/Operating Period and the project facilities to be
constructed during the Development and Construction Period;

(d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to the provisions
of Presidential Decree No. 512 (if applicable) and not be prevented from entry into private lands by surface owners and/or occupants thereof when
prospecting, exploring and exploiting for minerals therein;

xxx

(f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types of works on the Contract Area;

(g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to the Mining Operations and to use, sell or
otherwise dispose of, modify, remove or diminish any and all parts thereof;

(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and the use of timber, sand, clay, stone,
water and other natural resources in the Contract Area without cost for the purposes of the Mining Operations;

xxx

(l) have the right to mortgage, charge or encumber all or part of its interest and obligations under this Agreement, the plant, equipment and
infrastructure and the Minerals produced from the Mining Operations;

x x x.

All materials, equipment, plant and other installations erected or placed on the Contract Area remain the property of WMCP, which has the right to
deal with and remove such items within twelve months from the termination of the FTAA.

Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and personnel necessary for the Mining
Operations." The mining company binds itself to "perform all Mining Operations . . . providing all necessary services, technology and financing in
connection therewith," and to "furnish all materials, labour, equipment and other installations that may be required for carrying on all Mining
Operations." WMCP may make expansions, improvements and replacements of the mining facilities and may add such new facilities as it considers
necessary for the mining operations.
 These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources that properly belong to the State and are
intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental
law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.155 (Citations omitted)

Indeed, save for the fact that the contract covers a larger area, the subject FTAA is actually a mineral production sharing agreement. Respondent WMCP
admitted as much in its Memorandum.156 The first paragraph of Section 2, Article XII of the Constitution, however, allows this type of agreement only with Filipino
citizens or corporations.

That the subject FTAA is void for having an unlawful cause bears reaffirmation. In onerous contracts the cause is understood to be, for each contracting party,
the prestation or promise of a thing or service by the other.157 On the part of WMCP, a foreign-owned corporation, the cause was to extend not only technical or
financial assistance but management assistance as well. The management prerogatives contemplated by the FTAA are not merely incidental to the two other
forms of assistance, but virtually grant WMCP full control over its mining operations. Thus, in Section 8.3 158 of the FTAA, in case of a dispute between the DENR
and WMCP, it is WMCP's decision which will prevail.

The questioned FTAA also grants beneficial ownership over Philippine natural resources to WMCP, which is prohibited from entering into such contracts not only
by the fourth paragraph of Section 2, Article XII of the Constitution, but also by the first paragraph, the FTAA practically being a production-sharing agreement
reserved to Filipinos.

Contracts whose cause is contrary to law or public policy are inexistent and void from the beginning.159 They produce no effect whatsoever.160 They cannot be
ratified,161 and so cannot the WMCP FTAA.

The terms of the WMCP FTAA effectively give away

the Beneficial Ownership of Philippine minerals

As previously observed, the majority opinion finds Section 7.9. of the WMCP FTAA to be "grossly disadvantageous to the government, detrimental to the
interests of the Filipino people, and violative of public policy" since it "effectively gives away the State's share of net mining revenues (provided for in Section 7.7)
without anything in exchange."

It likewise finds Section 7.8(e) of the WMCP FTAA to be invalid. Said provision states:

7.8 The Government Share shall be deemed to include all of the following sums:

xxx

(e) an amount equivalent to whatever benefits that may be extended in the future by the Government to the Contractor or to
financial or technical assistance agreement contractors in general. (Emphasis supplied)

And in its own estimation:

Section 7.8(e) is out of place in the FTAA. This provision does not make any sense why, for instance, money spent by the government for the benefit
of the contractor in building roads leading to the mine site should still be deductible from the State's share in net mining revenues. Allowing this
deduction results in benefiting the contractor twice over. To do so would constitute unjust enrichment on the part of the contractor at the
expense of the government, since the latter is effectively being made to pay twice for the same item. For being grossly disadvantageous
and prejudicial to the government and contrary to public policy, Section 7.8(e) is undoubtedly invalid and must be declared to be without
effect. xxx (Emphasis supplied; citations omitted; underscore in the original)

The foregoing estimation notwithstanding, the majority opinion declines to invalidate the WMCP FTAA on the theory that Section 7.9 and 7.8 are separable from
the rest of the agreement, which may supposedly be given effect without the offending provisions.

As previously discussed, the same deleterious results are easily achieved by the foreign contractor's conversion of its FTAA into an MPSA under the provisions
of the Mining Act. Hence, merely striking out Sections 7.9 and 7.8(e) of the WMCP FTAA will not suffice; the provisions pertaining to FTAAs in the Mining Act
must be stricken out for being unconstitutional as well.

Moreover, Section 7.8 (e) and 7.9 are not the only provisions of the WMCP FTAA which convey beneficial ownership of mineral resources to a foreign
corporation.

Under Section 10.2 (l) of the WMCP FTAA, the foreign FTAA contractor shall have the right to mortgage and encumber, not only its rights and interests in the
FTAA, but the very minerals themselves:

10.2 Rights of Contractor

 The Government agrees that the Contractor shall:-

xxx

(l) have the right to mortgage, charge or encumber all or part of its interest and obligations under this Agreement, the plant, equipment and
infrastructure and the Minerals produced from the Mining Operations; (Emphasis supplied)

Although respondents did not proffer their own explanation, the majority opinion theorizes that the foregoing provision is necessitated by the conditions that may
be imposed by creditor-banks on the FTAA contractor:

xxx I believe that this provision may have to do with the conditions imposed by the creditor-banks of the then foreign contractor WMCP to secure the
lendings made to the latter. Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on encumbrances
of goods produced that can easily be sold and converted into cash that can be applied to the repayment of loans. Banks even lend on the security
of accounts receivable that are collectible within 90 days. (Citations omitted; underscore in the original)

It, however, overlooks the provision of Art. 2085 of the Civil Code which enumerates the essential requisites of a contract of mortgage:

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally
authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. (Emphasis and
underscoring supplied)

From the foregoing provision of law, it is abundantly clear

that only the absolute owner of the minerals has theright to mortgage the same, and under Section 2, Article XII of the Constitution the absolute owner
of theminerals is none other than the State. While the foreign FTAA contractor may have an interest in the proceeds of the minerals, it does not acquire
ownership over the minerals themselves.

Put differently, the act of mortgaging the minerals is an act of ownership, which, under the Constitution, is reserved solely to the State. In purporting to grant
such power to a foreign FTAA contractor, Section 10.2 (l) of the WMCP FTAA clearly runs afoul of the Constitution.

Moreover, it bears noting that to encumber natural resources of the State to secure a foreign FTAA contractor's obligations is anomalous since Section 1.2 of the
WMCP FTAA provides that "[a]ll financing, technology, management and personnel necessary for the Mining Operations shall be provided by the Contractor."

Indeed, even the provisions of the Mining Act, irredeemably flawed though they may be, require that the FTAA contractor have the financial capability to
undertake the large-scale exploration, development and utilization of mineral resources in the Philippines;162 and, specifically, that the contractor warrant that it
has or has access to all the financing required to promptly and effectively carry out the objectives of the FTAA.163

Under Section 10.2 (e) of the WMCP FTAA, the foreign FTAA Contractor has the power to require the Government to acquire surface rights in its behalf at such
price and terms acceptable to it:

10.2 Rights of Contractor

The Government agrees that the Contractor shall:-

xxx

(e) have the right to require the Government at the Contractor's own cost, to purchase or acquire surface areas for and on behalf of the
Contractor at such price and terms as may be acceptable to the Contractor. At the termination of this Agreement such areas shall be sold by
public auction or tender and the Contractor shall be entitled to reimbursement of the costs of acquisition and maintenance, adjusted for
inflation, from the proceeds of sale; (Emphasis supplied)

Petitioners, in their Memorandum, point out that pursuant to the foregoing, the foreign FTAA contractor may compel the Government to exercise its power of
eminent domain to acquire the title to the land under which the minerals are located for and in its behalf.
The majority opinion, however, readily accepts the explanation proffered by respondent WMCP, thus:

Section 10.2 (e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own land, identifies to the government the specific
surface areas within the FTAA contract area to be acquired for the mine infrastructure. The government then acquires ownership of the surface land
areas on behalf of the contractor, in order to enable the latter to proceed to fully implement the FTAA.

The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it, after the termination of the FTAA to be reimbursed
from proceeds of the sale of the surface areas, which the government will dispose of through public bidding.

And it concludes that "the provision does not call for the exercise of the power of eminent domain" and the determination of just compensation.

The foregoing arguments are specious.

First, the provision in question clearly contemplates a situation where the surface area is not already owned by the Government – i.e. when the land over which
the minerals are located is owned by some private person.

Second, the logical solution in that situation is not, as asserted by respondent WMCP, to have the Government purchase or acquire the land, but for the foreign
FTAA contractor to negotiate a lease over the property with the private owner.

Third, it is plain that the foreign FTAA contractor would only avail of Section 10.2 (e) if, for some reason or another, it is unable to lease the land in question at the
price it is willing to pay. In that situation, it would have the power under Section 10.2 (e) to compel the State, as the only entity which can legally compel the
landowner to involuntarily part with his property, to acquire the land at a price dictated by the foreign FTAA contractor.

Clearly, the State's power of eminent domain is very much related to the practical workings of Section 10.2 (e) of the WMCP FTAA. It is the very instrument by
which the contractor assures itself that it can obtain the "surface right" to the property at a price of its own choosing. Moreover, under Section 60 of DAO 40-96,
the contractor may, after final relinquishment, hold up to 5,000 hectares of land in this manner.

More. While the foreign FTAA contractor advances the purchase price for the property, in reality it acquires the "surface right" for free since under the same
provision of the WMCP FTAA it is entitled to reimbursement of the costs of acquisition and maintenance, adjusted for inflation. And as if the foregoing were not
enough, when read together with Section 3.3,164 the foreign FTAA contractor would have the right to hold the "surface area" for a maximum of 50 years, at its
option.

In sum, by virtue of Sections 10.2 (e) and 3.3. of the WMCP

FTAA, the foreign FTAA contractor is given thepower to hold inalienable mineral land of up to 5,000 hectares, with the assistance of the State's power
ofeminent domain, free of charge, for a period of up to 50 years in contravention of Section 3, Article XII of theConstitution:

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the
public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain shall be
limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease,
for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase,
homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress
shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.
(Emphasis supplied)

Taken together, the foregoing provisions of the WMCP FTAA amount to a conveyance to a foreign corporation of the beneficial ownership of both the minerals
and the surface rights to the same in contravention of the clear provisions of the Constitution.

The majority opinion posits that "[t]he acquisition by the State of land for the contractor is just to enable the contractor to establish its mine site, build its facilities,
establish a tailings pond, set up its machinery and equipment, and dig mine shafts and tunnels, etc." It thus concludes that "5,000 hectares is way too much for
the needs of a mining operator."

Evidently, the majority opinion does not take into account open pit mining. Open pit or opencut mining, as differentiated from methods that require tunneling into
the earth, is a method of extracting minerals by their removal from an open pit or borrow;165 it is a mine working in which excavation is performed from the
surface.166 It entails a surface mining operation in which blocks of earth are dug from the surface to extract the ore contained in them. During the mining process,
the surface of the land is excavated forming a deeper and deeper pit until the end of mining operations.167 It is used extensively in mining metal ores, copper,
gold, iron, aluminum168 – the very minerals which the Philippines is believed to possess in vast quantities; and is considered the most cost-effective mining
method.169
Furthermore, considering that FTAAs deal with large scale exploration, development and utilization of mineral resources and that the original contract area of the
WMCP FTAA was 99,387 hectares, an open pit mining operation covering a total of 5,000 hectares is not outside the realm of possibility.

In any event, regardless of what the majority opinion considers "way too much" (or too little), it is undisputed that under Section 60 of DAO 40-96, which is among
the enactments under review, the contractor may, after final relinquishment, hold up to 5,000 hectares of land. And, under Section 3.3. of the WMCP FTAA, it
may do so for a term of 25 years automatically renewable for another 25 years, at the option of the contractor.

The majority opinion also argues that, although entitled to reimbursement of its acquisition cost at the end of the contract term, the FTAA contractor does not
acquire its surface rights for free since "the contractor will have been cash-out for the entire duration of the term of the contract – 25 to 50 years, depending,"
thereby foregoing any interest income he might have earned. This is the "opportunity cost" of the contractor's decision to use its money to acquire the surface
rights instead of leaving it in the bank.

The majority opinion does not consider the fact that "opportunity cost" is more theoretical rather than actual and, for that reason, is not an allowable deduction
from gross income in an income statement. In layman's terms it is equivalent to "the value of the chickens that might have been hatched if only the cook had not
scrambled the eggs." Neither does it consider the fact that the contractor's foregone interest income does not find its way to the pockets of either the previous
land owner (in this case, the Bugal B'Laans) or the State.

But even if the contractor does incur some opportunity cost in holding the surface rights for 35 to 50 years. The fact remains that, under the terms of the WMCP
FTAA, the contractor is given the power to hold inalienable mineral land of up to 5,000 hectares, with the assistance of the State's power of eminent
domain for a period of up to 50 years in contravention of Section 3, Article XII of the Constitution.

Clearly, Section 3 and 10.2 (e) of the WMCP FTAA in conjunction with Section 60 of DAO 40-96, amount to a conveyance to a foreign corporation of the
beneficial ownership of both the minerals and the surface rights over the same, in contravention of the clear provisions of the Constitution.

The terms of the WMCP FTAA abdicate all control over the
mining operation in favor of the foreign FTAA contractor

The majority opinion's defense of the constitutionality of Section 8.1, 8.2, 8.3 of the WMCP FTAA is similarly unpersuasive. These Sections provide:

8.1 The Secretary shall be deemed to have approved any Work Programme or Budget or variation thereof submitted by the Contractor
unless within sixty (60) days after submission by the Contractor the Secretary gives notice declining such approval or proposing a
revision of certain features and specifying its reasons therefore ("the Rejection Notice").

8.2 If the Secretary gives a Rejection Notice the Parties shall promptly meet and endeavour to agree on amendments to the Work Programme or
budget. If the Secretary and the Contractor fail to agree on the proposed revision within 30 days from delivery of the Rejection Notice
then the Work Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved so as not to unnecessarily
delay the performance of this Agreement.

Even measured against the majority opinion's standards of control – i.e. either (1) the power to set aside, reverse, or modify plans and actions of the contractor;
or (2) regulatory control – the foregoing provisions cannot pass muster. This is because, by virtue of the foregoing provisions, the foreign FTAA contractor has
unfettered discretion to countermand the orders of its putative regulator, the DENR.

Contrary to the majority's assertions, the foregoing provisions do not provide merely temporary or stop-gap solutions. The determination of the FTAA contractor
permanently reverses the "Rejection Notice" of the DENRsince, by the majority opinion's own admission, there is no available remedy for the DENR under the
agreement except to seek the cancellation of the same.

Indeed, the justification for the foregoing provisions is revealing:

xxx First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the State as well as to the contractor. Second, who
is to say that the work program or budget proposed by the contractor and deemed approved under Clause 8.3 would not be the better or
more reasonable or more effective alternative? The contractor, being the "insider," as it were, may be said to be in a better position than
the State – an outsider looking in – to determine what work program or budget would be appropriate, more effective, or more suitable
under the circumstances. (Emphasis and underscoring supplied)

Both reasons tacitly rely on the unstated assumption that the interest of the foreign FTAA contractor and that of the Government are identical. They are not.

Private businesses, including large foreign-owned corporations brimming with capital and technical expertise, are primarily concerned with maximizing the
pecuniary returns to their owners or shareholders. To this extent, they can be relied upon to pursue the most efficient courses of action which maximize their
profits at the lowest possible cost.

The Government, on the other hand, is mandated to concern itself with more than just narrow self-interest. With respect to the nation's natural wealth, as the
majority opinion points out, the Government is mandated to preserve, protect and even maximize the beneficial interest of the Filipino people in their natural
resources. Moreover, it is directed to ensure that the large-scale exploration, development and utilization of these resources results in real contributions to the
economic growth and general welfare of the nation. To achieve these broader goals, the Constitution mandates that the State exercise full control and
supervision over the exploration, development and utilization of the country's natural resources.

However, taking the majority opinion's reasoning to its logical conclusion, the business "insider's opinion" would always be superior to the Government's
administrative or regulatory determination with respect to mining operations. Consequently, it is the foreign contractor's opinion that should always prevail.
Ultimately, this means that, at least for the majority, foreign private business interests outweigh those of the State – at least with respect to the conduct of mining
operations.

Indeed, in what other industry can the person regulated permanently overrule the administrative determinations of the regulatory agency?

To any reasonable mind, the absence of an effective means to enforce even administrative determinations over an FTAA contractor, except to terminate the
contract itself, falls far too short of the concept of "full control and supervision" as to cause the offending FTAA to fall outside the ambit of Section 2, Article XII of
the Constitution.

Verily, viewed in its entirety, the WMCP FTAA cannot withstand a rigid constitutional scrutiny since, by its provisions, it conveys both the beneficial
ownership of Philippine minerals and control over their exploration, development and utilization to a foreign corporation. Being contrary to both the
letter and intent of Section 2, Article XII of the Constitution, the WMCP FTAA must be declared void and of no effect whatsoever.

A Final Note

For over 350 years, the natural resources of this nation have been under the control and domination of foreign powers – whether political or corporate. Philippine
mineral wealth, viciously wrenched from the bosom of the motherland, has enriched foreign shores while the Filipino people, to whom such wealth justly belongs,
have remained impoverished and unrecompensed.

Time and time again the Filipino people have sought an end to this intolerable situation. From 1935 they have struggled to assert their legal control and
ownership over their patrimony only to have their efforts repeatedly subverted – first, by the parity amendment to the 1935 Constitution and subsequently by the
service contract provision in the 1973 Constitution.

It is not surprising that an industry, overly dependent on foreign support and now in decline, should implore this Court to reverse itself if only to perpetuate its
otherwise economically unsustainable conduct. It is even understandable, however regrettable, that a government, strapped for cash and in the midst of a self-
proclaimed fiscal crisis, would be inclined to turn a blind eye to the consequences of unconstitutional legislation in the hope, however false or empty, of obtaining
fabulous amounts of hard currency.

But these considerations should not outweigh the Constitution.

As always, the one overriding consideration of this Court should be the will of the sovereign Filipino people as embodied in their Constitution. The Constitution
which gives life to and empowers this Court. The same Constitution to which the members of this Court have sworn their unshakable loyalty and their unwavering
fidelity.

Now, the unmistakable letter and intent of the 1987 Constitution notwithstanding, the majority of this Court has chosen to reverse its earlier Decision which, to
me, would once again open the doors to foreign control and ownership of Philippine natural resources. The task of reclaiming Filipino control over Philippine
natural resources now belongs to another generation.

ACCORDINGLY, I vote to deny respondents' Motions for Reconsideration.

[G.R. No. L-26572. March 28, 1969.]

MORALES DEVELOPMENT COMPANY, INC., Petitioner, v. THE COURT OF APPEALS and HERMENEGILDO DESEO and SOCORRO
DESEO, Respondents.

Alberto R. de Joya for Petitioner.

Francisco Mendino for Respondents.

SYLLABUS
1. CIVIL LAW; CONTRACTS; SALE OF REAL PROPERTY; EFFECT OF INADEQUATE CONSIDERATION THEREFOR. — Inadequacy of the monetary
consideration does not render a conveyance inexistent, for the assignor’s liberality may be sufficient cause for a valid contract. It is not unusual, in deeds of
conveyance adhering to the Anglo-Saxon practice to state that the consideration given is the sum of P1.00, although the actual consideration may have been
much more.

2. ID.; ID.; ID.; EFFECT OF FRAUD OR BAD FAITH THEREON. — Fraud or bad faith may render either rescissible or voidable, although valid until annulled, a
contract concerning an object certain, entered into with a cause and with the consent of the contracting parties.

3. ID.; ID.; ID.; OWNERSHIP OF REGISTERED LAND IN INSTANT CASE PERTAINS TO POSSESSOR IN GOOD FAITH. — Since the object of the litigation is
a registered land and the two (2) buyers thereof have so far been unable to register the deeds of conveyance in their respective favor, it follows that "the
ownership" of said lot "pertain(s)" - pursuant to Art. 1544 of our Civil Code — to the Deseos, as the only party who took possession thereof in good faith.

4. ID.; ID.; ID.; IN THE PURCHASE OF PROPERTY IN DISPUTE, THE NEGLIGENT PARTY SHALL SUFFER THE CONSEQUENCES OF THE RESULTING
WRONG. — If, as Morales claims, it was not sufficient for the Deseos to verify in the Office of the Register of Deeds the genuineness of the owner’s duplicate of
TCT No. 21037, for they should have inquired into the inadequacy of the consideration given by the Abellos to the Reyeses and by the latter to Montinola, much
less would he have been justified in relying upon Montinola’s copy of TCT-15687 in his name. In fact, had he (Morales), at least, gone to the Office of the
Register of Deeds - as the Deseos did - before purchasing the property in dispute, he would have found out, not only that TCT No. T-15687 had long been
cancelled, but, also, that the property had been previously sold by Montinola to Reyes and by Reyes to the Abellos. In short, the negligence of Morales was the
proximate cause of the resulting wrong, and, hence, he should be the party to suffer its consequences.

DECISION

CONCEPCION, J.:

Petitioner, Morales Development Co., Inc. — hereafter referred to as Morales — seeks the review on certiorari of a decision of the Court of Appeals reversing
that of the Court of First Instance of the Province of Quezon.

Hermenegildo Deseo and Socorro Deseo, respondents herein and plaintiffs below, brought this action to annul a sale to Morales of lot No. 2488 of the Cadastral
Survey of Catanauan, Province of Quezon, and to secure the registration of a deed of conveyance of said lot in their (Deseos’) favor.

Lot No. 2488 used to belong to Enrique P. Montinola and was covered by Transfer Certificate of Title No. T-15687 of the Register of Deeds of said province, in
his name. Alleging that his owner’s duplicate copy of said certificate had been lost, Montinola succeeded in securing, from the Court above mentioned, an order
for the issuance of a second owner’s duplicate, with which he managed to sell the lot, on September 24, 1954, to Pio Reyes. Upon registration of the deed of sale
to the latter, said TCT No. T-15687 was cancelled and, in lieu thereof, TCT No. 21036, in the name of Reyes, was issued. On November 18, 1954; Lupo Abella,
married to Felisa Aguilar — hereafter referred to as the Abellas — purchased the land from Reyes, whereupon the deed of conveyance, executed by Reyes, was
registered and the Abellas got TCT No. 21037 in their name, upon cancellation of said TCT No. 21036. About seven (7) months later, or on June 16, 1955, the
Abellas sold the land, for P7,000, — of which P4,500 was then paid — to the Deseos, who immediately took possession of the property.

It appears, however, that the first owner’s duplicate of TCT No. T-15687 was either never lost or subsequently found by Montinola, who, making use of it,
mortgaged the lot in question, before February 21, 1956, to the Philippine National Bank, for P700. Then, on the date last mentioned, Montinola sold the property
to Morales, for P2,000, from which the sum due to the Bank was deducted. Upon presentation of the deed of sale in favor of Morales, the latter was advised by
the office of the Register of Deeds of Quezon that said TCT No. T-15687 had already been cancelled and the property sold, first, to Pio Reyes, and, then, to the
Abellas. Thereupon, Morales filed a petition for the annulment and cancellation of the second owner’s copy of TCT No. T- 15687. After due notice to Reyes and
the Abellas, but not to the Deseos, said petition was granted on March 12, 1956.

Having been unable, in view of these developments, to register the deed of conveyance executed by the Abellas, the Deseos commenced, in the court
aforementioned, the present action against Morales, for the annulment of the subsequent sale thereto by Montinola, and the registration of said deed of
conveyance in their (Deseos’) favor, alleging that the same enjoys preference over the sale to Morales, the Deseos having, prior thereto, bought lot No. 2488 in
good faith and for value, and having been first in possession of said lot, likewise, in good faith.

Upon the other hand, Morales claimed to have a better right upon the ground that it (Morales) had bought the property in good faith and for value, relying upon
the first owner’s duplicate copy of TCT No. T- 15687, unlike the Deseos, whose predecessor in interest, Pio Reyes, had relied upon the second owner’s
duplicate, which — Morales alleged — had been secured fraudulently, and that the sale to Reyes and that made by the latter to the Abellas are null and void,
because both sales took place under suspicious circumstances, so that — Morales concluded — they (Reyes and the Abellas) were not purchasers in good faith
and for value.

After appropriate proceedings, the court of first instance sustained the contention of Morales and rendered judgment in its favor, which, on appeal taken by the
Deseos, was reversed by the Court of Appeals. The dispositive part of the latter’s decision reads:jgc:chanrobles.com.ph

"WHEREFORE, the judgment appealed from is hereby reversed and another one entered in favor of the plaintiffs (Deseos) and against the defendant (Morales)
declaring said plaintiffs to be the lawful and absolute owners of Lot No. 2488 of the Cadastral Survey of Catanauan, Quezon, covered by Transfer Certificate of
Title No. T-21037 of the Office of the Register of Deeds of Quezon; declaring the deed of sale executed by Enrique P. Montinola in favor of defendant covering
the same property as null and void; ordering the Register of Deeds of Quezon to register the deed of sale executed by the spouses Lupo Abella and Felisa
Aguilar in favor of the plaintiffs dated June 16, 1955, marked Exhibit A, without cost, not having prayed for in the brief for the appellants."cralaw virtua1aw library

Hence, the present petition for review on certiorari by Morales, which insists that the Court of Appeals should have upheld its (Morales’) contention adverted to
above. We, however, find therein no merit.
Morales maintains that the sale by Montinola to Reyes and that later made by Reyes to the Abellas are "suspicious" ; that, consequently, Reyes and the Abellas
were not purchasers in good faith and for value; and that these two (2) premises, in turn, lead to the conclusion that both sales are "null and void." This syllogism
is obviously faulty. The major premise thereof is based upon the fact that the consideration stated in the deeds of sale in favor of Reyes and the Abellas is P1.00.
It is not unusual, however, in deeds of conveyance adhering to the Anglo-Saxon practice of stating that the consideration given is the sum of P1.00, although the
actual consideration may have been much more. Moreover, assuming that said consideration of P1.00 is suspicious, this circumstance, alone, does not
necessarily justify the inference that Reyes and the Abellas were not purchasers in good faith and for value. Neither does this inference warrant the conclusion
that the sales were null and void ab initio. Indeed, bad faith and inadequacy of the monetary consideration do not render a conveyance inexistent, for the
assignor’s liberality may be sufficient cause for a valid contract, 1 whereas fraud or bad faith may render either rescissible or voidable, although valid until
annulled, a contract concerning an object certain, entered into with a cause and with the consent of the contracting parties, as in the case at bar. 2 What is more,
the aforementioned conveyance may not be annulled, in the case at bar, inasmuch as Reyes and the Abellas are not parties therein.

Upon the other hand, the Deseos had bought the land in question for value and in good faith, relying upon the transfer certificate of title in the name of their
assignors, the Abellas. The sale by the latter to the former preceded the purchase made by Morales, by about eight (8) months, and the Deseos took immediate
possession of the land, which was actually held by them at the time of its conveyance to Morales by Montinola, and is in the possession of the Deseos, up to the
present. Then, again, TCT No. T-15687, in the name of Montinola, had been cancelled over a year before he sold the property to Morales, who, in turn, was
informed of this fact, when it sought to register the deed of conveyance in its favor. It should be noted, also, that TCT No. 21037, in the name of the Abellas, on
which the Deseos had relied in buying the lot in dispute, has not been ordered cancelled.

Since the object of this litigation is a registered land and the two (2) buyers thereof have so far been unable to register the deeds of conveyance in their
respective favor, it follows that "the ownership" of said lot "pertain(s)" — pursuant to Article 1544 of our Civil Code 3 — to the Deseos, as the only party who took
possession thereof in good faith. 4

Morales argues that it was not enough for the Deseos to have gone to the office of the Register of Deeds and found therein that there were no flaws in the title of
the Abellas, and that the Deseos should have, also, ascertained why the Abellas had paid only P1.00 to Reyes, and why the latter had paid the same amount to
Montinola. To begin with, the Deseos did not know that said sum was the consideration paid by the Abellas to Reyes and by Reyes to Montinola. Secondly, the
Deseos were not bound to check the deeds of conveyance by Reyes to the Abellas, and by Montinola to Reyes. Having found that the owner’s duplicate copy of
TCT No. 21037, in the name of the Abellas, was a genuine copy of the original on file with the Office of the Register of Deeds, the Deseos were fully justified in
relying upon said TCT No. 21037, and had no legal obligation to make further investigation.

Thirdly, were we to adopt the process of reasoning advocated by Morales, the result would still be adverse thereto. Indeed, if it were not sufficient for the Deseos
to verify in said office the genuineness of the owner’s duplicate of TCT No. 21037, much less would Morales have been justified in relying upon Montinola’s copy
of TCT No. T- 15687 in his name. In fact, had Morales, at least, gone to the Office of the Register of Deeds — as the Deseos did — before purchasing the
property in dispute, Morales would have found out, not only that TCT No. T-15687 had long been cancelled, but, also, that the property had been previously sold
by Montinola to Reyes and by Reyes to the Abellas. In short, the negligence of Morales was the proximate cause of the resulting wrong, and, hence, Morales
should be the party to suffer its consequences. 5

WHEREFORE, the appealed decision of the Court of Appeals should be, as it is hereby affirmed, with costs against petitioner herein, Morales Development
Company, Inc.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-1257 October 30, 1947

NICANOR TAVORA, petitioner,

vs.
BONIFACIO N. GAVINA and PEDRO O. ARCIAGA, respondents.

Tavora and Zandueta for petitioner.

Mon and Gavina for respondent Gavina.
Pedro O. Arciaga in his own behalf.

FERIA, J.:
There is no question about the fact alleged in the petition, that the petitioner was appointed justice of the peace of San Fernando, La Union, and took possession
of his office on or about April 16, 1916, that he has not resigned nor has been removed therefrom, and that he has ceased to act as such justice of the peace on
December 1941, but reassumed his office after liberation, that is, on April 27, 1945.

According to section 9 Article VIII of the Constitution of the Philippines, the members of the Supreme Court and all judges of inferior courts shall hold office during
good behavior until they reach the age of seventy years,or become incapacitated to discharge the duties of their office.

The fact that the petitioner has performed the duties of justice of the peace of the municipality of San Fernando, La Union, during the Japanese occupation of the
Philippines, by virtue of appointment made by the Chaiman of the Executive Commission, did not constitute an abandonment of his office held under the
Commonwealth, because the government established in the Philippines during the Japanese occupation was not a foreign government, but a government
established by the military occupant as an agency thereof to preserve order during the occupation. This Court, in its resolution denying the motion for
reconsideration in the case of Co Kim Cham vs. Valdez Tan Keh and Dizon (75 Phil., 113), held among others the following:

(5) It is argued with insistence that the courts of the Commonwealth continued in the Philippines by the belligerent occupant became also courts of
Japan, and their judgments and proceedings being acts of foreign courts can not now be considered valid and continued by the courts of the
Commonwealth Government after the restoration of the latter. As we have already stated in our decision the fundamental reasons why said courts,
while functioning during the Japanese regime, could not be considered as courts of Japan, it is sufficient now to invite attention to the decision of the
Supreme Court of the United States in the case of The Admittance, Jecker vs. Montgomery, 13 How., 498; 14 Law. ed., which we did not deem
necessary to quote in our decision, in which it was held that "the courts, established or sanctioned in Mexico during the war by the commanders of
the American forces, were nothing more than the agents of the military power, to assist it in preserving order in the conquered territory, and to protect
the inhabitants in their persons and property while it was occupied by the American arms. They were subject to the military power, and their
decisions under its control, whenever the commanding officer thought proper to interfere. They were not courts of the United States, and had no right
to adjudicate upon a question of prize or no prize." (The Admittance, Jecker vs.Montgomery, 13 How., 498; 14 Law. ed., 240.)

The appointment by President Osmeña of the respondent Bonifacio N. Gavina as ad-interim justice of the peace of San Fernando on February 18, 1946, did not
oust the petitioner from his office, not only because such appointment was disapproved by the Commission on Appointments, but because the petitioner had the
constitutional right to continue in office until he has reached the age of seventy years, and the President of the Commonwealth had no power to remove the
petitioner from office without just cause and previous investigation.

The appointment of the other respondent Pedro O. Arciaga as justice of the peace of the same municipality made by the President of the Republic of the
Philippines and approved by the Commission on Appointments on July 27, 1946, did not remove the petitioner from his office as justice of the peace of San
Fernando, La Union, since the petitioner had the constitutional right to continue as such justice of the peace until he has reached 70 years; and upon the
cessation of the American sovereignty over these Islands and the proclamation of the Philippine Independence, the petitioner did not cease to be justice of the
peace of said municipality of San Fernando, La Union. In this connection the writer of this opinion in his concurring opinion in the case of Brodett vs. De la Rosa
(77 Phil., 752), held the following:

The petitioners impugn the validity of the judgment of the respondent judge on the ground that, as said respondent was not reappointed by the
President of the Republic of the Philippines, he must have ceased to be judge upon the proclamation of the Independence of the Philippines.
Presumably the petitioners' contention is based on the legal maxim of statutory construction — expressio unius est exclusio alterius, and the
provision of our Constitution relating to the officers of the Commonwealth who should continue in office after the proclamation of our Independence,
which says:

The officials elected and serving under this Constitution shall be constitutional officers of the free and independent Government of the Philippines
and qualified to function in all respects as if elected directly under such Government, and shall serve their full terms of office as prescribed in this
Constitution.

The Philippine Independence Act promulgated by the Congress of the United States on March 24, 1944, provides in its section 2 (b) (2) as follows:

(b) The constitution [of the Philippines] shall also contain the following provisions, effective as of the date of the proclamation of the President
recognizing the independence of the Philippine Islands, as hereinafter provided:

(2) That the officials elected and serving under the constitution adopted pursuant to the provisions of the Act shall be constitutional officers of the free
and independent Government of the Philippine Islands and qualified to function in all respects as if elected directly under such Government, and
shall served their full terms of office as prescribed in the Constitution.

The last quoted provision which is incorporated in paragraph or section 1 (2), Article XVII, of the Constitution, constitutes a limitation on the power of
the framers of our Constitution to provide for the continuance or cessation of the officers therein mentioned. As they were not at liberty to insert or
not said provision, its inclusion in our Constitution can not be considered as the expression of their intention that the officers therein mentioned shall
continue as officer of the free and independent government of the Philippines. Consequently, the maxim expressio unius est exclusio alterius, which
is based upon the rules of logic and the natural working of the human mind and serve as a guide in determining the probable intention of the makers
of laws and constitutions expressly mentioning some and not others, can not be applied or invoked in support of the contention that, from the
inclusion of said provision it may be inferred that it was the intention of the delegates of the Constitutional Convention which drafted our Constitution
that appointive officers and employees and other elective officials should cease or not continue in office upon the proclamation of our Independence.
 On the other hand, as the framers of our Constitution were free to provide in the Constitution for the cessation or continuation in office of all
appointive officers and employees and all other elective officers under the Commonwealth, if it were their intention that they should not continue or
cease, they could and should have so expressly provided; but they did not do so. On the contrary, the Constitution prescribes that "The members of
the Supreme Court and all judges of inferior courts shall hold office during good behavior, until they reach the age of seventy years or become
incapacitated to discharge the duties of their office," (section 9, Article VIII); that "The Auditor General shall hold office for a term of ten years and
may not be reappointed" (section 1, Article XI); that "No officer or employee in the Civil Service shall be removed or suspended except for cause as
provided by law" (section 4, Article XII).

There is no doubt that the Constitution of the Philippines is a Constitution for the Commonwealth and the Republic. Article XVIII thereof provides that
"The government established by this Constitution shall be known as the Commonwealth of the Philippines. Upon the final and complete withdrawal of
the sovereignty of the United States and the proclamation of the Philippine Independence, the Commonwealth of the Philippines shall thenceforth be
known as the Republic of the Philippines." The only provisions of the Constitution not applicable to the Commonwealth are those of Article XVII
which became effective upon the declaration of the Independence of the Philippines; and the provisions of the Constitution not applicable to the
Republic of the Philippines are those of Article XVI, or the transitory provisions from the former colonial or territorial to the Commonwealth
Government.

The Constitution, referring to the transition from the former Philippine Government to the Commonwealth, provides in its section 4, Article XVI, that
"All officers and employees of the Government of the Philippine Islands shall continue in office until the Congress shall provide otherwise, but all
officers whose appointments are by this Constitution vested in the President shall vacate their respective offices, upon the appointment and
qualification of their successors, if such appointment is made within a period of one year from the date of the inauguration of the Commonwealth of
the Philippines." Undoubtedly, the framers of our Constitution deemed it necessary to so provide in order to avoid any doubt about their authority to
continue in office; because the said officers and employees were appointed by authorityof the People of the United States represented by the
Congress and the President of the United States, or the Jones Law; while the officers and employees of the Commonwealth of the Philippines were
to be appointed by authority of the People of the Philippines in whom the sovereignty resides and from whom all government authority emanates,
according to section 1, Article II of the Constitution of the Philippines.

But there is no similar provision in the Constitution covering the transition from the Commonwealth to the Republic. Evidently, it was not deemed
necessary to provide expressly in the Constitution for the continuation of all the officers and employees of the Commonwealth Government, because
thay had to continue, in the absence of an express provision to the contrary, for they are officers and employees appointed by authority of the People
of the Philippines, since the Commonwealth as well as the Republic are government established by the same Filipino people in the exercise of their
sovereignty, limited under the Commonwealth and complete or absolute after the proclamation of our independence.

That the Commonwealth of the Philippines was a sovereign government, though not absolute but subject to certain limitations imposed in the
Independence Act and incorporated as Ordinance appended to our Constitution, was recognized not only by the Legislative Department or Congress
of the United States in approving the Independence Law quoted and the Constitution of the Philippines, which contains the declaration that
"Sovereignty resides in the people and all government authority emanates from them" (section 1, Article II), but also by the Executive Department of
the United States. The late President Roosevelt in one of his messages to Congress said, among others, "As I stated on August 12, 1943, the United
States in practice regards the Philippines as having now the status as a government of other independent nations — in fact all the attributes of
complete and respected nationhood." (Congressional Record Vol. 29, part 6, page 8173). And it is a principle upheld by the Supreme Court of the
United States in many cases, among them in the case of Jones vs. United States (137 U. S., 202; 34 Law ed., 691, 696) that the question of
sovereignty is "a purely political question, the determination of which by the legislative and executivedepartments of any government conclusively
binds the judges, as well as all other officers, citizens and subjects."

A contrary construction, that is, that all appointive officers and employees of the Government of the Commonwealth, from the Chief Justice of the
Supreme Court to an office messenger had ceased ipso facto or automatically upon the proclamation of the Independence of the Philippines, would
lead to enormous public inconvenience, a complete paralization of all the functions of the government, since it would necessarily require a
considerable period of time to appoint the new officers and employees in their place. And if they were to hold over or continue in office until their
successors are appointed, as there is no limitation provided in the Constitution as to the time within which the appointing powers may or must
appoint their successors, a sort of Damocles' sword would be left hanging and ready to fall over the heads of said officers and employees for an
indefinite period of time, to the detriment of the proper discharge of their functions and the independence that is to be expected from judges in the
performance of their duties, essential for a good and clean government.

In view of all the foregoing, it is evident that the respondent judge had the constitutional right to continue acting as judge after the proclamation of the
Philippine Independence, and that, therefore, the judgment rendered by him in the present case is that of a judge de jure and valid.

The fact that during the pendency of the present case before this Court, the petitioner reached the age of seventy years, can not affect the question involved in
the present case, that is, whether or not the petitioner was the rightful justice of the peace of San Fernando, La Union, at the time the respondent Arciaga was
appointed on July, 1946, justice of the peace in lieu of the petitioner, and afterwards until he has reached the age of seventy years.

In view of the foregoing, we conclude and hold that the petitioner had the right to continue in office until he has reached the age of seventy years, with all the the
privileges and emoluments appurtenant to the office; and that the ad-interim appointment of respondent Gavina disapproved, and of the respondent Arciaga
approved, by the the Commission on Appointments, had no effect whatever on the status of the petitioner as justice of the peace of San Fernando until he has
reached the age of seventy years.

Moran, C.J., Briones, Padilla, and Tuason, JJ., concur.

Separate Opinions

HILADO, J., concurring:

I concur in the conclusion of the majority that petitioner had the right to continue in office until he reached the age of seventy years, with all the privileges and
emoluments thereto, appertaining, and that the ad interim appointments of respondent Gavina which was disapproved by the Commission on Appointments, and
that of respondent Arciaga which was approved thereby, did not operate to deprive petitioner of his right and title to said office until he reached the age of 70
years on January 8, 1947. My reasons follow:

Although I am of opinion that the constitutional right of members of the Supreme Court and judges of inferior courts to hold office during good behavior until they
reach at the age of 70 years or become incapacitated to discharge the duties of their office, is waivable by the incumbent, and should be construed without
prejudice to the legal effects of abandonment in proper cases, I do not see from the record that petitioner has waived said constitutional right nor that he has
abandoned his office as justice of the peace of San Fernando, La Union, to which he was appointed and in which he duly qualified, and which he took possession
of on April 16, 1916. Petitioner's appointment as justice of the peace of San Fernando, La Union, by the Chairman of the Philippine Executive Commission, and
which he alleges to have accepted "fearful that he might be branded or suspected as being anti-Japanese with injurious consequences to himself and his family,"
under which he avers that he "acted, not willingly, as such Justice of the Peace until July, 1944, but remaining all the time loyal of the United States of America
and the Commonwealth of the Philippines and now to the Republic of the Philippines" (Complaint, paragraph II [c], there being no allegation on the part of
respondents that petitioner acted willfully and disloyally toward his lawful government and to that the United States), did not in my opinion work an abandonment
of his Commonwealth appointment, for the double reason that if under the theory of the majority of this Court the Philippine Executive Commission was a de
factogovernment, then it was a different government from the Commonwealth Government, which latter, under such theory, must be considered as suspended in
the areas where such de facto government operated, with the consequences that when petitioner acted as justice of the peace of said de facto government his
functions under the de jure government were in a state of suspension, which in turn give rise to the result that hedid not need to abandon his Commonwealth
appointment in order to be able to accept the occupation appointment; and that if the Philippine Executive Commission was not even a de facto government but a
mere puppet organization, under my theory, then petitioner's appointment thereby was and is null and void so far as the Republic is concerned; and, lastly, so far
as the record reveals, his acceptance of the occupation appointments was under enemy pressure, and for that reason was null and void any way.

Besides, it appears that petitioner after the reestablishment of the Commonwealth government, more specifically on April 27, 1945, was recalled to the office of
the justice of the peace of San Fernando, La Union, and thereafter acted and continued to act as such justice of the peace until December 10, 1945, when he fell
ill and obtained from the judge of the Court of First Instance of the province a grant of sick leave, upon which occasion respondent Gavina, who was justice of the
peace of San Gabriel and San Juan, La Union, was designated to act in petitioner's place "until he (petitioner) shall return to duty," (Exh. 1). These facts clearly
show that the mind of the Commonwealth Government petitioner had not been guilty of disloyalty or within breach of his oath of office during the occupation.

Pablo and Perfecto, JJ. concur.

RESOLUTION

December 11, 1947

FERIA, J.:

This Court did not exercise its discretion ot require the appearance of the Solicitor General in this case under section 23, Rule 3, because the action does not
involve the validity of any treaty, law, ordinance,or executive order or regulation; and did not notify him of the filing of this action, because it is not the duty of the
Solicitor General to represent the respondent Arciaga under section 1661 (b) of the Administrative Code, since this is a quo warrantoproceeding instituted against
the said respondent, not in his official capacity as justice of the peace, but in his private capacity as an alleged intruder or person alleged to be unlawfully holding
the public office of justice of the peace of San Fernando, La Union, to which the latter is entitled under the Constitution.

However, we shall pass upon the merits of the motion for reconsideration and new trial filed by the office of the Solicitor General (signed by the First Assistant
Solicitor General Roberto A. Gianzon and Solicitor Francisco Carreon), in order to put in bolder relief the unassailability of our opinion on the right of the
appointive officers of the Commonwealth to continue as officers of the Republic. For clearness' sake, we shall first state the basis of our opinion and then the
arguments of the Solicitor General.

We hold, in our decision in this case, that the petitioner could not be removed from his office as justice of the peace of San Fernando, La Union, because section
9, Article VIII, of the Constitution provides that "the members of the Supreme Court and all judges of inferior courts shall hold office during good behavior, until
they reach the age of seventy years, or become incapacitated to discharge their office." The transition from the Commonwealth to the Republic did not affect
those officers appointed or holding office during the Commonwealth, since there can be no doubt that the Constitution of the Philippines is for the Commonwealth
as well as for the Republic. The Constitution is for both, because Article XVIII thereof provides that "The government established by this Constitution shall be
known as the Commonwealth of the Philippines. Upon the final and complete withdrawal of the sovereignty of the United States and the proclamation of the
Philippine independence, the Commonwealth of the Philippines shall thenceforth be known as the Republic of the Philippines."
We stated in our decision that, it cannot be contended that the intention of the framers of the Constitution to provide that appointive officers of the Commonwealth
should cease or not continue as officers of the Republic, may be inferred from the inclusion of the provision of section 2 (b) of the Philippine Independence Act of
Tydings-McDuffie Law in our Constitution (as section 1 [2], Article XVII) to the effect that "The officials elected and serving under this constitution shall be
constitutional officers of the free and independent Government of the Philippines and qualified to function in all respects as if elected directly under such
government, and shall serve their full term of office as prescribed in the Constitution. Because, the Congress of the United States having required the inclusion of
the above quoted provision in our Constitution, the framers thereof were not free or at liberty to insert or not said provision therein; and therefore, the legal maxim
"expressio unius est exclusio alterius" is not applicable, for this maxim is based upon the rules of logic and the natural working of the human mind, and serves as
a guide in determining the probable intention of the makers of laws and constitutions in mentioning some and not others of the same class.

The only arguments of the Solicitor General in support of his motion for reconsideration and new trial which deserve some consideration, boils down to a
syllogism the premises of which we are quoting verbatim from his memorandum, to wit:

Major premise: "Applying the maxim (inclusio unius est exclusio alterius)there can be no question as to the intention of the United States Congress, in providing
that elective officials should continue as officials of the independent Republic, to exclude those not belonging to that category of officers [that is, that the latter
should not continue in office upon proclamation of our Independence]. On the other hand, the framers of our Constitution, by inserting without alteration or
amendment the constitutional provision in question must be deemed to have also adopted the intention of the Congress of the United States as expressed in the
Tydings-McDuffie Act."

Minor premise: "The framers of the Constitution were most certainly free to provide that other officers of the Commonwealth, besides those mentioned in said
provision of the Philippine Independence Act, should continue in office under the Republic. Not having done so, the clear inference is that the framers of the
Constitution likewise adopted the intention of the United States Congress."

Conclusion: Therefore, it was also the intention of the framers of the Constitution that the appointive and other elective officers of the Commonwealth should not
continue as officers under the Republic.

The major and minor premises of the syllogism are not correct, and therefore the conclusion is untenable.

The major premise is incorrect, since it assumes that it was the intention of Congress, in requiring the insertion of the above-quoted provision, that the appointive
and other elective officers of the Commonwealth should not continue in office as officers of the independent Government of the Philippines. For it is evidently
clear that the intention of the Congress of the United States, in requiring that our Constitution should contain said transitory provision, was to establish only that
limitation on the Constitutiton and leave the framers thereof free or at liberty to provide whether or not the appointive and other elective officers of the
Commonwealth should continue as officers of the independent Government of the Philippines. The Solicitor General admits that "the framers of the Constitution
were free to provide that other officers of the Commonwealth should continue in office under the Republic," and consequently that they should also not continue.
Had it been the intention of the United States Congress that all the other officers of the Commonwealth should not continue as officers of the Republic, it should
have enacted a provision to that effect among those required by the Tydings-McDuffie Act to be included in our Constitution.

The minor premise is also incorrect, for it was not possible for the framers of our Constitution to have adopted by mere implication the assumed intention of the
United States Congress that the appointive and other elective officers of the Commonwealth should not continue as officers of the Republic. In the first place,
because there was no such an intention of the United States Congress as already shown. And, besides because even assuming arguendo that the United States
Congress, in requiring the insertion in our Constitution of the provision under consideration, had the intention that the appointive and other elective officers of the
Commonwealth should not continue as officers of the Republic, it can not be inferred that the framers of our Constitution, in including said provision and not
providing otherwise, have adopted such intention of the Congress. For the simple reason that the provision of the Tydings-McDuffie Law under consideration was
not adopted but imposed upon the framers of our Constitution, and the latter were not free to include it or not. To adopt a constitutional or statutory provision with
its necessary implications into another, presupposes freedom to do or not to do so. The legal maxim "inclusio unius est exclusio alterius" is predicated upon one's
own voluntary act and not upon that of others. Therefore, motion is denied.

Moran, C.J., Pablo, Perfecto, Briones, and Tuason, JJ., concur.

Paras, J., concurs in the result.

PERFECTO, J., concurring:

The Solicitor General, in a pleading dated November 14, 1947, moved for the reconsideration of our decision in this case promulgated on October 30, 1947. The
main question raised in the motion refers to the interpretation of subsection 2 of section 1 of Article XVII of the Constitution which reads as follows:

The officials elected and serving under this Constitution shall be constitutional officers of the free and independent Government of the Philippines
and qualified to function in all respects as if elected directly under such Government, and shall serve their full terms of office as prescribed in this
Constitution.

The movant contends that, applying to the provision the Latin maxim "expressio unius est exclusio alterius," we should reverse the doctrine set in our decision to
the effect that the appointive officers of the Commonwealth continue, without the need of a new appointment under theRepublic, as de jure officers of the
Republic and may not be removed from office by the appointment of other persons in their places except in the manner and for the cause provided by the
Constitution or by statutory provision.
The question herein discussed has been raised for the first time in the petition dated July 29, 1946, filed in the original case of prohibition of Brodett vs. De la
Rosa.

Petitioners in said case impunged the validity of an order issued on July 16, 1946, by Judge Mariano L. de la Rosa, of the Court of First Instance of Manila, upon
the fact that said judge has been appointed as such before the proclamation of independence on July 4, 1946, and that not having been appointed under the
Republic, he ceased to have authority to issue the order in question by virtue of the constitutional provision now under our consideration.

Petitioners argued that in accordance with subsection 2 of section 1 of Article XVII of the Constitution, upon the cessation of the Commonwealth Government on
July 4, 1946, all its officers, with the exception of the elective ones, ceased to have an authority. They maintain that to retain said authority Judge De la Rosa
must have been appointed anew by the President under the Republic before issuing the order in question.

Petitioner's contention was unanimously rejected by this Court in its decision promulgated on December 18, 1946. To elaborate upon the Court's theory, Mr.
Justice Feria wrote a concurring opinion, the statements in which have been adopted in the majority decision in the instant case.

After a careful re-examination of the question, we cannot find our way for reversing our pronouncement as to the inapplicability of the maxim. There is no single
valid ground in the arguments adduced by the Solicitor General to support the reversal.

The constitutional provision in question must be read and construed, not as an isolated and independent precept, but as an integral part of the whole document in
which it is embodied, and in the light of the history of its enactment and insertion in the fundamental law.

As truthfully stated by the writer of the majority decision in this case, the provision has been inserted in compliance with one of the specific mandates of the
Tydings-McDuffie Act. As one of the delegates to the Constitutional Convention, we are in a position to certify that this statement is based on fact.

It must be noted that there are three separate articles in the Constitution reproducing provisions of the Tydings-McDuffie Act — Article XVI, Transitory Provisions,
Article XVII, Special Provisions Effective Upon the Proclamation of the Independence of the Philippines, and unnumbered article entitled Ordinance Appended to
the Constitution. At the time we drafted the Constitution we had in mind two paramount purposes, to produce the best possible constitution and to insure its
approval by the President of the United States. Whenever we felt that there was a conflict between the two,we sacrificed the first for the sake of the second,
having in mind that whatever defects the document might have could later be cured by amendment when the metropolis shall have withdrawn completely its
sovereignty over our country.

The draft, as transferred to the Committee on Style, already embodied several provisions of the Tydings-McDuffie Act. Still concerned with the idea of insuring
the approval of the President of the United States of America, the Committee on Style, composed of the most representive members of the Convention, including
some of the foremost leaders of the two dominant political parties of the country, both committed to the platform of securing our national independence, added to
the next many other provisions taken from the Tydings-McDuffie Act, so as to drive in the mind of President Roosevelt the conviction that none of the conditions
imposed by the Tydings-McDuffie Act may remain unfulfilled. We wanted to be sure that the Constitution should come into effect and that upon the termination of
the ten-year transitory period our national independence shall be proclaimed. The complete success of the political aims of the Constitutional Convention is born
out by the events of more than one decade of our national history.

Reading the provision in question, not as an isolated unit, but as an integral part, so it is, of the fundamental law, there is absolutely no ground in support of the
theory advanced by the Solicitor General. The provisions of Articles XVI and XVII and of the Ordinance are of special and transitory character and, therefore,
should be strictly construed. Nothing ought to be read in them which is not clearly intended by their clear wording.

There is nothing in the provision in question to the effect that non-elective officers and employees of the Commonwealth shall cease in their office upon the
proclamation of independence, or that in the Republic they shall be divested of the rights, prerogatives and protection guaranteed and afforded to them by
constitutional or statutory provisions during the Commonwealth.

Being declaratory and affirmative, the provision in question cannot comprehend any matter not covered by the clear meaning of its words.

Section IV of Article XV of the Constitution provides:

No officer or employee of the Civil Service shall be removed or suspended except for cause as provided by law.

There is absolutely no incompatibility between this precept and the specia lprovision in question. There is no conflict between the provision that elective officials
of the Commonwealth shall complete their full terms of office after the proclamation of independence and the precept that the tenure of office of civil service
officers and employees shall not be interrupted subject only to removal or suspension for cause as provided by law.

Under section 9 of Article VIII of the Constitution, the members of the Supreme Court and all judges of inferior courts "shall hold office during good behavior, until
they reach the age of 70 years, or become incapacitated to discharge the duties of their office." This guaranty in favor of all members of the judiciary is not and
cannot be affected by the provision weare discussing. The two provisions may go hand in hand without any conflict.

The philosophy of the Constitution is premised on the idea of continuity and stability as a general principle guiding the transition from pre-Commonwealth to
Republic Government so as to avoid a vacuum or hiatus disrupting the orderly processes of society and leading to anarchy.
From a substantial point of view, the change and transfer from the pre-Commonwealth Government to the Commonwealth Government has been more
significant and important than the change from the Commonwealth to the Republic.

As a matter of fact, the last transition has been mostly a matter of form. Under Article XVIII of the Constitution, "upon the final and complete withdrawal of the
sovereignty of the United States and the proclamation of the Philippine Independence, the Commonwealth of the Philippines shall thenceforth be known as the
Republic of the Philippines." A mere matter of name.

The change from pre-Commonwealth to Commonwealth Government has been attended by a revolution, peaceful and orderly but no less real. The American
Governor General, appointed by the President of a foreign country, has been replaced by a Chief Executive elected by the free will of the Filipino people. It
seems unnecessary to elaborate on further details as to the revolutionary change from American government to a Filipino government, from a foreign to a
national government.

Even the fundamental concept of national sovereignty started only to become a reality since the establishment of the Commonwealth. Such national sovereignty
of the Filipino people has since then become recognized by the United States of America when, by authority of the Congress of the United States, President
Roosevelt approved our Constitution where it is declared: "The Philippines is a Republican state. Sovereignty resides in the people and all government authority
emanates from them. (Section 1, Article II.)

In more than one statement issued during the last war, President Roosevelt has officially recognized our government of a sovereign country. That recognition of
our national sovereignty has been ratified by all the members of the United Nations, not only when the Philippines took part in the organization of the United
Nations, but when all the other members have accepted the ratification of the Charter made by our Senate on August 30, 1945, almost a year before the
proclamation of independence.

The general rule of continuity and stability, lying behind the philosophy followed by the drafters of the Constitution, is supported by the fact that, in order that the
President of our people may place in government, especially in key positions, men of his confidence, in substitution of those appointed by the American Governor
General, it has been necessary to insert the exception provided in section 4 of Article XVI, which reads as follows:

All officers and employees in the existing Government of the Philippine Islands shall continue in office until the Congress shall provide otherwise, but
all officers whose appointments are by this Constitution vested in the President shall vacate their respective, offices upon the appointment and
qualification of their successors, if such appointment is made within a period of one year from the date of the inauguration of the Commonwealth of
the Philippines.

It will be noted that this section enunciates first the general rules of continuity and stability and then proceeds to provide for an exception, which is perfectly
understandable if we take into consideration the revolutionary change resulting from the replacement of a foreign appointive Chief Executive by an elective
Filipino President.

The transition from the Commonwealth Government to the Government of the Republic being merely formal, the delegates to the Constitutional Convention did
not perceive any reason why the appointive officers should be disturbed in their positions. By the same token by which we did not feel it necessary to disturb in
their positions the minor officers and employees upon the advent of the Commonwealth, because their functions are strictly administrative and are regulated by
Civil Service rules, in accordance with Article XII of the Constitution and pertinent statutory provisions, and there was no reasons to believe that the continuation
in office of Commonwealth minor officers and employees may offer any obstacle to any administrative policy which the Filipino President may adopt or any
legislative policy which the Filipino President may adopt or any legislative policy which the National Assembly may enact, in section 4 of Article XVI we
circumscribed, the exception to officers whose appointments are vested upon the President on the ground that many of them were exercising policy-determining
functions to control and supervise which the President should have a free hand for the success of his administration.

Upon the advent of the Republic, policy-determining officers derived their appointment from the elective President of the Philippines and not from any other Chief
Executive. Under our System of representative democracy, as established by the fundamental law, their authority emanated from the sovereign people, the latter
being represented by the elective officialswho will continue holding their offices after independence. There was absolutely no reason why we should have
authorized a new revamping of the government, prone to provoke unnecessary political complications, uncertainty and uneasiness in public service, set aside
merits in the service, and give rise to understandable machinations, each and all of which are not conduciveto the bolstering of the public interest but, on the
contrary, are highly detrimental to the general well-being of the people.

Movant's theory, besides lacking any basis in the clear text of the Constitution, is highly dangerous. In effect, it will give the President unlimited discretion to
change part of or the whole membership of the Supreme Court, the great majority of the judges of inferior courts, and other officers whose appointment is vested
in him by the Constitution, and high executive officers unlimited discretion to replace with outsiders, excluding political favorites, thousands upon thousnads of
officers and employees in the civil service, the overwhelming majority of whom have been rendering long years of honest, faithful, efficient, and meritorious
service to the government and to the people. Shall any one be surprised if under such situation the backbone of our judicial system and the solid body of our civil
service shall be broken into pieces to be used as pawns in political maneuvers? After smashing the principle of stability which guarantees the independence of
the judiciary and an honest and efficient civil service, the resulting situation of insecurity will not fail to lead to evil consequences, highly detrimental to public
peace.

No one can ignore the possibility that the situation may be used to further entrench in government the political party in power, no matter what the people may feel
about it, and wipe out all opposition to insure the existence of a one-party system, a step beyond which lies a truculent dictatorship. Judicial independence and
civil service stability are indespensable in the democratic system of government established by the Constitution. Their necessary alternatives will be an
unpardonable betrayal of our conscience and of our people.
The other grounds alleged in the motion for reconsideration being also unmeritorious, so much so that we deem it unnecessary to waste any time on them, we
hold and so vote that the motion should be, as it is now, denied.

HILADO, J., concurring:

I concur in the foregoing resolution, without prejudice to my concurring opinion when this case was decided originally. I only wish to add that when Article XVIII of
the Constitution was included therein, providing that "upon the final and complete withdrawal of the sovereignty of the United States and the proclamation of
Philippine independence, the Commonwealth of thePhilippines shall thenceforth be known as the Republic of the Philippines, "the framers must have intended
the Republic of the Philippines, which was there provided to automatically come into existence upon the happening of the event therein mentioned, to be a
republican government complete with the same three great departments, their respective bureaus, divisions and subordinate offices, and their respective
personnel , that made up the Government of the Commonwealth of the Philippines, which was thus to be transformed into the Republic. By its very nature a
republic, as that contemplated by the Tydings-McDuffie Act and the Constitution of the Philippines adopted pursuant thereto, is a tripartite form of government
composed of the legislative, the executive, and the judicial departments. Most assuredly, the framers did not intend that upon the withdrawal of the sovereignty of
the United States and the proclamation of the independence of the Philippines there should emerge a republic without a judicial department and without all other
governmental offices occupied by appointive officials, as well as elective ones not constitutional in nature; and just a certainly can be assumed that said framers
did not intend to leave with the newly born republic upon its emergence only the names of the offices and positions constituting the judiciary , as well as such
other appointive and elective offices as were not constitutional in nature, without their incumbents who were occcupying them under the Commonwealth
Government at the very moment of its transformation into the Republic.

If it be considered, as I think it should, that the framers of the Constitution in Article XVIII therefore intended that all the great departments of the Commonwealth
government, with all their personnel, should continue intact and go with the government when it was automatically transformed into that of the Republic of the
Philippines upon the happening of the historic event therein spoken of, it will follow without saying that those of said officials whose offices were constitutional
would continue in their respective offices by virtue of the same constitution, among whose provisions section section 9 of Article VIII would still continue to
govern. Concretely referring to the judiciary, as we have to in the present incident, it is elementary that a court can not exist without a judge (21 C. J. S., p. 214,
section 139).

Therefore, judicial officers referred to in said section 9 were under the Republic, just as they had under the Commonwealth, to "hold office during good behavior,
until they reach the age of seventy years, or become incapacitated to discharge the duties of their office."

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-21601 December 17, 1966

NIELSON & COMPANY, INC., plaintiff-appellant,

vs.
LEPANTO CONSOLIDATED MINING COMPANY, defendant-appellee.

W. H. Quasha and Associates for plaintiff-appellant.

Ponce Enrile, Siguion-Reyna, Montecillo and Belo for defendant-appellee.

ZALDIVAR, J.:

On February 6, 1958, plaintiff brought this action against defendant before the Court of First Instance of Manila to recover certain sums of money representing
damages allegedly suffered by the former in view of the refusal of the latter to comply with the terms of a management contract entered into between them on
January 30, 1937, including attorney's fees and costs.
Defendant in its answer denied the material allegations of the complaint and set up certain special defenses, among them, prescription and laches, as bars
against the institution of the present action.

After trial, during which the parties presented testimonial and numerous documentary evidence, the court a quo rendered a decision dismissing the complaint
with costs. The court stated that it did not find sufficient evidence to establish defendant's counterclaim and so it likewise dismissed the same.

The present appeal was taken to this Court directly by the plaintiff in view of the amount involved in the case.

The facts of this case, as stated in the decision appealed from, are hereunder quoted for purposes of this decision:

It appears that the suit involves an operating agreement executed before World War II between the plaintiff and the defendant whereby the former
operated and managed the mining properties owned by the latter for a management fee of P2,500.00 a month and a 10% participation in the net
profits resulting from the operation of the mining properties. For brevity and convenience, hereafter the plaintiff shall be referred to as NIELSON and
the defendant, LEPANTO.

The antecedents of the case are: The contract in question (Exhibit `C') was made by the parties on January 30, 1937 for a period of five (5) years. In
the latter part of 1941, the parties agreed to renew the contract for another period of five (5) years, but in the meantime, the Pacific War broke out in
December, 1941.

In January, 1942 operation of the mining properties was disrupted on account of the war. In February of 1942, the mill, power plant, supplies on
hand, equipment, concentrates on hand and mines, were destroyed upon orders of the United States Army, to prevent their utilization by the
invading Japanese Army. The Japanese forces thereafter occupied the mining properties, operated the mines during the continuance of the war, and
who were ousted from the mining properties only in August of 1945.

After the mining properties were liberated from the Japanese forces, LEPANTO took possession thereof and embarked in rebuilding and
reconstructing the mines and mill; setting up new organization; clearing the mill site; repairing the mines; erecting staff quarters and bodegas and
repairing existing structures; installing new machinery and equipment; repairing roads and maintaining the same; salvaging equipment and storing
the same within the bodegas; doing police work necessary to take care of the materials and equipment recovered; repairing and renewing the water
system; and remembering (Exhibits "D" and "E"). The rehabilitation and reconstruction of the mine and mill was not completed until 1948 (Exhibit
"F"). On June 26, 1948 the mines resumed operation under the exclusive management of LEPANTO (Exhibit "F-l").

Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement arose between NIELSON and LEPANTO over the status
of the operating contract in question which as renewed expired in 1947. Under the terms thereof, the management contract shall remain in suspense
in case fortuitous event orforce majeure, such as war or civil commotion, adversely affects the work of mining and milling.

"In the event of inundations, floodings of mine, typhoon, earthquake or any other force majeure, war, insurrection, civil commotion,
organized strike, riot, injury to the machinery or other event or cause reasonably beyond the control of NIELSON and which adversely
affects the work of mining and milling; NIELSON shall report such fact to LEPANTO and without liability or breach of the terms of this
Agreement, the same shall remain in suspense, wholly or partially during the terms of such inability." (Clause II of Exhibit "C").

NIELSON held the view that, on account of the war, the contract was suspended during the war; hence the life of the contract should be considered
extended for such time of the period of suspension. On the other hand, LEPANTO contended that the contract should expire in 1947 as originally
agreed upon because the period of suspension accorded by virtue of the war did not operate to extend further the life of the contract.

No understanding appeared from the record to have been bad by the parties to resolve the disagreement. In the meantime, LEPANTO rebuilt and
reconstructed the mines and was able to bring the property into operation only in June of 1948, . . . .

Appellant in its brief makes an alternative assignment of errors depending on whether or not the management contract basis of the action has been extended for
a period equivalent to the period of suspension. If the agreement is suspended our attention should be focused on the first set of errors claimed to have been
committed by the court a quo; but if the contrary is true, the discussion will then be switched to the alternative set that is claimed to have been committed. We will
first take up the question whether the management agreement has been extended as a result of the supervening war, and after this question shall have been
determined in the sense sustained by appellant, then the discussion of the defense of laches and prescription will follow as a consequence.

The pertinent portion of the management contract (Exh. C) which refers to suspension should any event constitutingforce majeure happen appears in Clause II
thereof which we quote hereunder:

In the event of inundations, floodings of the mine, typhoon, earthquake or any other force majeure, war, insurrection, civil commotion, organized
strike, riot, injury to the machinery or other event or cause reasonably beyond the control of NIELSON and which adversely affects the work of
mining and milling; NIELSON shall report such fact to LEPANTO and without liability or breach of the terms of this Agreement, the same shall remain
in suspense, wholly or partially during the terms of such inability.
A careful scrutiny of the clause above-quoted will at once reveal that in order that the management contract may be deemed suspended two events must take
place which must be brought in a satisfactory manner to the attention of defendant within a reasonable time, to wit: (1) the event constituting the force
majeure must be reasonably beyond the control of Nielson, and (2) it must adversely affect the work of mining and milling the company is called upon to
undertake. As long as these two condition exist the agreement is deem suspended.

Does the evidence on record show that these two conditions had existed which may justify the conclusion that the management agreement had been suspended
in the sense entertained by appellant? Let us go to the evidence.

It is a matter that this Court can take judicial notice of that war supervened in our country and that the mines in the Philippines were either destroyed or taken
over by the occupation forces with a view to their operation. The Lepanto mines were no exception for not was the mine itself destroyed but the mill, power plant,
supplies on hand, equipment and the like that were being used there were destroyed as well. Thus, the following is what appears in the Lepanto Company Mining
Report dated March 13, 1946 submitted by its President C. A. DeWitt to the defendant:1 "In February of 1942, our mill, power plant, supplies on hand, equipment,
concentrates on hand, and mine, were destroyed upon orders of the U.S. Army to prevent their utilization by the enemy." The report also mentions the report
submitted by Mr. Blessing, an official of Nielson, that "the original mill was destroyed in 1942" and "the original power plant and all the installed equipment were
destroyed in 1942." It is then undeniable that beginning February, 1942 the operation of the Lepanto mines stopped or became suspended as a result of the
destruction of the mill, power plant and other important equipment necessary for such operation in view of a cause which was clearly beyond the control of
Nielson and that as a consequence such destruction adversely affected the work of mining and milling which the latter was called upon to undertake under the
management contract. Consequently, by virtue of the very terms of said contract the same may be deemed suspended from February, 1942 and as of that month
the contract still had 60 months to go.

On the other hand, the record shows that the defendant admitted that the occupation forces operated its mining properties subject of the management
contract,2 and from the very report submitted by President DeWitt it appears that the date of the liberation of the mine was August 1, 1945 although at the time
there were still many booby traps.3 Similarly, in a report submitted by the defendant to its stockholders dated August 25, 1948, the following appears: "Your
Directors take pleasure in reporting that June 26, 1948 marked the official return to operations of this Company of its properties in Mankayan, Mountain Province,
Philippines."4

It is, therefore, clear from the foregoing that the Lepanto mines were liberated on August 1, 1945, but because of the period of rehabilitation and reconstruction
that had to be made as a result of the destruction of the mill, power plant and other necessary equipment for its operation it cannot be said that the suspension of
the contract ended on that date. Hence, the contract must still be deemed suspended during the succeeding years of reconstruction and rehabilitation, and this
period can only be said to have ended on June 26, 1948 when, as reported by the defendant, the company officially resumed the mining operations of the
Lepanto. It should here be stated that this period of suspension from February, 1942 to June 26, 1948 is the one urged by plaintiff.5

It having been shown that the operation of the Lepanto mines on the part of Nielson had been suspended during the period set out above within the purview of
the management contract, the next question that needs to be determined is the effect of such suspension. Stated in another way, the question now to be
determined is whether such suspension had the effect of extending the period of the management contract for the period of said suspension. To elucidate this
matter, we again need to resort to the evidence.

For appellant Nielson two witnesses testified, declaring that the suspension had the effect of extending the period of the contract, namely, George T. Scholey and
Mark Nestle. Scholey was a mining engineer since 1929, an incorporator, general manager and director of Nielson and Company; and for some time he was also
the vice-president and director of the Lepanto Company during the pre-war days and, as such, he was an officer of both appellant and appellee companies. As
vice-president of Lepanto and general manager of Nielson, Scholey participated in the negotiation of the management contract to the extent that he initialed the
same both as witness and as an officer of both corporations. This witness testified in this case to the effect that the standard force majeure clause embodied in
the management contract was taken from similar mining contracts regarding mining operations and the understanding regarding the nature and effect of said
clause was that when there is suspension of the operation that suspension meant the extension of the contract. Thus, to the question, "Before the war, what was
the understanding of the people in the particular trend of business with respect to the force majeure clause?", Scholey answered: "That was our understanding
that the suspension meant the extension of time lost."6

Mark Nestle, the other witness, testified along similar line. He had been connected with Nielson since 1937 until the time he took the witness stand and had been
a director, manager, and president of the same company. When he was propounded the question: "Do you know what was the custom or usage at that time in
connection with force majeure clause?", Nestle answered, "In the mining world the force majeure clause is generally considered. When a calamity comes up and
stops the work like in war, flood, inundation or fire, etc., the work is suspended for the duration of the calamity, and the period of the contract is extended after the
calamity is over to enable the person to do the big work or recover his money which he has invested, or accomplish what his obligation is to a third person ."7

And the above testimonial evidence finds support in the very minutes of the special meeting of the Board of Directors of the Lepanto Company issued on March
10, 1945 which was then chairmaned by Atty. C. A. DeWitt. We read the following from said report:

The Chairman also stated that the contract with Nielson and Company would soon expire if the obligations were not suspended, in which case we
should have to pay them the retaining fee of P2,500.00 a month. He believes however, that there is a provision in the contract suspending the effects
thereof in cases like the present, and that even if it were not there, the law itself would suspend the operations of the contract on account of the war.
Anyhow, he stated, we shall have no difficulty in solving satisfactorily any problem we may have with Nielson and Company. 8

Thus, we can see from the above that even in the opinion of Mr. DeWitt himself, who at the time was the chairman of the Board of Directors of the Lepanto
Company, the management contract would then expire unless the period therein rated is suspended but that, however, he expressed the belief that the period
was extended because of the provision contained therein suspending the effects thereof should any of the case of force majeure happen like in the present case,
and that even if such provision did not exist the law would have the effect of suspending it on account of the war. In substance, Atty. DeWitt expressed the
opinion that as a result of the suspension of the mining operation because of the effects of the war the period of the contract had been extended.

Contrary to what appellant's evidence reflects insofar as the interpretation of the force majeure clause is concerned, however, appellee gives Us an opposite
interpretation invoking in support thereof not only a letter Atty. DeWitt sent to Nielson on October 20, 1945,9 wherein he expressed for the first time an opinion
contrary to what he reported to the Board of Directors of Lepanto Company as stated in the portion of the minutes of its Board of Directors as quoted above, but
also the ruling laid down by our Supreme Court in some cases decided sometime ago, to the effect that the war does not have the effect of extending the term of
a contract that the parties may enter into regarding a particular transaction, citing in this connection the cases of Victorias Planters Association v. Victorias Milling
Company, 51 O.G. 4010; Rosario S. Vda. de Lacson, et al. v. Abelardo G. Diaz, 87 Phil. 150; and Lo Ching y So Young Chong Co. v. Court of Appeals, et al., 81
Phil. 601.

To bolster up its theory, appellee also contends that the evidence regarding the alleged custom or usage in mining contract that appellant's witnesses tried to
introduce was incompetent because (a) said custom was not specifically pleaded; (b) Lepanto made timely and repeated objections to the introduction of said
evidence; (c) Nielson failed to show the essential elements of usage which must be shown to exist before any proof thereof can be given to affect the contract;
and (d) the testimony of its witnesses cannot prevail over the very terms of the management contract which, as a rule, is supposed to contain all the terms and
conditions by which the parties intended to be bound.

It is here necessary to analyze the contradictory evidence which the parties have presented regarding the interpretation of the force majeure clause in the
management contract.

At the outset, it should be stated that, as a rule, in the construction and interpretation of a document the intention of the parties must be sought (Rule 130,
Section 10, Rules of Court). This is the basic rule in the interpretation of contracts because all other rules are but ancilliary to the ascertainment of the meaning
intended by the parties. And once this intention has been ascertained it becomes an integral part of the contract as though it had been originally expressed
therein in unequivocal terms (Shoreline Oil Corp. v. Guy, App. 189, So., 348, cited in 17A C.J.S., p. 47). How is this intention determined?

One pattern is to ascertain the contemporaneous and subsequent acts of the contracting parties in relation to the transaction under consideration (Article 1371,
Civil Code). In this particular case, it is worthy of note what Atty. C. A. DeWitt has stated in the special meeting of the Board of Directors of Lepanto in the portion
of the minutes already quoted above wherein, as already stated, he expressed the opinion that the life of the contract, if not extended, would last only until
January, 1947 and yet he said that there is a provision in the contract that the war had the effect of suspending the agreement and that the effect of that
suspension was that the agreement would have to continue with the result that Lepanto would have to pay the monthly retaining fee of P2,500.00. And this belief
that the war suspended the agreement and that the suspension meant its extension was so firm that he went to the extent that even if there was no provision for
suspension in the agreement the law itself would suspend it.

It is true that Mr. DeWitt later sent a letter to Nielson dated October 20, 1945 wherein apparently he changed his mind because there he stated that the contract
was merely suspended, but not extended, by reason of the war, contrary to the opinion he expressed in the meeting of the Board of Directors already adverted
to, but between the two opinions of Atty. DeWitt We are inclined to give more weight and validity to the former not only because such was given by him against
his own interest but also because it was given before the Board of Directors of Lepanto and in the presence, of some Nielson officials 10 who, on that occasion
were naturally led to believe that that was the true meaning of the suspension clause, while the second opinion was merely self-serving and was given as a mere
afterthought.

Appellee also claims that the issue of true intent of the parties was not brought out in the complaint, but anent this matter suffice it to state that in paragraph No.
19 of the complaint appellant pleaded that the contract was extended. 11 This is a sufficient allegation considering that the rules on pleadings must as a rule be
liberally construed.

It is likewise noteworthy that in this issue of the intention of the parties regarding the meaning and usage concerning the force majeure clause, the testimony
adduced by appellant is uncontradicted. If such were not true, appellee should have at least attempted to offer contradictory evidence. This it did not do. Not even
Lepanto's President, Mr. V. E. Lednicky who took the witness stand, contradicted said evidence.

In holding that the suspension of the agreement meant the extension of the same for a period equivalent to the suspension, We do not have the least intention of
overruling the cases cited by appellee. We simply want to say that the ruling laid down in said cases does not apply here because the material facts involved
therein are not the same as those obtaining in the present. The rule of stare decisis cannot be invoked where there is no analogy between the material facts of
the decision relied upon and those of the instant case.

Thus, in Victorias Planters Association vs. Victorias Milling Company, 51 O.G. 4010, there was no evidence at all regarding the intention of the parties to extend
the contract equivalent to the period of suspension caused by the war. Neither was there evidence that the parties understood the suspension to mean extension;
nor was there evidence of usage and custom in the industry that the suspension meant the extension of the agreement. All these matters, however, obtain in the
instant case.

Again, in the case of Rosario S. Vda. de Lacson vs. Abelardo G. Diaz, 87 Phil. 150, the issue referred to the interpretation of a pre-war contract of lease of sugar
cane lands and the liability of the lessee to pay rent during and immediately following the Japanese occupation and where the defendant claimed the right of an
extension of the lease to make up for the time when no cane was planted. This Court, in holding that the years which the lessee could not use the land because
of the war could not be discounted from the period agreed upon, held that "Nowhere is there any insinuation that the defendant-lessee was to have possession of
lands for seven years excluding years on which he could not harvest sugar." Clearly, this ratio decidendi is not applicable to the case at bar wherein there is
evidence that the parties understood the "suspension clause by force majeure" to mean the extension of the period of agreement.
Lastly, in the case of Lo Ching y So Young Chong Co. vs. Court of Appeals, et al., 81 Phil. 601, appellant leased a building from appellee beginning September
13, 1940 for three years, renewable for two years. The lessee's possession was interrupted in February, 1942 when he was ousted by the Japanese who turned
the same over to German Otto Schulze, the latter occupying the same until January, 1945 upon the arrival of the liberation forces. Appellant contended that the
period during which he did not enjoy the leased premises because of his dispossession by the Japanese had to be deducted from the period of the lease, but this
was overruled by this Court, reasoning that such dispossession was merely a simple "perturbacion de merohecho y de la cual no responde el arrendador" under
Article 1560 of the old Civil Code Art. 1664). This ruling is also not applicable in the instant case because in that case there was no evidence of the intention of
the parties that any suspension of the lease by force majeure would be understood to extend the period of the agreement.

In resume, there is sufficient justification for Us to conclude that the cases cited by appellee are inapplicable because the facts therein involved do not run parallel
to those obtaining in the present case.

We shall now consider appellee's defense of laches. Appellee is correct in its contention that the defense of laches applies independently of prescription. Laches
is different from the statute of limitations. Prescription is concerned with the fact of delay, whereas laches is concerned with the effect of delay. Prescription is a
matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the
property or the relation of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is based
on fixed time, laches is not. (30 C.J.S., p. 522; See also Pomeroy's Equity Jurisprudence, Vol. 2, 5th ed., p. 177).

The question to determine is whether appellant Nielson is guilty of laches within the meaning contemplated by the authorities on the matter. In the leading case of
Go Chi Gun, et al. vs. Go Cho, et al., 96 Phil. 622, this Court enumerated the essential elements of laches as follows:

(1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the
complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's
conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the
suit is not held barred.

Are these requisites present in the case at bar?

The first element is conceded by appellant Nielson when it claimed that defendant refused to pay its management fees, its percentage of profits and refused to
allow it to resume the management operation.

Anent the second element, while it is true that appellant Nielson knew since 1945 that appellee Lepanto has refused to permit it to resume management and that
since 1948 appellee has resumed operation of the mines and it filed its complaint only on February 6, 1958, there being apparent delay in filing the present
action, We find the delay justified and as such cannot constitute laches. It appears that appellant had not abandoned its right to operate the mines for even
before the termination of the suspension of the agreement as early as January 20, 194612 and even before March 10, 1945, it already claimed its right to the
extension of the contract,13 and it pressed its claim for the balance of its share in the profits from the 1941 operation 14 by reason of which negotiations had taken
place for the settlement of the claim15 and it was only on June 25, 1957 that appellee finally denied the claim. There is, therefore, only a period of less than one
year that had elapsed from the date of the final denial of the claim to the date of the filing of the complaint, which certainly cannot be considered as unreasonable
delay.

The third element of laches is absent in this case. It cannot be said that appellee Lepanto did not know that appellant would assert its rights on which it based
suit. The evidence shows that Nielson had been claiming for some time its rights under the contract, as already shown above.

Neither is the fourth element present, for if there has been some delay in bringing the case to court it was mainly due to the attempts at arbitration and
negotiation made by both parties. If Lepanto's documents were lost, it was not caused by the delay of the filing of the suit but because of the war.

Another reason why appellant Nielson cannot be held guilty of laches is that the delay in the filing of the complaint in the present case was the inevitable of the
protracted negotiations between the parties concerning the settlement of their differences. It appears that Nielson asked for arbitration16 which was granted. A
committee consisting of Messrs. DeWitt, Farnell and Blessing was appointed to act on said differences but Mr. DeWitt always tried to evade the issue17 until he
was taken ill and died. Mr. Farnell offered to Nielson the sum of P13,000.58 by way of compromise of all its claim arising from the management contract18 but
apparently the offer was refused. Negotiations continued with the exchange of letters between the parties but with no satisfactory result.19 It can be said that the
delay due to protracted negotiations was caused by both parties. Lepanto, therefore, cannot be permitted to take advantage of such delay or to question the
propriety of the action taken by Nielson. The defense of laches is an equitable one and equity should be applied with an even hand. A person will not be
permitted to take advantage of, or to question the validity, or propriety of, any act or omission of another which was committed or omitted upon his own request or
was caused by his conduct (R. H. Stearns Co. vs. United States, 291 U.S. 54, 78 L. Ed. 647, 54 S. Ct., 325; United States vs. Henry Prentiss & Co., 288 U.S. 73,
77 L. Ed., 626, 53 S. Ct., 283).

Had the action of Nielson prescribed? The court a quo held that the action of Nielson is already barred by the statute of limitations, and that ruling is now assailed
by the appellant in this appeal. In urging that the court a quo erred in reaching that conclusion the appellant has discussed the issue with reference to particular
claims.

The first claim is with regard to the 10% share in profits of 1941 operations. Inasmuch as appellee Lepanto alleges that the correct basis of the computation of
the sharing in the net profits shall be as provided for in Clause V of the Management Contract, while appellant Nielson maintains that the basis should be what is
contained in the minutes of the special meeting of the Board of Directors of Lepanto on August 21, 1940, this question must first be elucidated before the main
issue is discussed.

The facts relative to the matter of profit sharing follow: In the management contract entered into between the parties on January 30, 1937, which was renewed for
another five years, it was stipulated that Nielson would receive a compensation of P2,500.00 a month plus 10% of the net profits from the operation of the
properties for the preceding month. In 1940, a dispute arose regarding the computation of the 10% share of Nielson in the profits. The Board of Directors of
Lepanto, realizing that the mechanics of the contract was unfair to Nielson, authorized its President to enter into an agreement with Nielson modifying the
pertinent provision of the contract effective January 1, 1940 in such a way that Nielson shall receive (1) 10% of the dividends declared and paid, when and as
paid, during the period of the contract and at the end of each year, (2) 10% of any depletion reserve that may be set up, and (3) 10% of any amount expended
during the year out of surplus earnings for capital account. 20 Counsel for the appellee admitted during the trial that the extract of the minutes as found in Exhibit
B is a faithful copy from the original. 21 Mr. George Scholey testified that the foregoing modification was agreed upon. 22

Lepanto claims that this new basis of computation should be rejected (1) because the contract was clear on the point of the 10% share and it was so alleged by
Nielson in its complaint, and (2) the minutes of the special meeting held on August 21, 1940 was not signed.

It appearing that the issue concerning the sharing of the profits had been raised in appellant's complaint and evidence on the matter was introduced 23 the same
can be taken into account even if no amendment of the pleading to make it conform to the evidence has been made, for the same is authorized by Section 4,
Rule 17, of the old Rules of Court (now Section 5, Rule 10, of the new Rules of Court).

Coming now to the question of prescription raised by defendant Lepanto, it is contended by the latter that the period to be considered for the prescription of the
claim regarding participation in the profits is only four years, because the modification of the sharing embodied in the management contract is merely verbal, no
written document to that effect having been presented. This contention is untenable. The modification appears in the minutes of the special meeting of the Board
of Directors of Lepanto held on August 21, 1940, it having been made upon the authority of its President, and in said minutes the terms of the modification had
been specified. This is sufficient to have the agreement considered, for the purpose of applying the statute of limitations, as a written contract even if the minutes
were not signed by the parties (3 A.L.R., 2d, p. 831). It has been held that a writing containing the terms of a contract if adopted by two persons may constitute a
contract in writing even if the same is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an unsigned agreement the terms
of which are embodied in a document unconditionally accepted by both parties is a written contract (Corbin on Contracts, Vol. 1, p. 85)

The modification, therefore, made in the management contract relative to the participation in the profits by appellant, as contained in the minutes of the special
meeting of the Board of Directors of Lepanto held on August 21, 1940, should be considered as a written contract insofar as the application of the statutes of
limitations is concerned. Hence, the action thereon prescribes within ten (10) years pursuant to Section 43 of Act 190.

Coming now to the facts, We find that the right of Nielson to its 10% participation in the 1941 operations accrued on December 21, 1941 and the right to
commence an action thereon began on January 1, 1942 so that the action must be brought within ten (10) years from the latter date. It is true that the complaint
was filed only on February 6, 1958, that is sixteen (16) years, one (1) month and five (5) days after the right of action accrued, but the action has not yet
prescribed for various reasons which We will hereafter discuss.

The first reason is the operation of the Moratorium Law, for appellant's claim is undeniably a claim for money. Said claim accrued on December 31, 1941, and
Lepanto is a war sufferer. Hence the claim was covered by Executive Order No. 32 of March 10, 1945. It is well settled that the operation of the Moratorium Law
suspends the running of the statue of limitations (Pacific Commercial Co. vs. Aquino, G.R. No. L-10274, February 27, 1957).

This Court has held that the Moratorium Law had been enforced for eight (8) years, two (2) months and eight (8) days (Tioseco vs. Day, et al., L-9944, April 30,
1957; Levy Hermanos, Inc. vs. Perez, L-14487, April 29, 1960), and deducting this period from the time that had elapsed since the accrual of the right of action to
the date of the filing of the complaint, the extent of which is sixteen (16) years, one (1) month and five (5) days, we would have less than eight (8) years to be
counted for purposes of prescription. Hence appellant's action on its claim of 10% on the 1941 profits had not yet prescribed.

Another reason that may be taken into account in support of the no-bar theory of appellant is the arbitration clause embodied in the management contract which
requires that any disagreement as to any amount of profits before an action may be taken to court shall be subject to arbitration. 24 This agreement to arbitrate is
valid and binding. 25 It cannot be ignored by Lepanto. Hence Nielson could not bring an action on its participation in the 1941 operations-profits until the condition
relative to arbitration had been first complied with. 26 The evidence shows that an arbitration committee was constituted but it failed to accomplish its purpose on
June 25, 1957. 27 From this date to the filing of the complaint the required period for prescription has not yet elapsed.

Nielson claims the following: (1) 10% share in the dividends declared in 1941, exclusive of interest, amounting to P17,500.00; (2) 10% in the depletion reserves
for 1941; and (3) 10% in the profits for years prior to 1948 amounting to P19,764.70.

With regard to the first claim, the Lepanto's report for the calendar year of 1954 28 shows that it declared a 10% cash dividend in December, 1941, the amount of
which is P175,000.00. The evidence in this connection (Exhibits L and O) was admitted without objection by counsel for Lepanto. 29 Nielson claims 10% share in
said amount with interest thereon at 6% per annum. The document (Exhibit L) was even recognized by Lepanto's President V. L. Lednicky, 30 and this claim is
predicated on the provision of paragraph V of the management contract as modified pursuant to the proposal of Lepanto at the special meeting of the Board of
Directors on August 21, 1940 (Exh. B), whereby it was provided that Nielson would be entitled to 10% of any dividends to be declared and paid during the period
of the contract.

With regard to the second claim, Nielson admits that there is no evidence regarding the amount set aside by Lepanto for depletion reserve for 1941 31 and so the
10% participation claimed thereon cannot be assessed.
Anent the third claim relative to the 10% participation of Nielson on the sum of P197,647.08, which appears in Lepanto's annual report for 1948 32 and entered as
profit for prior years in the statement of income and surplus, which amount consisted "almost in its entirety of proceeds of copper concentrates shipped to the
United States during 1947," this claim should to denied because the amount is not "dividend declared and paid" within the purview of the management contract.

The fifth assignment of error of appellant refers to the failure of the lower court to order Lepanto to pay its management fees for January, 1942, and for the full
period of extension amounting to P150,000.00, or P2,500.00 a month for sixty (60) months, — a total of P152,500.00 — with interest thereon from the date of
judicial demand.

It is true that the claim of management fee for January, 1942 was not among the causes of action in the complaint, but inasmuch as the contract was suspended
in February, 1942 and the management fees asked for included that of January, 1942, the fact that such claim was not included in a specific manner in the
complaint is of no moment because an appellate court may treat the pleading as amended to conform to the evidence where the facts show that the plaintiff is
entitled to relief other than what is asked for in the complaint (Alonzo vs. Villamor, 16 Phil. 315). The evidence shows that the last payment made by Lepanto for
management fee was for November and December, 1941. 33 If, as We have declared, the management contract was suspended beginning February 1942, it
follows that Nielson is entitled to the management fee for January, 1942.

Let us now come to the management fees claimed by Nielson for the period of extension. In this respect, it has been shown that the management contract was
extended from June 27, 1948 to June 26, 1953, or for a period of sixty (60) months. During this period Nielson had a right to continue in the management of the
mining properties of Lepanto and Lepanto was under obligation to let Nielson do it and to pay the corresponding management fees. Appellant Nielson insisted in
performing its part of the contract but Lepanto prevented it from doing so. Hence, by virtue of Article 1186 of the Civil Code, there was a constructive fulfillment
an the part of Nielson of its obligation to manage said mining properties in accordance with the contract and Lepanto had the reciprocal obligation to pay the
corresponding management fees and other benefits that would have accrued to Nielson if Lepanto allowed it (Nielson) to continue in the management of the
mines during the extended period of five (5) years.

We find that the preponderance of evidence is to the effect that Nielson had insisted in managing the mining properties soon after liberation. In the report 34 of
Lepanto, submitted to its stockholders for the period from 1941 to March 13, 1946, are stated the activities of Nielson's officials in relation to Nielson's insistence
in continuing the management. This report was admitted in evidence without objection. We find the following in the report:

Mr. Blessing, in May, 1945, accompanied Clark and Stanford to San Fernando (La Union) to await the liberation of the mines. (Mr. Blessing was the Treasurer
and Metallurgist of Nielson). Blessing with Clark and Stanford went to the property on July 16 and found that while the mill site had been cleared of the enemy the
latter was still holding the area around the staff houses and putting up a strong defense. As a result, they returned to San Fernando and later went back to the
mines on July 26. Mr. Blessing made the report, dated August 6, recommending a program of operation. Mr. Nielson himself spent a day in the mine early in
December, 1945 and reiterated the program which Mr. Blessing had outlined. Two or three weeks before the date of the report, Mr. Coldren of the Nielson
organization also visited the mine and told President C. A. DeWitt of Lepanto that he thought that the mine could be put in condition for the delivery of the ore
within ten (10) days. And according to Mark Nestle, a witness of appellant, Nielson had several men including engineers to do the job in the mines and to resume
the work. These engineers were in fact sent to the mine site and submitted reports of what they had done. 35

On the other hand, appellee claims that Nielson was not ready and able to resume the work in the mines, relying mainly on the testimony of Dr. Juan Nabong,
former secretary of both Nielson and Lepanto, given in the separate case of Nancy Irving Romero vs. Lepanto Consolidated Mining Company (Civil Case No.
652, CFI, Baguio), to the effect that as far as he knew "Nielson and Company had not attempted to operate the Lepanto Consolidated Mining Company because
Mr. Nielson was not here in the Philippines after the last war. He came back later," and that Nielson and Company had no money nor stocks with which to start
the operation. He was asked by counsel for the appellee if he had testified that way in Civil Case No. 652 of the Court of First Instance of Baguio, and he
answered that he did not confirm it fully. When this witness was asked by the same counsel whether he confirmed that testimony, he said that when he testified
in that case he was not fully aware of what happened and that after he learned more about the officials of the corporation it was only then that he became aware
that Nielson had really sent his men to the mines along with Mr. Blessing and that he was aware of this fact personally. He further said that Mr. Nielson was here
in 1945 and "he was going out and contacting his people." 36

Lepanto admits, in its own brief, that Nielson had really insisted in taking over the management and operation of the mines but that it (Lepanto) unequivocally
refuse to allow it. The following is what appears in the brief of the appellee:

It was while defendant was in the midst of the rehabilitation work which was fully described earlier, still reeling under the terrible devastation and
destruction wrought by war on its mine that Nielson insisted in taking over the management and operation of the mine. Nielson thus put Lepanto in a
position where defendant, under the circumstances, had to refuse, as in fact it did, Nielson's insistence in taking over the management and operation
because, as was obvious, it was impossible, as a result of the destruction of the mine, for the plaintiff to manage and operate the same and because,
as provided in the agreement, the contract was suspended by reason of the war. The stand of Lepanto in disallowing Nielson to assume again the
management of the mine in 1945 was unequivocal and cannot be misinterpreted, infra.37

Based on the foregoing facts and circumstances, and Our conclusion that the management contract was extended, We believe that Nielson is entitled to the
management fees for the period of extension. Nielson should be awarded on this claim sixty times its monthly pay of P2,500.00, or a total of P150,000.00.

In its sixth assignment of error Nielson contends that the lower court erred in not ordering Lepanto to pay it (Nielson) the 10% share in the profits of operation
realized during the period of five (5) years from the resumption of its post-war operations of the Mankayan mines, in the total sum of P2,403,053.20 with interest
thereon at the rate of 6% per annum from February 6, 1958 until full payment. 38
The above claim of Nielson refers to four categories, namely: (1) cash dividends; (2) stock dividends; (3) depletion reserves; and (4) amount expended on capital
investment.

Anent the first category, Lepanto's report for the calendar year 1954 39 contains a record of the cash dividends it paid up to the date of said report, and the post-
war dividends paid by it corresponding to the years included in the period of extension of the management contract are as follows:

POST-WAR

8 10% November 1949 P 200,000.00

9 10% July 1950 300,000.00

10 10% October 1950 500,000.00

11 20% December 1950 1,000,000.00

12 20% March 1951 1,000,000.00

13 20% June 1951 1,000,000.00

14 20% September 1951 1,000,000.00

15 40% December 1951 2,000,000.00

16 20% March 1952 1,000,000.00

17 20% May 1952 1,000,000.00

18 20% July 1952 1,000,000.00

19 20% September 1952 1,000,000.00

20 20% December 1952 1,000,000.00

21 20% March 1953 1,000,000.00

22 20% June 1953 1,000,000.00

TOTAL P14,000,000.00
According to the terms of the management contract as modified, appellant is entitled to 10% of the P14,000,000.00 cash dividends that had been distributed, as
stated in the above-mentioned report, or the sum of P1,400,000.00.

With regard to the second category, the stock dividends declared by Lepanto during the period of extension of the contract are: On November 28, 1949, the stock
dividend declared was 50% of the outstanding authorized capital of P2,000,000.00 of the company, or stock dividends worth P1,000,000.00; and on August 22,
1950, the stock dividends declared was 66-2/3% of the standing authorized capital of P3,000,000.00 of the company, or stock dividends worth P2,000,000.00. 40

Appellant's claim that it should be given 10% of the cash value of said stock dividends with interest thereon at 6% from February 6, 1958 cannot be granted for
that would not be in accordance with the management contract which entitles Nielson to 10% of any dividends declared paid, when and as paid. Nielson,
therefore, is entitled to 10% of the stock dividends and to the fruits that may have accrued to said stock dividends pursuant to Article 1164 of the Civil Code.
Hence to Nielson is due shares of stock worth P100,000.00, as per stock dividends declared on November 28, 1949 and all the fruits accruing to said shares
after said date; and also shares of stock worth P200,000.00 as per stock dividends declared on August 20, 1950 and all fruits accruing thereto after said date.

Anent the third category, the depletion reserve appearing in the statement of income and surplus submitted by Lepanto corresponding to the years covered by
the period of extension of the contract, may be itemized as follows:

In 1948, as per Exh. F, p. 36 and Exh. Q, p. 5, the depletion reserve set up was P11,602.80.

In 1949, as per Exh. G, p. 49 and Exh. Q, p. 5, the depletion reserve set up was P33,556.07.

In 1950, as per Exh. H, p. 37, Exh. Q, p. 6 and Exh. I, p. 37, the depletion reserve set up was P84,963.30.

In 1951, as per Exh. I, p. 45, Exh. Q, p. 6, and Exh. J, p. 45, the depletion reserve set up was P129,089.88.
 In 1952, as per Exh. J, p. 45, Exh. Q, p. 6 and Exh. K p. 41, the depletion reserve was P147,141.54.

In 1953, as per Exh. K, p. 41, and Exh. Q, p. 6, the depletion reserve set up as P277,493.25.

Regarding the depletion reserve set up in 1948 it should be noted that the amount given was for the whole year. Inasmuch as the contract was extended only for
the last half of the year 1948, said amount of P11,602.80 should be divided by two, and so Nielson is only entitled to 10% of the half amounting to P5,801.40.

Likewise, the amount of depletion reserve for the year 1953 was for the whole year and since the contract was extended only until the first half of the year, said
amount of P277,493.25 should be divided by two, and so Nielson is only entitled to 10% of the half amounting to P138,746.62. Summing up the entire depletion
reserves, from the middle of 1948 to the middle of 1953, we would have a total of P539,298.81, of which Nielson is entitled to 10%, or to the sum of P53,928.88.

Finally, with regard to the fourth category, there is no figure in the record representing the value of the fixed assets as of the beginning of the period of extension
on June 27, 1948. It is possible, however, to arrive at the amount needed by adding to the value of the fixed assets as of December 31, 1947 one-half of the
amount spent for capital account in the year 1948. As of December 31, 1947, the value of the fixed assets was P1,061,878.88 41 and as of December 31, 1948,
the value of the fixed assets was P3,270,408.07. 42 Hence, the increase in the value of the fixed assets for the year 1948 was P2,208,529.19, one-half of which is
P1,104,264.59, which amount represents the expenses for capital account for the first half of the year 1948. If to this amount we add the fixed assets as of
December 31, 1947 amounting to P1,061,878.88, we would have a total of P2,166,143.47 which represents the fixed assets at the beginning of the second half
of the year 1948.

There is also no figure representing the value of the fixed assets when the contract, as extended, ended on June 26, 1953; but this may be computed by getting
one-half of the expenses for capital account made in 1953 and adding the same to the value of the fixed assets as of December 31, 1953 is
P9,755,840.41 43 which the value of the fixed assets as of December 31, 1952 is P8,463,741.82, the difference being P1,292,098.69. One-half of this amount is
P646,049.34 which would represent the expenses for capital account up to June, 1953. This amount added to the value of the fixed assets as of December 31,
1952 would give a total of P9,109,791.16 which would be the value of fixed assets at the end of June, 1953.

The increase, therefore, of the value of the fixed assets of Lepanto from June, 1948 to June, 1953 is P6,943,647.69, which amount represents the difference
between the value of the fixed assets of Lepanto in the year 1948 and in the year 1953, as stated above. On this amount Nielson is entitled to a share of 10% or
to the amount of P694,364.76.

Considering that most of the claims of appellant have been entertained, as pointed out in this decision, We believe that appellant is entitled to be awarded
attorney's fees, especially when, according to the undisputed testimony of Mr. Mark Nestle, Nielson obliged himself to pay attorney's fees in connection with the
institution of the present case. In this respect, We believe, considering the intricate nature of the case, an award of fifty thousand (P50,000.00) pesos for
attorney's fees would be reasonable.

IN VIEW OF THE FOREGOING CONSIDERATIONS, We hereby reverse the decision of the court a quo and enter in lieu thereof another, ordering the appellee
Lepanto to pay appellant Nielson the different amounts as specified hereinbelow:

(1) 10% share of cash dividends of December, 1941 in the amount of P17,500.00, with legal interest thereon from the date of the filing of the complaint;

(2) management fee for January, 1942 in the amount of P2,500.00, with legal interest thereon from the date of the filing of the complaint;

(3) management fees for the sixty-month period of extension of the management contract, amounting to P150,000.00, with legal interest from the date of the filing
of the complaint;

(4) 10% share in the cash dividends during the period of extension of the management contract, amounting to P1,400,000.00, with legal interest thereon from the
date of the filing of the complaint;

(5) 10% of the depletion reserve set up during the period of extension, amounting to P53,928.88, with legal interest thereon from the date of the filing of the
complaint;

(6) 10% of the expenses for capital account during the period of extension, amounting to P694,364.76, with legal interest thereon from the date of the filing of the
complaint;

(7) to issue and deliver to Nielson and Co., Inc. shares of stock of Lepanto Consolidated Mining Co. at par value equivalent to the total of Nielson's l0% share in
the stock dividends declared on November 28, 1949 and August 22, 1950, together with all cash and stock dividends, if any, as may have been declared and
issued subsequent to November 28, 1949 and August 22, 1950, as fruits that accrued to said shares;

If sufficient shares of stock of Lepanto's are not available to satisfy this judgment, defendant-appellee shall pay plaintiff-appellant an amount in cash equivalent to
the market value of said shares at the time of default (12 C.J.S., p. 130), that is, all shares of the stock that should have been delivered to Nielson before the
filing of the complaint must be paid at their market value as of the date of the filing of the complaint; and all shares, if any, that should have been delivered after
the filing of the complaint at the market value of the shares at the time Lepanto disposed of all its available shares, for it is only then that Lepanto placed itself in
condition of not being able to perform its obligation (Article 1160, Civil Code);
(8) the sum of P50,000.00 as attorney's fees; and

(9) the costs. It is so ordered.

Concepcion, C.J., Regala, Makalintal, Bengzon, J.P., Sanchez and Castro, JJ., concur.

Reyes, J.B.L. and Barrera, JJ., took no part.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

A.M. No. RTJ-08-2119 June 30, 2008

[Formerly A.M. O.C.A. IPI No. 07-2709-RTJ]

ATTY. MELVIN D.C. MANE, complainant,

vs.
JUDGE MEDEL ARNALDO B. BELEN, REGIONAL TRIAL COURT, BRANCH 36, CALAMBA CITY, respondent.

RESOLUTION

CARPIO MORALES, J.:

By letter-complaint dated May 19, 20061 which was received by the Office of the Court Administrator (OCA) on May 26, 2006, Atty. Melvin D.C. Mane
(complainant) charged Judge Medel Arnaldo B. Belen (respondent), Presiding Judge of Branch 36, Regional Trial Court, Calamba City, of "demean[ing],
humiliat[ing] and berat[ing]" him during the hearing on February 27, 2006 of Civil Case No. 3514-2003-C, "Rural Bank of Cabuyao, Inc. v. Samuel Malabanan, et
al" in which he was counsel for the plaintiff.

To prove his claim, complainant cited the remarks made by respondent in the course of the proceedings conducted on February 27, 2006 as transcribed by
stenographer Elenita C. de Guzman, viz:

COURT:

. . . Sir, are you from the College of Law of the University of the Philippines?

ATTY. MANE:

No[,] [Y]our Honor[,] from Manuel L. Quezon University[,] [Y]our Honor.

COURT:

No, you're not from UP.

ATTY. MANE:

I am very proud of it.

COURT:

Then you're not from UP. Then you cannot equate yourself to me because there is a saying and I know this, not all law students are
created equal, not all law schools are created equal, not all lawyers are created equal despite what the Supreme Being that we all are
created equal in His form and substance.2 (Emphasis supplied)

Complainant further claimed that the entire proceedings were "duly recorded in a tape recorder" by stenographer de Guzman, and despite his motion (filed on
April 24, 2006) for respondent to direct her to furnish him with a copy of the tape recording, the motion remained unacted as of the date he filed the present
administrative complaint on May 26, 2006. He, however, attached a copy of the transcript of stenographic notes taken on February 27, 2006.
In his Comments3 dated June 14, 2006 on the complaint filed in compliance with the Ist Indorsement dated May 31, 2006 4 of the OCA, respondent alleged that
complainant filed on December 15, 2005 an "Urgent Motion to Inhibit,"5paragraph 36 of which was malicious and "a direct assault to the integrity and dignity of the
Court and of the Presiding Judge" as it "succinctly implied that [he] issued the order dated 27 September 2005 for [a] consideration other than the merits of the
case." He thus could not "simply sit idly and allow a direct assault on his honor and integrity."

On the unacted motion to direct the stenographer to furnish complainant with a copy of the "unedited" tape recording of the proceedings, respondent quoted
paragraphs 4 and 37 of the motion which, to him, implied that the trial court was "illegally, unethically and unlawfully engaged in 'editing' the transcript of records
to favor a party litigant against the interest of [complainant's] client."

Respondent thus claimed that it was on account of the two motions that he ordered complainant, by separate orders dated June 5, 2006, to explain within 15
days8 why he should not be cited for contempt.

Complainant later withdrew his complaint, by letter of September 4, 2006,9 stating that it was a mere result of his impulsiveness.

In its Report dated November 7, 2007,10 the OCA came up with the following evaluation:

. . . The withdrawal or desistance of a complainant from pursuing an administrative complaint does not divest the Court of its disciplinary authority
over court officials and personnel. Thus, the complainant's withdrawal of the instant complaint will not bar the continuity of the instant administrative
proceeding against respondent judge.

The issue presented before us is simple: Whether or not the statements and actions made by the respondent judge during the subject February 27,
2006 hearing constitute conduct unbecoming of a judge and a violation of the Code of Judicial Conduct.

After a cursory evaluation of the complaint, the respondent's comment and the documents at hand, we find that there is no issue as to what actually
transpired during the February 27th hearing as evidenced by the stenographic notes. The happening of the incident complained of by herein
complainant was never denied by the respondent judge. If at all, respondent judge merely raised his justifications for his complained actuations.

xxxx

. . . [A] judge's official conduct and his behavior in the performance of judicial duties should be free from the appearance of impropriety and must be
beyond reproach. A judge must at all times be temperate in his language. Respondent judge's insulting statements which tend to question
complainant's capability and credibility stemming from the fact that the latter did not graduated [sic] from UP Law school is
clearly unwarranted and inexcusable. When a judge indulges in intemperate language, the lawyer can return the attack on his person and
character, through an administrative case against the judge, as in the instant case.

Although respondent judge's use in intemperate language may be attributable to human frailty, the noble position in the bench demands from him
courteous speech in and out of the court. Judges are demanded to be always temperate, patient and courteous both in conduct and language.

xxxx

Judge Belen should bear in mind that all judges should always observe courtesy and civility. In addressing counsel, litigants, or witnesses, the judge
should avoid a controversial tone or a tone that creates animosity. Judges should always be aware that disrespect to lawyers generates disrespect to
them. There must be mutual concession of respect. Respect is not a one-way ticket where the judge should be respected but free to insult
lawyers and others who appear in his court. Patience is an essential part of dispensing justice and courtesy is a mark of culture and good
breeding. If a judge desires not to be insulted, he should start using temperate language himself; he who sows the wind will reap a storm.

It is also noticeable that during the subject hearing, not only did respondent judge make insulting and demeaning remarks but he also engaged in
unnecessary "lecturing" and "debating". . .

xxxx

Respondent should have just ruled on the propriety of the motion to inhibit filed by complainant, but, instead, he opted for a conceited display of
arrogance, a conduct that falls below the standard of decorum expected of a judge. If respondent judge felt that there is a need to admonish
complainant Atty. Mane, he should have called him in his chambers where he can advise him privately rather than battering him with insulting
remarks and embarrassing questions such as asking him from what school he came from publicly in the courtroom and in the presence of his clients.
Humiliating a lawyer is highly reprehensible. It betrays the judge's lack of patience and temperance. A highly temperamental judge could hardly make
decisions with equanimity.

Thus, it is our view that respondent judge should shun from lecturing the counsels or debating with them during court hearings to prevent suspicions
as to his fairness and integrity. While judges should possess proficiency in law in order that they can competently construe and enforce the law, it is
more important that they should act and behave in such manner that the parties before them should have confidence in their impartiality.11 (Italics in
the original; emphasis and underscoring supplied)
The OCA thus recommended that respondent be reprimanded for violation of Canon 3 of the Code of Judicial Conduct with a warning that a repetition of the
same shall be dealt with more severely.12

By Resolution of January 21, 2008,13 this Court required the parties to manifest whether they were willing to submit the case for resolution on the basis of the
pleadings already filed. Respondent complied on February 26, 2008,14manifesting in the affirmative.

The pertinent provision of the Code of Judicial Conduct reads:

Rule 3.04. - A judge should be patient, attentive, and courteous to lawyers, especially the inexperienced, to litigants, witnesses, and others
appearing before the court. A judge should avoid unconsciously falling into the attitude of mind that the litigants are made for the courts, instead of
the courts for the litigants.

An author explains the import of this rule:

Rule 3.04 of the Code of Judicial Conduct mandates that a judge should be courteous to counsel, especially to those who are young and
inexperienced and also to all those others appearing or concerned in the administration of justice in the court. He should be considerate of witnesses
and others in attendance upon his court. He should be courteous and civil, for it is unbecoming of a judge to utter intemperate language
during the hearing of a case. In his conversation with counsel in court, a judge should be studious to avoid controversies which are apt to obscure
the merits of the dispute between litigants and lead to its unjust disposition. He should not interrupt counsel in their arguments except to clarify his
mind as to their positions. Nor should he be tempted to an unnecessary display of learning or premature judgment.

A judge without being arbitrary, unreasonable or unjust may endeavor to hold counsel to a proper appreciation of their duties to the courts, to their
clients and to the adverse party and his lawyer, so as to enforce due diligence in the dispatch of business before the court. He may utilize his
opportunities to criticize and correct unprofessional conduct of attorneys, brought to his attention, but he may not do so in an insulting
manner.15 (Emphasis and underscoring supplied)

The following portions of the transcript of stenographic notes, quoted verbatim, taken during the February 27, 2006 hearing show that respondent made
sarcastic and humiliating, even threatening and boastful remarks to complainant who is admittedly "still young," "unnecessary lecturing and debating," as well as
unnecessary display of learning:

COURT:

xxx

Sir do you know the principle or study the stare decisis?

ATTY. MANE:

Ah, with due respect your…

COURT:

Tell me, what is your school?

ATTY. MANE:

I am proud graduate of Manuel L. Quezon University.

COURT:

Were you taught at the MLQU College of Law of the principle of Stare Decisis and the interpretation of the Supreme Court of
the rules of procedure where it states that if there is already a decision by the Supreme Court, when that decision shall be
complied with by the Trial Court otherwise non-compliance thereof shall subject the Courts to judicial sanction, and I quote the
decision. That's why I quoted the decision of the Supreme Court Sir, because I know the problem between the bank and the third party
claimants and I state, "The fair market value is the price at which a property may be sold by a seller, who is not compelled to sell, and
bought by a buyer, who is not compelled to buy." Sir, that's very clear, that is what fair market value and that is not assessment value. In
fact even you say assessment value, the Court further state, "the assessed value is the fair market value multiplied. Not mere the basic
assesses value. Sir that is the decision of the Supreme Court, am I just reading the decision or was I inventing it?

ATTY. MANE:
 May I be allowed to proceed.

COURT:

Sir, you tell me. Was I inventing the Supreme Court decision which I quoted and which you should have researched too or I was merely
imagining the Supreme Court decision sir? Please answer it.

ATTY. MANE:

No your Honor.

COURT:

Please answer it.

xxxx

COURT:

That's why. Sir second, and again I quote from your own pleadings, hale me to the Supreme Court otherwise I will hale you to the bar.
Prove to me that I am grossly ignorant or corrupt.

ATTY. MANE:

Your Honor when this representation, your Honor . . .

COURT:

No, sir.

ATTY. MANE:

Yes your Honor . . .

COURT:

No sir unless you apologize to the Court I will hale you to the IBP Because hindi naman ako ganon. I am not that vindictive but if this
remains. You cannot take cover from the instruction of your client because even if the instruction of a client is "secret." Upon
consideration, the language of the pleader must still conform with the decorum and respect to the Court. Sir, that's the rule of practice. In
my twenty (20) years of practice I've never been haled by a judge to any question of integrity. Because even if I believed that the Court
committed error in judgment or decision or grave abuse of discretion, I never imputed any malicious or unethical behavior to the judge
because I know and I believe that anyone can commit errors. Because no one is like God. Sir, I hope sir you understand that this Court,
this Judge is not God but this Judge is human when challenge on his integrity and honor is lodged. No matter how simple it is because
that is the only thing I have now.

Atty. Bantin, can you please show him my statement of assets and liabilities?

ATTY. MANE:

I think that is not necessary your Honor.

COURT:

No counsel because the imputations are there, that's why I want you to see. Show him my assets and liabilities for the proud
graduate of MLQU. Sir, look at it. Sir, I have stock holdings in the U.S. before I joined the bench. And it was very clear to everyone, I
would do everything not be tempted to accept bribe but I said I have spent my fifteen (15) years and that's how much I have worked in
fifteen (15) years excluding my wife's assets which is more than what I have may be triple of what I have. May be even four fold of what I
have. And look at my assets. May be even your bank can consider on cash to cash basis my personal assets. That is the reason I am
telling you Atty. Mane. Please, look at it. If you want I can show you even the Income Tax Return of my wife and you will be surprised
 that my salary is not even her one-half month salary. Sir, she is the Chief Executive Officer of a Multi-National Publishing Company.
That's why I have the guts to take this job because doon po sa salary niya umaasa na lamang po ako sa aking asawa. Atty. Mane,
please you are still young. Other judges you would already be haled to the IBP. Take that as a lesson. Now that you are saying that I
was wrong in the three-day notice rule, again the Supreme Court decision validates me, PNB vs. Court of Appeals, you want me to cite
the quotation again that any pleadings that do not conform with the three-day notice rule is considered as useless scrap of paper and
therefore not subject to any judicial cognizance. You know sir, you would say but I was the one subject because the judge was
belligerent. No sir, you can go on my record and you will see that even prior to my rulings on your case I have already thrown out so
many motion for non-compliance of a three-day notice rule. If I will give you an exception because of this, then I would be looked upon
with suspicion. So sir again, please look again on the record and you will see how many motions I threw out for non-compliance with the
three-day notice rule. It is not only your case sir, because sir you are a practitioner and a proud graduate of the MLQU which is
also the Alma Mater of my uncle. And I supposed you were taught in thought that the three-day notice rule is almost sacrosanct
in order to give the other party time to appear and plead. In all books, Moran, Regalado and all other commentators state that
non-compliance with the three-day notice rule makes the pleading and motion a useless scrap of paper. If that is a useless
scrap of paper, sir, what would be my ground to grant exception to your motion? Tell me.

xxxx

COURT:

Procedural due process. See. So please sir don't confuse the Court. Despite of being away for twenty years from the college of law, still
I can remember my rules, In your motion you said . . . imputing things to the Court. Sir please read your rules. Familiarize
yourself, understand the jurisprudence before you be the Prince Valiant or a Sir Gallahad in Quest of the Holy Grail. Sir, ako po
ay mahirap na tao, karangalan ko lang po ang aking kayang ibigay sa aking mga anak at iyan po ay hindi ko palalampasin maski kanino
pa. Sir, have you ever heard of anything about me in this Court for one year. Ask around, ask around. You know, if you act like a
duck, walk like a duck, quack like a duck, you are a duck. But have you ever heard anything against the court. Sir in a judicial
system, in a Court, one year is time enough for the practitioner to know whether a judge is what, dishonest; 2), whether the judge is
incompetent; and 3) whether the judge is just playing loco. And I have sat hear for one year sir and please ask around before you
charge into the windmill. I am a proud product of a public school system from elementary to college. And my only, and my only, the only
way I can repay the taxpayers is a service beyond reproach without fear or favor to anyone. Not even the executive, not even the one
sitting in Malacanang, not even the Supreme Court if you are right. Sir, sana po naman inyo ring igalang ang Hukuman kasi po kami,
meron nga po, tinatanggap ko, kung inyo pong mamarapatin, meron pong mga corrupt, maaari pong nakahanap na kayo ng corrupt na
Judge pero hindi po lahat kami ay corrupt. Maaari ko rin pong tanggapin sa inyong abang lingcod na merong mga Hukom na tanga pero
hindi po naman lahat kami ay tanga. Ako po ay 8:30 or before ay nandito po ako sa husgado ko. Aalis po ako dito sa hapon, babasahin
ko lahat ang kaso ko para ko po malaman kung any po ang kaso, para po pagharap ko sa inyo at sa publiko hindi po ako
magmumukhang tanga. Sir, please have the decency, not the respect, not to me but to the Court. Because if you are a lawyer who
cannot respect the Court then you have no business appearing before the Court because you don't believe in the Court system. That's
why one of my classmates never appeared before Court because he doesn't believe in that system. He would rather stay in their
airconditioned room because they say going to Court is useless. Then, to them I salute, I give compliment because in their own ways
they know the futility and they respect the Court, in that futility rather than be a hypocrite. Atty. Mane hindi mo ako kilala, I've never
disrespect the courts and I can look into your eyes. Kaya po dito ko gusto kasi di po ako dito nagpractice para po walang makalapit sa
akin. Pero kung ako po naman ay inyong babastusin ng ganyang handa po akong lumaban kahit saan, miski saan po. And you can
quote me, you can go there together to the Supreme Court. Because the only sir, the only treasure I have is my name and my integrity. I
could have easily let it go because it is the first time, but the second time is too much too soon. Sir, masyado pong kwan yon, sinampal
na po ninyo ako nung primero, dinuran pa po ninyo ako ng pangalawa. That's adding insult to the injury po. Hindi ko po sana gagawin ito
pero ayan po ang dami diyang abugado. I challenge anyone to file a case against me for graft and corruption, for incompetence.

xxxx

COURT:

I will ask the lawyer to read the statement and if they believe that you are not imputing any wrong doing to me I will apologize to you.

Atty. Hildawa please come over. The Senior, I respect the old practitioner, whose integrity is unchallenged.

Sir you said honest. Sir ganoon po ako. You still want to defend your position, so be it.

Atty. Hildawa I beg your indulgence, I am sorry but I know that you are an old practitioner hammered out by years of practice and whose
integrity by reputation precedes you. Please read what your younger companero has written to this Honorable Court in pleading and see
for yourself the implications he hurled to the Court in his honest opinion. Remember he said honest. That implication is your honest
opinion of an implication sir.

Sir 1, 2 and 3. Paragraphs 1, 2 and 3. If that is your honest opinion. Remember the word you said honest opinion.
 Alam mo Atty. Mane I know when one has to be vigilant and vigorous in the pursue of pride. But if you are vigilant and vigor, you should
never crossed the line.

Sir, what is your interpretation to the first three paragraphs?

ATTY. HILDAWA:

There will be some . . .

COURT:

What sir?

ATTY. HILDAWA:

. . . indiscretion.

COURT:

Indiscretion. See, that is the most diplomatic word that an old practitioner could say to the Court because of respect.

Sir, salamat po.

xxxx

COURT:

Kita po ninyo, iyan po ang matatandang abogado. Indiscretion na lang. Now you say that is your honest opinion and the old
practitioner hammered through years of practice could only say indiscretion committed by this judge. Much more I who sits in this
bench?

Now is that your honest opinion?16 (Emphasis and underscoring supplied)

The Court thus finds the evaluation by the OCA well-taken.

An alumnus of a particular law school has no monopoly of knowledge of the law. By hurdling the Bar Examinations which this Court administers, taking of the
Lawyer's oath, and signing of the Roll of Attorneys, a lawyer is presumed to be competent to discharge his functions and duties as, inter alia, an officer of the
court, irrespective of where he obtained his law degree. For a judge to determine the fitness or competence of a lawyer primarily on the basis of his alma mater is
clearly an engagement in an argumentum ad hominem.

A judge must address the merits of the case and not on the person of the counsel. If respondent felt that his integrity and dignity were being "assaulted," he acted
properly when he directed complainant to explain why he should not be cited for contempt. He went out of bounds, however, when he, as the above-quoted
portions of the transcript of stenographic notes show, engaged on a supercilious legal and personal discourse.

This Court has reminded members of the bench that even on the face of boorish behavior from those they deal with, they ought to conduct themselves in a
manner befitting gentlemen and high officers of the court.17

Respondent having exhibited conduct unbecoming of a judge, classified as a light charge under Section 10, Rule 140 of the Revised Rules of Court, which is
penalized under Section 11(c) of the same Rule by any of the following: (1) a fine of not less than P1,000 but not exceeding P10,000; (2) censure; (3) reprimand;
and (4) admonition with warning, the Court imposes upon him the penalty of reprimand.

WHEREFORE, respondent, Judge Medel Arnaldo B. Belen, Presiding Judge of the Regional Trial Court, Branch 36, Calamba City, is found GUILTY of conduct
unbecoming of a judge and is REPRIMANDED therefor. He is further warned that a repetition of the same or similar act shall be dealt with more severely.

SO ORDERED.