Republic of the Philippines III. THE SUPERMAJORITY PROVISIONS OF THE ORGANIC ACT (R.A.

9054) ARE NOT

SUPREME COURT IRREPEALABLE LAWS.
Manila
IV. SECTION 3, ARTICLE XVII OF R.A. 9054 DOES NOT VIOLATE SECTION 18, ARTICLE X OF THE
EN BANC CONSTITUTION.

G.R. No. 196271 February 28, 2012 V. BALANCE OF INTERESTS TILT IN FAVOR OF THE DEMOCRATIC PRINCIPLE[.]1

DATU MICHAEL ABAS KIDA, in his personal capacity, and in representation of MAGUINDANAO The petitioner in G.R. No. 197221 raises similar grounds, arguing that:
FEDERATION OF AUTONOMOUS IRRIGATORS ASSOCIATION, INC., HADJI MUHMINA J. USMAN, JOHN
ANTHONY L. LIM, JAMILON T. ODIN, ASRIN TIMBOL JAIYARI, MUJIB M. KALANG, ALIH AL-SAIDI J. SAPI-
I. THE ELECTIVE REGIONAL EXECUTIVE AND LEGISLATIVE OFFICIALS OF ARMM CANNOT BE
E, KESSAR DAMSIE ABDIL, and BASSAM ALUH SAUPI, Petitioners,
CONSIDERED AS OR EQUATED WITH THE TRADITIONAL LOCAL GOVERNMENT OFFICIALS IN
vs.
THE LOCAL GOVERNMENT UNITS (LGUs) BECAUSE (A) THERE IS NO EXPLICIT CONSTITUTIONAL
SENATE OF THE PHILIPPINES, represented by its President JUAN PONCE ENRILE, HOUSE OF
PROVISION ON SUCH PARITY; AND (B) THE ARMM IS MORE SUPERIOR THAN LGUs IN
REPRESENTATIVES, thru SPEAKER FELICIANO BELMONTE, COMMISSION ON ELECTIONS, thru its
STRUCTURE, POWERS AND AUTONOMY, AND CONSEQUENTLY IS A CLASS OF ITS OWN APART
Chairman, SIXTO BRILLANTES, JR., PAQUITO OCHOA, JR., Office of the President Executive Secretary,
FROM TRADITIONAL LGUs.
FLORENCIO ABAD, JR., Secretary of Budget, and ROBERTO TAN, Treasurer of the
Philippines, Respondents.
II. THE UNMISTAKABLE AND UNEQUIVOCAL CONSTITUTIONAL MANDATE FOR AN ELECTIVE
AND REPRESENTATIVE EXECUTIVE DEPARTMENT AND LEGISLATIVE ASSEMBLY IN ARMM
RESOLUTION
INDUBITABLY PRECLUDES THE APPOINTMENT BY THE PRESIDENT OF OFFICERS-IN-CHARGE
(OICs), ALBEIT MOMENTARY OR TEMPORARY, FOR THE POSITIONS OF ARMM GOVERNOR,
BRION, J.: VICE GOVERNOR AND MEMBERS OF THE REGIONAL ASSEMBLY.

We resolve: (a) the motion for reconsideration filed by petitioners Datu Michael Abas Kida, et al. in G.R.
No. 196271; (b) the motion for reconsideration filed by petitioner Rep. Edcel Lagman in G.R. No. 197221;
(c) the ex abundante ad cautelam motion for reconsideration filed by petitioner Basari Mapupuno in G.R.
No. 196305; (d) the motion for reconsideration filed by petitioner Atty. Romulo Macalintal in G.R. No.
197282; (e) the motion for reconsideration filed by petitioners Almarim Centi Tillah, Datu Casan Conding
Cana and Partido Demokratiko Pilipino Lakas ng Bayan in G.R. No. 197280; (f) the manifestation and
motion filed by petitioners Almarim Centi Tillah, et al. in G.R. No. 197280; and (g) the very urgent motion
to issue clarificatory resolution that the temporary restraining order (TRO) is still existing and effective.
III. THE PRESIDENT’S APPOINTING POWER IS LIMITED TO APPOINTIVE OFFICIALS AND DOES
NOT EXTEND TO ELECTIVE OFFICIALS EVEN AS THE PRESIDENT IS ONLY VESTED WITH
SUPERVISORY POWERS OVER THE ARMM, THEREBY NEGATING THE AWESOME POWER TO
APPOINT AND REMOVE OICs OCCUPYING ELECTIVE POSITIONS.
IV. THE CONSTITUTION DOES NOT PROSCRIBE THE HOLDOVER OF ARMM ELECTED OFFICIALS
PENDING THE ELECTION AND QUALIFICATION OF THEIR SUCCESSORS.

These motions assail our Decision dated October 18, 2011, where we upheld the constitutionality of
Republic Act (RA) No. 10153. Pursuant to the constitutional mandate of synchronization, RA No. 10153
postponed the regional elections in the Autonomous Region in Muslim Mindanao (ARMM) (which were
scheduled to be held on the second Monday of August 2011) to the second Monday of May 2013 and
recognized the President’s power to appoint officers-in-charge (OICs) to temporarily assume these
positions upon the expiration of the terms of the elected officials.
The Motions for Reconsideration
The petitioners in G.R. No. 196271 raise the following grounds in support of their motion:
V. THE RULING IN OSMENA DOES NOT APPLY TO ARMM ELECTED OFFICIALS WHOSE TERMS
OF OFFICE ARE NOT PROVIDED FOR BY THE CONSTITUTION BUT PRESCRIBED BY THE ORGANIC
ACTS.
VI. THE REQUIREMENT OF A SUPERMAJORITY OF ¾ VOTES IN THE HOUSE OF
REPRESENTATIVES AND THE SENATE FOR THE VALIDITY OF A SUBSTANTIVE AMENDMENT OR
REVISION OF THE ORGANIC ACTS DOES NOT IMPOSE AN IRREPEALABLE LAW.
VII. THE REQUIREMENT OF A PLEBISCITE FOR THE EFFECTIVITY OF A SUBSTANTIVE
AMENDMENT OR REVISION OF THE ORGANIC ACTS DOES NOT UNDULY EXPAND THE
PLEBISCITE REQUIREMENT OF THE CONSTITUTION.

I. THE HONORABLE COURT ERRED IN CONCLUDING THAT THE ARMM ELECTIONS ARE LOCAL
VIII. SYNCHRONIZATION OF THE ARMM ELECTION WITH THE NATIONAL AND LOCAL
ELECTIONS, CONSIDERING THAT THE CONSTITUTION GIVES THE ARMM A SPECIAL STATUS
ELECTIONS IS NOT MANDATED BY THE CONSTITUTION.
AND IS SEPARATE AND DISTINCT FROM ORDINARY LOCAL GOVERNMENT UNITS.

IX. THE COMELEC HAS THE AUTHORITY TO HOLD AND CONDUCT SPECIAL ELECTIONS IN
II. R.A. 10153 AND R.A. 9333 AMEND THE ORGANIC ACT.
ARMM, AND THE ENACTMENT OF AN IMPROVIDENT AND UNCONSTITUTIONAL STATUTE IS
AN ANALOGOUS CAUSE WARRANTING COMELEC’S HOLDING OF SPECIAL ELECTIONS.2 (italics
supplied)
The petitioner in G.R. No. 196305 further asserts that:
I. BEFORE THE COURT MAY CONSTRUE OR INTERPRET A STATUTE, IT IS A CONDITION SINE
QUA NON THAT THERE BE DOUBT OR AMBIGUITY IN ITS LANGUAGE.
THE TRANSITORY PROVISIONS HOWEVER ARE CLEAR AND UNAMBIGUOUS: THEY REFER TO
THE 1992 ELECTIONS AND TURN-OVER OF ELECTIVE OFFICIALS.
IN THUS RECOGNIZING A SUPPOSED "INTENT" OF THE FRAMERS, AND APPLYING THE SAME
TO ELECTIONS 20 YEARS AFTER, THE HONORABLE SUPREME COURT MAY HAVE
VIOLATED THE FOREMOST RULE IN STATUTORY CONSTRUCTION.
xxxx
II. THE HONORABLE COURT SHOULD HAVE CONSIDERED THAT RA 9054, AN ORGANIC ACT,
WAS COMPLETE IN ITSELF. HENCE, RA 10153 SHOULD BE CONSIDERED TO HAVE BEEN
ENACTED PRECISELY TO AMEND RA 9054.
xxxx
III. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS ERROR IN DECLARING THE
2/3 VOTING REQUIREMENT SET FORTH IN RA 9054 AS UNCONSTITUTIONAL.
xxxx
IV. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS ERROR IN HOLDING THAT A
PLEBISCITE IS NOT NECESSARY IN AMENDING THE ORGANIC ACT.
xxxx
V. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN DECLARING THE HOLD-OVER
OF ARMM ELECTIVE OFFICIALS UNCONSTITUTIONAL.
xxxx
VI. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN UPHOLDING THE
APPOINTMENT OF OFFICERS-IN-CHARGE.3 (italics and underscoring supplied)
The petitioner in G.R. No. 197282 contends that:
A.
ASSUMING WITHOUT CONCEDING THAT THE APPOINTMENT OF OICs FOR THE REGIONAL
GOVERNMENT OF THE ARMM IS NOT UNCONSTITUTIONAL TO BEGIN WITH, SUCH
APPOINTMENT OF OIC REGIONAL OFFICIALS WILL CREATE A FUNDAMENTAL CHANGE IN THE
BASIC STRUCTURE OF THE REGIONAL GOVERNMENT SUCH THAT R.A. NO. 10153 SHOULD
HAVE BEEN SUBMITTED TO A PLEBISCITE IN THE ARMM FOR APPROVAL BY ITS PEOPLE,
WHICH PLEBISCITE REQUIREMENT CANNOT BE CIRCUMVENTED BY SIMPLY CHARACTERIZING
THE PROVISIONS OF R.A. NO. 10153 ON APPOINTMENT OF OICs AS AN "INTERIM MEASURE".
B.
THE HONORABLE COURT ERRED IN RULING THAT THE APPOINTMENT BY THE PRESIDENT OF
OICs FOR THE ARMM REGIONAL GOVERNMENT IS NOT VIOLATIVE OF THE CONSTITUTION.
C.
THE HOLDOVER PRINCIPLE ADOPTED IN R.A. NO. 9054 DOES NOT VIOLATE THE
CONSTITUTION, AND BEFORE THEIR SUCCESSORS ARE ELECTED IN EITHER AN ELECTION TO BE
HELD AT THE SOONEST POSSIBLE TIME OR IN MAY 2013, THE SAID INCUMBENT ARMM
REGIONAL OFFICIALS MAY VALIDLY CONTINUE FUNCTIONING AS SUCH IN A HOLDOVER
CAPACITY IN ACCORDANCE WITH SECTION 7, ARTICLE VII OF R.A. NO. 9054.
D.
WITH THE CANCELLATION OF THE AUGUST 2011 ARMM ELECTIONS, SPECIAL ELECTIONS
MUST IMMEDIATELY BE HELD FOR THE ELECTIVE REGIONAL OFFICIALS OF THE ARMM WHO
SHALL SERVE UNTIL THEIR SUCCESSORS ARE ELECTED IN THE MAY 2013 SYNCHRONIZED
ELECTIONS.4
Finally, the petitioners in G.R. No. 197280 argue that:
a) the Constitutional mandate of synchronization does not apply to the ARMM elections;
b) RA No. 10153 negates the basic principle of republican democracy which, by constitutional
mandate, guides the governance of the Republic;
c) RA No. 10153 amends the Organic Act (RA No. 9054) and, thus, has to comply with the 2/3
vote from the House of Representatives and the Senate, voting separately, and be ratified in a
plebiscite;
d) if the choice is between elective officials continuing to hold their offices even after their
terms are over and non-elective individuals getting into the vacant elective positions by
appointment as OICs, the holdover option is the better choice;
e) the President only has the power of supervision over autonomous regions, which does not
include the power to appoint OICs to take the place of ARMM elective officials; and
f) it would be better to hold the ARMM elections separately from the national and local
elections as this will make it easier for the authorities to implement election laws.
In essence, the Court is asked to resolve the following questions:
(a) Does the Constitution mandate the synchronization of ARMM regional elections with
national and local elections?
 (b) Does RA No. 10153 amend RA No. 9054? If so, does RA No. 10153 have to comply with the
supermajority vote and plebiscite requirements?
(c) Is the holdover provision in RA No. 9054 constitutional?
(d) Does the COMELEC have the power to call for special elections in ARMM?
(e) Does granting the President the power to appoint OICs violate the elective and
representative nature of ARMM regional legislative and executive offices?
(f) Does the appointment power granted to the President exceed the President’s supervisory
powers over autonomous regions?
The Court’s Ruling
We deny the motions for lack of merit.
Synchronization mandate includes ARMM elections
The Court was unanimous in holding that the Constitution mandates the synchronization of national and
local elections. While the Constitution does not expressly instruct Congress to synchronize the national
and local elections, the intention can be inferred from the following provisions of the Transitory
Provisions (Article XVIII) of the Constitution, which state:
Section 1. The first elections of Members of the Congress under this Constitution shall be held on the
second Monday of May, 1987.
The first local elections shall be held on a date to be determined by the President, which may be
simultaneous with the election of the Members of the Congress. It shall include the election of all
Members of the city or municipal councils in the Metropolitan Manila area.
Section 2. The Senators, Members of the House of Representatives, and the local officials first elected
under this Constitution shall serve until noon of June 30, 1992.
Of the Senators elected in the elections in 1992, the first twelve obtaining the highest number of votes
shall serve for six years and the remaining twelve for three years.
xxxx
Section 5. The six-year term of the incumbent President and Vice-President elected in the February 7,
1986 election is, for purposes of synchronization of elections, hereby extended to noon of June 30, 1992.
The first regular elections for the President and Vice-President under this Constitution shall be held on
the second Monday of May, 1992.
To fully appreciate the constitutional intent behind these provisions, we refer to the discussions of the
Constitutional Commission:
MR. MAAMBONG. For purposes of identification, I will now read a section which we will temporarily
indicate as Section 14. It reads: "THE SENATORS, MEMBERS OF THE HOUSE OF REPRESENTATIVES AND
THE LOCAL OFFICIALS ELECTED IN THE FIRST ELECTION SHALL SERVE FOR FIVE YEARS, TO EXPIRE AT
NOON OF JUNE 1992."
This was presented by Commissioner Davide, so may we ask that Commissioner Davide be recognized.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner Davide is recognized.
MR. DAVIDE. Before going to the proposed amendment, I would only state that in view of the action
taken by the Commission on Section 2 earlier, I am formulating a new proposal. It will read as follows:
"THE SENATORS, MEMBERS OF THE HOUSE OF REPRESENTATIVES AND THE LOCAL OFFICIALS FIRST
ELECTED UNDER THIS CONSTITUTION SHALL SERVE UNTIL NOON OF JUNE 30, 1992."
I proposed this because of the proposed section of the Article on Transitory Provisions giving a term to
the incumbent President and Vice-President until 1992. Necessarily then, since the term provided by the
Commission for Members of the Lower House and for local officials is three years, if there will be an
election in 1987, the next election for said officers will be in 1990, and it would be very close to 1992. We
could never attain, subsequently, any synchronization of election which is once every three years.
So under my proposal we will be able to begin actual synchronization in 1992, and consequently, we
should not have a local election or an election for Members of the Lower House in 1990 for them to be
able to complete their term of three years each. And if we also stagger the Senate, upon the first
election it will result in an election in 1993 for the Senate alone, and there will be an election for 12
Senators in 1990. But for the remaining 12 who will be elected in 1987, if their term is for six years, their
election will be in 1993. So, consequently we will have elections in 1990, in 1992 and in 1993. The later
election will be limited to only 12 Senators and of course to the local officials and the Members of the
Lower House. But, definitely, thereafter we can never have an election once every three years, therefore
defeating the very purpose of the Commission when we adopted the term of six years for the President
and another six years for the Senators with the possibility of staggering with 12 to serve for six years and
12 for three years insofar as the first Senators are concerned. And so my proposal is the only way to
effect the first synchronized election which would mean, necessarily, a bonus of two years to the
Members of the Lower House and a bonus of two years to the local elective officials.
THE PRESIDING OFFICER (Mr. Rodrigo). What does the committee say?
MR. DE CASTRO. Mr. Presiding Officer.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner de Castro is recognized.
MR. DE CASTRO. Thank you.
During the discussion on the legislative and the synchronization of elections, I was the one who proposed
that in order to synchronize the elections every three years, which the body approved — the first
national and local officials to be elected in 1987 shall continue in office for five years, the same thing the
Honorable Davide is now proposing. That means they will all serve until 1992, assuming that the term of
the President will be for six years and continue beginning in 1986. So from 1992, we will again have
national, local and presidential elections. This time, in 1992, the President shall have a term until 1998
and the first 12 Senators will serve until 1998, while the next 12 shall serve until 1995, and then the
local officials elected in 1992 will serve until 1995. From then on, we shall have an election every three
years.
So, I will say that the proposition of Commissioner Davide is in order, if we have to synchronize our
elections every three years which was already approved by the body.
Thank you, Mr. Presiding Officer.
xxxx
MR. GUINGONA. What will be synchronized, therefore, is the election of the incumbent President and
Vice-President in 1992.
MR. DAVIDE. Yes.
MR. GUINGONA. Not the reverse. Will the committee not synchronize the election of the Senators and
local officials with the election of the President?
MR. DAVIDE. It works both ways, Mr. Presiding Officer. The attempt here is on the assumption that the
provision of the Transitory Provisions on the term of the incumbent President and Vice-President would
really end in 1992.
MR. GUINGONA. Yes.
MR. DAVIDE. In other words, there will be a single election in 1992 for all, from the President up to the
municipal officials.5 (emphases and underscoring ours)
The framers of the Constitution could not have expressed their objective more clearly – there was to be
a single election in 1992 for all elective officials – from the President down to the municipal officials.
Significantly, the framers were even willing to temporarily lengthen or shorten the terms of elective
officials in order to meet this objective, highlighting the importance of this constitutional mandate.
We came to the same conclusion in Osmeña v. Commission on Elections,6 where we unequivocally stated
that "the Constitution has mandated synchronized national and local elections."7 Despite the length and
verbosity of their motions, the petitioners have failed to convince us to deviate from this established
ruling.
Neither do we find any merit in the petitioners’ contention that the ARMM elections are not covered by
the constitutional mandate of synchronization because the ARMM elections were not specifically
mentioned in the above-quoted Transitory Provisions of the Constitution.
That the ARMM elections were not expressly mentioned in the Transitory Provisions of the Constitution
on synchronization cannot be interpreted to mean that the ARMM elections are not covered by the
constitutional mandate of synchronization. We have to consider that the ARMM, as we now know it, had
not yet been officially organized at the time the Constitution was enacted and ratified by the people.
Keeping in mind that a constitution is not intended to provide merely for the exigencies of a few years
but is to endure through generations for as long as it remains unaltered by the people as ultimate
sovereign, a constitution should be construed in the light of what actually is a continuing instrument to
govern not only the present but also the unfolding events of the indefinite future. Although the
principles embodied in a constitution remain fixed and unchanged from the time of its adoption, a
constitution must be construed as a dynamic process intended to stand for a great length of time, to be
progressive and not static.8
To reiterate, Article X of the Constitution, entitled "Local Government," clearly shows the intention of
the Constitution to classify autonomous regions, such as the ARMM, as local governments. We refer to
Section 1 of this Article, which provides:
Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces,
cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the
Cordilleras as hereinafter provided.
The inclusion of autonomous regions in the enumeration of political subdivisions of the State under the
heading "Local Government" indicates quite clearly the constitutional intent to consider autonomous
regions as one of the forms of local governments.
That the Constitution mentions only the "national government" and the "local governments," and does
not make a distinction between the "local government" and the "regional government," is particularly
revealing, betraying as it does the intention of the framers of the Constitution to consider the
autonomous regions not as separate forms of government, but as political units which, while having
more powers and attributes than other local government units, still remain under the category of local
governments. Since autonomous regions are classified as local governments, it follows that elections
held in autonomous regions are also considered as local elections.
The petitioners further argue that even assuming that the Constitution mandates the synchronization of
elections, the ARMM elections are not covered by this mandate since they are regional elections and not
local elections.
In construing provisions of the Constitution, the first rule is verba legis, "that is, wherever possible, the
words used in the Constitution must be given their ordinary meaning except where technical terms are
employed."9 Applying this principle to determine the scope of "local elections," we refer to the meaning
of the word "local," as understood in its ordinary sense. As defined in Webster’s Third New International
Dictionary Unabridged, "local" refers to something "that primarily serves the needs of a particular
limited district, often a community or minor political subdivision." Obviously, the ARMM elections, which
are held within the confines of the autonomous region of Muslim Mindanao, fall within this definition.
To be sure, the fact that the ARMM possesses more powers than other provinces, cities, or
municipalities is not enough reason to treat the ARMM regional elections differently from the other local
elections. Ubi lex non distinguit nec nos distinguire debemus. When the law does not distinguish, we
must not distinguish.10
RA No. 10153 does not amend RA No. 9054
The petitioners are adamant that the provisions of RA No. 10153, in postponing the ARMM elections,
amend RA No. 9054.
We cannot agree with their position.
A thorough reading of RA No. 9054 reveals that it fixes the schedule for only the first ARMM
elections;11 it does not provide the date for the succeeding regular ARMM elections. In providing for the
date of the regular ARMM elections, RA No. 9333 and RA No. 10153 clearly do not amend RA No. 9054
since these laws do not change or revise any provision in RA No. 9054. In fixing the date of the ARMM
elections subsequent to the first election, RA No. 9333 and RA No. 10153 merely filled the gap left in RA
No. 9054.
We reiterate our previous observations:
This view – that Congress thought it best to leave the determination of the date of succeeding ARMM
elections to legislative discretion – finds support in ARMM’s recent history.
To recall, RA No. 10153 is not the first law passed that rescheduled the ARMM elections. The First
Organic Act – RA No. 6734 – not only did not fix the date of the subsequent elections; it did not even fix
the specific date of the first ARMM elections, leaving the date to be fixed in another legislative
enactment. Consequently, RA No. 7647, RA No. 8176, RA No. 8746, RA No. 8753, and RA No. 9012 were
all enacted by Congress to fix the dates of the ARMM elections. Since these laws did not change or
modify any part or provision of RA No. 6734, they were not amendments to this latter law.
Consequently, there was no need to submit them to any plebiscite for ratification.
The Second Organic Act – RA No. 9054 – which lapsed into law on March 31, 2001, provided that the first
elections would be held on the second Monday of September 2001. Thereafter, Congress passed RA No.
9140 to reset the date of the ARMM elections. Significantly, while RA No. 9140 also scheduled the
plebiscite for the ratification of the Second Organic Act (RA No. 9054), the new date of the ARMM
regional elections fixed in RA No. 9140 was not among the provisions ratified in the plebiscite held to
approve RA No. 9054. Thereafter, Congress passed RA No. 9333, which further reset the date of the
ARMM regional elections. Again, this law was not ratified through a plebiscite.
From these legislative actions, we see the clear intention of Congress to treat the laws which fix the date
of the subsequent ARMM elections as separate and distinct from the Organic Acts. Congress only acted
consistently with this intent when it passed RA No. 10153 without requiring compliance with the
amendment prerequisites embodied in Section 1 and Section 3, Article XVII of RA No. 9054.12 (emphases
supplied)
The petitioner in G.R. No. 196305 contends, however, that there is no lacuna in RA No. 9054 as regards
the date of the subsequent ARMM elections. In his estimation, it can be implied from the provisions of
RA No. 9054 that the succeeding elections are to be held three years after the date of the first ARMM
regional elections.
We find this an erroneous assertion. Well-settled is the rule that the court may not, in the guise of
interpretation, enlarge the scope of a statute and include therein situations not provided nor intended
by the lawmakers. An omission at the time of enactment, whether careless or calculated, cannot be
judicially supplied however later wisdom may recommend the inclusion.13 Courts are not authorized to
insert into the law what they think should be in it or to supply what they think the legislature would have
supplied if its attention had been called to the omission.14 Providing for lapses within the law falls within
the exclusive domain of the legislature, and courts, no matter how well-meaning, have no authority to
intrude into this clearly delineated space.
Since RA No. 10153 does not amend, but merely fills in the gap in RA No. 9054, there is no need for RA
No. 10153 to comply with the amendment requirements set forth in Article XVII of RA No. 9054.
Supermajority vote requirement makes RA No. 9054 an irrepealable law
Even assuming that RA No. 10153 amends RA No. 9054, however, we have already established that the
supermajority vote requirement set forth in Section 1, Article XVII of RA No. 905415 is unconstitutional for
violating the principle that Congress cannot pass irrepealable laws.
The power of the legislature to make laws includes the power to amend and repeal these laws. Where
the legislature, by its own act, attempts to limit its power to amend or repeal laws, the Court has the
duty to strike down such act for interfering with the plenary powers of Congress. As we explained
in Duarte v. Dade:16
A state legislature has a plenary law-making power over all subjects, whether pertaining to persons or
things, within its territorial jurisdiction, either to introduce new laws or repeal the old, unless prohibited
expressly or by implication by the federal constitution or limited or restrained by its own. It cannot bind
itself or its successors by enacting irrepealable laws except when so restrained. Every legislative body
may modify or abolish the acts passed by itself or its predecessors. This power of repeal may be
exercised at the same session at which the original act was passed; and even while a bill is in its progress
and before it becomes a law. This legislature cannot bind a future legislature to a particular mode of
repeal. It cannot declare in advance the intent of subsequent legislatures or the effect of subsequent
legislation upon existing statutes. [emphasis ours]
Under our Constitution, each House of Congress has the power to approve bills by a mere majority vote,
provided there is quorum.17 In requiring all laws which amend RA No. 9054 to comply with a higher
voting requirement than the Constitution provides (2/3 vote), Congress, which enacted RA No. 9054,
clearly violated the very principle which we sought to establish in Duarte. To reiterate, the act of one
legislature is not binding upon, and cannot tie the hands of, future legislatures.18
We also highlight an important point raised by Justice Antonio T. Carpio in his dissenting opinion, where
he stated: "Section 1, Article XVII of RA 9054 erects a high vote threshold for each House of Congress to
surmount, effectively and unconstitutionally, taking RA 9054 beyond the reach of Congress’ amendatory
powers. One Congress cannot limit or reduce the plenary legislative power of succeeding Congresses by
requiring a higher vote threshold than what the Constitution requires to enact, amend or repeal laws. No
law can be passed fixing such a higher vote threshold because Congress has no power, by ordinary
legislation, to amend the Constitution."19
Plebiscite requirement in RA No. 9054 overly broad
Similarly, we struck down the petitioners’ contention that the plebiscite requirement20 applies to all
amendments of RA No. 9054 for being an unreasonable enlargement of the plebiscite requirement set
forth in the Constitution.
Section 18, Article X of the Constitution provides that "[t]he creation of the autonomous region shall be
effective when approved by majority of the votes cast by the constituent units in a plebiscite called for
the purpose[.]" We interpreted this to mean that only amendments to, or revisions of, the Organic Act
constitutionally-essential to the creation of autonomous regions – i.e., those aspects specifically
mentioned in the Constitution which Congress must provide for in the Organic Act21 – require ratification
through a plebiscite. We stand by this interpretation.
The petitioners argue that to require all amendments to RA No. 9054 to comply with the plebiscite
requirement is to recognize that sovereignty resides primarily in the people.
While we agree with the petitioners’ underlying premise that sovereignty ultimately resides with the
people, we disagree that this legal reality necessitates compliance with the plebiscite requirement for all
amendments to RA No. 9054. For if we were to go by the petitioners’ interpretation of Section 18, Article
X of the Constitution that all amendments to the Organic Act have to undergo the plebiscite requirement
before becoming effective, this would lead to impractical and illogical results – hampering the ARMM’s
progress by impeding Congress from enacting laws that timely address problems as they arise in the
region, as well as weighing down the ARMM government with the costs that unavoidably follow the
holding of a plebiscite.
Interestingly, the petitioner in G.R. No. 197282 posits that RA No. 10153, in giving the President the
power to appoint OICs to take the place of the elective officials of the ARMM, creates a fundamental
change in the basic structure of the government, and thus requires compliance with the plebiscite
requirement embodied in RA No. 9054.
Again, we disagree.
The pertinent provision in this regard is Section 3 of RA No. 10153, which reads:
Section 3. Appointment of Officers-in-Charge. — The President shall appoint officers-in-charge for the
Office of the Regional Governor, Regional Vice Governor and Members of the Regional Legislative
Assembly who shall perform the functions pertaining to the said offices until the officials duly elected in
the May 2013 elections shall have qualified and assumed office.
We cannot see how the above-quoted provision has changed the basic structure of the ARMM regional
government. On the contrary, this provision clearly preserves the basic structure of the ARMM regional
government when it recognizes the offices of the ARMM regional government and directs the OICs who
shall temporarily assume these offices to "perform the functions pertaining to the said offices."
Unconstitutionality of the holdover provision
The petitioners are one in defending the constitutionality of Section 7(1), Article VII of RA No. 9054,
which allows the regional officials to remain in their positions in a holdover capacity. The petitioners
essentially argue that the ARMM regional officials should be allowed to remain in their respective
positions until the May 2013 elections since there is no specific provision in the Constitution which
prohibits regional elective officials from performing their duties in a holdover capacity.
The pertinent provision of the Constitution is Section 8, Article X which provides:
Section 8. The term of office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for more than three consecutive
terms. [emphases ours]
On the other hand, Section 7(1), Article VII of RA No. 9054 provides:
Section 7. Terms of Office of Elective Regional Officials. – (1) Terms of Office. The terms of office of the
Regional Governor, Regional Vice Governor and members of the Regional Assembly shall be for a period
of three (3) years, which shall begin at noon on the 30th day of September next following the day of the
election and shall end at noon of the same date three (3) years thereafter. The incumbent elective
officials of the autonomous region shall continue in effect until their successors are elected and
qualified.
The clear wording of Section 8, Article X of the Constitution expresses the intent of the framers of the
Constitution to categorically set a limitation on the period within which all elective local officials can
occupy their offices. We have already established that elective ARMM officials are also local officials;
they are, thus, bound by the three-year term limit prescribed by the Constitution. It, therefore, becomes
irrelevant that the Constitution does not expressly prohibit elective officials from acting in a holdover
capacity. Short of amending the Constitution, Congress has no authority to extend the three-year term
limit by inserting a holdover provision in RA No. 9054. Thus, the term of three years for local officials
should stay at three (3) years, as fixed by the Constitution, and cannot be extended by holdover by
Congress.
Admittedly, we have, in the past, recognized the validity of holdover provisions in various laws. One
significant difference between the present case and these past cases22 is that while these past cases all
refer to elective barangay or sangguniang kabataan officials whose terms of office are not explicitly
provided for in the Constitution, the present case refers to local elective officials - the ARMM Governor,
the ARMM Vice Governor, and the members of the Regional Legislative Assembly - whose terms fall
within the three-year term limit set by Section 8, Article X of the Constitution.
Even assuming that a holdover is constitutionally permissible, and there had been statutory basis for it
(namely Section 7, Article VII of RA No. 9054), the rule of holdover can only apply as an available option
where no express or implied legislative intent to the contrary exists; it cannot apply where such contrary
intent is evident.23
Congress, in passing RA No. 10153 and removing the holdover option, has made it clear that it wants to
suppress the holdover rule expressed in RA No. 9054. Congress, in the exercise of its plenary legislative
powers, has clearly acted within its discretion when it deleted the holdover option, and this Court has no
authority to question the wisdom of this decision, absent any evidence of unconstitutionality or grave
abuse of discretion. It is for the legislature and the executive, and not this Court, to decide how to fill the
vacancies in the ARMM regional government which arise from the legislature complying with the
constitutional mandate of synchronization.
COMELEC has no authority to hold special elections
Neither do we find any merit in the contention that the Commission on Elections (COMELEC) is
sufficiently empowered to set the date of special elections in the ARMM. To recall, the Constitution has
merely empowered the COMELEC to enforce and administer all laws and regulations relative to the
conduct of an election.24 Although the legislature, under the Omnibus Election Code (Batas Pambansa
Bilang [BP] 881), has granted the COMELEC the power to postpone elections to another date, this power
is confined to the specific terms and circumstances provided for in the law. Specifically, this power falls
within the narrow confines of the following provisions:
Section 5. Postponement of election. - When for any serious cause such as violence, terrorism, loss or
destruction of election paraphernalia or records, force majeure, and other analogous causes of such a
nature that the holding of a free, orderly and honest election should become impossible in any political
subdivision, the Commission, motu proprio or upon a verified petition by any interested party, and after
due notice and hearing, whereby all interested parties are afforded equal opportunity to be heard,
shall postpone the election therein to a date which should be reasonably close to the date of the
election not held, suspended or which resulted in a failure to elect but not later than thirty days after
the cessation of the cause for such postponement or suspension of the election or failure to elect.
Section 6. Failure of election. - If, on account of force majeure, violence, terrorism, fraud, or other
analogous causes the election in any polling place has not been held on the date fixed, or had been
suspended before the hour fixed by law for the closing of the voting, or after the voting and during the
preparation and the transmission of the election returns or in the custody or canvass thereof, such
election results in a failure to elect, and in any of such cases the failure or suspension of election would
affect the result of the election, the Commission shall, on the basis of a verified petition by any
interested party and after due notice and hearing, call for the holding or continuation of the election not
held, suspended or which resulted in a failure to elect on a date reasonably close to the date of the
election not held, suspended or which resulted in a failure to elect but not later than thirty days after the
cessation of the cause of such postponement or suspension of the election or failure to elect. [emphases
and underscoring ours]
As we have previously observed in our assailed decision, both Section 5 and Section 6 of BP 881 address
instances where elections have already been scheduled to take place but do not occur or had to be
suspended because of unexpected and unforeseen circumstances, such as violence, fraud, terrorism,
and other analogous circumstances.
In contrast, the ARMM elections were postponed by law, in furtherance of the constitutional mandate of
synchronization of national and local elections. Obviously, this does not fall under any of the
circumstances contemplated by Section 5 or Section 6 of BP 881.
More importantly, RA No. 10153 has already fixed the date for the next ARMM elections and the
COMELEC has no authority to set a different election date.
Even assuming that the COMELEC has the authority to hold special elections, and this Court can compel
the COMELEC to do so, there is still the problem of having to shorten the terms of the newly elected
officials in order to synchronize the ARMM elections with the May 2013 national and local elections.
Obviously, neither the Court nor the COMELEC has the authority to do this, amounting as it does to an
amendment of Section 8, Article X of the Constitution, which limits the term of local officials to three
years.
President’s authority to appoint OICs
The petitioner in G.R. No. 197221 argues that the President’s power to appoint pertains only to
appointive positions and cannot extend to positions held by elective officials.
The power to appoint has traditionally been recognized as executive in nature.25 Section 16, Article VII of
the Constitution describes in broad strokes the extent of this power, thus:
Section 16. The President shall nominate and, with the consent of the Commission on Appointments,
appoint the heads of the executive departments, ambassadors, other public ministers and consuls, or
officers of the armed forces from the rank of colonel or naval captain, and other officers whose
appointments are vested in him in this Constitution. He shall also appoint all other officers of the
Government whose appointments are not otherwise provided for by law, and those whom he may be
authorized by law to appoint. The Congress may, by law, vest the appointment of other officers lower in
rank in the President alone, in the courts, or in the heads of departments, agencies, commissions, or
boards. [emphasis ours]
The 1935 Constitution contained a provision similar to the one quoted above. Section 10(3), Article VII of
the 1935 Constitution provides:
(3) The President shall nominate and with the consent of the Commission on Appointments, shall
appoint the heads of the executive departments and bureaus, officers of the Army from the rank of
colonel, of the Navy and Air Forces from the rank of captain or commander, and all other officers of the
Government whose appointments are not herein otherwise provided for, and those whom he may be
authorized by law to appoint; but the Congress may by law vest the appointment of inferior officers, in
the President alone, in the courts, or in the heads of departments. [emphasis ours]
The main distinction between the provision in the 1987 Constitution and its counterpart in the 1935
Constitution is the sentence construction; while in the 1935 Constitution, the various appointments the
President can make are enumerated in a single sentence, the 1987 Constitution enumerates the various
appointments the President is empowered to make and divides the enumeration in two sentences. The
change in style is significant; in providing for this change, the framers of the 1987 Constitution clearly
sought to make a distinction between the first group of presidential appointments and the second group
of presidential appointments, as made evident in the following exchange:
MR. FOZ. Madame President x x x I propose to put a period (.) after "captain" and x x x delete "and all"
and substitute it with HE SHALL ALSO APPOINT ANY.
MR. REGALADO. Madam President, the Committee accepts the proposed amendment because it makes
it clear that those other officers mentioned therein do not have to be confirmed by the Commission on
Appointments.26
The first group of presidential appointments, specified as the heads of the executive departments,
ambassadors, other public ministers and consuls, or officers of the Armed Forces, and other officers
whose appointments are vested in the President by the Constitution, pertains to the appointive officials
who have to be confirmed by the Commission on Appointments.
The second group of officials the President can appoint are "all other officers of the Government whose
appointments are not otherwise provided for by law, and those whom he may be authorized by law to
appoint."27 The second sentence acts as the "catch-all provision" for the President’s appointment power,
in recognition of the fact that the power to appoint is essentially executive in nature.28 The wide latitude
given to the President to appoint is further demonstrated by the recognition of the President’s power to
appoint officials whose appointments are not even provided for by law. In other words, where there
are offices which have to be filled, but the law does not provide the process for filling them, the
Constitution recognizes the power of the President to fill the office by appointment.
Any limitation on or qualification to the exercise of the President’s appointment power should be strictly
construed and must be clearly stated in order to be recognized.29 Given that the President derives his
power to appoint OICs in the ARMM regional government from law, it falls under the classification of
presidential appointments covered by the second sentence of Section 16, Article VII of the Constitution;
the President’s appointment power thus rests on clear constitutional basis.
The petitioners also jointly assert that RA No. 10153, in granting the President the power to appoint OICs
in elective positions, violates Section 16, Article X of the Constitution,30 which merely grants the
President the power of supervision over autonomous regions.
This is an overly restrictive interpretation of the President’s appointment power. There is no
incompatibility between the President’s power of supervision over local governments and autonomous
regions, and the power granted to the President, within the specific confines of RA No. 10153, to appoint
OICs.
The power of supervision is defined as "the power of a superior officer to see to it that lower officers
perform their functions in accordance with law."31 This is distinguished from the power of control or "the
power of an officer to alter or modify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former for the latter."32
The petitioners’ apprehension regarding the President’s alleged power of control over the OICs is rooted
in their belief that the President’s appointment power includes the power to remove these officials at
will. In this way, the petitioners foresee that the appointed OICs will be beholden to the President, and
act as representatives of the President and not of the people.
Section 3 of RA No. 10153 expressly contradicts the petitioners’ supposition. The provision states:
adoption of this measure is a matter of necessity in order to comply with a mandate that the
Constitution itself has set out for us. Moreover, the implementation of the provisions of RA No. 10153 as
an interim measure is comparable to the interim measures traditionally practiced when, for instance, the
President appoints officials holding elective offices upon the creation of new local government units.
The grant to the President of the power to appoint OICs in place of the elective members of the Regional
Legislative Assembly is neither novel nor innovative. The power granted to the President, via RA No.
10153, to appoint members of the Regional Legislative Assembly is comparable to the power granted by
BP 881 (the Omnibus Election Code) to the President to fill any vacancy for any cause in the Regional
Legislative Assembly (then called the Sangguniang Pampook).34

Section 3. Appointment of Officers-in-Charge. — The President shall appoint officers-in-charge for the
Executive is not bound by the principle of judicial courtesy
Office of the Regional Governor, Regional Vice Governor and Members of the Regional Legislative
Assembly who shall perform the functions pertaining to the said offices until the officials duly elected in
the May 2013 elections shall have qualified and assumed office. The petitioners in G.R. No. 197280, in their Manifestation and Motion dated December 21, 2011,
question the propriety of the appointment by the President of Mujiv Hataman as acting Governor and
Bainon Karon as acting Vice Governor of the ARMM. They argue that since our previous decision was
The wording of the law is clear. Once the President has appointed the OICs for the offices of the
based on a close vote of 8-7, and given the numerous motions for reconsideration filed by the parties,
Governor, Vice Governor and members of the Regional Legislative Assembly, these same officials will
the President, in recognition of the principle of judicial courtesy, should have refrained from
remain in office until they are replaced by the duly elected officials in the May 2013 elections. Nothing in
implementing our decision until we have ruled with finality on this case.
this provision even hints that the President has the power to recall the appointments he already made.
Clearly, the petitioners’ fears in this regard are more apparent than real.
We find the petitioners’ reasoning specious.
RA No. 10153 as an interim measure
Firstly, the principle of judicial courtesy is based on the hierarchy of courts and applies only to lower
courts in instances where, even if there is no writ of preliminary injunction or TRO issued by a higher
We reiterate once more the importance of considering RA No. 10153 not in a vacuum, but within the
court, it would be proper for a lower court to suspend its proceedings for practical and ethical
context it was enacted in. In the first place, Congress enacted RA No. 10153 primarily to heed the
considerations.35 In other words, the principle of "judicial courtesy" applies where there is a strong
constitutional mandate to synchronize the ARMM regional elections with the national and local
probability that the issues before the higher court would be rendered moot and moribund as a result of
elections. To do this, Congress had to postpone the scheduled ARMM elections for another date, leaving
the continuation of the proceedings in the lower court or court of origin.36 Consequently, this principle
it with the problem of how to provide the ARMM with governance in the intervening period, between
cannot be applied to the President, who represents a co-equal branch of government. To suggest
the expiration of the term of those elected in August 2008 and the assumption to office – twenty-one
otherwise would be to disregard the principle of separation of powers, on which our whole system of
(21) months away – of those who will win in the synchronized elections on May 13, 2013.
government is founded upon.

In our assailed Decision, we already identified the three possible solutions open to Congress to address
Secondly, the fact that our previous decision was based on a slim vote of 8-7 does not, and cannot, have
the problem created by synchronization – (a) allow the incumbent officials to remain in office after the
the effect of making our ruling any less effective or binding. Regardless of how close the voting is, so long
expiration of their terms in a holdover capacity; (b) call for special elections to be held, and shorten the
as there is concurrence of the majority of the members of the en banc who actually took part in the
terms of those to be elected so the next ARMM regional elections can be held on May 13, 2013; or (c)
deliberations of the case,37 a decision garnering only 8 votes out of 15 members is still a decision of the
recognize that the President, in the exercise of his appointment powers and in line with his power of
Supreme Court en banc and must be respected as such. The petitioners are, therefore, not in any
supervision over the ARMM, can appoint interim OICs to hold the vacated positions in the ARMM
position to speculate that, based on the voting, "the probability exists that their motion for
regional government upon the expiration of their terms. We have already established the
reconsideration may be granted."38
unconstitutionality of the first two options, leaving us to consider the last available option.

Similarly, the petitioner in G.R. No. 197282, in his Very Urgent Motion to Issue Clarificatory Resolution,
In this way, RA No. 10153 is in reality an interim measure, enacted to respond to the adjustment that
argues that since motions for reconsideration were filed by the aggrieved parties challenging our
synchronization requires. Given the context, we have to judge RA No. 10153 by the standard of
October 18, 2011 decision in the present case, the TRO we initially issued on September 13, 2011 should
reasonableness in responding to the challenges brought about by synchronizing the ARMM elections
remain subsisting and effective. He further argues that any attempt by the Executive to implement our
with the national and local elections. In other words, "given the plain unconstitutionality of providing
October 18, 2011 decision pending resolution of the motions for reconsideration "borders on disrespect
for a holdover and the unavailability of constitutional possibilities for lengthening or shortening the
if not outright insolence"39 to this Court.
term of the elected ARMM officials, is the choice of the President’s power to appoint – for a fixed and
specific period as an interim measure, and as allowed under Section 16, Article VII of the Constitution –
an unconstitutional or unreasonable choice for Congress to make?"33 In support of this theory, the petitioner cites Samad v. COMELEC,40 where the Court held that while it had
already issued a decision lifting the TRO, the lifting of the TRO is not yet final and executory, and can also
be the subject of a motion for reconsideration. The petitioner also cites the minute resolution issued by
We admit that synchronization will temporarily disrupt the election process in a local community, the
the Court in Tolentino v. Secretary of Finance,41 where the Court reproached the Commissioner of the
ARMM, as well as the community’s choice of leaders. However, we have to keep in mind that the
Bureau of Internal Revenue for manifesting its intention to implement the decision of the Court, noting
that the Court had not yet lifted the TRO previously issued.42
We agree with the petitioner that the lifting of a TRO can be included as a subject of a motion for
reconsideration filed to assail our decision. It does not follow, however, that the TRO remains effective
until after we have issued a final and executory decision, especially considering the clear wording of the
dispositive portion of our October 18, 2011 decision, which states:
WHEREFORE, premises considered, we DISMISS the consolidated petitions assailing the validity of RA No.
10153 for lack of merit, and UPHOLD the constitutionality of this law. We likewise LIFT the temporary
restraining order we issued in our Resolution of September 13, 2011. No costs.43 (emphases ours)
In this regard, we note an important distinction between Tolentino and the present case. While it may be
true that Tolentino and the present case are similar in that, in both cases, the petitions assailing the
challenged laws were dismissed by the Court, an examination of the dispositive portion of the decision in
Tolentino reveals that the Court did not categorically lift the TRO. In sharp contrast, in the present case,
we expressly lifted the TRO issued on September 13, 2011.1âwphi1 There is, therefore, no legal
impediment to prevent the President from exercising his authority to appoint an acting ARMM Governor
and Vice Governor as specifically provided for in RA No. 10153.
Conclusion
As a final point, we wish to address the bleak picture that the petitioner in G.R. No. 197282 presents in
his motion, that our Decision has virtually given the President the power and authority to appoint
672,416 OICs in the event that the elections of barangay and Sangguniang Kabataan officials are
postponed or cancelled.
We find this speculation nothing short of fear-mongering.
This argument fails to take into consideration the unique factual and legal circumstances which led to
the enactment of RA No. 10153. RA No. 10153 was passed in order to synchronize the ARMM elections
with the national and local elections. In the course of synchronizing the ARMM elections with the
national and local elections, Congress had to grant the President the power to appoint OICs in the
ARMM, in light of the fact that: (a) holdover by the incumbent ARMM elective officials is legally
impermissible; and (b) Congress cannot call for special elections and shorten the terms of elective local
officials for less than three years.
Unlike local officials, as the Constitution does not prescribe a term limit for barangay and Sangguniang
Kabataan officials, there is no legal proscription which prevents these specific government officials from
continuing in a holdover capacity should some exigency require the postponement of barangay or
Sangguniang Kabataan elections. Clearly, these fears have neither legal nor factual basis to stand on.
For the foregoing reasons, we deny the petitioners’ motions for reconsideration.
WHEREFORE, premises considered, we DENY with FINALITY the motions for reconsideration for lack of
merit and UPHOLD the constitutionality of RA No. 10153.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 176951 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS,
CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR
MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners,
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF BAYBAY, PROVINCE OF LEYTE; MUNICIPALITY OF
BOGO, PROVINCE OF CEBU; MUNICIPALITY OF CATBALOGAN, PROVINCE OF WESTERN SAMAR;
MUNICIPALITY OF TANDAG, PROVINCE OF SURIGAO DEL SUR; MUNICIPALITY OF BORONGAN,
PROVINCE OF EASTERN SAMAR; and MUNICIPALITY OF TAYABAS, PROVINCE OF QUEZON, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF
TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY
OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA,
CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY
OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.
x-----------------------------x
G.R. No. 177499 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS,
CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR
MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners,
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF LAMITAN, PROVINCE OF BASILAN; MUNICIPALITY OF
TABUK, PROVINCE OF KALINGA; MUNICIPALITY OF BAYUGAN, PROVINCE OF AGUSAN DEL SUR;
MUNICIPALITY OF BATAC, PROVINCE OF ILOCOS NORTE; MUNICIPALITY OF MATI, PROVINCE OF
DAVAO ORIENTAL; and MUNICIPALITY OF GUIHULNGAN, PROVINCE OF NEGROS
ORIENTAL, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF
TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY
OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA,
CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY
OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.
x - - - - - - - - - - - - - - - - - - - - - - - - - - --x
G.R. No. 178056 November 18, 2008
LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS,
CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR
MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners
vs.
COMMISSION ON ELECTIONS; MUNICIPALITY OF CABADBARAN, PROVINCE OF AGUSAN DEL NORTE;
MUNICIPALITY OF CARCAR, PROVINCE OF CEBU; and MUNICIPALITY OF EL SALVADOR, MISAMIS
ORIENTAL, respondents.
CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF
TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF
ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY
OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA,
CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY
OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.
DECISION
CARPIO, J.:
The Case
These are consolidated petitions for prohibition1 with prayer for the issuance of a writ of preliminary
injunction or temporary restraining order filed by the League of Cities of the Philippines, City of Iloilo,
City of Calbayog, and Jerry P. Treñas2 assailing the constitutionality of the subject Cityhood Laws and
enjoining the Commission on Elections (COMELEC) and respondent municipalities from conducting
plebiscites pursuant to the Cityhood Laws.
The Facts
During the 11th Congress,3 Congress enacted into law 33 bills converting 33 municipalities into cities.
However, Congress did not act on bills converting 24 other municipalities into cities.
During the 12th Congress,4 Congress enacted into law Republic Act No. 9009 (RA 9009),5 which took effect
on 30 June 2001. RA 9009 amended Section 450 of the Local Government Code by increasing the annual
income requirement for conversion of a municipality into a city from P20 million to P100 million. The
rationale for the amendment was to restrain, in the words of Senator Aquilino Pimentel, "the mad rush"
of municipalities to convert into cities solely to secure a larger share in the Internal Revenue Allotment
despite the fact that they are incapable of fiscal independence.6
After the effectivity of RA 9009, the House of Representatives of the 12th Congress7 adopted Joint
Resolution No. 29,8 which sought to exempt from the P100 million income requirement in RA 9009 the
24 municipalities whose cityhood bills were not approved in the 11th Congress. However, the
12th Congress ended without the Senate approving Joint Resolution No. 29.
During the 13th Congress,9 the House of Representatives re-adopted Joint Resolution No. 29 as Joint
Resolution No. 1 and forwarded it to the Senate for approval. However, the Senate again failed to
approve the Joint Resolution. Following the advice of Senator Aquilino Pimentel, 16 municipalities filed,
through their respective sponsors, individual cityhood bills. The 16 cityhood bills contained a common
provision exempting all the 16 municipalities from the P100 million income requirement in RA 9009.
On 22 December 2006, the House of Representatives approved the cityhood bills. The Senate also
approved the cityhood bills in February 2007, except that of Naga, Cebu which was passed on 7 June
2007. The cityhood bills lapsed into law (Cityhood Laws10) on various dates from March to July 2007
without the President's signature.11
The Cityhood Laws direct the COMELEC to hold plebiscites to determine whether the voters in each
respondent municipality approve of the conversion of their municipality into a city.
Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional for violation of
Section 10, Article X of the Constitution, as well as for violation of the equal protection
clause.12 Petitioners also lament that the wholesale conversion of municipalities into cities will reduce
the share of existing cities in the Internal Revenue Allotment because more cities will share the same
amount of internal revenue set aside for all cities under Section 285 of the Local Government Code.13
The Issues
The petitions raise the following fundamental issues:
1. Whether the Cityhood Laws violate Section 10, Article X of the Constitution; and
2. Whether the Cityhood Laws violate the equal protection clause.
The Ruling of the Court
We grant the petitions.
The Cityhood Laws violate Sections 6 and 10, Article X of the Constitution, and are thus unconstitutional.
First, applying the P100 million income requirement in RA 9009 to the present case is a prospective, not
a retroactive application, because RA 9009 took effect in 2001 while the cityhood bills became law more
than five years later.
Second, the Constitution requires that Congress shall prescribe all the criteria for the creation of a city in
the Local Government Code and not in any other law, including the Cityhood Laws.
Third, the Cityhood Laws violate Section 6, Article X of the Constitution because they prevent a fair and
just distribution of the national taxes to local government units.
Fourth, the criteria prescribed in Section 450 of the Local Government Code, as amended by RA 9009, for
converting a municipality into a city are clear, plain and unambiguous, needing no resort to any statutory
construction.
Fifth, the intent of members of the 11th Congress to exempt certain municipalities from the coverage of
RA 9009 remained an intent and was never written into Section 450 of the Local Government Code.
Sixth, the deliberations of the 11th or 12th Congress on unapproved bills or resolutions are not extrinsic
aids in interpreting a law passed in the 13th Congress.
Seventh, even if the exemption in the Cityhood Laws were written in Section 450 of the Local
Government Code, the exemption would still be unconstitutional for violation of the equal protection
clause.
Preliminary Matters
Prohibition is the proper action for testing the constitutionality of laws administered by the acted upon during the 11th Congress. This Resolution reached the Senate. However, the 12th Congress
COMELEC,14 like the Cityhood Laws, which direct the COMELEC to hold plebiscites in implementation of adjourned without the Senate approving Joint Resolution No. 29.
the Cityhood Laws. Petitioner League of Cities of the Philippines has legal standing because Section 499
of the Local Government Code tasks the League with the "primary purpose of ventilating, articulating
During the 13th Congress, 16 of the 24 municipalities mentioned in the unapproved Joint Resolution No.
and crystallizing issues affecting city government administration and securing, through proper and legal
29 filed between November and December of 2006, through their respective sponsors in Congress,
means, solutions thereto."15 Petitioners-in-intervention,16 which are existing cities, have legal standing
individual cityhood bills containing a common provision, as follows:
because their Internal Revenue Allotment will be reduced if the Cityhood Laws are declared
constitutional. Mayor Jerry P. Treñas has legal standing because as Mayor of Iloilo City and as a taxpayer
he has sufficient interest to prevent the unlawful expenditure of public funds, like the release of more Exemption from Republic Act No. 9009. - The City of x x x shall be exempted from the income
Internal Revenue Allotment to political units than what the law allows. requirement prescribed under Republic Act No. 9009.

Applying RA 9009 is a Prospective Application of the Law
RA 9009 became effective on 30 June 2001 during the 11th Congress. This law specifically amended
Section 450 of the Local Government Code, which now provides:
This common provision exempted each of the 16 municipalities from the income requirement of P100
million prescribed in Section 450 of the Local Government Code, as amended by RA 9009. These
cityhood bills lapsed into law on various dates from March to July 2007 after President Gloria Macapagal-
Arroyo failed to sign them.

Indisputably, Congress passed the Cityhood Laws long after the effectivity of RA 9009. RA 9009 became
Section 450. Requisites for Creation. – (a) A municipality or a cluster of barangays may be
effective on 30 June 2001 or during the 11th Congress. The 13th Congress passed in December 2006 the
converted into a component city if it has a locally generated average annual income, as
cityhood bills which became law only in 2007. Thus, respondent municipalities cannot invoke the
certified by the Department of Finance, of at least One hundred million pesos
principle of non-retroactivity of laws.17 This basic rule has no application because RA 9009, an earlier law
(P100,000,000.00) for the last two (2) consecutive years based on 2000 constant prices, and
to the Cityhood Laws, is not being applied retroactively but prospectively.
if it has either of the following requisites:

Congress Must Prescribe in the Local Government Code All Criteria

(i) a contiguous territory of at least one hundred (100) square kilometers, as
certified by the Land Management Bureau; or
Section 10, Article X of the 1987 Constitution provides:
(ii) a population of not less than one hundred fifty thousand (150,000) inhabitants,
as certified by the National Statistics Office. No province, city, municipality, or barangay shall be created, divided, merged, abolished or its
boundary substantially altered, except in accordance with the criteria established in the
local government code and subject to approval by a majority of the votes cast in a plebiscite
The creation thereof shall not reduce the land area, population and income of the original
in the political units directly affected. (Emphasis supplied)
unit or units at the time of said creation to less than the minimum requirements prescribed
herein.
The Constitution is clear. The creation of local government units must follow the criteria established in
the Local Government Code and not in any other law. There is only one Local Government Code.18 The
(b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and
Constitution requires Congress to stipulate in the Local Government Code all the criteria necessary for
bounds. The requirement on land area shall not apply where the city proposed to be created
the creation of a city, including the conversion of a municipality into a city. Congress cannot write such
is composed of one (1) or more islands. The territory need not be contiguous if it comprises
criteria in any other law, like the Cityhood Laws.
two (2) or more islands.

(c) The average annual income shall include the income accruing to the general fund,
exclusive of special funds, transfers, and non-recurring income. (Emphasis supplied)
Thus, RA 9009 increased the income requirement for conversion of a municipality into a city from P20
million to P100 million. Section 450 of the Local Government Code, as amended by RA 9009, does not
provide any exemption from the increased income requirement.
Prior to the enactment of RA 9009, a total of 57 municipalities had cityhood bills pending in Congress.
Thirty-three cityhood bills became law before the enactment of RA 9009. Congress did not act on 24
cityhood bills during the 11th Congress.
The criteria prescribed in the Local Government Code govern exclusively the creation of a city. No other
law, not even the charter of the city, can govern such creation. The clear intent of the Constitution is to
insure that the creation of cities and other political units must follow the same uniform, non-
discriminatory criteria found solely in the Local Government Code. Any derogation or deviation from
the criteria prescribed in the Local Government Code violates Section 10, Article X of the Constitution.
RA 9009 amended Section 450 of the Local Government Code to increase the income requirement
from P20 million to P100 million for the creation of a city. This took effect on 30 June 2001. Hence, from
that moment the Local Government Code required that any municipality desiring to become a city
must satisfy the P100 million income requirement. Section 450 of the Local Government Code, as
amended by RA 9009, does not contain any exemption from this income requirement.

During the 12th Congress, the House of Representatives adopted Joint Resolution No. 29, exempting from In enacting RA 9009, Congress did not grant any exemption to respondent municipalities, even though
the income requirement of P100 million in RA 9009 the 24 municipalities whose cityhood bills were not their cityhood bills were pending in Congress when Congress passed RA 9009. The Cityhood Laws, all
enacted after the effectivity of RA 9009, explicitly exempt respondent municipalities from the increased
income requirement in Section 450 of the Local Government Code, as amended by RA 9009. Such
exemption clearly violates Section 10, Article X of the Constitution and is thus patently
unconstitutional. To be valid, such exemption must be written in the Local Government Code and not
in any other law, including the Cityhood Laws.
Cityhood Laws Violate Section 6, Article X of the Constitution
Uniform and non-discriminatory criteria as prescribed in the Local Government Code are essential to
implement a fair and equitable distribution of national taxes to all local government units. Section 6,
Article X of the Constitution provides:
Local government units shall have a just share, as determined by law, in the national taxes
which shall be automatically released to them. (Emphasis supplied)
If the criteria in creating local government units are not uniform and discriminatory, there can be no fair
and just distribution of the national taxes to local government units.
A city with an annual income of only P20 million, all other criteria being equal, should not receive the
same share in national taxes as a city with an annual income of P100 million or more. The criteria of land
area, population and income, as prescribed in Section 450 of the Local Government Code, must be
strictly followed because such criteria, prescribed by law, are material in determining the "just share" of
local government units in national taxes. Since the Cityhood Laws do not follow the income criterion in
Section 450 of the Local Government Code, they prevent the fair and just distribution of the Internal
Revenue Allotment in violation of Section 6, Article X of the Constitution.
Section 450 of the Local Government Code is Clear,
Plain and Unambiguous
There can be no resort to extrinsic aids – like deliberations of Congress – if the language of the law is
plain, clear and unambiguous. Courts determine the intent of the law from the literal language of the
law, within the law's four corners.19 If the language of the law is plain, clear and unambiguous, courts
simply apply the law according to its express terms. If a literal application of the law results in absurdity,
impossibility or injustice, then courts may resort to extrinsic aids of statutory construction like the
legislative history of the law.20
Congress, in enacting RA 9009 to amend Section 450 of the Local Government Code, did not provide any
exemption from the increased income requirement, not even to respondent municipalities whose
cityhood bills were then pending when Congress passed RA 9009. Section 450 of the Local Government
Code, as amended by RA 9009, contains no exemption whatsoever. Since the law is clear, plain and
unambiguous that any municipality desiring to convert into a city must meet the increased income
requirement, there is no reason to go beyond the letter of the law in applying Section 450 of the Local
Government Code, as amended by RA 9009.
The 11th Congress' Intent was not Written into the Local Government Code
True, members of Congress discussed exempting respondent municipalities from RA 9009, as shown by
the various deliberations on the matter during the 11th Congress. However, Congress did not write this
intended exemption into law. Congress could have easily included such exemption in RA 9009 but
Congress did not. This is fatal to the cause of respondent municipalities because such exemption must
appear in RA 9009 as an amendment to Section 450 of the Local Government Code. The Constitution
requires that the criteria for the conversion of a municipality into a city, including any exemption from
such criteria, must all be written in the Local Government Code. Congress cannot prescribe such criteria
or exemption from such criteria in any other law. In short, Congress cannot create a city through a law
that does not comply with the criteria or exemption found in the Local Government Code.
Section 10 of Article X is similar to Section 16, Article XII of the Constitution prohibiting Congress from
creating private corporations except by a general law. Section 16 of Article XII provides:
The Congress shall not, except by general law, provide for the formation, organization, or
regulation of private corporations. Government-owned or controlled corporations may be
created or established by special charters in the interest of the common good and subject to
the test of economic viability. (Emphasis supplied)
Thus, Congress must prescribe all the criteria for the "formation, organization, or regulation" of private
corporations in a general law applicable to all without discrimination.21 Congress cannot create a
private corporation through a special law or charter.
Deliberations of the 11th Congress on Unapproved Bills Inapplicable
Congress is not a continuing body.22 The unapproved cityhood bills filed during the 11th Congress became
mere scraps of paper upon the adjournment of the 11th Congress. All the hearings and deliberations
conducted during the 11th Congress on unapproved bills also became worthless upon the adjournment of
the 11th Congress. These hearings and deliberations cannot be used to interpret bills enacted into law
in the 13th or subsequent Congresses.
The members and officers of each Congress are different. All unapproved bills filed in one Congress
become functus officio upon adjournment of that Congress and must be re-filed anew in order to be
taken up in the next Congress. When their respective authors re-filed the cityhood bills in 2006 during
the 13th Congress, the bills had to start from square one again, going through the legislative mill just like
bills taken up for the first time, from the filing to the approval. Section 123, Rule XLIV of the Rules of the
Senate, on Unfinished Business, provides:
Sec. 123. x x x
All pending matters and proceedings shall terminate upon the expiration of one (1)
Congress, but may be taken by the succeeding Congress as if presented for the first time.
(Emphasis supplied)
Similarly, Section 78 of the Rules of the House of Representatives, on Unfinished Business, states:
Section 78. Calendar of Business. The Calendar of Business shall consist of the following:
a. Unfinished Business. This is business being considered by the House at the time
of its last adjournment. Its consideration shall be resumed until it is disposed of.
The Unfinished Business at the end of a session shall be resumed at the
commencement of the next session as if no adjournment has taken place. At the
end of the term of a Congress, all Unfinished Business are deemed
terminated. (Emphasis supplied)
Thus, the deliberations during the 11th Congress on the unapproved cityhood bills, as well as the
deliberations during the 12th and 13th Congresses on the unapproved resolution exempting from RA 9009
certain municipalities, have no legal significance. They do not qualify as extrinsic aids in construing laws
passed by subsequent Congresses.
Applicability of Equal Protection Clause
If Section 450 of the Local Government Code, as amended by RA 9009, contained an exemption to
the P100 million annual income requirement, the criteria for such exemption could be scrutinized for
possible violation of the equal protection clause. Thus, the criteria for the exemption, if found in the
Local Government Code, could be assailed on the ground of absence of a valid classification. However,
Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption.
The exemption is contained in the Cityhood Laws, which are unconstitutional because such exemption
must be prescribed in the Local Government Code as mandated in Section 10, Article X of the
Constitution.
Even if the exemption provision in the Cityhood Laws were written in Section 450 of the Local
Government Code, as amended by RA 9009, such exemption would still be unconstitutional for violation
of the equal protection clause. The exemption provision merely states, "Exemption from Republic Act
No. 9009 ─ The City of x x x shall be exempted from the income requirement prescribed under Republic
Act No. 9009." This one sentence exemption provision contains no classification standards or guidelines
differentiating the exempted municipalities from those that are not exempted.
Even if we take into account the deliberations in the 11th Congress that municipalities with pending
cityhood bills should be exempt from the P100 million income requirement, there is still no valid
classification to satisfy the equal protection clause. The exemption will be based solely on the fact that
the 16 municipalities had cityhood bills pending in the 11th Congress when RA 9009 was enacted. This
is not a valid classification between those entitled and those not entitled to exemption from the P100
million income requirement.
To be valid, the classification in the present case must be based on substantial distinctions, rationally
related to a legitimate government objective which is the purpose of the law,23 not limited to existing
conditions only, and applicable to all similarly situated. Thus, this Court has ruled:
The equal protection clause of the 1987 Constitution permits a valid classification under the
following conditions:
1. The classification must rest on substantial distinctions;
2. The classification must be germane to the purpose of the law;
3. The classification must not be limited to existing conditions only; and
4. The classification must apply equally to all members of the same class.24
There is no substantial distinction between municipalities with pending cityhood bills in the
11th Congress and municipalities that did not have pending bills. The mere pendency of a cityhood bill in
the 11th Congress is not a material difference to distinguish one municipality from another for the
purpose of the income requirement. The pendency of a cityhood bill in the 11th Congress does not affect
or determine the level of income of a municipality. Municipalities with pending cityhood bills in the
11th Congress might even have lower annual income than municipalities that did not have pending
cityhood bills. In short, the classification criterion − mere pendency of a cityhood bill in the 11th Congress
− is not rationally related to the purpose of the law which is to prevent fiscally non-viable municipalities
from converting into cities.
Municipalities that did not have pending cityhood bills were not informed that a pending cityhood bill in
the 11th Congress would be a condition for exemption from the increased P100 million income
requirement. Had they been informed, many municipalities would have caused the filing of their own
cityhood bills. These municipalities, even if they have bigger annual income than the 16 respondent
municipalities, cannot now convert into cities if their income is less than P100 million.
The fact of pendency of a cityhood bill in the 11th Congress limits the exemption to a specific condition
existing at the time of passage of RA 9009. That specific condition will never happen again. This violates
the requirement that a valid classification must not be limited to existing conditions only. This
requirement is illustrated in Mayflower Farms, Inc. v. Ten Eyck,25 where the challenged law allowed milk
dealers engaged in business prior to a fixed date to sell at a price lower than that allowed to newcomers
in the same business. In Mayflower, the U.S. Supreme Court held:
We are referred to a host of decisions to the effect that a regulatory law may be prospective
in operation and may except from its sweep those presently engaged in the calling or activity
to which it is directed. Examples are statutes licensing physicians and dentists, which apply
only to those entering the profession subsequent to the passage of the act and exempt those
then in practice, or zoning laws which exempt existing buildings, or laws forbidding
slaughterhouses within certain areas, but excepting existing establishments. The challenged
provision is unlike such laws, since, on its face, it is not a regulation of a business or an
activity in the interest of, or for the protection of, the public, but an attempt to give an
economic advantage to those engaged in a given business at an arbitrary date as against all
those who enter the industry after that date. The appellees do not intimate that the
classification bears any relation to the public health or welfare generally; that the provision
will discourage monopoly; or that it was aimed at any abuse, cognizable by law, in the milk
business. In the absence of any such showing, we have no right to conjure up possible
situations which might justify the discrimination. The classification is arbitrary and
unreasonable and denies the appellant the equal protection of the law. (Emphasis supplied)
In the same vein, the exemption provision in the Cityhood Laws gives the 16 municipalities a unique
advantage based on an arbitrary date − the filing of their cityhood bills before the end of the
11th Congress - as against all other municipalities that want to convert into cities after the effectivity of
RA 9009.
Furthermore, limiting the exemption only to the 16 municipalities violates the requirement that the
classification must apply to all similarly situated. Municipalities with the same income as the 16
respondent municipalities cannot convert into cities, while the 16 respondent municipalities can. Clearly,
as worded the exemption provision found in the Cityhood Laws, even if it were written in Section 450 of
the Local Government Code, would still be unconstitutional for violation of the equal protection clause.
WHEREFORE, we GRANT the petitions and declare UNCONSTITUTIONAL the Cityhood Laws, namely:
Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435,
9436, and 9491.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 166471 March 22, 2011
TAWANG MULTI-PURPOSE COOPERATIVE Petitioner,
vs.
LA TRINIDAD WATER DISTRICT, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition1 challenges the
1 October 2004 Judgment2 and 6 November 2004 Order3 of the Regional Trial Court (RTC), Judicial Region
1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV-1878.
The Facts
Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with the Cooperative
Development Authority, and organized to provide domestic water services in Barangay Tawang, La
Trinidad, Benguet.
La Trinidad Water District (LTWD) is a local water utility created under Presidential Decree (PD) No. 198,
as amended. It is authorized to supply water for domestic, industrial and commercial purposes within
the municipality of La Trinidad, Benguet.
On 9 October 2000, TMPC filed with the National Water Resources Board (NWRB) an application for a
certificate of public convenience (CPC) to operate and maintain a waterworks system in Barangay
Tawang. LTWD opposed TMPC’s application. LTWD claimed that, under Section 47 of PD No. 198, as
amended, its franchise is exclusive. Section 47 states that:
Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic,
industrial or commercial water service within the district or any portion thereof unless and except to the
extent that the board of directors of said district consents thereto by resolution duly adopted, such
resolution, however, shall be subject to review by the Administration.
In its Resolution No. 04-0702 dated 23 July 2002, the NWRB approved TMPC’s application for a CPC. In its
15 August 2002 Decision,4 the NWRB held that LTWD’s franchise cannot be exclusive since exclusive
franchises are unconstitutional and found that TMPC is legally and financially qualified to operate and
maintain a waterworks system. NWRB stated that:
With respect to LTWD’s opposition, this Board observes that:
1. It is a substantial reproduction of its opposition to the application for water permits previously filed by
this same CPC applicant, under WUC No. 98-17 and 98-62 which was decided upon by this Board on April
27, 2000. The issues being raised by Oppositor had been already resolved when this Board said in
pertinent portions of its decision:
"The authority granted to LTWD by virtue of P.D. 198 is not Exclusive. While Barangay Tawang is within
their territorial jurisdiction, this does not mean that all others are excluded in engaging in such service,
especially, if the district is not capable of supplying water within the area. This Board has time and again
ruled that the "Exclusive Franchise" provision under P.D. 198 has misled most water districts to believe
that it likewise extends to be [sic] the waters within their territorial boundaries. Such ideological
adherence collides head on with the constitutional provision that "ALL WATERS AND NATURAL
RESOURCES BELONG TO THE STATE". (Sec. 2, Art. XII) and that "No franchise, certificate or authorization
for the operation of public [sic] shall be exclusive in character".
xxxx
All the foregoing premises all considered, and finding that Applicant is legally and financially qualified to
operate and maintain a waterworks system; that the said operation shall redound to the benefit of the
homeowners/residents of the subdivision, thereby, promoting public service in a proper and suitable
manner, the instant application for a Certificate of Public Convenience is, hereby, GRANTED.5
LTWD filed a motion for reconsideration. In its 18 November 2002 Resolution,6 the NWRB denied the
motion.
LTWD appealed to the RTC.
The RTC’s Ruling
In its 1 October 2004 Judgment, the RTC set aside the NWRB’s 23 July 2002 Resolution and 15 August
2002 Decision and cancelled TMPC’s CPC. The RTC held that Section 47 is valid. The RTC stated that:
The Constitution uses the term "exclusive in character". To give effect to this provision, a reasonable,
practical and logical interpretation should be adopted without disregard to the ultimate purpose of the
Constitution. What is this ultimate purpose? It is for the state, through its authorized agencies or
instrumentalities, to be able to keep and maintain ultimate control and supervision over the operation of
public utilities. Essential part of this control and supervision is the authority to grant a franchise for the
operation of a public utility to any person or entity, and to amend or repeal an existing franchise to serve
the requirements of public interest. Thus, what is repugnant to the Constitution is a grant of franchise
"exclusive in character" so as to preclude the State itself from granting a franchise to any other person or
entity than the present grantee when public interest so requires. In other words, no franchise of
whatever nature can preclude the State, through its duly authorized agencies or instrumentalities, from
granting franchise to any person or entity, or to repeal or amend a franchise already granted.
Consequently, the Constitution does not necessarily prohibit a franchise that is exclusive on its face,
meaning, that the grantee shall be allowed to exercise this present right or privilege to the exclusion of
all others. Nonetheless, the grantee cannot set up its exclusive franchise against the ultimate authority
of the State.7
TMPC filed a motion for reconsideration. In its 6 November 2004 Order, the RTC denied the motion.
Hence, the present petition.
 Issue
TMPC raises as issue that the RTC erred in holding that Section 47 of PD No. 198, as amended, is valid.
The Court’s Ruling
The petition is meritorious.
What cannot be legally done directly cannot be done indirectly. This rule is basic and, to a reasonable
mind, does not need explanation. Indeed, if acts that cannot be legally done directly can be done
indirectly, then all laws would be illusory.
In Alvarez v. PICOP Resources, Inc.,8 the Court held that, "What one cannot do directly, he cannot do
indirectly."9 In Akbayan Citizens Action Party v. Aquino,10 quoting Agan, Jr. v. Philippine International Air
Terminals Co., Inc.,11 the Court held that, "This Court has long and consistently adhered to the legal
maxim that those that cannot be done directly cannot be done indirectly."12 In Central Bank Employees
Association, Inc. v. Bangko Sentral ng Pilipinas,13 the Court held that, "No one is allowed to do indirectly
what he is prohibited to do directly."14
The President, Congress and the Court cannot create directly franchises for the operation of a public
utility that are exclusive in character. The 1935, 1973 and 1987 Constitutions expressly and clearly
prohibit the creation of franchises that are exclusive in character. Section 8, Article XIII of the 1935
Constitution states that:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or other entities organized under the laws
of the Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines, nor
shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty
years. (Empahsis supplied)
Section 5, Article XIV of the 1973 Constitution states that:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized under the laws
of the Philippines at least sixty per centum of the capital of which is owned by such citizens, nor shall
such franchise, certificate or authorization be exclusive in character or for a longer period than fifty
years. (Emphasis supplied)
Section 11, Article XII of the 1987 Constitution states that:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized under the laws
of the Philippines, at least sixty per centum of whose capital is owned by such citizens, nor shall such
franchise, certificate or authorization be exclusive in character or for a longer period than fifty years.
(Emphasis supplied)
Plain words do not require explanation. The 1935, 1973 and 1987 Constitutions are clear — franchises
for the operation of a public utility cannot be exclusive in character. The 1935, 1973 and 1987
Constitutions expressly and clearly state that, "nor shall such franchise x x x be exclusive in
character." There is no exception.
When the law is clear, there is nothing for the courts to do but to apply it. The duty of the Court is to
apply the law the way it is worded. In Security Bank and Trust Company v. Regional Trial Court of Makati,
Branch 61,15 the Court held that:
Basic is the rule of statutory construction that when the law is clear and unambiguous, the court is left
with no alternative but to apply the same according to its clear language. As we have held in the case
of Quijano v. Development Bank of the Philippines:
"x x x We cannot see any room for interpretation or construction in the clear and unambiguous language
of the above-quoted provision of law. This Court had steadfastly adhered to the doctrine that its first
and fundamental duty is the application of the law according to its express terms, interpretation being
called for only when such literal application is impossible. No process of interpretation or construction
need be resorted to where a provision of law peremptorily calls for application. Where a requirement or
condition is made in explicit and unambiguous terms, no discretion is left to the judiciary. It must see
to it that its mandate is obeyed."16 (Emphasis supplied)
In Republic of the Philippines v. Express Telecommunications Co., Inc.,17 the Court held that, "The
Constitution is quite emphatic that the operation of a public utility shall not be exclusive."18 In Pilipino
Telephone Corporation v. National Telecommunications Commission,19 the Court held that, "Neither
Congress nor the NTC can grant an exclusive ‘franchise, certificate, or any other form of authorization’ to
operate a public utility."20 In National Power Corp. v. Court of Appeals,21 the Court held that, "Exclusivity
of any public franchise has not been favored by this Court such that in most, if not all, grants by the
government to private corporations, the interpretation of rights, privileges or franchises is taken against
the grantee."22 In Radio Communications of the Philippines, Inc. v. National Telecommunications
Commission,23 the Court held that, "The Constitution mandates that a franchise cannot be exclusive in
nature."24
Indeed, the President, Congress and the Court cannot create directly franchises that are exclusive in
character. What the President, Congress and the Court cannot legally do directly they cannot do
indirectly. Thus, the President, Congress and the Court cannot create indirectly franchises that are
exclusive in character by allowing the Board of Directors (BOD) of a water district and the Local Water
Utilities Administration (LWUA) to create franchises that are exclusive in character.
In PD No. 198, as amended, former President Ferdinand E. Marcos (President Marcos) created indirectly
franchises that are exclusive in character by allowing the BOD of LTWD and the LWUA to create directly
franchises that are exclusive in character. Section 47 of PD No. 198, as amended, allows the BOD and the
LWUA to create directly franchises that are exclusive in character. Section 47 states:
Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic,
industrial or commercial water service within the district or any portion thereof unless and except to the
extent that the board of directors of said district consents thereto by resolution duly adopted, such
resolution, however, shall be subject to review by the Administration. (Emphasis supplied)
In case of conflict between the Constitution and a statute, the Constitution always prevails because the
Constitution is the basic law to which all other laws must conform to. The duty of the Court is to uphold
the Constitution and to declare void all laws that do not conform to it.
In Social Justice Society v. Dangerous Drugs Board,25 the Court held that, "It is basic that if a law or an
administrative rule violates any norm of the Constitution, that issuance is null and void and has no effect.
The Constitution is the basic law to which all laws must conform; no act shall be valid if it conflicts with
the Constitution."26 In Sabio v. Gordon,27 the Court held that, "the Constitution is the highest law of the
land. It is the ‘basic and paramount law to which all other laws must conform.’"28 In Atty. Macalintal v.
Commission on Elections,29 the Court held that, "The Constitution is the fundamental and paramount law
of the nation to which all other laws must conform and in accordance with which all private rights must
be determined and all public authority administered. Laws that do not conform to the Constitution shall
be stricken down for being unconstitutional."30 In Manila Prince Hotel v. Government Service Insurance
System,31 the Court held that:
Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the
constitution that law or contract whether promulgated by the legislative or by the executive branch or
entered into by private persons for private purposes is null and void and without any force and effect.
Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is
deemed written in every statute and contract."32 (Emphasis supplied)
To reiterate, the 1935, 1973 and 1987 Constitutions expressly prohibit the creation of franchises that are
exclusive in character. They uniformly command that "nor shall such franchise x x x be exclusive in
character." This constitutional prohibition is absolute and accepts no exception. On the other hand, PD
No. 198, as amended, allows the BOD of LTWD and LWUA to create franchises that are exclusive in
character. Section 47 states that, "No franchise shall be granted to any other person or agency x x
x unless and except to the extent that the board of directors consents thereto x x x subject to review
by the Administration." Section 47 creates a glaring exception to the absolute prohibition in the
Constitution. Clearly, it is patently unconstitutional.
Section 47 gives the BOD and the LWUA the authority to make an exception to the absolute prohibition
in the Constitution. In short, the BOD and the LWUA are given the discretion to create franchises that are
exclusive in character. The BOD and the LWUA are not even legislative bodies. The BOD is not a
regulatory body but simply a management board of a water district. Indeed, neither the BOD nor the
LWUA can be granted the power to create any exception to the absolute prohibition in the Constitution,
a power that Congress itself cannot exercise.
In Metropolitan Cebu Water District v. Adala,33 the Court categorically declared Section 47 void. The
Court held that:
Nonetheless, while the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for the
reasons discussed above, the same provision must be deemed void ab initio for being irreconcilable
with Article XIV, Section 5 of the 1973 Constitution which was ratified on January 17, 1973 — the
constitution in force when P.D. 198 was issued on May 25, 1973. Thus, Section 5 of Art. XIV of the 1973
Constitution reads:
"SECTION 5. No franchise, certificate, or any other form of authorization for the operation of a public
utility shall be granted except to citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines at least sixty per centum of the capital of which is owned by such
citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer
period than fifty years. Neither shall any such franchise or right be granted except under the condition
that it shall be subject to amendment, alteration, or repeal by the Batasang Pambansa when the public
interest so requires. The State shall encourage equity participation in public utiltities by the general
public. The participation of foreign investors in the governing body of any public utility enterprise shall
be limited to their proportionate share in the capital thereof."
This provision has been substantially reproduced in Article XII Section 11 of the 1987 Constitution,
including the prohibition against exclusive franchises.
xxxx
Since Section 47 of P.D. 198, which vests an "exclusive franchise" upon public utilities, is clearly
repugnant to Article XIV, Section 5 of the 1973 Constitution, it is unconstitutional and may not,
therefore, be relied upon by petitioner in support of its opposition against respondent’s application for
CPC and the subsequent grant thereof by the NWRB.
WHEREFORE, Section 47 of P.D. 198 is unconstitutional.34 (Emphasis supplied)
The dissenting opinion declares Section 47 valid and constitutional. In effect, the dissenting opinion
holds that (1) President Marcos can create indirectly franchises that are exclusive in character; (2) the
BOD can create directly franchises that are exclusive in character; (3) the LWUA can create directly
franchises that are exclusive in character; and (4) the Court should allow the creation of franchises that
are exclusive in character.
Stated differently, the dissenting opinion holds that (1) President Marcos can violate indirectly the
Constitution; (2) the BOD can violate directly the Constitution; (3) the LWUA can violate directly the
Constitution; and (4) the Court should allow the violation of the Constitution.
The dissenting opinion states that the BOD and the LWUA can create franchises that are exclusive in
character "based on reasonable and legitimate grounds," and such creation "should not be construed as
a violation of the constitutional mandate on the non-exclusivity of a franchise" because it "merely refers
to regulation" which is part of "the government’s inherent right to exercise police power in regulating
public utilities" and that their violation of the Constitution "would carry with it the legal presumption
that public officers regularly perform their official functions." The dissenting opinion states that:
To begin with, a government agency’s refusal to grant a franchise to another entity, based on reasonable
and legitimate grounds, should not be construed as a violation of the constitutional mandate on the non-
exclusivity of a franchise; this merely refers to regulation, which the Constitution does not prohibit. To
say that a legal provision is unconstitutional simply because it enables a government instrumentality to
determine the propriety of granting a franchise is contrary to the government’s inherent right to exercise
police power in regulating public utilities for the protection of the public and the utilities themselves. The
refusal of the local water district or the LWUA to consent to the grant of other franchises would carry
with it the legal presumption that public officers regularly perform their official functions.
The dissenting opinion states two "reasonable and legitimate grounds" for the creation of exclusive
franchise: (1) protection of "the government’s investment,"35 and (2) avoidance of "a situation where
ruinous competition could compromise the supply of public utilities in poor and remote areas."36
There is no "reasonable and legitimate" ground to violate the Constitution. The Constitution should
never be violated by anyone. Right or wrong, the President, Congress, the Court, the BOD and the LWUA
have no choice but to follow the Constitution. Any act, however noble its intentions, is void if it violates
the Constitution. This rule is basic.
In Social Justice Society,37 the Court held that, "In the discharge of their defined functions, the three
departments of government have no choice but to yield obedience to the commands of the
Constitution. Whatever limits it imposes must be observed."38 In Sabio,39 the Court held that, "the
Constitution is the highest law of the land. It is ‘the basic and paramount law to which x x x all persons,
including the highest officials of the land, must defer. No act shall be valid, however noble its
intentions, if it conflicts with the Constitution.’"40 In Bengzon v. Drilon,41 the Court held that, "the three
branches of government must discharge their respective functions within the limits of authority
conferred by the Constitution."42 In Mutuc v. Commission on Elections,43 the Court held that, "The three
departments of government in the discharge of the functions with which it is [sic] entrusted have no
choice but to yield obedience to [the Constitution’s] commands. Whatever limits it imposes must be
observed."44
Police power does not include the power to violate the Constitution. Police power is the plenary power
vested in Congress to make laws not repugnant to the Constitution. This rule is basic.
In Metropolitan Manila Development Authority v. Viron Transportation Co., Inc.,45 the Court held that,
"Police power is the plenary power vested in the legislature to make, ordain, and establish wholesome
and reasonable laws, statutes and ordinances, not repugnant to the Constitution."46 In Carlos Superdrug
Corp. v. Department of Social Welfare and Development,47 the Court held that, police power "is ‘the
power vested in the legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances x x x not repugnant to the
constitution.’"48 In Metropolitan Manila Development Authority v. Garin,49 the Court held that, "police
power, as an inherent attribute of sovereignty, is the power vested by the Constitution in the legislature
to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances x
x x not repugnant to the Constitution."50
There is no question that the effect of Section 47 is the creation of franchises that are exclusive in
character. Section 47 expressly allows the BOD and the LWUA to create franchises that are exclusive in
character.
The dissenting opinion explains why the BOD and the LWUA should be allowed to create franchises that
are exclusive in character — to protect "the government’s investment" and to avoid "a situation where
ruinous competition could compromise the supply of public utilities in poor and remote areas." The
dissenting opinion declares that these are "reasonable and legitimate grounds." The dissenting opinion
also states that, "The refusal of the local water district or the LWUA to consent to the grant of other
franchises would carry with it the legal presumption that public officers regularly perform their official
functions."
When the effect of a law is unconstitutional, it is void. In Sabio,51 the Court held that, "A statute may be
declared unconstitutional because it is not within the legislative power to enact; or it creates or
establishes methods or forms that infringe constitutional principles; or its purpose or effect violates the
Constitution or its basic principles."52 The effect of Section 47 violates the Constitution, thus, it is void.
In Strategic Alliance Development Corporation v. Radstock Securities Limited,53 the Court held that, "This
Court must perform its duty to defend and uphold the Constitution."54 In Bengzon,55 the Court held that,
"The Constitution expressly confers on the judiciary the power to maintain inviolate what it
decrees."56 In Mutuc,57 the Court held that:
The concept of the Constitution as the fundamental law, setting forth the criterion for the validity of any
public act whether proceeding from the highest official or the lowest functionary, is a postulate of our
system of government. That is to manifest fealty to the rule of law, with priority accorded to that which
occupies the topmost rung in the legal hierarchy. The three departments of government in the discharge
of the functions with which it is [sic] entrusted have no choice but to yield obedience to its commands.
Whatever limits it imposes must be observed. Congress in the enactment of statutes must ever be on
guard lest the restrictions on its authority, whether substantive or formal, be transcended. The
Presidency in the execution of the laws cannot ignore or disregard what it ordains. In its task of applying
the law to the facts as found in deciding cases, the judiciary is called upon to maintain inviolate what is
decreed by the fundamental law. Even its power of judicial review to pass upon the validity of the acts of
the coordinate branches in the course of adjudication is a logical corollary of this basic principle that the
Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates.
Thereby there is a recognition of its being the supreme law.58
Sustaining the RTC’s ruling would make a dangerous precedent. It will allow Congress to do indirectly
what it cannot do directly. In order to circumvent the constitutional prohibition on franchises that are
exclusive in character, all Congress has to do is to create a law allowing the BOD and the LWUA to create
franchises that are exclusive in character, as in the present case.
WHEREFORE, we GRANT the petition. We DECLARE Section 47 of Presidential Decree No.
198 UNCONSTITUTIONAL. We SET ASIDE the 1 October 2004 Judgment and 6 November 2004 Order of
the Regional Trial Court, Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV-1878
and REINSTATE the 23 July 2002 Resolution and 15 August 2002 Decision of the National Water
Resources Board.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 197528 - September 5, 2012]
PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, v. ARMANDO A. VINUY A, LOUIE M.
ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M.
ERA, SANDY 0. ENJAMBRE and NOEL T. LADEA, Respondents.
DECISION
BRION, J.:
We resolve the present Petition for Review on Certiorari 1ςrνll assailing the decision2ςrνll dated May 9,
2011 and the resolution3dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353.
The Antecedents
On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito
S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed
a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency),
and its President Romeo P. Nacino.
The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to
work as aluminum fabricator/installer for the agency s principal, Modern Metal Solution LLC/MMS
Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates.
The respondents employment contracts,4ςrνll which were approved by the Philippine Overseas
Employment Administration (POEA), provided for a two-year employment, nine hours a day, salary of
1,350 AED with overtime pay, food allowance, free and suitable housing (four to a room), free
transportation, free laundry, and free medical and dental services. They each paid a P 15,000.00
processing fee.5ςrνllςrνll
On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters6ςrνll with terms
different from those in the employment contracts which they signed at the agency s office in the
Philippines. Under the letters of appointment, their employment was increased to three years at 1,000
to 1,200 AED and food allowance of 200 AED.
The respondents claimed that they were shocked to find out what their working and living conditions
were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to
one and a half hours. When they rendered overtime work, they were most of the time either underpaid
or not paid at all. Their housing accommodations were cramped and were shared with 27 other
occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them
only three to four hours of sleep a day because of the long hours of travel to and from their place of
work; there was no potable water and the air was polluted.
When the respondents received their first salaries (at the rates provided in their appointment letters and
with deductions for placement fees) and because of their difficult living and working conditions, they
called up the agency and complained about their predicament. The agency assured them that their
concerns would be promptly addressed, but nothing happened.
On May 5, 2007, Modern Metal required the respondents to sign new employment
contracts,7ςrνll except for Era who was made to sign later. The contracts reflected the terms of their
appointment letters. Burdened by all the expenses and financial obligations they incurred for their
deployment, they were left with no choice but to sign the contracts. They raised the matter with the
agency, which again took no action.
The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the
labor arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they
executed in Dubai, which were mere photocopies of the originals and which failed to explain the
circumstances behind their execution; (2) failing to consider that the compromise agreements they
signed before the POEA covered only the refund of their airfare and not all their money claims; and (3)
ruling that they violated the rule on non-forum shopping.
On May 12, 2009, the NLRC granted the appeal.11ςrνll It ruled that the respondents had been illegally
dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It
stressed that it is illegal for an employer to require its employees to execute new employment papers,
especially those which provide benefits that are inferior to the POEA-approved contracts.
The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the
respondents executed the quitclaim documents under duress as they were afraid that they would not be
allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal
disagreed with the labor arbiter s opinion that the compromise agreement they executed before the
POEA had effectively foreclosed the illegal dismissal complaint before the NLRC and that the
respondents had been guilty of forum shopping. It pointed out that the POEA case involved pre-
deployment issues; whereas, the complaint before the NLRC is one for illegal dismissal and money claims
arising from employment.
Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the
respondents, as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency s WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is
inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO,
that Modern Metal would not give them their salaries and release papers, the respondents, except Era, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the following:
cited personal/family problems for their resignation.8ςrνll Era mentioned the real reason "because I
dont (sic) want the company policy"9ςrνll for his resignation.
Salary for
the
It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to
unexpired
Manila in September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own Underpaid Placement Exemplary
Employee portion of
airfare. Salary fee Damages
the contract
(1350 x 6
For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily months)
resigned from their employment to seek a better paying job. It claimed that the respondents, while still
working for Modern Metal, applied with another company which offered them a higher pay. Vinuya,
150 x 6 = 900 AED USD 400 8100 AED P 20,000.00
Unfortunately, their supposed employment failed to materialize and they had to go home because they ARMANDO
had already resigned from Modern Metal.
Alcantara
150 X 4 = 600 AED USD 400 8100 AED P 20,000.00
VIRGILIO
The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and
release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act
Era,
No. (R.A.) 8042, damages and attorney s fees is unfounded. 350 x 4 = 1400 AED USD 400 8100 AED P 20,000.00
MARINO

The Compulsory Arbitration Rulings Ladea,

150 x 5 = 750 AED USD 400 8100 AED P 20,000.00
NOEL
On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a Decision10ςrνll dismissing the complaint,
Ordovez,
finding that the respondents voluntarily resigned from their jobs. He also found that four of them 250 X 3 = 750 AED USD 400 8100 AED P 20,000.00
LOUIE
Alcantara, Era, Anipan and Lumanta even executed a compromise agreement (with quitclaim and
release) before the POEA. He considered the POEA recourse a case of forum shopping.
 Anipan,
150 x 4 = 600 AED USD 400 8100 AED P 20,000.00 Ladea, 29 March 8 August 19 months
ROBELITO 2 years
NOEL 2007 2007 and 21 days
Enjambre,
150 x 4 = 600 AED USD 400 8100 AED P 20,000.00
SANDY
Ordovez, 21 months
Lumanta, 2 years 3 April 2007 26 July 2007
250 x 5 = 1250 AED USD 400 8100 AED P 20,000.00 LOUIE and 23 days
ARSENIO

TOTAL: 6,850 AED US$3,200 64,800 AED P 400,000.00 Anipan, 8 August 20 months
2 years 3 April 2007
ROBELITO 2007 and 5 days

or their peso equivalent at the time of actual payment plus attorney s fees equivalent to 10% of the
judgment award.12ςrνllςrνll Enjambre, 29 March 20 months
2 years 26 July 2007
SANDY 2007 and 3 days
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The agency moved for reconsideration, contending that the appeal was never perfected and that the 19 months
Lumanta, 29 March 8 August
NLRC gravely abused its discretion in reversing the labor arbiter s decision.The respondents, on the other 2 years and 21
ARSENIO 2007 2007
hand, moved for partial reconsideration, maintaining that their salaries should have covered the days15ςrνll
unexpired portion of their employment contracts, pursuant to the Court s ruling in Serrano v. Gallant
Maritime Services, Inc.13ςrνllςrνll
Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally,
The NLRC denied the agency s motion for reconsideration, but granted the respondents motion.14ςrνll It questioning the application of the Serrano ruling in the case because it was not yet final and executory.
sustained the respondents argument that the award needed to be adjusted, particularly in relation to The NLRC denied the motion, prompting the agency to seek recourse from the CA through a Petition
the payment of their salaries, consistent with the Court s ruling in Serrano. The ruling declared for Certiorari.
unconstitutional the clause, "or for three (3) months for every year of the unexpired term, whichever is
less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally dismissed overseas The CA Decision
Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is
less. Accordingly, it modified its earlier decision and adjusted the respondents salary entitlement based
on the following matrix: The CA dismissed the petition for lack of merit.16ςrνll It upheld the NLRC ruling that the respondents
were illegally dismissed. It found no grave abuse of discretion in the NLRC s rejection of the respondents
resignation letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary
termination of employment.
Duration Unexpired
Departure Date
Employee of portion of
date dismissed The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation.
Contract contract
Moreover, it found nothing in the records to substantiate the agency s contention that the respondents
resignation was of their own accord; on the contrary, it considered the resignation letters "dubious for
having been lopsidedly-worded to ensure that the petitioners (employers) are free from any
Vinuya, 29 March 8 August 19 months liability."17ςrνllςrνll
2 years
ARMANDO 2007 2007 and 21 days
The appellate court likewise refused to give credit to the compromise agreements that the respondents
executed before the POEA. It agreed with the NLRC s conclusion that the agreements pertain to the
Alcantara, 8 August 20 months respondents charge of recruitment violations against the agency distinct from their illegal dismissal
2 years 3 April 2007
VIRGILIO 2007 and 5 days complaint, thus negating forum shopping by the respondents.

Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the
Era, 8 August 21 months respondents), by adjusting the respondents salary award on the basis of the unexpired portion of their
2 years 12 May 2007
MARINO 2007 and 4 days contracts, as enunciated in the Serrano case.
The agency moved for, but failed to secure, a reconsideration of the CA decision.18ςrνllςrνll
The Petition
The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA
erred in:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
1. affirming the NLRC s finding that the respondents were illegally dismissed;
2. holding that the compromise agreements before the POEA pertain only to the respondents charge of
recruitment violations against the agency; andcralawlibrary
3. affirming the NLRC s award to the respondents of their salaries for the unexpired portion of their
employment contracts, pursuant to the Serrano ruling.
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The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as
correctly found by the labor arbiter, the respondents voluntarily resigned from their jobs, and even
executed affidavits of quitclaim and release; the respondents stated family concerns for their
resignation. The agency posits that the letters were duly proven as they were written unconditionally by
the respondents. It, therefore, assails the conclusion that the respondents resigned under duress or that
the resignation letters were dubious.
The agency raises the same argument with respect to the compromise agreements, with quitclaim and
release, it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta
before the POEA, although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and
Ladea signing one document;19ςrνll Era20ςrνll and Alcantara21ςrνll signing a document each. It points
out that the agreement was prepared with the assistance of POEA Conciliator Judy Santillan, and was
duly and freely signed by the respondents; moreover, the agreement is not conditional as it pertains to
all issues involved in the dispute between the parties.
On the third issue, the agency posits that the Serrano ruling has no application in the present case for
three reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to
their money claims. Second, the respondents filed the complaint in 2007, while the Serrano ruling came
out on March 24, 2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was
enacted on March 8, 2010 and which amended R.A. 8042, restored the subject clause in Section 10 of
R.A. 8042, declared unconstitutional by the Court.
The Respondents Position
In their Comment (to the Petition) dated September 28, 2011,22ςrνll the respondents ask the Court to
deny the petition for lack of merit. They dispute the agency s insistence that they resigned voluntarily.
They stand firm on their submission that because of their unbearable living and working conditions in
Dubai, they were left with no choice but to resign. Also, the agency never refuted their detailed narration
of the reasons for giving up their employment.
23
The respondents maintain that the quitclaim and release affidavits, ςrνll which the agency presented,
betray its desperate attempt to escape its liability to them. They point out that, as found by the NLRC,
the affidavits are ready-made documents; for instance, in Lumanta s24ςrνll and Era s25ςrνll affidavits,
they mentioned a certain G & A International Manpower as the agency which recruited them a fact
totally inapplicable to all the respondents. They contend that they had no choice but to sign the
documents; otherwise, their release papers and remaining salaries would not be given to them, a
submission which the agency never refuted.
On the agency s second line of defense, the compromise agreement (with quitclaim and release)
between the respondents and the agency before the POEA, the respondents argue that the agreements
pertain only to their charge of recruitment violations against the agency. They add that based on the
agreements, read and considered entirely, the agency was discharged only with respect to the
recruitment and pre-deployment issues such as excessive placement fees, non-issuance of receipts and
placement misrepresentation, but not with respect to post-deployment issues such as illegal dismissal,
breach of contract, underpayment of salaries and underpayment and nonpayment of overtime pay. The
respondents stress that the agency failed to controvert their contention that the agreements came
about only to settle their claim for refund of their airfare which they paid for when they were
repatriated.
Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding
the NLRC s award of their salaries for the unexpired portion of their employment contracts, as
enunciated in Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as
such, should be given retroactive application as the Court declared in Yap v. Thenamaris Ship s
Management.26ςrνll Further, the respondents take exception to the agency s contention that the
Serrano ruling cannot, in any event, be applied in the present case in view of the enactment of R.A.
10022 on March 8, 2010, amending Section 10 of R.A. 8042. The amendment restored the subject clause
in paragraph 5, Section 10 of R.A. 8042 which was struck down as unconstitutional in Serrano.
The respondents maintain that the agency cannot raise the issue for the first time before this Court
when it could have raised it before the CA with its Petition for Certiorari which it filed on June 8,
2010;27ςrνll otherwise, their right to due process will be violated. The agency, on the other hand, would
later claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before
the CA in CA-G.R. SP No. 114353.28ςrνll They further argue that RA 10022 cannot be applied in their
case, as the law is an amendatory statute which is, as a rule, prospective in application, unless the
contrary is provided.29ςrνll To put the issue to rest, the respondents ask the Court to also declare
unconstitutional Section 7 of R.A. 10022.
Finally, the respondents submit that the petition should be dismissed outright for raising only questions
of fact, rather than of law.
The Court s Ruling
The procedural question
We deem it proper to examine the facts of the case on account of the divergence in the factual
conclusions of the labor arbiter on the one hand, and, of the NLRC and the CA, on the other.30ςrνll The
arbiter found no illegal dismissal in the respondents loss of employment in Dubai because they
voluntarily resigned; whereas, the NLRC and the CA adjudged them to have been illegally dismissed
because they were virtually forced to resign.
The merits of the case
We find no merit in the petition. The CA committed no reversible error and neither did it commit grave
abuse of discretion in affirming the NLRC s illegal dismissal ruling.
The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas
employment, as well as basic norms of decency and fair play in an employment relationship, pushing the
respondents to look for a better employment and, ultimately, to resign from their jobs.
First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a
POEA-approved two-year employment contract,31ςrνll with Modern Metal providing among others, as
earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them
appointment letters32ςrνll whereby the respondents were hired for a longer three-year period and a
reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were
required to sign new employment contracts33ςrνll reflecting the same terms contained in their
appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum
fabricator/installer. The respondents complained with the agency about the contract substitution, but
the agency refused or failed to act on the matter.
The fact that the respondents contracts were altered or substituted at the workplace had never been
denied by the agency. On the contrary, it admitted that the contract substitution did happen when it
argued, "as to their claim for underpayment of salary, their original contract mentioned 1350 AED
monthly salary, which includes allowance while in their Appointment Letters, they were supposed to
receive 1,300 AED. While there was a difference of 50 AED monthly, the same could no longer be
claimed by virtue of their Affidavits of Quitclaims and Desistance."34ςrνllςrνll
Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal
recruitment under the law. Article 34 of the Labor Code
provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of
authority:
x x x
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to and including the periods of expiration of the same
without the approval of the Secretary of Labor.
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Further, Article 38 of the Labor Code, as amended by R.A. 8042,35ςrνll defined "illegal recruitment" to
include the following act:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by
the Department of Labor and Employment from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval of the Department of Labor
and Employment.
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Second. The agency and Modern Metal committed breach of contract. Aggravating the contract
substitution imposed upon them by their employer, the respondents were made to suffer substandard
(shocking, as they put it) working and living arrangements. Both the original contracts the respondents
signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided
for free housing and transportation to and from the jobsite. The original contract mentioned free and
suitable housing.36ςrνll Although no description of the housing was made in the letters of appointment
except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or
accommodation would be "suitable."
As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal
break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their
living quarters were cramped as they shared them with 27 other workers. The lodging house was in
Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday
because of the long hours of travel to and from their place of work, not to mention that there was no
potable water in the lodging house which was located in an area where the air was polluted. The
respondents complained with the agency about the hardships that they were suffering, but the agency
failed to act on their reports. Significantly, the agency failed to refute their claim, anchored on the ordeal
that they went through while in Modern Metal s employ.
Third. With their original contracts substituted and their oppressive working and living conditions
unmitigated or unresolved, the respondents decision to resign is not surprising. They were compelled by
the dismal state of their employment to give up their jobs; effectively, they were constructively
dismissed. A constructive dismissal or discharge is "a quitting because continued employment is
rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a
diminution in pay."37ςrνllςrνll
Without doubt, the respondents continued employment with Modern Metal had become unreasonable.
A reasonable mind would not approve of a substituted contract that pays a diminished salary from 1350
AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference
of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3
years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site,
cramped and crowded, without potable water and exposed to air pollution.
We thus cannot accept the agency s insistence that the respondents voluntarily resigned since they
personally prepared their resignation letters38ςrνll in their own handwriting, citing family problems as
their common ground for resigning. As the CA did, we find the resignation letters "dubious,"39ςrνll not
only for having been lopsidedly worded to ensure that the employer is rendered free from any liability,
but also for the odd coincidence that all the respondents had, at the same time, been confronted with
urgent family problems so that they had to give up their employment and go home. The truth, as the
respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would
not give them their salaries and their release papers. Only Era was bold enough to say the real reason for
his resignation to protest company policy.
We likewise find the affidavits40of quitclaim and release which the respondents executed suspect.
Obviously, the affidavits were prepared as a follow through of the respondents supposed voluntary
resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the
affidavits. They must have been prepared by a representative of Modern Metal as they appear to come
from a standard form and were apparently introduced for only one purpose to lend credence to the
resignation letters. In Modern Metal s haste, however, to secure the respondents affidavits, they did not
check on the model they used. Thus, Lumanta s affidavit41ςrνll mentioned a G & A International
Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true
for Era s affidavit.42ςrνll This confusion is an indication of the employer s hurried attempt to avoid
liability to the respondents.
The respondents position is well-founded. The NLRC itself had the same impression, which we find in
order and hereunder quote:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The acts of respondents of requiring the signing of new contracts upon reaching the place of work and
requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too
familiar stories of despicable labor practices which our employees are subjected to abroad. While it is
true that quitclaims are generally given weight, however, given the facts of the case, We are of the
opinion that the complainants-appellants executed the same under duress and fear that they will not be
allowed to return to the Philippines.43ςrνllςrνll
chanrobles virtual law library
Fourth. The compromise agreements (with quitclaim and release)44ςrνll between the respondents and
the agency before the POEA did not foreclose their employer-employee relationship claims before the
NLRC. The respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their
own airfare when they returned home45ςrνll and that the compromise agreements settled only their
claim for refund of their airfare, but not their other claims.46ςrνll Again, this submission has not been
refuted or denied by the agency.
On the surface, the compromise agreements appear to confirm the agency s position, yet a closer
examination of the documents would reveal their true nature. Copy of the compromise agreement is a
standard POEA document, prepared in advance and readily made available to parties who are involved in
disputes before the agency, such as what the respondents filed with the POEA ahead (filed in 2007) of
the illegal dismissal complaint before the NLRC (filed on March 5, 2008).
Under the heading "Post-Deployment," the agency agreed to pay Era47ςrνll and
Alcantara48ςrνllP 12,000.00 each, purportedly in satisfaction of the respondents claims arising from
overseas employment, consisting of unpaid salaries, salary differentials and other benefits, including
money claims with the NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4)
Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last four signing on the left hand side of
the document; the last two were not among those who filed the illegal dismissal complaint).49ςrνllςrνll
The agency agreed to pay them a total of P 72,000.00. Although there was no breakdown of the
entitlement for each of the six, but guided by the compromise agreement signed by Era and Alcantara,
we believe that the agency paid them P 12,000.00 each, just like Era and Alcantara.
The uniform insubstantial amount for each of the signatories to the agreement lends credence to their
contention that the settlement pertained only to their claim for refund of the airfare which they
shouldered when they returned to the Philippines. The compromise agreement, apparently, was
intended by the agency as a settlement with the respondents and others with similar claims, which
explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with
the NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered
to have fully settled the respondents claims before the NLRC illegal dismissal and monetary benefits
arising from employment. We thus find no reversible error nor grave abuse of discretion in the rejection
by the NLRC and the CA of said agreements.
Fifth. The agency s objection to the application of the Serrano ruling in the present case is of no moment.
Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is
untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the
Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been
resolved in Yap v. Thenamaris Ship s Management,50ςrνll where the Court sustained the retroactive
application of the Serrano ruling which declared unconstitutional the subject clause in Section 10,
paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas
Filipino Workers.
Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022,
entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and
Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and
Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and For
Other Purposes."51ςrνll It argues that R.A. 10022, which lapsed into law (without the Signature of the
President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042.
The amendment, contained in Section 7 of R.A. 10022, reads as
follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
In case of termination of overseas employment without just, valid or authorized cause as defined by law
or contract, or any unauthorized deductions from the migrant worker s salary, the worker shall be
entitled to the full reimbursement "of" his placement fee and the deductions made with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.52ςrνll (emphasis ours)
chanrobles virtual law library
This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is
provided.53ςrνll By its very nature, the amendment introduced by R.A. 10022 restoring a provision of
R.A. 8042 declared unconstitutional cannot be given retroactive effect, not only because there is no
express declaration of retroactivity in the law, but because retroactive application will result in an
impairment of a right that had accrued to the respondents by virtue of the Serrano ruling - entitlement
to their salaries for the unexpired portion of their employment contracts.
All statutes are to be construed as having only a prospective application, unless the purpose and
intention of the legislature to give them a retrospective effect are expressly declared or are necessarily
implied from the language used.54ςrνll We thus see no reason to nullity the application of the Serrano
ruling in the present case. Whether or not R.A. 1 0022 is constitutional is not for us to rule upon in the
present case as this is an issue that is not squarely before us. In other words, this is an issue that awaits
its proper day in court; in the meanwhile, we make no pronouncement on it.
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and
the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let
this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the
Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment
record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered
in any similar future violations.
Costs against the petitioner.ςrαlαωlιbrαrÿ
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 196231 January 28, 2014
EMILIO A. GONZALES III, Petitioner, In view of the Court’s ruling, the OP filed the present motion for reconsideration through the Office of
vs. the Solicitor General (OSG).
OFFICE OF THE PRESIDENT OF THE PHILIPPINES, ACTING THROUGH AND REPRESENTED BY EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR., SENIOR DEPUTY EXECUTIVE SECRETARY JOSE AMOR M.
We briefly narrate the facts that preceded the filing of the petitions and the present motion for
AMORANDO, OFFICER-IN-CHARGE - OFFICE OF THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL
reconsideration.
AFFAIRS, ATTY. RONALDO A. GERON, DIR. ROWENA TURINGAN-SANCHEZ, AND ATTY. CARLITO D.
CATAYONG, Respondents.
I. ANTECEDENTS
x-----------------------x
A. Gonzales’ petition (G.R. No. 196231)
G.R. No. 196232
a. Factual antecedents
WENDELL BARRERAS-SULIT Petitioner,
vs. On May 26, 2008, Christian Kalaw filed separate charges with the Philippine National Police Internal
ATTY. PAQUITO N. OCHOA, JR., IN HIS CAP A CITY AS EXECUTIVE SECRETARY, OFFICE OF THE Affairs Service (PNP-IAS) and with the Manila City Prosecutor’s Office against Manila Police District
PRESIDENT, ATTY. DENNIS F. ORTIZ, ATTY. CARLO D. SULAY AND ATTY. FROILAN D. MONTALBAN, JR., Senior Inspector Rolando Mendoza and four others (Mendoza, et al.) for robbery, grave threat, robbery
IN THEIR CAPACITIES AS CHAIRMAN AND MEMBERS OF OFFICE OF MALACANANG LEGAL extortion and physical injury.4
AFFAIRS, Respondents.
On May 29, 2008, Police Senior Superintendent Atty. Clarence Guinto filed an administrative charge for
DECISION grave misconduct with the National Police Commission (NAPOLCOM) PNP-NCRPO against Mendoza, et
al. based on the same allegations made by Kalaw before the PNP-IAS.5
BRION, J.:
On July 2, 2008, Gonzales, Deputy Ombudsman for Military and Other Law Enforcement Officers
(MOLEO), directed the NAPOLCOM to turn over the records of Mendoza’s case to his office. The Office of
We resolve the Office of the President's (OP 's) motion for reconsideration of our September 4, 2012
the Regional Director of the NAPOLCOM duly complied on July 24, 2008.6 Mendoza, et al. filed their
Decision1 which ruled on the petitions filed by Deputy Ombudsman Emilio Gonzales III and Special
position papers with Gonzales, in compliance with his Order.7
Prosecutor Wendell Barreras-Sulit. Their petitions challenged the constitutionality of Section 8(2) of
Republic Act (RA) No. 6770.2
Pending Gonzales’ action on Mendoza, et al.’s case (on August 26, 2008), the Office of the City
Prosecutor of Manila City dismissed Kalaw’s complaint against Mendoza, et al. for his failure to
In the challenged Decision, the Court upheld the constitutionality of Section 8(2) of RA No. 6770 and
substantiate his allegations.8 Similarly, on October 17, 2008, the PNP-IAS recommended the dismissal
ruled that the President has disciplinary jurisdiction over a Deputy Ombudsman and a Special Prosecutor.
without prejudice of the administrative case against Mendoza, et al. for Kalaw’s failure to prosecute.9
The Court, however, reversed the OP ruling that: (i) found Gonzales guilty of Gross Neglect of Duty and
Grave Misconduct constituting betrayal of public trust; and (ii) imposed on him the penalty of dismissal.
On February 16, 2009, after preparing a draft decision on Mendoza, et al.’s case, Gonzales forwarded the
entire records to the Office of then Ombudsman Merceditas Gutierrez for her review.10 In his draft
Sulit, who had not then been dismissed and who simply sought to restrain the disciplinary proceedings
decision, Gonzales found Mendoza, et al. guilty of grave misconduct and imposed on them the penalty of
against her, solely questioned the jurisdiction of the OP to subject her to disciplinary proceedings. The
dismissal from the service.11
Court affirmed the continuation of the proceedings against her after upholding the constitutionality of
Section 8(2) of RA No. 6770.
Mendoza, et al. received a copy of the Ombudsman’s decision that approved Gonzales’ recommendation
on October 30, 2009. Mendoza, et al. filed a motion for reconsideration12 on November 5, 2009, followed
The fallo of our assailed Decision reads:
by a Supplement to the Motion for Reconsideration.13

WHEREFORE, in G.R. No. 196231, the decision of the Office of the President in OP Case No. 1 O-J-460 is
On December 10, 2009, the MOLEO-Records Section forwarded Mendoza, et al.’s case records to the
REVERSED and SET ASIDE. Petitioner Emilio A. Gonzales III is ordered REINSTATED with payment of
Criminal Investigation, Prosecution and Administrative Bureau-MOLEO. On December 14, 2009, the case
backwages corresponding to the period of suspension effective immediately, even as the Office of the
was assigned to Graft Investigation and Prosecution Officer (GIPO) Dennis Garcia for review and
Ombudsman is directed to proceed with the investigation in connection with the above case against
recommendation.14
petitioner. In G.R. No. 196232, We AFFIRM the continuation of OP-DC Case No. ll-B-003 against Special
Prosecutor Wendell Barreras-Sulit for alleged acts and omissions tantamount to culpable violation of the
Constitution and a betrayal of public trust, in accordance with Section 8(2) of the Ombudsman Act of GIPO Garcia released a draft order15 to his immediate superior, Director Eulogio S. Cecilio, for
1989.3 appropriate action on April 5, 2010. Dir. Cecilio signed and forwarded the draft order to Gonzales’ office
on April 27, 2010. Gonzales reviewed the draft and endorsed the order, together with the case records,
on May 6, 2010 for the final approval by the Ombudsman.16
On August 23, 2010, pending final action by the Ombudsman on Mendoza, et al.’s case, Mendoza
hijacked a tourist bus and held the 21 foreign tourists and the four Filipino tour assistants on board as
hostages. While the government exerted earnest attempts to peacefully resolve the hostage-taking, it
ended tragically, resulting in the deaths of Mendoza and several others on board the hijacked bus.
In the aftermath, President Benigno C. Aquino III directed the Department of Justice and the Department
of Interior and Local Government to conduct a joint thorough investigation of the incident. The two
departments issued Joint Department Order No. 01-2010, creating an Incident Investigation and Review
Committee (IIRC).
In its September 16, 2010 First Report, the IIRC found the Ombudsman and Gonzales accountable for
their "gross negligence and grave misconduct in handling the case against Mendoza."17 The IIRC stated
that the Ombudsman and Gonzales’ failure to promptly resolve Mendoza’s motion for reconsideration,
"without justification and despite repeated pleas" xxx "precipitated the desperate resort to hostage-
taking."18 The IIRC recommended the referral of its findings to the OP for further determination of
possible administrative offenses and for the initiation of the proper administrative proceedings.19
Accordingly, on October 15, 2010, Gonzales was formally charged before the OP for Gross Neglect of
Duty and/or Inefficiency in the Performance of Official Duty and for Misconduct in Office.20
b. The OP ruling
On March 31, 2011, the OP found Gonzales guilty as charged and dismissed him from the
service.21 According to the OP, "the inordinate and unjustified delay in the resolution of [Mendoza’s]
Motion for Reconsideration [‘that spanned for nine (9) long months’] xxx amounted to gross neglect of
duty" and "constituted a flagrant disregard of the Office of the Ombudsman’s own Rules of Procedure."22
c. The Petition
Gonzales posited in his petition that the OP has no administrative disciplinary jurisdiction over a Deputy
Ombudsman. Under Section 21 of RA No. 6770, it is the Ombudsman who exercises administrative
disciplinary jurisdiction over the Deputy Ombudsman.
On the merits, Gonzales argued that his office received the draft order from GIPO Garcia on April 27,
2010. On May 6, 2010, he completed his review of the draft, approved it, and transmitted it to the Office
of the Ombudsman for final approval. Since the draft order on Mendoza’s motion for reconsideration
had to undergo different levels of preparation, review and approval, the period it took to resolve the
motion could not be unjustified, since he himself acted on the draft order only within nine (9) calendars
days from his receipt of the order.23
B. Sulit’s petition (G.R. No. 196232)
In April 2005, the Office of the Ombudsman charged Major General Carlos F. Garcia and several others,
before the Sandiganbayan, with plunder and money laundering. On May 7, 2007, Garcia filed an Urgent
Petition for Bail which the prosecution opposed. The Sandiganbayan denied Garcia's urgent petition for
bail on January 7, 2010, in view of the strength of the prosecution’s evidence against Garcia.
On February 25, 2010, the Office of the Ombudsman, through Sulit and her prosecutorial staff, entered
into a plea bargaining agreement (Agreement) with Garcia.24 Garcia thereby agreed to: (i) withdraw his
plea of not guilty to the charge of plunder and enter a plea of guilty to the lesser offense of indirect
bribery; and (ii) withdraw his plea of not guilty to the charge of money laundering and enter a guilty plea
to the lesser offense of facilitating money laundering. In exchange, he would convey to the government
his ownership, rights and other interests over the real and personal properties enumerated in the
Agreement and the bank deposits alleged in the information.25
The Sandiganbayan approved the Agreement on May 4, 201026 based on the parties’ submitted Joint
Motion for Approval.27
The apparent one-sidedness of the Agreement drew public outrage and prompted the Committee on
Justice of the House of Representatives to conduct an investigation. After public hearings, the
Committee found that Sulit, her deputies and assistants committed culpable violations of the
Constitution and betrayal of public trust – grounds for removal under Section 8(2) of RA No. 6770.28 The
Committee recommended to the President the dismissal from the service of Sulit and the filing of
appropriate charges against her deputies and assistants before the appropriate government office.
Accordingly, the OP initiated an administrative disciplinary proceeding against Sulit.29 On March 24,
2011, Sulit filed her Written Explanation, questioning the OP’s jurisdiction.30 The question of jurisdiction
notwithstanding, the OP set the case for preliminary investigation on April 15, 2011, prompting Sulit to
seek relief from this Court.
II. COURT’S RULING
On motion for reconsideration and further reflection, the Court votes to grant Gonzales’ petition and to
declare Section 8(2) of RA No. 6770 unconstitutional with respect to the Office of the Ombudsman. (As
the full explanation of the Court’s vote describes below, this conclusion does not apply to Sulit as the
grant of independence is solely with respect to the Office of the Ombudsman which does not include the
Office of the Special Prosecutor under the Constitution. The prevailing ruling on this latter point is
embodied in the Concurring and Dissenting Opinion of J. Marvic Mario Victor Leonen).
A. Preliminary considerations:
a. Absence of motion for reconsideration on the part of the petitioners
At the outset, the Court notes that Gonzales and Sulit did not file a motion for reconsideration of the
Court’s September 4, 2012 Decision; only the OP, through the OSG, moved for the reconsideration of our
ruling reinstating Gonzales.
This omission, however, poses no obstacle for the Court’s review of its ruling on the whole case since a
serious constitutional question has been raised and is one of the underlying bases for the validity or
invalidity of the presidential action. If the President does not have any constitutional authority to
discipline a Deputy Ombudsman and/or a Special Prosecutor in the first place, then any ruling on the
legal correctness of the OP’s decision on the merits will be an empty one.
In other words, since the validity of the OP’s decision on the merits of the dismissal is inextricably
anchored on the final and correct ruling on the constitutional issue, the whole case – including the
constitutional issue – remains alive for the Court’s consideration on motion for reconsideration.
b. The justiciability of the constitutional
issue raised in the petitions
We clarify, too, that the issue of whether a Deputy Ombudsman may be subjected to the administrative
disciplinary jurisdiction of the President (concurrently with that of the Ombudsman) is a justiciable – not
a political – question. A justiciable question is one which is inherently susceptible of being decided on
grounds recognized by law,31 as where the court finds that there are constitutionally-imposed limits on
the exercise of the powers conferred on a political branch of the government.32
In resolving the petitions, we do not inquire into the wisdom of the Congress’ choice to grant concurrent
disciplinary authority to the President. Our inquiry is limited to whether such statutory grant violates the
Constitution, particularly whether Section 8(2) of RA No. 6770 violates the core constitutional principle
of the independence of the Office of the Ombudsman as expressed in Section 5, Art. XI of the
Constitution.
To be sure, neither the Executive nor the Legislative can create the power that Section 8(2) of RA No.
6770 grants where the Constitution confers none. When exercised authority is drawn from a vacuum,
more so when the authority runs counter to a core constitutional principle and constitutional intents, the
Court is duty-bound to intervene under the powers and duties granted and imposed on it by Article VIII
of the Constitution.
B. The Deputy Ombudsman: Constitutional Issue
a. The Philippine Ombudsman
Prior to the 1973 Constitution, past presidents established several Ombudsman-like agencies to serve as
the people's medium for airing grievances and for direct redress against abuses and misconduct in the
government. Ultimately, however, these agencies failed to fully realize their objective for lack of the
political independence necessary for the effective performance of their function as government critic.33
It was under the 1973 Constitution that the Office of the Ombudsman became a constitutionally-
mandated office to give it political independence and adequate powers to enforce its mandate. Pursuant
to the 1973 Constitution, President Ferdinand Marcos enacted Presidential Decree (PD) No. 1487, as
amended by PD No. 1607 and PD No. 1630, creating the Office of the Ombudsman to be known as
Tanodbayan. It was tasked principally to investigate, on complaint or motu proprio, any administrative
act of any administrative agency, including any government-owned or controlled corporation. When the
Office of the Tanodbayan was reorganized in 1979, the powers previously vested in the Special
Prosecutor were transferred to the Tanodbayan himself. He was given the exclusive authority to conduct
preliminary investigation of all cases cognizable by the Sandiganbayan, file the corresponding
information, and control the prosecution of these cases.34
With the advent of the 1987 Constitution, a new Office of the Ombudsman was created by constitutional
fiat. Unlike in the 1973 Constitution, its independence was expressly and constitutionally guaranteed. Its
objectives are to enforce the state policy in Section 27, Article II35 and the standard of accountability in
public service under Section 1, Article XI of the 1987 Constitution. These provisions read:
Section 27. The State shall maintain honesty and integrity in the public service and take positive and
effective measures against graft and corruption.
Section 1. Public office is a public trust. Public officers and employees must, at all times, be accountable
to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency; act with patriotism
and justice, and lead modest lives.
Under Section 12, Article XI of the 1987 Constitution, the Office of the Ombudsman is envisioned to be
the "protector of the people" against the inept, abusive, and corrupt in the Government, to function
essentially as a complaints and action bureau.36 This constitutional vision of a Philippine Ombudsman
practically intends to make the Ombudsman an authority to directly check and guard against the ills,
abuses and excesses of the bureaucracy. Pursuant to Section 13(8), Article XI of the 1987 Constitution,
Congress enacted RA No. 6770 to enable it to further realize the vision of the Constitution. Section 21 of
RA No. 6770 provides:
Section 21. Official Subject to Disciplinary Authority; Exceptions. — The Office of the Ombudsman shall
have disciplinary authority over all elective and appointive officials of the Government and its
subdivisions, instrumentalities and agencies, including Members of the Cabinet, local government,
government-owned or controlled corporations and their subsidiaries, except over officials who may be
removed only by impeachment or over Members of Congress, and the Judiciary. [emphasis ours, italics
supplied]
As the Ombudsman is expected to be an "activist watchman,"37 the Court has upheld its actions,
although not squarely falling under the broad powers granted it by the Constitution and by RA No. 6770,
if these actions are reasonably in line with its official function and consistent with the law and the
Constitution.38
The Ombudsman’s broad investigative and disciplinary powers include all acts of malfeasance,
misfeasance, and nonfeasance of all public officials, including Members of the Cabinet and key Executive
officers, during their tenure. To support these broad powers, the Constitution saw it fit to insulate the
Office of the Ombudsman from the pressures and influence of officialdom and partisan politics and from
fear of external reprisal by making it an "independent" office. Section 5,
Article XI of the Constitution expressed this intent, as follows:
Section 5. There is hereby created the independent Office of the Ombudsman, composed of the
Ombudsman to be known as Tanodbayan, one overall Deputy and at least one Deputy each for Luzon,
Visayas, and Mindanao. A separate Deputy for the military establishment may likewise be appointed.
[emphasis ours]
Given the scope of its disciplinary authority, the Office of the Ombudsman is a very powerful
government constitutional agency that is considered "a notch above other grievance-handling
investigative bodies."39 It has powers, both constitutional and statutory, that are commensurate with its
daunting task of enforcing accountability of public officers.40
b. "Independence" of constitutional bodies vis-a-vis the Ombudsman’s independence
Under the Constitution, several constitutional bodies have been expressly labeled as
"independent."41 The extent of the independence enjoyed by these constitutional bodies however varies
and is to be interpreted with two significant considerations in mind: first, the functions performed or the
powers involved in a given case; and second, consistency of any allowable interference to these powers
and functions, with the principle of checks and balances.
Notably, the independence enjoyed by the Office of the Ombudsman and by the Constitutional
Commissions shares certain characteristics – they do not owe their existence to any act of Congress, but
are created by the Constitution itself; additionally, they all enjoy fiscal autonomy. In general terms, the
framers of the Constitution intended that these "independent" bodies be insulated from political
pressure to the extent that the absence of "independence" would result in the impairment of their core
functions.
In Bengzon v. Drilon,42 involving the fiscal autonomy of the Judiciary, we ruled against the interference
that the President may bring and maintained that the independence and the flexibility of the Judiciary,
the Constitutional Commissions and the Office of the Ombudsman are crucial to our legal system.
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and
flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and
constraints on the manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and violative not only the express
mandate of the Constitution but especially as regards the Supreme Court, of the independence and
separation of powers upon which the entire fabric of our constitutional system is based.
The constitutional deliberations explain the Constitutional Commissions’ need for independence. In the
deliberations of the 1973 Constitution, the delegates amended the 1935 Constitution by providing for a
constitutionally-created Civil Service Commission, instead of one created by law, on the premise that the
effectivity of this body is dependent on its freedom from the tentacles of politics.43 In a similar manner,
the deliberations of the 1987 Constitution on the Commission on Audit highlighted the developments in
the past Constitutions geared towards insulating the Commission on Audit from political pressure.44
Notably, the Constitution also created an "independent" Commission on Human Rights, although it
enjoys a lesser degree of independence since it is not granted fiscal autonomy in the manner fiscal
autonomy is granted to the constitutional commissions. The lack of fiscal autonomy notwithstanding, the
framers of the 1987 Constitution clearly expressed their desire to keep the Commission independent
from the executive branch and other political leaders:
MR. MONSOD. We see the merits of the arguments of Commissioner Rodrigo. If we explain to him our
concept, he can advise us on how to reconcile his position with ours. The position of the committee is
that we need a body that would be able to work and cooperate with the executive because the
Commissioner is right. Many of the services needed by this commission would need not only the
cooperation of the executive branch of the government but also of the judicial branch of government.
This is going to be a permanent constitutional commission over time. We also want a commission to
function even under the worst circumstance when the executive may not be very cooperative. However,
the question in our mind is: Can it still function during that time? Hence, we are willing to accept
suggestions from Commissioner Rodrigo on how to reconcile this. We realize the need for coordination
and cooperation. We also would like to build in some safeguards that it will not be rendered useless by
an uncooperative executive.
xxxx
MR. GARCIA. xxx Very often, when international commissions or organizations on human rights go to a
country, the most credible organizations are independent human rights bodies. Very often these are
private organizations, many of which are prosecuted, such as those we find in many countries in Latin
America. In fact, what we are proposing is an independent body on human rights, which would provide
governments with credibility precisely because it is independent of the present administration.
Whatever it says on the human rights situation will be credible because it is not subject to pressure or
control from the present political leadership.
Secondly, we all know how political fortunes come and go. Those who are in power yesterday are in
opposition today and those who are in power today may be in the opposition tomorrow. Therefore, if we
have a Commission on Human Rights that would investigate and make sure that the rights of each one is
protected, then we shall have a body that could stand up to any power, to defend the rights of
individuals against arrest, unfair trial, and so on.45
These deliberative considerations abundantly show that the independent constitutional commissions
have been consistently intended by the framers to be independent from executive control or supervision
or any form of political influence. At least insofar as these bodies are concerned, jurisprudence is not
scarce on how the "independence" granted to these bodies prevents presidential interference.
In Brillantes, Jr. v. Yorac,46 we emphasized that the Constitutional Commissions, which have been
characterized under the Constitution as "independent," are not under the control of the President, even
if they discharge functions that are executive in nature. The Court declared as unconstitutional the
President’s act of temporarily appointing the respondent in that case as Acting Chairman of the Comelec
"however well-meaning"47 it might have been.
In Bautista v. Senator Salonga,48 the Court categorically stated that the tenure of the commissioners of
the independent Commission on Human Rights could not be placed under the discretionary power of the
President:
Indeed, the Court finds it extremely difficult to conceptualize how an office conceived and created by the
Constitution to be independent – as the Commission on Human Rights – and vested with the delicate
and vital functions of investigating violations of human rights, pinpointing responsibility and
recommending sanctions as well as remedial measures therefor, can truly function with independence
and effectiveness, when the tenure in office of its Chairman and Members is made dependent on the
pleasure of the President. Executive Order No. 163-A, being antithetical to the constitutional mandate of
independence for the Commission on Human Rights has to be declared unconstitutional.
Again, in Atty. Macalintal v. Comelec,49 the Court considered even the mere review of the rules of the
Commission on Elections by Congress a "trampling" of the constitutional mandate of independence of
this body. Obviously, the mere review of rules places considerably less pressure on a constitutional body
than the Executive’s power to discipline and remove key officials of the Office of the Ombudsman, yet
the Court struck down the law as unconstitutional.
The kind of independence enjoyed by the Office of the Ombudsman certainly cannot be inferior – but is
similar in degree and kind – to the independence similarly guaranteed by the Constitution to the
Constitutional Commissions since all these offices fill the political interstices of a republican democracy
that are crucial to its existence and proper functioning.50
c. Section 8(2) of RA No. 6770
vesting disciplinary authority
in the President over the
Deputy Ombudsman violates
the independence of the Office
of the Ombudsman and is thus
unconstitutional
Our discussions, particularly the Court’s expressed caution against presidential interference with the
constitutional commissions, on one hand, and those expressed by the framers of the 1987 Constitution,
on the other, in protecting the independence of the Constitutional Commissions, speak for themselves as
overwhelming reasons to invalidate Section 8(2) of RA No. 6770 for violating the independence of the
Office of the Ombudsman.
In more concrete terms, we rule that subjecting the Deputy Ombudsman to discipline and removal by
the President, whose own alter egos and officials in the Executive Department are subject to the
Ombudsman’s disciplinary authority, cannot but seriously place at risk the independence of the Office of
the Ombudsman itself. The Office of the Ombudsman, by express constitutional mandate, includes its
key officials, all of them tasked to support the Ombudsman in carrying out her mandate. Unfortunately,
intrusion upon the constitutionally-granted independence is what Section 8(2) of RA No. 6770 exactly
did. By so doing, the law directly collided not only with the independence that the Constitution
guarantees to the Office of the Ombudsman, but inevitably with the principle of checks and balances
that the creation of an Ombudsman office seeks to revitalize.
What is true for the Ombudsman must be equally and necessarily true for her Deputies who act as
agents of the Ombudsman in the performance of their duties. The Ombudsman can hardly be expected
to place her complete trust in her subordinate officials who are not as independent as she is, if only
because they are subject to pressures and controls external to her Office. This need for complete trust is
true in an ideal setting and truer still in a young democracy like the Philippines where graft and
corruption is still a major problem for the government. For these reasons, Section 8(2) of RA No. 6770
(providing that the President may remove a Deputy Ombudsman) should be declared void.
The deliberations of the Constitutional Commission on the independence of the Ombudsman fully
support this position. Commissioner Florenz Regalado of the Constitutional Commission expressed his
apprehension that any form of presidential control over the Office of the Ombudsman would diminish its
independence.51 The following exchanges between Commissioners Blas Ople and Christian Monsod
further reveal the constitutional intent to keep the Office of the Ombudsman independent from the
President:
MR. OPLE. xxx
May I direct a question to the Committee? xxx [W]ill the Committee consider later an amendment xxx,
by way of designating the office of the Ombudsman as a constitutional arm for good government,
efficiency of the public service and the integrity of the President of the Philippines, instead of creating
another agency in a kind of administrative limbo which would be accountable to no one on the pretext
that it is a constitutional body?
MR. MONSOD. The Committee discussed that during our committee deliberations and when we
prepared the report, it was the opinion of the Committee — and I believe it still is — that it may not
contribute to the effectiveness of this office of the Ombudsman precisely because many of the culprits in
inefficiency, injustice and impropriety are in the executive department. Therefore, as we saw the wrong
implementation of the Tanodbayan which was under the tremendous influence of the President, it was
an ineffectual body and was reduced to the function of a special fiscal. The whole purpose of our
proposal is precisely to separate those functions and to produce a vehicle that will give true meaning to
the concept of Ombudsman. Therefore, we regret that we cannot accept the proposition.52
The statements made by Commissioner Monsod emphasized a very logical principle: the Executive
power to remove and discipline key officials of the Office of the Ombudsman, or to exercise any power
over them, would result in an absurd situation wherein the Office of the Ombudsman is given the duty to
adjudicate on the integrity and competence of the very persons who can remove or suspend its
members. Equally relevant is the impression that would be given to the public if the rule were otherwise.
A complainant with a grievance against a high-ranking official of the Executive, who appears to enjoy the
President’s favor, would be discouraged from approaching the Ombudsman with his complaint; the
complainant’s impression (even if misplaced), that the Ombudsman would be susceptible to political
pressure, cannot be avoided. To be sure, such an impression would erode the constitutional intent of
creating an Office of the Ombudsman as champion of the people against corruption and bureaucracy.
d. The mutual-protection argument for
crafting Section 8(2)of RA No. 6770
In crafting Section 8(2) of RA No. 6770, Congress apparently addressed the concern that a lack of an
external check against the Deputy Ombudsman would result in mutual protection between the
Ombudsman and her Deputies.
While the preceding discussion already suffices to address this concern, it should be added that this
concern stands on shaky grounds since it ignores the existing checks and balances already in place. On
the one hand, the Ombudsman’s Deputies cannot protect the Ombudsman because she is subject to the
impeachment power of Congress. On the other hand, the Ombudsman’s attempt to cover up the
misdeeds of her Deputies can be questioned before the Court on appeal or certiorari. The same attempt
can likewise subject her to impeachment.
The judicial recourse available is only consistent with the nature of the Supreme Court as a non-political
independent body mandated by the Constitution to settle judicial and quasi-judicial disputes, whose
judges and employees are not subject to the disciplinary authority of the Ombudsman and whose
neutrality would be less questionable. The Members of the Court themselves may be subjected to the
impeachment power of Congress.
In these lights, the appeal, if any, of the mutual protection argument becomes distinctly implausible. At
the same time, the Court remains consistent with its established rulings - that the independence granted
to the Constitutional Commissions bars any undue interference from either the Executive or Congress –
and is in full accord with constitutional intent.
e. Congress’ power determines the
manner and causes for the removal
of non-impeachable officers is not a
carte blanch authority
Under Section 2, Article XI of the 1987 Constitution,53 Congress is empowered to determine the modes of
removal from office of all public officers and employees except the President, the Vice-President, the
Members of the Supreme Court, the Members of the Constitutional Commissions, and the Ombudsman,
who are all impeachable officials.
The intent of the framers of the Constitution in providing that "[a]ll other public officers and employees
may be removed from office as provided by law, but not by impeachment" in the second sentence of
Section 2, Article XI is to prevent Congress from extending the more stringent rule of "removal only by
impeachment" to favored public officers.54 Understandably so, impeachment is the most difficult and
cumbersome mode of removing a public officer from office. It is, by its nature, a sui generis politico-legal
process55 that signals the need for a judicious and careful handling as shown by the process required to
initiate the proceeding;56 the one-year limitation or bar for its initiation;57 the limited grounds for
impeachment;58 the defined instrumentality given the power to try impeachment cases;59 and the
number of votes required for a finding of guilt.60 All these argue against the extension of this removal
mechanism beyond those mentioned in the Constitution.
On the practical side, our nation has witnessed the complications and problems an impeachment
proceeding entails, thus justifying its limited application only to the officials occupying the highest
echelons of responsibility in our government. To name a few, some of the negative practical effects of
impeachment are: it stalls legislative work; it is an expensive process in terms of the cost of prosecution
alone; and, more importantly, it is inherently divisive of the nation.61 Thus, in a cost-benefit analysis of
adopting impeachment as a mechanism, limiting Congress’ power to otherwise legislate on the matter is impeachment-grounds in Section 8(2) of RA No. 6770 cannot be considered, even at a minimum, a
far more advantageous to the country. measure of protection of the independence of the Office of the Ombudsman.

It is in these lights that the second sentence in Section 2, Article XI of the 1987 Constitution should be C. The Deputy Ombudsman: The Dismissal Issue
read. Contrary to the implied view of the minority, in no way can this provision be regarded as blanket
authority for Congress to provide for any ground of removal it deems fit. While the manner and cause of
a. The Office of the President’s
removal are left to congressional determination, this must still be consistent with constitutional
finding of gross negligence
guarantees and principles, namely: the right to procedural and substantive due process; the
has no legal and factual leg to
constitutional guarantee of security of tenure; the principle of separation of powers; and the principle of
stand on
checks and balances.62

The OP’s decision found Gonzales guilty of Gross Neglect of Duty and of Grave Misconduct. The assailed
In short, the authority granted by the Constitution to Congress to provide for the manner and cause of
Decision of the OP reads:
removal of all other public officers and employees does not mean that Congress can ignore the basic
principles and precepts established by the Constitution.
Upon consideration of the First Report, the evidence and allegations of respondent Deputy Ombudsman
himself, and other documentary evidence gathered, this Office finds that the inordinate and unjustified
In the same manner, the congressional determination of the identity of the disciplinary authority is not a
delay in the resolution of Captain Mendoza’s Motion for Reconsideration timely filed on 5 November
blanket authority for Congress to repose it on whomsoever Congress chooses without running afoul of
2009 xxx amounted to gross neglect of duty and/or inefficiency in the performance of official duty.64
the independence enjoyed by the Office of the Ombudsman and without disrupting the delicate check
and balance mechanism under the Constitution. Properly viewed from this perspective, the core
constitutional principle of independence is observed and any possible absurdity resulting from a contrary b. No gross neglect of duty or inefficiency
interpretation is avoided. In other words, while the Constitution itself vested Congress with the power to
determine the manner and cause of removal of all non-impeachable officials, this power must be Let us again briefly recall the facts.
interpreted consistent with the core constitutional principle of independence of the Office of the
Ombudsman. Our observation in Macalintal v. Comelec63 is apt:
1. November 5, 2009 - Mendoza filed a Motion for Reconsideration of the decision of the
Ombudsman,65 which was followed by a Supplement to the Motion for Reconsideration;66
The ambit of legislative power under Article VI of the Constitution is circumscribed by other
constitutional provisions. One such provision is Section 1 of Article IX-A of the 1987 Constitution
ordaining that constitutional commissions such as the COMELEC shall be "independent." 2. December 14, 200967 - GIPO Garcia, who was assigned to review these motions and make
his recommendation for the appropriate action, received the records of the case;

While one may argue that the grounds for impeachment under Section 8(2) of RA No. 6770 is intended
as a measure of protection for the Deputy Ombudsman and Special Prosecutor – since these grounds are 3. April 5, 2010 – GIPO Garcia released a draft order to be reviewed by his immediate
not intended to cover all kinds of official wrongdoing and plain errors of judgment - this argument superior, Dir. Cecilio;68
seriously overlooks the erosion of the independence of the Office of the Ombudsman that it creates. The
mere fact that a statutorily-created sword of Damocles hangs over the Deputy Ombudsman’s head, by 4. April 27, 2010 – Dir. Cecilio signed and forwarded to Gonzales this draft order;69
itself, opens up all the channels for external pressures and influence of officialdom and partisan politics.
The fear of external reprisal from the very office he is to check for excesses and abuses defeats the very
purpose of granting independence to the Office of the Ombudsman. 5. May 6, 2010 (or nine days after the records were forwarded to Gonzales) – Gonzales
endorsed the draft order for the final approval of the Ombudsman.70

That a judicial remedy is available (to set aside dismissals that do not conform to the high standard
required in determining whether a Deputy Ombudsman committed an impeachable offense) and that
the President’s power of removal is limited to specified grounds are dismally inadequate when balanced
with the constitutional principle of independence. The mere filing of an administrative case against the
Deputy Ombudsman and the Special Prosecutor before the OP can already result in their suspension and
can interrupt the performance of their functions, in violation of Section 12, Article XI of the Constitution.
With only one term allowed under Section 11, a Deputy Ombudsman or Special Prosecutor, if removable
by the President, can be reduced to the very same ineffective Office of the Ombudsman that the framers
had foreseen and carefully tried to avoid by making these offices independent constitutional bodies.
At any rate, even assuming that the OP has disciplinary authority over the Deputy Ombudsman, its
decision finding Gonzales guilty of Gross Neglect of Duty and Grave Misconduct constituting betrayal of
public trust is patently erroneous. The OP’s decision perfectly illustrates why the requirement of
Clearly, when Mendoza hijacked the tourist bus on August 23, 2010, the records of the case were already
pending before Ombudsman Gutierrez.
Gross negligence refers to negligence characterized by the want of even the slightest care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be affected. In
the case of public officials, there is gross negligence when a breach of duty is flagrant and palpable.71
Gonzales cannot be guilty of gross neglect of duty and/or inefficiency since he acted on the case
forwarded to him within nine days. In finding Gonzales guilty, the OP72 relied on Section 8, Rule III of
Administrative Order No. 7 (or the Rules of Procedure of the Office of the Ombudsman, series of 1990, as
amended) in ruling that Gonzales should have acted on Mendoza’s Motion for Reconsideration within
five days:
Section 8. Motion for reconsideration or reinvestigation: Grounds – Whenever allowable, a motion for
reconsideration or reinvestigation may only be entertained if filed within ten (10) days from receipt of
the decision or order by the party on the basis of any of the following grounds:
a) New evidence had been discovered which materially affects the order, directive or
decision;
b) Grave errors of facts or laws or serious irregularities have been committed prejudicial to
the interest of the movant.
Only one motion for reconsideration or reinvestigation shall be allowed, and the Hearing Officer shall
resolve the same within five (5) days from the date of submission for resolution. [emphasis and
underscore ours]
Even if we consider this provision to be mandatory, the period it requires cannot apply to Gonzales since
he is a Deputy Ombudsman whose obligation is to review the case; he is not simply a Hearing Officer
tasked with the initial resolution of the motion. In Section 6 of Administrative Order No. 7 on the
resolution of the case and submission of the proposed decision, the period for resolving the case does
not cover the period within which it should be reviewed:
Section 6. Rendition of decision. – Not later than thirty (30) days after the case is declared submitted for
resolution, the Hearing Officer shall submit a proposed decision containing his findings and
recommendation for the approval of the Ombudsman. Said proposed decision shall be reviewed by the
Directors, Assistant Ombudsmen and Deputy Ombudsmen concerned. With respect to low ranking public
officials, the Deputy Ombudsman concerned shall be the approving authority. Upon approval, copies
thereof shall be served upon the parties and the head of the office or agency of which the respondent is
an official or employee for his information and compliance with the appropriate directive contained
therein. [italics and emphases supplied]
Thus, the OP’s ruling that Gonzales had been grossly negligent for taking nine days, instead of five days,
to review a case was totally baseless.
c. No actionable failure to supervise subordinates
The OP’s claims that Gonzales could have supervised his subordinates to promptly act on Mendoza’s
motion and apprised the Tanodbayan of the urgency of resolving the same are similarly groundless.
The Office of the Ombudsman is not a corner office in our bureaucracy. It handles numerous cases that
involve the potential loss of employment of many other public employees. We cannot conclusively state,
as the OP appears to suggest, that Mendoza’s case should have been prioritized over other similar cases.
The Court has already taken judicial notice of the steady stream of cases reaching the Office of the
Ombudsman.73 This consideration certainly militates against the OSG’s observation that there was "a
grossly inordinate and inexcusable delay"74 on the part of Gonzales.
Equally important, the constitutional guarantee of "speedy disposition of cases" before, among others,
quasi-judicial bodies,75 like the Office of the Ombudsman, is itself a relative concept.76 Thus, the delay, if
any, must be measured in this objective constitutional sense. Unfortunately, because of the very
statutory grounds relied upon by the OP in dismissing Gonzales, the political and, perhaps, "practical"
considerations got the better of what is legal and constitutional.
The facts do not show that Gonzales’ subordinates had in any way been grossly negligent in their work.
While GIPO Garcia reviewed the case and drafted the order for more than three months, it is noteworthy
that he had not drafted the initial decision and, therefore, had to review the case for the first
time.77 Even the Ombudsman herself could not be faulted for acting on a case within four months, given
the amount of cases that her office handles.
The point is that these are not inordinately long periods for the work involved: examination of the
records, research on the pertinent laws and jurisprudence, and exercise of legal judgment and discretion.
If this Court rules that these periods per se constitute gross neglect of duty, the Ombudsman’s
constitutional mandate to prosecute all the erring officials of this country would be subjected to an
unreasonable and overwhelming constraint. Similarly, if the Court rules that these periods per se
constitute gross neglect of duty, then we must be prepared to reconcile this with the established
concept of the right of speedy disposition of cases – something the Court may be hard put to justify.
d. No undue interest
The OP also found Gonzales guilty of showing undue interest in Mendoza’s case by having the case
endorsed to the Office of the Ombudsman and by resolving it against Mendoza on the basis of the
unverified complaint-affidavit of the alleged victim, Kalaw.
The fact that Gonzales had Mendoza’s case endorsed to his office lies within his mandate, even if it were
based merely on the request of the alleged victim’s father. The Constitution empowers the Ombudsman
and her Deputies to act promptly on complaints filed in any form or manner against any public official or
employee of the government.78 This provision is echoed by Section 13 of RA No. 6770,79 and by Section 3,
Rule III of Administrative Order No. 7, series of 1990, as amended.80
Moreover, Gonzales and his subordinates did not resolve the complaint only on the basis of the
unverified affidavit of Kalaw. Based on the prosecution officer’s recommendations, the finding of guilt on
the part of Mendoza, et al. was based on their admissions as well. Mendoza, et al. admitted that they
had arrested Kalaw based on two traffic violations and allowed him to stay the whole night until the
following morning in the police precinct. The next morning, Kalaw was allowed to leave the precinct
despite his failure to show a valid license and based merely on his promise to return with the proper
documents.81 These admissions led Gonzales and his staff to conclude that Mendoza, et al. irregularly
acted in apprehending Kalaw, since the proper procedure for the apprehension of traffic violators would
be to give them a ticket and to file a case, when appropriate.82
Lastly, we cannot deduce undue interest simply because Gonzales’ decision differs from the decision of
the PNP-IAS (which dismissed the complaint against Mendoza). To be sure, we cannot tie the hands of
any judicial or quasi-judicial body by ruling that it should always concur with the decisions of other
judicial or quasi-judicial bodies which may have also taken cognizance of the case. To do so in the case of
a Deputy Ombudsman would be repugnant to the independence that our Constitution has specifically
granted to this office and would nullify the very purpose for which it was created.
e. Penalty of dismissal totally
incommensurate with established facts
Given the lack of factual basis for the charges against Gonzales, the penalty of removal imposed by the
OP necessarily suffers grave infirmity. Basic strictures of fair play dictate that we can only be held liable
for our own misdeeds; we can be made to account only for lapses in our responsibilities. It is notable
that of all the officers, it was Gonzales who took the least time — nine days — followed by Cecilio, who
took 21 days; Garcia — the writer of the draft — took less than four months, and the Ombudsman, less
than four months until the kidnapping incident rendered Mendoza’s motion moot.
In these lights, the decision of the OP is clearly and patently wrong. This conclusion, however, does not
preclude the Ombudsman from looking into any other possible administrative liability of Gonzales under
existing Civil Service laws, rules and regulations.
D. The Special Prosecutor: The Constitutional Issue
The 1987 Constitution created a new, independent Office of the Ombudsman. The existing Tanodbayan
at the time83 became the Office of the Special Prosecutor under the 1987 Constitution. While the
composition of the independent Office of the Ombudsman under the 1987 Constitution does not
textually include the Special Prosecutor, the weight of the foregoing discussions on the
unconstitutionality of Section 8(2) of RA No. 6770 should equally apply to the
Special Prosecutor on the basis of the legislative history of the Office of the Ombudsman as expounded
in jurisprudence.
Under the 1973 Constitution,84 the legislature was mandated to create the Office of the Ombudsman,
known as the Tanodbayan, with investigative and prosecutorial powers. Accordingly, on June 11, 1978,
President Ferdinand Marcos enacted PD No. 1487.85
Under PD No. 1486,86 however, the "Chief Special Prosecutor" (CSP) was given the "exclusive authority"
to conduct preliminary investigation and to prosecute cases that are within the jurisdiction of the
Sandiganbayan.87 PD No. 1486 expressly gave the Secretary of Justice the power of control and
supervision over the Special Prosecutor.88 Consistent with this grant of power, the law also authorized
the Secretary of Justice to appoint or detail to the Office of the CSP "any officer or employee of
Department of Justice or any Bureau or Office under the executive supervision thereof" to assist the
Office of the CSP.
In December 1978, PD No. 160789 practically gave back to the Tanodbayan the powers taken away from
it by the Office of the CSP. The law "created in the Office of the Tanodbayan an Office of the Chief Special
Prosecutor" under the Tanodbayan’s control,90 with the exclusive authority to conduct preliminary
investigation and prosecute all cases cognizable by the Sandiganbayan. Unlike the earlier decree, the law
also empowered the Tanodbayan to appoint Special Investigators and subordinate personnel and/or to
detail to the Office of the CSP any public officer or employees who "shall be under the supervision and
control of the Chief Special Prosecutor."91 In 1979, PD No. 1630 further amended the earlier decrees by
transferring the powers previously vested in the Special Prosecutor directly to the Tanodbayan himself.92
This was the state of the law at the time the 1987 Constitution was ratified. Under the 1987 Constitution,
an "independent Office of the Ombudsman" is created.93 The existing Tanodbayan is made the Office of
the Special Prosecutor, "who shall continue to function and exercise its powers as now94 or hereafter
may be provided by law."95
Other than the Ombudsman’s Deputies, the Ombudsman shall appoint all other officials and employees
of the Office of the Ombudsman.96 Section 13(8), Article XI of the 1987 Constitution provides that the
Ombudsman may exercise "such other powers or perform such functions or duties as may be provided
by law." Pursuant to this constitutional command, Congress enacted RA No. 6770 to provide for the
functional and structural organization of the Office of the Ombudsman and the extent of its disciplinary
authority.
In terms of composition, Section 3 of RA No. 6770 defines the composition of the Office of the
Ombudsman, including in this Office not only the offices of the several Deputy Ombudsmen but the
Office of the Special Prosecutor as well. In terms of appointment, the law gave the President the
authority to appoint the Ombudsman, his Deputies and the Special Prosecutor, from a list of nominees
prepared by the Judicial and Bar Council. In case of vacancy in these positions, the law requires that the
vacancy be filled within three (3) months from occurrence.97
The law also imposes on the Special Prosecutor the same qualifications it imposes on the Ombudsman
himself/herself and his/her deputies.98 Their terms of office,99 prohibitions and qualifications,100 rank and
salary are likewise the same.101 The requirement on disclosure102 is imposed on the Ombudsman, the
Deputies and the Special Prosecutor as well. In case of vacancy in the Office of the Ombudsman, the
Overall Deputy cannot assume the role of Acting Ombudsman; the President may designate any of the
Deputies or the Special Prosecutor as Acting Ombudsman.103 The power of the Ombudsman and his or
her deputies to require other government agencies to render assistance to the Office of the Ombudsman
is likewise enjoyed by the Special Prosecutor.104
Given this legislative history, the present overall legal structure of the Office of the Ombudsman, both
under the 1987 Constitution and RA No. 6770, militates against an interpretation that would insulate the
Deputy Ombudsman from the disciplinary authority of the OP and yet expose the Special Prosecutor to
the same ills that a grant of independence to the Office of the Ombudsman was designed for.
Congress recognized the importance of the Special Prosecutor as a necessary adjunct of the
Ombudsman, aside from his or her deputies, by making the Office of the Special Prosecutor an organic
component of the Office of the Ombudsman and by granting the Ombudsman control and supervision
over that office.105 This power of control and supervision includes vesting the Office of the Ombudsman
with the power to assign duties to the Special Prosecutor as he/she may deem fit.1âwphi1 Thus, by
constitutional design, the Special Prosecutor is by no means an ordinary subordinate but one who
effectively and directly aids the Ombudsman in the exercise of his/her duties, which include investigation
and prosecution of officials in the Executive Department.
Under Section 11(4) of RA No. 6770, the Special Prosecutor handles the prosecution of criminal cases
within the jurisdiction of the Sandiganbayan and this prosecutorial authority includes high-ranking
executive officials. For emphasis, subjecting the Special Prosecutor to disciplinary and removal powers of
the President, whose own alter egos and officials in the Executive Department are subject to the
prosecutorial authority of the Special Prosecutor, would seriously place the independence of the Office
of the Ombudsman itself at risk.
Thus, even if the Office of the Special Prosecutor is not expressly made part of the composition of the
Office of the Ombudsman, the role it performs as an organic component of that Office militates against a
differential treatment between the Ombudsman’s Deputies, on one hand, and the Special Prosecutor
himself, on the other. What is true for the Ombudsman must be equally true, not only for her Deputies
but, also for other lesser officials of that Office who act directly as agents of the Ombudsman herself in
the performance of her duties.
In Acop v. Office of the Ombudsman,106 the Court was confronted with an argument that, at bottom, the
Office of the Special Prosecutor is not a subordinate agency of the Office of the Ombudsman and is, in
fact, separate and distinct from the latter. In debunking that argument, the Court said:
Firstly, the petitioners misconstrue Commissioner Romulo's statement as authority to advocate that the
intent of the framers of the 1987 Constitution was to place the Office of the Special Prosecutor under the
Office of the President. Xxx
In the second place, Section 7 of Article XI expressly provides that the then existing Tanodbayan, to be DEL CASTILLO, J.:
henceforth known as the Office of the Special Prosecutor, "shall continue to function and exercise its
powers as now or hereafter may be provided by law, except those conferred on the Office of the
Before the Court is a Petition for certiorari and mandamus1 seeking to annul the Resolution No. 14-0509
Ombudsman created under this Constitution." The underscored phrase evidently refers to the
dated July 22, 20142 of the respondent Commission of Elections (COMELEC). The assailed resolution
Tanodbayan's powers under P.D. No. 1630 or subsequent amendatory legislation. It follows then that
declared that the power of initiative could not be invoked by the petitioner, Engr. Oscar A. Marmeto
Congress may remove any of the Tanodbayan's/Special Prosecutor's powers under P.D. N0. 1630 or
(Marmeto ), for the passage of a proposed ordinance in Muntinlupa City, citing the lack of budgetary
grant it other powers, except those powers conferred by the Constitution on the Office of the
appropriation for the conduct of the initiative process.3
Ombudsman.

Pursuing the present line of reasoning, when one considers that by express mandate of paragraph 8,
Section 13, Article XI of the Constitution, the Ombudsman may "exercise such other powers or perform
functions or duties as may be provided by law," it is indubitable then that Congress has the power to
place the Office of the Special Prosecutor under the Office of the Ombudsman.107
Thus, under the present Constitution, there is every reason to treat the Special Prosecutor to be at par
with the Ombudsman's deputies, at least insofar as an extraneous disciplinary authority is concerned,
and must also enjoy the same grant of independence under the Constitution.
III. SUMMARY OF VOTING
THE FACTS
On January 21, 2013, Marmeto filed in behalf of the Muntinlupa People Power4 (MPP) a proposed
ordinance with the Sangguniang Panlungsod of Muntinlupa.5 The proposal sought the creation of a
sectoral council and the appropriation of the amount of ₱200 million for the livelihood programs and
projects that would benefit the people of Muntinlupa City.
For failure of the Sanggunian Panlungsod to act on the proposition within 30 days from its filing,
Marmeto filed a petition for initiative with the same body to invoke the power of initiative under the
Republic Act (RA) No. 7160, otherwise known as the Local Government Code of 1991 (LGC).

The secretary of Sanggunian Panlungsod of Muntinlupa wrote a letter dated June 11, 2013 to the
In the voting held on January 28, 2014, by a vote of 8-7,108 the Court resolved to reverse its September 4,
COMELEC stating that the proposal could not be acted upon by the Sanggunian because the City's
2012 Decision insofar as petitioner Gonzales is concerned (G.R. No. 196231). We declared Section 8(2) of
budget for FY 2013 had already been enacted. Thus, the secretary claimed that a new appropriation
RA No. 6770 unconstitutional by granting disciplinary jurisdiction to the President over a Deputy
ordinance was needed to provide funds for the conduct of the initiative.
Ombudsman, in violation of the independence of the Office of the Ombudsman.

On July 31, 2013, the COMELEC issued Resolution No. 13-0904 setting aside Marmeto' s initiative
However, by another vote of 8-7,109 the Court resolved to maintain the validity of Section 8(2) of RA No.
petition because the propositions therein were beyond the powers of the Sanggunian Panglunsod to
6770 insofar as Sulit is concerned. The Court did not consider the Office of the Special Prosecutor to be
enact and were not in accordance with the provisions of existing laws and rules.6
constitutionally within the Office of the Ombudsman and is, hence, not entitled to the independence the
latter enjoys under the Constitution.
Marmeto sought reconsideration7 of COMELEC's Resolution No. 13-0904 by contending that the sectoral
council sought to be created would not constitute as a legislative body separate from
WHEREFORE, premises considered, the Court resolves to declare Section 8(2) UNCONSTITUTIONAL. This
the Sanggunian Panlungsod. He clarified that the sectoral council would merely act as the people's
ruling renders any further ruling on the dismissal of Deputy Ombudsman Emilio Gonzales III unnecessary,
representative, which would facilitate the exercise of the people's power of initiative and referendum.
but is without prejudice to the power of the Ombudsman to conduct an administrative investigation, if
warranted, into the possible administrative liability of Deputy Ombudsman Emilio Gonzales III under
pertinent Civil Service laws, rules and regulations. However, the COMELEC did not find Marmeto's motion for reconsideration meritorious and issued
Resolution No. 13-1039 dated September 17, 2013,8 affirming its earlier ruling dismissing the initiative
petition. It ruled that the issues Marmeto raised in his motion were mere reiterations of his petition
SO ORDERED.
which it had already addressed. Nonetheless, it noted that Marmeto might opt to re-file his initiative
petition, since the then newly-elected members of the Sangguniang Panlungsod of Muntinlupa might be
EN BANC more sympathetic to Marmeto' s propositions.

September 26, 2017 Accordingly, on December 2, 2013, Marmeto filed a second proposed ordinance with the Sangguniang
Panlungsod of Muntinlupa. Again, no favorable action was done by the Sanggunian within 30 days from
the filing of the proposal, prompting Marmeto file a second initiative petition with the Office of the City
G.R. No. 213953
Election Officer on February 10, 2014.9

ENGR. OSCAR A. MARMETO, Petitioner

On April 1, 2014, Marmeto filed a Supplemental Petition to comply with the requirements of COMELEC
vs.
Resolution No. 2300,10 which provided the Rules and Regulations Governing the Conduct of Initiative on
COMMISSION ON ELECTIONS, Respondent
the Constitution, and Initiative and Referendum on National and Local Laws.

DECISION
The Assailed COMELEC Resolution
On July 22, 2014, the COMELEC issued the assailed Resolution No. 14- 050911 which effectively dismissed
Marmeto's second initiative petition for lack of budgetary allocation. The pertinent portion of the
assailed resolution reads as follows:
Considering the absence of any provision in the Commission's FY 2014 budget for the expenses for
local initiative or any other election activity x x x the Commission RESOLVED, as it hereby RESOLVES, to
adopt the foregoing recommendation x x x that the power of local initiative cannot be invoked by Engr.
Oscar A. Marmeto x x x for the passage of an ordinance for the appropriation of funds for livelihood
projects for the residents of Muntinlupa City since the setting up of signature stations, verification of
signatures, the certification of the number of registered voters, and all other acts to be done in exercise
thereof will entail expenses on the part of the Commission.12 (Emphasis supplied)
Disagreeing with Resolution No. 14-0509, Marmeto filed the present certiorari and mandamus petition
contending that the COMELEC acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when it ' dismissed his second initiative petition.
THE PARTIES' ARGUMENTS
Marmeto assails the COMELEC's Resolution No. 14-0509, contending that the denial of an initiative
petition due to lack of appropriated funds constitutes a gross neglecfaabandonment of the COMELEC's
duties under the Constitution.13
Marmeto believes that the COMELEC has a ministerial duty to conduct the initiative proceedings under
pertinent laws upon compliance with the legal requirements for the exercise of the right. He asserts that
the COMELEC evaded its mandated duty by citing unavailability of funds as ground to frustrate the
conduct oflocal initiative.14
The COMELEC, on the other hand, claims that the denial of Marmeto's initiative petition was proper,
since the propositions therein were beyond the legal powers of the Sangguniang Panlungsod to enact.
15 Section 124(b) of the LGC provides that the "[i]nitiative shall extend only to subjects or matters which
are within the legal powers of the Sanggunian to enact." According to the COMELEC, Marmeto's second
initiative petition proposed the creation of a council composed of 12 sectoral representatives. This
sectoral council will act as a legislative body that will directly propose, enact, approve, or reject any
ordinance through the power of initiative and referendum.16
The COMELEC refers to Section 458 of the LGC which enumerates the powers and duties of
the Sangguniang Panlungsod, noting that nothing in the provision grants the Sanggunian the power to
create a separate local legislative body. Moreover, Section 457 of the LGC allows only three sectoral
representatives to become members of the Sangguniang Panlungsod. These sectoral representatives are
to be elected by the residents of the city as members of the Sanggunian, and cannot be appointed
through an initiative election.
THE COURT'S RULING
The Court dismisses the Petition.
The COMELEC is mandated to enforce
and administer the laws on local
initiative and referendum
Initiative has been described as an instrument of direct democracy whereby the citizens directly propose
and legislate laws.17 As it is the citizens themselves who legislate the laws, direct legislation through
initiative (along with referendum) is considered as an exercise of original legislative power,18 as opposed
to that of derivative legislative power which has been delegated by the sovereign people to
legislative bodies such as the Congress.19
Section 1 of Article VI of the Constitution recognizes the distinction between original and derivative
legislative power by declaring that "legislative power shall be vested in the Congress x x x except to the
extent reserved to the people by the provision on initiative and referendum." The italicized clause
pertains to the original power of legislation which the sovereign people have reserved for their exercise
in matters they consider fit. Considering that derivative legislative power is merely delegated by the
sovereign people to its elected representatives, it is deemed subordinate to the original power of the
people.20
The Constitution further mandated the Congress to "provide for a system of initiative and referendum, x
x x whereby the people can directly propose and enact laws or approve or reject any act or law or part
thereof by the Congress or local legislative body x x x."21 In compliance, the Congress enacted RA No.
6735 on August 4, 1989 which provided for a system of initiative and referendum on national and local
laws. To implement RA No. 6735, the COMELEC promulgated Resolution No. 2300 on January 16, 1991,
which provided the rules and regulations governing the conduct of initiative on the Constitution,22and
initiative and referendum on national and local laws. Since the LGC codified all laws pertaining to local
governments,23 the provisions on local initiative and referendum found in RA No. 6735 were reiterated,
with slight modifications, in Sections 120 to 127 of the LGC; all other provisions in RA No. 6735 not
inconsistent within the Sections 120 and 127 of the LGC remained valid and in effect.
RA No. 6735 and the LGC are thus the pertinent laws on local initiative and referendum which the
COMELEC is mandated to enforce and administer under Article IX-C, Section 2(1) of the Constitution.
Naturally, the conduct of initiative and referendum (as with any election exercise) will entail expenses on
the part of the government. The budget for the conduct of the exercise of political rights, specifically
those on suffrage and electoral rights, is given to the COMELEC, whose approved annual appropriations
are automatically and regularly released.24
The COMELEC cannot defeat the
exercise of the people's original
legislative power for lack of budgetary
allocation for its conduct
In Goh v. Hon. Bayron,25 the Court has definitely ruled the question of whether the COMELEC may
prevent the conduct of a recall election for lack of specific budgetary allocation therefor. In as much as
the issue resolved in Goh is similar to the present one before the Court, a brief summary thereof is
necessary.
In 2014, Alroben Goh commenced the proceedings for the conduct of recall elections against Puerto
Princessa City Mayor Lucilo Bayron. Although the COMELEC found Goh 's petition sufficient in form and
substance, it resolved to suspend the recall election because there was no appropriation provided for
the conduct of recall elections in the FY 2014 General Appropriations Act (GAA). As there was no line
item in the GAA for recall elections, there could likewise be no augmentation according to the COMELEC.
Contrary to the COMELEC's assertions, the Court ruled that the FY 2014 GAA "actually expressly provides Notably, for its Major Final Output (MFO) 1 on the Regulation of Elections, the COMELEC was provided
for a line item appropriation for the conduct and supervision of recall elections."26 Under the Program with a total of Pl,401,501,000 for the "Conduct and supervision of elections, referenda, recall votes and
category of the COMELEC's 2014 budget,27 the following amounts were provided: plebiscites," which amount was subdivided among the 15 administrative regions in the country.

The Court added that "[w]hen the COMELEC receives a budgetary appropriation for its 'Current
Operating Expenditures,' such appropriation includes expenditures to carry out its constitutional
functions x x x"28 The Court considered the appropriation of P 1.4 billion as specific enough to fund
elections, which includes both regular and special elections, including recall elections.

Further, the allocation of a specific budget for the conduct of elections constituted as "a line item which
can be augmented from the COMELEC's savings to fund the conduct of recall elections in 2014."29 Thus,
the Court concluded that -

[c]onsidering that there is an existing line item appropriation for the conduct of recall elections in the
2014 GAA, we see no reason why the COMELEC is unable to perform its constitutional mandate to
'enforce and administer all laws and regulations relative to the conduct of x x x recall.' Should the funds
appropriated in the 2014 GAA be deemed insufficient, then the COMELEC Chairman may exercise his
authority to augment such line item appropriation from the COMELEC's existing savings, as this
augmentation is expressly authorized in the 2014 GAA.30

There is no reason not to extend the Goh ruling to the present case. In fact, Marmeto's second initiative
petition was also filed in 2014; in dismissing Marmeto' s petition for lack of funds, the COMELEC was
referring to its budget under the FY 2014 GAA.

Although Goh involved the conduct of recall elections, the ₱1.4 billion appropriation under the FY 2014
GAA was for the "conduct and supervision of elections, referenda, recall votes and plebiscites."31 The
term "election" is comprehensive enough to include other kinds of electoral exercises, including initiative
elections. As earlier mentioned, the COMELEC's constitutional mandate is to enforce and administer all
laws relative to the conduct of an election, plebiscite, initiative, referendum, and recall. The Constitution
further states that the "[f]unds certified by the [COMELEC] as necessary to defray the expenses for
holding regular and special elections, plebiscites, initiatives, referenda, and recalls, shall be provided in
the regular or special appropriations and, once approved shall be released automatically."32 Thus, the
budgetary allocation for the "regulation of elections" identified as the COMELEC's MFO 1 should
necessarily also cover expenses for the conduct of initiative elections.

The Court also notes that, aside from the ₱1.4 billion appropriation for the "conduct and supervision of
elections, referenda, recall votes and plebiscites," the COMELEC was also given ₱1.6 billion in the FY
2014 GAA for the "management and supervision of elections and other electoral exercises."33

Thus, as in Goh , the COMELEC was provided with budgetary allocation for the conduct of initiative
elections. The COMELEC, therefore, committed grave abuse of discretion in dismissing Marmeto' s
second initiative petition on the ground that there were no funds allocated for the purpose.

The COMELEC has the power to

review whether the propositions in an
initiative petition are within the power
of the concerned Sanggunian to enact

The resolution of the present case, however, does not end in applying the Court's ruling in Goh to the
present case. In its Comment and Memorandum, the COMELEC defends the dismissal of Marmeto's
second initiative petition on the ground that the propositions raised therein were matters that were not
within the powers of the Sangguiang Panlungsod to enact. This petition purportedly proposed the
creation of another legislative body separate from the Sanggunian, composed of 12 appointive sectoral
representatives. Not only does the LGC denies to the Sanggunian the power to create a separate
legislative body, but it also limits the number of sectoral representatives in the Sanggunian itself to only
three elected members.34 For these reasons, the COMELEC argues that the dismissal of Marmeto's
second initiative petition was proper.
Marmeto counters that the arguments the COMELEC now raises were not the grounds which the
COMELEC cited in Resolution No. 14-0509 that is assailed in the present certiorari and mandamus
petition. He points out that Resolution No. 14-0509 dismissed his second initiative petition solely for lack
of specific budgetary allocation. There was no mention in the assailed resolution that the propositions in
his second initiative petition were not within the powers of the Sanggunian to enact. This ground was
instead cited by the COMELEC in its Resolution Nos. 13-0904 and 13-1039 which dismissed
Marmeto'sfirst initiative petition. Hence, he opines that the propriety of the propositions contained in
his second initiative petition, not being covered by the assailed COMELEC resolution, cannot be reviewed
in the present petition.
In several cases, this Court considered issues which were not raised by either party when these issues
are necessary for the complete resolution of the cases. 35 If the Court can review unassigned errors which
are necessary to arrive at a just resolution of the case, with all the more reason can it review a matter
raised as a defense by a party to uphold the validity of a resolution assailed in the case.
Section 124(b) of the LGC provides that "[i]nitiatives shall extend only to subjects or matters which are
within the legal powers of the Sanggunian to enact." Section 127 of the LGC gives the courts authority to
declare "null and void any proposition approved pursuant to this Chapter36 for violation of the
Constitution or want of capacity of the Sanggunian concerned to enact the said
measure."37 Significantly, the power of the courts to nullify propositions for being ultra vires extends
only to those already approved, i.e. those which have been approved by a majority of the votes cast in
the initiative election called for the purpose. In other words, the courts can review the terms only of
an approved ordinance. It will be premature for the courts to review the propositions contained in an
initiative petition that has yet to be voted for by the people because at that point, there is no actual
controversy that the courts may adjudicate. This begs the question of which tribunal can review the
sufficiency of an initiative petition?
Inasmuch as the COMELEC also has quasi-judicial and administrative functions, it is the COMELEC which
has the power to determine whether the propositions in an initiative petition are within the powers of
a concerned Sanggunian to enact. In Subic Bay Metropolitan Authority v. Commission on Elections,38 the
Court ruled that -
while regular courts may take jurisdiction over 'approved propositions' per said Sec. 18 of R.A. 6735, the
Comelec in the exercise of its quasi-judicial and administrative powers may adjudicate and pass upon
such proposals insofar as their form and language are concerned x x x and it may be added, even as to
content, where the proposals or parts thereof are patently and clearly outside the 'capacity of the
local legislative body to enact.' x x x (Emphasis supplied)
The COMELEC's power to review the substance of the propositions is also implied in Section 12 of RA No.
6735, which gives this Court appellate power to review the COMELEC's "findings of the sufficiency or
insufficiency of the petition for initiative or referendum x x x."
Marmeto 's propositions in his initiative
petition are beyond the powers of the
Sanggunian Panlungsod ng
Muntinlupa to enact
Accordingly, a review of the propositions put forth by Marmeto in his second initiative petition becomes
imperative.
Unfortunately, the records do not contain a copy of the proposed ordinance itself. Nevertheless,
Marmeto's pleadings and the annexes thereto (particularly the Supplemental Petition39) refer to the
significant propositions put forth in his second initiative petition.
The Court also notes that the propositions in Marmeto' s second petition are closely related to those in
his first petition, which are mentioned in the COMELEC Resolution Nos. 13-0904 and 13-1039. As
Marmeto never denied that the propositions in his second initiative petition are completely different
from those in his first petition,40 it is not implausible to presume that the propositions contained in both
petitions are more or less the same. Since the COMELEC had already ruled on the propriety of these
propositions in its Resolution No. 13-0904 and to avoid a remand of the case that will prolong these
proceedings, the Court will proceed to rule on the issue of whether Marmeto's propositions are within
the power of the Sanggunian to enact and thus be valid subjects of an initiative petition.
Marmeto's initiative petitions propose the following:
(1) The creation of a sectoral council composed of 12 members from various sectors who will serve as
the people's representatives for the implementation and management of livelihood programs and
projects;41
(2) The sectoral council will also stand as the people's representatives that will directly propose, enact,
approve, or reject ordinances through initiative or referendum;42
(3) An appropriation of ₱200 million to be allocated for livelihood projects of the people and other
purposes. The net income from the projects will then be used for the delivery of basic services and
facility for Muntinlupa residents;43
(4) The MPP will create the implementing guidelines and procedure for the utilization of the
appropriated funds, and conduct programs and project feasibility studies. It shall comply with the
prescribed accounting and auditing rules of, and submit monthly accomplishment report to the local
government unit (LGU). It shall also observe transparency and accountability in fund management.44
These propositions, however, are either sufficiently covered by or violative of the LGC for reasons
explained below.
(A) The creation of a separate local legislative body is ultra vires
Under the LGC, local legislative power within the city is to be exercised by the Sangguniang
Panlungsod,45 which shall be comprised of elected district and sectoral representatives.46 The sectoral
representatives, moreover, shall be limited to three members, coming from enumerated/identified
sectors.47
Significantly, nothing in the LGC allows the creation of another local legislative body that will enact,
approve, or reject local laws either through the regular legislative process or through initiative or
referendum. Even Marmeto's claim that the sectoral council will not legislate but will merely "facilitate"
the people's exercise of the power of initiative and referendum is rendered unnecessary by the task the
COMELEC must assume under the LGC. Section 122(c) of the LGC provides that the COMELEC (or its
designated representative) shall extend assistance in the formulation of the proposition.
(B) The sectoral council VMPP's proposed function overlaps with the Local Development Council
The law recognizes the right of the people to organize themselves and encourages the formation of non-
governmental, community-based, or sectoral organizations that aim to promote the nation's
welfare.48 Even the LGC promotes relations between the LGUs and people's and non-governmental
organizations (PO/NGOs ), and provides various ways by which they can be active partners in pursuing
local autonomy.49
The LGC, moreover, requires the establishment in each LGU of a local development council, whose
membership includes representatives of POs/NGOs operating within the LGU.50 These local development
councils are primarily tasked with developing a "comprehensive multi-sectoral development plan"51 in
their respective LGUs. City development councils are specifically tasked to exercise the following
functions:
(1) Formulate long-term, medium-term, and annual development plans and policies;
(2) xxx;
(3) Appraise and prioritize socio-economic development programs and projects;
(4) x x x;
(5) Coordinate, monitor, and evaluate the implementation of development programs and projects; and
(6) Perform such other functions as may be provided by law or competent authority.52
Given these functions of the city development council, there is a clear overlap with those proposed by
Marmeto to be performed by the sectoral council and/or MPP.1âwphi1
(C) The LGC requires local government funds and monies to be spent solely for public purposes, and
provides transparency and accountability measures to ensure this end
The overlap in functions, by itself, does not suffice to turn down Marmeto's proposal to create a sectoral
council or any similar organization. What the Court finds disturbing in Marmeto' s initiative petitions is
the authority of the proposed sectoral council to utilize, manage, and administer public funds as it sees
fit.
The fundamental principles in local fiscal administration provided in the LGC state that no money shall be
paid out of the local treasury except in pursuance of an appropriations ordinance or law,53 and that local
government funds and monies shall be spent solely for public purposes.54
Marmeto' s petition proposes the appropriation of ₱200 million for the livelihood programs and projects
of Muntinlupa residents. Significantly, the utilization of this amount is subject to the guidelines to be
later implemented by Marmeto's MPP. That these guidelines will be drafted and implemented
subsequent to the initiative elections denies the Muntinlupa residents of the opportunity to assess and
scrutinize the utilization of local funds, and gives Marmeto and his organization an almost complete
discretion in determining the allocation and disbursement of the funds. It is no justification that the
funds will be used for public purposes on the claim these will be applied to programs and projects that
will eventually redound to the benefit of the public.
Our laws have put in place measures to ensure transparency and accountability in dealing with public
funds,55 since "[p]ublic funds are the property of the people and must be used prudently at all times with
a view to prevent dissipation and waste."56 These measures may be subverted or rendered inapplicable
when the management and utilization of the funds is turned over to private persons or entities. Although
comprised of Muntinlupa residents and voters, Marmeto' s MPP remains a private organization and its
members cannot be considered as public officers who are burdened with responsibility for public funds
and who may be held administratively and criminally liable for the imprudent use thereof.
CONCLUSION
Initiative and referendum are the means by which the sovereign people exercise their legislative power,
and the valid exercise thereof should not be easily defeated by claiming lack of specific budgetary
appropriation for their conduct. The Court reiterates its ruling in Goh that the grant of a line item in the
FY 2014 GAA for the conduct and supervision of elections constitutes as sufficient authority for the
COMELEC to use the amount for elections and other political exercises, including initiative and recall, and
to augment this amount from the COMELEC's existing savings.
Nonetheless, as the Court ruled in Subic Bay Metropolitan Authority, the COMELEC is likewise given the
power to review the sufficiency of initiative petitions, particularly the issue of whether the propositions
set forth therein are within the power of the concerned Sanggunian to enact. In as much as a
sanggu,nian does not have the power to create a separate local legislative body and that other
propositions in Marmeto's initiative petition clearly contravene the existing laws, the COMELEC did not
commit grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the petition
and cannot be ordered to conduct and supervise the procedure for the conduct of initiative elections.
WHEREFORE, the Petition for certiorari and mandamus is DISMISSED. The Resolution No. 14-0509 of the
Commission on Elections dated July 22, 2014 is AFFIRMED.
SO ORDERED.
G.R. No. 188179 January 22, 2013
HENRY R. GIRON, Petitioner,
vs.
COMMISSION ON ELECTIONS, Respondent,
ALMARIO E. FRANCISCO, FEDERICO S. JONG JR., and RICARDO L. BAES JR., Petitioners-in-Intervention.
DECISION
SERENO, CJ.:
Before the Court is a special civil action for certiorari and prohibition assailing the constitutionality of
Section 12 (Substitution of Candidates) and Section 14 (Repealing Clause) of Republic Act No. (R.A.) 9006,
otherwise known as the Fair Election Act. The present Petition also seeks to prohibit the Commission on
Elections (COMELEC) from further implementing the aforesaid sections of the Fa1r Election Act, on the
ground that these provisions would enable elective officials to gain campaign advantage and allow them
to disburse public funds from the time they file their certificates of candidacy until after the elections.
On the one hand, petitioner Henry R. Giron (Giron) asserts that the insertion of Sections 12 and 14 in the
Fair Election Act violates Section 26(1), Article VI of the 1987 Constitution, which specifically requires:
"Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title
thereof." Petitioner avers that these provisions are unrelated to the main subject of the Fair Election Act:
the lifting of the political ad ban. Section 12 refers to the treatment of the votes cast for substituted
candidates after the official ballots have been printed, while Section 14 pertains to the repeal of Section
67 (Candidates holding elective office) of Batas Pambansa Blg. 881, otherwise known as the Omnibus
Election Code. Section 67 of this law concerns the ipso facto resignation of elective officials immediately
after they file their respective certificates of candidacy for an office other than that which they are
currently holding in a permanent capacity.
On the other hand, respondent Jose Melo, then chairperson of the COMELEC, opposes the Petition and
argues inter alia that this Court has already resolved the matter in Fariñas v. Executive Secretary.1
Almario E. Francisco, Federico S. Jong Jr., and Ricardo L. Baes Jr. filed their respective petitions-in-
intervention,2 which essentially reiterated the ratiocinations of Giron.
Issue
Whether or not the inclusion of Sections 12 and 14 in the Fair Election Act violates Section 26(1), Article
VI of the 1987 Constitution, or the "one subject-one title" rule.
Ruling
It is a well-settled rule that courts are to adopt a liberal interpretation in favor of the constitutionality of
a legislation,3 as Congress is deemed to have enacted a valid, sensible, and just law.4 Because of this
strong presumption, the one who asserts the invalidity of a law has to prove that there is a clear,
unmistakable, and unequivocal breach of the Constitution; otherwise, the petition must fail.5
After a thorough review of the arguments raised, we find that petitioner and petitioners-in-intervention
were unable to present a compelling reason that would surpass the strong presumption of validity and
constitutionality in favor of the Fair Election Act. They have not put forward any gripping justification to
reverse our ruling in Fariñas, in which we have already ruled that the title and the objectives of R.A. 9006
are comprehensive enough to include subjects other than the lifting of the ban on the use of media for
election propaganda. Below is a reproduction of our exhaustive exposition on the matter in the 10
December 2003 En Banc Decision:6
At the core of the controversy is Section 14, the repealing clause of Rep. Act No. 9006, which provides:
SECTION 14. Repealing Clause. — Sections 67 and 85 of the Omnibus Election Code (Batas Pambansa Blg.
881) and Sections 10 and 11 of Republic Act No. 6646 are hereby repealed. As a consequence, the first
proviso in the third paragraph of Section 11 of Republic Act No. 8436 is rendered ineffective. All laws,
presidential decrees, executive orders, rules and regulations, or any part thereof inconsistent with the
provisions of this Act are hereby repealed or modified or amended accordingly.
The repealed provision, Section 67 of the Omnibus Election Code, quoted earlier, reads:
SECTION 67. Candidates holding elective office.
— Any elective official, whether national or local, running for any office other than the one which he is
holding in a permanent capacity, except for President and Vice-President, shall be considered ipso facto
resigned from his office upon the filing of his certificate of candidacy.
xxxx
The proscription under Section 26(1), Article VI of the Constitution is aimed against the evils of the so-
called omnibus bills and log-rolling legislation as well as surreptitious and/or unconsidered encroaches.
The provision merely calls for all parts of an act relating to its subject finding expression in its title.
To determine whether there has been compliance with the constitutional requirement that the subject
of an act shall be expressed in its title, the Court laid down the rule that —
Constitutional provisions relating to the subject matter and titles of statutes should not be so narrowly
construed as to cripple or impede the power of legislation. The requirement that the subject of an act
shall be expressed in its title should receive a reasonable and not a technical construction. It is sufficient
if the title be comprehensive enough reasonably to include the general object which a statute seeks to
effect, without expressing each and every end and means necessary or convenient for the accomplishing
of that object. Mere details need not be set forth. The title need not be an abstract or index of the Act.
The title of Rep. Act No. 9006 reads: "An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful
and Credible Elections through Fair Election Practices." Section 2 of the law provides not only the
declaration of principles but also the objectives thereof:
Sec. 2. Declaration of Principles. — The State shall, during the election period, supervise or regulate the
enjoyment or utilization of all franchises or permits for the operation of media of communication or
information to guarantee or ensure equal opportunity for public service, including access to media time
and space, and the equitable right to reply, for public information campaigns and for among candidates
and assure free, orderly, honest, peaceful and credible elections.
The State shall ensure that bona fide candidates for any public office shall be free from any form of
harassment and discrimination.
The Court is convinced that the title and the objectives of Rep. Act No. 9006 are comprehensive enough
to include the repeal of Section 67 of the Omnibus Election Code within its contemplation. To require
that the said repeal of Section 67 of the Code be expressed in the title is to insist that the title be a
complete index of its content.
The purported dissimilarity of Section 67 of the Omnibus Election Code, which imposes a limitation on
elective officials who run for an office other than the one they are holding, to the other provisions of
Rep. Act No. 9006, which deal with the lifting of the ban on the use of media for election propaganda,
does not violate the "one subject-one title" rule. This Court has held that an act having a single general
subject, indicated in the title, may contain any number of provisions, no matter how diverse they may
be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying out the general subject.
xxxx
Moreover, the avowed purpose of the constitutional directive that the subject of a bill should be
embraced in its title is to apprise the legislators of the purposes, the nature and scope of its provisions,
and prevent the enactment into law of matters which have not received the notice, action and study of
the legislators and the public. In this case, it cannot be claimed that the legislators were not apprised of
the repeal of Section 67 of the Omnibus Election Code as the same was amply and comprehensively
deliberated upon by the members of the House. (Emphases supplied and citations omitted)
The reasoning behind Fariñas similarly applies to the claim of unconstitutionality with respect to Section
12 of the Fair Election Act. The questioned provision reads:
SECTION 12. Substitution of Candidates. — In case of valid substitutions after the official ballots have
been printed, the votes cast for the substituted candidates shall be considered as stray votes but shall
not invalidate the whole ballot. For this purpose, the official ballots shall provide spaces where the
voters may write the name of the substitute candidates if they are voting for the latter: Provided,
however, That if the substitute candidate is of the same family name, this provision shall not apply.
To give a contextual background, we observe that Congress consciously looked for a more generic title in
order to express the thrust of the law. Below is an excerpt from the Bicameral Conference Committee
deliberations:7
CHAIRMAN SYJUCO. x x x x. First of all, we will need to answer when we get back to our own chamber
what it is that there seems to be a rider here that does not seem to be pertinent or relevant to
the...germane to the spirit. And in fact that title and the purpose for this very Act -It is an Act to enhance
the holding of free, orderly, honest, peaceful, and credible elections through fair election practices.
It is the opinion of many of us in the House that this should be the subject of another legislation rather
than a rider "kuno" on legislation that is...that refers totally to a different subject matter. So that’s one. x
xxx
CHAIRMAN SYJUCO. Okay. May we jump a little ahead of ourselves, no. But I think it’s necessary to get a
little ahead so that we can be enlightened as to how this will fit, these particular things will fit into the
whole pie, no. So, what sort of title then would emanate so as to accommodate a subject matter which
under the present title or the proposed titles or the title from the House or the title from the Senate
would seem to be more appropriately the subject of another legislation?
May I draw on the experience of the Chairman for this, please?
CHAIRMAN ROCO. Yes. We really studied that very carefully and we weighed, and that’s why we
recommended as a last thing was fair election practices, and we combed in fact the laws. It becomes fair
election practices. We went through all the different laws pa kung meron pa kaming maii-spot na
unfairness para ipapasok pa, pero wala na eh. The unfairness were in the opportunity lang to run and
then you’re disqualified when you run for something else. Ngayon we restrict it only for President and
Vice President. You forfeit...it’s the reverse really of the present law. x x x x.
CHAIRMAN SYJUCO. Okay. So do you believe, Mr. Chairman, that we can find an appropriate title for this
so that it will not stick out like a sword and seem to be inappropriate as part of the whole body?
CHAIRMAN ROCO. Will you feel comfortable with fair election practices? Baka okey na because it’s really
fair na. x x x x.
CHAIRMAN SYJUCO. So if the scope can be widened so as to cover this as well, then it should be all right.
SEN. LEGARDA-LEVISTE. Yes, Mr. Chairman. I just wanted to clarify. So all we’re looking for now is
appropriate title to make it broader so that it would cover this provision. Is that correct? CHAIRMAN
SYJUCO. We’re looking for an appropriate coverage which will result in the nomenclature.
SEN. LEGARDA-LEVISTE. Because I really do not believe that it is out-of-place. I think that even with the
term FAIR ELECTION PRACTICE it really covers it. Because as expressed by Sen. Roco, those conditions
stated earlier seemed unfair and it is an election practice and therefore, I think I’m very comfortable with
the title FAIR ELECTION PRACTICE so that we can get over with these things so that we don’t come back
again until we find the title. I mean it’s one provision which I think is fair for everybody. It may seem like
a limitation but this limitation actually provides for fairness in election practices as the title implies. x x x
x.
CHAIRPERSON MARCOS. Mr. Chairman, may I just make the observation that although it is true that the
bulk of provisions deals with the area of propaganda and political advertising, the complete title is
actually one that indulge full coverage. It says, AN ACT TO ENHANCE THE HOLDING OF FREE, ORDERLY,
HONEST, etcetera ELECTIONS through fair election practices. But as we said we will put that aside to
discuss later on.
Secondly, I think the declaration of principles contained in Section 2, paragraph 2, is perfectly adequate
and that it says that it shall ensure candidates for public office that be free from any form of harassment
and discrimination. Surely, this provision in Section 67 of the old Election
Code of the existing Omnibus Election Code is a form of harassment or discrimination.1âwphi1 And so I
think that in the effort at leveling the playing field, we can cover this and it should not be considered a
rider. x x x x.
CHAIRMAN ROCO. Yeah, I think what is on the table is that we are not disputing this but we are looking
for a title that is more generic so that then we have less x x x of an objection on constitutionality. I think
that’s the theory. So, there is acceptance of this. Maybe we should not call it nga limitation on elected
officials. Maybe we should say, special provision on elected officials. So, how is that? Now, also, then we
say… On the short title of the Act, we say… (unfinished) x x x x.
CHAIRMAN ROCO. It's done. So, okay na iyun. The title will be FAIR ELECTION ACT. The rest are wala
nang problema, ana? Wala na. Wala na. (Italics and boldface supplied)
What the above discussion tells us is that Congress did not limit the law to the lifting of the political ad
ban. After combing through various laws, they found other election practices that they considered
inequitable. Some of these practices included the appreciation of the votes cast in case of a late
substitution of candidates and the ipso facto resignation of certain elective officials upon the filing of
their certificates of candidacy. Thus, to "level the playing field," Congress fashioned a law that would
address what they determined were unfair election practices; hence, the birth of the Fair Election Act.
After a careful analysis of the foregoing, we find that the assailed Section 12 (Substitution of Candidates)
and Section 14 (Repealing Clause) are indeed germane to the subject expressed in the title of R.A. 9006:
An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful and Credible Elections through Fair
Election Practices. The title was worded broadly enough to include the measures embodied in the
assailed sections. Consequently, we dismiss the Petition and the petitions-in-intervention for failure to
establish a clear breach of the Constitution.
On a final note, we observe that petitioner and petitioners-in-intervention raise various arguments that
we deem are matters of policy. Whether or not those ratiocinations are valid, we reiterate that the
power of this Court is limited to the interpretation of the law. Judicial power does not include the
determination of the wisdom, fairness, soundness, or expediency of a statute. Otherwise, the Court may
be accused of engaging in judicial legislation. As it is Congress that is empowered by the Constitution to
determine state policies and to enact laws, we feel that petitioner's reasoning would be best addressed
by the legislature.
WHEREFORE, the Petition is hereby DISMISSED.
SO ORDERED.
G.R. No. 105371 November 11, 1993
THE PHILIPPINE JUDGES ASSOCIATION, duly rep. by its President, BERNARDO P. ABESAMIS, Vice-
President for Legal Affairs, MARIANO M. UMALI, Director for Pasig, Makati, and Pasay, Metro Manila,
ALFREDO C. FLORES, and Chairman of the Committee on Legal Aid, JESUS G. BERSAMIRA, Presiding
Judges of the Regional Trial Court, Branch 85, Quezon City and Branches 160, 167 and 166, Pasig,
Metro Manila, respectively: the NATIONAL CONFEDERATION OF THE JUDGES ASSOCIATION OF THE
PHILIPPINES, composed of the METROPOLITAN TRIAL COURT JUDGES ASSOCIATION rep. by its
President. REINATO QUILALA of the MUNICIPAL TRIAL CIRCUIT COURT, Manila; THE MUNICIPAL
JUDGES LEAGUE OF THE PHILIPPINES rep. by its President, TOMAS G. TALAVERA; by themselves and in
behalf of all the Judges of the Regional Trial and Shari'a Courts, Metropolitan Trial Courts and
Municipal Courts throughout the Country, petitioners,
vs.
HON. PETE PRADO, in his capacity as Secretary of the Department of Transportation and
Communications, JORGE V. SARMIENTO, in his capacity as Postmaster General, and the PHILIPPINE
POSTAL CORP., respondents.
CRUZ, J.:
The basic issue raised in this petition is the independence of the Judiciary. It is asserted by the
petitioners that this hallmark of republicanism is impaired by the statute and circular they are here
challenging. The Supreme Court is itself affected by these measures and is thus an interested party that
should ordinarily not also be a judge at the same time. Under our system of government, however, it
cannot inhibit itself and must rule upon the challenge, because no other office has the authority to do
so. We shall therefore act upon this matter not with officiousness but in the discharge of an unavoidable
duty and, as always, with detachment and fairness.
The main target of this petition is Section 35 of R.A. No. 7354 as implemented by the Philippine Postal
Corporation through its Circular No.
92-28. These measures withdraw the franking privilege from the Supreme Court, the Court of Appeals,
the Regional Trial Courts, the Metropolitan Trial Courts, the Municipal Trial Courts, and the Land
Registration Commission and its Registers of Deeds, along with certain other government offices.
The petitioners are members of the lower courts who feel that their official functions as judges will be
prejudiced by the above-named measures. The National Land Registration Authority has taken common
cause with them insofar as its own activities, such as sending of requisite notices in registration cases,
affect judicial proceedings. On its motion, it has been allowed to intervene.
The petition assails the constitutionality of R.A. No. 7354 on the grounds that: (1) its title embraces more
than one subject and does not express its purposes; (2) it did not pass the required readings in both
Houses of Congress and printed copies of the bill in its final form were not distributed among the
members before its passage; and (3) it is discriminatory and encroaches on the independence of the
Judiciary.
We approach these issues with one important principle in mind, to wit, the presumption of the
constitutionality of statutes. The theory is that as the joint act of the Legislature and the Executive, every
statute is supposed to have first been carefully studied and determined to be constitutional before it was
finally enacted. Hence, unless it is clearly shown that it is constitutionally flawed, the attack against its
validity must be rejected and the law itself upheld. To doubt is to sustain.
I
We consider first the objection based on Article VI, Sec. 26(l), of the Constitution providing that "Every
bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof."
The purposes of this rule are: (1) to prevent hodge-podge or "log-rolling" legislation; (2) to prevent
surprise or fraud upon the legislature by means of provisions in bills of which the title gives no
intimation, and which might therefore be overlooked and carelessly and unintentionally adopted; and (3)
to fairly apprise the people, through such publication of legislative proceedings as is usually made, of the
subject of legislation that is being considered, in order that they may have opportunity of being heard
thereon, by petition or otherwise, if they shall so desire.1
It is the submission of the petitioners that Section 35 of R.A. No. 7354 which withdrew the franking
privilege from the Judiciary is not expressed in the title of the law, nor does it reflect its purposes.
R.A. No. 7354 is entitled "An Act Creating the Philippine Postal Corporation, Defining its Powers,
Functions and Responsibilities, Providing for Regulation of the Industry and for Other Purposes
Connected Therewith."
The objectives of the law are enumerated in Section 3, which provides:
The State shall pursue the following objectives of a nationwide postal system:
a) to enable the economical and speedy transfer of mail and other postal matters,
from sender to addressee, with full recognition of their privacy or confidentiality;
b) to promote international interchange, cooperation and understanding through
the unhampered flow or exchange of postal matters between nations;
c) to cause or effect a wide range of postal services to cater to different users and
changing needs, including but not limited to, philately, transfer of monies and
valuables, and the like;
d) to ensure that sufficient revenues are generated by and within the industry to
finance the overall cost of providing the varied range of postal delivery and
messengerial services as well as the expansion and continuous upgrading of
service standards by the same.
Sec. 35 of R.A. No. 7354, which is the principal target of the petition, reads as follows: II

Sec. 35. Repealing Clause. — All acts, decrees, orders, executive orders,
instructions, rules and regulations or parts thereof inconsistent with the provisions
of this Act are repealed or modified accordingly.
All franking privileges authorized by law are hereby repealed, except those
provided for under Commonwealth Act No. 265, Republic Acts Numbered 69, 180,
1414, 2087 and 5059. The Corporation may continue the franking privilege under
Circular No. 35 dated October 24, 1977 and that of the Vice President, under such
arrangements and conditions as may obviate abuse or unauthorized use thereof.
The petitioners' contention is untenable. We do not agree that the title of the challenged act violates the
Constitution.
The petitioners maintain that the second paragraph of Sec. 35 covering the repeal of the franking
privilege from the petitioners and this Court under E.O. 207, PD 1882 and PD 26 was not included in the
original version of Senate Bill No. 720 or House Bill No. 4200. As this paragraph appeared only in the
Conference Committee Report, its addition, violates Article VI, Sec. 26(2) of the Constitution, reading as
follows:
(2) No bill passed by either House shall become a law unless it has passed three
readings on separate days, and printed copies thereof in its final form have been
distributed to its Members three days before its passage, except when the
President certifies to the necessity of its immediate enactment to meet a public
calamity or emergency. Upon the last reading of a bill, no amendment thereto
shall be allowed, and the vote thereon shall be taken immediately thereafter, and
the yeas and nays entered in the Journal.

The title of the bill is not required to be an index to the body of the act, or to be as comprehensive as to
The petitioners also invoke Sec. 74 of the Rules of the House of Representatives, requiring that
cover every single detail of the measure. It has been held that if the title fairly indicates the general
amendment to any bill when the House and the Senate shall have differences thereon may be settled by
subject, and reasonably covers all the provisions of the act, and is not calculated to mislead the
a conference committee of both chambers. They stress that Sec. 35 was never a subject of any
legislature or the people, there is sufficient compliance with the constitutional requirement. 2
disagreement between both Houses and so the second paragraph could not have been validly added as
an amendment.
To require every end and means necessary for the accomplishment of the general objectives of the
statute to be expressed in its title would not only be unreasonable but would actually render legislation
These argument are unacceptable.
impossible. 3 As has been correctly explained:

While it is true that a conference committee is the mechanism for compromising differences between
The details of a legislative act need not be specifically stated in its title, but matter
the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is
germane to the subject as expressed in the title, and adopted to the
described thus:
accomplishment of the object in view, may properly be included in the act. Thus, it
is proper to create in the same act the machinery by which the act is to be
enforced, to prescribe the penalties for its infraction, and to remove obstacles in A conference committee may, deal generally with the subject matter or it may be
the way of its execution. If such matters are properly connected with the subject limited to resolving the precise differences between the two houses. Even where
as expressed in the title, it is unnecessary that they should also have special the conference committee is not by rule limited in its jurisdiction, legislative
mention in the title (Southern Pac. Co. v. Bartine, 170 Fed. 725). custom severely limits the freedom with which new subject matter can be inserted
into the conference bill. But occasionally a conference committee produces
unexpected results, results beyond its mandate, These excursions occur even
This is particularly true of the repealing clause, on which Cooley writes: "The repeal of a statute on a
where the rules impose strict limitations on conference committee jurisdiction.
given subject is properly connected with the subject matter of a new statute on the same subject; and
This is symptomatic of the authoritarian power of conference committee (Davies,
therefore a repealing section in the new statute is valid, notwithstanding that the title is silent on the
Legislative Law and Process: In a Nutshell, 1986 Ed., p.81).
subject. It would be difficult to conceive of a matter more germane to an act and to the object to be
accomplished thereby than the repeal of previous legislations connected therewith."4
It is a matter of record that the conference Committee Report on the bill in question was returned to and
duly approved by both the Senate and the House of Representatives. Thereafter, the bill was enrolled
The reason is that where a statute repeals a former law, such repeal is the effect and not the subject of
with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House
the statute; and it is the subject, not the effect of a law, which is required to be briefly expressed in its
of Representatives as having been duly passed by both Houses of Congress. It was then presented to and
title.5 As observed in one case,6 if the title of an act embraces only one subject, we apprehend it was
approved by President Corazon C. Aquino on April 3, 1992.
never claimed that every other act which repeals it or alters by implication must be mentioned in the
title of the new act. Any such rule would be neither within the reason of the Constitution, nor
practicable. Under the doctrine of separation powers, the Court may not inquire beyond the certification of the
approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez7 laid
down the rule that the enrolled bill, is conclusive upon the Judiciary (except in matters that have to be
We are convinced that the withdrawal of the franking privilege from some agencies is germane to the
entered in the journals like the yeas and nays on the final reading of the
accomplishment of the principal objective of R.A. No. 7354, which is the creation of a more efficient and
bill).8 The journals are themselves also binding on the Supreme Court, as we held in the old (but still
effective postal service system. Our ruling is that, by virtue of its nature as a repealing clause, Section 35
valid) case of U.S. vs. Pons,9 where we explained the reason thus:
did not have to be expressly included in the title of the said law.
 To inquire into the veracity of the journals of the Philippine legislature when they
are, as we have said, clear and explicit, would be to violate both the, letter and
spirit of the organic laws by which the Philippine Government was brought into
existence, to invade a coordinate and independent department of the
Government, and to interfere with the legitimate powers and functions, of the
Legislature.
Applying these principles, we shall decline to look into the petitioners' charges that an amendment was
made upon the last reading of the bill that eventually became R.A. No. 7354 and that copies thereof in its
final form were not distributed among the members of each House. Both the enrolled bill and the
legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec.
26(2) of the Constitution. We are bound by such official assurances from a coordinate department of the
government, to which we owe, at the very least, a becoming courtesy.
III
The third and most serious challenge of the petitioners is based on the equal protection clause.
What is the reason for the grant of the franking privilege in the first place? Is the franking privilege
extended to the President of the Philippines or the Commission on Elections or to former Presidents of
the Philippines purely as a courtesy from the lawmaking body? Is it offered because of
the importance or status of the grantee or because of its need for the privilege? Or have the grantees
been chosen pell-mell, as it were, without any basis at all for the selection?
We reject outright the last conjecture as there is no doubt that the statute as a whole was carefully
deliberated upon, by the political departments before it was finally enacted. There is reason to suspect,
however, that not enough care or attention was given to its repealing clause, resulting in the unwitting
withdrawal of the franking privilege from the Judiciary.
We also do not believe that the basis of the classification was mere courtesy, for it is unimaginable that
the political departments would have intended this serious slight to the Judiciary as the third of the
major and equal departments the government. The same observations are made if the importance or
status of the grantee was the criterion used for the extension of the franking privilege, which is enjoyed
by the National Census and Statistics Office and even some private individuals but not the courts of
justice.

In our view, the only acceptable reason for the grant of the franking privilege was the perceived need of
It is alleged that R.A. No. 7354 is discriminatory because while withdrawing the franking privilege from
the grantee for the accommodation, which would justify a waiver of substantial revenue by the
the Judiciary, it retains the same for the President of the Philippines, the Vice President of the
Corporation in the interest of providing for a smoother flow of communication between the government
Philippines; Senators and Members of the House of Representatives, the Commission on Elections;
and the people.
former Presidents of the Philippines; the National Census and Statistics Office; and the general public in
the filing of complaints against public offices and officers.10
Assuming that basis, we cannot understand why, of all the departments of the government, it is the
Judiciary, that has been denied the franking privilege. There is no question that if there is any major
The respondents counter that there is no discrimination because the law is based on a valid classification
branch of the government that needs the privilege, it is the Judicial Department, as the respondents
in accordance with the equal protection clause. In fact, the franking privilege has been withdrawn not
themselves point out. Curiously, the respondents would justify the distinction on the basis precisely of
only from the Judiciary but also the Office of Adult Education, the Institute of National Language; the
this need and, on this basis, deny the Judiciary the franking privilege while extending it to others less
Telecommunications Office; the Philippine Deposit Insurance Corporation; the National Historical
deserving.
Commission; the Armed Forces of the Philippines; the Armed Forces of the Philippines Ladies Steering
Committee; the City and Provincial Prosecutors; the Tanodbayan (Office of Special Prosecutor); the
Kabataang Barangay; the Commission on the Filipino Language; the Provincial and City Assessors; and In their Comment, the respondents point out that available data from the Postal Service Office show that
the National Council for the Welfare of Disabled Persons.11 from January 1988 to June 1992, the total volume of frank mails amounted to P90,424,175.00. Of this
amount, frank mails from the Judiciary and other agencies whose functions include the service of judicial
processes, such as the intervenor, the Department of Justice and the Office of the Ombudsman,
The equal protection of the laws is embraced in the concept of due process, as every unfair
amounted to P86,481,759. Frank mails coming fromthe Judiciary amounted to P73,574,864.00, and
discrimination offends the requirements of justice and fair play. It has nonetheless been embodied in a
those coming from the petitioners reached the total amount of P60,991,431.00. The respondents'
separate clause in Article III Sec. 1., of the Constitution to provide for a more, specific guaranty against
conclusion is that because of this considerable volume of mail from the Judiciary, the franking privilege
any form of undue favoritism or hostility from the government. Arbitrariness in general may be
must be withdrawn from it.
challenged on the basis of the due process clause. But if the particular act assailed partakes of an
unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.
The argument is self-defeating. The respondents are in effect saying that the franking privilege should be
extended only to those who do not need it very much, if at all, (like the widows of former Presidents) but
According to a long line of decisions, equal protection simply requires that all persons or things similarly
not to those who need it badly (especially the courts of justice). It is like saying that a person may be
situated should be treated alike, both as to rights conferred and responsibilities imposed, 12 Similar
allowed cosmetic surgery although it is not really necessary but not an operation that can save his life.
subjects, in other words, should not be treated differently, so as to give undue favor to some and
unjustly discriminate against others.
If the problem of the respondents is the loss of revenues from the franking privilege, the remedy, it
seems to us, is to withdraw it altogether from all agencies of government, including those who do not
The equal protection clause does not require the universal application of the laws on all persons or
need it. The problem is not solved by retaining it for some and withdrawing it from others, especially
things without distinction. This might in fact sometimes result in unequal protection, as where, for
where there is no substantial distinction between those favored, which may or may not need it at all,
example, a law prohibiting mature books to all persons, regardless of age, would benefit the morals of
and the Judiciary, which definitely needs it. The problem is not solved by violating the Constitution.
the youth but violate the liberty of adults. What the clause requires is equality among equals as
determined according to a valid classification. By classification is meant the grouping of persons or things
similar to each other in certain particulars and different from all others in these same particulars. 13
In lumping the Judiciary with the other offices from which the franking privilege has been withdrawn,
Section 35 has placed the courts of justice in a category to which it does not belong. If it recognizes the
need of the President of the Philippines and the members of Congress for the franking privilege, there is
no reason why it should not recognize a similar and in fact greater need on the part of the Judiciary for
such privilege. While we may appreciate the withdrawal of the franking privilege from the Armed Forces
of the Philippines Ladies Steering Committee, we fail to understand why the Supreme Court should be
similarly treated as that Committee. And while we may concede the need of the National Census and
Statistics Office for the franking privilege, we are intrigued that a similar if not greater need is not
recognized in the courts of justice.
(On second thought, there does not seem to be any justifiable need for withdrawing the privilege from
the Armed Forces of the Philippines Ladies Steering Committee, which, like former Presidents of the
Philippines or their widows, does not send as much frank mail as the Judiciary.)
It is worth observing that the Philippine Postal Corporation, as a government-controlled corporation, was
created and is expected to operate for the purpose of promoting the public service. While it may have
been established primarily for private gain, it cannot excuse itself from performing certain functions for
the benefit of the public in exchange for the franchise extended to it by the government and the many
advantages it enjoys under its charter.14 Among the services it should be prepared to extend is free
carriage of mail for certain offices of the government that need the franking privilege in the discharge of
their own public functions.
We also note that under Section 9 of the law, the Corporation is capitalized at P10 billion pesos, 55% of
which is supplied by the Government, and that it derives substantial revenues from the sources
enumerated in Section 10, on top of the exemptions it enjoys. It is not likely that the retention of the
franking privilege of the Judiciary will cripple the Corporation.
At this time when the Judiciary is being faulted for the delay in the administration of justice, the
withdrawal from it of the franking privilege can only further deepen this serious problem. The volume of
judicial mail, as emphasized by the respondents themselves, should stress the dependence of the courts
of justice on the postal service for communicating with lawyers and litigants as part of the judicial
process. The Judiciary has the lowest appropriation in the national budget compared to the Legislative
and Executive Departments; of the P309 billion budgeted for 1993, only .84%, or less than 1%, is alloted
for the judiciary. It should not be hard to imagine the increased difficulties of our courts if they have to
affix a purchased stamp to every process they send in the discharge of their judicial functions.
We are unable to agree with the respondents that Section 35 of R.A. No. 7354 represents a valid exercise
of discretion by the Legislature under the police power. On the contrary, we find its repealing clause to
be a discriminatory provision that denies the Judiciary the equal protection of the laws guaranteed for all
persons or things similarly situated. The distinction made by the law is superficial. It is not based on
substantial distinctions that make real differences between the Judiciary and the grantees of the franking
privilege.
This is not a question of wisdom or power into which the Judiciary may not intrude. It is a matter of
arbitrariness that this Court has the duty and power to correct.
IV
In sum, we sustain R.A. No. 7354 against the attack that its subject is not expressed in its title and that it
was not passed in accordance with the prescribed procedure. However, we annul Section 35 of the law
as violative of Article 3, Sec. 1, of the Constitution providing that no person shall "be deprived of the
equal protection of laws."
We arrive at these conclusions with a full awareness of the criticism it is certain to provoke. While ruling
against the discrimination in this case, we may ourselves be accused of similar discrimination through
the exercise of our ultimate power in our own favor. This is inevitable. Criticism of judicial conduct,
however undeserved, is a fact of life in the political system that we are prepared to accept.. As judges,
we cannot debate with our detractors. We can only decide the cases before us as law imposes on us the
duty to be fair and our own conscience gives us the light to be right.
ACCORDINGLY, the petition is partially GRANTED and Section 35 of R.A. No. 7354 is declared
UNCONSTITUTIONAL. Circular No. 92-28 is SET ASIDE insofar as it withdraws the franking privilege from
the Supreme Court, the Court of Appeals, the Regional trail Courts, the Municipal trial Courts, and the
National Land Registration Authority and its Register of Deeds to all of which offices the said privilege
shall be RESTORED. The temporary restraining order dated June 2, 1992, is made permanent.
SO ORDERED.
G.R. No. 184849 February 13, 2009
SPOUSES PNP DIRECTOR ELISEO D. DELA PAZ (Ret.) and MARIA FE C. DELA PAZ, Petitioners,
vs.
SENATE COMMITTEE ON FOREIGN RELATIONS and the SENATE SERGEANT-AT-ARMS JOSE BALAJADIA,
JR., Respondents.
RESOLUTION
NACHURA, J.:
This is a Petition for Certiorari and Prohibition1 under Rule 65 of the Rules of Court filed on October 28,
2008 by petitioners-spouses General (Ret.) Eliseo D. dela Paz (Gen. Dela Paz) and Mrs. Maria Fe C. dela
Paz (Mrs. Dela Paz) assailing, allegedly for having been rendered with grave abuse of discretion
amounting to lack or excess of jurisdiction, the orders of respondent Senate Foreign Relations
Committee (respondent Committee), through its Chairperson, Senator Miriam Defensor-Santiago
(Senator Santiago), (1) denying petitioners’ Challenge to Jurisdiction with Motion to Quash Subpoenae
and (2) commanding respondent Senate Sergeant-at-Arms Jose Balajadia, Jr. (Balajadia) to immediately
arrest petitioners during the Senate committee hearing last October 23, 2008. The petition thus prays
that respondent Committee be enjoined from conducting its hearings involving petitioners, and to enjoin
Balajadia from implementing the verbal arrest order against them.
The antecedents are as follow –
On October 6, 2008, a Philippine delegation of eight (8) senior Philippine National Police (PNP) officers
arrived in Moscow, Russia to attend the 77th General Assembly Session of the International Criminal
Police Organization (ICPO)-INTERPOL in St. Petersburg from October 6-10, 2008. With the delegation was
Gen. Dela Paz, then comptroller and special disbursing officer of the PNP. Gen. Dela Paz, however, was to
retire from the PNP on October 9, 2008.
On October 11, 2008, Gen. Dela Paz was apprehended by the local authorities at the Moscow airport
departure area for failure to declare in written form the 105,000 euros [approximately ₱6,930,000.00]
found in his luggage. In addition, he was also found to have in his possession 45,000 euros (roughly
equivalent to ₱2,970,000.00).
Petitioners were detained in Moscow for questioning. After a few days, Gen. Dela Paz and the PNP
delegation were allowed to return to the Philippines, but the Russian government confiscated the euros.
On October 21, 2008, Gen. Dela Paz arrived in Manila, a few days after Mrs. Dela Paz. Awaiting them
were subpoenae earlier issued by respondent Committee for the investigation it was to conduct on the
Moscow incident on October 23, 2008.
On October 23, 2008, respondent Committee held its first hearing. Instead of attending the hearing,
petitioners filed with respondent Committee a pleading denominated Challenge to Jurisdiction with
Motion to Quash Subpoena.2 Senator Santiago emphatically defended respondent Committee’s
jurisdiction and commanded Balajadia to arrest petitioners.
Hence, this Petition.
Petitioners argue that respondent Committee is devoid of any jurisdiction to investigate the Moscow
incident as the matter does not involve state to state relations as provided in paragraph 12, Section 13,
Rule 10 of the Senate Rules of Procedure (Senate Rules). They further claim that respondent Committee
violated the same Senate Rules when it issued the warrant of arrest without the required signatures of
the majority of the members of respondent Committee. They likewise assail the very same Senate Rules
because the same were not published as required by the Constitution, and thus, cannot be used as the
basis of any investigation involving them relative to the Moscow incident.
Respondent Committee filed its Comment3 on January 22, 2009.
The petition must inevitably fail.
First. Section 16(3), Article VI of the Philippine Constitution states:
"Each House shall determine the rules of its proceedings."
This provision has been traditionally construed as a grant of full discretionary authority to the Houses of
Congress in the formulation, adoption and promulgation of its own rules. As such, the exercise of this
power is generally exempt from judicial supervision and interference, except on a clear showing of such
arbitrary and improvident use of the power as will constitute a denial of due process.4
The challenge to the jurisdiction of the Senate Foreign Relations Committee, raised by petitioner in the
case at bench, in effect, asks this Court to inquire into a matter that is within the full discretion of the
Senate. The issue partakes of the nature of a political question that, in Tañada v. Cuenco,5 was
characterized as a question which, under the Constitution, is to be decided by the people in their
sovereign capacity, or in regard to which full discretionary authority has been delegated to the legislative
or executive branch of the government. Further, pursuant to this constitutional grant of virtually
unrestricted authority to determine its own rules, the Senate is at liberty to alter or modify these rules at
any time it may see fit, subject only to the imperatives of quorum, voting and publication.
Thus, it is not for this Court to intervene in what is clearly a question of policy, an issue dependent upon
the wisdom, not the legality, of the Senate’s action.
Second. Even if it is within our power to inquire into the validity of the exercise of jurisdiction over the
petitioners by the Senate Foreign Relations Committee, we are convinced that respondent Committee
has acted within the proper sphere of its authority.lawphil.net
Paragraph 12, Section 13, Rule 10 of the Senate Rules provides:
12) Committee on Foreign Relations. – Fifteen (15) members. All matters relating to the relations of the
Philippines with other nations generally; diplomatic and consular services; the Association of Southeast
Asian Nations; the United Nations Organization and its agencies; multi-lateral organizations, all
international agreements, obligations and contracts; and overseas Filipinos.
A reading of the above provision unmistakably shows that the investigation of the Moscow incident
involving petitioners is well within the respondent Committee’s jurisdiction.
The Moscow incident could create ripples in the relations between the Philippines and Russia. Gen. Dela
Paz went to Moscow in an official capacity, as a member of the Philippine delegation to the INTERPOL
Conference in St. Petersburg, carrying a huge amount of "public" money ostensibly to cover the
expenses to be incurred by the delegation. For his failure to comply with immigration and currency laws,
the Russian government confiscated the money in his possession and detained him and other members
of the delegation in Moscow.
Furthermore, the matter affects Philippine international obligations. We take judicial notice of the fact
that the Philippines is a state-party to the United Nations Convention Against Corruption and the United
Nations Convention Against Transnational Organized Crime. The two conventions contain provisions
dealing with the movement of considerable foreign
currency across borders.6 The Moscow incident would reflect on our country’s compliance with the
obligations required of state-parties under these conventions. Thus, the respondent Committee can
properly inquire into this matter, particularly as to the source and purpose of the funds discovered in
Moscow as this would involve the Philippines’ commitments under these conventions.
Third. The Philippine Senate has decided that the legislative inquiry will be jointly conducted by the
respondent Committee and the Senate Committee on Accountability of Public Officers and Investigations
(Blue Ribbon Committee).
Pursuant to paragraph 36, Section 13, Rule 10 of the Senate Rules, the Blue Ribbon Committee may
conduct investigations on all matters relating to malfeasance, misfeasance and nonfeasance in office by
officers and employees of the government, its branches, agencies, subdivisions and instrumentalities,
and on any matter of public interest on its own initiative or brought to its attention by any of its
members. It is, thus, beyond cavil that the Blue Ribbon Committee can investigate Gen. Dela Paz, a
retired PNP general and member of the official PNP delegation to the INTERPOL Conference in Russia,
who had with him millions which may have been sourced from public funds.
Fourth. Subsequent to Senator Santiago’s verbal command to Balajadia to arrest petitioners, the
Philippine Senate issued a formal written Order7 of arrest, signed by ten (10) senators, with the Senate
President himself approving it, in accordance with the Senate Rules.
Fifth. The Philippine Senate has already published its Rules of Procedure Governing Inquiries in Aid of
Legislation in two newspapers of general circulation.8
Sixth. The arrest order issued against the petitioners has been rendered ineffectual. In the legislative ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,
inquiry held on November 15, 2008, jointly by the respondent Committee and the Senate Blue Ribbon vs.
Committee, Gen. Dela Paz voluntarily appeared and answered the questions propounded by the HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent.
Committee members. Having submitted himself to the jurisdiction of the Senate Committees, there was
no longer any necessity to implement the order of arrest. Furthermore, in the same hearing, Senator
x-------------------------x
Santiago granted the motion of Gen. Dela Paz to dispense with the presence of Mrs. Dela Paz for
humanitarian considerations.9 Consequently, the order for her arrest was effectively withdrawn.
G.R. No. 169834 April 20, 2006
WHEREFORE, the petition is DISMISSED for lack of merit and for being moot and academic.
PDP- LABAN, Petitioner,
vs.
SO ORDERED.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.

G.R. No. 169777* April 20, 2006

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

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as Senate President,
G.R. No. 171246 April 20, 2006
JUAN M. FLAVIER, in his capacity as Senate President Pro Tempore, FRANCIS N. PANGILINAN, in his
capacity as Majority Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as Minority Leader, SENATORS
RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY EJERCITO ESTRADA, LUISA "LOI" JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR AMORANDO,
EJERCITO ESTRADA, JUAN PONCE ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B. JOVY C. BERNABE, BERNARD
M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and MAR ROXAS, Petitioners, L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED BAR FOR THE PHILIPPINES, Petitioners,
vs. vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of the
Philippines, Respondents. DECISION

x-------------------------x CARPIO MORALES, J.:

G.R. No. 169659 April 20, 2006 A transparent government is one of the hallmarks of a truly republican state. Even in the early history of
republican thought, however, it has been recognized that the head of government may keep certain
BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep. CRISPIN information confidential in pursuit of the public interest. Explaining the reason for vesting executive
BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL VIRADOR, power in only one magistrate, a distinguished delegate to the U.S. Constitutional Convention said:
COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE DEFENSE OF LIBERTIES (CODAL) "Decision, activity, secrecy, and dispatch will generally characterize the proceedings of one man, in a
represented by ATTY. REMEDIOS BALBIN, Petitioners, much more eminent degree than the proceedings of any greater number; and in proportion as the
vs. number is increased, these qualities will be diminished."1
EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria Macapagal-
Arroyo, Respondent. History has been witness, however, to the fact that the power to withhold information lends itself to
abuse, hence, the necessity to guard it zealously.
x-------------------------x
The present consolidated petitions for certiorari and prohibition proffer that the President has abused
G.R. No. 169660 April 20, 2006 such power by issuing Executive Order No. 464 (E.O. 464) last September 28, 2005. They thus pray for its
declaration as null and void for being unconstitutional.
FRANCISCO I. CHAVEZ, Petitioner,
vs. In resolving the controversy, this Court shall proceed with the recognition that the issuance under review
EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his capacity as has come from a co-equal branch of government, which thus entitles it to a strong presumption of
Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief of Staff, Respondents. constitutionality. Once the challenged order is found to be indeed violative of the Constitution, it is duty-
bound to declare it so. For the Constitution, being the highest expression of the sovereign will of the
Filipino people, must prevail over any issuance of the government that contravenes its mandates.
x-------------------------x

In the exercise of its legislative power, the Senate of the Philippines, through its various Senate
G.R. No. 169667 April 20, 2006
Committees, conducts inquiries or investigations in aid of legislation which call for, inter alia, the
attendance of officials and employees of the executive department, bureaus, and offices including those
employed in Government Owned and Controlled Corporations, the Armed Forces of the Philippines
(AFP), and the Philippine National Police (PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole issued invitations to various
officials of the Executive Department for them to appear on September 29, 2005 as resource speakers in
a public hearing on the railway project of the North Luzon Railways Corporation with the China National
Machinery and Equipment Group (hereinafter North Rail Project). The public hearing was sparked by a
privilege speech of Senator Juan Ponce Enrile urging the Senate to investigate the alleged overpricing
and other unlawful provisions of the contract covering the North Rail Project.
The Senate Committee on National Defense and Security likewise issued invitations2 dated September
22, 2005 to the following officials of the AFP: the Commanding General of the Philippine Army, Lt. Gen.
Hermogenes C. Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of
Staff for Intelligence of the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence Service of the AFP
Brig. Gen. Marlu Q. Quevedo; Assistant Superintendent of the Philippine Military Academy (PMA) Brig.
Gen. Francisco V. Gudani; and Assistant Commandant, Corps of Cadets of the PMA, Col. Alexander F.
Balutan, for them to attend as resource persons in a public hearing scheduled on September 28, 2005 on
the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr., delivered on June 6, 2005 entitled
"Bunye has Provided Smoking Gun or has Opened a Can of Worms that Show Massive Electoral Fraud in
the Presidential Election of May 2005"; (2) Privilege Speech of Senator Jinggoy E. Estrada delivered on
July 26, 2005 entitled "The Philippines as the Wire-Tapping Capital of the World"; (3) Privilege Speech of
Senator Rodolfo Biazon delivered on August 1, 2005 entitled "Clear and Present Danger"; (4) Senate
Resolution No. 285 filed by Senator Maria Ana Consuelo Madrigal – Resolution Directing the Committee
on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, and in the National
Interest, on the Role of the Military in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No.
295 filed by Senator Biazon – Resolution Directing the Committee on National Defense and Security to
Conduct an Inquiry, in Aid of Legislation, on the Wire-Tapping of the President of the Philippines.
Also invited to the above-said hearing scheduled on September 28 2005 was the AFP Chief of Staff,
General Generoso S. Senga who, by letter3 dated September 27, 2005, requested for its postponement
"due to a pressing operational situation that demands [his utmost personal attention" while "some of
the invited AFP officers are currently attending to other urgent operational matters."
On September 28, 2005, Senate President Franklin M. Drilon received from Executive Secretary Eduardo
R. Ermita a letter4 dated September 27, 2005 "respectfully request[ing] for the postponement of the
hearing [regarding the NorthRail project] to which various officials of the Executive Department have
been invited" in order to "afford said officials ample time and opportunity to study and prepare for the
various issues so that they may better enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5 Executive Secretary Ermita that the Senators "are unable to
accede to [his request]" as it "was sent belatedly" and "[a]ll preparations and arrangements as well as
notices to all resource persons were completed [the previous] week."
Senate President Drilon likewise received on September 28, 2005 a letter6 from the President of the
North Luzon Railways Corporation Jose L. Cortes, Jr. requesting that the hearing on the NorthRail project
be postponed or cancelled until a copy of the report of the UP Law Center on the contract agreements
relative to the project had been secured.
On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the Principle of
Separation of Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public
Officials Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other
Purposes,"7 which, pursuant to Section 6 thereof, took effect immediately. The salient provisions of the
Order are as follows:
SECTION 1. Appearance by Heads of Departments Before Congress. – In accordance with Article VI,
Section 22 of the Constitution and to implement the Constitutional provisions on the separation of
powers between co-equal branches of the government, all heads of departments of the Executive
Branch of the government shall secure the consent of the President prior to appearing before either
House of Congress.
When the security of the State or the public interest so requires and the President so states in writing,
the appearance shall only be conducted in executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege. –
(a) Nature and Scope. - The rule of confidentiality based on executive privilege is fundamental to the
operation of government and rooted in the separation of powers under the Constitution (Almonte vs.
Vasquez, G.R. No. 95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of Conduct and
Ethical Standards for Public Officials and Employees provides that Public Officials and Employees shall
not use or divulge confidential or classified information officially known to them by reason of their office
and not made available to the public to prejudice the public interest.
Executive privilege covers all confidential or classified information between the President and the public
officers covered by this executive order, including:
Conversations and correspondence between the President and the public official covered by this
executive order (Almonte vs. Vasquez G.R. No. 95367, 23 May 1995; Chavez v. Public Estates Authority,
G.R. No. 133250, 9 July 2002);
Military, diplomatic and other national security matters which in the interest of national security should
not be divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission
on Good Government, G.R. No. 130716, 9 December 1998).
Information between inter-government agencies prior to the conclusion of treaties and executive
agreements (Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December
1998);
Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on Good Government,
G.R. No. 130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public Estates Authority, G.R. No. 133250,
9 July 2002).
(b) Who are covered. – The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the department heads are covered by
the executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such other officers who in the
judgment of the Chief of Staff are covered by the executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other
officers who in the judgment of the Chief of the PNP are covered by the executive privilege;
Senior national security officials who in the judgment of the National Security Adviser are covered by the
executive privilege; and
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. – All public officials enumerated in
Section 2 (b) hereof shall secure prior consent of the President prior to appearing before either House of
Congress to ensure the observance of the principle of separation of powers, adherence to the rule on
executive privilege and respect for the rights of public officials appearing in inquiries in aid of legislation.
(Emphasis and underscoring supplied)
Also on September 28, 2005, Senate President Drilon received from Executive Secretary Ermita a copy of
E.O. 464, and another letter8 informing him "that officials of the Executive Department invited to appear
at the meeting [regarding the NorthRail project] will not be able to attend the same without the consent
of the President, pursuant to [E.O. 464]" and that "said officials have not secured the required consent
from the President." On even date which was also the scheduled date of the hearing on the alleged
wiretapping, Gen. Senga sent a letter9 to Senator Biazon, Chairperson of the Committee on National
Defense and Security, informing him "that per instruction of [President Arroyo], thru the Secretary of
National Defense, no officer of the [AFP] is authorized to appear before any Senate or Congressional
hearings without seeking a written approval from the President" and "that no approval has been granted
by the President to any AFP officer to appear before the public hearing of the Senate Committee on
National Defense and Security scheduled [on] 28 September 2005."
Despite the communications received from Executive Secretary Ermita and Gen. Senga, the investigation
scheduled by the Committee on National Defense and Security pushed through, with only Col. Balutan
and Brig. Gen. Gudani among all the AFP officials invited attending.
For defying President Arroyo’s order barring military personnel from testifying before legislative inquiries
without her approval, Brig. Gen. Gudani and Col. Balutan were relieved from their military posts and
were made to face court martial proceedings.
As to the NorthRail project hearing scheduled on September 29, 2005, Executive Secretary Ermita, citing
E.O. 464, sent letter of regrets, in response to the invitations sent to the following government officials:
Light Railway Transit Authority Administrator Melquiades Robles, Metro Rail Transit Authority
Administrator Roberto Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then
Presidential Legal Counsel Merceditas Gutierrez, Department of Transportation and Communication
(DOTC) Undersecretary Guiling Mamonding, DOTC Secretary Leandro Mendoza, Philippine National
Railways General Manager Jose Serase II, Monetary Board Member Juanita Amatong, Bases Conversion
Development Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L. Neri.10 NorthRail
President Cortes sent personal regrets likewise citing E.O. 464.11
On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and 169667, for certiorari
and prohibition, were filed before this Court challenging the constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives Members Satur
Ocampo, Crispin Beltran, Rafael Mariano, Liza Maza, Joel Virador and Teodoro Casino, Courage, an
organization of government employees, and Counsels for the Defense of Liberties (CODAL), a group of
lawyers dedicated to the promotion of justice, democracy and peace, all claiming to have standing to file
the suit because of the transcendental importance of the issues they posed, pray, in their petition that
E.O. 464 be declared null and void for being unconstitutional; that respondent Executive Secretary
Ermita, in his capacity as Executive Secretary and alter-ego of President Arroyo, be prohibited from
imposing, and threatening to impose sanctions on officials who appear before Congress due to
congressional summons. Additionally, petitioners claim that E.O. 464 infringes on their rights and
impedes them from fulfilling their respective obligations. Thus, Bayan Muna alleges that E.O. 464
infringes on its right as a political party entitled to participate in governance; Satur Ocampo, et al. allege
that E.O. 464 infringes on their rights and duties as members of Congress to conduct investigation in aid
of legislation and conduct oversight functions in the implementation of laws; Courage alleges that the
tenure of its members in public office is predicated on, and threatened by, their submission to the
requirements of E.O. 464 should they be summoned by Congress; and CODAL alleges that its members
have a sworn duty to uphold the rule of law, and their rights to information and to transparent
governance are threatened by the imposition of E.O. 464.
In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional rights as a citizen,
taxpayer and law practitioner, are affected by the enforcement of E.O. 464, prays in his petition that E.O.
464 be declared null and void for being unconstitutional.
In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG), alleging that as a coalition of 17 legal
resource non-governmental organizations engaged in developmental lawyering and work with the poor
and marginalized sectors in different parts of the country, and as an organization of citizens of the
Philippines and a part of the general public, it has legal standing to institute the petition to enforce its
constitutional right to information on matters of public concern, a right which was denied to the public
by E.O. 464,13 prays, that said order be declared null and void for being unconstitutional and that
respondent Executive Secretary Ermita be ordered to cease from implementing it.
On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital interest in the
resolution of the issue of the validity of E.O. 464 for it stands to suffer imminent and material injury, as it
has already sustained the same with its continued enforcement since it directly interferes with and
impedes the valid exercise of the Senate’s powers and functions and conceals information of great public
interest and concern, filed its petition for certiorari and prohibition, docketed as G.R. No. 169777 and
prays that E.O. 464 be declared unconstitutional.
On October 14, 2005, PDP-Laban, a registered political party with members duly elected into the
Philippine Senate and House of Representatives, filed a similar petition for certiorari and prohibition,
docketed as G.R. No. 169834, alleging that it is affected by the challenged E.O. 464 because it hampers
its legislative agenda to be implemented through its members in Congress, particularly in the conduct of
inquiries in aid of legislation and transcendental issues need to be resolved to avert a constitutional crisis
between the executive and legislative branches of the government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation to Gen. Senga for
him and other military officers to attend the hearing on the alleged wiretapping scheduled on February
10, 2005. Gen. Senga replied, however, by letter15 dated February 8, 2006, that "[p]ursuant to Executive
Order No. 464, th[e] Headquarters requested for a clearance from the President to allow [them] to
appear before the public hearing" and that "they will attend once [their] request is approved by the
President." As none of those invited appeared, the hearing on February 10, 2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on Agriculture and Food and the
Blue Ribbon Committee on the alleged mismanagement and use of the fertilizer fund under the
Ginintuang Masaganang Ani program of the Department of Agriculture (DA), several Cabinet officials
were invited to the hearings scheduled on October 5 and 26, November 24 and December 12, 2005 but
most of them failed to attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix Jose
Montes, Fertilizer and Pesticide Authority Executive Director Norlito R. Gicana,17 and those from the
Department of Budget and Management18 having invoked E.O. 464.
In the budget hearings set by the Senate on February 8 and 13, 2006, Press Secretary and Presidential
Spokesperson Ignacio R. Bunye,19 DOJ Secretary Raul M. Gonzalez20 and Department of Interior and Local
Government Undersecretary Marius P. Corpus21 communicated their inability to attend due to lack of
appropriate clearance from the President pursuant to E.O. 464. During the February 13, 2005 budget
hearing, however, Secretary Bunye was allowed to attend by Executive Secretary Ermita.
On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the Board of Governors of
the Integrated Bar of the Philippines, as taxpayers, and the Integrated Bar of the Philippines as the
official organization of all Philippine lawyers, all invoking their constitutional right to be informed on
matters of public interest, filed their petition for certiorari and prohibition, docketed as G.R. No. 171246,
and pray that E.O. 464 be declared null and void.
All the petitions pray for the issuance of a Temporary Restraining Order enjoining respondents from
implementing, enforcing, and observing E.O. 464.
In the oral arguments on the petitions conducted on February 21, 2006, the following substantive issues
were ventilated: (1) whether respondents committed grave abuse of discretion in implementing E.O. 464
prior to its publication in the Official Gazette or in a newspaper of general circulation; and (2) whether
E.O. 464 violates the following provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7,
Art. IV. Sec. 1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The procedural issue of
whether there is an actual case or controversy that calls for judicial review was not taken up; instead, the
parties were instructed to discuss it in their respective memoranda.
After the conclusion of the oral arguments, the parties were directed to submit their respective
memoranda, paying particular attention to the following propositions: (1) that E.O. 464 is, on its face,
unconstitutional; and (2) assuming that it is not, it is unconstitutional as applied in four instances,
namely: (a) the so called Fertilizer scam; (b) the NorthRail investigation (c) the Wiretapping activity of the
ISAFP; and (d) the investigation on the Venable contract.22
Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on March 7, 2006, while
those in G.R. No. 16966725 and G.R. No. 16983426 filed theirs the next day or on March 8, 2006.
Petitioners in G.R. No. 171246 did not file any memorandum.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to file
memorandum27 was granted, subsequently filed a manifestation28 dated March 14, 2006 that it would no
longer file its memorandum in the interest of having the issues resolved soonest, prompting this Court to
issue a Resolution reprimanding them.29
Petitioners submit that E.O. 464 violates the following constitutional provisions:
Art. VI, Sec. 2130
Art. VI, Sec. 2231
Art. VI, Sec. 132
Art. XI, Sec. 133
Art. III, Sec. 734
Art. III, Sec. 435
Art. XIII, Sec. 16 36
Art. II, Sec. 2837
Respondents Executive Secretary Ermita et al., on the other hand, pray in their consolidated
memorandum38 on March 13, 2006 for the dismissal of the petitions for lack of merit.
The Court synthesizes the issues to be resolved as follows:
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;
2. Whether E.O. 464 violates the right of the people to information on matters of public
concern; and
3. Whether respondents have committed grave abuse of discretion when they implemented
E.O. 464 prior to its publication in a newspaper of general circulation.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of E.O. 464, ascertainment of whether the
requisites for a valid exercise of the Court’s power of judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial review is subject to
limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial
power; (2) the person challenging the act must have standing to challenge the validity of the subject act
or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he
has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be
the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual case or controversy where
the disagreement between the parties lies, discussion of the rest of the requisites shall be omitted.
Standing
Respondents, through the Solicitor General, assert that the allegations in G.R. Nos. 169659, 169660 and
169667 make it clear that they, adverting to the non-appearance of several officials of the executive
department in the investigations called by the different committees of the Senate, were brought to
vindicate the constitutional duty of the Senate or its different committees to conduct inquiry in aid of
legislation or in the exercise of its oversight functions. They maintain that Representatives Ocampo et al.
have not shown any specific prerogative, power, and privilege of the House of Representatives which
had been effectively impaired by E.O. 464, there being no mention of any investigation called by the
House of Representatives or any of its committees which was aborted due to the implementation of E.O.
464.
As for Bayan Muna’s alleged interest as a party-list representing the marginalized and underrepresented,
and that of the other petitioner groups and individuals who profess to have standing as advocates and
defenders of the Constitution, respondents contend that such interest falls short of that required to
confer standing on them as parties "injured-in-fact."40
Respecting petitioner Chavez, respondents contend that Chavez may not claim an interest as a taxpayer
for the implementation of E.O. 464 does not involve the exercise of taxing or spending power.41
With regard to the petition filed by the Senate, respondents argue that in the absence of a personal or
direct injury by reason of the issuance of E.O. 464, the Senate and its individual members are not the
proper parties to assail the constitutionality of E.O. 464.
Invoking this Court’s ruling in National Economic Protectionism Association v. Ongpin42 and Valmonte v.
Philippine Charity Sweepstakes Office,43 respondents assert that to be considered a proper party, one
must have a personal and substantial interest in the case, such that he has sustained or will sustain direct
injury due to the enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not only for intelligent public
decision-making in a democratic system, but more especially for sound legislation45 is not disputed. E.O.
464, however, allegedly stifles the ability of the members of Congress to access information that is
crucial to law-making.46 Verily, the Senate, including its individual members, has a substantial and direct
interest over the outcome of the controversy and is the proper party to assail the constitutionality of
E.O. 464. Indeed, legislators have standing to maintain inviolate the prerogative, powers and privileges
vested by the Constitution in their office and are allowed to sue to question the validity of any official
action which they claim infringes their prerogatives as legislators.47
It is well-settled that when suing as a citizen, the interest of the petitioner in assailing the
constitutionality of laws, presidential decrees, orders, and other regulations, must be direct and
personal. In Franciso v. House of Representatives,53 this Court held that when the proceeding involves
the assertion of a public right, the mere fact that he is a citizen satisfies the requirement of personal
interest.
As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in view of the
transcendental issues raised in its petition which this Court needs to resolve in order to avert a
constitutional crisis. For it to be accorded standing on the ground of transcendental importance,
however, it must establish (1) the character of the funds (that it is public) or other assets involved in the
case, (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the
public respondent agency or instrumentality of the government, and (3) the lack of any party with a
more direct and specific interest in raising the questions being raised.54 The first and last determinants
not being present as no public funds or assets are involved and petitioners in G.R. Nos. 169777 and
169659 have direct and specific interests in the resolution of the controversy, petitioner PDP-Laban is
bereft of standing to file its petition. Its allegation that E.O. 464 hampers its legislative agenda is vague
and uncertain, and at best is only a "generalized interest" which it shares with the rest of the political
parties. Concrete injury, whether actual or threatened, is that indispensable element of a dispute which
serves in part to cast it in a form traditionally capable of judicial resolution. 55 In fine, PDP-Laban’s alleged
interest as a political party does not suffice to clothe it with legal standing.
Actual Case or Controversy
Petitioners assert that an actual case exists, they citing the absence of the executive officials invited by
the Senate to its hearings after the issuance of E.O. 464, particularly those on the NorthRail project and
the wiretapping controversy.

In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino (Bayan Muna),
Respondents counter that there is no case or controversy, there being no showing that President Arroyo
Joel Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza
has actually withheld her consent or prohibited the appearance of the invited officials.56 These officials,
(Gabriela) are allowed to sue to question the constitutionality of E.O. 464, the absence of any claim that
they claim, merely communicated to the Senate that they have not yet secured the consent of the
an investigation called by the House of Representatives or any of its committees was aborted due to the
President, not that the President prohibited their attendance.57 Specifically with regard to the AFP
implementation of E.O. 464 notwithstanding, it being sufficient that a claim is made that E.O. 464
officers who did not attend the hearing on September 28, 2005, respondents claim that the instruction
infringes on their constitutional rights and duties as members of Congress to conduct investigation in aid
not to attend without the President’s consent was based on its role as Commander-in-Chief of the
of legislation and conduct oversight functions in the implementation of laws.
Armed Forces, not on E.O. 464.

The national political party, Bayan Muna, likewise meets the standing requirement as it obtained three
Respondents thus conclude that the petitions merely rest on an unfounded apprehension that the
seats in the House of Representatives in the 2004 elections and is, therefore, entitled to participate in
President will abuse its power of preventing the appearance of officials before Congress, and that such
the legislative process consonant with the declared policy underlying the party list system of affording
apprehension is not sufficient for challenging the validity of E.O. 464.
citizens belonging to marginalized and underrepresented sectors, organizations and parties who lack
well-defined political constituencies to contribute to the formulation and enactment of legislation that
will benefit the nation.48 The Court finds respondents’ assertion that the President has not withheld her consent or prohibited the
appearance of the officials concerned immaterial in determining the existence of an actual case or
controversy insofar as E.O. 464 is concerned. For E.O. 464 does not require either a deliberate
As Bayan Muna and Representatives Ocampo et al. have the standing to file their petitions, passing on
withholding of consent or an express prohibition issuing from the President in order to bar officials from
the standing of their co-petitioners Courage and Codal is rendered unnecessary.49
appearing before Congress.

In filing their respective petitions, Chavez, the ALG which claims to be an organization of citizens, and the
As the implementation of the challenged order has already resulted in the absence of officials invited to
incumbent members of the IBP Board of Governors and the IBP in behalf of its lawyer members,50 invoke
the hearings of petitioner Senate of the Philippines, it would make no sense to wait for any further event
their constitutional right to information on matters of public concern, asserting that the right to
before considering the present case ripe for adjudication. Indeed, it would be sheer abandonment of
information, curtailed and violated by E.O. 464, is essential to the effective exercise of other
duty if this Court would now refrain from passing on the constitutionality of E.O. 464.
constitutional rights51 and to the maintenance of the balance of power among the three branches of the
government through the principle of checks and balances.52
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials before Congress, deprives
Congress of the information in the possession of these officials. To resolve the question of whether such
withholding of information violates the Constitution, consideration of the general power of Congress to
obtain information, otherwise known as the power of inquiry, is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of Article VI of the Constitution
which reads:
SECTION 21. The Senate or the House of Representatives or any of its respective committees may
conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights
of persons appearing in or affected by such inquiries shall be respected. (Underscoring supplied)
This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution except that, in the
latter, it vests the power of inquiry in the unicameral legislature established therein – the Batasang
Pambansa – and its committees.
The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v. Nazareno,58 a case
decided in 1950 under that Constitution, the Court already recognized that the power of inquiry is
inherent in the power to legislate.
Arnault involved a Senate investigation of the reportedly anomalous purchase of the Buenavista and
Tambobong Estates by the Rural Progress Administration. Arnault, who was considered a leading witness
in the controversy, was called to testify thereon by the Senate. On account of his refusal to answer the
questions of the senators on an important point, he was, by resolution of the Senate, detained for
contempt. Upholding the Senate’s power to punish Arnault for contempt, this Court held:
Although there is no provision in the Constitution expressly investing either House of Congress with
power to make investigations and exact testimony to the end that it may exercise its legislative functions
advisedly and effectively, such power is so far incidental to the legislative function as to be implied. In
other words, the power of inquiry – with process to enforce it – is an essential and appropriate auxiliary
to the legislative function. A legislative body cannot legislate wisely or effectively in the absence of
information respecting the conditions which the legislation is intended to affect or change; and where
the legislative body does not itself possess the requisite information – which is not infrequently true –
recourse must be had to others who do possess it. Experience has shown that mere requests for such
information are often unavailing, and also that information which is volunteered is not always accurate
or complete; so some means of compulsion is essential to obtain what is needed.59 . . . (Emphasis and
underscoring supplied)
That this power of inquiry is broad enough to cover officials of the executive branch may be deduced
from the same case. The power of inquiry, the Court therein ruled, is co-extensive with the power to
legislate.60 The matters which may be a proper subject of legislation and those which may be a proper
subject of investigation are one. It follows that the operation of government, being a legitimate subject
for legislation, is a proper subject for investigation.
Thus, the Court found that the Senate investigation of the government transaction involved in Arnault
was a proper exercise of the power of inquiry. Besides being related to the expenditure of public funds of
which Congress is the guardian, the transaction, the Court held, "also involved government agencies
created by Congress and officers whose positions it is within the power of Congress to regulate or even
abolish."
Since Congress has authority to inquire into the operations of the executive branch, it would be
incongruous to hold that the power of inquiry does not extend to executive officials who are the most
familiar with and informed on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity
of information in the legislative process. If the information possessed by executive officials on the
operation of their offices is necessary for wise legislation on that subject, by parity of reasoning,
Congress has the right to that information and the power to compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy era," however, the right of
Congress to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than
executive or judicial power. It may thus be subjected to judicial review pursuant to the Court’s certiorari
powers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself might not properly be
in aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp
judicial functions. Parenthetically, one possible way for Congress to avoid such a result as occurred in
Bengzon is to indicate in its invitations to the public officials concerned, or to any person for that matter,
the possible needed statute which prompted the need for the inquiry. Given such statement in its
invitations, along with the usual indication of the subject of inquiry and the questions relative to and in
furtherance thereof, there would be less room for speculation on the part of the person invited on
whether the inquiry is in aid of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe the legislative power of
inquiry. The provision requires that the inquiry be done in accordance with the Senate or House’s duly
published rules of procedure, necessarily implying the constitutional infirmity of an inquiry conducted
without duly published rules of procedure. Section 21 also mandates that the rights of persons appearing
in or affected by such inquiries be respected, an imposition that obligates Congress to adhere to the
guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons
affected, even if they belong to the executive branch. Nonetheless, there may be exceptional
circumstances, none appearing to obtain at present, wherein a clear pattern of abuse of the legislative
power of inquiry might be established, resulting in palpable violations of the rights guaranteed to
members of the executive department under the Bill of Rights. In such instances, depending on the
particulars of each case, attempts by the Executive Branch to forestall these abuses may be accorded
judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized exemptions to the power of
inquiry, which exemptions fall under the rubric of "executive privilege." Since this term figures
prominently in the challenged order, it being mentioned in its provisions, its preambular clauses,62 and in
its very title, a discussion of executive privilege is crucial for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the
promulgation of the 1986 Constitution.63 Being of American origin, it is best understood in light of how it
has been defined and used in the legal literature of the United States.
Schwartz defines executive privilege as "the power of the Government to withhold information from the
public, the courts, and the Congress."64 Similarly, Rozell defines it as "the right of the President and high-
level executive branch officers to withhold information from Congress, the courts, and ultimately the
public."65
Executive privilege is, nonetheless, not a clear or unitary concept. 66 It has encompassed claims of varying
kinds.67 Tribe, in fact, comments that while it is customary to employ the phrase "executive privilege," it
may be more accurate to speak of executive privileges "since presidential refusals to furnish information
may be actuated by any of at least three distinct kinds of considerations, and may be asserted, with
differing degrees of success, in the context of either judicial or legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege invoked by U.S. Presidents,
beginning with Washington, on the ground that the information is of such nature that its disclosure
would subvert crucial military or diplomatic objectives. Another variety is the informer’s privilege, or the
privilege of the Government not to disclose the identity of persons who furnish information of violations
of law to officers charged with the enforcement of that law. Finally, a generic privilege for internal
deliberations has been said to attach to intragovernmental documents reflecting advisory opinions,
recommendations and deliberations comprising part of a process by which governmental decisions and
policies are formulated. 68
Tribe’s comment is supported by the ruling in In re Sealed Case, thus:
Since the beginnings of our nation, executive officials have claimed a variety of privileges to resist
disclosure of information the confidentiality of which they felt was crucial to fulfillment of the unique
role and responsibilities of the executive branch of our government. Courts ruled early that the executive
had a right to withhold documents that might reveal military or state secrets. The courts have also
granted the executive a right to withhold the identity of government informers in some circumstances
and a qualified right to withhold information related to pending investigations. x x x"69 (Emphasis and
underscoring supplied)
President’s claim of privilege, ruling that the privilege must be balanced against the public interest in the
fair administration of criminal justice. Notably, the Court was careful to clarify that it was not there
addressing the issue of claims of privilege in a civil litigation or against congressional demands for
information.
Cases in the U.S. which involve claims of executive privilege against Congress are rare.73 Despite frequent
assertion of the privilege to deny information to Congress, beginning with President Washington’s
refusal to turn over treaty negotiation records to the House of Representatives, the U.S. Supreme Court
has never adjudicated the issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit,
in a case decided earlier in the same year as Nixon, recognized the President’s privilege over his
conversations against a congressional subpoena.75 Anticipating the balancing approach adopted by the
U.S. Supreme Court in Nixon, the Court of Appeals weighed the public interest protected by the claim of
privilege against the interest that would be served by disclosure to the Committee. Ruling that the
balance favored the President, the Court declined to enforce the subpoena. 76
In this jurisdiction, the doctrine of executive privilege was recognized by this Court in Almonte v.
Vasquez.77 Almonte used the term in reference to the same privilege subject of Nixon. It quoted the
following portion of the Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and correspondences, like the
claim of confidentiality of judicial deliberations, for example, has all the values to which we accord
deference for the privacy of all citizens and, added to those values, is the necessity for protection of the
public interest in candid, objective, and even blunt or harsh opinions in Presidential decision-making. A
President and those who assist him must be free to explore alternatives in the process of shaping policies
and making decisions and to do so in a way many would be unwilling to express except privately. These
are the considerations justifying a presumptive privilege for Presidential communications. The privilege is
fundamental to the operation of government and inextricably rooted in the separation of powers under
the Constitution x x x " (Emphasis and underscoring supplied)

The entry in Black’s Law Dictionary on "executive privilege" is similarly instructive regarding the scope of
Almonte involved a subpoena duces tecum issued by the Ombudsman against the therein petitioners. It
the doctrine.
did not involve, as expressly stated in the decision, the right of the people to information.78 Nonetheless,
the Court recognized that there are certain types of information which the government may withhold
This privilege, based on the constitutional doctrine of separation of powers, exempts the executive from from the public, thus acknowledging, in substance if not in name, that executive privilege may be
disclosure requirements applicable to the ordinary citizen or organization where such exemption is claimed against citizens’ demands for information.
necessary to the discharge of highly important executive responsibilities involved in maintaining
governmental operations, and extends not only to military and diplomatic secrets but also to documents
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law holding that there is
integral to an appropriate exercise of the executive’ domestic decisional and policy making functions,
a "governmental privilege against public disclosure with respect to state secrets regarding military,
that is, those documents reflecting the frank expression necessary in intra-governmental advisory and
diplomatic and other national security matters."80 The same case held that closed-door Cabinet meetings
deliberative communications.70 (Emphasis and underscoring supplied)
are also a recognized limitation on the right to information.

That a type of information is recognized as privileged does not, however, necessarily mean that it would
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to information does not
be considered privileged in all instances. For in determining the validity of a claim of privilege, the
extend to matters recognized as "privileged information under the separation of powers,"82 by which the
question that must be asked is not only whether the requested information falls within one of the
Court meant Presidential conversations, correspondences, and discussions in closed-door Cabinet
traditional privileges, but also whether that privilege should be honored in a given procedural setting.71
meetings. It also held that information on military and diplomatic secrets and those affecting national
security, and information on investigations of crimes by law enforcement agencies before the
The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided in 1974. In issue in prosecution of the accused were exempted from the right to information.
that case was the validity of President Nixon’s claim of executive privilege against a subpoena issued by a
district court requiring the production of certain tapes and documents relating to the Watergate
From the above discussion on the meaning and scope of executive privilege, both in the United States
investigations. The claim of privilege was based on the President’s general interest in the confidentiality
and in this jurisdiction, a clear principle emerges. Executive privilege, whether asserted against Congress,
of his conversations and correspondence. The U.S. Court held that while there is no explicit reference to
the courts, or the public, is recognized only in relation to certain types of information of a sensitive
a privilege of confidentiality in the U.S. Constitution, it is constitutionally based to the extent that it
character. While executive privilege is a constitutional concept, a claim thereof may be valid or not
relates to the effective discharge of a President’s powers. The Court, nonetheless, rejected the
depending on the ground invoked to justify it and the context in which it is made. Noticeably absent is
any recognition that executive officials are exempt from the duty to disclose information by the mere
fact of being executive officials. Indeed, the extraordinary character of the exemptions indicates that the
presumption inclines heavily against executive secrecy and in favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by them to secure the consent
of the President prior to appearing before Congress. There are significant differences between the two
provisions, however, which constrain this Court to discuss the validity of these provisions separately.
Section 1 specifically applies to department heads. It does not, unlike Section 3, require a prior
determination by any official whether they are covered by E.O. 464. The President herself has, through
the challenged order, made the determination that they are. Further, unlike also Section 3, the coverage
of department heads under Section 1 is not made to depend on the department heads’ possession of
any information which might be covered by executive privilege. In fact, in marked contrast to Section 3
vis-à-vis Section 2, there is no reference to executive privilege at all. Rather, the required prior consent
under Section 1 is grounded on Article VI, Section 22 of the Constitution on what has been referred to as
the question hour.
SECTION 22. The heads of departments may upon their own initiative, with the consent of the President,
or upon the request of either House, as the rules of each House shall provide, appear before and be
heard by such House on any matter pertaining to their departments. Written questions shall be
submitted to the President of the Senate or the Speaker of the House of Representatives at least three
days before their scheduled appearance. Interpellations shall not be limited to written questions, but
may cover matters related thereto. When the security of the State or the public interest so requires and
the President so states in writing, the appearance shall be conducted in executive session.
Determining the validity of Section 1 thus requires an examination of the meaning of Section 22 of
Article VI. Section 22 which provides for the question hour must be interpreted vis-à-vis Section 21 which
provides for the power of either House of Congress to "conduct inquiries in aid of legislation." As the
following excerpt of the deliberations of the Constitutional Commission shows, the framers were aware
that these two provisions involved distinct functions of Congress.
MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the Question Hour] yesterday,
I noticed that members of the Cabinet cannot be compelled anymore to appear before the House of
Representatives or before the Senate. I have a particular problem in this regard, Madam President,
because in our experience in the Regular Batasang Pambansa – as the Gentleman himself has
experienced in the interim Batasang Pambansa – one of the most competent inputs that we can put in
our committee deliberations, either in aid of legislation or in congressional investigations, is the
testimonies of Cabinet ministers. We usually invite them, but if they do not come and it is a
congressional investigation, we usually issue subpoenas.
I want to be clarified on a statement made by Commissioner Suarez when he said that the fact that the
Cabinet ministers may refuse to come to the House of Representatives or the Senate [when requested
under Section 22] does not mean that they need not come when they are invited or subpoenaed by the
committee of either House when it comes to inquiries in aid of legislation or congressional investigation.
According to Commissioner Suarez, that is allowed and their presence can be had under Section 21. Does
the gentleman confirm this, Madam President?
MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to what was originally
the Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of legislation, under
which anybody for that matter, may be summoned and if he refuses, he can be held in contempt of the
House.83 (Emphasis and underscoring supplied)
A distinction was thus made between inquiries in aid of legislation and the question hour. While
attendance was meant to be discretionary in the question hour, it was compulsory in inquiries in aid of
legislation. The reference to Commissioner Suarez bears noting, he being one of the proponents of the
amendment to make the appearance of department heads discretionary in the question hour.
So clearly was this distinction conveyed to the members of the Commission that the Committee on Style,
precisely in recognition of this distinction, later moved the provision on question hour from its original
position as Section 20 in the original draft down to Section 31, far from the provision on inquiries in aid
of legislation. This gave rise to the following exchange during the deliberations:
MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style] We now go, Mr.
Presiding Officer, to the Article on Legislative and may I request the chairperson of the Legislative
Department, Commissioner Davide, to give his reaction.
THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is recognized.|avvphi|.net
MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the Question Hour. I propose
that instead of putting it as Section 31, it should follow Legislative Inquiries.
THE PRESIDING OFFICER. What does the committee say?
MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer.
MR. MAAMBONG. Actually, we considered that previously when we sequenced this but we reasoned
that in Section 21, which is Legislative Inquiry, it is actually a power of Congress in terms of its own
lawmaking; whereas, a Question Hour is not actually a power in terms of its own lawmaking power
because in Legislative Inquiry, it is in aid of legislation. And so we put Question Hour as Section 31. I hope
Commissioner Davide will consider this.
MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is precisely as a
complement to or a supplement of the Legislative Inquiry. The appearance of the members of Cabinet
would be very, very essential not only in the application of check and balance but also, in effect, in aid of
legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the suggestion of Commissioner
Davide. In other words, we are accepting that and so this Section 31 would now become Section 22.
Would it be, Commissioner Davide?
MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)
Consistent with their statements earlier in the deliberations, Commissioners Davide and Maambong
proceeded from the same assumption that these provisions pertained to two different functions of the
legislature. Both Commissioners understood that the power to conduct inquiries in aid of legislation is
different from the power to conduct inquiries during the question hour. Commissioner Davide’s only
concern was that the two provisions on these distinct powers be placed closely together, they being
complementary to each other. Neither Commissioner considered them as identical functions of
Congress.
The foregoing opinion was not the two Commissioners’ alone. From the above-quoted exchange,
Commissioner Maambong’s committee – the Committee on Style – shared the view that the two
provisions reflected distinct functions of Congress. Commissioner Davide, on the other hand, was
speaking in his capacity as Chairman of the Committee on the Legislative Department. His views may
thus be presumed as representing that of his Committee.
In the context of a parliamentary system of government, the "question hour" has a definite meaning. It is
a period of confrontation initiated by Parliament to hold the Prime Minister and the other ministers
accountable for their acts and the operation of the government,85 corresponding to what is known in
Britain as the question period. There was a specific provision for a question hour in the 1973
Constitution86 which made the appearance of ministers mandatory. The same perfectly conformed to the
parliamentary system established by that Constitution, where the ministers are also members of the
legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the immediate accountability of the
Prime Minister and the Cabinet to the National Assembly. They shall be responsible to the National
Assembly for the program of government and shall determine the guidelines of national policy. Unlike in
the presidential system where the tenure of office of all elected officials cannot be terminated before
their term expired, the Prime Minister and the Cabinet remain in office only as long as they enjoy the
confidence of the National Assembly. The moment this confidence is lost the Prime Minister and the
Cabinet may be changed.87
The framers of the 1987 Constitution removed the mandatory nature of such appearance during the
question hour in the present Constitution so as to conform more fully to a system of separation of
powers.88 To that extent, the question hour, as it is presently understood in this jurisdiction, departs
from the question period of the parliamentary system. That department heads may not be required to
appear in a question hour does not, however, mean that the legislature is rendered powerless to elicit
information from them in all circumstances. In fact, in light of the absence of a mandatory question
period, the need to enforce Congress’ right to executive information in the performance of its legislative
function becomes more imperative. As Schwartz observes:
Indeed, if the separation of powers has anything to tell us on the subject under discussion, it is that the
Congress has the right to obtain information from any source – even from officials of departments and
agencies in the executive branch. In the United States there is, unlike the situation which prevails in a
parliamentary system such as that in Britain, a clear separation between the legislative and executive
branches. It is this very separation that makes the congressional right to obtain information from the
executive so essential, if the functions of the Congress as the elected representatives of the people are
adequately to be carried out. The absence of close rapport between the legislative and executive
branches in this country, comparable to those which exist under a parliamentary system, and the
nonexistence in the Congress of an institution such as the British question period have perforce made
reliance by the Congress upon its right to obtain information from the executive essential, if it is
intelligently to perform its legislative tasks. Unless the Congress possesses the right to obtain executive
information, its power of oversight of administration in a system such as ours becomes a power devoid
of most of its practical content, since it depends for its effectiveness solely upon information parceled
out ex gratia by the executive.89 (Emphasis and underscoring supplied)
Sections 21 and 22, therefore, while closely related and complementary to each other, should not be
considered as pertaining to the same power of Congress. One specifically relates to the power to
conduct inquiries in aid of legislation, the aim of which is to elicit information that may be used for
legislation, while the other pertains to the power to conduct a question hour, the objective of which is to
obtain information in pursuit of Congress’ oversight function.
When Congress merely seeks to be informed on how department heads are implementing the statutes
which it has issued, its right to such information is not as imperative as that of the President to whom, as
Chief Executive, such department heads must give a report of their performance as a matter of duty. In
such instances, Section 22, in keeping with the separation of powers, states that Congress may only
request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is
"in aid of legislation" under Section 21, the appearance is mandatory for the same reasons stated in
Arnault.90
In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent
that it is performed in pursuit of legislation. This is consistent with the intent discerned from the
deliberations of the Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive officials under Section 21 and
the lack of it under Section 22 find their basis in the principle of separation of powers. While the
executive branch is a co-equal branch of the legislature, it cannot frustrate the power of Congress to
legislate by refusing to comply with its demands for information.
When Congress exercises its power of inquiry, the only way for department heads to exempt themselves
therefrom is by a valid claim of privilege. They are not exempt by the mere fact that they are department
heads. Only one executive official may be exempted from this power — the President on whom
executive power is vested, hence, beyond the reach of Congress except through the power of
impeachment. It is based on her being the highest official of the executive branch, and the due respect
accorded to a co-equal branch of government which is sanctioned by a long-standing custom.
By the same token, members of the Supreme Court are also exempt from this power of inquiry. Unlike
the Presidency, judicial power is vested in a collegial body; hence, each member thereof is exempt on
the basis not only of separation of powers but also on the fiscal autonomy and the constitutional
independence of the judiciary. This point is not in dispute, as even counsel for the Senate, Sen. Joker
Arroyo, admitted it during the oral argument upon interpellation of the Chief Justice.
Having established the proper interpretation of Section 22, Article VI of the Constitution, the Court now
proceeds to pass on the constitutionality of Section 1 of E.O. 464.
Section 1, in view of its specific reference to Section 22 of Article VI of the Constitution and the absence
of any reference to inquiries in aid of legislation, must be construed as limited in its application to
appearances of department heads in the question hour contemplated in the provision of said Section 22
of Article VI. The reading is dictated by the basic rule of construction that issuances must be interpreted,
as much as possible, in a way that will render it constitutional.
The requirement then to secure presidential consent under Section 1, limited as it is only to appearances
in the question hour, is valid on its face. For under Section 22, Article VI of the Constitution, the
appearance of department heads in the question hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads in inquiries in aid of
legislation. Congress is not bound in such instances to respect the refusal of the department head to
appear in such inquiry, unless a valid claim of privilege is subsequently made, either by the President
herself or by the Executive Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to secure the consent of
the President prior to appearing before either house of Congress. The enumeration is broad. It covers all
senior officials of executive departments, all officers of the AFP and the PNP, and all senior national
security officials who, in the judgment of the heads of offices designated in the same section (i.e.
department heads, Chief of Staff of the AFP, Chief of the PNP, and the National Security Adviser), are
"covered by the executive privilege."
The enumeration also includes such other officers as may be determined by the President. Given the title
of Section 2 — "Nature, Scope and Coverage of Executive Privilege" —, it is evident that under the rule of
ejusdem generis, the determination by the President under this provision is intended to be based on a
similar finding of coverage under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that executive privilege actually
covers persons. Such is a misuse of the doctrine. Executive privilege, as discussed above, is properly
invoked in relation to specific categories of information and not to categories of persons.
In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and coverage of executive
privilege, the reference to persons being "covered by the executive privilege" may be read as an
abbreviated way of saying that the person is in possession of information which is, in the judgment of
the head of office concerned, privileged as defined in Section 2(a). The Court shall thus proceed on the
assumption that this is the intention of the challenged order.
Upon a determination by the designated head of office or by the President that an official is "covered by
the executive privilege," such official is subjected to the requirement that he first secure the consent of
the President prior to appearing before Congress. This requirement effectively bars the appearance of
the official concerned unless the same is permitted by the President. The proviso allowing the President
to give its consent means nothing more than that the President may reverse a prohibition which already
exists by virtue of E.O. 464.
Thus, underlying this requirement of prior consent is the determination by a head of office, authorized
by the President under E.O. 464, or by the President herself, that such official is in possession of
information that is covered by executive privilege. This determination then becomes the basis for the
official’s not showing up in the legislative investigation.
In view thereof, whenever an official invokes E.O. 464 to justify his failure to be present, such invocation
must be construed as a declaration to Congress that the President, or a head of office authorized by the
President, has determined that the requested information is privileged, and that the President has not
reversed such determination. Such declaration, however, even without mentioning the term "executive
privilege," amounts to an implied claim that the information is being withheld by the executive branch,
by authority of the President, on the basis of executive privilege. Verily, there is an implied claim of
privilege.
The letter dated September 28, 2005 of respondent Executive Secretary Ermita to Senate President
Drilon illustrates the implied nature of the claim of privilege authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the Whole regarding the Northrail
Project of the North Luzon Railways Corporation on 29 September 2005 at 10:00 a.m., please be
informed that officials of the Executive Department invited to appear at the meeting will not be able to
attend the same without the consent of the President, pursuant to Executive Order No. 464 (s. 2005),
entitled "Ensuring Observance Of The Principle Of Separation Of Powers, Adherence To The Rule On
Executive Privilege And Respect For The Rights Of Public Officials Appearing In Legislative Inquiries In Aid
Of Legislation Under The Constitution, And For Other Purposes". Said officials have not secured the
required consent from the President. (Underscoring supplied)
The letter does not explicitly invoke executive privilege or that the matter on which these officials are
being requested to be resource persons falls under the recognized grounds of the privilege to justify
their absence. Nor does it expressly state that in view of the lack of consent from the President under
E.O. 464, they cannot attend the hearing.
Significant premises in this letter, however, are left unstated, deliberately or not. The letter assumes that
the invited officials are covered by E.O. 464. As explained earlier, however, to be covered by the order
means that a determination has been made, by the designated head of office or the President, that the
invited official possesses information that is covered by executive privilege. Thus, although it is not
stated in the letter that such determination has been made, the same must be deemed implied.
Respecting the statement that the invited officials have not secured the consent of the President, it only
means that the President has not reversed the standing prohibition against their appearance before
Congress.
Inevitably, Executive Secretary Ermita’s letter leads to the conclusion that the executive branch, either
through the President or the heads of offices authorized under E.O. 464, has made a determination that
the information required by the Senate is privileged, and that, at the time of writing, there has been no
contrary pronouncement from the President. In fine, an implied claim of privilege has been made by the
executive.
While there is no Philippine case that directly addresses the issue of whether executive privilege may be
invoked against Congress, it is gathered from Chavez v. PEA that certain information in the possession of
the executive may validly be claimed as privileged even against Congress. Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in
the separation of powers. The information does not cover Presidential conversations, correspondences,
or discussions during closed-door Cabinet meetings which, like internal-deliberations of the Supreme
Court and other collegiate courts, or executive sessions of either house of Congress, are recognized as
confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank
exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power. This is not the situation in the instant
case.91 (Emphasis and underscoring supplied)
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere fact that it sanctions
claims of executive privilege. This Court must look further and assess the claim of privilege authorized by
the Order to determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case basis, examining the ground
invoked therefor and the particular circumstances surrounding it, there is, in an implied claim of
privilege, a defect that renders it invalid per se. By its very nature, and as demonstrated by the letter of
respondent Executive Secretary quoted above, the implied claim authorized by Section 3 of E.O. 464 is
not accompanied by any specific allegation of the basis thereof (e.g., whether the information demanded
involves military or diplomatic secrets, closed-door Cabinet meetings, etc.). While Section 2(a)
enumerates the types of information that are covered by the privilege under the challenged order,
Congress is left to speculate as to which among them is being referred to by the executive. The
enumeration is not even intended to be comprehensive, but a mere statement of what is included in the
phrase "confidential or classified information between the President and the public officers covered by
this executive order."
Certainly, Congress has the right to know why the executive considers the requested information
privileged. It does not suffice to merely declare that the President, or an authorized head of office, has
determined that it is so, and that the President has not overturned that determination. Such declaration
leaves Congress in the dark on how the requested information could be classified as privileged. That the
message is couched in terms that, on first impression, do not seem like a claim of privilege only makes it
more pernicious. It threatens to make Congress doubly blind to the question of why the executive
branch is not providing it with the information that it has requested.
A claim of privilege, being a claim of exemption from an obligation to disclose information, must,
therefore, be clearly asserted. As U.S. v. Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can neither be claimed nor
waived by a private party. It is not to be lightly invoked. There must be a formal claim of privilege, lodged
by the head of the department which has control over the matter, after actual personal consideration by
that officer. The court itself must determine whether the circumstances are appropriate for the claim of
privilege, and yet do so without forcing a disclosure of the very thing the privilege is designed to
protect.92 (Underscoring supplied)
Absent then a statement of the specific basis of a claim of executive privilege, there is no way of
determining whether it falls under one of the traditional privileges, or whether, given the circumstances
in which it is made, it should be respected.93 These, in substance, were the same criteria in assessing the
claim of privilege asserted against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a
committee of the Senate in Senate Select Committee on Presidential Campaign Activities v. Nixon.95
A.O. Smith v. Federal Trade Commission is enlightening:
[T]he lack of specificity renders an assessment of the potential harm resulting from disclosure
impossible, thereby preventing the Court from balancing such harm against plaintiffs’ needs to
determine whether to override any claims of privilege.96 (Underscoring supplied)
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform this balancing operation. In
stating its objection to claimant’s interrogatories, government asserts, and nothing more, that the
disclosures sought by claimant would inhibit the free expression of opinion that non-disclosure is
designed to protect. The government has not shown – nor even alleged – that those who evaluated
claimant’s product were involved in internal policymaking, generally, or in this particular instance.
Privilege cannot be set up by an unsupported claim. The facts upon which the privilege is based must be
established. To find these interrogatories objectionable, this Court would have to assume that the
evaluation and classification of claimant’s products was a matter of internal policy formulation, an
assumption in which this Court is unwilling to indulge sua sponte.98 (Emphasis and underscoring
supplied)
Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must provide ‘precise
and certain’ reasons for preserving the confidentiality of requested information."
Black v. Sheraton Corp. of America100 amplifies, thus:
A formal and proper claim of executive privilege requires a specific designation and description of the
documents within its scope as well as precise and certain reasons for preserving their confidentiality.
Without this specificity, it is impossible for a court to analyze the claim short of disclosure of the very
thing sought to be protected. As the affidavit now stands, the Court has little more than its sua sponte
speculation with which to weigh the applicability of the claim. An improperly asserted claim of privilege
is no claim of privilege. Therefore, despite the fact that a claim was made by the proper executive as
Reynolds requires, the Court can not recognize the claim in the instant case because it is legally
insufficient to allow the Court to make a just and reasonable determination as to its applicability. To
recognize such a broad claim in which the Defendant has given no precise or compelling reasons to
shield these documents from outside scrutiny, would make a farce of the whole procedure.101 (Emphasis
and underscoring supplied)
Due respect for a co-equal branch of government, moreover, demands no less than a claim of privilege
clearly stating the grounds therefor. Apropos is the following ruling in McPhaul v. U.S:102
We think the Court’s decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724, is highly relevant to
these questions. For it is as true here as it was there, that ‘if (petitioner) had legitimate reasons for failing
to produce the records of the association, a decent respect for the House of Representatives, by whose
authority the subpoenas issued, would have required that (he) state (his) reasons for noncompliance
upon the return of the writ. Such a statement would have given the Subcommittee an opportunity to
avoid the blocking of its inquiry by taking other appropriate steps to obtain the records. ‘To deny the
Committee the opportunity to consider the objection or remedy is in itself a contempt of its authority
and an obstruction of its processes. His failure to make any such statement was "a patent evasion of the
duty of one summoned to produce papers before a congressional committee[, and] cannot be
condoned." (Emphasis and underscoring supplied; citations omitted)
Upon the other hand, Congress must not require the executive to state the reasons for the claim with
such particularity as to compel disclosure of the information which the privilege is meant to protect.103 A
useful analogy in determining the requisite degree of particularity would be the privilege against self-
incrimination. Thus, Hoffman v. U.S.104 declares:
The witness is not exonerated from answering merely because he declares that in so doing he would
incriminate himself – his say-so does not of itself establish the hazard of incrimination. It is for the court
to say whether his silence is justified, and to require him to answer if ‘it clearly appears to the court that
he is mistaken.’ However, if the witness, upon interposing his claim, were required to prove the hazard in
the sense in which a claim is usually required to be established in court, he would be compelled to
surrender the very protection which the privilege is designed to guarantee. To sustain the privilege, it
need only be evident from the implications of the question, in the setting in which it is asked, that a
responsive answer to the question or an explanation of why it cannot be answered might be dangerous
because injurious disclosure could result." x x x (Emphasis and underscoring supplied)
The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is not
asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it merely
invokes E.O. 464, coupled with an announcement that the President has not given her consent. It is
woefully insufficient for Congress to determine whether the withholding of information is justified under
the circumstances of each case. It severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.
No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines, binding only on
the heads of office mentioned in Section 2(b), on what is covered by executive privilege. It does not
purport to be conclusive on the other branches of government. It may thus be construed as a mere
expression of opinion by the President regarding the nature and scope of executive privilege.
Petitioners, however, assert as another ground for invalidating the challenged order the alleged unlawful
delegation of authority to the heads of offices in Section 2(b). Petitioner Senate of the Philippines, in
particular, cites the case of the United States where, so it claims, only the President can assert executive
privilege to withhold information from Congress.
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a
certain information is privileged, such determination is presumed to bear the President’s authority and
has the effect of prohibiting the official from appearing before Congress, subject only to the express
pronouncement of the President that it is allowing the appearance of such official. These provisions thus
allow the President to authorize claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the privilege.
Executive privilege, as already discussed, is recognized with respect to information the confidential
nature of which is crucial to the fulfillment of the unique role and responsibilities of the executive
branch,105 or in those instances where exemption from disclosure is necessary to the discharge of highly
important executive responsibilities.106 The doctrine of executive privilege is thus premised on the fact
that certain informations must, as a matter of necessity, be kept confidential in pursuit of the public
interest. The privilege being, by definition, an exemption from the obligation to disclose information, in
this case to Congress, the necessity must be of such high degree as to outweigh the public interest in
enforcing that obligation in a particular case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the
President the power to invoke the privilege. She may of course authorize the Executive Secretary to
invoke the privilege on her behalf, in which case the Executive Secretary must state that the authority is
"By order of the President," which means that he personally consulted with her. The privilege being an
extraordinary power, it must be wielded only by the highest official in the executive hierarchy. In other
words, the President may not authorize her subordinates to exercise such power. There is even less
reason to uphold such authorization in the instant case where the authorization is not explicit but by
mere silence. Section 3, in relation to Section 2(b), is further invalid on this score.
It follows, therefore, that when an official is being summoned by Congress on a matter which, in his own
judgment, might be covered by executive privilege, he must be afforded reasonable time to inform the
President or the Executive Secretary of the possible need for invoking the privilege. This is necessary in
order to provide the President or the Executive Secretary with fair opportunity to consider whether the
matter indeed calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither
the President nor the Executive Secretary invokes the privilege, Congress is no longer bound to respect
the failure of the official to appear before Congress and may then opt to avail of the necessary legal
means to compel his appearance.
The Court notes that one of the expressed purposes for requiring officials to secure the consent of the
President under Section 3 of E.O. 464 is to ensure "respect for the rights of public officials appearing in
inquiries in aid of legislation." That such rights must indeed be respected by Congress is an echo from
Article VI Section 21 of the Constitution mandating that "[t]he rights of persons appearing in or affected
by such inquiries shall be respected."
In light of the above discussion of Section 3, it is clear that it is essentially an authorization for implied
claims of executive privilege, for which reason it must be invalidated. That such authorization is partly
motivated by the need to ensure respect for such officials does not change the infirm nature of the
authorization itself.
Right to Information
E.O 464 is concerned only with the demands of Congress for the appearance of executive officials in the
hearings conducted by it, and not with the demands of citizens for information pursuant to their right to
information on matters of public concern. Petitioners are not amiss in claiming, however, that what is
involved in the present controversy is not merely the legislative power of inquiry, but the right of the
people to information.
There are, it bears noting, clear distinctions between the right of Congress to information which
underlies the power of inquiry and the right of the people to information on matters of public concern.
For one, the demand of a citizen for the production of documents pursuant to his right to information
does not have the same obligatory force as a subpoena duces tecum issued by Congress. Neither does
the right to information grant a citizen the power to exact testimony from government officials. These
powers belong only to Congress and not to an individual citizen.
Thus, while Congress is composed of representatives elected by the people, it does not follow, except in
a highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their
right to information.
To the extent that investigations in aid of legislation are generally conducted in public, however, any
executive issuance tending to unduly limit disclosures of information in such investigations necessarily
deprives the people of information which, being presumed to be in aid of legislation, is presumed to be a
matter of public concern. The citizens are thereby denied access to information which they can use in
formulating their own opinions on the matter before Congress — opinions which they can then
communicate to their representatives and other government officials through the various legal means
allowed by their freedom of expression. Thus holds Valmonte v. Belmonte:
It is in the interest of the State that the channels for free political discussion be maintained to the end
that the government may perceive and be responsive to the people’s will. Yet, this open dialogue can be
effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently.
Only when the participants in the discussion are aware of the issues and have access to information
relating thereto can such bear fruit.107 (Emphasis and underscoring supplied)
The impairment of the right of the people to information as a consequence of E.O. 464 is, therefore, in
the sense explained above, just as direct as its violation of the legislature’s power of inquiry.
Implementation of E.O. 464 prior to its publication
While E.O. 464 applies only to officials of the executive branch, it does not follow that the same is
exempt from the need for publication. On the need for publishing even those statutes that do not
directly apply to people in general, Tañada v. Tuvera states:
The term "laws" should refer to all laws and not only to those of general application, for strictly speaking
all laws relate to the people in general albeit there are some that do not apply to them directly. An
example is a law granting citizenship to a particular individual, like a relative of President Marcos who
was decreed instant naturalization. It surely cannot be said that such a law does not affect the public
although it unquestionably does not apply directly to all the people. The subject of such law is a matter
of public interest which any member of the body politic may question in the political forums or, if he is a
proper party, even in courts of justice.108 (Emphasis and underscoring supplied)
Although the above statement was made in reference to statutes, logic dictates that the challenged
order must be covered by the publication requirement. As explained above, E.O. 464 has a direct effect
on the right of the people to information on matters of public concern. It is, therefore, a matter of public
interest which members of the body politic may question before this Court. Due process thus requires
that the people should have been apprised of this issuance before it was implemented.
Conclusion
Congress undoubtedly has a right to information from the executive branch whenever it is sought in aid
of legislation. If the executive branch withholds such information on the ground that it is privileged, it
must so assert it and state the reason therefor and why it must be respected.
The infirm provisions of E.O. 464, however, allow the executive branch to evade congressional requests
for information without need of clearly asserting a right to do so and/or proffering its reasons therefor.
By the mere expedient of invoking said provisions, the power of Congress to conduct inquiries in aid of
legislation is frustrated. That is impermissible. For
[w]hat republican theory did accomplish…was to reverse the old presumption in favor of secrecy, based
on the divine right of kings and nobles, and replace it with a presumption in favor of publicity, based on
the doctrine of popular sovereignty. (Underscoring supplied)109
Resort to any means then by which officials of the executive branch could refuse to divulge information
cannot be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to
inquire into the operations of government, but we shall have given up something of much greater value
– our right as a people to take part in government.
WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of Executive Order No. 464 (series
of 2005), "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on
Executive
Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of
Legislation Under the Constitution, and For Other Purposes," are declared VOID. Sections 1 and 2(a) are,
however, VALID.
SO ORDERED.
G.R. No. 180643 September 4, 2008
ROMULO L. NERI, petitioner,
vs.
SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS, SENATE
COMMITTEE ON TRADE AND COMMERCE, AND SENATE COMMITTEE ON NATIONAL DEFENSE AND
SECURITY, respondents.
RESOLUTION
LEONARDO-DE CASTRO, J.:
Executive privilege is not a personal privilege, but one that adheres to the Office of the President. It
exists to protect public interest, not to benefit a particular public official. Its purpose, among others, is to
assure that the nation will receive the benefit of candid, objective and untrammeled communication and
exchange of information between the President and his/her advisers in the process of shaping or forming
policies and arriving at decisions in the exercise of the functions of the Presidency under the
Constitution. The confidentiality of the President’s conversations and correspondence is not unique. It is
akin to the confidentiality of judicial deliberations. It possesses the same value as the right to privacy of
all citizens and more, because it is dictated by public interest and the constitutionally ordained
separation of governmental powers.
In these proceedings, this Court has been called upon to exercise its power of review and arbitrate a
hotly, even acrimoniously, debated dispute between the Court’s co-equal branches of government. In
this task, this Court should neither curb the legitimate powers of any of the co-equal and coordinate
branches of government nor allow any of them to overstep the boundaries set for it by our Constitution.
The competing interests in the case at bar are the claim of executive privilege by the President, on the
one hand, and the respondent Senate Committees’ assertion of their power to conduct legislative
inquiries, on the other. The particular facts and circumstances of the present case, stripped of the
politically and emotionally charged rhetoric from both sides and viewed in the light of settled
constitutional and legal doctrines, plainly lead to the conclusion that the claim of executive privilege
must be upheld.
Assailed in this motion for reconsideration is our Decision dated March 25, 2008 (the "Decision"),
granting the petition for certiorari filed by petitioner Romulo L. Neri against the respondent Senate
Committees on Accountability of Public Officers and Investigations,1 Trade and Commerce,2 and National
Defense and Security (collectively the "respondent Committees").3
A brief review of the facts is imperative.
On September 26, 2007, petitioner appeared before respondent Committees and testified for about
eleven (11) hours on matters concerning the National Broadband Project (the "NBN Project"), a project
awarded by the Department of Transportation and Communications ("DOTC") to Zhong Xing
Telecommunications Equipment ("ZTE"). Petitioner disclosed that then Commission on Elections
("COMELEC") Chairman Benjamin Abalos offered him P200 Million in exchange for his approval of the
NBN Project. He further narrated that he informed President Gloria Macapagal Arroyo ("President
Arroyo") of the bribery attempt and that she instructed him not to accept the bribe. However, when
probed further on President Arroyo and petitioner’s discussions relating to the NBN Project, petitioner
refused to answer, invoking "executive privilege." To be specific, petitioner refused to answer questions
on: (a) whether or not President Arroyo followed up the NBN Project,4 (b) whether or not she directed
him to prioritize it,5 and (c) whether or not she directed him to approve it.6
Respondent Committees persisted in knowing petitioner’s answers to these three questions by requiring
him to appear and testify once more on November 20, 2007. On November 15, 2007, Executive Secretary
Eduardo R. Ermita wrote to respondent Committees and requested them to dispense with petitioner’s
testimony on the ground of executive privilege.7 The letter of Executive Secretary Ermita pertinently
stated:
Following the ruling in Senate v. Ermita, the foregoing questions fall under conversations and
correspondence between the President and public officials which are considered executive
privilege (Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez v. PEA, G.R. 133250, July 9,
2002). Maintaining the confidentiality of conversations of the President is necessary in the
exercise of her executive and policy decision making process. The expectation of a President
to the confidentiality of her conversations and correspondences, like the value which we
accord deference for the privacy of all citizens, is the necessity for protection of the public
interest in candid, objective, and even blunt or harsh opinions in Presidential decision-
making. Disclosure of conversations of the President will have a chilling effect on the
 President, and will hamper her in the effective discharge of her duties and responsibilities, if
she is not protected by the confidentiality of her conversations.
The context in which executive privilege is being invoked is that the information sought to be
disclosed might impair our diplomatic as well as economic relations with the People’s
Republic of China. Given the confidential nature in which these information were conveyed to
the President, he cannot provide the Committee any further details of these conversations,
without disclosing the very thing the privilege is designed to protect.
In light of the above considerations, this Office is constrained to invoke the settled doctrine of
executive privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly.
Considering that Sec. Neri has been lengthily interrogated on the subject in an unprecedented
11-hour hearing, wherein he has answered all questions propounded to him except the
foregoing questions involving executive privilege, we therefore request that his testimony on
20 November 2007 on the ZTE / NBN project be dispensed with.
On November 20, 2007, petitioner did not appear before respondent Committees upon orders of the
President invoking executive privilege. On November 22, 2007, the respondent Committees issued the
show-cause letter requiring him to explain why he should not be cited in contempt. On November 29,
2007, in petitioner’s reply to respondent Committees, he manifested that it was not his intention to
ignore the Senate hearing and that he thought the only remaining questions were those he claimed to be
covered by executive privilege. He also manifested his willingness to appear and testify should there be
new matters to be taken up. He just requested that he be furnished "in advance as to what else" he
"needs to clarify."
Respondent Committees found petitioner’s explanations unsatisfactory. Without responding to his
request for advance notice of the matters that he should still clarify, they issued the Order dated January
30, 2008; In Re: P.S. Res. Nos. 127,129,136 & 144; and privilege speeches of Senator Lacson and Santiago
(all on the ZTE-NBN Project), citing petitioner in contempt of respondent Committees and ordering his
arrest and detention at the Office of the Senate Sergeant-at-Arms until such time that he would appear
and give his testimony.
On the same date, petitioner moved for the reconsideration of the above Order.8 He insisted that he had
not shown "any contemptible conduct worthy of contempt and arrest." He emphasized his willingness to
testify on new matters, but respondent Committees did not respond to his request for advance notice of
questions. He also mentioned the petition for certiorari he previously filed with this Court on December
7, 2007. According to him, this should restrain respondent Committees from enforcing the order dated
January 30, 2008 which declared him in contempt and directed his arrest and detention.
Petitioner then filed his Supplemental Petition for Certiorari (with Urgent Application for
TRO/Preliminary Injunction) on February 1, 2008. In the Court’s Resolution dated February 4, 2008, the
parties were required to observe the status quo prevailing prior to the Order dated January 30, 2008.
On March 25, 2008, the Court granted his petition for certiorari on two grounds: first, the
communications elicited by the three (3) questions were covered by executive privilege; and second,
respondent Committees committed grave abuse of discretion in issuing the contempt order. Anent the
first ground, we considered the subject communications as falling under the presidential
communications privilege because (a) they related to a quintessential and non-delegable power of the
President, (b) they were received by a close advisor of the President, and (c) respondent Committees
failed to adequately show a compelling need that would justify the limitation of the privilege and the
unavailability of the information elsewhere by an appropriate investigating authority. As to the second
ground, we found that respondent Committees committed grave abuse of discretion in issuing the
contempt order because (a) there was a valid claim of executive privilege, (b) their invitations to
petitioner did not contain the questions relevant to the inquiry, (c) there was a cloud of doubt as to the
regularity of the proceeding that led to their issuance of the contempt order, (d) they violated Section
21, Article VI of the Constitution because their inquiry was not in accordance with the "duly published
rules of procedure," and (e) they issued the contempt order arbitrarily and precipitately.
On April 8, 2008, respondent Committees filed the present motion for reconsideration, anchored on the
following grounds:
I
CONTRARY TO THIS HONORABLE COURT’S DECISION, THERE IS NO DOUBT THAT THE
ASSAILED ORDERS WERE ISSUED BY RESPONDENT COMMITTEES PURSUANT TO THE
EXERCISE OF THEIR LEGISLATIVE POWER, AND NOT MERELY THEIR OVERSIGHT FUNCTIONS.
II
CONTRARY TO THIS HONORABLE COURT’S DECISION, THERE CAN BE NO PRESUMPTION
THAT THE INFORMATION WITHHELD IN THE INSTANT CASE IS PRIVILEGED.
III
CONTRARY TO THIS HONORABLE COURT’S DECISION, THERE IS NO FACTUAL OR LEGAL BASIS
TO HOLD THAT THE COMMUNICATIONS ELICITED BY THE SUBJECT THREE (3) QUESTIONS
ARE COVERED BY EXECUTIVE PRIVILEGE, CONSIDERING THAT:
A. THERE IS NO SHOWING THAT THE MATTERS FOR WHICH EXECUTIVE PRIVILEGE IS
CLAIMED CONSTITUTE STATE SECRETS.
B. EVEN IF THE TESTS ADOPTED BY THIS HONORABLE COURT IN THE DECISION IS APPLIED,
THERE IS NO SHOWING THAT THE ELEMENTS OF PRESIDENTIAL COMMUNICATIONS
PRIVILEGE ARE PRESENT.
C. ON THE CONTRARY, THERE IS ADEQUATE SHOWING OF A COMPELLING NEED TO JUSTIFY
THE DISCLOSURE OF THE INFORMATION SOUGHT.
D. TO UPHOLD THE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT CASE WOULD
SERIOUSLY IMPAIR THE RESPONDENTS’ PERFORMANCE OF THEIR PRIMARY FUNCTION TO
ENACT LAWS.
E. FINALLY, THE CONSTITUTIONAL RIGHT OF THE PEOPLE TO INFORMATION, AND THE
CONSTITUTIONAL POLICIES ON PUBLIC ACCOUNTABILITY AND TRANSPARENCY OUTWEIGH
THE CLAIM OF EXECUTIVE PRIVILEGE.
IV
 CONTRARY TO THIS HONORABLE COURT’S DECISION, RESPONDENTS DID NOT COMMIT
GRAVE ABUSE OF DISCRETION IN ISSUING THE ASSAILED CONTEMPT ORDER, CONSIDERING
THAT:
A. THERE IS NO LEGITIMATE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT CASE.
B. RESPONDENTS DID NOT VIOLATE THE SUPPOSED REQUIREMENTS LAID DOWN IN SENATE
V. ERMITA.
C. RESPONDENTS DULY ISSUED THE CONTEMPT ORDER IN ACCORDANCE WITH THEIR
INTERNAL RULES.
D. RESPONDENTS DID NOT VIOLATE THE REQUIREMENTS UNDER ARTICLE VI, SECTION 21 OF
THE CONSTITUTION REQUIRING THAT ITS RULES OF PROCEDURE BE DULY PUBLISHED, AND
WERE DENIED DUE PROCESS WHEN THE COURT CONSIDERED THE OSG’S INTERVENTION ON
THIS ISSUE WITHOUT GIVING RESPONDENTS THE OPPORTUNITY TO COMMENT.
E. RESPONDENTS’ ISSUANCE OF THE CONTEMPT ORDER IS NOT ARBITRARY OR
PRECIPITATE.
In his Comment, petitioner charges respondent Committees with exaggerating and distorting the
Decision of this Court. He avers that there is nothing in it that prohibits respondent Committees from
investigating the NBN Project or asking him additional questions. According to petitioner, the Court
merely applied the rule on executive privilege to the facts of the case. He further submits the following
contentions: first, the assailed Decision did not reverse the presumption against executive secrecy laid
down in Senate v. Ermita; second, respondent Committees failed to overcome the presumption of
executive privilege because it appears that they could legislate even without the communications
elicited by the three (3) questions, and they admitted that they could dispense with petitioner’s
testimony if certain NEDA documents would be given to them; third, the requirement of specificity
applies only to the privilege for State, military and diplomatic secrets, not to the necessarily broad and
all-encompassing presidential communications privilege; fourth, there is no right to pry into the
President’s thought processes or exploratory exchanges; fifth, petitioner is not covering up or hiding
anything illegal; sixth, the Court has the power and duty to annul the Senate Rules; seventh, the Senate
is not a continuing body, thus the failure of the present Senate to publish its Rules of Procedure
Governing Inquiries in Aid of Legislation (Rules) has a vitiating effect on them; eighth, the requirement
for a witness to be furnished advance copy of questions comports with due process and the
constitutional mandate that the rights of witnesses be respected; and ninth, neither petitioner nor
respondent has the final say on the matter of executive privilege, only the Court.
For its part, the Office of the Solicitor General maintains that: (1) there is no categorical pronouncement
from the Court that the assailed Orders were issued by respondent Committees pursuant to their
oversight function; hence, there is no reason for them "to make much" of the distinction between
Sections 21 and 22, Article VI of the Constitution; (2) presidential communications enjoy a presumptive
privilege against disclosure as earlier held in Almonte v. Vasquez9 and Chavez v. Public Estates
Authority (PEA)10; (3) the communications elicited by the three (3) questions are covered by executive
privilege, because all the elements of the presidential communications privilege are present; (4) the
subpoena ad testificandum issued by respondent Committees to petitioner is fatally defective under
existing law and jurisprudence; (5) the failure of the present Senate to publish its Rules renders the same
void; and (6) respondent Committees arbitrarily issued the contempt order.
Incidentally, respondent Committees’ objection to the Resolution dated March 18, 2008 (granting the
Office of the Solicitor General’s Motion for Leave to Intervene and to Admit Attached Memorandum)
only after the promulgation of the Decision in this case is foreclosed by its untimeliness.
The core issues that arise from the foregoing respective contentions of the opposing parties are as
follows:
(1) whether or not there is a recognized presumptive presidential communications privilege in
our legal system;
(2) whether or not there is factual or legal basis to hold that the communications elicited by
the three (3) questions are covered by executive privilege;
(3) whether or not respondent Committees have shown that the communications elicited by
the three (3) questions are critical to the exercise of their functions; and
(4) whether or not respondent Committees committed grave abuse of discretion in issuing
the contempt order.
We shall discuss these issues seriatim.
I
There Is a Recognized Presumptive
Presidential Communications Privilege
Respondent Committees ardently argue that the Court’s declaration that presidential communications
are presumptively privileged reverses the "presumption" laid down in Senate v. Ermita11 that "inclines
heavily against executive secrecy and in favor of disclosure." Respondent Committees then claim that the
Court erred in relying on the doctrine in Nixon.
Respondent Committees argue as if this were the first time the presumption in favor of the presidential
communications privilege is mentioned and adopted in our legal system. That is far from the truth. The
Court, in the earlier case of Almonte v. Vasquez,12 affirmed that the presidential communications
privilege is fundamental to the operation of government and inextricably rooted in the separation of
powers under the Constitution. Even Senate v. Ermita,13 the case relied upon by respondent Committees,
reiterated this concept. There, the Court enumerated the cases in which the claim of executive privilege
was recognized, among them Almonte v. Chavez, Chavez v. Presidential Commission on Good
Government (PCGG),14 and Chavez v. PEA.15 The Court articulated in these cases that "there are certain
types of information which the government may withhold from the public,16" that there is a
"governmental privilege against public disclosure with respect to state secrets regarding military,
diplomatic and other national security matters";17 and that "the right to information does not extend to
matters recognized as ‘privileged information’ under the separation of powers, by which the Court
meant Presidential conversations, correspondences, and discussions in closed-door Cabinet
meetings."18
Respondent Committees’ observation that this Court’s Decision reversed the "presumption that inclines
heavily against executive secrecy and in favor of disclosure" arises from a piecemeal interpretation of the
said Decision. The Court has repeatedly held that in order to arrive at the true intent and meaning of a
decision, no specific portion thereof should be isolated and resorted to, but the decision must be
considered in its entirety.19
Note that the aforesaid presumption is made in the context of the circumstances obtaining in Senate v.
Ermita, which declared void Sections 2(b) and 3 of Executive Order (E.O.) No. 464, Series of 2005. The
pertinent portion of the decision in the said case reads:
From the above discussion on the meaning and scope of executive privilege, both in the
United States and in this jurisprudence, a clear principle emerges. Executive privilege,
whether asserted against Congress, the courts, or the public, is recognized only in relation
to certain types of information of a sensitive character. While executive privilege is a
constitutional concept, a claim thereof may be valid or not depending on the ground invoked
to justify it and the context in which it is made. Noticeably absent is any recognition that
executive officials are exempt from the duty to disclose information by the mere fact of being
executive officials. Indeed, the extraordinary character of the exemptions indicates that the
presumption inclines heavily against executive secrecy and in favor of disclosure. (Emphasis
and underscoring supplied)
Obviously, the last sentence of the above-quoted paragraph in Senate v. Ermita refers to the
"exemption" being claimed by the executive officials mentioned in Section 2(b) of E.O. No. 464, solely by
virtue of their positions in the Executive Branch. This means that when an executive official, who is one
of those mentioned in the said Sec. 2(b) of E.O. No. 464, claims to be exempt from disclosure, there can
be no presumption of authorization to invoke executive privilege given by the President to said
executive official, such that the presumption in this situation inclines heavily against executive secrecy
and in favor of disclosure.
Senate v. Ermita 20 expounds on the premise of the foregoing ruling in this wise:
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines
that a certain information is privileged, such determination is presumed to bear the
President’s authority and has the effect of prohibiting the official from appearing before
Congress, subject only to the express pronouncement of the President that it is allowing the
appearance of such official. These provisions thus allow the President to authorize claims of
privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the
privilege. Executive privilege, as already discussed, is recognized with respect to information
the confidential nature of which is crucial to the fulfillment of the unique role and
responsibilities of the executive branch, or in those instances where exemption from
disclosure is necessary to the discharge of highly important executive responsibilities. The
doctrine of executive privilege is thus premised on the fact that certain information must, as a
matter of necessity, be kept confidential in pursuit of the public interest. The privilege being,
by definition, an exemption from the obligation to disclose information, in this case to
Congress, the necessity must be of such high degree as to outweigh the public interest in
enforcing that obligation in a particular case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to
the President the power to invoke the privilege. She may of course authorize the Executive
Secretary to invoke the privilege on her behalf, in which case the Executive Secretary must
state that the authority is "By order of the President", which means that he personally
consulted with her. The privilege being an extraordinary power, it must be wielded only by
the highest official in the executive hierarchy. In other words, the President may not
authorize her subordinates to exercise such power. There is even less reason to uphold such
authorization in the instant case where the authorization is not explicit but by mere silence.
Section 3, in relation to Section 2(b), is further invalid on this score.
The constitutional infirmity found in the blanket authorization to invoke executive privilege granted by
the President to executive officials in Sec. 2(b) of E.O. No. 464 does not obtain in this case.
In this case, it was the President herself, through Executive Secretary Ermita, who invoked executive
privilege on a specific matter involving an executive agreement between the Philippines and China,
which was the subject of the three (3) questions propounded to petitioner Neri in the course of the
Senate Committees’ investigation. Thus, the factual setting of this case markedly differs from that passed
upon in Senate v. Ermita.
Moreover, contrary to the claim of respondents, the Decision in this present case hews closely to the
ruling in Senate v. Ermita,21 to wit:
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior
to the promulgation of the 1986 Constitution. Being of American origin, it is best understood
in light of how it has been defined and used in the legal literature of the United States.
Schwart defines executive privilege as "the power of the Government to withhold
information from the public, the courts, and the Congress. Similarly, Rozell defines it as "the
right of the President and high-level executive branch officers to withhold information from
Congress, the courts, and ultimately the public." x x x In this jurisdiction, the doctrine of
executive privilege was recognized by this Court in Almonte v. Vasquez. Almonte used the
term in reference to the same privilege subject of Nixon. It quoted the following portion of
the Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and
correspondences, like the claim of confidentiality of judicial deliberations, for example, he
has all the values to which we accord deference for the privacy of all citizens and, added to
those values, is the necessity for protection of the public interest in candid, objective, and
even blunt or harsh opinions in Presidential decision-making. A President and those who assist
him must be free to explore alternatives in the process of shaping policies and making
decisions and to do so in a way many would be unwilling to express except privately. These
are the considerations justifying a presumptive privilege for Presidential communications.
The privilege is fundamental to the operation of government and inextricably rooted in the
separation of powers under the Constitution x x x " (Emphasis and italics supplied)
Clearly, therefore, even Senate v. Ermita adverts to "a presumptive privilege for Presidential
communication," which was recognized early on in Almonte v. Vasquez. To construe the passage
in Senate v. Ermita adverted to in the Motion for Reconsideration of respondent Committees, referring
to the non-existence of a "presumptive authorization" of an executive official, to mean that the
"presumption" in favor of executive privilege "inclines heavily against executive secrecy and in favor of
disclosure" is to distort the ruling in the Senate v. Ermita and make the same engage in self-
contradiction.
Senate v. Ermita22 expounds on the constitutional underpinning of the relationship between the
Executive Department and the Legislative Department to explain why there should be no implied
authorization or presumptive authorization to invoke executive privilege by the President’s subordinate
officials, as follows:
When Congress exercises its power of inquiry, the only way for department heads to
exempt themselves therefrom is by a valid claim of privilege. They are not exempt by the
mere fact that they are department heads. Only one executive official may be exempted
from this power - the President on whom executive power is vested, hence, beyond the reach
of Congress except through the power of impeachment. It is based on he being the highest
official of the executive branch, and the due respect accorded to a co-equal branch of
governments which is sanctioned by a long-standing custom. (Underscoring supplied)
Thus, if what is involved is the presumptive privilege of presidential communications when invoked by
the President on a matter clearly within the domain of the Executive, the said presumption dictates that
the same be recognized and be given preference or priority, in the absence of proof of a compelling or
critical need for disclosure by the one assailing such presumption. Any construction to the contrary will
render meaningless the presumption accorded by settled jurisprudence in favor of executive privilege. In
fact, Senate v. Ermita reiterates jurisprudence citing "the considerations justifying a presumptive
privilege for Presidential communications."23
II
There Are Factual and Legal Bases to
Hold that the Communications Elicited by the
Three (3) Questions Are Covered by Executive Privilege
Respondent Committees claim that the communications elicited by the three (3) questions are not
covered by executive privilege because the elements of the presidential communications privilege are
not present.
A. The power to enter into an executive agreement is a "quintessential and non-delegable presidential
power."
First, respondent Committees contend that the power to secure a foreign loan does not relate to a
"quintessential and non-delegable presidential power," because the Constitution does not vest it in the
President alone, but also in the Monetary Board which is required to give its prior concurrence and to
report to Congress.
This argument is unpersuasive.
The fact that a power is subject to the concurrence of another entity does not make such power less
executive. "Quintessential" is defined as the most perfect embodiment of something, the concentrated
essence of substance.24 On the other hand, "non-delegable" means that a power or duty cannot be
delegated to another or, even if delegated, the responsibility remains with the obligor.25 The power to
enter into an executive agreement is in essence an executive power. This authority of the President to
enter into executive agreements without the concurrence of the Legislature has traditionally been
recognized in Philippine jurisprudence.26 Now, the fact that the President has to secure the prior
concurrence of the Monetary Board, which shall submit to Congress a complete report of its decision
before contracting or guaranteeing foreign loans, does not diminish the executive nature of the power.
The inviolate doctrine of separation of powers among the legislative, executive and judicial branches of
government by no means prescribes absolute autonomy in the discharge by each branch of that part of
the governmental power assigned to it by the sovereign people. There is the corollary doctrine of checks
and balances, which has been carefully calibrated by the Constitution to temper the official acts of each
of these three branches. Thus, by analogy, the fact that certain legislative acts require action from the
President for their validity does not render such acts less legislative in nature. A good example is the
power to pass a law. Article VI, Section 27 of the Constitution mandates that every bill passed by
Congress shall, before it becomes a law, be presented to the President who shall approve or veto the
same. The fact that the approval or vetoing of the bill is lodged with the President does not render the
power to pass law executive in nature. This is because the power to pass law is generally a quintessential
and non-delegable power of the Legislature. In the same vein, the executive power to enter or not to
enter into a contract to secure foreign loans does not become less executive in nature because of
conditions laid down in the Constitution. The final decision in the exercise of the said executive power is
still lodged in the Office of the President.
B. The "doctrine of operational proximity" was laid down precisely to limit the scope of the presidential
communications privilege but, in any case, it is not conclusive.
Second, respondent Committees also seek reconsideration of the application of the "doctrine of
operational proximity" for the reason that "it maybe misconstrued to expand the scope of the
presidential communications privilege to communications between those who are ‘operationally
proximate’ to the President but who may have "no direct communications with her."
It must be stressed that the doctrine of "operational proximity" was laid down in In re: Sealed
Case27precisely to limit the scope of the presidential communications privilege. The U.S. court was aware
of the dangers that a limitless extension of the privilege risks and, therefore, carefully cabined its reach
by explicitly confining it to White House staff, and not to staffs of the agencies, and then only to White
House staff that has "operational proximity" to direct presidential decision-making, thus:
We are aware that such an extension, unless carefully circumscribed to accomplish the
purposes of the privilege, could pose a significant risk of expanding to a large swath of the
executive branch a privilege that is bottomed on a recognition of the unique role of the
President. In order to limit this risk, the presidential communications privilege should be
construed as narrowly as is consistent with ensuring that the confidentiality of the President’s
decision-making process is adequately protected. Not every person who plays a role in the
development of presidential advice, no matter how remote and removed from the
President, can qualify for the privilege. In particular, the privilege should not extend to staff
outside the White House in executive branch agencies. Instead, the privilege should apply
only to communications authored or solicited and received by those members of an
immediate White House advisor’s staff who have broad and significant responsibility for
investigation and formulating the advice to be given the President on the particular matter to
which the communications relate. Only communications at that level are close enough to
the President to be revelatory of his deliberations or to pose a risk to the candor of his
advisers. See AAPS, 997 F.2d at 910 (it is "operational proximity" to the President that
matters in determining whether "[t]he President’s confidentiality interests" is
implicated). (Emphasis supplied)
In the case at bar, the danger of expanding the privilege "to a large swath of the executive branch" (a
fear apparently entertained by respondents) is absent because the official involved here is a member of
the Cabinet, thus, properly within the term "advisor" of the President; in fact, her alter ego and a
member of her official family. Nevertheless, in circumstances in which the official involved is far too
remote, this Court also mentioned in the Decision the organizational test laid down in Judicial Watch,
Inc. v. Department of Justice.28 This goes to show that the operational proximity test used in the Decision
is not considered conclusive in every case. In determining which test to use, the main consideration is to
limit the availability of executive privilege only to officials who stand proximate to the President, not only
by reason of their function, but also by reason of their positions in the Executive’s organizational
structure. Thus, respondent Committees’ fear that the scope of the privilege would be unnecessarily
expanded with the use of the operational proximity test is unfounded.
C. The President’s claim of executive privilege is not merely based on a generalized interest; and in
balancing respondent Committees’ and the President’s clashing interests, the Court did not disregard
the 1987 Constitutional provisions on government transparency, accountability and disclosure of
information.
then, a right in the House of Representatives to demand and to have as a matter of course all
the papers respecting a negotiation with a foreign power would be to establish a dangerous
precedent.
US jurisprudence clearly guards against the dangers of allowing Congress access to all papers relating to
a negotiation with a foreign power. In this jurisdiction, the recent case of Akbayan Citizens Action Party,
et al. v. Thomas G. Aquino, et al.39 upheld the privileged character of diplomatic negotiations.
In Akbayan, the Court stated:
Privileged character of diplomatic negotiations

Third, respondent Committees claim that the Court erred in upholding the President’s invocation,
The privileged character of diplomatic negotiations has been recognized in this jurisdiction. In
through the Executive Secretary, of executive privilege because (a) between respondent Committees’
discussing valid limitations on the right to information, the Court in Chavez v. PCGG held that
specific and demonstrated need and the President’s generalized interest in confidentiality, there is a
"information on inter-government exchanges prior to the conclusion of treaties and executive
need to strike the balance in favor of the former; and (b) in the balancing of interest, the Court
agreements may be subject to reasonable safeguards for the sake of national interest." Even
disregarded the provisions of the 1987 Philippine Constitution on government transparency,
earlier, the same privilege was upheld in People’s Movement for Press Freedom (PMPF) v.
accountability and disclosure of information, specifically, Article III, Section 7;29 Article II, Sections
Manglapus wherein the Court discussed the reasons for the privilege in more precise terms.
2430 and 28;31 Article XI, Section 1;32 Article XVI, Section 10;33 Article VII, Section 20;34 and Article XII,
Sections 9,35 21,36 and 22.37
In PMPF v. Manglapus, the therein petitioners were seeking information from the President’s
representatives on the state of the then on-going negotiations of the RP-US Military Bases
It must be stressed that the President’s claim of executive privilege is not merely founded on her
Agreement. The Court denied the petition, stressing that "secrecy of negotiations with
generalized interest in confidentiality. The Letter dated November 15, 2007 of Executive Secretary
foreign countries is not violative of the constitutional provisions of freedom of speech or of
Ermita specified presidential communications privilege in relation to diplomatic and economic relations
the press nor of the freedom of access to information." The Resolution went on to state,
with another sovereign nation as the bases for the claim. Thus, the Letter stated:
thus:

The context in which executive privilege is being invoked is that the information sought to
The nature of diplomacy requires centralization of authority and expedition of
be disclosed might impair our diplomatic as well as economic relations with the People’s
decision which are inherent in executive action. Another essential characteristic
Republic of China. Given the confidential nature in which this information were conveyed to
of diplomacy is its confidential nature. Although much has been said about
the President, he cannot provide the Committee any further details of these conversations,
"open" and "secret" diplomacy, with disparagement of the latter, Secretaries of
without disclosing the very thing the privilege is designed to protect. (emphasis supplied)
State Hughes and Stimson have clearly analyzed and justified the practice. In the
words of Mr. Stimson:
Even in Senate v. Ermita, it was held that Congress must not require the Executive to state the reasons
for the claim with such particularity as to compel disclosure of the information which the privilege is
"A complicated negotiation …cannot be carried through without
meant to protect. This is a matter of respect for a coordinate and co-equal department.
many, many private talks and discussion, man to man; many tentative
suggestions and proposals. Delegates from other countries come and
It is easy to discern the danger that goes with the disclosure of the President’s communication with her tell you in confidence of their troubles at home and of their
advisor. The NBN Project involves a foreign country as a party to the agreement. It was actually a differences with other countries and with other delegates; they tell
product of the meeting of minds between officials of the Philippines and China. Whatever the President you of what they would do under certain circumstances and would
says about the agreement - particularly while official negotiations are ongoing - are matters which China not do under other circumstances… If these reports… should become
will surely view with particular interest. There is danger in such kind of exposure. It could adversely public… who would ever trust American Delegations in another
affect our diplomatic as well as economic relations with the People’s Republic of China. We reiterate the conference? (United States Department of State, Press Releases, June
importance of secrecy in matters involving foreign negotiations as stated in United States v. Curtiss- 7, 1930, pp. 282-284)
Wright Export Corp., 38 thus:
xxxx
The nature of foreign negotiations requires caution, and their success must often depend on
secrecy, and even when brought to a conclusion, a full disclosure of all the measures,
There is frequent criticism of the secrecy in which negotiation with foreign
demands, or eventual concessions which may have been proposed or contemplated would be
powers on nearly all subjects is concerned. This, it is claimed, is incompatible
extremely impolitic, for this might have a pernicious influence on future negotiations or
with the substance of democracy. As expressed by one writer, "It can be said that
produce immediate inconveniences, perhaps danger and mischief, in relation to other
there is no more rigid system of silence anywhere in the world." (E.J. Young,
powers. The necessity of such caution and secrecy was one cogent reason for vesting the
Looking Behind the Censorship, J. B. Lipincott Co., 1938) President Wilson in
power of making treaties in the President, with the advice and consent of the Senate, the
principle on which the body was formed confining it to a small number of members. To admit,
 starting his efforts for the conclusion of the World War declared that we must
have "open covenants, openly arrived at." He quickly abandoned his thought.
No one who has studied the question believes that such a method of publicity is
possible. In the moment that negotiations are started, pressure groups attempt
to "muscle in." An ill-timed speech by one of the parties or a frank declaration of
the concession which are exacted or offered on both sides would quickly lead to
a widespread propaganda to block the negotiations. After a treaty has been
drafted and its terms are fully published, there is ample opportunity for
discussion before it is approved. (The New American Government and Its Works,
James T. Young, 4th Edition, p. 194) (Emphasis and underscoring supplied)
Still in PMPF v. Manglapus, the Court adopted the doctrine in U.S. v. Curtiss-Wright Export
Corp. that the President is the sole organ of the nation in its negotiations with foreign
countries,viz:
"x x x In this vast external realm, with its important, complicated, delicate and
manifold problems, the President alone has the power to speak or listen as a
representative of the nation. He makes treaties with the advice and consent of the
Senate; but he alone negotiates. Into the field of negotiation the Senate cannot
intrude; and Congress itself is powerless to invade it. As Marshall said in his great
arguments of March 7, 1800, in the House of Representatives, "The President is
the sole organ of the nation in its external relations, and its sole representative
with foreign nations." Annals, 6th Cong., col. 613… (Emphasis supplied;
underscoring in the original)
Considering that the information sought through the three (3) questions subject of this Petition involves
the President’s dealings with a foreign nation, with more reason, this Court is wary of approving the view
that Congress may peremptorily inquire into not only official, documented acts of the President but even
her confidential and informal discussions with her close advisors on the pretext that said questions serve
some vague legislative need. Regardless of who is in office, this Court can easily foresee unwanted
consequences of subjecting a Chief Executive to unrestricted congressional inquiries done with increased
frequency and great publicity. No Executive can effectively discharge constitutional functions in the face
of intense and unchecked legislative incursion into the core of the President’s decision-making process,
which inevitably would involve her conversations with a member of her Cabinet.
With respect to respondent Committees’ invocation of constitutional prescriptions regarding the right of
the people to information and public accountability and transparency, the Court finds nothing in these
arguments to support respondent Committees’ case.
There is no debate as to the importance of the constitutional right of the people to information and the
constitutional policies on public accountability and transparency. These are the twin postulates vital to
the effective functioning of a democratic government. The citizenry can become prey to the whims and
caprices of those to whom the power has been delegated if they are denied access to information. And
the policies on public accountability and democratic government would certainly be mere empty words
if access to such information of public concern is denied.
In the case at bar, this Court, in upholding executive privilege with respect to three (3) specific questions,
did not in any way curb the public’s right to information or diminish the importance of public
accountability and transparency.
This Court did not rule that the Senate has no power to investigate the NBN Project in aid of legislation.
There is nothing in the assailed Decision that prohibits respondent Committees from inquiring into the
NBN Project. They could continue the investigation and even call petitioner Neri to testify again. He
himself has repeatedly expressed his willingness to do so. Our Decision merely excludes from the scope
of respondents’ investigation the three (3) questions that elicit answers covered by executive privilege
and rules that petitioner cannot be compelled to appear before respondents to answer the said
questions. We have discussed the reasons why these answers are covered by executive privilege. That
there is a recognized public interest in the confidentiality of such information is a recognized principle in
other democratic States. To put it simply, the right to information is not an absolute right.
Indeed, the constitutional provisions cited by respondent Committees do not espouse an absolute right
to information. By their wording, the intention of the Framers to subject such right to the regulation of
the law is unmistakable. The highlighted portions of the following provisions show the obvious
limitations on the right to information, thus:
Article III, Sec. 7. 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
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 limitations as may be provided by law.
Article II, Sec. 28. 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. (Emphasis supplied)
In Chavez v. Presidential Commission on Good Government,40 it was stated that there are no specific laws
prescribing the exact limitations within which the right may be exercised or the correlative state duty
may be obliged. Nonetheless, it enumerated the recognized restrictions to such rights, among them: (1)
national security matters, (2) trade secrets and banking transactions, (3) criminal matters, and (4) other
confidential information. National security matters include state secrets regarding military and
diplomatic matters, as well as information on inter-government exchanges prior to the conclusion of
treaties and executive agreements. It was further held that even where there is no need to protect such
state secrets, they must be "examined in strict confidence and given scrupulous protection."
Incidentally, the right primarily involved here is the right of respondent Committees to obtain
information allegedly in aid of legislation, not the people’s right to public information. This is the reason
why we stressed in the assailed Decision the distinction between these two rights. As laid down
in Senate v. Ermita, "the demand of a citizen for the production of documents pursuant to his right to
information does not have the same obligatory force as a subpoena duces tecum issued by Congress"
and "neither does the right to information grant a citizen the power to exact testimony from government
officials." As pointed out, these rights belong to Congress, not to the individual citizen. It is worth
mentioning at this juncture that the parties here are respondent Committees and petitioner Neri and
that there was no prior request for information on the part of any individual citizen. This Court will not
be swayed by attempts to blur the distinctions between the Legislature's right to information in a
legitimate legislative inquiry and the public's right to information.
For clarity, it must be emphasized that the assailed Decision did not enjoin respondent Committees
from inquiring into the NBN Project. All that is expected from them is to respect matters that are
covered by executive privilege.
III.
 Respondent Committees Failed to Show That
the Communications Elicited by the Three Questions
Are Critical to the Exercise of their Functions
In their Motion for Reconsideration, respondent Committees devote an unusually lengthy discussion on
the purported legislative nature of their entire inquiry, as opposed to an oversight inquiry.
At the outset, it must be clarified that the Decision did not pass upon the nature of respondent
Committees’ inquiry into the NBN Project. To reiterate, this Court recognizes respondent Committees’
power to investigate the NBN Project in aid of legislation. However, this Court cannot uphold the view
that when a constitutionally guaranteed privilege or right is validly invoked by a witness in the course of
a legislative investigation, the legislative purpose of respondent Committees’ questions can be
sufficiently supported by the expedient of mentioning statutes and/or pending bills to which their
inquiry as a whole may have relevance. The jurisprudential test laid down by this Court in past decisions
on executive privilege is that the presumption of privilege can only be overturned by a showing of
compelling need for disclosure of the information covered by executive privilege.
In the Decision, the majority held that "there is no adequate showing of a compelling need that would
justify the limitation of the privilege and of the unavailability of the information elsewhere by an
appropriate investigating authority." In the Motion for Reconsideration, respondent Committees argue
that the information elicited by the three (3) questions are necessary in the discharge of their legislative
functions, among them, (a) to consider the three (3) pending Senate Bills, and (b) to curb graft and
corruption.
We remain unpersuaded by respondents’ assertions.
In U.S. v. Nixon, the U.S. Court held that executive privilege is subject to balancing against other interests
and it is necessary to resolve the competing interests in a manner that would preserve the essential
functions of each branch. There, the Court weighed between presidential privilege and the legitimate
claims of the judicial process. In giving more weight to the latter, the Court ruled that the President's
generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a
pending criminal trial.
The Nixon Court ruled that an absolute and unqualified privilege would stand in the way of the primary
constitutional duty of the Judicial Branch to do justice in criminal prosecutions. The said Court further
ratiocinated, through its ruling extensively quoted in the Honorable Chief Justice Puno's dissenting
opinion, as follows:
"... this presumptive privilege must be considered in light of our historic commitment to the
rule of law. This is nowhere more profoundly manifest than in our view that 'the twofold aim
(of criminal justice) is that guild shall not escape or innocence suffer.' Berger v. United States,
295 U.S., at 88, 55 S.Ct., at 633. We have elected to employ an adversary system of criminal
justice in which the parties contest all issues before a court of law. The need to develop all
relevant facts in the adversary system is both fundamental and comprehensive. The ends of
criminal justice would be defeated if judgments were to be founded on a partial or
speculative presentation of the facts. The very integrity of the judicial system and public
confidence in the system depend on full disclosure of all the facts, within the framework of
the rules of evidence. To ensure that justice is done, it is imperative to the function of
courts that compulsory process be available for the production of evidence needed either by
the prosecution or by the defense.
xxx xxx xxx
The right to the production of all evidence at a criminal trial similarly has constitutional
dimensions. The Sixth Amendment explicitly confers upon every defendant in a criminal trial
the right 'to be confronted with the witness against him' and 'to have compulsory
process for obtaining witnesses in his favor.' Moreover, the Fifth Amendment also guarantees
that no person shall be deprived of liberty without due process of law. It is the manifest
duty of the courts to vindicate those guarantees, and to accomplish that it is essential that all
relevant and admissible evidence be produced.
In this case we must weigh the importance of the general privilege of confidentiality of
Presidential communications in performance of the President's responsibilities against the
inroads of such a privilege on the fair administration of criminal justice. (emphasis supplied)
xxx xxx xxx
...the allowance of the privilege to withhold evidence that is demonstrably relevant in a
criminal trial would cut deeply into the guarantee of due process of law and gravely impair
the basic function of the courts. A President's acknowledged need for confidentiality in the
communications of his office is general in nature, whereas the constitutional need for
production of relevant evidence in a criminal proceeding is specific and central to the fair
adjudication of a particular criminal case in the administration of justice. Without access to
specific facts a criminal prosecution may be totally frustrated. The President's broad interest
in confidentiality of communication will not be vitiated by disclosure of a limited number of
conversations preliminarily shown to have some bearing on the pending criminal cases.
We conclude that when the ground for asserting privilege as to subpoenaed materials sought
for use in a criminal trial is based only on the generalized interest in confidentiality, it cannot
prevail over the fundamental demands of due process of law in the fair administration of
criminal justice. The generalized assertion of privilege must yield to the demonstrated,
specific need for evidence in a pending criminal trial. (emphasis supplied)
In the case at bar, we are not confronted with a court’s need for facts in order to adjudge liability in a
criminal case but rather with the Senate’s need for information in relation to its legislative functions. This
leads us to consider once again just how critical is the subject information in the discharge of respondent
Committees’ functions. The burden to show this is on the respondent Committees, since they seek to
intrude into the sphere of competence of the President in order to gather information which, according
to said respondents, would "aid" them in crafting legislation.
Senate Select Committee on Presidential Campaign Activities v. Nixon41 expounded on the nature of a
legislative inquiry in aid of legislation in this wise:
The sufficiency of the Committee's showing of need has come to depend, therefore, entirely
on whether the subpoenaed materials are critical to the performance of its legislative
functions. There is a clear difference between Congress' legislative tasks and the
responsibility of a grand jury, or any institution engaged in like functions. While fact-finding
by a legislative committee is undeniably a part of its task, legislative judgments normally
depend more on the predicted consequences of proposed legislative actions and their
political acceptability, than on precise reconstruction of past events; Congress frequently
legislates on the basis of conflicting information provided in its hearings. In contrast, the
responsibility of the grand jury turns entirely on its ability to determine whether there is
 probable cause to believe that certain named individuals did or did not commit specific
crimes. If, for example, as in Nixon v. Sirica, one of those crimes is perjury concerning the
content of certain conversations, the grand jury's need for the most precise evidence, the
exact text of oral statements recorded in their original form, is undeniable. We see no
comparable need in the legislative process, at least not in the circumstances of this case.
Indeed, whatever force there might once have been in the Committee's argument that the
subpoenaed materials are necessary to its legislative judgments has been substantially
undermined by subsequent events. (Emphasis supplied)
Clearly, the need for hard facts in crafting legislation cannot be equated with the compelling or
demonstratively critical and specific need for facts which is so essential to the judicial power to
adjudicate actual controversies. Also, the bare standard of "pertinency" set in Arnault cannot be lightly
applied to the instant case, which unlike Arnault involves a conflict between two (2) separate, co-equal
and coordinate Branches of the Government.
So can you tell the Court how critical are these questions to the lawmaking
function of the Senate. For instance, question Number 1 whether the President
followed up the NBN project. According to the other counsel this question has
already been asked, is that correct?
ATTY. AGABIN
Well, the question has been asked but it was not answered, Your Honor.
CHIEF JUSTICE PUNO
Yes. But my question is how critical is this to the lawmaking function of the
Senate?

Whatever test we may apply, the starting point in resolving the conflicting claims between the Executive ATTY. AGABIN
and the Legislative Branches is the recognized existence of the presumptive presidential communications
privilege. This is conceded even in the Dissenting Opinion of the Honorable Chief Justice Puno, which
states: I believe it is critical, Your Honor.

A hard look at Senate v. Ermita ought to yield the conclusion that it bestowed a qualified CHIEF JUSTICE PUNO
presumption in favor of the Presidential communications privilege. As shown in the previous
discussion, U.S. v. Nixon, as well as the other related Nixon cases Sirica and Senate Select Why?
Committee on Presidential Campaign Activities, et al., v. Nixon in the D.C. Court of Appeals,
as well as subsequent cases all recognize that there is a presumptive privilege in favor of
Presidential communications. The Almonte case quoted U.S. v. Nixon and recognized a ATTY. AGABIN
presumption in favor of confidentiality of Presidential communications.
For instance, with respect to the proposed Bill of Senator Miriam Santiago, she
The presumption in favor of Presidential communications puts the burden on the respondent Senate would like to indorse a Bill to include Executive Agreements had been used as a
Committees to overturn the presumption by demonstrating their specific need for the information to be device to the circumventing the Procurement Law.
elicited by the answers to the three (3) questions subject of this case, to enable them to craft legislation.
Here, there is simply a generalized assertion that the information is pertinent to the exercise of the CHIEF JUSTICE PUNO
power to legislate and a broad and non-specific reference to pending Senate bills. It is not clear what
matters relating to these bills could not be determined without the said information sought by the three
But the question is just following it up.
(3) questions. As correctly pointed out by the Honorable Justice Dante O. Tinga in his Separate
Concurring Opinion:
ATTY. AGABIN
…If respondents are operating under the premise that the president and/or her executive
officials have committed wrongdoings that need to be corrected or prevented from I believe that may be the initial question, Your Honor, because if we look at this
recurring by remedial legislation, the answer to those three questions will not necessarily problem in its factual setting as counsel for petitioner has observed, there are
bolster or inhibit respondents from proceeding with such legislation. They could easily intimations of a bribery scandal involving high government officials.
presume the worst of the president in enacting such legislation.
CHIEF JUSTICE PUNO
For sure, a factual basis for situations covered by bills is not critically needed before legislatives bodies
can come up with relevant legislation unlike in the adjudication of cases by courts of law. Interestingly, Again, about the second question, were you dictated to prioritize this ZTE, is that
during the Oral Argument before this Court, the counsel for respondent Committees impliedly admitted critical to the lawmaking function of the Senate? Will it result to the failure of the
that the Senate could still come up with legislations even without petitioner answering the three (3) Senate to cobble a Bill without this question?
questions. In other words, the information being elicited is not so critical after all. Thus:

ATTY. AGABIN
CHIEF JUSTICE PUNO
 I think it is critical to lay the factual foundations for a proposed amendment to the
Procurement Law, Your Honor, because the petitioner had already testified that he
was offered a P200 Million bribe, so if he was offered a P200 Million bribe it is
possible that other government officials who had something to do with the
approval of the contract would be offered the same amount of bribes.
CHIEF JUSTICE PUNO
Again, that is speculative.
ATTY. AGABIN
That is why they want to continue with the investigation, Your Honor.
CHIEF JUSTICE PUNO
How about the third question, whether the President said to go ahead and
approve the project after being told about the alleged bribe. How critical is that to
the lawmaking function of the Senate? And the question is may they craft a Bill a
remedial law without forcing petitioner Neri to answer this question?
ATTY. AGABIN
Well, they can craft it, Your Honor, based on mere speculation. And sound
legislation requires that a proposed Bill should have some basis in fact.42
The failure of the counsel for respondent Committees to pinpoint the specific need for the information
sought or how the withholding of the information sought will hinder the accomplishment of their
legislative purpose is very evident in the above oral exchanges. Due to the failure of the respondent
Committees to successfully discharge this burden, the presumption in favor of confidentiality of
presidential communication stands. The implication of the said presumption, like any other, is to
dispense with the burden of proof as to whether the disclosure will significantly impair the President’s
performance of her function. Needless to state this is assumed, by virtue of the presumption.
Anent respondent Committees’ bewailing that they would have to "speculate" regarding the questions
covered by the privilege, this does not evince a compelling need for the information sought.
Indeed, Senate Select Committee on Presidential Campaign Activities v. Nixon43 held that while fact-
finding by a legislative committee is undeniably a part of its task, legislative judgments normally depend
more on the predicted consequences of proposed legislative actions and their political acceptability than
on a precise reconstruction of past events. It added that, normally, Congress legislates on the basis of
conflicting information provided in its hearings. We cannot subscribe to the respondent Committees’
self-defeating proposition that without the answers to the three (3) questions objected to as privileged,
the distinguished members of the respondent Committees cannot intelligently craft legislation.
Anent the function to curb graft and corruption, it must be stressed that respondent Committees’ need
for information in the exercise of this function is not as compelling as in instances when the purpose of
the inquiry is legislative in nature. This is because curbing graft and corruption is merely an oversight
function of Congress.44 And if this is the primary objective of respondent Committees in asking the three
(3) questions covered by privilege, it may even contradict their claim that their purpose is legislative in
nature and not oversight. In any event, whether or not investigating graft and corruption is a legislative
or oversight function of Congress, respondent Committees’ investigation cannot transgress bounds set
by the Constitution.
In Bengzon, Jr. v. Senate Blue Ribbon Committee,45 this Court ruled:
The "allocation of constitutional boundaries" is a task that this Court must perform under
the Constitution. Moreover, as held in a recent case, "the political question doctrine neither
interposes an obstacle to judicial determination of the rival claims. The jurisdiction to delimit
constitutional boundaries has been given to this Court. It cannot abdicate that obligation
mandated by the 1987 Constitution, although said provision by no means does away with the
applicability of the principle in appropriate cases.46 (Emphasis supplied)
There, the Court further ratiocinated that "the contemplated inquiry by respondent Committee is not
really ‘in aid of legislation’ because it is not related to a purpose within the jurisdiction of Congress,
since the aim of the investigation is to find out whether or not the relatives of the President or Mr.
Ricardo Lopa had violated Section 5 of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, a
matter that appears more within the province of the courts rather than of the Legislature."47 (Emphasis
and underscoring supplied)
The general thrust and the tenor of the three (3) questions is to trace the alleged bribery to the Office of
the President.48 While it may be a worthy endeavor to investigate the potential culpability of high
government officials, including the President, in a given government transaction, it is simply not a task
for the Senate to perform. The role of the Legislature is to make laws, not to determine anyone’s guilt of
a crime or wrongdoing. Our Constitution has not bestowed upon the Legislature the latter role. Just as
the Judiciary cannot legislate, neither can the Legislature adjudicate or prosecute.
Respondent Committees claim that they are conducting an inquiry in aid of legislation and a "search for
truth," which in respondent Committees’ view appears to be equated with the search for persons
responsible for "anomalies" in government contracts.
No matter how noble the intentions of respondent Committees are, they cannot assume the power
reposed upon our prosecutorial bodies and courts. The determination of who is/are liable for a crime or
illegal activity, the investigation of the role played by each official, the determination of who should be
haled to court for prosecution and the task of coming up with conclusions and finding of facts regarding
anomalies, especially the determination of criminal guilt, are not functions of the Senate. Congress is
neither a law enforcement nor a trial agency. Moreover, it bears stressing that no inquiry is an end in
itself; it must be related to, and in furtherance of, a legitimate task of the Congress, i.e. legislation.
Investigations conducted solely to gather incriminatory evidence and "punish" those investigated are
indefensible. There is no Congressional power to expose for the sake of exposure.49 In this regard, the
pronouncement in Barenblatt v. United States50 is instructive, thus:
Broad as it is, the power is not, however, without limitations. Since Congress may only
investigate into the areas in which it may potentially legislate or appropriate, it cannot inquire
into matters which are within the exclusive province of one of the other branches of the
government. Lacking the judicial power given to the Judiciary, it cannot inquire into matters
that are exclusively the concern of the Judiciary. Neither can it supplant the Executive in what
exclusively belongs to the Executive. (Emphasis supplied.)
At this juncture, it is important to stress that complaints relating to the NBN Project have already been
filed against President Arroyo and other personalities before the Office of the Ombudsman. Under our
Constitution, it is the Ombudsman who has the duty "to investigate any act or omission of any public
official, employee, office or agency when such act or omission appears to be illegal, unjust, improper,
or inefficient."51 The Office of the Ombudsman is the body properly equipped by the Constitution and
our laws to preliminarily determine whether or not the allegations of anomaly are true and who are
liable therefor. The same holds true for our courts upon which the Constitution reposes the duty to
determine criminal guilt with finality. Indeed, the rules of procedure in the Office of the Ombudsman and
the courts are well-defined and ensure that the constitutionally guaranteed rights of all persons,
parties and witnesses alike, are protected and safeguarded.
Should respondent Committees uncover information related to a possible crime in the course of their
investigation, they have the constitutional duty to refer the matter to the appropriate agency or branch
of government. Thus, the Legislature’s need for information in an investigation of graft and corruption
cannot be deemed compelling enough to pierce the confidentiality of information validly covered by
executive privilege. As discussed above, the Legislature can still legislate on graft and corruption even
without the information covered by the three (3) questions subject of the petition.
Corollarily, respondent Committees justify their rejection of petitioner’s claim of executive privilege on
the ground that there is no privilege when the information sought might involve a crime or illegal
activity, despite the absence of an administrative or judicial determination to that effect. Significantly,
however, in Nixon v. Sirica,52 the showing required to overcome the presumption favoring confidentiality
turned, not on the nature of the presidential conduct that the subpoenaed material might reveal, but,
instead, on the nature and appropriateness of the function in the performance of which the material
was sought, and the degree to which the material was necessary to its fulfillment.
Respondent Committees assert that Senate Select Committee on Presidential Campaign Activities v.
Nixon does not apply to the case at bar because, unlike in the said case, no impeachment proceeding has
been initiated at present. The Court is not persuaded. While it is true that no impeachment proceeding
has been initiated, however, complaints relating to the NBN Project have already been filed against
President Arroyo and other personalities before the Office of the Ombudsman. As the Court has said
earlier, the prosecutorial and judicial arms of government are the bodies equipped and mandated by the
Constitution and our laws to determine whether or not the allegations of anomaly in the NBN Project are
true and, if so, who should be prosecuted and penalized for criminal conduct.
Legislative inquiries, unlike court proceedings, are not subject to the exacting standards of evidence
essential to arrive at accurate factual findings to which to apply the law. Hence, Section 10 of the Senate
Rules of Procedure Governing Inquiries in Aid of Legislation provides that "technical rules of evidence
applicable to judicial proceedings which do not affect substantive rights need not be observed by the
Committee." Court rules which prohibit leading, hypothetical, or repetitive questions or questions calling
for a hearsay answer, to name a few, do not apply to a legislative inquiry. Every person, from the highest
public official to the most ordinary citizen, has the right to be presumed innocent until proven guilty in
proper proceedings by a competent court or body.
IV
Respondent Committees Committed Grave
Abuse of Discretion in Issuing the Contempt Order
Respondent Committees insist that they did not commit grave abuse of discretion in issuing the
contempt order because (1) there is no legitimate claim of executive privilege; (2) they did not violate
the requirements laid down in Senate v. Ermita; (3) they issued the contempt order in accordance with
their internal Rules; (4) they did not violate the requirement under Article VI, Section 21 of the
Constitution requiring the publication of their Rules; and (5) their issuance of the contempt order is not
arbitrary or precipitate.
We reaffirm our earlier ruling.
The legitimacy of the claim of executive privilege having been fully discussed in the preceding pages, we
see no reason to discuss it once again.
Respondent Committees’ second argument rests on the view that the ruling in Senate v. Ermita,
requiring invitations or subpoenas to contain the "possible needed statute which prompted the need for
the inquiry" along with the "usual indication of the subject of inquiry and the questions relative to and in
furtherance thereof" is not provided for by the Constitution and is merely an obiter dictum.
On the contrary, the Court sees the rationale and necessity of compliance with these requirements.
An unconstrained congressional investigative power, like an unchecked Executive, generates its own
abuses. Consequently, claims that the investigative power of Congress has been abused (or has the
potential for abuse) have been raised many times.53 Constant exposure to congressional subpoena takes
its toll on the ability of the Executive to function effectively. The requirements set forth in Senate v.
Ermita are modest mechanisms that would not unduly limit Congress’ power. The legislative inquiry
must be confined to permissible areas and thus, prevent the "roving commissions" referred to in the U.S.
case, Kilbourn v. Thompson.54 Likewise, witnesses have their constitutional right to due process. They
should be adequately informed what matters are to be covered by the inquiry. It will also allow them to
prepare the pertinent information and documents. To our mind, these requirements concede too little
political costs or burdens on the part of Congress when viewed vis-à-vis the immensity of its power of
inquiry. The logic of these requirements is well articulated in the study conducted by William P.
Marshall,55 to wit:
A second concern that might be addressed is that the current system allows committees to
continually investigate the Executive without constraint. One process solution addressing this
concern is to require each investigation be tied to a clearly stated purpose. At present, the
charters of some congressional committees are so broad that virtually any matter involving
the Executive can be construed to fall within their province. Accordingly, investigations can
proceed without articulation of specific need or purpose. A requirement for a more precise
charge in order to begin an inquiry should immediately work to limit the initial scope of the
investigation and should also serve to contain the investigation once it is
instituted. Additionally, to the extent clear statements of rules cause legislatures to pause
and seriously consider the constitutional implications of proposed courses of action in other
areas, they would serve that goal in the context of congressional investigations as well.
The key to this reform is in its details. A system that allows a standing committee to simply
articulate its reasons to investigate pro forma does no more than imposes minimal drafting
burdens. Rather, the system must be designed in a manner that imposes actual burdens on
the committee to articulate its need for investigation and allows for meaningful debate
about the merits of proceeding with the investigation. (Emphasis supplied)
Clearly, petitioner’s request to be furnished an advance copy of questions is a reasonable demand that
should have been granted by respondent Committees.
Unfortunately, the Subpoena Ad Testificandum dated November 13, 2007 made no specific reference to
any pending Senate bill. It did not also inform petitioner of the questions to be asked. As it were, the
subpoena merely commanded him to "testify on what he knows relative to the subject matter under
inquiry."
Anent the third argument, respondent Committees contend that their Rules of Procedure Governing
Inquiries in Aid of Legislation (the "Rules") are beyond the reach of this Court. While it is true that this
Court must refrain from reviewing the internal processes of Congress, as a co-equal branch of
government, however, when a constitutional requirement exists, the Court has the duty to look into
Congress’ compliance therewith. We cannot turn a blind eye to possible violations of the Constitution
simply out of courtesy. In this regard, the pronouncement in Arroyo v. De Venecia56 is enlightening, thus:
"Cases both here and abroad, in varying forms of expression, all deny to the courts the power
to inquire into allegations that, in enacting a law, a House of Congress failed to comply with
its own rules, in the absence of showing that there was a violation of a constitutional
provision or the rights of private individuals.
United States v. Ballin, Joseph & Co., the rule was stated thus: ‘The Constitution empowers
each House to determine its rules of proceedings. It may not by its rules ignore
constitutional restraints or violate fundamental rights, and there should be a reasonable
relation between the mode or method of proceeding established by the rule and the result
which is sought to be attained."
In the present case, the Court’s exercise of its power of judicial review is warranted because there
appears to be a clear abuse of the power of contempt on the part of respondent Committees. Section 18
of the Rules provides that:
"The Committee, by a vote of majority of all its members, may punish for contempt any
witness before it who disobey any order of the Committee or refuses to be sworn or to testify
or to answer proper questions by the Committee or any of its members." (Emphasis supplied)
In the assailed Decision, we said that there is a cloud of doubt as to the validity of the contempt order
because during the deliberation of the three (3) respondent Committees, only seven (7) Senators were
present. This number could hardly fulfill the majority requirement needed by respondent Committee on
Accountability of Public Officers and Investigations which has a membership of seventeen (17) Senators
and respondent Committee on National Defense and Security which has a membership of eighteen (18)
Senators. With respect to respondent Committee on Trade and Commerce which has a membership of
nine (9) Senators, only three (3) members were present.57 These facts prompted us to quote in the
Decision the exchanges between Senators Alan Peter Cayetano and Aquilino Pimentel, Jr. whereby the
former raised the issue of lack of the required majority to deliberate and vote on the contempt order.
When asked about such voting during the March 4, 2008 hearing before this Court, Senator Francis
Pangilinan stated that any defect in the committee voting had been cured because two-thirds of the
Senators effectively signed for the Senate in plenary session.58
Obviously the deliberation of the respondent Committees that led to the issuance of the contempt order
is flawed. Instead of being submitted to a full debate by all the members of the respondent Committees,
the contempt order was prepared and thereafter presented to the other members for signing. As a
result, the contempt order which was issued on January 30, 2008 was not a faithful representation of the
proceedings that took place on said date. Records clearly show that not all of those who signed the
contempt order were present during the January 30, 2008 deliberation when the matter was taken up.
Section 21, Article VI of the Constitution states that:
The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The
rights of person appearing in or affected by such inquiries shall be respected. (Emphasis
supplied)
All the limitations embodied in the foregoing provision form part of the witness’ settled expectation. If
the limitations are not observed, the witness’ settled expectation is shattered. Here, how could there be
a majority vote when the members in attendance are not enough to arrive at such majority? Petitioner
has the right to expect that he can be cited in contempt only through a majority vote in a proceeding in
which the matter has been fully deliberated upon. There is a greater measure of protection for the
witness when the concerns and objections of the members are fully articulated in such proceeding. We
do not believe that respondent Committees have the discretion to set aside their rules anytime they
wish. This is especially true here where what is involved is the contempt power. It must be stressed that
the Rules are not promulgated for their benefit. More than anybody else, it is the witness who has the
highest stake in the proper observance of the Rules.
Having touched the subject of the Rules, we now proceed to respondent Committees’ fourth argument.
Respondent Committees argue that the Senate does not have to publish its Rules because the same was
published in 1995 and in 2006. Further, they claim that the Senate is a continuing body; thus, it is not
required to republish the Rules, unless the same is repealed or amended.
On the nature of the Senate as a "continuing body," this Court sees fit to issue a clarification. Certainly,
there is no debate that the Senate as an institution is "continuing", as it is not dissolved as an entity with
each national election or change in the composition of its members. However, in the conduct of its day-
to-day business the Senate of each Congress acts separately and independently of the Senate of the
Congress before it. The Rules of the Senate itself confirms this when it states:
RULE XLIV
UNFINISHED BUSINESS
SEC. 123. Unfinished business at the end of the session shall be taken up at the next session in
the same status.
All pending matters and proceedings shall terminate upon the expiration of one (1)
Congress, but may be taken by the succeeding Congress as if present for the first time.
(emphasis supplied)
Undeniably from the foregoing, all pending matters and proceedings, i.e. unpassed bills and even
legislative investigations, of the Senate of a particular Congress are considered terminated upon the
expiration of that Congress and it is merely optional on the Senate of the succeeding Congress to take up
such unfinished matters, not in the same status, but as if presented for the first time. The logic and
practicality of such a rule is readily apparent considering that the Senate of the succeeding Congress
(which will typically have a different composition as that of the previous Congress) should not be bound
by the acts and deliberations of the Senate of which they had no part. If the Senate is a continuing body
even with respect to the conduct of its business, then pending matters will not be deemed terminated
with the expiration of one Congress but will, as a matter of course, continue into the next Congress with
the same status.
This dichotomy of the continuity of the Senate as an institution and of the opposite nature of the
conduct of its business is reflected in its Rules. The Rules of the Senate (i.e. the Senate’s main rules of
procedure) states:
 RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE RULES
SEC. 136. At the start of each session in which the Senators elected in the preceding elections
shall begin their term of office, the President may endorse the Rules to the appropriate
committee for amendment or revision.
The Rules may also be amended by means of a motion which should be presented at least
one day before its consideration, and the vote of the majority of the Senators present in the
session shall be required for its approval. (emphasis supplied)
RULE LII
DATE OF TAKING EFFECT
SEC. 137. These Rules shall take effect on the date of their adoption and shall remain in force
until they are amended or repealed. (emphasis supplied)
Section 136 of the Senate Rules quoted above takes into account the new composition of the Senate
after an election and the possibility of the amendment or revision of the Rules at the start
of each session in which the newly elected Senators shall begin their term.
However, it is evident that the Senate has determined that its main rules are intended to be valid from
the date of their adoption until they are amended or repealed. Such language is conspicuously absent
from the Rules. The Rules simply state "(t)hese Rules shall take effect seven (7) days after publication in
two (2) newspapers of general circulation."59 The latter does not explicitly provide for the continued
effectivity of such rules until they are amended or repealed. In view of the difference in the language of
the two sets of Senate rules, it cannot be presumed that the Rules (on legislative inquiries) would
continue into the next Congress. The Senate of the next Congress may easily adopt different rules for its
legislative inquiries which come within the rule on unfinished business.
The language of Section 21, Article VI of the Constitution requiring that the inquiry be conducted in
accordance with the duly published rules of procedure is categorical. It is incumbent upon the Senate to
publish the rules for its legislative inquiries in each Congress or otherwise make the published rules
clearly state that the same shall be effective in subsequent Congresses or until they are amended or
repealed to sufficiently put public on notice.
If it was the intention of the Senate for its present rules on legislative inquiries to be effective even in the
next Congress, it could have easily adopted the same language it had used in its main rules regarding
effectivity.
Lest the Court be misconstrued, it should likewise be stressed that not all orders issued or proceedings
conducted pursuant to the subject Rules are null and void. Only those that result in violation of the rights
of witnesses should be considered null and void, considering that the rationale for the publication is to
protect the rights of witnesses as expressed in Section 21, Article VI of the Constitution. Sans such
violation, orders and proceedings are considered valid and effective.
Respondent Committees’ last argument is that their issuance of the contempt order is not precipitate or
arbitrary. Taking into account the totality of circumstances, we find no merit in their argument.
As we have stressed before, petitioner is not an unwilling witness, and contrary to the assertion of
respondent Committees, petitioner did not assume that they no longer had any other questions for him.
He repeatedly manifested his willingness to attend subsequent hearings and respond to new matters.
His only request was that he be furnished a copy of the new questions in advance to enable him to
adequately prepare as a resource person. He did not attend the November 20, 2007 hearing because
Executive Secretary Ermita requested respondent Committees to dispense with his testimony on the
ground of executive privilege. Note that petitioner is an executive official under the direct control and
supervision of the Chief Executive. Why punish petitioner for contempt when he was merely directed by
his superior? Besides, save for the three (3) questions, he was very cooperative during the September 26,
2007 hearing.
On the part of respondent Committees, this Court observes their haste and impatience. Instead of ruling
on Executive Secretary Ermita’s claim of executive privilege, they curtly dismissed it as unsatisfactory and
ordered the arrest of petitioner. They could have informed petitioner of their ruling and given him time
to decide whether to accede or file a motion for reconsideration. After all, he is not just an ordinary
witness; he is a high- ranking official in a co-equal branch of government. He is an alter ego of the
President. The same haste and impatience marked the issuance of the contempt order, despite the
absence of the majority of the members of the respondent Committees, and their subsequent disregard
of petitioner’s motion for reconsideration alleging the pendency of his petition for certiorari before this
Court.
On a concluding note, we are not unmindful of the fact that the Executive and the Legislature are
political branches of government. In a free and democratic society, the interests of these branches
inevitably clash, but each must treat the other with official courtesy and respect. This Court
wholeheartedly concurs with the proposition that it is imperative for the continued health of our
democratic institutions that we preserve the constitutionally mandated checks and balances among the
different branches of government.
In the present case, it is respondent Committees’ contention that their determination on the validity of
executive privilege should be binding on the Executive and the Courts. It is their assertion
that their internal procedures and deliberations cannot be inquired into by this Court supposedly in
accordance with the principle of respect between co-equal branches of government. Interestingly, it is a
courtesy that they appear to be unwilling to extend to the Executive (on the matter of executive
privilege) or this Court (on the matter of judicial review). It moves this Court to wonder: In respondent
Committees’ paradigm of checks and balances, what are the checks to the Legislature’s all-
encompassing, awesome power of investigation? It is a power, like any other, that is susceptible to grave
abuse.
While this Court finds laudable the respondent Committees’ well-intentioned efforts to ferret out
corruption, even in the highest echelons of government, such lofty intentions do not validate or accord
to Congress powers denied to it by the Constitution and granted instead to the other branches of
government.
There is no question that any story of government malfeasance deserves an inquiry into its veracity. As
respondent Committees contend, this is founded on the constitutional command of transparency and
public accountability. The recent clamor for a "search for truth" by the general public, the religious
community and the academe is an indication of a concerned citizenry, a nation that demands an
accounting of an entrusted power. However, the best venue for this noble undertaking is not in the
political branches of government. The customary partisanship and the absence of generally accepted
rules on evidence are too great an obstacle in arriving at the truth or achieving justice that meets the
test of the constitutional guarantee of due process of law. We believe the people deserve a more
exacting "search for truth" than the process here in question, if that is its objective.
WHEREFORE, respondent Committees’ Motion for Reconsideration dated April 8, 2008 is
hereby DENIED.
SO ORDERED.
EN BANC
[G.R. NO. 167173 : December 27, 2007]
STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON MORRIS, SUNDARA RAMESH, OWEN
BELMAN, SANJAY AGGARWAL, RAJAMANI CHANDRASHEKAR, MARIVEL GONZALES, MA. ELLEN
VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS, RAMONA BERNAD, MICHAELANGELO AGUILAR, and
FERNAND TANSINGCO, Petitioners, v. SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND
CURRENCIES, as represented by its Chairperson, HON. EDGARDO J. ANGARA, Respondent.
legislation, to prevent the occurrence of a similar fraudulent activity in the future. Upon motion of
Senator Francis Pangilinan, the speech was referred to respondent. Prior to the privilege speech, Senator
Enrile had introduced P.S. Resolution No. 166,2 to wit:
RESOLUTION
DIRECTING THE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, TO CONDUCT AN
INQUIRY, IN AID OF LEGISLATION, INTO THE ILLEGAL SALE OF UNREGISTERED AND HIGH-RISK
SECURITIES BY STANDARD CHARTERED BANK, WHICH RESULTED IN BILLIONS OF PESOS OF LOSSES TO
THE INVESTING PUBLIC
WHEREAS, Republic Act No. 7721, otherwise known as the "Law Liberalizing the Entry and Scope of
Operations of Foreign Banks in the Philippines," was approved on May 18, 1994 to promote greater
participation of foreign banks in the Philippine Banking Industry that will stimulate economic growth and
serve as a channel for the flow of funds into the economy;

DECISION
WHEREAS, to promote greater competition in the Philippine Banking Industry, foreign banks were
accorded the same privileges, allowed to perform the same functions and subjected to the same
NACHURA, J.: limitations under relevant banking laws imposed upon domestic banks;

Before us is a Petition for Prohibition (With Prayer for Issuance of Temporary Restraining Order and/or WHEREAS, Standard Chartered Bank was among the foreign banks granted the privilege to do business in
Injunction) dated and filed on March 11, 2005 by petitioners against respondent Senate Committee on our country under Republic Act No. 7721;
Banks, Financial Institutions and Currencies, as represented by its Chairperson Edgardo J. Angara
(respondent).
WHEREAS, there are complaints against Standard Chartered Bank whose actions have reportedly
defrauded hundreds of Filipino investors of billions of pesos through the sale of unregistered securities in
Petitioner Standard Chartered Bank (SCB)-Philippines is an institution incorporated in England with the form of high-risk mutual funds falsely advertised and marketed as safe investment havens;
limited liability and is licensed to engage in banking, trust, and other related operations in the
Philippines. Petitioners Paul Simon Morris, Sundara Ramesh, Owen Belman, Sanjay Aggarwal, Rajamani
WHEREAS, there are reports that Standard Chartered Bank clearly knew that its actions were violative of
Chandrashekar, Marivel Gonzales, Ma. Ellen Victor, Chona G. Reyes, Zenaida Iglesias, Ramona Bernad,
Philippine banking and securities laws but cleverly disguised its illegal acts through the use of pro-forma
Michaelangelo Aguilar, and Fernand Tansingco are the Chief Executive Officer, Chief Operations Officer,
agreements containing waivers of liability in favor of the bank;
Country Head of Consumer Banking, General Manager for Credit Card and Personal Loans, Chief Financial
Officer, Legal and Compliance Officer, former Trust and Investment Services Head, Country Tax Officer,
Head of Corporate Affairs, Head of Banking Services, Head of Client Relationships, and the Head of WHEREAS, there are reports that in the early stages of conducting these questionable activities, the
Global Markets of SCB-Philippines, respectively. Respondent, on the other hand, is one of the permanent Bangko Sentral ng Pilipinas warned and eventually fined Standard Chartered Bank a measly P30,000 for
committees of the Senate of the Philippines. violating Philippine banking laws;

The petition seeks the issuance of a temporary restraining order (TRO) to enjoin respondent from (1) WHEREAS, the particular operations of Standard Chartered Bank may constitute "conducting business in
proceeding with its inquiry pursuant to Philippine Senate (P.S.) Resolution No. 166; (2) compelling an unsafe and unsound manner," punishable under Section 37 of Republic Act No. 7653 and should have
petitioners who are officers of petitioner SCB-Philippines to attend and testify before any further hearing drawn the higher penalty of revocation of its quasi-banking license;
to be conducted by respondent, particularly that set on March 15, 2005; and (3) enforcing any hold-
departure order (HDO) and/or putting the petitioners on the Watch List. It also prays that judgment be
WHEREAS, Republic Act No. 8791 or the "General Banking Act of 2000" deems a particular act or
rendered (1) annulling the subpoenae ad testificandum and duces tecum issued to petitioners, and (2)
omission as conducting business in an unsafe and unsound manner as follows:
prohibiting the respondent from compelling petitioners to appear and testify in the inquiry being
conducted pursuant to P.S. Resolution No. 166.
"Section 56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk
to the institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public
The facts are as follows:
in general."

On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of respondent, delivered a privilege
WHEREAS, the sale of unregistered securities is also a clear violation of Republic Act No. 8799 or "The
speech entitled "Arrogance of Wealth"1 before the Senate based on a letter from Atty. Mark R. Bocobo
Securities Regulation Code of 2000" which states:
denouncing SCB-Philippines for selling unregistered foreign securities in violation of the Securities
Regulation Code (R.A. No. 8799) and urging the Senate to immediately conduct an inquiry, in aid of
"Section 8.1 Securities shall not be sold or offered for sale or distribution within the Philippines, without
a registration statement duly filed with and approved by the Commission. Prior to such sale, information
on the securities, in such form and with such substance as the Commission may prescribe, shall be made
available to each prospective purchaser."
WHEREAS, the Securities and Exchange Commission (SEC) reportedly issued a Cease-and-Desist Order
(CDO) against Standard Chartered Bank for the sale of these unregistered securities but the case was
reportedly settled administratively and dismissed after Standard Chartered Bank paid a fine of P7
Million;
WHEREAS, the SEC reportedly made an official finding that Standard Chartered Bank actively engaged in
promoting and marketing the so-called "Global Third Party Mutual Funds" to the investing public and
even set revenue quotas for the sale of these funds;
WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing
the sale of unregistered securities and in effectively enforcing the registration rules intended to protect
the investing public from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition
of proportionate penalties to offending entities and their directors, officers and representatives among
other additional regulatory measures;
Now, therefore, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to direct the Committee on Banks,
Currencies, and Financial Institutions, to conduct an inquiry, in aid of legislation, into the reported sale of
unregistered and high-risk securities by Standard Chartered Bank which resulted in billions of losses to
the investing public.
Acting on the referral, respondent, through its Chairperson, Senator Edgardo J. Angara, set the initial
hearing on February 28, 2005 to investigate, in aid of legislation, the subject matter of the speech and
resolution filed by Senator Enrile.
Respondent invited petitioners, among others, to attend the hearing, requesting them to submit their
written position paper. Petitioners, through counsel, submitted to respondent a letter3 dated February
24, 2005 presenting their position, particularly stressing that there were cases pending in court allegedly
involving the same issues subject of the legislative inquiry, thereby posing a challenge to the jurisdiction
of respondent to continue with the inquiry.
On February 28, 2005, respondent commenced the investigation. Senator Enrile inquired who among
those invited as resource persons were present and who were absent. Thereafter, Senator Enrile moved
that subpoenae be issued to those who did not attend the hearing and that the Senate request the
Department of Justice, through the Bureau of Immigration and Deportation, to issue an HDO against
them and/or include them in the Bureau's Watch List. Senator Juan Flavier seconded the motion and the
motion was approved.
Respondent then proceeded with the investigation proper. Towards the end of the hearing, petitioners,
through counsel, made an Opening Statement4 that brought to the attention of respondent the lack of
proper authorization from affected clients for the bank to make disclosures of their accounts and the
lack of copies of the accusing documents mentioned in Senator Enrile's privilege speech, and reiterated
that there were pending court cases regarding the alleged sale in the Philippines by SCB-Philippines of
unregistered foreign securities.
The February 28, 2005 hearing was adjourned without the setting of the next hearing date. However,
petitioners were later served by respondent with subpoenae ad testificandum and duces tecum to
compel them to attend and testify at the hearing set on March 15, 2005. Hence, this petition.
The grounds relied upon by petitioners are as follows:
I.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN CONDUCTING AN INVESTIGATION, PURPORTEDLY IN AID OF
LEGISLATION, BUT IN REALITY PROBING INTO THE ISSUE OF WHETHER THE STANDARD CHARTERED BANK
HAD SOLD UNREGISTERED FOREIGN SECURITIES IN THE PHILIPPINES. SAID ISSUE HAS LONG BEEN THE
SUBJECT OF CRIMINAL AND CIVIL ACTIONS NOW PENDING BEFORE THE COURT OF APPEALS, REGIONAL
TRIAL COURT OF PASIG CITY, METROPOLITAN TRIAL COURT OF MAKATI CITY AND THE PROSECUTOR'S
OFFICE OF MAKATI CITY.
II.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION BY
CONDUCTING AN INVESTIGATION, PURPORTEDLY "IN AID OF LEGISLATION," BUT IN REALITY IN "AID OF
COLLECTION" BY A HANDFUL OF TWO (2) CLIENTS OF STANDARD CHARTERED BANK OF LOSSES WHICH
WERE FOR THEIR ACCOUNT AND RISK. AT ANY RATE, SUCH COLLECTION IS WITHIN THE PROVINCE OF
THE COURT RATHER THAN OF THE LEGISLATURE.
III.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN COMPELLING PETITIONERS, SOME OF WHOM ARE
RESPONDENTS IN THE PENDING CRIMINAL AND CIVIL ACTIONS BROUGHT BY SAID CLIENTS, IN
VIOLATION OF PETITIONERS' RIGHT AGAINST SELF-INCRIMINATION AND RIGHT TO PURSUE AND DEFEND
THEIR CAUSE IN COURT RATHER THAN ENGAGE IN TRIAL BY PUBLICITY - A CLEAR VIOLATION OF DUE
PROCESS, RIGHT TO PRIVACY AND TO TRAVEL.
IV.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION BY
DISREGARDING ITS OWN RULES.5
Petitioners argue that respondent has no jurisdiction to conduct the inquiry because its subject matter is
the very same subject matter of the following cases, to wit:
(a) CA-G.R. SP No. 85078, entitled "Manuel V. Baviera v. Hon. Esperanza P. Rosario, et al., pending before
the 9th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the
dismissal by the Department of Justice of his complaint against Standard Chartered Bank and its officers
accusing them of SELLING UNREGISTERED FOREIGN SECURITIES IN VIOLATION OF P.D. NO. 1869
(SYNDICATED ESTAFA) AND ARTICLE 315 OF THE REVISED PENAL CODE.
(b) CA-G.R. SP No. 86200, entitled "Manuel V. Baviera v. Hon. Rafael Buenaventura, et al.", pending
before the 15th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside
the termination for lack of probable cause by the Anti-Money Laundering Council ("AMLC") of the
investigation of Standard Chartered Bank for money laundering activities BY SELLING UNREGISTERED
FOREIGN SECURITIES.
(c) CA-G.R. SP No. 87328, entitled "Manuel V. Baviera v. Hon. Esperanza Paglinawan Rozario, et
al.," pending before the 16th Division of the Court of Appeals. The petition seeks to annul and set aside
the dismissal by the Department of Justice of Mr. Baviera's complaint accusing SCB and its officers of
violation of the Securities Regulation Code by SELLING UNREGISTERED FOREIGN SECURITIES.
(d) Civil Case No. 70173, entitled "Mr. Noel G. Sanchez, et al. v. Standard Chartered Bank," pending
before Branch 155 of the Regional Trial Court of Pasig City. Plaintiff seeks damages and recovery of their
investment accusing the bank of SELLING UNREGISTERED FOREIGN SECURITIES.
(e) Criminal Case No. 332034, entitled "People of the Philippines v. Manuel V. Baviera," pending before
Branch 64 of the Metropolitan Trial Court of Makati City. Petitioner Morris is the private complainant in
this information for extortion or blackmail against Mr. Baviera for demanding the payment of US$2
Million with the threat to EXPOSE THE BANK'S "LARGE SCALE SCAM" CONSISTING [OF] ILLEGAL SELLING
OF UNREGISTERED FOREIGN SECURITIES BY THE BANK, before various government offices, such as the
Department of Justice, the BIR, Bangko Sentral ng Pilipinas, Regional Trial Courts, and both houses of
Congress.
(f) Criminal Case No. 331395, entitled "People of the Philippines v. Manuel V. Baviera," pending before
Branch 64 of the Metropolitan Trial Court of Makati City. Petitioners Victor and Chona Reyes are the
private complainants in this information for perjury committed by Mr. Baviera in securing a hold
departure order against the petitioners herein from the Department of Justice for their alleged
involvement in syndicated estafa and swindling BY SELLING UNREGISTERED FOREIGN SECURITIES.
(g) I.S. No. 2004-B-2279-80, entitled "Aurelio Litonjua III and Aurelio Litonjua, Jr. v. Antonette de los
Reyes, et al.," pending before the Office of the Prosecutor, Makati City. This is a criminal complaint
accusing SCB and its officers of estafa for SELLING UNREGISTERED FOREIGN SECURITIES.6
Citing Bengzon, Jr. v. Senate Blue Ribbon Committee,7 the petitioners claim that since the issue of
whether or not SCB-Philippines illegally sold unregistered foreign securities is already preempted by the
courts that took cognizance of the foregoing cases, the respondent, by this investigation, would
encroach upon the judicial powers vested solely in these courts.
The argument is misplaced. Bengzon does not apply squarely to petitioners' case.
It is true that in Bengzon, the Court declared that the issue to be investigated was one over which
jurisdiction had already been acquired by the Sandiganbayan, and to allow the [Senate Blue Ribbon]
Committee to investigate the matter would create the possibility of conflicting judgments; and that the
inquiry into the same justiciable controversy would be an encroachment on the exclusive domain of
judicial jurisdiction that had set in much earlier.
To the extent that, in the case at bench, there are a number of cases already pending in various courts
and administrative bodies involving the petitioners, relative to the alleged sale of unregistered foreign
securities, there is a resemblance between this case and Bengzon. However, the similarity ends there.
Central to the Court's ruling in Bengzon - - that the Senate Blue Ribbon Committee was without any
constitutional mooring to conduct the legislative investigation - - was the Court's determination that the
intended inquiry was not in aid of legislation. The Court found that the speech of Senator Enrile, which
sought such investigation contained no suggestion of any contemplated legislation; it merely called upon
the Senate to look into possible violations of Section 5, Republic Act No. 3019. Thus, the Court held that
the requested probe failed to comply with a fundamental requirement of Section 21, Article VI of the
Constitution, which states:
The Senate or the House of Representatives or any of its respective committees may conduct inquiries in
aid of legislation in accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected.
Accordingly, we stopped the Senate Blue Ribbon Committee from proceeding with the legislative
investigation in that case.
Unfortunately for the petitioners, this distinguishing factual milieu in Bengzon does not obtain in the
instant case. P.S. Resolution No. 166 is explicit on the subject and nature of the inquiry to be (and
already being) conducted by the respondent Committee, as found in the last three Whereas clauses
thereof, viz.:
WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing
the sale of unregistered securities and in effectively enforcing the registration rules intended to protect
the investing public from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition
of proportionate penalties to offending entities and their directors, officers and representatives among
other additional regulatory measures; (emphasis supplied)
The unmistakable objective of the investigation, as set forth in the said resolution, exposes the error in
petitioners' allegation that the inquiry, as initiated in a privilege speech by the very same Senator Enrile,
was simply "to denounce the illegal practice committed by a foreign bank in selling unregistered foreign
securities x x x." This fallacy is made more glaring when we consider that, at the conclusion of his
privilege speech, Senator Enrile urged the Senate "to immediately conduct an inquiry, in aid of
legislation, so as to prevent the occurrence of a similar fraudulent activity in the future."
Indeed, the mere filing of a criminal or an administrative complaint before a court or a quasi-judicial
body should not automatically bar the conduct of legislative investigation. Otherwise, it would be
extremely easy to subvert any intended inquiry by Congress through the convenient ploy of instituting a
criminal or an administrative complaint. Surely, the exercise of sovereign legislative authority, of which
the power of legislative inquiry is an essential component, cannot be made subordinate to a criminal or
an administrative investigation.
As succinctly stated in the landmark case Arnault v. Nazareno8'
[T]he power of inquiry - with process to enforce it - is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively in the absence of information
respecting the conditions which the legislation is intended to affect or change; and where the legislative
body does not itself possess the requisite information - which is not infrequently true - recourse must be
had to others who possess it.
Neither can the petitioners claim that they were singled out by the respondent Committee. The Court
notes that among those invited as resource persons were officials of the Securities and Exchange
Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). These officials were subjected to the same
critical scrutiny by the respondent relative to their separate findings on the illegal sale of unregistered
foreign securities by SCB-Philippines. It is obvious that the objective of the investigation was the quest
for remedies, in terms of legislation, to prevent the recurrence of the allegedly fraudulent activity.
Still, petitioners insist that the inquiry conducted by respondent was, in fact, "in aid of collection." They
claim that Atty. Bocobo and Manuel Baviera, the latter a party to the pending court cases cited by
petitioners, were only seeking a friendly forum so that they could recover their investments from SCB-
Philippines; and that the respondent has allowed itself to be used as the conveniently available vehicle to
effect this purpose.
However, as correctly pointed out by respondent in its Comment on the petition, Atty. Bocobo did not
file a complaint before the Senate for the purpose of recovering his investment. On the contrary, and as
confirmed during the initial hearing on February 28, 2005, his letter-complaint humbly requested the
Senate to conduct an inquiry into the purportedly illegal activities of SCB-Philippines, with the end view
of preventing the future occurrence of any similar fraudulent activity by the banks in general.9 Baviera,
on the other hand, was not a "complainant" but merely a witness in the investigation, invited to testify
on the alleged illegal sale of unregistered foreign securities by SCB-Philippines, being one of the
supposed victims thereof.
The Court further notes that when it denied petitioners' prayer for the issuance of a TRO to restrain the
hearing set on March 15, 2005,10 respondent proceeded with the investigation. On the said date,
outraged by petitioners' imputation that it was conducting the investigation "in aid of collection,"
respondent held petitioners, together with their counsel, Atty. Reynaldo Geronimo, in contempt and
ordered their detention for six hours.
Petitioners filed a Motion for Partial Reconsideration of this Court's Resolution dated March 14, 2005
only with respect to the denial of the prayer for the issuance of a TRO and/or writ of preliminary
injunction, alleging that their being held in contempt was without legal basis, as the phrase "in aid of
collection" partakes of an absolutely privileged allegation in the petition.
We do not agree. The Court has already expounded on the essence of the contempt power of Congress
and its committees in this wise'
The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is founded
upon reason and policy. Said power must be considered implied or incidental to the exercise of
legislative power. How could a legislative body obtain the knowledge and information on which to base
intended legislation if it cannot require and compel the disclosure of such knowledge and information, if
it is impotent to punish a defiance of its power and authority? When the framers of the Constitution
adopted the principle of separation of powers, making each branch supreme within the realm of its
respective authority, it must have intended each department's authority to be full and complete,
independently of each other's authority or power. And how could the authority and power become
complete if for every act of refusal, every act of defiance, every act of contumacy against it, the
legislative body must resort to the judicial department for the appropriate remedy, because it is
impotent by itself to punish or deal therewith, with affronts committed against its authority or dignity.11
The exercise by Congress or by any of its committees of the power to punish contempt is based on the
principle of self-preservation. As the branch of the government vested with the legislative power,
independently of the judicial branch, it can assert its authority and punish contumacious acts against it.
Such power is sui generis, as it attaches not to the discharge of legislative functions per se, but to the
sovereign character of the legislature as one of the three independent and coordinate branches of
government.12
In this case, petitioners' imputation that the investigation was "in aid of collection" is a direct challenge
against the authority of the Senate Committee, as it ascribes ill motive to the latter. In this light, we find
the contempt citation against the petitioners reasonable and justified.
Furthermore, it is axiomatic that the power of legislative investigation includes the power to compel the
attendance of witnesses. Corollary to the power to compel the attendance of witnesses is the power to
ensure that said witnesses would be available to testify in the legislative investigation. In the case at
bench, considering that most of the officers of SCB-Philippines are not Filipino nationals who may easily
evade the compulsive character of respondent's summons by leaving the country, it was reasonable for
the respondent to request the assistance of the Bureau of Immigration and Deportation to prevent said
witnesses from evading the inquiry and defeating its purpose. In any event, no HDO was issued by a
court. The BID instead included them only in the Watch List, which had the effect of merely delaying
petitioners' intended travel abroad for five (5) days, provided no HDO is issued against them.13
With respect to the right of privacy which petitioners claim respondent has violated, suffice it to state
that privacy is not an absolute right. While it is true that Section 21, Article VI of the Constitution,
guarantees respect for the rights of persons affected by the legislative investigation, not every invocation
of the right to privacy should be allowed to thwart a legitimate congressional inquiry. In Sabio v.
Gordon,14 we have held that the right of the people to access information on matters of public concern
generally prevails over the right to privacy of ordinary financial transactions. In that case, we declared
that the right to privacy is not absolute where there is an overriding compelling state interest. Employing
the rational basis relationship test, as laid down in Morfe v. Mutuc,15 there is no infringement of the
individual's right to privacy as the requirement to disclosure information is for a valid purpose, in this
case, to ensure that the government agencies involved in regulating banking transactions adequately
protect the public who invest in foreign securities. Suffice it to state that this purpose constitutes a
reason compelling enough to proceed with the assailed legislative investigation.16
As regards the issue of self-incrimination, the petitioners, officers of SCB-Philippines, are not being
indicted as accused in a criminal proceeding. They were summoned by respondent merely as resource
persons, or as witnesses, in a legislative inquiry. As distinguished by this Court'
[An] accused occupies a different tier of protection from an ordinary witness. Whereas an ordinary
witness may be compelled to take the witness stand and claim the privilege as each question requiring
an incriminating answer is shot at him, an accused may altogether refuse to take the witness stand and
refuse to answer any and all questions.17
Concededly, this right of the accused against self-incrimination is extended to respondents in
administrative investigations that partake of the nature of or are analogous to criminal proceedings. The
privilege has consistently been held to extend to all proceedings sanctioned by law; and to all cases in
which punishment is sought to be visited upon a witness, whether a party or not.18
However, in this case, petitioners neither stand as accused in a criminal case nor will they be subjected
by the respondent to any penalty by reason of their testimonies. Hence, they cannot altogether decline
appearing before respondent, although they may invoke the privilege when a question calling for an
incriminating answer is propounded.19
Petitioners' argument, that the investigation before respondent may result in a recommendation for
their prosecution by the appropriate government agencies, such as the Department of Justice or the
Office of the Ombudsman, does not persuade.
As held in Sinclair v. United States20 - -
It may be conceded that Congress is without authority to compel disclosures for the purpose of aiding
the prosecution of pending suits; but the authority of that body, directly or through its Committees, to
require pertinent disclosures in aid of its own constitutional power is not abridged because the
information sought to be elicited may also be of use in such suits. x x x It is plain that investigation of the
matters involved in suits brought or to be commenced under the Senate resolution directing the
institution of suits for the cancellation of the leases might directly aid in respect of legislative action.
The prosecution of offenders by the prosecutorial agencies and the trial before the courts is for the
punishment of persons who transgress the law. The intent of legislative inquiries, on the other hand, is
to arrive at a policy determination, which may or may not be enacted into law.
Except only when it exercises the power to punish for contempt, the respondent, as with the other
Committees of the Senate or of the House of Representatives, cannot penalize violators even if there is
overwhelming evidence of criminal culpability. Other than proposing or initiating amendatory or
remedial legislation, respondent can only recommend measures to address or remedy whatever
irregularities may be unearthed during the investigation, although it may include in its Report a
recommendation for the criminal indictment of persons who may appear liable. At best, the
recommendation, along with the evidence, contained in such a Report would be persuasive, but it is still
up to the prosecutorial agencies and the courts to determine the liabilities of the offender.
Finally, petitioners sought anew, in their Manifestation and Motion21 dated June 21, 2006, the issuance
by this Court of a TRO and/or writ of preliminary injunction to prevent respondent from submitting its
Committee Report No. 75 to the Senate in plenary for approval. However, 16 days prior to the filing of
the Manifestation and Motion, or on June 5, 2006, respondent had already submitted the report to the
Senate in plenary. While there is no showing that the said report has been approved by the Senate, the
subject of the Manifestation and Motion has inescapably become moot and academic.
WHEREFORE, the Petition for Prohibition is DENIED for lack of merit. The Manifestation and Motion
dated June 21, 2006 is, likewise, DENIED for being moot and academic.
SO ORDERED.
G.R. No. 170165 August 15, 2006
B/GEN. (RET.) FRANCISCO V. GUDANI AND LT. COL. ALEXANDER F. BALUTAN Petitioners,
vs.
LT./GEN. GENEROSO S. SENGA CORONA, AS CHIEF OF STAFF OF THE CARPIO-MORALES, ARMED
FORCES OF THE CALLEJO, SR., PHILIPPINES, COL. GILBERTO AZCUNA, JOSE C. ROA AS THE PRE-TRIAL
TINGA, INVESTIGATING OFFICER, THE CHICO-NAZARIO, PROVOST MARSHALL GENERAL GARCIA, and OF
THE ARMED FORCES OF THE PHILIPPINES AND THE GENERAL COURT-MARTIAL, Respondents.
DECISION
TINGA, J.:
A most dangerous general proposition is foisted on the Court — that soldiers who defy orders of their
superior officers are exempt
from the strictures of military law and discipline if such defiance is predicated on an act otherwise valid
under civilian law. Obedience and deference to the military chain of command and the President as
commander-in-chief are the cornerstones of a professional military in the firm cusp of civilian control.
These values of obedience and deference expected of military officers are content-neutral, beyond the
sway of the officer’s own sense of what is prudent or rash, or more elementally, of right or wrong. A self-
righteous military invites itself as the scoundrel’s activist solution to the "ills" of participatory democracy.
Petitioners seek the annulment of a directive from President Gloria Macapagal-Arroyo1 enjoining them
and other military officers from testifying before Congress without the President’s consent. Petitioners
also pray for injunctive relief against a pending preliminary investigation against them, in preparation for
possible court-martial proceedings, initiated within the military justice system in connection with
petitioners’ violation of the aforementioned directive.
The Court is cognizant that petitioners, in their defense, invoke weighty constitutional principles that
center on fundamental freedoms enshrined in the Bill of Rights. Although these concerns will not be
addressed to the satisfaction of petitioners, the Court recognizes these values as of paramount
importance to our civil society, even if not determinative of the resolution of this petition. Had the
relevant issue before us been the right of the Senate to compel the testimony of petitioners, the
constitutional questions raised by them would have come to fore. Such a scenario could have very well
been presented to the Court in such manner, without the petitioners having had to violate a direct order
from their commanding officer. Instead, the Court has to resolve whether petitioners may be subjected
to military discipline on account of their defiance of a direct order of the AFP Chief of Staff.
The solicited writs of certiorari and prohibition do not avail; the petition must be denied.
I.
The petitioners are high-ranking officers of the Armed Forces of the Philippines (AFP). Both petitioners,
Brigadier General Francisco Gudani (Gen. Gudani) and Lieutenant Colonel Alexander Balutan (Col.
Balutan), belonged to the Philippine Marines. At the time of the subject incidents, both Gen. Gudani and
Col. Balutan were assigned to the Philippine Military Academy (PMA) in Baguio City, the former as the
PMA Assistant Superintendent, and the latter as the Assistant Commandant of Cadets.2
On 22 September 2005, Senator Rodolfo Biazon (Sen. Biazon) invited several senior officers of the AFP to
appear at a public hearing before the Senate Committee on National Defense and Security (Senate
Committee) scheduled on 28 September 2005. The hearing was scheduled after topics concerning the
conduct of the 2004 elections emerged in the public eye, particularly allegations of massive cheating and
the surfacing of copies of an audio excerpt purportedly of a phone conversation between President
Gloria Macapagal Arroyo and an official of the Commission on Elections (COMELEC) widely reputed as
then COMELEC Commissioner Virgilio Garcillano. At the time of the 2004 elections, Gen. Gudani had
been designated as commander, and Col. Balutan a member, of "Joint Task Force Ranao" by the AFP
Southern Command. "Joint Task Force Ranao" was tasked with the maintenance of peace and order
during the 2004 elections in the provinces of Lanao del Norte and Lanao del Sur.3 `
Gen. Gudani, Col. Balutan, and AFP Chief of Staff Lieutenant General Generoso Senga (Gen. Senga) were
among the several AFP officers who received a letter invitation from Sen. Biazon to attend the 28
September 2005 hearing. On 23 September 2005, Gen. Senga replied through a letter to Sen. Biazon that
he would be unable to attend the hearing due to a previous commitment in Brunei, but he nonetheless
"directed other officers from the AFP who were invited to attend the hearing."4
On 26 September 2005, the Office of the Chief of Staff of the AFP issued a Memorandum addressed to
the Superintendent of the PMA Gen. Cristolito P. Baloing (Gen. Baloing). It was signed by Lt. Col.
Hernando DCA Iriberri in behalf of Gen. Senga.5 Noting that Gen. Gudani and Col. Balutan had been
invited to attend the Senate Committee hearing on 28 September 2005, the Memorandum directed the
two officers to attend the hearing.6 Conformably, Gen. Gudani and Col. Balutan filed their respective
requests for travel authority addressed to the PMA Superintendent.
On 27 September 2005, Gen. Senga wrote a letter to Sen. Biazon, requesting the postponement of the
hearing scheduled for the following day, since the AFP Chief of Staff was himself unable to attend said
hearing, and that some of the invited officers also could not attend as they were "attending to other
urgent operational matters." By this time, both Gen. Gudani and Col. Balutan had already departed
Baguio for Manila to attend the hearing.
Then on the evening of 27 September 2005, at around 10:10 p.m., a message was transmitted to the
PMA Superintendent from the office of Gen. Senga, stating as follows:
PER INSTRUCTION OF HER EXCELLENCY PGMA, NO AFP PERSONNEL SHALL APPEAR BEFORE
ANY CONGRESSIONAL OR SENATE HEARING WITHOUT HER APPROVAL. INFORM BGEN
FRANCISCO F GUDANI AFP AND LTC ALEXANDER BALUTAN PA (GSC) ACCORDINGLY.7
The following day, Gen. Senga sent another letter to Sen. Biazon, this time informing the senator that
"no approval has been granted by the President to any AFP officer to appear" before the hearing
scheduled on that day. Nonetheless, both Gen. Gudani and Col. Balutan were present as the hearing
started, and they both testified as to the conduct of the 2004 elections.
The Office of the Solicitor General (OSG), representing the respondents before this Court, has offered
additional information surrounding the testimony of Gen. Gudani and Col. Balutan. The OSG manifests
that the couriers of the AFP Command Center had attempted to deliver the radio message to Gen.
Gudani’s residence in a subdivision in Parañaque City late in the night of 27 September 2005, but they
were not permitted entry by the subdivision guards. The next day, 28 September 2005, shortly before
the start of the hearing, a copy of Gen. Senga’s letter to Sen. Biazon sent earlier that day was handed at
the Senate by Commodore Amable B. Tolentino of the AFP Office for Legislative Affairs to Gen. Gudani,
who replied that he already had a copy. Further, Gen. Senga called Commodore Tolentino on the latter’s
cell phone and asked to talk to Gen. Gudani, but Gen. Gudani refused. In response, Gen. Senga
instructed Commodore Tolentino to inform Gen. Gudani that "it was an order," yet Gen. Gudani still
refused to take Gen. Senga’s call.8
A few hours after Gen. Gudani and Col. Balutan had concluded their testimony, the office of Gen. Senga
issued a statement which noted that the two had appeared before the Senate Committee "in spite of the
fact that a guidance has been given that a Presidential approval should be sought prior to such an
appearance;" that such directive was "in keeping with the time[-]honored principle of the Chain of
Command;" and that the two officers "disobeyed a legal order, in violation of A[rticles of] W[ar] 65
(Willfully Disobeying Superior Officer), hence they will be subjected to General Court Martial proceedings
x x x" Both Gen. Gudani and Col. Balutan were likewise relieved of their assignments then.9
On the very day of the hearing, 28 September 2005, President Gloria-Macapagal-Arroyo issued Executive
Order No. 464 (E.O. 464). The OSG notes that the E.O. "enjoined officials of the executive department
including the military establishment from appearing in any legislative inquiry without her
approval."10 This Court subsequently ruled on the constitutionality of the said executive order in Senate
v. Ermita.11 The relevance of E.O. 464 and Senate to the present petition shall be discussed forthwith.
In the meantime, on 30 September 2005, petitioners were directed by General Senga, through Col.
Henry A. Galarpe of the AFP Provost Marshal General, to appear before the Office of the Provost Marshal
General (OPMG) on 3 October 2005 for investigation. During their appearance before Col. Galarpe, both
petitioners invoked their right to remain silent.12 The following day, Gen. Gudani was compulsorily
retired from military service, having reached the age of 56.13
In an Investigation Report dated 6 October 2005, the OPMG recommended that petitioners be charged
with violation of Article of War 65, on willfully disobeying a superior officer, in relation to Article of War
97, on conduct prejudicial to the good order and military discipline.14 As recommended, the case was
referred to a Pre-Trial Investigation Officer (PTIO) preparatory to trial by the General Court Martial
(GCM).15 Consequently, on 24 October 2005, petitioners were separately served with Orders respectively
addressed to them and signed by respondent Col. Gilbert Jose C. Roa, the Pre-Trial Investigating Officer
of the PTIO. The Orders directed petitioners to appear in person before Col. Roa at the Pre-Trial
Investigation of the Charges for violation of Articles 6516 and 9717 of Commonwealth Act No. 408,18 and
to submit their counter-affidavits and affidavits of witnesses at the Office of the Judge Advocate
General.19 The Orders were accompanied by respective charge sheets against petitioners, accusing them
of violating Articles of War 65 and 97.
It was from these premises that the present petition for certiorari and prohibition was filed, particularly
seeking that (1) the order of President Arroyo coursed through Gen. Senga preventing petitioners from
testifying before Congress without her prior approval be declared unconstitutional; (2) the charges
stated in the charge sheets against petitioners be quashed; and (3) Gen. Senga, Col. Galarpe, Col. Roa,
and their successors-in-interest or persons acting for and on their behalf or orders, be permanently
enjoined from proceeding against petitioners, as a consequence of their having testified before the
Senate on 28 September 2005.20
Petitioners characterize the directive from President Arroyo requiring her prior approval before any AFP
personnel appear before Congress as a "gag order," which violates the principle of separation of powers
in government as it interferes with the investigation of the Senate Committee conducted in aid of
legislation. They also equate the "gag order" with culpable violation of the Constitution, particularly in
relation to the public’s constitutional right to information and transparency in matters of public concern.
Plaintively, petitioners claim that "the Filipino people have every right to hear the [petitioners’]
testimonies," and even if the "gag order" were unconstitutional, it still was tantamount to "the crime of
obstruction of justice." Petitioners further argue that there was no law prohibiting them from testifying
before the Senate, and in fact, they were appearing in obeisance to the authority of Congress to conduct
inquiries in aid of legislation.
Finally, it is stressed in the petition that Gen. Gudani was no longer subject to military jurisdiction on
account of his compulsory retirement on 4 October 2005. It is pointed out that Article 2, Title I of the
Articles of War defines persons subject to military law as "all officers and soldiers in the active service" of
the AFP.
II.
We first proceed to define the proper litigable issues. Notably, the guilt or innocence of petitioners in
violating Articles 65 and 97 of the Articles of War is not an issue before this Court, especially considering
that per records, petitioners have not yet been subjected to court martial proceedings. Owing to the
absence of such proceedings, the correct inquiry should be limited to whether respondents could
properly initiate such proceedings preparatory to a formal court-martial, such as the aforementioned
preliminary investigation, on the basis of petitioners’ acts surrounding their testimony before the Senate
on 28 September 2005. Yet this Court, consistent with the principle that it is not a trier of facts at first
instance,21 is averse to making any authoritative findings of fact, for that function is first for the court-
martial court to fulfill.
Thus, we limit ourselves to those facts that are not controverted before the Court, having been
commonly alleged by petitioners and the OSG (for respondents). Petitioners were called by the Senate
Committee to testify in its 28 September 2005 hearing. Petitioners attended such hearing and testified
before the Committee, despite the fact that the day before, there was an order from Gen. Senga (which
in turn was sourced "per instruction" from President Arroyo) prohibiting them from testifying without
the prior approval of the President. Petitioners do not precisely admit before this Court that they had
learned of such order prior to their testimony, although the OSG asserts that at the very least, Gen.
Gudani already knew of such order before he testified.22 Yet while this fact may be ultimately material in
the court-martial proceedings, it is not determinative of this petition, which as stated earlier, does not
proffer as an issue whether petitioners are guilty of violating the Articles of War.
What the Court has to consider though is whether the violation of the aforementioned order of Gen.
Senga, which emanated from the President, could lead to any investigation for court-martial of
petitioners. It has to be acknowledged as a general principle23 that AFP personnel of whatever rank are
liable under military law for violating a direct order of an officer superior in rank. Whether petitioners did
violate such an order is not for the Court to decide, but it will be necessary to assume, for the purposes
of this petition, that petitioners did so.
III.
Preliminarily, we must discuss the effect of E.O. 464 and the Court’s ruling in Senate on the present
petition. Notably, it is not alleged that petitioners were in any way called to task for violating E.O. 464,
but instead, they were charged for violating the direct order of Gen. Senga not to appear before the
Senate Committee, an order that stands independent of the executive order. Distinctions are called for,
since Section 2(b) of E.O. 464 listed "generals and flag officers of the Armed Forces of the Philippines and
such other officers who in the judgment of the Chief of Staff are covered by the executive privilege," as
among those public officials required in Section 3 of E.O. 464 "to secure prior consent of the President
prior to appearing before either House of Congress." The Court in Senate declared both Section 2(b) and
Section 3 void,24 and the impression may have been left following Senate that it settled as doctrine, that
the President is prohibited from requiring military personnel from attending congressional hearings
without having first secured prior presidential consent. That impression is wrong.
Senate turned on the nature of executive privilege, a presidential prerogative which is encumbered by
significant limitations. Insofar as E.O. 464 compelled officials of the executive branch to seek prior
presidential approval before appearing before Congress, the notion of executive control also comes into
consideration.25 However, the ability of the President to require a military official to secure prior consent
before appearing before Congress pertains to a wholly different and independent specie of presidential
authority—the commander-in-chief powers of the President. By tradition and jurisprudence, the
commander-in-chief powers of the President are not encumbered by the same degree of restriction as
that which may attach to executive privilege or executive control.
During the deliberations in Senate, the Court was very well aware of the pendency of this petition as well
as the issues raised herein. The decision in Senate was rendered with the comfort that the nullification of
portions of E.O. 464 would bear no impact on the present petition since petitioners herein were not
called to task for violating the executive order. Moreover, the Court was then cognizant that Senate and
this case would ultimately hinge on disparate legal issues. Relevantly, Senate purposely did not touch
upon or rule on the faculty of the President, under the aegis of the commander-in-chief powers26 to
require military officials from securing prior consent before appearing before Congress. The pertinent
factors in considering that question are markedly outside of those which did become relevant in
adjudicating the issues raised in Senate. It is in this petition that those factors come into play.
At this point, we wish to dispose of another peripheral issue before we strike at the heart of the matter.
General Gudani argues that he can no longer fall within the jurisdiction of the court-martial, considering
his retirement last 4 October 2005. He cites Article 2, Title I of Commonwealth Act No. 408, which
defines persons subject to military law as, among others, "all officers and soldiers in the active service of
the [AFP]," and points out that he is no longer in the active service.
This point was settled against Gen. Gudani’s position in Abadilla v. Ramos,27 where the Court declared
that an officer whose name was dropped from the roll of officers cannot be considered to be outside the
jurisdiction of military authorities when military justice proceedings were initiated against him before
the termination of his service. Once jurisdiction has been acquired over the officer, it continues until his
case is terminated. Thus, the Court held:
The military authorities had jurisdiction over the person of Colonel Abadilla at the time of the alleged
offenses. This jurisdiction having been vested in the military authorities, it is retained up to the end of
the proceedings against Colonel Abadilla. Well-settled is the rule that jurisdiction once acquired is not
lost upon the instance of the parties but continues until the case is terminated.28
Citing Colonel Winthrop’s treatise on Military Law, the Court further stated:
We have gone through the treatise of Colonel Winthrop and We find the following passage which goes
against the contention of the petitioners, viz —
3. Offenders in general — Attaching of jurisdiction. It has further been held, and is now settled law, in
regard to military offenders in general, that if the military jurisdiction has once duly attached to them
previous to the date of the termination of their legal period of service, they may be brought to trial by
court-martial after that date, their discharge being meanwhile withheld. This principle has mostly been
applied to cases where the offense was committed just prior to the end of the term. In such cases the
interests of discipline clearly forbid that the offender should go unpunished. It is held therefore that if
before the day on which his service legally terminates and his right to a discharge is complete,
proceedings with a view to trial are commenced against him — as by arrest or the service of charges,
— the military jurisdiction will fully attach and once attached may be continued by a trial by court-
martial ordered and held after the end of the term of the enlistment of the accused x x x 29
Thus, military jurisdiction has fully attached to Gen. Gudani inasmuch as both the acts complained of and
the initiation of the proceedings against him occurred before he compulsorily retired on 4 October 2005.
We see no reason to unsettle the Abadilla doctrine. The OSG also points out that under Section 28 of
Presidential Decree No. 1638, as amended, "[a]n officer or enlisted man carried in the retired list [of the
Armed Forces of the Philippines] shall be subject to the Articles of War x x x"30 To this citation,
petitioners do not offer any response, and in fact have excluded the matter of Gen. Gudani’s retirement
as an issue in their subsequent memorandum.
IV.
We now turn to the central issues.
Petitioners wish to see annulled the "gag order" that required them to secure presidential consent prior
to their appearance before the Senate, claiming that it violates the constitutional right to information
and transparency in matters of public concern; or if not, is tantamount at least to the criminal acts of
obstruction of justice and grave coercion. However, the proper perspective from which to consider this
issue entails the examination of the basis and authority of the President to issue such an order in the first
place to members of the AFP and the determination of whether such an order is subject to any
limitations.
The vitality of the tenet that the President is the commander-in-chief of the Armed Forces is most crucial
to the democratic way of life, to civilian supremacy over the military, and to the general stability of our
representative system of government. The Constitution reposes final authority, control and supervision
of the AFP to the President, a civilian who is not a member of the armed forces, and whose duties as
commander-in-chief represent only a part of the organic duties imposed upon the office, the other
functions being clearly civil in nature.31 Civilian supremacy over the military also countermands the
notion that the military may bypass civilian authorities, such as civil courts, on matters such as
conducting warrantless searches and seizures.32
Pursuant to the maintenance of civilian supremacy over the military, the Constitution has allocated
specific roles to the legislative and executive branches of government in relation to military affairs.
Military appropriations, as with all other appropriations, are determined by Congress, as is the power to
declare the existence of a state of war.33 Congress is also empowered to revoke a proclamation of
martial law or the suspension of the writ of habeas corpus.34 The approval of the Commission on
Appointments is also required before the President can promote military officers from the rank of
colonel or naval captain.35 Otherwise, on the particulars of civilian dominance and administration over
the military, the Constitution is silent, except for the commander-in-chief clause which is fertile in
meaning and
implication as to whatever inherent martial authority the President may possess.36
The commander-in-chief provision in the Constitution is denominated as Section 18, Article VII, which
begins with the simple declaration that "[t]he President shall be the Commander-in-Chief of all armed
forces of the Philippines x x x"37 Outside explicit constitutional limitations, such as those found in Section
5, Article XVI, the commander-in-chief clause vests on the President, as commander-in-chief, absolute
authority over the persons and actions of the members of the armed forces. Such authority includes the
ability of the President to restrict the travel, movement and speech of military officers, activities which
may otherwise be sanctioned under civilian law.
Reference to Kapunan, Jr. v. De Villa38 is useful in this regard. Lt. Col. Kapunan was ordered confined
under "house arrest" by then Chief of Staff (later President) Gen. Fidel Ramos. Kapunan was also
ordered, as a condition for his house arrest, that he may not issue any press statements or give any press
conference during his period of detention. The Court unanimously upheld such restrictions, noting:
[T]he Court is of the view that such is justified by the requirements of military discipline. It cannot be
gainsaid that certain liberties of persons in the military service, including the freedom of speech, may
be circumscribed by rules of military discipline. Thus, to a certain degree, individual rights may be
curtailed, because the effectiveness of the military in fulfilling its duties under the law depends to a
large extent on the maintenance of discipline within its ranks. Hence, lawful orders must be followed
without question and rules must be faithfully complied with, irrespective of a soldier's personal views
on the matter. It is from this viewpoint that the restrictions imposed on petitioner Kapunan, an officer in
the AFP, have to be considered.39
Any good soldier, or indeed any ROTC cadet, can attest to the fact that the military way of life
circumscribes several of the cherished freedoms of civilian life. It is part and parcel of the military
package. Those who cannot abide by these limitations normally do not pursue a military career and
instead find satisfaction in other fields; and in fact many of those discharged from the service are
inspired in their later careers precisely by their rebellion against the regimentation of military life.
Inability or unwillingness to cope with military discipline is not a stain on character, for the military mode
is a highly idiosyncratic path which persons are not generally conscripted into, but volunteer themselves
to be part of. But for those who do make the choice to be a soldier, significant concessions to personal
freedoms are expected. After all, if need be, the men and women of the armed forces may be
commanded upon to die for country, even against their personal inclinations.
It may be so that military culture is a remnant of a less democratic era, yet it has been fully integrated
into the democratic system of governance. The constitutional role of the armed forces is as protector of
the people and of the State.40 Towards this end, the military must insist upon a respect for duty and a
discipline without counterpart in civilian life.41 The laws and traditions governing that discipline have a
long history; but they are founded on unique military exigencies as powerful now as in the past.42 In the
end, it must be borne in mind that the armed forces has a distinct subculture with unique needs, a
specialized society separate from civilian society. 43 In the elegant prose of the eminent British military
historian, John Keegan:
[Warriors who fight wars have] values and skills [which] are not those of politicians and diplomats. They
are those of a world apart, a very ancient world, which exists in parallel with the everyday world but
does not belong to it. Both worlds change over time, and the warrior world adopts in step to the civilian.
It follows it, however, at a distance. The distance can never be closed, for the culture of the warrior can
never be that of civilization itself….44
Critical to military discipline is obeisance to the military chain of command. Willful disobedience of a
superior officer is punishable by court-martial under Article 65 of the Articles of War.45 "An individual
soldier is not free to ignore the lawful orders or duties assigned by his immediate superiors. For there
would be an end of all discipline if the seaman and marines on board a ship of war [or soldiers deployed
in the field], on a distant service, were permitted to act upon their own opinion of their rights [or their
opinion of the
President’s intent], and to throw off the authority of the commander whenever they supposed it to be
unlawfully exercised."46
Further traditional restrictions on members of the armed forces are those imposed on free speech and
mobility.1âwphi1 Kapunan is ample precedent in justifying that a soldier may be restrained by a superior
officer from speaking out on certain matters. As a general rule, the discretion of a military officer to
restrain the speech of a soldier under his/her command will be accorded deference, with minimal regard
if at all to the reason for such restraint. It is integral to military discipline that the soldier’s speech be
with the consent and approval of the military commander.
The necessity of upholding the ability to restrain speech becomes even more imperative if the soldier
desires to speak freely on political matters. The Constitution requires that "[t]he armed forces shall be
insulated from partisan politics," and that ‘[n]o member of the military shall engage directly or indirectly
in any partisan political activity, except to vote."47 Certainly, no constitutional provision or military
indoctrination will eliminate a soldier’s ability to form a personal political opinion, yet it is vital that such
opinions be kept out of the public eye. For one, political belief is a potential source of discord among
people, and a military torn by political strife is incapable of fulfilling its constitutional function as
protectors of the people and of the State. For another, it is ruinous to military discipline to foment an
atmosphere that promotes an active dislike of or dissent against the President, the commander-in-chief
of the armed forces. Soldiers are constitutionally obliged to obey a President they may dislike or distrust.
This fundamental principle averts the country from going the way of banana republics.
Parenthetically, it must be said that the Court is well aware that our country’s recent past is marked by
regime changes wherein active military dissent from the chain of command formed a key, though not
exclusive, element. The Court is not blind to history, yet it is a judge not of history but of the
Constitution. The Constitution, and indeed our modern democratic order, frown in no uncertain terms
on a politicized military, informed as they are on the trauma of absolute martial rule. Our history might
imply that a political military is part of the natural order, but this view cannot be affirmed by the legal
order. The evolutionary path of our young democracy necessitates a reorientation from this view, reliant
as our socio-political culture has become on it. At the same time, evolution mandates a similar demand
that our system of governance be more responsive to the needs and aspirations of the citizenry, so as to
avoid an environment vulnerable to a military apparatus able at will to exert an undue influence in our
polity.
Of possibly less gravitas, but of equal importance, is the principle that mobility of travel is another
necessary restriction on members of the military. A soldier cannot leave his/her post without the
consent of the commanding officer. The reasons are self-evident. The commanding officer has to be
aware at all times of the location of the troops under command, so as to be able to appropriately
respond to any exigencies. For the same reason, commanding officers have to be able to restrict the
movement or travel of their soldiers, if in their judgment, their presence at place of call of duty is
necessary. At times, this may lead to unsentimental, painful consequences, such as a soldier being
denied permission to witness the birth of his first-born, or to attend the funeral of a parent. Yet again,
military life calls for considerable personal sacrifices during the period of conscription, wherein the
higher duty is not to self but to country.
Indeed, the military practice is to require a soldier to obtain permission from the commanding officer
before he/she may leave his destination. A soldier who goes from the properly appointed place of duty
or absents from his/her command, guard, quarters, station, or camp without proper leave is subject to
punishment by court-martial.48 It is even clear from the record that petitioners had actually requested
for travel authority from the PMA in Baguio City to Manila, to attend the Senate Hearing.49 Even
petitioners are well aware that it was necessary for them to obtain permission from their superiors
before they could travel to Manila to attend the Senate Hearing.
It is clear that the basic position of petitioners impinges on these fundamental principles we have
discussed. They seek to be exempted from military justice for having traveled to the Senate to testify
before the Senate Committee against the express orders of Gen. Senga, the AFP Chief of Staff. If
petitioners’ position is affirmed, a considerable exception would be carved from the unimpeachable right
of military officers to restrict the speech and movement of their juniors. The ruinous consequences to
the chain of command and military discipline simply cannot warrant the Court’s imprimatur on
petitioner’s position.
V.
Still, it would be highly myopic on our part to resolve the issue solely on generalities surrounding military
discipline. After all, petitioners seek to impress on us that their acts are justified as they were responding
to an invitation from the Philippine Senate, a component of the legislative branch of government. At the
same time, the order for them not to testify ultimately came from the President, the head of the
executive branch of government and the commander-in-chief of the armed forces.
Thus, we have to consider the question: may the President prevent a member of the armed forces from
testifying before a legislative inquiry? We hold that the President has constitutional authority to do so,
by virtue of her power as commander-in-chief, and that as a consequence a military officer who defies
such injunction is liable under military justice. At the same time, we also hold that any chamber of
Congress which seeks the appearance before it of a military officer against the consent of the President
has adequate remedies under law to compel such attendance. Any military official whom Congress
summons to testify before it may be compelled to do so by the President. If the President is not so
inclined, the President may be commanded by judicial order to compel the attendance of the military
officer. Final judicial orders have the force of the law of the land which the President has the duty to
faithfully execute.50
Explication of these principles is in order.
As earlier noted, we ruled in Senate that the President may not issue a blanket requirement of prior
consent on executive officials summoned by the legislature to attend a congressional hearing. In doing
so, the Court recognized the considerable limitations on executive privilege, and affirmed that the
privilege must be formally invoked on specified grounds. However, the ability of the President to
prevent military officers from testifying before Congress does not turn on executive privilege, but on
the Chief Executive’s power as commander-in-chief to control the actions and speech of members of
the armed forces. The President’s prerogatives as commander-in-chief are not hampered by the same
limitations as in executive privilege.
Our ruling that the President could, as a general rule, require military officers to seek presidential
approval before appearing before Congress is based foremost on the notion that a contrary rule unduly
diminishes the prerogatives of the President as commander-in-chief. Congress holds significant control
over the armed forces in matters such as budget appropriations and the approval of higher-rank
promotions,51 yet it is on the President that the Constitution vests the title as commander-in-chief and all
the prerogatives and functions appertaining to the position. Again, the exigencies of military discipline
and the chain of command mandate that the President’s ability to control the individual members of the
armed forces be accorded the utmost respect. Where a military officer is torn between obeying the
President and obeying the Senate, the Court will without hesitation affirm that the officer has to choose
the President. After all, the Constitution prescribes that it is the President, and not the Senate, who is
the commander-in-chief of the armed forces.52
At the same time, the refusal of the President to allow members of the military to appear before
Congress is still subject to judicial relief. The Constitution itself recognizes as one of the legislature’s
functions is the conduct of inquiries in aid of legislation.53 Inasmuch as it is ill-advised for Congress to
interfere with the President’s power as commander-in-chief, it is similarly detrimental for the President
to unduly interfere with Congress’s right to conduct legislative inquiries. The impasse did not come to
pass in this petition, since petitioners testified anyway despite the presidential prohibition. Yet the Court
is aware that with its pronouncement today that the President has the right to require prior consent
from members of the armed forces, the clash may soon loom or actualize.
We believe and hold that our constitutional and legal order sanctions a modality by which members of
the military may be compelled to attend legislative inquiries even if the President desires otherwise, a
modality which does not offend the Chief Executive’s prerogatives as commander-in-chief. The remedy
lies with the courts.
The fact that the executive branch is an equal, coordinate branch of government to the legislative
creates a wrinkle to any basic rule that persons summoned to testify before Congress must do so. There
is considerable interplay between the legislative and executive branches, informed by due deference and
respect as to their various constitutional functions. Reciprocal courtesy idealizes this relationship; hence,
it is only as a last resort that one branch seeks to compel the other to a particular mode of behavior. The
judiciary, the third coordinate branch of government, does not enjoy a similar dynamic with either the
legislative or executive branches. Whatever weakness inheres on judicial power due to its inability to
originate national policies and legislation, such is balanced by the fact that it is the branch empowered
by the Constitution to compel obeisance to its rulings by the other branches of government.
As evidenced by Arnault v. Nazareno54 and Bengzon v. Senate Blue Ribbon Committee,55 among others,
the Court has not shirked from reviewing the exercise by Congress of its power of legislative
inquiry.56 Arnault recognized that the legislative power of inquiry and the process to enforce it, "is an
essential and appropriate auxiliary to the legislative function."57 On the other
hand, Bengzon acknowledged that the power of both houses of Congress to conduct inquiries in aid of
legislation is not "absolute or unlimited", and its exercise is circumscribed by Section 21, Article VI of the
Constitution.58 From these premises, the Court enjoined the Senate Blue Ribbon Committee from
requiring the petitioners in Bengzon from testifying and producing evidence before the committee,
holding that the inquiry in question did not involve any intended legislation.
Senate affirmed both the Arnault and Bengzon rulings. It elucidated on the constitutional scope and
limitations on the constitutional power of congressional inquiry. Thus:
As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity
of information in the legislative process. If the information possessed by executive officials on the
operation of their offices is necessary for wise legislation on that subject, by parity of reasoning,
Congress has the right to that information and the power to compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy era", however, the right of
Congress to conduct inquirites in aid of legislation is, in theory, no less susceptible to abuse than
executive or judicial power. It may thus be subjected to judicial review pursuant to the Court’s certiorari
powers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee, the inquiry itself might not properly be in
aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp
judicial functions. Parenthetically, one possible way for Congress to avoid such result as occurred
in Bengzon is to indicate in its invitations to the public officials concerned, or to any person for that
matter, the possible needed statute which prompted the need for the inquiry. Given such statement in
its invitations, along with the usual indication of the subject of inquiry and the questions relative to and
in furtherance thereof, there would be less room for speculation on the part of the person invited on
whether the inquiry is in aid of legislation.
Section 21, Article VI likewise establishes critical safeguards that proscribe the legislative power of
inquiry. The provision requires that the inquiry be done in accordance with the Senate or House’s duly
published rules of procedure, necessarily implying the constitutional infirmity of an inquiry conducted
without duly published rules of procedure. Section 21 also mandates that the rights of persons appearing
in or affected by such inquiries be respected, an imposition that obligates Congress to adhere to the
guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons
affected, even if they belong to the executive branch. Nonetheless, there may be exceptional
circumstances… wherein a clear pattern of abuse of the legislative power of inquiry might be established,
resulting in palpable violations of the rights guaranteed to members of the executive department under
the Bill of Rights. In such instances, depending on the particulars of each case, attempts by the Executive
Branch to forestall these abuses may be accorded judicial sanction59 .
In Senate, the Court ruled that the President could not impose a blanket prohibition barring executive
officials from testifying before Congress without the President’s consent notwithstanding the invocation
of executive privilege to justify such prohibition. The Court did not rule that the power to conduct
legislative inquiry ipso facto superseded the claim of executive privilege, acknowledging instead that the
viability of executive privilege stood on a case to case basis. Should neither branch yield to the other
branch’s assertion, the constitutional recourse is to the courts, as the final arbiter if the dispute. It is only
the courts that can compel, with conclusiveness, attendance or non-attendance in legislative inquiries.
Following these principles, it is clear that if the President or the Chief of Staff refuses to allow a member
of the AFP to appear before Congress, the legislative body seeking such testimony may seek judicial relief
to compel the attendance. Such judicial action should be directed at the heads of the executive branch
or the armed forces, the persons who wield authority and control over the actions of the officers
concerned. The legislative purpose of such testimony, as well as any defenses against the same —
whether grounded on executive privilege, national security or similar concerns — would be accorded
due judicial evaluation. All the constitutional considerations pertinent to either branch of government
may be raised, assessed, and ultimately weighed against each other. And once the courts speak with
finality, both branches of government have no option but to comply with the decision of the courts,
whether the effect of the decision is to their liking or disfavor.
Courts are empowered, under the constitutional principle of judicial review, to arbitrate disputes
between the legislative and executive branches of government on the proper constitutional parameters
of power.60 This is the fair and workable solution implicit in the constitutional allocation of powers
among the three branches of government. The judicial filter helps assure that the particularities of each
case would ultimately govern, rather than any overarching principle unduly inclined towards one branch
of government at the expense of the other. The procedure may not move as expeditiously as some may
desire, yet it ensures thorough deliberation of all relevant and cognizable issues before one branch is
compelled to yield to the other. Moreover, judicial review does not preclude the legislative and
executive branches from negotiating a mutually acceptable solution to the impasse. After all, the two
branches, exercising as they do functions and responsibilities that are political in nature, are free to
smooth over the thorns in their relationship with a salve of their own choosing.
And if emphasis be needed, if the courts so rule, the duty falls on the shoulders of the President, as
commander-in-chief, to authorize the appearance of the military officers before Congress. Even if the
President has earlier disagreed with the notion of officers appearing before the legislature to testify,
the Chief Executive is nonetheless obliged to comply with the final orders of the courts.
Petitioners have presented several issues relating to the tenability or wisdom of the President’s order on
them and other military officers not to testify before Congress without the President’s consent. Yet these
issues ultimately detract from the main point — that they testified before the Senate despite an order
from their commanding officer and their commander-in-chief for them not to do so,61 in contravention of
the traditions of military discipline which we affirm today.1âwphi1 The issues raised by petitioners could
have very well been raised and properly adjudicated if the proper procedure was observed. Petitioners
could have been appropriately allowed to testify before the Senate without having to countermand their
Commander-in-chief and superior officer under the setup we have prescribed.
We consider the other issues raised by petitioners unnecessary to the resolution of this petition.
Petitioners may have been of the honest belief that they were defying a direct order of their
Commander-in-Chief and Commanding General in obeisance to a paramount idea formed within their
consciences, which could not be lightly ignored. Still, the Court, in turn, is guided by the superlative
principle that is the Constitution, the embodiment of the national conscience. The Constitution simply
does not permit the infraction which petitioners have allegedly committed, and moreover, provides for
an orderly manner by which the same result could have been achieved without offending constitutional
principles.
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
SO ORDERED.
EN BANC
G.R. No. 232395, July 03, 2018
PEDRO S. AGCAOILI, JR., ENCARNACION A. GAOR, JOSEPHINE P. CALAJATE, GENEDINE D. JAMBARO,
EDEN C. BATTULAYAN, EVANGELINE C. TABULOG, Petitioners, MARIA IMELDA JOSEFA "IMEE" R.
MARCOS, Co-Petitioner, v. THE HONORABLE REPRESENTATIVE RODOLFO C. FARIÑAS, THE HONORABLE
REPRESENTATIVE JOHNNY T. PIMENTEL, CHAIRMAN OF THE COMMITTEE ON GOOD GOVERNMENT
AND PUBLIC ACCOUNTABILITY, AND LT. GEN. ROLAND DETABALI (RET.), IN HIS CAPACITY AS
SERGEANT-AT-ARMS OF THE HOUSE OF REPRESENTATIVES, Respondents, THE COMMITTEE ON GOOD
GOVERNMENT AND PUBLIC ACCOUNTABILITY, Co-Respondent.
DECISION
TIJAM, J.:
Styled as an Omnibus Petition,1 petitioners Pedro S. Agcaoili, Jr. (Agcaoili, Jr.), Encarnacion A. Gaor
(Gaor), Josephine P. Calajate (Calajate), Genedine D. Jambaro (Jambaro), Eden C. Battulayan
(Battulayan), Evangeline C. Tabulog (Tabulog) – all employees2 of the Provincial Government of Ilocos
Norte and storied as "Ilocos 6" – seek that the Court assume jurisdiction over the Habeas
Corpus Petition3 earlier filed by petitioners before the Court of Appeals (CA),4 and upon assumption, to
direct the CA to forward the records of the case to the Court for proper disposition and resolution.
Co-petitioner Maria Imelda Josefa "Imee" Marcos – the incumbent Governor of the Province of Ilocos
Norte – joins the present petition by seeking the issuance of a writ of prohibition under Rule 65 of the
Rules of Court for purposes of declaring the legislative investigation into House Resolution No.
8825 illegal and in excess of jurisdiction, and to enjoin respondents Representatives Rodolfo C. Fariñas
(Fariñas) and Johnny T. Pimentel and co-respondent Committee on Good Government and Public
Accountability (House Committee) from further proceeding with the same. Co-petitioner prays for the
issuance of a temporary restraining order and/or issuance of a writ of preliminary injunction, to restrain
and enjoin respondents and co-respondent from conducting any further hearings or proceedings relative
to the investigation pending resolution of the instant petition.
In common, petitioners and co-petitioner seek the issuance of a writ of Amparo to protect them from
alleged actual and threatened violations of their rights to liberty and security of person.
The Antecedents
On March 14, 2017, House Resolution No. 882 was introduced by respondent Fariñas, along with
Representatives Pablo P. Bondoc and Aurelio D. Gonzales, Jr., directing House Committee to conduct an
inquiry, in aid of legislation, pertaining to the use by the Provincial Government of Ilocos Norte of its
shares from the excise taxes on locally manufactured virginia-type cigarettes for a purpose other than
that provided for by Republic Act (R.A.) No. 7171.6 The "whereas clause" of House Resolution No. 882
states that the following purchases by the Provincial Government of Ilocos Norte of vehicles in three
separate transactions from the years 2011 to 2012 in the aggregate amount of P66,450,000.00 were in
violation of R.A. No. 7171 as well as of R.A. No. 9184 7 and Presidential Decree (P.O.) No. 1445:8
a. Check dated December 1, 2011, "to cash advance the amount needed for the purchase of 40 units
Mini cab for distribution to the different barangays of Ilocos Norte as per supporting papers hereto
attached to the amount of ...." EIGHTEEN MILLION SIX HUNDRED THOUSAND PESOS (PhP18,000,000.00);
b. Check dated May 25,2012, "to cash advance the amount needed for the purchase of 5 units Buses as
per supporting papers hereto attached to the amount of ..." FIFTEEN MILLION THREE HUNDRED
THOUSAND PESOS (PhP15,300,000.00), which were all second hand units; and
c. Check dated September 12, 2012, "to cash advance payment of 70 units Foton Mini Truck for
distribution to different municipalities of Ilocos Norte as per supporting papers hereto attached in the
amount of ...." THIRTY TWO MILLION FIVE HUNDRED FIFTY THOUSAND PESOS (PhP32,550,000.00).9
Invitation Letters10 dated April 6, 2017 were individually sent to petitioners for them to attend as
resource persons the initial hearing on House Resolution No. 882 scheduled on May 2, 2017. In response,
petitioners sent similarly-worded Letters11 dated April 21, 2017 asking to be excused from the inquiry
pending official instructions from co-petitioner Marcos as head of the agency.
Because of petitioners' absence at the May 2, 2017 hearing, a subpoena ad testificandum was issued by
co-respondent House Committee on May 3, 2017 directing petitioners to appear and testify under oath
at a hearing set on May 16, 2017.12 Likewise, an invitation was sent to co-petitioner Marcos to appear on
said hearing.13
Since the subpoena was received by petitioners only one day prior to the scheduled hearing, petitioners
requested that their appearance be deferred to a later date to give them time to prepare. In their letters
also, petitioners requested clarification as to what information co-respondent House Committee seeks to
elicit and its relevance to R.A. No. 7171.14 Co-petitioner Marcos, on the other hand, submitted a
Letter 15 dated May 15, 2017 seeking clarification on the legislative objective of House Resolution No.
882 and its discriminatory application to the Province of Ilocos Norte to the exclusion of other virginia-
type tobacco producing provinces.
Petitioners failed to attend the hearing scheduled on May 16, 2017. As such, the House Committee
issued a Show Cause Order16 why they should not be cited in contempt for their refusal without legal
excuse to obey summons. Additionally, petitioners and co-petitioner Marcos were notified of the next
scheduled hearing on May 29, 2017.17
In response to the Show Cause Order, petitioners reiterated that they received the notice only one day
prior to the scheduled hearing date in alleged violation of the three-day notice rule under Section 818 of
the House Rules Governing Inquiries.19 Co-petitioner Marcos, on the other hand, reiterated the queries
she raised in her earlier letter.
Nevertheless, at the scheduled committee hearing on May 29, 2017, all the petitioners appeared.20 It is
at this point of the factual narrative where the parties' respective interpretations of what transpired
during the May 29, 2017 begin to differ.
Legislative hearing on May 29, 2017 and the contempt citation
On one hand, petitioners allege that at the hearing of May 29, 2017, they were subjected to threats and
intimidation.21 According to petitioners, they were asked "leading and misleading questions" and that
regardless of their answers, the same were similarly treated as evasive.22
Specifically, Jambaro claims that because she could not recall the transactions Fariñas alluded to and
requested to see the original copy of a document presented to her for identification, she was cited in
contempt and ordered detained.23 Allegedly, the same inquisitorial line of questioning was used in the
interrogation of Gaor. When Gaor answered that she could no longer remember if she received a cash
advance of P18,600,000.00 for the purchase of 40 units of minicab, Gaor was likewise cited in contempt
and ordered detained.24
At the hearing set on June 8, 2017, Detabali again failed to attend. On June 9, 2017, the CA issued a
Resolution35 denying Detabali's motion to dissolve the writ of Habeas Corpus and granting petitioners'
Motion for Provisional Release upon posting of a bond. Accordingly, the CA issued an Order of Release
Upon Bond.36 Attempts to serve said Resolution and Order of Release Upon Bond to Detabali were made
but to no avail.37
On June 20, 2017, the House of Representatives called a special session for the continuation of the
legislative inquiry.38 Thereat, a subpoena ad testificandum was issued to compel co-petitioner Marcos to
appear at the scheduled July 25, 2017 hearing.39

The same threats, intimidation and coercion were likewise supposedly employed on Calajate when she
was asked by Fariñas if she signed a cash advance voucher in the amount of P18,600,000.00 for the
purchase of the 40 units of minicabs. When Calajate refused to answer, she was also cited in contempt
and ordered detained.25
Similarly, when Battulayan could no longer recall having signed a cash advance voucher for the purchase
of minicabs, she was also cited in contempt and ordered detained.26
Agcaoili, Jr. was likewise cited in contempt and ordered detained when he failed to answer Fariñas's
query regarding the records of the purchase of the vehicles.27 Allegedly, the same threats and
intimidation were employed by Fariñas in the questioning of Tabulog who was similarly asked if she
remembered the purchase of 70 mini trucks. When Tabulog replied that she could no longer remember
such transaction, she was also cited in contempt and ordered detained.28
The tension between the House of Representatives and the CA
During the June 20, 2017 hearing, House Committee unanimously voted to issue a Show Cause Order
against the three Justices of the CA's Special Fourth Division,40 directing them to explain why they should
not be cited in contempt by the House of Representatives.41 The House of Representatives was
apparently dismayed over the CA's actions in the Habeas Corpus Petition, with House Speaker Pantaleon
Alvarez quoted as calling the involved CA Justices "mga gago" and threatening to dissolve the
CA.42 Disturbed by this turn of events, the involved CA Justices wrote a letter dated July 3, 2017
addressed to the Court En Banc deferring action on certain pending motions43 and administratively
referring the same to the Court for advice and/or appropriate action.
Meanwhile, in the Habeas Corpus Petition, Detabali moved for the inhibition of CA Justices Stephen Cruz
and Nina Antonio-Valenzuela while CA Justice Edwin Sorongon voluntarily inhibited himself.44

On the other hand, respondents aver that petitioners were evasive in answering questions and simply
claimed not to remember the specifics of the subject transactions. According to respondents, petitioners Subsequent Release of Petitioners and Dismissal of the Habeas Corpus Petition by the CA
requested to be confronted with the original documents to refresh their memories when they knew
beforehand that the Commission on Audit (COA) to which the original vouchers were submitted could no
longer find the same.29
On July 13, 2017 and while the Habeas Corpus Petition was still pending before the CA, petitioners and
co-petitioner Marcos filed the instant Omnibus Petition.
Proceedings before the CA
During the congressional hearing on July 25, 2017 which petitioners and co-petitioner Marcos attended,
The next day, or on May 30, 2017, petitioners filed a Petition for Habeas Corpus against respondent and while the present Omnibus Petition is pending final resolution by the Court, respondent House
House Sergeant-at-Arms Lieutenant General Detabali (Detabali) before the CA. The CA scheduled the Committee lifted the contempt order and ordered the release of petitioners. Consequently, petitioners
petition for hearing on June 5, 2017 where the Office of the Solicitor General (OSG) entered its special were released on the same date.45 Respondent House Committee held the continuance of the legislative
appearance for Detabali, arguing that the latter was not personally served with a copy of the hearings on August 9, 2017 and August 23, 2017.46
petition.30 On June 2, 2017, the CA in its Resolution31 issued a writ of Habeas Corpus ordering Detabali to
produce the bodies of the petitioners before the court on June 5, 2017.
On August 31, 2017, the CA issued a Resolution in the Habeas Corpus Petition considering the case as
closed and terminated on the ground of mootness.47
On June 5, 2017, Detabali again failed to attend. Instead, the Deputy Secretary General of the House of
Representatives appeared to explain that Detabali accompanied several members of the House of
The Arguments
Representatives on a Northern Luzon trip, thus his inability to attend the scheduled hearing.32 A motion
to dissolve the writ of Habeas Corpus was also filed on the ground that the CA had no jurisdiction over
the petition.33
For the assumption of jurisdiction over the Habeas Corpus Petition

On June 6, 2017, petitioners filed a Motion for Provisional Release based on petitioners' constitutional
right to bail. Detabali, through the OSG, opposed the motion.34
Petitioners insist that the Habeas Corpus Petition then pending before the CA can be transferred to the
Court on the strength of the latter's power to promulgate rules concerning the pleading, practice and
procedure in all courts and its authority to exercise jurisdiction over all courts as provided under Sections
148 and 5(5),49 Article VIII of the Constitution.
Additionally, petitioners stress that the Court exercises administrative supervision over all courts as
provided under Section 6,50 Article VIII of the Constitution, and pursuant to its authority as such, the
Court has the power to transfer cases from one court to another which power it implements through
Rule 4, Section 3(c)51 of AM No. 10-4-20-SC.52
Citing People of the Philippines v. Gutierrez, et al.,53 petitioners likewise argue that the administrative
power of the Court to transfer cases from one court to another is based on its inherent power to protect
the judiciary and prevent a miscarriage of justice.54
Respondents counter that the Omnibus Petition should be dismissed on the ground of mootness as
petitioners were released from detention.
In any case, respondents argue that petitioners cannot compel the Court to assume jurisdiction over
the Habeas Corpus Petition pending before the CA as assumption of jurisdiction is conferred by law.
Respondents also argue that the Omnibus Petition is dismissible on the grounds of misjoinder of action
and for failure to implead indispensable parties, i.e., the CA in the petition to assume jurisdiction over
the Habeas Corpus Petition and the Congress in the prohibition and Amparo petitions. Respondents also
argue that petitioners committed forum shopping when they filed the present Omnibus Petition at a
time when a motion for reconsideration before the CA was still pending resolution.
For the issuance of a Writ of Prohibition
Co-petitioner Marcos assails the nature of the legislative inquiry as a fishing expedition in violation of
petitioners' right to due process and is allegedly discriminatory to the Province of Ilocos Norte.
Respondents counter that a petition for prohibition is not the proper remedy to enjoin legislative
actions. House Committee is not a tribunal, corporation, board or person exercising judicial or ministerial
function but a separate and independent branch of government. Citing Holy Spirit Homeowners
Association, Inc. v. Defensor,55 and The Senate Blue Ribbon Committee v. Hon. Majaducon,56 respondents
argue that prohibition does not lie against legislative or quasi-legislative functions.
For the issuance of a Writ of Amparo
Petitioners contend that their rights to liberty and personal security were violated as they have been
detained, while co-petitioner Marcos is continuously being threatened of arrest.57
In opposition, respondents maintain that the writ of Amparo and writ of Habeas Corpus are two separate
remedies which are incompatible and therefore cannot co-exist in a single petition. Further, respondents
argue that the issuance of a writ of Amparo is limited only to cases of extrajudicial killings and enforced
disappearances which are not extant in the instant case.
The Issues
Encapsulated, the issues for resolution are:
1. Whether or not the instant Omnibus Petition which seeks the release of petitioners from detention
was rendered moot by their subsequent release from detention?
2. Whether or not the Court can assume jurisdiction over the Habeas Corpus Petition then pending
before the CA?
3. Whether or not the subject legislative inquiry on House Resolution No. 882 may be enjoined by a writ
of prohibition?
4. Whether or not the instant Omnibus Petition sufficiently states a cause of action for the issuance of a
writ of Amparo?58
Ruling of the Court
We dismiss the Omnibus Petition.
I.
The Petition to Assume Jurisdiction
over Habeas Corpus Petition
The release of persons in whose behalf the application for a Writ of Habeas Corpus was filed
renders the petition for the issuance thereof moot and academic
The writ of Habeas Corpus or the "great writ of liberty"59 was devised as a "speedy and effectual remedy
to relieve persons from unlawful restraint, and as the best and only sufficient defense of personal
freedom."60 The primary purpose of the writ "is to inquire into all manner of involuntary restraint as
distinguished from voluntary, and to relieve a person therefrom if such restraint is illegal."61 Under the
Constitution, the privilege of the writ of Habeas Corpus cannot be suspended except in cases of invasion
or rebellion when the public safety requires it.62
As to what kind of restraint against which the writ is effective, case law63 deems any restraint which will
preclude freedom of action as sufficient. Thus, as provided in the Rules of Court under Section 1, Rule
102 thereof, a writ of Habeas Corpus "shall extend to all cases of illegal confinement or detention by
which any person is deprived of his liberty, or by which the rightful custody of any person is withheld
from the person entitled thereto."
On the other hand, Section 4, Rule 102 spells the instances when the writ of Habeas Corpus is not
allowed or when the discharge thereof is authorized:
Sec. 4. When writ not allowed or discharge authorized. – If it appears that the person alleged to be
restrained of his liberty is in the custody of an officer under process issued by a court or judge or by
virtue of a judgment or order of a court of record, and that the court or judge had jurisdiction to issue
the process, render the judgment, or make the order, the writ shall not be allowed; or if the jurisdiction
appears after the writ is allowed, the person shall not be discharged by reason of any informality or
defect in the process, judgment, or order. Nor shall anything in this rule be held to authorize the
discharge of a person charged with or convicted of an offense in the Philippines, or of a person suffering
imprisonment under lawful judgment.
Accordingly, a Writ of Habeas Corpus may no longer be issued if the person allegedly deprived of liberty
is restrained under a lawful process or order of the court64 because since then, the restraint has become
legal.65 In the illustrative case of Ilagan v. Hon. Ponce Enrile,66 the Court dismissed the petition for habeas
corpus on the ground of mootness considering the filing of an information before the court. The court
pronounced that since the incarceration was now by virtue of a judicial order, the remedy of habeas
corpus no longer lies.
Like so, in Duque v. Capt. Vinarao,67 the Court held that a petition for habeas corpus can be dismissed
upon voluntary withdrawal of the petitioner. Further, in Pestaño v. Corvista,68 it was pronounced that
where the subject person had already been released from the custody complained of, the petition
for habeas corpus then still pending was considered already moot and academic and should be
dismissed. This pronouncement was carried on in Olaguer v. Military Commission No. 34,69 where the
Court reiterated that the release of the persons in whose behalf the application for a writ of habeas
corpus was filed is effected, the petition for the issuance of the writ becomes moot and
academic.70 Thus, with the subsequent release of all the petitioners from detention, their petition
for habeas corpus has been rendered moot. The rule is that courts of justice constituted to pass upon
substantial rights will not consider questions where no actual interests are involved and thus, will not
determine a moot question as the resolution thereof will be of no practical value.71
Far compelling than the question of mootness is that the element of illegal deprivation of freedom of
movement or illegal restraint is jurisdictional in petitions for habeas corpus. Consequently, in the
absence of confinement and custody, the courts lack the power to act on the petition for habeas
corpus and the issuance of a writ thereof must be refused.
Any lingering doubt as to the justiciability of the petition to assume jurisdiction over the Habeas
Corpus Petition before the CA is ultimately precluded by the CA Resolution considering the petition
closed and terminated. With the termination of the Habeas Corpus Petition before the CA, petitioners'
plea that the same be transferred to this Court, or that the Court assume jurisdiction thereof must
necessarily be denied.
Nevertheless, the Court, in exceptional cases, decides moot questions
Although as above-enunciated, the general rule is that mootness of the issue warrants a dismissal, the
same admits of certain exceptions.
In Prof. David v. Pres. Macapagal-Arroyo,72 the Court summed up the four exceptions to the rule when
Courts will decide cases, otherwise moot, thus: first, there is a grave violation of the
Constitution; second, the exceptional character of the situation and the paramount public interest is
involved; third, when constitutional issue raised requires formulation of controlling principles to guide
the bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.73 At
the least, the presence of the second and fourth exceptions to the general rule in the instant case
persuades us to proceed.
The Court's administrative supervision over lower courts does not equate to the power to usurp
jurisdiction already acquired by lower courts
Jurisdiction over petitions for habeas corpus and the adjunct authority to issue the writ are shared by
this Court and the lower courts.
The Constitution vests upon this Court original jurisdiction over petitions for habeas corpus.74 On the
other hand, Batas Pambansa (B.P.) Big. 129,75 as amended, gives the CA original jurisdiction to issue a
writ of habeas corpus whether or not in aid of its appellate jurisdiction.76 The CA's original jurisdiction
over Habeas Corpus petitions was re-stated in R.A. No. 7902.77 Similarly, B.P. Blg. 129 gives the RTCs
original jurisdiction in the issuance of a writ of Habeas Corpus.78 Family courts have concurrent
jurisdiction with this Court and the CA in petitions for habeas corpus where the custody of minors is at
issue,79 with the Family courts having exclusive jurisdiction to issue the ancillary writ of Habeas Corpus in
a petition for custody of minors filed before it.80 In the absence of all RTC judges in a province or city,
special jurisdiction is likewise conferred to any Metropolitan Trial Judge, Municipal Trial Judge or
Municipal Circuit Trial Judge to hear and decide petitions for a writ of Habeas Corpus.81
These conferment of jurisdiction finds procedural translation in Rule 102, Section 2 which provides that
an application for a writ of Habeas Corpus may be made before this Court, or any member thereof, or
the Court of Appeals or any member thereof, and if so granted, the same shall be enforceable anywhere
in the Philippines.82 An application for a writ of Habeas Corpus may also be made before the RTCs, or any
of its judges, but if so granted, is enforceable only within the RTC's judicial district.83 The writ of Habeas
Corpus granted by the Court or by the CA may be made returnable before the court or any member
thereof, or before the RTC or any judge thereof for hearing and decision on the merits.84
It is clear from the foregoing that this Court, the CA and the RTC enjoy concurrent jurisdiction over
petitions for habeas corpus. As the Habeas Corpus Petition was filed by petitioners with the CA, the latter
has acquired jurisdiction over said petition to the exclusion of all others, including this Court. This must
be so considering the basic postulate that jurisdiction once acquired by a court is not lost upon the
instance of the parties but continues until the case is terminated.85 A departure from this established
rule is to run the risk of having conflicting decisions from courts of concurrent jurisdiction and would
unwittingly promote judicial interference and instability.
Rule 102 in fact supports this interpretation. Observe that under Section 6, Rule 102, the return of the
writ of Habeas Corpus may be heard by a court apart from that which issued the writ.86 In such case, the
lower court to which the writ is made returnable by the issuing court shall proceed to decide the petition
for habeas corpus. In Medina v. Gen. Yan87 and Saulo v. Brig. Gen. Cruz, etc.,88 the Court held that by
virtue of such designation, the lower court "acquire[s] the power and authority to determine the merits
of the [petition for habeas corpus.]" Indeed, when a court acquires jurisdiction over the petition
for habeas corpus, even if merely designated to hear the return of the writ, such court has the power
and the authority to carry the petition to its conclusion.
Petitioners are without unbridled freedom to choose which between this Court and the CA should decide
the habeas corpus petition. Mere concurrency of jurisdiction does not afford the parties absolute
freedom to choose the court to which the petition shall be filed. After all, the hierarchy of courts "also
serves as a general determinant of the appropriate forum for petitions for the extraordinary writs."89
Further, there appears to be no basis either in fact or in law for the Court to assume or wrest jurisdiction
over the Habeas Corpus Petition filed with the CA.
Petitioners' fear that the CA will be unable to decide the Habeas Corpus petition because of the
assault90 it suffered from the House of Representatives is unsubstantiated and therefore insufficient to
justify their plea for the Court to over-step into the jurisdiction acquired by the CA. There is no showing
that the CA will be or has been rendered impotent by the threats it received from the House of
Representatives.91 Neither was there any compelling reason advanced by petitioners that the non-
assumption by this Court of the habeas corpus petition will result to an iniquitous situation for any of the
parties.
Neither can the Court assume jurisdiction over the then pending Habeas Corpus Petition by invoking
Section 6, Article VIII of the Constitution and Section 3(c), Rule 4 of A.M. No. 10-4-20-SC which both refer
to the Court's exercise of administrative supervision over all courts.
Section 6, Article VIII of the Constitution provides:
Sec. 6. The Supreme Court shall have administrative supervision over all courts and the personnel
thereof.
This Constitutional provision refers to the administrative supervision that the Department of Justice
previously exercised over the courts and their personnel. The deliberations of the Constitutional
Commission enlighten:
MR. GUINGONA: x x x.
The second question has reference to Section 9, about the administrative supervision over all courts to
be retained in the Supreme Court. I was wondering if the Committee had taken into consideration the
proposed resolution for the transfer of the administrative supervision from the Supreme Court to the
Ministry of Justice. But as far as I know, none of the proponents had been invited to explain or defend
the proposed resolution.
Also, I wonder if the Committee also took into consideration the fact that the UP Law Constitution
Project in its Volume I, entitled: Annotated Provision had, in fact, made this an alternative proposal, the
transfer of administrative supervision from the Supreme Court to the Ministry of Justice.
Thank you.
MR. CONCEPCION: May I refer the question to Commissioner Regalado?
THE PRESIDING OFFICER (Mr. Sarmiento): Commissioner Regalado is recognized.
MR. REGALADO: Thank you, Mr. Presiding Officer.
We did invite Minister Neptali Gonzales, who was the proponent for the transfer of supervision of the
lower courts to the Ministry of Justice. I even personally called up and sent a letter or a short note
inviting him, but the good Minister unfortunately was enmeshed in a lot of official commitments. We
wanted to hear him because the Solicitor General of his office, Sedfrey Ordofiez, appeared before us,
and asked for the maintenance of the present arrangement wherein the supervision over lower courts is
with the Supreme Court. But aside from that, although there were no resource persons, we did further
studies on the feasibility of transferring the supervision over the lower courts to the Ministry of Justice.
All those things were taken into consideration motu proprio.92
Administrative Supervision in Section 38, paragraph 2, Chapter 7, Book IV of the Administrative Code is
defined as follows:
(2) Administrative Supervision.—(a) Administrative supervision which shall govern the administrative
relationship between a department or its equivalent and regulatory agencies or other agencies as may
be provided by law, shall be limited to the authority of the department or its equivalent to generally
oversee the operations of such agencies and to insure that they are managed effectively, efficiently and
economically but without interference with day-to-day activities; or require the submission of reports
and cause the conduct of management audit, performance evaluation and inspection to determine
compliance with policies, standards and guidelines of the department; to take such action as may be
necessary for the proper performance of official functions, including rectification of violations, abuses
and other forms of maladministration; and to review and pass upon budget proposals of such agencies
but may not increase or add to them[.]
Thus, administrative supervision merely involves overseeing the operations of agencies to ensure that
they are managed effectively, efficiently and economically, but without interference with day-to-day
activities.93
Thus, to effectively exercise its power of administrative supervision over all courts as prescribed by the
Constitution, Presidential Decree No. 828, as amended by Presidential Decree No. 842, created the
Office of the Court Administrator. Nowhere in the functions of the several offices in the Office of the
Court Administrator is it provided that the Court can assume jurisdiction over a case already pending
with another court.94
Rule 4, Section 3(c) of A.M. No. 10-4-20-SC, on the other hand provides:
Sec. 3. Administrative Functions of the Court. - The administrative functions of the Court en banc consist
of, but are not limited to, the following:
xxxx
(c) the transfer of cases, from one court, administrative area or judicial region, to another, or the
transfer of venue of the trial of cases to avoid miscarriage of justice[.] (Emphasis ours)
Clearly, the administrative function of the Court to transfer cases is a matter of venue, rather than
jurisdiction. As correctly pointed out by respondents, the import of the Court's pronouncement
in Gutierrez95 is the recognition of the incidental and inherent power of the Court to transfer the trial of
cases from one court to another of equal rank in a neighboring site, whenever the imperative of securing
a fair and impartial trial, or of preventing a miscarriage of justice, so demands.96 Such incidental and
inherent power cannot be interpreted to mean an authority on the part of the Court to determine which
court should hear specific cases without running afoul with the doctrine of separation of powers
between the Judiciary and the Legislative.
II.
The Petition for Prohibition
Under the Court's expanded jurisdiction, the remedy of prohibition may be issued to correct errors
of jurisdiction by any branch or instrumentality of the Government
Respondents principally oppose co-petitioner Marcos' petition for prohibition on the ground that a writ
of prohibition does not lie to enjoin legislative or quasi-legislative actions. In support thereof,
respondents cite the cases of Holy Spirit Homeowners Association97 and The Senate Blue Ribbon
Committee.98
Contrary to respondents' contention, nowhere in The Senate Blue Ribbon Committee did the Court finally
settle that prohibition does not lie against legislative functions.99 The import of the Court's decision in
said case is the recognition of the Constitutional authority of the Congress to conduct inquiries in aid of While there is no question that a writ of prohibition lies against legislative functions, the Court finds no
legislation in accordance with its duly published rules of procedure and provided that the rights of justification for the issuance thereof in the instant case.
persons appearing in or affected by such inquiries shall be respected. Thus, if these Constitutionally-
prescribed requirements are met, courts have no authority to prohibit Congressional committees from
The power of both houses of Congress to conduct inquiries in aid of legislation is expressly provided by
requiring the attendance of persons to whom it issues a subpoena.
the Constitution under Section 21, Article VI thereof, which provides:

On the other hand, the Court's pronouncement in Holy Spirit Homeowners Association should be taken in
Sec. 21. The Senate or the House of Representatives or any of its respective committee may conduct
its proper context. The principal relief sought by petitioners therein was the invalidation of the
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of
implementing rules issued by the National Government Center Administration Committee pursuant to its
persons appearing in, or affected by, such inquiries shall be respected. (Emphasis ours)
quasi-legislative power. Hence, the Court therein stated that prohibition is not the proper remedy but an
ordinary action for nullification, over which the Court generally exercises not primary, but appellate
jurisdiction.100 Even before the advent of the 1987 Constitution, the Court in Arnault v. Nazareno106 recognized that the
power of inquiry is an "essential and appropriate auxiliary to the legislative function."107 In Senate of the
Philippines v. Exec. Sec. Ermita,108 the Court categorically pronounced that the power of inquiry is broad
In any case, the availability of the remedy of prohibition for determining and correcting grave abuse of
enough to cover officials of the executive branch, as in the instant case.109
discretion amounting to lack or excess of jurisdiction on the part of the Legislative and Executive
branches has been categorically affirmed by the Court in Judge Villanueva v. Judicial and Bar
Council,101 thus: Although expansive, the power of both houses of Congress to conduct inquiries in aid of legislation is not
without limitations. Foremost, the inquiry must be in furtherance of a legitimate task of the
Congress, i.e., legislation, and as such, "investigations conducted solely to gather incriminatory evidence
With respect to the Court, however, the remedies of certiorari and prohibition are necessarily broader in
and punish those investigated" should necessarily be struck down.110 Further, the exercise of the power
scope and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction
of inquiry is circumscribed by the above-quoted Constitutional provision, such that the investigation
committed not only by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or
must be "in aid of legislation in accordance with its duly published rules of procedure" and that "the
ministerial functions but also to set right, undo and restrain any act of grave abuse of discretion
rights of persons appearing in or affected by such inquiries shall be respected."111 It is jurisprudentially
amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, even if
settled that the rights of persons under the Bill of Rights must be respected, including the right to due
the latter does not exercise judicial, quasi-judicial or ministerial functions. This application is expressly
process and the right not to be compelled to testify against one's self.
authorized by the text of the second paragraph of Section 1, supra.

Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and
to review and/or prohibit or nullify the acts of legislative and executive officials.102 (Citation omitted
and emphasis ours)
The above pronouncement is but an application of the Court's judicial power which Section 1,103 Article
VIII of the Constitution defines as the duty of the courts of justice (1) to settle actual controversies
involving rights which are legally demandable and enforceable, and (2) 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. Such innovation under the 1987 Constitution later on
became known as the Court's "traditional jurisdiction" and "expanded jurisdiction," respectively.104
While the requisites for the court's exercise of either concept of jurisdiction remain constant, note that
the exercise by the Court of its "expanded jurisdiction" is not limited to the determination of grave abuse
of discretion to quasi-judicial or judicial acts, but extends to any act involving the exercise of discretion
on the part of the government. Indeed, the power of the Court to enjoin a legislative act is beyond cavil
as what the Court did in Garcillano v. The House of Representatives Committees on Public Information, et
al.105 when it enjoined therein respondent committees from conducting an inquiry in aid of legislation on
the notorious "Hello Garci" tapes for failure to comply with the requisite publication of the rules of
procedure.
In this case, co-petitioner Marcos primordially assails the nature of the legislative inquiry as a fishing
expedition in alleged violation of her right to due process and to be discriminatory to the Province of
Ilocos Norte. However, a perusal of the minutes of legislative hearings so far conducted reveals that the
same revolved around the use of the Province of Ilocos Norte's shares from the excise tax on locally
manufactured virginia-type cigarettes through cash advances which co-petitioner Marcos herself
admits112 to be the "usual practice" and was actually allowed by the Commission on Audit (COA).113 In
fact, the cause of petitioners' detention was not the perceived or gathered illegal use of such shares but
the rather unusual inability of petitioners to recall the transactions despite the same having involved
considerable sums of money.
Like so, co-petitioner Marcos' plea for the prevention of the legislative inquiry was anchored on her
apprehension that she, too, will be arrested and detained by House Committee. However, such remains
to be an apprehension which does not give cause for the issuance of the extraordinary remedy of
prohibition. Consequently, co-petitioner Marcos' prayer for the ancillary remedy of a preliminary
injunction cannot be granted, because her right thereto has not been proven to be clear and
unmistakable. In any event, such injunction would be of no useful purpose given that the instant
Omnibus Petition has been decided on the merits.114
III.
The Petition for the Issuance of a
Writ of Amparo

Co-petitioner Marcos failed to show that the subject legislative inquiry violates the Constitution or
that the conduct thereof was attended by grave abuse of discretion amounting to lack or in excess
The filing of the petition for the issuance of a writ of Amparo before this Court while the Habeas
of jurisdiction
Corpus Petition before the CA was still pending is improper
Even in civil cases pending before the trial courts, the Court has no authority to separately and directly
intervene through the writ of Amparo, as elucidated in Tapuz, et al. v. Hon. Judge Del Rosario, et
al.,115 thus:
Where, as in this case, there is an ongoing civil process dealing directly with the possessory dispute and
the reported acts of violence and harassment, we see no point in separately and directly intervening
through a writ of Amparo in the absence of any clear prima facie showing that the right to life, liberty or
security — the personal concern that the writ is intended to protect — is immediately in danger or
threatened, or that the danger or threat is continuing. We see no legal bar, however, to an application
for the issuance of the writ, in a proper case, by motion in a pending case on appeal or on certiorari,
applying by analogy the provisions on the co-existence of the writ with a separately filed criminal
case.116 (Italics in the original)
Thus, while there is no procedural and legal obstacle to the joining of a petition for habeas corpus and a
petition for Amparo,117 the peculiarity of the then pendency of the Habeas Corpus Petition before the CA
renders the direct resort to this Court for the issuance of a writ of Amparo inappropriate.
The privilege of the writ of Amparo is confined to instances of extralegal killings and enforced
disappearances, or threats thereof
Even if the Court sets aside this procedural faux pas, petitioners and co-petitioner Marcos failed to show,
by prima facie evidence, entitlement to the issuance of the writ. Much less have they exhibited, by
substantial evidence, meritorious grounds to the grant of the petition.
Section 1 of the Rule on the writ of Amparo provides:
SECTION 1. Petition. The petition for a writ of Amparo is a remedy available to any person whose right to
life, liberty and security is violated or threatened with violation by an unlawful act or omission of a public
official or employee, or of a private individual or entity.
The writ shall cover extralegal killings and enforced disappearances.
In the landmark case of Secretary of National Defense, et al. v. Manalo, et al.,118 the Court categorically
pronounced that the Amparo Rule, as it presently stands, is confined to extralegal killings and enforced
disappearances, or to threats thereof, and jurisprudentially defined these two instances, as follows:
[T]he Amparo Rule was intended to address the intractable problem of "extralegal killings" and
"enforced disappearances," its coverage, in its present form, is confined to these two instances or to
threats thereof. "Extralegal killings" are killings committed without due process of law, i.e., without legal
safeguards or judicial proceedings. On the other hand, enforced disappearances are attended by the
following characteristics: an arrest, detention or abduction of a person by a government official or
organized groups or private individuals acting with the direct or indirect acquiescence of the
government; the refusal of the State to disclose the fate or whereabouts of the person concerned or a
refusal to acknowledge the deprivation of liberty which places such persons outside the protection of
law.119 (Citations omitted)
The above definition of "enforced disappearance" appears in the Declaration on the Protection of All
Persons from Enforced Disappearances120 and is as statutorily defined in Section 3(g)121 of R. A. No.
9851.122 Thus, in Navia, et al. v. Pardico,123 the elements constituting "enforced disappearance," are
enumerated as follows:
(a) that there be an arrest, detention, abduction or any form of deprivation of liberty;
(b) that it be carried out by, or with the authorization, support or acquiescence of, the State or a political
organization;
(c) that it be followed by the State or political organization's refusal to acknowledge or give information
on the fate or whereabouts of the person subject of the Amparo petition; and,
(d) that the intention for such refusal is to remove subject person from the protection of the law for a
prolonged period of time.124
In Lozada, Jr., et al. v. President Macapagal-Arroyo, et al.,125 the Court reiterates that the privilege of the
writ of Amparo is a remedy available to victims of extra-judicial killings and enforced disappearances or
threats of a similar nature, regardless of whether the perpetrator of the unlawful act or omission is a
public official or employee or a private individual.126
Here, petitioners and co-petitioner Marcos readily admit that the instant Omnibus Petition does not
cover extralegal killings or enforced disappearances, or threats thereof. Thus, on this ground alone, their
petition for the issuance of a writ of Amparo is dismissible.
Despite this, petitioners insist that their rights to liberty and security were violated because of their
unlawful detention. On the other hand, co-petitioner Marcos seeks the protective writ of Amparo on the
ground that her right to liberty and security are being threatened by the conduct of the legislative
inquiry on House Resolution No. 882. But even these claims of actual and threatened violations of the
right to liberty and security fail to impress.
To reiterate, the writ of Amparo is designed to protect and guarantee the (1) right to life; (2) right to
liberty; and (3) right to security of persons, free from fears and threats that vitiate the quality of life.
In Rev. Fr. Reyes v. Court of Appeals, et al.,127 the Court had occasion to expound on the rights falling
within the protective mantle of the writ of Amparo, thus:
The rights that fall within the protective mantle of the Writ of Amparo under Section 1 of the Rules
thereon are the following: (1) right to life; (2) right to liberty; and (3) right to security.
In Secretary of National Defense et al. v. Manalo et al., the Court explained the concept of right to life in
this wise:
While the right to life under Article III, Section 1 guarantees essentially the right to be alive- upon which
the enjoyment of all other rights is preconditioned - the right to security of person is a guarantee of the
secure quality of this life, viz: "The life to which each person has a right is not a life lived in fear that his
person and property may be unreasonably violated by a powerful ruler. Rather, it is a life lived with the
assurance that the government he established and consented to, will protect the security of his person
and property. The ideal of security in life and property ... pervades the whole history of man. It touches
every aspect of man's existence." In a broad sense, the right to security of person "emanates in a
person's legal and uninterrupted enjoyment of his life, his limbs, his body, his health, and his reputation.
It includes the right to exist, and the right to enjoyment of life while existing, and it is invaded not only by
a deprivation of life but also of those things which are necessary to the enjoyment of life according to
the nature, temperament, and lawful desires of the individual."
The right to liberty, on the other hand, was defined in the City of Manila, et al. v. Hon. Laguio, Jr., in this
manner:
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." x x x
Secretary of National Defense et al. v. Manalo et al., thoroughly expounded on the import of the right to
security, thus:
A closer look at the right to security of person would yield various permutations of the exercise of this
right.
xxxx
Third, the right to security of person is a guarantee of protection of ones rights by the government. In
the context of the writ of Amparo, this right is built into the guarantees of the right to life and
liberty under Article III, Section 1 of the 1987 Constitution and the right to security of person (as
freedom from threat and guarantee of bodily and psychological integrity) under Article III, Section 2. The
right to security of person in this third sense is a corollary of the policy that the State guarantees full
respect for human rights under Article II, Section 11 of the 1987 Constitution. As the government is the
chief guarantor of order and security, the Constitutional guarantee of the rights to life, liberty and
security of person is rendered ineffective if government does not afford protection to these rights
especially when they are under threat. Protection includes conducting effective investigations,
organization of the government apparatus to extend protection to victims of extralegal killings or
enforced disappearances (or threats thereof) and/or their families, and bringing offenders to the bar of
justice. x x x.128 (Citations omitted and emphasis and italics in the original)
Nevertheless, and by way of caution, the rule is that a writ of Amparo shall not issue on amorphous and
uncertain grounds. Consequently, every petition for the issuance of a writ of Amparo should be
supported by justifying allegations of fact, which the Court in Tapuz129 laid down as follows:

First, the right to security of person is "freedom from fear." In its "whereas" clauses, the Universal "(a) The personal circumstances of the petitioner;
Declaration of Human Rights (UDHR) enunciates that "a world in which human beings shall enjoy
freedom of speech and belief and freedom from fear and want has been proclaimed as the highest
(b) The name and personal circumstances of the respondent responsible for the threat, act or omission,
aspiration of the common people." x x x Some scholars postulate that "freedom from fear" is not only an
or, if the name is unknown or uncertain, the respondent may be described by an assumed appellation;
aspirational principle, but essentially an individual international human right. It is the "right to security of
person" as the word "security" itself means "freedom from fear." Article 3 of the UDHR provides, viz:
(c) The right to life, liberty and security of the aggrieved party violated or threatened with violation by an
unlawful act or omission of the respondent, and how such threat or violation is committed with the
Everyone has the right to life, liberty and security of person.
attendant circumstances detailed in supporting affidavits;

xxxx
(d) The investigation conducted, if any, specifying the names, personal circumstances, and addresses of
the investigating authority or individuals, as well as the manner and conduct of the investigation,
The Philippines is a signatory to both the UDHR and the ICCPR. together with any report;

In the context of Section 1 of the Amparo Rule, "freedom from fear" is the right and any threat to the (e) The actions and recourses taken by the petitioner to determine the fate or whereabouts of the
rights to life, liberty or security is the actionable wrong. Fear is a state of mind, a reaction; threat is a aggrieved party and the identity of the person responsible for the threat, act or omission; and
stimulus, a cause of action. Fear caused by the same stimulus can range from being baseless to well-
founded as people react differently. The degree of fear can vary from one person to another with the
(f) The relief prayed for.
variation of the prolificacy of their imagination, strength of character or past experience with the
stimulus. Thus, in the Amparo context, it is more correct to say that the "right to security" is actually the
"freedom from threat." Viewed in this light, the "threatened with violation" Clause in the latter part of The petition may include a general prayer for other just and equitable reliefs."
Section 1 of the Amparo Rule is a form of violation of the right to security mentioned in the earlier part
of the provision.
The writ shall issue if the Court is preliminarily satisfied with the prima facie existence of the ultimate
facts determinable from the supporting affidavits that detail the circumstances of how and to what
Second, the right to security of person is a guarantee of bodily and psychological integrity or extent a threat to or violation of the rights to life, liberty and security of the aggrieved party was or is
security. Article III, Section II of the 1987 Constitution guarantees that, as a general rule, ones body being committed.130 (Citations omitted and italics in the original)
cannot be searched or invaded without a search warrant. Physical injuries inflicted in the context of
extralegal killings and enforced disappearances constitute more than a search or invasion of the body. It
Even more telling is the rule that the writ of Amparo cannot be issued in cases where the alleged threat
may constitute dismemberment, physical disabilities, and painful physical intrusion. As the degree of
has ceased and is no longer imminent or continuing.131
physical injury increases, the danger to life itself escalates. Notably, in criminal law, physical injuries
constitute a crime against persons because they are an affront to the bodily integrity or security of a
person. In this case, the alleged unlawful restraint on petitioners' liberty has effectively ceased upon their
subsequent release from detention. On the other hand, the apprehension of co-petitioner Marcos that
she will be detained is, at best, merely speculative. In other words, co-petitioner Marcos has failed to
show any clear threat to her right to liberty actionable through a petition for a writ of Amparo.
In Mayor William N. Mamba, et al. v. Leomar Bueno,132 the Court held that:
Neither did petitioners and co-petitioner successfully establish the existence of a threat to or violation of
their right to security. In an Amparo action, the parties must establish their respective claims by
substantial evidence. Substantial evidence is that amount of evidence which a reasonable mind might
accept as adequate to support a conclusion. It is more than a mere imputation of wrongdoing or
violation that would warrant a finding of liability against the person charged.133
Here, it appears that petitioners and co-petitioner Marcos even attended and participated in the
subsequent hearings on House Resolution No. 882 without any untoward incident. Petitioners and co-
petitioner Marcos thus failed to establish that their attendance at and participation in the legislative
inquiry as resource persons have seriously violated their right to liberty and security, for which no other
legal recourse or remedy is available. Perforce, the petition for the issuance of a writ of Amparo must be
dismissed.
IV.
Congress' Power to Cite in Contempt
and to Compel Attendance of Court Justices
It has not escaped the attention of the Court that the events surrounding the filing of the present
Omnibus Petition bear the unsavory impression that a display of force between the CA and the Congress
is impending. Truth be told, the letter of the CA Justices to the Court En Banc betrays the struggle these
CA Justices encountered in view of the Congressional power to cite in contempt and consequently, to
arrest and detain. These Congressional powers are indeed awesome. Yet, such could not be used to
deprive the Court of its Constitutional duty to supervise judges of lower courts in the performance of
their official duties. The fact remains that the CA Justices are non-impeachable officers. As such,
authority over them primarily belongs to this Court and to no other.
To echo the Court's ruling in Maceda v. Ombudsman Vasquez:134
[T]he Supreme Court [has] administrative supervision over all courts and court personnel, from the
Presiding Justice of the Court of Appeals down to the lowest municipal trial court clerk. By virtue of this
power, it is only the Supreme Court that can oversee the judges' and court personnel's compliance with
all laws, and take the proper administrative action against them if they commit any violation thereof. No
other branch of government may intrude into this power, without running afoul of the doctrine of
separation of powers.135
It is this very principle of the doctrine of separation of powers as enshrined under the Constitution that
urges the Court to carefully tread on areas falling under the sole discretion of the legislative branch of
the government. In point is the power of legislative investigation which the Congress exercises as a
Constitutional prerogative.
Concomitantly, the principle of separation of powers also serves as one of the basic postulates for
exempting the Justices, officials and employees of the Judiciary and for excluding the Judiciary's
privileged and confidential documents and information from any compulsory processes which very well
includes the Congress' power of inquiry in aid of legislation.136 Such exemption has been jurisprudentially
referred to as judicial privilege as implied from the exercise of judicial power expressly vested in one
Supreme Court and lower courts created by law.137
However, as in all privileges, the exercise thereof is not without limitations. The invocation of the Court's
judicial privilege is understood to be limited to matters that are part of the internal deliberations and
actions of the Court in the exercise of the Members' adjudicatory functions and duties. For the guidance
of the bench, the Court herein reiterates its Per Curiam Resolution138 dated February 14, 2012 on the
production of court records and attendance of court officials and employees as witnesses in the then
impeachment complaint against former Chief Justice Renato C. Corona, insofar as it summarized the
documents or communications considered as privileged as follows:
(1) Court actions such as the result of the raffle of cases and the actions taken by the Court on each case
included in the agenda of the Court's session on acts done material to pending cases, except where a
party litigant requests information on the result of the raffle of the case, pursuant to Rule 7, Section 3 of
the Internal Rules of the Supreme Court (IRSC);
(2) Court deliberations or the deliberations of the Members in court sessions on cases and matters
pending before the Court;
(3) Court records which are "predecisional" and "deliberative" in nature, in particular, documents and
other communications which are part of or related to the deliberative process, i.e, notes, drafts, research
papers, internal discussions, internal memoranda, records of internal deliberations, and similar papers;
(4) Confidential information secured by justices, judges, court officials and employees in the course of
their official functions, mentioned in (2) and (3) above, are privileged even after their term of office.
(5) Records of cases that are still pending for decision are privileged materials that cannot be disclosed,
except only for pleadings, orders and resolutions that have been made available by the court to the
general public.
xxxx
By way of qualification, judicial privilege is unavailing on matters external to the Judiciary's deliberative
adjudicatory functions and duties. Justice Antonio T. Carpio discussed in his Separate Opinion to the Per
Curiam Resolution, by way of example, the non-confidential matters as including those "information
relating to the commission of crimes or misconduct, or violations of the Code of Judicial Conduct, or any
violation of a law or regulation," and those outside the Justices' adjudicatory functions such as "financial,
budgetary, personnel and administrative matters relating to the operations of the Judiciary."
As a guiding principle, the purpose of judicial privilege, as a child of judicial power, is principally for the
effective discharge of such judicial power. If the matter upon which Members of the Court, court officials
and employees privy to the Court's deliberations, are called to appear and testify do not relate to and
will not impair the Court's deliberative adjudicatory judicial power, then judicial privilege may not be
successfully invoked.
The Court had occasion to illustrate the application of the rule on judicial privilege and its qualifications
to impeachment proceedings as follows:
[W]here the ground cited in an impeachment complaint is bribery, a Justice may be called as a witness in
the impeachment of another Justice, as bribery is a matter external to or is not connected with the
adjudicatory functions and duties of a magistrate. A Justice, however, may not be called to testify on the
arguments the accused Justice presented in the internal debates as these constitute details of the
deliberative process.139
Nevertheless, the traditional application of judicial privilege cannot be invoked to defeat a positive
Constitutional duty. Impeachment proceedings, being sui generis,140 is a Constitutional process designed
to ensure accountability of impeachable officers, the seriousness and exceptional importance of which
outweighs the claim of judicial privilege.
To be certain, the Court, in giving utmost importance to impeachment proceedings even as against its
own Members, recognizes not the superiority of the power of the House of Representatives to initiate
impeachment cases and the power of the Senate to try and decide the same, but the superiority of the
impeachment proceedings as a Constitutional process intended to safeguard public office from culpable
abuses. In the words of Chief Justice Maria Lourdes P. A. Sereneo in her Concurring and Dissenting
Opinion to the Per Curiam Resolution, the matter of impeachment is of such paramount societal
importance that overrides the generalized claim of judicial privilege and as such, the Court should extend
respect to the Senate acting as an Impeachment Court and give it wide latitude in favor of its function of
exacting accountability as required by the Constitution.
With the foregoing disquisition, the Court finds it unnecessary to discuss the other issues raised in the
Omnibus Petition.
WHEREFORE, the Omnibus Petition is DISMISSED.
SO ORDERED.
G.R. No. 188635 January 29, 2013
BRENDA L. NAZARETH, REGIONAL DIRECTOR, DEPARTMENT OF SCIENCE AND TECHNOLOGY, REGIONAL
OFFICE NO. IX, ZAMBOANGA CITY, Petitioner,
vs.
THE HON. REYNALDO A. VILLAR, HON. JUANITO G. ESPINO, JR., (COMMISSIONERS OF THE
COMMISSION ON AUDIT), and DIR. KHEM M. INOK, Respondents.
DECISION
BERSAMIN, J.:
No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.1 A
violation of this constitutional edict warrants the disallowance of the payment. However, the refund of
the disallowed payment of a benefit granted by law to a covered person, agency or office of the
Government may be barred by the good faith of the approving official and of the recipient.
Being assailed by petition for certiorari on the ground of its being issued with grave abuse of discretion
amounting to lack or excess of jurisdiction is the decision rendered on June 4, 2009 by the Commission
on Audit (COA) in COA Case No. 2009-045 entitled Petition of Ms. Brenda L. Nazareth, Regional Director,
Department of Science and Technology, Regional Office No. IX, Zamboanga City, for review of Legal and
Adjudication Office (LAO)-National Decision No. 2005-308 dated September 15, 2005 and LAO-National
Resolution No. 2006-308A dated May 12, 2006 on disallowances of subsistence, laundry, hazard and
other benefits in the total amount of P3,591,130.36,2 affirming the issuance of notices of disallowance
(NDs) by the Audit Team Leader of COA Regional Office No. IX in Zamboanga City against the payment of
benefits to covered officials and employees of the Department of Science and Technology (DOST) for
calendar year (CY) 2001 out of the savings of the DOST.
The petitioner DOST Regional Director hereby seeks to declare the decision dated June 4, 2009 "null and
void," and prays for the lifting of the disallowance of the payment of the benefits for CY2001 for being
within the ambit of Republic Act No. 8439 (R.A. No. 8439), otherwise known as the Magna Carta for
Scientists, Engineers, Researchers, and other Science and Technology Personnel in the Government
(Magna Carta, for short), and on the strength of the Memorandum of Executive Secretary Ronaldo B.
Zamora dated April 12, 2000 authorizing the use of the savings for the purpose.
Antecedents
On December 22, 1997, Congress enacted R.A. No. 8439 to address the policy of the State to provide a
program for human resources development in science and technology in order to achieve and maintain
the necessary reservoir of talent and manpower that would sustain the drive for total science and
technology mastery.3 Section 7 of R.A. No. 8439 grants the following additional allowances and benefits
(Magna Carta benefits) to the covered officials and employees of the DOST, to wit:
(a) Honorarium. - S & T personnel who rendered services beyond the established irregular
workload of scientists, technologists, researchers and technicians whose broad and superior
knowledge, expertise or professional standing in a specific field contributes to productivity
and innovativeness shall be entitled to receive honorarium subject to rules to be set by the
Department;
(b) Share in royalties. - S & T scientists, engineers, researchers and other S & T personnel shall
be entitled to receive share in royalties subject to guidelines of the Department. The share in
royalties shall be on a sixty percent-forty percent (60%-40%) basis in favor of the Government
and the personnel involved in the technology/ activity which has been produced or
undertaken during the regular performance of their functions. For the purpose of this Act,
share in royalties shall be defined as a share in the proceeds of royalty payments arising from
patents, copyrights and other intellectual property rights;
If the researcher works with a private company and the program of activities to be
undertaken has been mutually agreed upon by the parties concerned, any royalty arising
therefrom shall be divided according to the equity share in the research project;
(c) Hazard allowance. - S & T personnel involved in hazardous undertakings or assigned in
hazardous workplaces, shall be paid hazard allowances ranging from ten (10%) to thirty (30%)
percent of their monthly basic salary depending on the nature and extent of the hazard
involved. The following shall be considered hazardous workplaces:
(1) Radiation-exposed laboratories and service workshops;
(2) Remote/depressed areas;
(3) Areas declared under a state of calamity or emergency;
(4) Strife-torn or embattled areas;
(5) Laboratories and other disease-infested areas.
(d) Subsistence allowance. - S & T personnel shall be entitled to full subsistence allowance
equivalent to three (3) meals a day, which may be computed and implemented in accordance
with the criteria to be provided in the implementing rules and regulations. Those assigned out
of their regular work stations shall be entitled to per diem in place of the allowance;
 (e) Laundry allowance. - S & T personnel who are required to wear a prescribed uniform
during office hours shall be entitled to a laundry allowance of not less than One hundred fifty
pesos (P150.00) a month;
(f) Housing and quarter allowance. - S & T personnel who are on duty in laboratories, research
and development centers and other government facilities shall be entitled to free living
quarters within the government facility where they are stationed: Provided, That the
personnel have their residence outside of the fifty (50)-kilometer radius from such
government facility;
(g) Longevity pay. - A monthly longevity pay equivalent to five percent (5%) of the monthly
basic salary shall be paid to S & T personnel for every five (5) years of continuous and
meritorious service as determined by the Secretary of the Department; and
(h) Medical examination. - During the tenure of their employment, S & T personnel shall be
given a compulsory free medical examination once a year and immunization as the case may
warrant. The medical examination shall include:
(1) Complete physical examination;
(2) Routine laboratory, Chest X-ray and ECG;
(3) Psychometric examination;
(4) Dental examination;
(5) Other indicated examination.
Under R.A. No. 8439, the funds for the payment of the Magna Carta benefits are to be appropriated by
the General Appropriations Act (GAA) of the year following the enactment of R.A. No. 8439.4
The DOST Regional Office No. IX in Zamboanga City released the Magna Carta benefits to the covered
officials and employees commencing in CY 1998 despite the absence of specific appropriation for the
purpose in the GAA. Subsequently, following the post-audit conducted by COA State Auditor Ramon E.
Vargas on April 23, 1999, October 28, 1999, June 20, 2000, February 27, 2001, June 27, 2001, October 10,
2001 and October 17, 2001, several NDs were issued disapproving the payment of the Magna Carta
benefits. The justifications for the disallowance were stated in the post-audit report, as follows:
a) ND Nos. 99-001-101 (98) to 99-105-101 (98) Payment of Subsistence and Laundry
Allowances and Hazard Pay for the months of February-November 1998 – The State Auditor
claims that no funds were appropriated in the 1998 General Appropriations Act for the said
purpose notwithstanding the effectivity of the Magna Carta, providing for payment of
allowances and benefits, among others, to Science and Technology Personnel in the
Government;
b) ND Nos. 2000-101-101 (99) to 2000-010-101 (99) Payment of Subsistence and Laundry
Allowances and Hazard Pay for the months of January-June 1999 – The State Auditor claims
that no Department of Budget and Management (DBM) and Civil Service Commission (CSC)
guidelines were issued by the said Departments on the payment thereof;
c) ND Nos. 2001-001-101 (00) to 2001-013-101 (00) Payment of Subsistence and Laundry
Allowances, Hazard Pay and Health Care Program for the month of October 1999 and
January-September 2000 – The State Auditor claims that there was no basis for the payment
of the said allowances because the President vetoed provisions of the General Appropriations
Act (GAA) regarding the use of savings for the payment of benefits;
d) ND Nos. 2001-014-101(00) to 2001-025-101 (00) Payment of Subsistence and Laundry
Allowances, Hazard Pay and Medical Benefits for the months of January-October 2001 – The
provision for the use of savings in the General Appropriations Act (GAA) was vetoed by the
President; hence, there was no basis for the payment of the aforesaid allowances or benefits according
to the State Auditor.5
The disallowance by the COA prompted then DOST Secretary Dr. Filemon Uriarte, Jr. to request the
Office of the President (OP) through his
Memorandum dated April 3, 2000 (Request for Authority to Use Savings for the Payment of Magna Carta
Benefits as provided for in R.A. 8439) for the authority to utilize the DOST’s savings to pay the Magna
Carta benefits.6 The salient portions of the Memorandum of Secretary Uriarte, Jr. explained the request
in the following manner:
x x x. However, the amount necessary for its full implementation had not been provided in the General
Appropriations Act (GAA). Since the Act’s effectivity, the Department had paid the 1998 MC benefits out
of its current year’s savings as provided for in the Budget Issuances of the Department of Budget and
Management while the 1999 MC benefits were likewise sourced from the year’s savings as authorized in
the 1999 GAA.
The 2000 GAA has no provision for the use of savings. The Department, therefore, cannot continue the
payment of the Magna Carta benefits from its 2000 savings. x x x. The DOST personnel are looking
forward to His Excellency’s favorable consideration for the payment of said MC benefits, being part of
the administration’s 10-point action program to quote "I will order immediate implementation of RA
8439 (the Magna Carta for Science and Technology Personnel in Government)" as published in the
Manila Bulletin dated May 20, 1998.
Through the Memorandum dated April 12, 2000, then Executive Secretary Ronaldo Zamora, acting by
authority of the President, approved the request of Secretary Uriarte, Jr.,7 viz:
With reference to your Memorandum dated April 03, 2000 requesting authority to use savings from the
appropriations of that Department and its agencies for the payment of Magna Carta Benefits as provided
for in R.A. 8439, please be informed that the said request is hereby approved.
On July 28, 2003, the petitioner, in her capacity as the DOST Regional Director in Region IX, lodged an
appeal with COA Regional Cluster Director Ellen Sescon, urging the lifting of the disallowance of the
Magna Carta benefits for the period covering CY 1998 to CY 2001 amounting to P4,363,997.47. She
anchored her appeal on the April 12, 2000 Memorandum of Executive Secretary Zamora, and cited the
provision in the GAA of 1998,8 to wit:
Section 56. Priority in the Use of Savings.– In the use of savings, priority shall be given to the
augmentation of the amounts set aside for compensation, bonus, retirement gratuity, terminal leave, old
age pension of veterans and other personnel benefits authorized by law and those expenditure items
authorized in agency Special Provisions and in Sec. 16 and in other sections of the General Provisions of
this Act.9
In support of her appeal, the petitioner contended that the DOST Regional Office had "considered the
subsistence and laundry allowance as falling into the category ‘other personnel benefits authorized by
law,’ hence the payment of such allowances were charged to account 100-900 for Other Benefits
(Honoraria), which was declared to be the savings of our Office."10 She argued that the April 12, 2000
Memorandum of Executive Secretary Zamora not only ratified the payment of the Magna Carta benefits
out of the savings for CY 1998 and CY 1999 and allowed the use of the savings for CY 2000, but also
operated as a continuing endorsement of the use of savings to cover the Magna Carta benefits in
succeeding calendar years.
The appeal was referred to the Regional Legal and Adjudication Director (RLAD), COA Regional Office IX
in Zamboanga City, which denied the appeal and affirmed the grounds stated in the NDs.
Not satisfied with the result, the petitioner elevated the matter to the COA Legal and Adjudication Office
in Quezon City
On September 15, 2005, respondent Director Khem N. Inok of the COA Legal and Adjudication Office
rendered a decision in LAO-N-2005-308,11 denying the petitioner’s appeal with the modification that only
the NDs covering the Magna Carta benefits for CY 2000 were to be set aside in view of the authorization
under the Memorandum of April 12, 2000 issued by Executive Secretary Zamora as the alter ego of the
President. The decision explained itself as follows:
In resolving the case, the following issues should first be resolved:
1. Whether or not the "approval" made by the Executive Secretary on April 12, 2000 on the
request for authority to use savings of the agency to pay the benefits, was valid; and
2. Whether or not the payments of the benefits made by the agency using its savings for the
years 1998 and 1999 based on Section 56 of RA 8522 (General Appropriations Act of 1998
[GAA]) were legal and valid.
Anent the first issue, the law in point is Article VI, Section 25(5) of the 1987 Constitution, which aptly
provides that:
"(5) No law shall be passed authorizing any transfer of appropriations, however, the PRESIDENT, x x x
may by law, be authorized to augment any item in the general appropriations law for their respective
offices from savings in other items of their respective appropriations."
Simply put, it means that only the President has the power to augment savings from one item to another
in the budget of administrative agencies under his control and supervision. This is the very reason why
the President vetoed the Special Provisions in the 1998 GAA that would authorize the department heads
to use savings to augment other items of appropriations within the Executive Branch. Such power could
well be extended to his Cabinet Secretaries as alter egos under the "doctrine of qualified political
agency" enunciated by the Supreme Court in the case of Binamira v. Garrucho, 188 SCRA 154, where it
was pronounced that the official acts of a Department Secretary are deemed acts of the President unless
disapproved or reprobated by the latter. Thus, in the instant case, the authority granted to the DOST by
the Executive Secretary, being one of the alter egos of the President, was legal and valid but in so far as
the use of agency’s savings for the year 2000 only. Although 2000 budget was reenacted in 2001, the
authority granted on the use of savings did not necessarily extend to the succeeding year.
On the second issue, the payments of benefits made by the agency in 1998 and 1999 were admittedly
premised on the provisions of the General Appropriations Acts (GAA) for CY 1998 and 1999 regarding the
use of savings which states that:
"In the use of savings, priority shall be given to the augmentation of the amount set aside for
compensation, bonus, retirement gratuity, terminal leave, old age pensions of veterans and other
personal benefits x x x." (Underscoring ours.)
It can be noted, however, that augmentation was likewise a requisite to make payments for such
benefits which means that Presidential approval was necessary in accordance with the above-cited
provision of the 1987 Constitution. Therefore, the acts of the agency in using its savings to pay the said
benefits without the said presidential approval were illegal considering that during those years there was
no appropriations provided in the GAA to pay such benefits.
Further, COA Decision Nos. 2003-060 dated March 18, 2003 and 2002-022 dated January 11, 2002,
where this Commission lifted the DOST disallowance on the payments of similar benefits in 1992 to
1995, can not be applied in the instant case. The disallowances therein dealt more on the classification of
the agency as health related or not while the instant case deals mainly on the availability of appropriated
funds for the benefits under RA 8439 and the guidelines for their payments.
Likewise, the certification of the DOST Secretary declaring work areas of S and T personnel as hazardous
for purposes of entitlement to hazard allowance is not valid and may be considered as self-serving.
Under RA 7305 and its Implementing Rules and Regulation[s] (Magna Carta of Public Health Workers),
the determination which agencies are considered health-related establishments is within the
competence of the Secretary of Health which was used by this Commission in COA Decision No. 2003-
060, supra, to wit:
xxxx
"It bears emphasis to state herein that it is within the competence of the Secretary of Health as
mandated by RA 7305 and its IRR to determine which agencies are health-related establishments.
Corollary thereto, the certifications dated October 10, 1994 issued by then DOH Secretary Juan M.
Flavier that certain DOST personnel identified by DOST Secretary Padolina in his letter dated September
29, 1994 to be engaged in health and health-related work and that of Secretary Hilarion J. Ramiro dated
December 12, 1996 confirming the staff and personnel of the DOST and its attached agencies to be
engaged in health-related work and further certified to be a health-related establishment were sufficient
basis for reconsideration of the disallowance on subsistence and laundry allowances paid for 1992, 1993
and 1995."
xxxx
Assuming that the situation in the DOST and its attached agencies did not change as to consider it
health-related establishment for its entitlement to magna carta benefits, still the payments of the
benefits cannot be sustained in audit not only for lack of said certification from the Secretary of
Department of Health for the years 1998 and 1999 but more importantly, for lack of funding.
WHEREFORE, premises considered, the herein Appeal is DENIED with modification. NDs Nos. 2001-001- of the Magna Carta benefits to its qualified personnel, the said payments became lawful for the periods
101 (00) to 2001-013-101 (00) issued for the payments of benefits for CY 2000 are hereby SET ASIDE covered in the request, that is, CYs 1998, 1999 and 2000. Since the Magna Carta benefits paid in 2001
while NDs pertaining to benefits paid for CY 1998, 1999 and 2001 shall STAY. were not covered by the approval, the same were correctly disallowed in audit.

On December 1, 2005, the petitioner filed her motion for reconsideration in the COA Legal and
Adjudication Office-National in Quezon City.
By resolution dated May 12, 2006,12 the COA Legal and Adjudication Office-National denied the motion
for reconsideration.
Thence, the petitioner filed a petition for review in the COA Head Office, insisting that the payment of
Magna Carta benefits to qualified DOST Regional Office No. IX officials and employees had been allowed
under R.A. No. 8349.
In a previous COA Decision-No. 2006-015 dated January 31, 2006, the payment of hazard, subsistence
and laundry allowances given to personnel of the DOST, Regional Office No. VI, Iloilo City, was granted.
The same decision also stated that in (sic) no doubt the DOST personnel, who are qualified, are entitled
to receive the Magna Carta benefits. The 1999 GAA did not prohibit the grant of these benefits but
merely emphasized the discretion of the agency head, upon authority of the President, to use savings
from the Department’s appropriation, to implement the payment of benefits pursuant to the DOST
Charter.
RULING

WHEREFORE, premises considered, the instant appeal on the payment of Magna Carta benefits for CYs
On June 4, 2009, the COA rendered the assailed decision, further modifying the decision of respondent
1998 and 1999 which were disallowed in ND Nos. 99-001-101 (98) to 99-015-101 (98) and 2000-001-101
Director Inok by also lifting and setting aside the NDs covering the Magna Carta benefits for CY 1998 and
(99) to 2000-010-101 (99), is hereby GRANTED. Likewise, the lifting of ND Nos. 2001-001-101 (00) to
CY 1999 for the same reason applicable to the lifting of the NDs for CY 2000, but maintaining the
2001-013-101 (00) as embodied in LAO-National Decision No. 2005-308 dated September 15, 2005 is
disallowance of the benefits for CY 2001 on the ground that they were not covered by the authorization
hereby CONFIRMED. While the disallowances on the payment of said benefits for 2001 as covered by ND
granted by the Memorandum of April 12, 2000 of Executive Secretary Zamora.
Nos. 2001-014-101 (01) to 2001-032-101 (01) are hereby AFFIRMED.

The pertinent portions of the decision are quoted below, to wit:

Issues

Hence, the appellant filed the instant petition for review with the main argument that the payment of
Hence, this special civil action for certiorari, with the petitioner insisting that the COA gravely abused its
Magna Carta benefits to qualified DOST Regional Office No. IX employees is allowed pursuant to RA No.
discretion amounting to lack or excess of jurisdiction in affirming the disallowance of the Magna Carta
8439.
benefits for CY 2001 despite the provisions of R.A. No. 8439, and in ruling that the Memorandum of April
12, 2000 did not cover the payment of the Magna Carta benefits for CY 2001.
ISSUE
Did the COA commit grave abuse of discretion in issuing ND No. 2001-014-101(01) to ND No. 2001-032-
The sole issue to be resolved is whether or not the payment of Magna Carta benefits for CYs 1998, 1999 101(01)?
and 2001 is valid and legal.
Ruling
DISCUSSION
The petition for certiorari lacks merit.
It is clear that the funds utilized for the payment of the Magna Carta benefits came from the savings of
the agency. The approval by the Executive Secretary of the request for authority to use the said savings
R. A. No. 8439 was enacted as a manifestation of the State’s recognition of science and technology as an
for payments of the benefits was an affirmation that the payments were authorized. The Memorandum
essential component for the attainment of national development and progress. The law offers a program
dated April 3, 2000 of the DOST Secretary requested for the approval of the payment out of savings of
of human resources development in science and technology to help realize and maintain a sufficient pool
the CY 2000 benefits. Likewise, the same Memorandum mentioned the 1998 Magna Carta benefits
of talent and manpower that will sustain the initiative for total science and technology mastery. In
which were paid out of its current year’s savings as provided for in the budget issuances of the DBM and
furtherance of this objective, the law not only ensures scholarship programs and improved science and
the 1999 Magna Carta benefits which were sourced from the year’s savings as authorized in the 1999
engineering education, but also affords incentives for those pursuing careers in science and technology.
GAA. When such memorandum request was approved by the Executive Secretary in a Memorandum
Moreover, the salary scale of science and technology personnel is differentiated by R. A. No. 8439 from
dated April 12, 2000, it was clear that the approval covered the periods stated in the request, which
the salary scales of government employees under the existing law.
were the 1998, 1999 and 2000 Magna Carta benefits.

As earlier mentioned, Section 7 of R. A. No. 8439 confers the Magna Carta benefits consisting of
Thus, this Commission hereby affirms LAO-National Decision No. 2005-308 dated September 15, 2005
additional allowances and benefits to DOST officers and employees, such as honorarium, share in
which lifted ND Nos. 2001-001-101 (00) to 2001-013-101 (00) for the payments of Magna Carta benefits
royalties, hazard, subsistence, laundry, and housing and quarter allowances, longevity pay, and medical
for CY 2000 and which sustained the NDs for payments in 2001. However, for the disallowances covering
examination. But the Magna Carta benefits will remain merely paper benefits without the corresponding
payments in 1998 and 1999, this Commission is inclined to lift the same. This is in view of the approval
allocation of funds in the GAA.
made by the Executive Secretary for the agency to use its savings to pay the benefits for the years
covered. Thus, when the Executive Secretary granted the request of the DOST Secretary for the payment
The petitioner urges the Court to treat the authority granted in the April 12, 2000 Memorandum of
Executive Secretary Zamora as a continuing authorization to use the DOST’s savings to pay the Magna
Carta benefits.
We cannot agree with the petitioner.
The April 12, 2000 Memorandum was not a blanket authority from the OP to pay the benefits out of the
DOST’s savings. Although the Memorandum was silent as to the period covered by the request for
authority to use the DOST’s savings, it was clear just the same that the Memorandum encompassed only
CY 1998, CY 1999 and CY 2000. The limitation of its applicability to those calendar years was based on
the tenor of the request of Secretary Uriarte, Jr. to the effect that the DOST had previously used its
savings to pay the Magna Carta benefits in CY 1998 and CY 1999; that the 2000 GAA did not provide for
the use of savings; and that the DOST personnel were looking forward to the President’s favorable
consideration. The Memorandum could only be read as an authority covering the limited period until
and inclusive of CY 2000. The text of the Memorandum was also bereft of any indication that the
authorization was to be indefinitely extended to any calendar year beyond CY 2000.
As we see it, the COA correctly ruled on the matter at hand. Article VI Section 29 (1) of the 1987
Constitution firmly declares that: "No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law." This constitutional edict requires that the GAA be purposeful, deliberate,
and precise in its provisions and stipulations. As such, the requirement under Section 2013 of R.A. No.
8439 that the amounts needed to fund the Magna Carta benefits were to be appropriated by the GAA
only meant that such funding must be purposefully, deliberately, and precisely included in the GAA. The
funding for the Magna Carta benefits would not materialize as a matter of course simply by fiat of R.A.
No. 8439, but must initially be proposed by the officials of the DOST as the concerned agency for
submission to and consideration by Congress. That process is what complies with the constitutional
edict. R.A. No. 8439 alone could not fund the payment of the benefits because the GAA did not mirror
every provision of law that referred to it as the source of funding. It is worthy to note that the DOST itself
acknowledged the absolute need for the appropriation in the GAA. Otherwise, Secretary Uriarte, Jr.
would not have needed to request the OP for the express authority to use the savings to pay the Magna
Carta benefits.
In the funding of current activities, projects, and programs, the general rule should still be that the
budgetary amount contained in the appropriations bill is the extent Congress will determine as sufficient
for the budgetary allocation for the proponent agency. The only exception is found in Section 25
(5),14 Article VI of the Constitution, by which the President, the President of the Senate, the Speaker of
the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions are authorized to transfer appropriations to augment any item in the GAA for their
respective offices from the savings in other items of their respective appropriations. The plain language
of the constitutional restriction leaves no room for the petitioner’s posture, which we should now
dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article VI of
the Constitution limiting the authority to transfer savings only to augment another item in the GAA is
strictly but reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v. Commission on
Elections:15
When the statute itself enumerates the exceptions to the application of the general rule, the exceptions
are strictly but reasonably construed. The exceptions extend only as far as their language fairly warrants,
and all doubts should be resolved in favor of the general provision rather than the exceptions. Where the
general rule is established by a statute with exceptions, none but the enacting authority can curtail the
former. Not even the courts may add to the latter by implication, and it is a rule that an express
exception excludes all others, although it is always proper in determining the applicability of the rule to
inquire whether, in a particular case, it accords with reason and justice.
The appropriate and natural office of the exception is to exempt something from the scope of the
general words of a statute, which is otherwise within the scope and meaning of such general words.
Consequently, the existence of an exception in a statute clarifies the intent that the statute shall apply to
all cases not excepted. Exceptions are subject to the rule of strict construction; hence, any doubt will be
resolved in favor of the general provision and against the exception. Indeed, the liberal construction of a
statute will seem to require in many circumstances that the exception, by which the operation of the
statute is limited or abridged, should receive a restricted construction.
The claim of the petitioner that the payment of the 2001 Magna Carta benefits was upon the
authorization extended by the OP through the 12 April 2000 Memorandum of Executive Secretary
Zamora was outrightly bereft of legal basis. In so saying, she inexplicably, but self-servingly, ignored the
important provisions in the 2000 GAA on the use of savings, to wit:
Sec. 54. Use of Savings. The President of the Philippines, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions under Article IX of the Constitution, the Ombudsman and the Chairman of the Commission
on Human Rights are hereby authorized to augment any item in this Act for their respective offices from
savings in other items of their respective appropriations.
Sec. 55. Meaning of Savings and Augmentation. Savings refer to portions or balances of any programmed
appropriation in this Act free of any obligation or encumbrance still available after the completion or
final discontinuance or abandonment of the work, activity or purpose for which the appropriation is
authorized, or arising from unpaid compensation and related costs pertaining to vacant positions and
leaves of absence without pay.
Augmentation implies the existence in this Act of an item, project, activity or purpose with an
appropriation which upon implementation or subsequent evaluation of needed resources is determined
to be deficient. In no case, therefore, shall a non-existent item, project, activity, purpose or object of
expenditure be funded by augmentation from savings or by the use of appropriations authorized
otherwise in this Act. (Bold emphases added)
Under these provisions, the authority granted to the President was subject to two essential requisites in
order that a transfer of appropriation from the agency’s savings would be validly effected. The first
required that there must be savings from the authorized appropriation of the agency. The second
demanded that there must be an existing item, project, activity, purpose or object of expenditure with
an appropriation to which the savings would be transferred for augmentation purposes only.
At any rate, the proposition of the petitioner that savings could and should be presumed from the mere
transfer of funds is plainly incompatible with the doctrine laid down in Demetria v. Alba,16 in which the
petition challenged the constitutionality of paragraph 1 of Section 4417 of Presidential Decree No. 1177
(Budget Reform Decree of 1977) in view of the express prohibition contained in Section 16(5)18 of Article
VIII of the 1973 Constitution against the transfer of appropriations except to augment out of
savings,19 with the Court declaring the questioned provision of Presidential Decree No. 1177 "null and
void for being unconstitutional" upon the following reasoning, to wit:
The prohibition to transfer an appropriation for one item to another was explicit and categorical under
the 1973 Constitution. However, to afford the heads of the different branches of the government and
those of the constitutional commissions considerable flexibility in the use of public funds and resources,
the constitution allowed the enactment of a law authorizing the transfer of funds for the purpose of
augmenting an item from savings in another item in the appropriation of the government branch or
constitutional body concerned. The leeway granted was thus limited. The purpose and conditions for
which funds may be transferred were specified, i.e., transfer may be allowed for the purpose of
augmenting an item and such transfer may be made only if there are savings from another item in the
appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly overextends the privilege granted under said Section
16(5). It empowers the President to indiscriminately transfer funds from one department, bureau, office
or agency of the Executive Department to any program, project, or activity of any department, bureau or
office included in the General Appropriations Act or approved after its enactment, without regard as to
whether or not the funds to be transferred are actually savings in the item from which the same are to
be taken, or whether or not the transfer is for the purpose of augmenting the item to which said transfer
is to be made. It does not only completely disregard the standards set in the fundamental law, thereby
amounting to an undue delegation of legislative powers, but likewise goes beyond the tenor thereof.
Indeed, such constitutional infirmities render the provision in question null and void.
Clearly and indubitably, the prohibition against the transfer of appropriations is the general rule.
Consequently, the payment of the Magna Carta benefits for CY 2001 without a specific item or provision
in the GAA and without due authority from the President to utilize the DOST’s savings in other items for
the purpose was repugnant to R.A. No. 8439, the Constitution, and the re-enacted GAA for 2001.
The COA is endowed with sufficient latitude to determine, prevent, and disallow the irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures of government funds. It has the
power to ascertain whether public funds were utilized for the purposes for which they had been
intended by law. The "Constitution has made the COA the guardian of public funds, vesting it with broad
powers over all accounts pertaining to government revenue and expenditures and the uses of public
funds and property, including the exclusive authority to define the scope of its audit and examination, to
establish the techniques and methods for such review, and to promulgate accounting and auditing rules
and regulations".20
Thus, the COA is generally accorded complete discretion in the exercise of its constitutional duty and
responsibility to examine and audit expenditures of public funds, particularly those which are perceptibly
beyond what is sanctioned by law. Verily, the Court has sustained the decisions of administrative
authorities like the COA as a matter of general policy, not only on the basis of the doctrine of separation
of powers but also upon the recognition that such administrative authorities held the expertise as to the
laws they are entrusted to enforce.21 The Court has accorded not only respect but also finality to their
findings especially when their decisions are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion.22
Only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, may the Court entertain and grant a petition for certiorari
brought to assail its actions.23 Section 1 of Rule 65,24 Rules of Court, demands that the petitioner must
show that, one, the tribunal, board or officer exercising judicial or quasi-judicial functions acted without
or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction,
and, two, there is neither an appeal nor any plain, speedy and adequate remedy in the ordinary course
of law for the purpose of amending or nullifying the proceeding. Inasmuch as the sole office of the writ
of certiorari is the correction of errors of jurisdiction, which includes the commission of grave abuse of
discretion amounting to lack of jurisdiction, the petitioner should establish that the COA gravely abused
its discretion. The abuse of discretion must be grave, which means either that the judicial or quasi-
judicial power was exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to
perform the duty enjoined or to act in contemplation of law, such as when such judge, tribunal or board
exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent
to lack of jurisdiction.25 Mere abuse of discretion is not enough to warrant the issuance of the writ.26
The petitioner dismally failed to discharge her burden.1âwphi1 We conclude and declare, therefore, that
the COA’s assailed decision was issued in steadfast compliance of its duty under the Constitution and in
the judicious exercise of its general audit power conferred to it by the Constitution.
Nonetheless, the Court opines that the DOST officials who caused the payment of the Magna Carta
benefits to the covered officials and employees acted in good faith in the honest belief that there was a
firm legal basis for the payment of the benefits. Evincing their good faith even after receiving the NDs
from the COA was their taking the initiative of earnestly requesting the OP for the authorization to use
the DOST’s savings to pay the Magna Carta benefits. On their part, the DOST covered officials and
employees received the benefits because they considered themselves rightfully deserving of the benefits
under the long-awaited law.
The Court declares and holds that the disallowed benefits received in good faith need not be reimbursed
to the Government. This accords with consistent pronouncements of the Court, like that issued in De
Jesus v. Commission on Audit,27 to wit:
Nevertheless, our pronouncement in Blaquera v. Alcala28 supports petitioners’ position on the refund of
the benefits they received. In Blaquera, the officials and employees of several government departments
and agencies were paid incentive benefits which the COA disallowed on the ground that Administrative
Order No. 29 dated 19 January 1993 prohibited payment of these benefits. While the Court sustained the
COA on the disallowance, it nevertheless declared that:
Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of
subject incentive benefits for the year 1992, which amounts the petitioners have already received.
Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials
and chiefs of offices concerned disbursed such incentive benefits in the honest belief that the amounts
given were due to the recipients and the latter accepted the same with gratitude, confident that they
richly deserve such benefits.
This ruling in Blaquera applies to the instant case. Petitioners here received the additional allowances
and bonuses in good faith under the honest belief that LWUA Board Resolution No. 313 authorized such
payment. At the time pet1t10ners received the additional allowances and bonuses, the Court had not
yet decided Baybay Water District v. Commission on Audit.29 Petitioners had no knowledge that such
payment was without legal basis. Thus, being in good faith, petitioners need not refund the allowances
and bonuses they received but disallowed by the COA.
Also, in Veloso v. Commission on Audit30 the Court, relying on a slew of jurisprudence31 ruled that the
recipients of the disallowed retirement and gratuity pay remuneration need not refund whatever they
had received:
x x x because all the parties acted in good faith. In this case, the questioned disbursement was made
pursuant to an ordinance enacted as early as December 7, 2000 although deemed approved only on
August 22, 2002. The city officials disbursed the retirement and gratuity pay remuneration in the honest
belief that the amounts given were due to the recipients and the latter accepted the same with
gratitude, confident that they richly deserve such reward.
WHEREFORE, the Court DISMISSES the petition for certiorari for lack of merit; AFFIRMS the decision
issued on June 4, 2009 by the Commission Proper of the Commission on Audit in COA Case No. 2009-
045; and DECLARES that the covered officials and employees of the Department of Science and xxx xxx xxx
Technology who received the Magna Carta benefits for calendar year 2001 are not required to refund
the disallowed benefits received.
Section 8. Submission of Report and Recommendations. – After completing its investigation or hearing,
the Commission en banc shall submit its report and recommendations to the President. The report and
No pronouncement on costs of suit. recommendations shall state, among others, the factual findings and legal conclusions, as well as the
penalty recommend (sic) to be imposed or such other action that may be taken."
SO ORDERED.
On November 15, 2010, President Benigno Simeon Aquino III issued Executive Order No. 13 (E.O. 13),
abolishing the PAGC and transferring its functions to the Office of the Deputy Executive Secretary for
G.R. No. 196425 July 24, 2012
Legal Affairs (ODESLA), more particularly to its newly-established Investigative and Adjudicatory Division
(IAD). The full text of the assailed executive order reads:
PROSPERO A. PICHAY, JR., Petitioner,
vs.
EXECUTIVE ORDER NO. 13
OFFICE OF THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS INVESTIGATIVE AND
ADJUDICATORY DIVISION, HON. PAQUITO N. OCHOA, JR., in his capacity as Executive Secretary, and
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, and as an ex-officio member of the ABOLISHING THE PRESIDENTIAL ANTI-GRAFT COMMISSION AND TRANSFERRING ITS INVESTIGATIVE,
Monetary Board, Respondents. ADJUDICATORY AND RECOMMENDATORY FUNCTIONS TO THE OFFICE OF THE DEPUTY EXECUTIVE
SECRETARY FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT
DECISION
WHEREAS, this administration has a continuing mandate and advocacy to fight and eradicate corruption
in the different departments, bureaus, offices and other government agencies and instrumentalities;
PERLAS-BERNABE, J.:

WHEREAS, the government adopted a policy of streamlining the government bureaucracy to promote
The Case
economy and efficiency in government;

This is a Petition for Certiorari and Prohibition with a prayer for the issuance of a temporary restraining
WHEREAS, Section VII of the 1987 Philippine Constitution provides that the President shall have control
order, seeking to declare as unconstitutional Executive Order No. 13, entitled, "Abolishing the
of all the executive departments, bureaus and offices;
Presidential Anti-Graft Commission and Transferring Its Investigative, Adjudicatory and Recommendatory
Functions to the Office Of The Deputy Executive Secretary For Legal Affairs, Office of the President",1 and
to permanently prohibit respondents from administratively proceeding against petitioner on the WHEREAS, Section 31 Chapter 10, Title III, Book III of Executive Order 292 (Administrative Code of 1987)
strength of the assailed executive order. provides for the continuing authority of the President to reorganize the administrative structure of the
Office of the President;
The Facts
WHEREAS, Presidential Decree (PD) No. 1416 (Granting Continuing Authority to the President of the
Philippines to Reorganize the National Government), as amended by PD 1722, provides that the
On April 16, 2001, then President Gloria Macapagal-Arroyo issued Executive Order No. 12 (E.O. 12)
President of the Philippines shall have continuing authority to reorganize the administrative structure of
creating the Presidential Anti-Graft Commission (PAGC) and vesting it with the power to investigate or
the National Government and may, at his discretion, create, abolish, group, consolidate, merge or
hear administrative cases or complaints for possible graft and corruption, among others, against
integrate entities, agencies, instrumentalities and units of the National Government, as well as, expand,
presidential appointees and to submit its report and recommendations to the President. Pertinent
amend, change or otherwise modify their powers, functions and authorities;
portions of E.O. 12 provide:

WHEREAS, Section 78 of the General Provisions of Republic Act No. 9970 (General Appropriations Act of
Section 4. Jurisdiction, Powers and Functions. –
2010) authorizes the President of the Philippines to direct changes in the organizational units or key
positions in any department or agency;
(a) x x x xxx xxx
NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers vested
(b) The Commission, acting as a collegial body, shall have the authority to investigate or hear in me by law, do hereby order the following:
administrative cases or complaints against all presidential appointees in the government and any of its
agencies or instrumentalities xxx
SECTION 1. Declaration of Policy. It is the policy of the government to fight and eradicate graft and
corruption in the different departments, bureaus, offices and other government agencies and
xxx xxx xxx instrumentalities.
The government adopted a policy of streamlining the government bureaucracy to promote economy and
efficiency in the government.
SECTION 2. Abolition of Presidential Anti-Graft Commission (PAGC). To enable the Office of the President
(OP) to directly investigate graft and corrupt cases of Presidential appointees in the Executive
Department including heads of government-owned and controlled corporations, the
Presidential Anti-Graft Commission (PAGC) is hereby abolished and their vital functions and other
powers and functions inherent or incidental thereto, transferred to the Office of the Deputy Executive
Secretary for Legal Affairs (ODESLA), OP in accordance with the provisions of this Executive Order.
SECTION 3. Restructuring of the Office of the Deputy Executive Secretary for Legal Affairs, OP. In addition
to the Legal and Legislative Divisions of the ODESLA, the Investigative and Adjudicatory Division shall be
created.
The newly created Investigative and Adjudicatory Division shall perform powers, functions and duties
mentioned in Section 2 hereof, of PAGC.
The Deputy Executive Secretary for Legal Affairs (DESLA) will be the recommending authority to the
President, thru the Executive Secretary, for approval, adoption or modification of the report and
recommendations of the Investigative and Adjudicatory Division of ODESLA.
SECTION 4. Personnel Who May Be Affected By the Abolition of PAGC. The personnel who may be
affected by the abolition of the PAGC shall be allowed to avail of the benefits provided under existing
laws if applicable. The Department of Budget and Management (DBM) is hereby ordered to release the
necessary funds for the benefits of the employees.
SECTION 5. Winding Up of the Operation and Disposition of the Functions, Positions, Personnel, Assets
and Liabilities of PAGC. The winding up of the operations of PAGC including the final disposition or
transfer of their functions, positions, personnel, assets and liabilities as may be necessary, shall be in
accordance with the applicable provision(s) of the Rules and Regulations Implementing EO 72
(Rationalizing the Agencies Under or Attached to the Office of the President) dated March 15, 2002. The
winding up shall be implemented not later than 31 December 2010.
The Office of the Executive Secretary, with the assistance of the Department of Budget and
Management, shall ensure the smooth and efficient implementation of the dispositive actions and
winding-up of the activities of PAGC.
SECTION 6. Repealing Clause. All executive orders, rules, regulations and other issuances or parts
thereof, which are inconsistent with the provisions of this Executive Order, are hereby revoked or
modified accordingly.
SECTION 7. Effectivity. This Executive Order shall take effect immediately after its publication in a
newspaper of general circulation.
On April 6, 2011, respondent Finance Secretary Cesar V. Purisima filed before the IAD-ODESLA a
complaint affidavit2 for grave misconduct against petitioner Prospero A. Pichay, Jr., Chairman of the
Board of Trustees of the Local Water Utilities Administration (LWUA), as well as the incumbent members
of the LWUA Board of Trustees, namely, Renato Velasco, Susana Dumlao Vargas, Bonifacio Mario M.
Pena, Sr. and Daniel Landingin, which arose from the purchase by the LWUA of Four Hundred Forty-Five
Thousand Three Hundred Seventy Seven (445,377) shares of stock of Express Savings Bank, Inc.
On April 14, 2011, petitioner received an Order3 signed by Executive Secretary Paquito N. Ochoa, Jr.
requiring him and his co-respondents to submit their respective written explanations under oath. In
compliance therewith, petitioner filed a Motion to Dismiss Ex Abundante Ad Cautelam manifesting that a
case involving the same transaction and charge of grave misconduct entitled, "Rustico B. Tutol, et al. v.
Prospero Pichay, et al.", and docketed as OMB-C-A-10-0426-I, is already pending before the Office of the
Ombudsman.
Now alleging that no other plain, speedy and adequate remedy is available to him in the ordinary course
of law, petitioner has resorted to the instant petition for certiorari and prohibition upon the following
grounds:
I. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO
CREATE A PUBLIC OFFICE.
II. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO
APPROPRIATE FUNDS.
III. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF CONGRESS TO DELEGATE
QUASI-JUDICIAL POWERS TO ADMINISTRATIVE AGENCIES.
IV. E.O. 13 IS UNCONSTITUTIONAL FOR ENCROACHING UPON THE POWERS OF THE
OMBUDSMAN.
V. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE GUARANTEE OF DUE PROCESS.
VI. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE EQUAL PROTECTION CLAUSE.
Our Ruling
In assailing the constitutionality of E.O. 13, petitioner asseverates that the President is not authorized
under any existing law to create the Investigative and Adjudicatory Division, Office of the Deputy
Executive Secretary for Legal Affairs (IAD-ODESLA) and that by creating a new, additional and distinct
office tasked with quasi-judicial functions, the President has not only usurped the powers of congress to
create a public office, appropriate funds and delegate quasi-judicial functions to administrative agencies
but has also encroached upon the powers of the Ombudsman. Petitioner avers that the
unconstitutionality of E.O. 13 is also evident when weighed against the due process requirement and
equal protection clause under the 1987 Constitution.
The contentions are unavailing.
The President has Continuing Authority to Reorganize the Executive Department under E.O. 292.
Section 31 of Executive Order No. 292 (E.O. 292), otherwise known as the Administrative Code of 1987,
vests in the President the continuing authority to reorganize the offices under him in order to achieve
simplicity, economy and efficiency. E.O. 292 sanctions the following actions undertaken for such
purpose:
 (1)Restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the Presidential Special Assistants/Advisers System and the Common Staff
Support System, by abolishing, consolidating, or merging units thereof or transferring
functions from one unit to another;
(2)Transfer any function under the Office of the President to any other Department or Agency
as well as transfer functions to the Office of the President from other Departments and
Agencies; and
(3)Transfer any agency under the Office of the President to any other Department or Agency
as well as transfer agencies to the Office of the President from other departments or
agencies.4
In the case of Buklod ng Kawaning EIIB v. Zamora5 the Court affirmed that the President's authority to
carry out a reorganization in any branch or agency of the executive department is an express grant by
the legislature by virtue of E.O. 292, thus:
But of course, the list of legal basis authorizing the President to reorganize any department or agency in
the executive branch does not have to end here. We must not lose sight of the very source of the power
– that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No.
292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy of the
Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing
authority to reorganize the administrative structure of the Office of the President." For this purpose, he
may transfer the functions of other Departments or Agencies to the Office of the President. (Emphasis
supplied)
And in Domingo v. Zamora,6 the Court gave the rationale behind the President's continuing authority in
this wise:
The law grants the President this power in recognition of the recurring need of every President to
reorganize his office "to achieve simplicity, economy and efficiency." The Office of the President is the
nerve center of the Executive Branch. To remain effective and efficient, the Office of the President must
be capable of being shaped and reshaped by the President in the manner he deems fit to carry out his
directives and policies. After all, the Office of the President is the command post of the President.
(Emphasis supplied)
Clearly, the abolition of the PAGC and the transfer of its functions to a division specially created within
the ODESLA is properly within the prerogative of the President under his continuing "delegated
legislative authority to reorganize" his own office pursuant to E.O. 292.
Generally, this authority to implement organizational changes is limited to transferring either an office or
a function from the Office of the President to another Department or Agency, and the other way
around.7
Only Section 31(1) gives the President a virtual freehand in dealing with the internal structure of the
Office of the President Proper by allowing him to take actions as extreme as abolition, consolidation or
merger of units, apart from the less drastic move of transferring functions and offices from one unit to
another. Again, in Domingo v. Zamora8 the Court noted:
However, the President's power to reorganize the Office of the President under Section 31 (2) and (3) of
EO 292 should be distinguished from his power to reorganize the Office of the President Proper. Under
Section 31 (1) of EO 292, the President can reorganize the Office of the President Proper by abolishing,
consolidating or merging units, or by transferring functions from one unit to another. In contrast, under
Section 31 (2) and (3) of EO 292, the President's power to reorganize offices outside the Office of the
President Proper but still within the Office of the
President is limited to merely transferring functions or agencies from the Office of the President to
Departments or Agencies, and vice versa.
The distinction between the allowable organizational actions under Section 31(1) on the one hand and
Section 31 (2) and (3) on the other is crucial not only as it affects employees' tenurial security but also
insofar as it touches upon the validity of the reorganization, that is, whether the executive actions
undertaken fall within the limitations prescribed under E.O. 292. When the PAGC was created under E.O.
12, it was composed of a Chairman and two (2) Commissioners who held the ranks of Presidential
Assistant II and I, respectively,9 and was placed directly "under the Office of the President."10 On the
other hand, the ODESLA, to which the functions of the PAGC have now been transferred, is an office
within the Office of the President Proper.11 Since both of these offices belong to the Office of the
President Proper, the reorganization by way of abolishing the PAGC and transferring its functions to the
ODESLA is allowable under Section 31 (1) of E.O. 292.
Petitioner, however, goes on to assert that the President went beyond the authority granted by E.O. 292
for him to reorganize the executive department since his issuance of E.O. 13 did not merely involve the
abolition of an office but the creation of one as well. He argues that nowhere in the legal definition laid
down by the Court in several cases does a reorganization include the act of creating an office.
The contention is misplaced.
The Reorganization Did not Entail the Creation of a New, Separate and Distinct Office.
The abolition of the PAGC did not require the creation of a new, additional and distinct office as the
duties and functions that pertained to the defunct anti-graft body were simply transferred to the
ODESLA, which is an existing office within the Office of the President Proper. The reorganization required
no more than a mere alteration of the administrative structure of the ODESLA through the establishment
of a third division – the Investigative and Adjudicatory Division – through which ODESLA could take on
the additional functions it has been tasked to discharge under E.O. 13. In Canonizado v. Aguirre,12 We
ruled that –
Reorganization takes place when there is an alteration of the existing structure of government offices or
units therein, including the lines of control, authority and responsibility between them. It involves a
reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or
redundancy of functions.
The Reorganization was Pursued in Good Faith.
A valid reorganization must not only be exercised through legitimate authority but must also be pursued
in good faith. A reorganization is said to be carried out in good faith if it is done for purposes of economy
and efficiency.13 It appears in this case that the streamlining of functions within the Office of the
President Proper was pursued with such purposes in mind.
In its Whereas clauses, E.O. 13 cites as bases for the reorganization the policy dictates of eradicating
corruption in the government and promoting economy and efficiency in the bureaucracy. Indeed, the
economical effects of the reorganization is shown by the fact that while Congress had initially
appropriated P22 Million for the PAGC's operation in the 2010 annual budget,14 no separate or added
funding of such a considerable amount was ever required after the transfer of the PAGC functions to the
IAD-ODESLA.
Apparently, the budgetary requirements that the IAD-ODESLA needed to discharge its functions and
maintain its personnel would be sourced from the following year's appropriation for the President's
Offices under the General Appropriations Act of 2011.15 Petitioner asseverates, however, that since
Congress did not indicate the manner by which the appropriation for the Office of the President was to
be distributed, taking therefrom the operational funds of the IAD-ODESLA would amount to an illegal
appropriation by the President. The contention is without legal basis.
There is no usurpation of the legislative power to appropriate public funds.
In the chief executive dwell the powers to run government. Placed upon him is the power to recommend
the budget necessary for the operation of the Government,16 which implies that he has the necessary
authority to evaluate and determine the structure that each government agency in the executive
department would need to operate in the most economical and efficient manner.17 Hence, the express
recognition under Section 78 of R.A. 9970 or the General Appropriations Act of 2010 of the President’s
authority to "direct changes in the organizational units or key positions in any department or agency."
The aforecited provision, often and consistently included in the general appropriations laws, recognizes
the extent of the President’s power to reorganize the executive offices and agencies under him, which is,
"even to the extent of modifying and realigning appropriations for that purpose."18
And to further enable the President to run the affairs of the executive department, he is likewise given
constitutional authority to augment any item in the General Appropriations Law using the savings in
other items of the appropriation for his office.19 In fact, he is explicitly allowed by law to transfer any
fund appropriated for the different departments, bureaus, offices and agencies of the Executive
Department which is included in the General Appropriations Act, to any program, project or activity of
any department, bureau or office included in the General Appropriations Act or approved after its
enactment.20
Thus, while there may be no specific amount earmarked for the IAD-ODESLA from the total amount
appropriated by Congress in the annual budget for the Office of the President, the necessary funds for
the IAD-ODESLA may be properly sourced from the President's own office budget without committing
any illegal appropriation. After all, there is no usurpation of the legislature's power to appropriate funds
when the President simply allocates the existing funds previously appropriated by Congress for his office.
The IAD-ODESLA is a fact-finding and recommendatory body not vested with quasi-judicial powers.
Petitioner next avers that the IAD-ODESLA was illegally vested with judicial power which is reserved to
the Judicial Department and, by way of exception through an express grant by the legislature, to
administrative agencies. He points out that the name Investigative and Adjudicatory Division is proof
itself that the IAD-ODESLA wields quasi-judicial power.
The argument is tenuous. As the OSG aptly explained in its Comment,21 while the term "adjudicatory"
appears part of its appellation, the IAD-ODESLA cannot try and resolve cases, its authority being limited
to the conduct of investigations, preparation of reports and submission of recommendations. E.O. 13
explicitly states that the IAD-ODESLA shall "perform powers, functions and duties xxx, of PAGC."22
Under E.O. 12, the PAGC was given the authority to "investigate or hear administrative cases or
complaints against all presidential appointees in the government"23 and to "submit its report and
recommendations to the President."24 The IAD-ODESLA is a fact-finding and recommendatory body to
the President, not having the power to settle controversies and adjudicate cases. As the Court ruled in
Cariño v. Commission on Human Rights,25 and later reiterated in Biraogo v. The Philippine Truth
Commission:26
Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or
even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the
facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence
and arriving at factual conclusions in a controversy must be accompanied by the authority of applying
the law to the factual conclusions to the end that the controversy may be decided or determined
authoritatively, finally and definitively, subject to such appeals or modes of review as may be provided
by law.
The President's authority to issue E.O. 13 and constitute the IAD-ODESLA as his fact-finding investigator
cannot be doubted. After all, as Chief Executive, he is granted full control over the Executive Department
to ensure the enforcement of the laws. Section 17, Article VII of the Constitution provides:
Section 17. The President shall have control of all the executive departments, bureaus and offices. He
shall ensure that the laws be faithfully executed.
The obligation to see to it that laws are faithfully executed necessitates the corresponding power in the
President to conduct investigations into the conduct of officials and employees in the executive
department.27
The IAD-ODESLA does not encroach upon the powers and duties of the Ombudsman.
Contrary to petitioner's contention, the IAD-ODESLA did not encroach upon the Ombudsman's primary
jurisdiction when it took cognizance of the complaint affidavit filed against him notwithstanding the
earlier filing of criminal and administrative cases involving the same charges and allegations before the
Office of the Ombudsman. The primary jurisdiction of the Ombudsman to investigate and prosecute
cases refers to criminal cases cognizable by the Sandiganbayan and not to administrative cases. It is only
in the exercise of its primary jurisdiction that the Ombudsman may, at any time, take over the
investigation being conducted by another investigatory agency. Section 15 (1) of R.A. No. 6770 or the
Ombudsman Act of 1989, empowers the Ombudsman to –
(1)Investigate and prosecute on its own or on complaint by any person, any act or omission of any public
officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper
or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise
of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government,
the investigation of such cases. (Emphasis supplied)
Since the case filed before the IAD-ODESLA is an administrative disciplinary case for grave misconduct,
petitioner may not invoke the primary jurisdiction of the Ombudsman to prevent the IAD-ODESLA from
proceeding with its investigation. In any event, the Ombudsman's authority to investigate both elective
and appointive officials in the government, extensive as it may be, is by no means exclusive. It is shared
with other similarly authorized government agencies.28
While the Ombudsman's function goes into the determination of the existence of probable cause and
the adjudication of the merits of a criminal accusation, the investigative authority of the IAD- ODESLA is
limited to that of a fact-finding investigator whose determinations and recommendations remain so until
acted upon by the President. As such, it commits no usurpation of the Ombudsman's constitutional
duties.
Executive Order No. 13 Does Not Violate Petitioner's Right to Due Process and the Equal Protection of
the Laws.
Petitioner goes on to assail E.O. 13 as violative of the equal protection clause pointing to the
arbitrariness of limiting the IAD-ODESLA's investigation only to presidential appointees occupying upper-
level positions in the government. The equal protection of the laws is a guaranty against any form of
undue favoritism or hostility from the government.29 It is embraced under the due process concept and
simply requires that, in the application of the law, "all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed."30 The equal protection clause,
however, is not absolute but subject to reasonable classification so that aggrupations bearing substantial
distinctions may be treated differently from each other. This we ruled in Farinas v. Executive
Secretary,31 wherein we further stated that –
The equal protection of the law clause is against undue favor and individual or class privilege, as well as
hostile discrimination or the oppression of inequality. It is not intended to prohibit legislation which is
limited either in the object to which it is directed or by territory within which it is to operate. It does not
demand absolute equality among residents; it merely requires that all persons shall be treated alike,
under like circumstances and conditions both as to privileges conferred and liabilities enforced. The
equal protection clause is not infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and reasonable grounds exist for making
a distinction between those who fall within such class and those who do not. (Emphasis supplied)
Presidential appointees come under the direct disciplining authority of the President. This proceeds from
the well settled principle that, in the absence of a contrary law, the power to remove or to discipline is
lodged in the same authority on which the power to appoint is vested.32 Having the power to remove
and/or discipline presidential appointees, the President has the corollary authority to investigate such
public officials and look into their conduct in office.33 Petitioner is a presidential appointee occupying the
high-level position of Chairman of the LWUA. Necessarily, he comes under the disciplinary jurisdiction of
the President, who is well within his right to order an investigation into matters that require his informed
decision.
There are substantial distinctions that set apart presidential appointees occupying upper-level positions
in government from non-presidential appointees and those that occupy the lower positions in
government. In Salumbides v. Office of the Ombudsman,34 we had ruled extensively on the substantial
distinctions that exist between elective and appointive public officials, thus:
Substantial distinctions clearly exist between elective officials and appointive officials. The former
occupy their office by virtue of the mandate of the electorate. They are elected to an office for a definite
term and may be removed therefrom only upon stringent conditions. On the other hand, appointive
officials hold their office by virtue of their designation thereto by an appointing authority. Some
appointive officials hold their office in a permanent capacity and are entitled to security of tenure while
others serve at the pleasure of the appointing authority.
xxxx
An election is the embodiment of the popular will, perhaps the purest expression of the sovereign power
of the people.1âwphi1 It involves the choice or selection of candidates to public office by popular vote.
Considering that elected officials are put in office by their constituents for a definite term, x x x complete
deference is accorded to the will of the electorate that they be served by such officials until the end of
the term for which they were elected. In contrast, there is no such expectation insofar as appointed
officials are concerned. (Emphasis supplied)
Also, contrary to petitioner's assertions, his right to due process was not violated when the IAD-ODESLA
took cognizance of the administrative complaint against him since he was given sufficient opportunity to
oppose the formal complaint filed by Secretary Purisima. In administrative proceedings, the filing of
charges and giving reasonable opportunity for the person so charged to answer the accusations against
him constitute the minimum requirements of due process,35 which simply means having the opportunity
to explain one’s side.36 Hence, as long as petitioner was given the opportunity to explain his side and
present evidence, the requirements of due process are satisfactorily complied with because what the
law abhors is an absolute lack of opportunity to be heard.37 The records show that petitioner was issued
an Order requiring him to submit his written explanation under oath with respect to the charge of grave
misconduct filed against him. His own failure to submit his explanation despite notice defeats his
subsequent claim of denial of due process.
Finally, petitioner doubts that the IAD-ODESLA can lawfully perform its duties as an impartial tribunal,
contending that both the IAD-ODESLA and respondent Secretary Purisima are connected to the
President. The mere suspicion of partiality will not suffice to invalidate the actions of the IAD-ODESLA.
Mere allegation is not equivalent to proof. Bias and partiality
cannot be presumed.38 Petitioner must present substantial proof to show that the lAD-ODES LA had
unjustifiably sided against him in the conduct of the investigation. No such evidence has been presented
as to defeat the presumption of regularity m the performance of the fact-finding investigator's duties.
The assertion, therefore, deserves scant consideration.
Every law has in its favor the presumption of constitutionality, and to justify its nullification, there must
be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative
one.39 Petitioner has failed to discharge the burden of proving the illegality of E.O. 13, which IS
indubitably a valid exercise of the President's continuing authority to reorganize the Office of the
President.
WHEREFORE, premises considered, the petition IS hereby DISMISSED.
SO ORDERED.
G.R. No. 219683
HON. JONATHAN A. DELA CRUZ and HON. GUSTA VO S. TAMBUNTING, as MEMBERS OF THE HOUSE OF
REPRESENTATIVES and as Taxpayers, Petitioners
vs.
HON. PAQUITO N. OCHOA JR., in his capacity as the EXECUTIVE SECRETARY; HON. JOSEPH EMILIO A.
ABAYA, in his capacity as the SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS; HON. FLORENCIO B. ABAD, in his capacity as the SECRETARY OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT; and HON. ROSALIA V. DE LEON, in her capacity as the
NATIONAL TREASURER, Respondents
DECISION
BERSAMIN, J.:
In this special civil action for certiorari and prohibition, the petitioners, as Members of the House of
Representatives and as taxpayers, assail the implementation of the Motor Vehicle License
PlateStandardization Program (MVPSP) of the Land Transportation Office (LTO)1 by using funds
appropriated under Republic Act No. 10633 (General Appropriations Act of 2014), hereinafter referred to
as the 2014 GAA.2
This case was preceded by the ruling in Jacomille v. Abaya,3 which involved the procurement for the
MVPSP. On May 19, 2014, Reynaldo M. Jacomille (Jacomille) filed in this Court a petition
for certiorari and prohibition assailing the legality of the procurement under the MVPSP. He insisted
therein that the MVPSP contract was void for lack of adequate budgetary appropriations in the General
Appropriations Act of 2013 (2013 GAA) as well as for the failure of the procuring entity to obtain the
required Multi-Year Obligational Authority (MYOA) from the Department of Budget and
Management (DBM).4
In the decision promulgated on April 22, 2015, the Court dismissed Jacomille's petition for having been
rendered moot and academic by the passage of the 2014 GAA that already included the full
appropriation necessary to fund the MVPSP. Nonetheless, the Court expressly observed therein that the
appropriation made in the 2013 GAA had been insufficient for the MVPSP; and that the procurement
process had been tainted with irregularities, to wit:
x x x [T]he project did not have the adequate appropriation when its procurement was commenced on
February 20, 2013, contrary to the provisions of Sections 5a, 7 and 20 of R.A. No. 9184. The DOTC and
the LTO likewise failed to secure the MYOA before the start of the procurement process even though
MVPSP is MYP [Multi-Year Project] involving MYC [Multi-Year Contract]. All these irregularities tainted
the earlier procurement process and rendered it null and void.
At the outset, however, the Court has stated that the present petition has been rendered moot and
academic by the appropriation for the full amount of the project fund in GAA 2014. Said appropriation
"cured" whatever defect the process had.5
Jacomille moved for reconsideration but the Court, denying his motion on July 25, 2016,6 reiterated that:
x x x Congress had appropriated the amount of ₱4,843,753,000.00 for the MVPSP project. Consequently,
the Court deemed it proper not to question the wisdom of the legislative department in
appropriating the full budget of the MVPSP in the GAA 2014. As the MVPSP was adequately funded by
law when it was signed by the contracting parties, the petition became moot and academic. With that,
the duty of the Court in the present petition was discharged. (Bold underscoring supplied for emphasis)7
Antecedents
Given the intimate connection between this case and Jacomille v. Abaya, supra, we adopt and reiterate
the summary of the factual antecedents rendered in Jacomille v. Abaya for the sake of consistency, as
follows:
The Department of Transportation and Communications (DOTC) is the primary policy, planning,
programming, coordinating, implementing, regulating, and administrative entity of the Executive Branch
of the government in the promotion, development and regulation of dependable and coordinated
networks of transportation and communications systems as well as in the fast, safe, efficient, and
reliable postal, transportation and communication services. One of its line agencies is the Land
Transportation Office (LTO) which is tasked, among others, to register motor vehicles and regulate their
operation.
In accordance with its mandate, the LTO is required to issue motor vehicle license plates which serve to
identify the registered vehicles as they ply the roads. These plates should at all times be conspicuously
displayed on the front and rear portions of the registered vehicles to assure quick and expedient
identification should there be a need, as in the case of motor vehicle accidents or infraction of traffic
rules.
Recently, the LTO formulated the Motor Vehicle License Plate Standardization Program (MVPSP) to
supply the new license plates for both old and new vehicle registrants. On February 20, 2013, the DOTC
published in newspapers of general circulation the Invitation To Bid for the supply and delivery of motor
vehicle license plates for the MVPSP, to wit:
The Department of Transportation and Communications (DOTC)/Land Transportation Office (L TO) are
inviting bids for its LTO MV Plate Standardization Program which involves the procurement, supply and
delivery of Motor Vehicle License Plates. The program shall run from July 2013 until June 2018 when the
supply and delivery of the Motor Vehicle License Plates of the L TO MV Plate Standardization program is
completed.
The LTO, through the General Appropriations Act, intends to apply the sum of Three Billion Eight
Hundred Fifty One Million Six Hundred Thousand One Hundred Pesos (Php 3,851,600,100.00) being the
Approved Budget for the Contract (ABC), for payment of approximately [₱]5,236,439 for Motor Vehicles
(MV) and approximately [₱]9,968,017 for motorcycles (MC), under the contract for the Supply and
Delivery of Motor Vehicle License Plate for the Land Transportation Office Motor Vehicle License Plate
Standardization Program or the "LTO MV Plate Standardization Program".
On February 25, 2013, the DOTC Bids and Awards Committee (BAC) issued BAC General Bid Bulletin No.
002-2013 setting the Submission and Opening of Bids on March 25, 2013. On February 28, 2013, the first
Pre-Bid Conference was held at the offices of the BAC.
On March 6, 2013, BAC General Bid Bulletin No. 003-2013 was issued, amending paragraph 1 of the
Invitation to Bid, to wit:
The Department of Transportation and Communication (DOTC)/Land Transportation Office (LTO),
through the General Appropriations Act, intends to apply the sum of Three Billion Eight Hundred Fifty
One Million Six Hundred Thousand One Hundred Pesos (Php 3,851,600, 100.00) being the Approved
Budget for the Contract (ABC), to payments for:
a. Lot 1 - Motor Vehicle License Plates (MV): 5,236,439 pairs for MV amounting to
Two Billion Three Hundred Fifty Six Million Three Hundred Ninety Seven Thousand
Five Hundred Fifty Pesos (Php 2,356,397,550.00)
b. Lot 2 - Motorcycles Plates (MC): 9,968,017 pieces for MC amounting to One
Billion Four Hundred Ninety Five Million Two Hundred Two Thousand Five
Hundred Fifty Pesos (Php 1,495,202,550.00) under the contract for the Supply and
Delivery of Motor Vehicle License Plate for the Land Transportation Office Motor
Vehicle License Plate Standardization Program (herein after the "LTO MV Plate
Standardization Program").
 a. The joint venture of the Netherlands' J. Knieriem B.V. Goes and local
company Power Plates Development Concepts. Inc. (JKG-Power
Plates); and
b. The joint venture of Spain's Industrias Samar't and local company
Datatrail Corporation (Industrias Samar't-Datatrial).
As the only eligible bidders, their financial proposals were then opened to reveal that JKG-Power Plates
made the lowest offers. For Lot 1, JKG-Power Plates proposed to supply the MV License Plates for a total
of ₱1 .98 Billion, while Industrias Samar't-Datatrial offered it at P2.03 Billion. On the other hand, for Lot
2, JKG-Power Plates aimed to supply the MC License Plates for a total of ₱l.196 Billion, while Industrias
Samar't-Datatrial's offer was at ₱l.275 Billion.
On July 22, 2013, the DOTC issued the Notice of Award to JKG-Power Plates.2 It was only on August 8,
2013 [,] however, when JKGPower Plates signified its conforme on the Notice of Award.3 On August 12,
2013, the Notice of Award was posted in the DOTC website; while the A ward Notice Abstract was
posted in the Philippine Government Electronic Procurement System (PhilGEPS) website on even date.
Despite the notice of award, the contract signing of the project was not immediately undertaken. On
February 17, 2014, the DOTC issued the Notice to Proceed4 to JKG-Power Plates and directed it to
commence delivery of the items within seven (7) calendar days from the date of the issuance of the said
notice.
On February 21, 2014, the contract for MVPSP was finally signed by Jose Perpetuo M. Lotilla, as DOTC
Undersecretary for Legal Affairs, and by Christian S. Calalang, as Chief Executive Officer of JKG-Power
Plates. It was approved by public respondent Joseph Emilio A. Abaya (Secretary Abaya), as DOTC
Secretary.
On March 11, 2014, the Senate Committee on Public Services, pursuant to Resolution No. 31, conducted
an inquiry in aid of legislation on the reported delays in the release of motor vehicle license plates,
stickers and tags by the LTO. On April 4, 2014, JKG-Power Plates delivered the first batch of plates to the
DOTC/LTO.8
The Commission on Audit (COA) issued three Audit Observation Memoranda (AOM) to the LTO, namely:
AOM No. 14-013 dated September 2, 2014; AOM No. 14-014 dated November 17, 2014; and AOM No.
15-004 dated March 5, 2015. The COA later on issued Notice of Suspension No. 15- 002-101-(14) dated
April 10, 2015.9
The COA ultimately issued Notice of Disallowance No. 2015-001-101-(l4) dated July 13, 2015 stating
therein that it had disallowed the advance payment of P477,901,329.00 to JKG Power Plates for the
supply and delivery of motor vehicle plates on the ground that the transaction had been irregular and
illegal for being in violation of Sections 46(1) and 47, Book V of the Administrative Code of 1987; Sections
85(1) and 86 of the Government Auditing Code of the Philippines; DBM Circular Letter No. 2004-12 dated
October 27, 2004; and the implementing rules of the Government Procurement Reform Act. 10
On September 1, 2015, the petitioners instituted this special civil action. Initially, the Court consolidated
this case with G.R. No. 212381 (Jacomille).11 However, the cases were deconsolidated and treated
separately12 because G.R. No. 212381 raised legal issues centering on the procurement of the MVPSP but
this case raised issues referring to the implementation of the MVPSP.
To be clear, the petitioners herein do not seek the review of the COA's issuance of Notice of
Disallowance No. 2015-001-101-(14).1âwphi1 They only assail the constitutionality of the
implementation of the MVPSP using funds appropriated under the 2014 GAA, arguing that:
A. The transfer of the appropriation for the Motor Vehicle Registration and Driver's Licensing Regulatory
Services under the GAA 2014 and the application and implementation of said transferred appropriation
to the L TO-MVPSP is unconstitutional.
xxx
B. The fact that L TO-MVPSP does not appear as an item under the Motor Vehicle Registration and
Driver's Licensing Regulatory Services in effect deprives the President of its veto powers under Section
27 .(2) of Article VI of the Constitution and must be declared as unconstitutional.
xxx
C. The public expenditure in the amount of [₱]3,186,008,860 for the LTO-MVP SP in the absence of an
appropriation under the GAA 2013 and GAA 2014 is unconstitutional.13
On June 14, 2016, the Court issued a temporary restraining order enjoining the release and distribution
of the license plates for both motor vehicles and motorcycles.14
The Office of the Solicitor General (OSG) filed its Manifestation and Motion in Lieu of
Comment, 15 whereby it affirmed that the 2014 GAA did not contain an appropriation for the MVPSP, a
fact that was known to the DOTC; that the transfer of funds allotted for Motor Vehicle Registration and
Driver's Licensing Regulatory Services under the 2014 GAA to the MVPSP was contrary to the
Constitution because the DOTC Secretary lacked the authority to transfer funds, and because the timing
of the transfer belied the existence of savings; and that without a valid transfer or realignment, the
release of funds for the MVPSP violated Section 29, Article VI of the Constitution.
In its own Comment and Opposition-in-Intervention, 16 JKG-Power Plates contended that the legality of
the MVPSP had been settled by the Court in its decision and resolution in G.R. No. 212381 (Jacomille);
and that the Court could not yet rule on the propriety of Notice of Disallowance No. 2015-001-101-(14)
because it was still pending review by the COA.
On his part, respondent Joseph Emilio Abaya (Abaya), the former Secretary of the Department of
Transportation and Communication (DOTC),17 submitted his own Consolidated Comment vis-a-vis the
petition and the OSG's Manifestation and Motion in Lieu of Comment.18 He represented therein
that Jacomille v. Abaya constituted stare decisis; that the requisites for judicial review were not present;
that the amount of ₱4,483,700,000.00 under the description Motor Vehicle Registration and Driver's
Licensing Regulatory Services in the 2014 GAA included the allocation for the implementation of the
MVPSP; and that the use of the amount appropriated under the 2014 GAA to implement the MVPSP did
not violate the Constitution.
In their Reply to the Consolidated Comment, the petitioners maintained that there was no sufficient
appropriation in the 2013 GAA when the public bidding for the MVPSP was conducted; that any
discussion on the funding of the MVPSP under the 2014 GAA had no bearing in reality on the MVPSP that
was bid in 2013 without sufficient appropriation; and that the principles of stare decisis and res
judicata did not apply because the ruling in G.R. No. 212381 (Jacomille) was still pending reconsideration
at the time when this case was commenced.
 Issues
The primordial issue is whether or not the 2014 GAA included an appropriation for the implementation
of the MVPSP.
The second issue is whether or not the use of the appropriation under 2014 GAA for the implementation
of the MVPSP was constitutional.19
Ruling of the Court
The Court affirms that there was an appropriation for the MVPSP under the 2014 GAA; and that the use
of such appropriation for the implementation of the MVPSP was constitutional.
1.
The decision in G.R. No.212381 (Jacomille) constituted stare decisis
In Jacomille v. Abaya,20 the Court, upholding the legality of the procurement of the MVPSP, opined that
whatever defects had attended its procurement were "cured" by the appropriation for the full amount of
the project under the 2014 GAA. The Court specifically stated that:
The Court agrees with the OSG that the present controversy has been rendered moot by the passage of
GAA 2014. The essence of petitioner's case is that MVPSP was not sufficiently funded under GAA 2013.
Because of GAA 2014, however, the amount of IUl-,843,753,000.00 had been appropriated by Congress
to MVPSP before the contract was entered into on February 21, 2014.
By appropriating the amount of ₱4,843,753,000.00 for MVPSP, Congress agreed with the DOTC and the
LTO that the said project should be funded and implemented. Verily, the Court cannot question the
wisdom of the legislative department in appropriating the full budget of MVPSP in GAA 2014.
Thus, it is settled that MVPSP was adequately funded before the contract was signed by the parties.
Petitioner even admits, and the Court takes judicial notice, that the new vehicle plates under MVPSP are
being distributed by the LTO and released to new vehicle owners.
xxxx
Conclusion
The Court concludes that MVPSP did not follow the timelines provided in Sec. 37 of R.A. No. 9184. As
earlier recited, the project did not have the adequate appropriation when its procurement was
commenced on February 20, 2013, contrary to the provisions of Sections 5a, 7 and 20 of R.A. No. 9184.
The DOTC and the LTO likewise failed to secure the MYOA before the start of the procurement process
even though MVPSP is MYP involving MYC. All these irregularities tainted the earlier procurement
process and rendered it null and void.
At the outset, however, the Court has stated that the present petition has been rendered moot and
academic by the appropriation for the full amount of the project fund in GAA 2014. Said appropriation
"cured" whatever defect the process had.21
The doctrine of stare decisis et non quieta movere is fully applicable. The doctrine means -
"[T]o adhere to precedents, and not to unsettle things which are established." Under the doctrine, when
this Court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to
that principle, and apply it to all future cases, where facts are substantially the same; regardless of
whether the parties and property are the same. The doctrine of stare decisis is based upon the legal
principle or rule involved and not upon the judgment, which results therefrom. In this particular
sense, stare decisis differs from res judicata, which is based upon the judgment.
The doctrine of stare decisis is one of policy grounded on the necessity for securing certainty and stability
of judicial decisions, thus:
Time and again, the Court has held that it is a very desirable and necessary judicial practice that when a
court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the facts are substantially the same. Stare decisis et non
quieta movere. Stand by the decisions and disturb not what is settled. Stare decisis simply means that for
the sake of certainty, a conclusion reached in one case should be applied to those that follow if the facts
are substantially the same, even though the parties may be different. It proceeds from the first principle
of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike.
Thus, where the same questions relating to the same event have been put forward by the parties
similarly situated as in a previous case litigated and decided by a competent court, the rule of stare
decisis is a bar to any attempt to relitigate the same [issue].22
Even if G.R. No. 212381 (Jacomille) focused on the legality of the procurement of the MVPSP because of
the inadequacy of the funding for the project under the 2013 GAA, the Court nonetheless determined
and declared therein that the 2014 GAA contained an appropriation for the MVPSP, and held that the
MVPSP could be validly implemented using the funds appropriated under the 2014 GAA. With G.R. No.
212381 (Jacomille) having thus fully examined and definitively ruled upon the existence of sufficient
funding for the MVPSP, both for procurement and implementation, the pronouncement therein on the
applicability of the appropriation under the 2104 GAA for the MVPSP - a question of law – now
constituted stare decisis that precluded further contention on the same matter.
2.
The implementation of thee MVPSP was properly funded under the appropriation for Motor Vehicle
Registration and Driver's Licensing Regulatory Services in the 2014 GAA; hence, no unconstitutionally
transfer of funds took place
The following discussion will further substantiate the valid implementation of the MVPSP because no
funds were unconstitutionally transferred for the purpose.
The DOTC serves as the primary policy, planning, programming, coordinating, implementing, regulating,
and administrative entity of the Executive Branch of the Government in the promotion, development
and regulation of dependable and coorfinated transportation networks as well as fast, safe, efficient, and
reliable transportation services.23 As a line agency of the DOTC, the L TO is tasked, among others, with
the registration of motor vehicles,24 as well as wit the preparation and issuance of motor vehicle number
plates.25
Pursuant to its legal mandate, the L TO formulated and adopted the MVPSP in order to supply new
standardized license plates for all motor vehicles. LTO Memorandum Circular No. (MC) VPT-2013-
177226 outlined the underlying purposes behind the MVPSP, viz:
WHEREAS, there exist nine (9) license plates of various designs, some of which date back to 1981;
 WHEREAS, there is a proliferation of dilapidated and illegible license plates and the prevalent practice of Maintenance and
not replacing lost license plates by motor vehicle owners; Personnel
Operations Other Operating Capital Outlays Total
Services
Expenses
WHEREAS, there is difficulty in promptly identifying counterfeit license plates;
MFO 2: Motor Vehicle ₱314,981,000 ₱2,038,797,000 ₱375,000 ₱2,354,153
Registration and
WHEREAS, the foregoing problems have adversely affected law enforcement and national security; Driver's Licensing
Regulatory Services
WHEREAS, in order to aid law enforcement, improve the motor vehicle registration database and
enhance the institutional capability of the government, there is a need to replace all existing motor Motor vehicle ₱148,236,000 ₱1,378,945,000 ₱375,000 ₱ 1,527,556
vehicle license plates with standardized license plates.27 registration system

In this connection, the DOTC was given the following appropriation for 2014:28 Although the Details of the FY 2014 Budget seemed to present a discrepancy from the main text of the
2014 GAA given that the total allotment indicated for the MF02 was only ₱2,354,153,000, and a separate
allocation of ₱1,527,556,000 appeared for Motor vehicle registration system, the discrepancy can be
Maintenance and easily clarified by referring to the 2014 NEP, and the letter of respondent former DOTC Secretary Joseph
Personnel
Operations Other Operating Capital Outlays Total Emilio Aguinaldo Abaya.
Services
Expenses

MFO 2: Motor ₱314,981,000 ₱4,528,397,000 ₱375,000 ₱4,843,753,000 To explain, the NEP provides the details of spending for each department and agency by program,
Vehicle activity or project (PAP), and is submitted by the President to Congress along with a budget
Registration and message.32 Upon the submission of the NEP to Congress, the NEP morphs into the General Appropriation
Driver's Licensing Bill.
Regulatory Services
Under the 2014 NEP, the MF02 had the following proposed budget:33
According to the petitioners, however, the 2014 GAA appropriated ₱4,843,753,000.00 specifically only
for the Major Final Output 2 (MF02): Motor Vehicle Registration and Driver's Licensing Regulatory Operations by MFO PS MOOE CO TOTAL
Services. They argue that considering that Motor vehicle plate making project did not appear as an item
in the 2014 National Expenditure Program (2014 NEP) and the 2014 GAA, unlike in the 2013 GAA, the use MF02: Motor ₱314,981,000 ₱2,039,297,000 ₱375,000 ₱2,354,653,000
of the funds allocated for the MF02: Motor Vehicle Registration and Driver's Licensing Regulatory vehicle registration
Services amounted to an unconstitutional transfer of appropriations prohibited by Article VI, Section 25 and driver's
(5) of the Constitution. licensing regulatory
services
The petitioners' argument lacks persuasion.
The proposed budget for the MF02 stated in the 2014 NEP, which was only ₱2,354,653,000.00, would be
In Goh v. Bayron, 29 the Court explained that: inadequate to fund the implementation of the MVPSP. Thus, on September 1, 2013, respondent
Secretary Abaya wrote to DBM Secretary Florencio B. Abad to request the modification of the 2014 NEP
by way of a realignment to increase the MF02 budget by ₱2,489,600,100.00 for the LTO Plate
x x x To be valid, an appropriation must indicate a specific amount and a specific purpose. However, the
Standardization Program, to wit:
purpose may be specific even if it is broken down into different related sub-categories of the same
nature. For example, the purpose can be to "conduct elections," which even if not expressly spelled out
covers regular, special, or recall elections. The purpose of the appropriation is still specific - to fund xxxx
elections, which naturally and logically include, even if not expressly stated, not only regular but also
special or recall elections.30
Dear Secretary Abad:

The Court holds that the appropriation for motor vehicle registration naturally and logically included
This is to request for modifications in the 2014 National Expenditure Program of the DOTC as follows:
plate-making inasmuch as plate-making was an integral component of the registration process. Plate-
making ensured that the LTO fulfilled its function to "aid law enforcement and improve the motor
vehicle registration database." xxxx

The inclusion of the MVPSP in the line item for the MF02 was further explained in Details of the FY 2014 2. Realignment from LRT 1 Cavite Extension (₱500,000,000). New Bohol (Panglao) International Airport
Budget: 31 Development Project (₱l,000,000,000) and LRT Line East Extension Project (₱989,600,100) for the LTO
Plate Standardization Program under MF02-Motor Vehicle Registration and Driver's Licensing Regulatory
Services (Maintenance & Other Operating Expenses) .... (₱2,489,600,100 Operating Expenses)
This will be for the immediate implementation of the Plate Standardization Program.
34
xxxx
The same requested increase in the LTO's 2014 budget in order to cover the MVPSP was discussed
during the hearings before the Committee on Appropriations of the House of Representatives:
MR. LIMCACO. x x x x
The next slide will show you a bird's eye view of the DOTC's summary of our proposed 2014 budget. We
are proposing a total budget of 46.7 billion pesos which is 31 % higher that last year's budget of 35.7; our
program budget is 11.2 billion which is 27% higher than last year, primarily, it is derived from 2.3 billion
due to the reclassification of MRT3 operations and maintenance budget from where it used to be four
which was project and we are reclassifying it to programs. That's the first and the second is to increase
the Land Transportation Office's MOOE due to the increase requirement of our plate standardization
program.35
Likewise, the records of the hearings before the Senate Committee on Finance confirmed that the
purpose for the increase in the LTO's 2014 budget was the implementation of the MVPSP:
THE CHAIRMAN (SEN. OSMENA). All right. So why don't you present your budget?
We can do it quickly because I've already read it. But you might want just to do it for the record para
nasa transcript.
MR. TAN. Yes, Your Honor.
For the year 2014, we have the proposed plans and programs. The LTO IT System, meaning, this intends
to be the replacement for the current IT system which expired in February of this year. Second, we have
the Motor Vehicle Inspection System. This is a program than intends to privatize the inspection of motor
vehicles. It's presently with the PPP Center for the bidding and a transactional advisor. Third, we have
the Motor Vehicle License Plate Standardization Program. The bidding for this is presently with the
DOTC.
xxxx
For our MOOE, the increase is mainly due to two factors: the implementation of the our Plate
Standardization Program; as well as our intent to rent impounding areas for violations which require
impounding of motor vehicles.36
That Congress approved the request for the ₱2,489,600,100.00 increase was indubitable. This is borne
out by the fact that the final amount appropriated for MF02 under the 2014 GAA aggregated to
₱4,843,753,000.00 (i.e., ₱2,489,600, 100.00+₱2,354,153,000.00). We can see that such
final increased amount was almost exactly identical37 to the total appearing in Details of the FY 2014
Budget. Indeed, the legislative intent to fund the MVPSP under the 2014 GAA was manifest.
We further remind that the Court, in interpreting the 2014 GAA, should consider the figures appearing in
the main text as controlling over the attached details.1awp++i1 The general provisions of the 2014 GAA
expressly so provided, viz.:
Sec. 3. Details of the FY 2014 Budget. The details of the budgetary programs and projects authorized
herein, attached as Annex A (Volumes 1 and 2) "Details of the FY 2014 Budget" shall be considered as an
integral part of this Act. Said amounts and details should be consistent with those indicated herein. In
case of discrepancy, the amounts provided herein shall be controlling.38
Considering that Congress appropriated ₱4,843, 753,000.00 for the MF02 (inclusive of the requested
increase of ₱2,489,600,100.00) for the purpose of funding the LTO's MVPSP, the inescapable conclusion
is that the 2014 GAA itself contained the direct appropriation necessary to implement the MVPSP. Under
the circumstances, there was no unconstitutional transfer of funds because no transfer of funds was
made to augment the item Motor Vehicle Registration and Driver's Licensing Regulatory Services to
include the funding for the MVPSP.
3.
The item Motor Vehicle Registration and Driver's Licensing Regulatory Services did not constitute a
lump-sum appropriation
The petitioners contended that the implementation of the MVPSP using the funds allocated under the
item MF02: Motor Vehicle Registration and Driver's Licensing Regulatory Services was unconstitutional
because the item constituted a lump-sum appropriation39 that undermined the exercise by the President
of his veto power under Article VI, Section 27(2)40 of the Constitution.
The petitioners' contention lacks merit.
Starting in 2014, the National Government adopted the system of "Performance Informed
Budgeting"41 in the preparation and presentation of the National Budget. This adoption is expressed in
Section 2 of the general provisions of the 2014 GAA, to wit:
Sec. 2. Performance Informed Budgeting. The amounts appropriated herein considered the physical
accomplishments vis-a-vis performance targets of departments, bureaus, offices and instrumentalities of
the National Government, including Constitutional Offices enjoying fiscal autonomy, SUCs and GOCCs,
formulated in terms of Major Final Outputs (MF Os) and their corresponding Performance Indicators
under the Organizational Performance Indicator Framework, the results-based budgeting system being
adopted in the whole of government. Accordingly, the budget allocations for the various programs and
projects under this Act are informed by, among others, the actual performance of spending units in
delivering their MFOs and their impact on the sectoral and societal objectives and priorities set by the
National Government. This is consistent with the national policy of orienting the budget towards the
achievement of explicit objectives and desire budget outcomes, as well as for greater transparency and
accountability in public spending. x x x
Under the system of Performance Informed Budgeting, the PAPS are grouped or aligned into the Major
Final Outputs (MFOs). However, the groupings do not mean that there are no longer any line-items. As
explained in Belgica v. Executive Secretary,42 line-items under appropriations should be "specific
appropriations of money" that will enable the President to discernibly veto the same, to wit:
An item, as defined in the field of appropriations, pertains to "the particulars, the details, the distinct and
severable parts of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of the
Philippine Islands, the US Supreme Court characterized an item of appropriation as follows:
 "An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of
money, not some general provision of law which happens to be put into an appropriation bill."
On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able
to exercise his power of item veto, must contain "specific appropriations of money" and not only
"general provisions" which provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be an item characterized by
singular correspondence - meaning an allocation of a specified singular amount for a specified singular
purpose, otherwise known as a "line-item." This treatment not only allows the item to be consistent with
its definition as a "specific appropriation of money" but also ensures that the President may discernibly
veto the same.43
In Araullo v. Aquino III, 44 the Court has expounded the term item as the last and indivisible purpose of a
program in the appropriation law, which is distinct from the expense category or allotment class, viz.:
Indeed, Section 25(5) of the 1987 Constitution mentions of the term item that may be the object of
augmentation by the President, the Senate President, the Speaker of the House, the Chief Justice, and
the heads of the Constitutional Commissions. In Belgica v. Ochoa, we said that an item that is the distinct
and several part of the appropriation bill, in line with the item-veto power of the President, must contain
"specific appropriations of money" and not be only general provisions, x x x
xxxx
Accordingly, the item referred to by Section 25(5) of the Constitution is the last and indivisible purpose of
a program in the appropriation law, which is distinct from the expense category or allotment class. There
is no specificity, indeed, either in the Constitution or in the relevant GAAs that the object of
augmentation should be the expense category or allotment class. In the same vein, the President cannot
exercise his veto power over an expense category; he may only veto the item to which that expense
category belongs to.45
The petitioners' contention that the MF02 constituted a lump-sum appropriation46 had no basis. The
specific appropriations of money were still found under Details of the FY 2014 Budget which was
attached to the 2014 GAA. They specified and contained the authorized budgetary programs and
projects under the GAA, as follows:
Personnel Maintenance and Other
Operations Capital Outlays
Services Operating Expenses
O 2: Motor Vehicle ₱314,981,000 ₱2,038,797,000 ₱375,000
stration and
er's Licensing
ulatory Services
or vehicle ₱148,236,000 ₱1,378,945,000 ₱375,000
stration system47
As gleaned from the Details of the FY 2014 Budget, the MFOs constituted the expense category or class;
while the last and indivisible purpose of each program under the MFOs were enumerated under
the Details of the FY 2014 Budget. In particular, the specific purpose provided under the MF02 was an
appropriation for a Motor vehicle registration system. Such specific purpose satisfied the requirement of
a valid line-item that the President could discernibly veto.
WHEREFORE, the Court DISMISSES the petition for certiorari and prohibition; and DECLARES the use of
the appropriation under Motor Vehicle Registration and Driver's Licensing Regulatory Services in
the General Appropriations Act of 2014 for the implementation of the Motor Vehicle License Plate
Standardization Program of the Land Transportation Office of the Department of Transportation as
CONSTITUTIONAL.
The TEMPORARY RESTRAINING ORDER issued by the Court on June 14, 2016 is LIFTED.
SO ORDERED.
G.R. No. 166006 March 14, 2008
PLANTERS PRODUCTS, INC., Petitioner,
vs.
FERTIPHIL CORPORATION, Respondent.
DECISION
REYES, R.T., J.:
THE Regional Trial Courts (RTC) have the authority and jurisdiction to consider the constitutionality of
statutes, executive orders, presidential decrees and other issuances. The Constitution vests that power
not only in the Supreme Court but in all Regional Trial Courts.
The principle is relevant in this petition for review on certiorari of the Decision1 of the Court of Appeals
(CA) affirming with modification that of the RTC in Makati City,2 finding petitioner Planters Products, Inc.
(PPI) liable to private respondent Fertiphil Corporation (Fertiphil) for the levies it paid under Letter of
Instruction (LOI) No. 1465.
Total
The Facts
₱2,354, 153,000
Petitioner PPI and private respondent Fertiphil are private corporations incorporated under Philippine
laws.3 They are both engaged in the importation and distribution of fertilizers, pesticides and agricultural
chemicals.
₱1,527,556,000
On June 3, 1985, then President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465
which provided, among others, for the imposition of a capital recovery component (CRC) on the
domestic sale of all grades of fertilizers in the Philippines.4 The LOI provides:
3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula
a capital contribution component of not less than ₱10 per bag. This capital contribution shall be
collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by
FPA to all domestic sales of fertilizers in the Philippines.5 (Underscoring supplied)
Pursuant to the LOI, Fertiphil paid ₱10 for every bag of fertilizer it sold in the domestic market to the
Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount collected to the Far East Bank and
Trust Company, the depositary bank of PPI. Fertiphil paid ₱6,689,144 to FPA from July 8, 1985 to January
24, 1986.6
After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the ₱10 levy. With the return
of democracy, Fertiphil demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI
refused to accede to the demand.7
Fertiphil filed a complaint for collection and damages8 against FPA and PPI with the RTC in Makati. It
questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable, oppressive, invalid and
an unlawful imposition that amounted to a denial of due process of law.9 Fertiphil alleged that the LOI
solely favored PPI, a privately owned corporation, which used the proceeds to maintain its monopoly of
the fertilizer industry.
In its Answer,10 FPA, through the Solicitor General, countered that the issuance of LOI No. 1465 was a
valid exercise of the police power of the State in ensuring the stability of the fertilizer industry in the
country. It also averred that Fertiphil did not sustain any damage from the LOI because the burden
imposed by the levy fell on the ultimate consumer, not the seller.
RTC Disposition
On November 20, 1991, the RTC rendered judgment in favor of Fertiphil, disposing as follows:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the plaintiff and
against the defendant Planters Product, Inc., ordering the latter to pay the former:
1) the sum of ₱6,698,144.00 with interest at 12% from the time of judicial demand;
2) the sum of ₱100,000 as attorney’s fees;
3) the cost of suit.
SO ORDERED.11
Ruling that the imposition of the ₱10 CRC was an exercise of the State’s inherent power of taxation, the
RTC invalidated the levy for violating the basic principle that taxes can only be levied for public purpose,
viz.:
It is apparent that the imposition of ₱10 per fertilizer bag sold in the country by LOI 1465 is purportedly
in the exercise of the power of taxation. It is a settled principle that the power of taxation by the state is
plenary. Comprehensive and supreme, the principal check upon its abuse resting in the responsibility of
the members of the legislature to their constituents. However, there are two kinds of limitations on the
power of taxation: the inherent limitations and the constitutional limitations.
One of the inherent limitations is that a tax may be levied only for public purposes:
The power to tax can be resorted to only for a constitutionally valid public purpose. By the same token,
taxes may not be levied for purely private purposes, for building up of private fortunes, or for the redress
of private wrongs. They cannot be levied for the improvement of private property, or for the benefit, and
promotion of private enterprises, except where the aid is incident to the public benefit. It is well-settled
principle of constitutional law that no general tax can be levied except for the purpose of raising money
which is to be expended for public use. Funds cannot be exacted under the guise of taxation to promote
a purpose that is not of public interest. Without such limitation, the power to tax could be exercised or
employed as an authority to destroy the economy of the people. A tax, however, is not held void on the
ground of want of public interest unless the want of such interest is clear. (71 Am. Jur. pp. 371-372)
In the case at bar, the plaintiff paid the amount of ₱6,698,144.00 to the Fertilizer and Pesticide Authority
pursuant to the ₱10 per bag of fertilizer sold imposition under LOI 1465 which, in turn, remitted the
amount to the defendant Planters Products, Inc. thru the latter’s depository bank, Far East Bank and
Trust Co. Thus, by virtue of LOI 1465 the plaintiff, Fertiphil Corporation, which is a private domestic
corporation, became poorer by the amount of ₱6,698,144.00 and the defendant, Planters Product, Inc.,
another private domestic corporation, became richer by the amount of ₱6,698,144.00.
Tested by the standards of constitutionality as set forth in the afore-quoted jurisprudence, it is quite
evident that LOI 1465 insofar as it imposes the amount of ₱10 per fertilizer bag sold in the country and
orders that the said amount should go to the defendant Planters Product, Inc. is unlawful because it
violates the mandate that a tax can be levied only for a public purpose and not to benefit, aid and
promote a private enterprise such as Planters Product, Inc.12
PPI moved for reconsideration but its motion was denied.13 PPI then filed a notice of appeal with the RTC
but it failed to pay the requisite appeal docket fee. In a separate but related proceeding, this
Court14 allowed the appeal of PPI and remanded the case to the CA for proper disposition.
CA Decision
On November 28, 2003, the CA handed down its decision affirming with modification that of the RTC,
with the following fallo:
IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby AFFIRMED, subject to the
MODIFICATION that the award of attorney’s fees is hereby DELETED.15
In affirming the RTC decision, the CA ruled that the lis mota of the complaint for collection was the
constitutionality of LOI No. 1465, thus:
The question then is whether it was proper for the trial court to exercise its power to judicially
determine the constitutionality of the subject statute in the instant case.
As a rule, where the controversy can be settled on other grounds, the courts will not resolve the
constitutionality of a law (Lim v. Pacquing, 240 SCRA 649 [1995]). The policy of the courts is to avoid
ruling on constitutional questions and to presume that the acts of political departments are valid, absent
a clear and unmistakable showing to the contrary.
However, the courts are not precluded from exercising such power when the following requisites are
obtaining in a controversy before it: First, there must be before the court an actual case calling for the
exercise of judicial review. Second, the question must be ripe for adjudication. Third, the person
challenging the validity of the act must have standing to challenge. Fourth, the question of
constitutionality must have been raised at the earliest opportunity; and lastly, the issue of
constitutionality must be the very lis mota of the case (Integrated Bar of the Philippines v. Zamora, 338
SCRA 81 [2000]).
Indisputably, the present case was primarily instituted for collection and damages. However, a perusal of
the complaint also reveals that the instant action is founded on the claim that the levy imposed was an
unlawful and unconstitutional special assessment. Consequently, the requisite that the constitutionality
of the law in question be the very lis mota of the case is present, making it proper for the trial court to
rule on the constitutionality of LOI 1465.16
The CA held that even on the assumption that LOI No. 1465 was issued under the police power of the
state, it is still unconstitutional because it did not promote public welfare. The CA explained:
In declaring LOI 1465 unconstitutional, the trial court held that the levy imposed under the said law was
an invalid exercise of the State’s power of taxation inasmuch as it violated the inherent and
constitutional prescription that taxes be levied only for public purposes. It reasoned out that the amount
collected under the levy was remitted to the depository bank of PPI, which the latter used to advance its
private interest.
On the other hand, appellant submits that the subject statute’s passage was a valid exercise of police
power. In addition, it disputes the court a quo’s findings arguing that the collections under LOI 1465 was
for the benefit of Planters Foundation, Incorporated (PFI), a foundation created by law to hold in trust
for millions of farmers, the stock ownership of PPI.
Of the three fundamental powers of the State, the exercise of police power has been characterized as
the most essential, insistent and the least limitable of powers, extending as it does to all the great public
needs. It may be exercised as long as the activity or the property sought to be regulated has some
relevance to public welfare (Constitutional Law, by Isagani A. Cruz, p. 38, 1995 Edition).
Vast as the power is, however, it must be exercised within the limits set by the Constitution, which
requires the concurrence of a lawful subject and a lawful method. Thus, our courts have laid down the
test to determine the validity of a police measure as follows: (1) the interests of the public generally, as
distinguished from those of a particular class, requires its exercise; and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals
(National Development Company v. Philippine Veterans Bank, 192 SCRA 257 [1990]).
It is upon applying this established tests that We sustain the trial court’s holding LOI 1465
unconstitutional. To be sure, ensuring the continued supply and distribution of fertilizer in the country is
an undertaking imbued with public interest. However, the method by which LOI 1465 sought to achieve
this is by no means a measure that will promote the public welfare. The government’s commitment to
support the successful rehabilitation and continued viability of PPI, a private corporation, is an
unmistakable attempt to mask the subject statute’s impartiality. There is no way to treat the self-interest
of a favored entity, like PPI, as identical with the general interest of the country’s farmers or even the
Filipino people in general. Well to stress, substantive due process exacts fairness and equal protection
disallows distinction where none is needed. When a statute’s public purpose is spoiled by private
interest, the use of police power becomes a travesty which must be struck down for being an arbitrary
exercise of government power. To rule in favor of appellant would contravene the general principle that
revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of
private individuals.17
The CA did not accept PPI’s claim that the levy imposed under LOI No. 1465 was for the benefit of
Planters Foundation, Inc., a foundation created to hold in trust the stock ownership of PPI. The CA
stated:
Appellant next claims that the collections under LOI 1465 was for the benefit of Planters Foundation,
Incorporated (PFI), a foundation created by law to hold in trust for millions of farmers, the stock
ownership of PFI on the strength of Letter of Undertaking (LOU) issued by then Prime Minister Cesar
Virata on April 18, 1985 and affirmed by the Secretary of Justice in an Opinion dated October 12, 1987,
to wit:
"2. Upon the effective date of this Letter of Undertaking, the Republic shall cause FPA to include in its
fertilizer pricing formula a capital recovery component, the proceeds of which will be used initially for
the purpose of funding the unpaid portion of the outstanding capital stock of Planters presently held in
trust by Planters Foundation, Inc. (Planters Foundation), which unpaid capital is estimated at
approximately ₱206 million (subject to validation by Planters and Planters Foundation) (such unpaid
portion of the outstanding capital stock of Planters being hereafter referred to as the ‘Unpaid Capital’),
and subsequently for such capital increases as may be required for the continuing viability of Planters.
The capital recovery component shall be in the minimum amount of ₱10 per bag, which will be added to
the price of all domestic sales of fertilizer in the Philippines by any importer and/or fertilizer mother
company. In this connection, the Republic hereby acknowledges that the advances by Planters to
Planters Foundation which were applied to the payment of the Planters shares now held in trust by
Planters Foundation, have been assigned to, among others, the Creditors. Accordingly, the Republic,
through FPA, hereby agrees to deposit the proceeds of the capital recovery component in the special
trust account designated in the notice dated April 2, 1985, addressed by counsel for the Creditors to
Planters Foundation. Such proceeds shall be deposited by FPA on or before the 15th day of each month.
The capital recovery component shall continue to be charged and collected until payment in full of (a)
the Unpaid Capital and/or (b) any shortfall in the payment of the Subsidy Receivables, (c) any carrying
cost accruing from the date hereof on the amounts which may be outstanding from time to time of the
Unpaid Capital and/or the Subsidy Receivables and (d) the capital increases contemplated in paragraph 2
hereof. For the purpose of the foregoing clause (c), the ‘carrying cost’ shall be at such rate as will
represent the full and reasonable cost to Planters of servicing its debts, taking into account both its peso
and foreign currency-denominated obligations." (Records, pp. 42-43)
Appellant’s proposition is open to question, to say the least. The LOU issued by then Prime Minister
Virata taken together with the Justice Secretary’s Opinion does not preponderantly demonstrate that
the collections made were held in trust in favor of millions of farmers. Unfortunately for appellant, in the
absence of sufficient evidence to establish its claims, this Court is constrained to rely on what is explicitly
provided in LOI 1465 – that one of the primary aims in imposing the levy is to support the successful
rehabilitation and continued viability of PPI.18
PPI moved for reconsideration but its motion was denied.19 It then filed the present petition with this
Court.
Issues
Petitioner PPI raises four issues for Our consideration, viz.:
I
THE CONSTITUTIONALITY OF LOI 1465 CANNOT BE COLLATERALLY ATTACKED AND BE DECREED VIA A
DEFAULT JUDGMENT IN A CASE FILED FOR COLLECTION AND DAMAGES WHERE THE ISSUE OF
CONSTITUTIONALITY IS NOT THE VERY LIS MOTA OF THE CASE. NEITHER CAN LOI 1465 BE CHALLENGED
BY ANY PERSON OR ENTITY WHICH HAS NO STANDING TO DO SO.
II
LOI 1465, BEING A LAW IMPLEMENTED FOR THE PURPOSE OF ASSURING THE FERTILIZER SUPPLY AND
DISTRIBUTION IN THE COUNTRY, AND FOR BENEFITING A FOUNDATION CREATED BY LAW TO HOLD IN
TRUST FOR MILLIONS OF FARMERS THEIR STOCK OWNERSHIP IN PPI CONSTITUTES A VALID LEGISLATION
PURSUANT TO THE EXERCISE OF TAXATION AND POLICE POWER FOR PUBLIC PURPOSES.
III
THE AMOUNT COLLECTED UNDER THE CAPITAL RECOVERY COMPONENT WAS REMITTED TO THE
GOVERNMENT, AND BECAME GOVERNMENT FUNDS PURSUANT TO AN EFFECTIVE AND VALIDLY
ENACTED LAW WHICH IMPOSED DUTIES AND CONFERRED RIGHTS BY VIRTUE OF THE PRINCIPLE OF
"OPERATIVE FACT" PRIOR TO ANY DECLARATION OF UNCONSTITUTIONALITY OF LOI 1465.
IV
THE PRINCIPLE OF UNJUST VEXATION (SHOULD BE ENRICHMENT) FINDS NO APPLICATION IN THE
INSTANT CASE.20 (Underscoring supplied)
Our Ruling
We shall first tackle the procedural issues of locus standi and the jurisdiction of the RTC to resolve
constitutional issues.
Fertiphil has locus standi because it suffered direct injury; doctrine of standing is a mere procedural
technicality which may be waived.
PPI argues that Fertiphil has no locus standi to question the constitutionality of LOI No. 1465 because it
does not have a "personal and substantial interest in the case or will sustain direct injury as a result of its
enforcement."21 It asserts that Fertiphil did not suffer any damage from the CRC imposition because
"incidence of the levy fell on the ultimate consumer or the farmers themselves, not on the seller
fertilizer company."22
We cannot agree. The doctrine of locus standi or the right of appearance in a court of justice has been
adequately discussed by this Court in a catena of cases. Succinctly put, the doctrine requires a litigant to
have a material interest in the outcome of a case. In private suits, locus standi requires a litigant to be a
"real party in interest," which is defined as "the party who stands to be benefited or injured by the
judgment in the suit or the party entitled to the avails of the suit."23
In public suits, this Court recognizes the difficulty of applying the doctrine especially when plaintiff
asserts a public right on behalf of the general public because of conflicting public policy issues. 24 On one
end, there is the right of the ordinary citizen to petition the courts to be freed from unlawful government
intrusion and illegal official action. At the other end, there is the public policy precluding excessive
judicial interference in official acts, which may unnecessarily hinder the delivery of basic public services.
In this jurisdiction, We have adopted the "direct injury test" to determine locus standi in public suits. In
People v. Vera,25 it was held that a person who impugns the validity of a statute must have "a personal
and substantial interest in the case such that he has sustained, or will sustain direct injury as a result."
The "direct injury test" in public suits is similar to the "real party in interest" rule for private suits under
Section 2, Rule 3 of the 1997 Rules of Civil Procedure.26
Recognizing that a strict application of the "direct injury" test may hamper public interest, this Court
relaxed the requirement in cases of "transcendental importance" or with "far reaching implications."
Being a mere procedural technicality, it has also been held that locus standi may be waived in the public
interest.27
Whether or not the complaint for collection is characterized as a private or public suit, Fertiphil has locus
standi to file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465. It was required,
and it did pay, the ₱10 levy imposed for every bag of fertilizer sold on the domestic market. It may be
true that Fertiphil has passed some or all of the levy to the ultimate consumer, but that does not
disqualify it from attacking the constitutionality of the LOI or from seeking a refund. As seller, it bore the
ultimate burden of paying the levy. It faced the possibility of severe sanctions for failure to pay the levy.
The fact of payment is sufficient injury to Fertiphil.
Moreover, Fertiphil suffered harm from the enforcement of the LOI because it was compelled to factor
in its product the levy. The levy certainly rendered the fertilizer products of Fertiphil and other domestic
sellers much more expensive. The harm to their business consists not only in fewer clients because of the
increased price, but also in adopting alternative corporate strategies to meet the demands of LOI No.
1465. Fertiphil and other fertilizer sellers may have shouldered all or part of the levy just to be
competitive in the market. The harm occasioned on the business of Fertiphil is sufficient injury for
purposes of locus standi.
Even assuming arguendo that there is no direct injury, We find that the liberal policy consistently
adopted by this Court on locus standi must apply. The issues raised by Fertiphil are of paramount public
importance. It involves not only the constitutionality of a tax law but, more importantly, the use of taxes
for public purpose. Former President Marcos issued LOI No. 1465 with the intention of rehabilitating an
ailing private company. This is clear from the text of the LOI. PPI is expressly named in the LOI as the
direct beneficiary of the levy. Worse, the levy was made dependent and conditional upon PPI becoming
financially viable. The LOI provided that "the capital contribution shall be collected until adequate capital
is raised to make PPI viable."
The constitutionality of the levy is already in doubt on a plain reading of the statute. It is Our
constitutional duty to squarely resolve the issue as the final arbiter of all justiciable controversies. The
doctrine of standing, being a mere procedural technicality, should be waived, if at all, to adequately
thresh out an important constitutional issue.
RTC may resolve constitutional issues; the constitutional issue was adequately raised in the complaint; it
is the lis mota of the case.
PPI insists that the RTC and the CA erred in ruling on the constitutionality of the LOI. It asserts that the
constitutionality of the LOI cannot be collaterally attacked in a complaint for collection.28 Alternatively,
the resolution of the constitutional issue is not necessary for a determination of the complaint for
collection.29
Fertiphil counters that the constitutionality of the LOI was adequately pleaded in its complaint. It claims
that the constitutionality of LOI No. 1465 is the very lis mota of the case because the trial court cannot
determine its claim without resolving the issue.30
It is settled that the RTC has jurisdiction to resolve the constitutionality of a statute, presidential decree
or an executive order. This is clear from Section 5, Article VIII of the 1987 Constitution, which provides:
SECTION 5. The Supreme Court shall have the following powers:
xxxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may
provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement,
law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
(Underscoring supplied)
In Mirasol v. Court of Appeals,31 this Court recognized the power of the RTC to resolve constitutional
issues, thus:
On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider
the constitutionality of a statute, presidential decree, or executive order. The Constitution vests the
power of judicial review or the power to declare a law, treaty, international or executive agreement,
presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all Regional
Trial Courts.32
In the recent case of Equi-Asia Placement, Inc. v. Department of Foreign Affairs,33 this Court reiterated:
There is no denying that regular courts have jurisdiction over cases involving the validity or
constitutionality of a rule or regulation issued by administrative agencies. Such jurisdiction, however, is
not limited to the Court of Appeals or to this Court alone for even the regional trial courts can take
cognizance of actions assailing a specific rule or set of rules promulgated by administrative bodies.
Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in
the courts, including the regional trial courts.34
Judicial review of official acts on the ground of unconstitutionality may be sought or availed of through
any of the actions cognizable by courts of justice, not necessarily in a suit for declaratory relief. Such
review may be had in criminal actions, as in People v. Ferrer35 involving the constitutionality of the now
defunct Anti-Subversion law, or in ordinary actions, as in Krivenko v. Register of Deeds36 involving the
constitutionality of laws prohibiting aliens from acquiring public lands. The constitutional issue, however,
(a) must be properly raised and presented in the case, and (b) its resolution is necessary to a
determination of the case, i.e., the issue of constitutionality must be the very lis mota presented.37
Contrary to PPI’s claim, the constitutionality of LOI No. 1465 was properly and adequately raised in the
complaint for collection filed with the RTC. The pertinent portions of the complaint allege:
6. The CRC of ₱10 per bag levied under LOI 1465 on domestic sales of all grades of fertilizer in the
Philippines, is unlawful, unjust, uncalled for, unreasonable, inequitable and oppressive because:
xxxx
(c) It favors only one private domestic corporation, i.e., defendant PPPI, and imposed at the expense and
disadvantage of the other fertilizer importers/distributors who were themselves in tight business
situation and were then exerting all efforts and maximizing management and marketing skills to remain
viable;
xxxx
(e) It was a glaring example of crony capitalism, a forced program through which the PPI, having been
presumptuously masqueraded as "the" fertilizer industry itself, was the sole and anointed beneficiary;
7. The CRC was an unlawful; and unconstitutional special assessment and its imposition is tantamount to
illegal exaction amounting to a denial of due process since the persons of entities which had to bear the
burden of paying the CRC derived no benefit therefrom; that on the contrary it was used by PPI in trying
to regain its former despicable monopoly of the fertilizer industry to the detriment of other distributors
and importers.38 (Underscoring supplied)
The constitutionality of LOI No. 1465 is also the very lis mota of the complaint for collection. Fertiphil
filed the complaint to compel PPI to refund the levies paid under the statute on the ground that the law
imposing the levy is unconstitutional. The thesis is that an unconstitutional law is void. It has no legal
effect. Being void, Fertiphil had no legal obligation to pay the levy. Necessarily, all levies duly paid
pursuant to an unconstitutional law should be refunded under the civil code principle against unjust
enrichment. The refund is a mere consequence of the law being declared unconstitutional. The RTC
surely cannot order PPI to refund Fertiphil if it does not declare the LOI unconstitutional. It is the
unconstitutionality of the LOI which triggers the refund. The issue of constitutionality is the very lis mota
of the complaint with the RTC.
The ₱10 levy under LOI No. 1465 is an exercise of the power of taxation.
At any rate, the Court holds that the RTC and the CA did not err in ruling against the constitutionality of
the LOI.
PPI insists that LOI No. 1465 is a valid exercise either of the police power or the power of taxation. It
claims that the LOI was implemented for the purpose of assuring the fertilizer supply and distribution in
the country and for benefiting a foundation created by law to hold in trust for millions of farmers their
stock ownership in PPI.
Fertiphil counters that the LOI is unconstitutional because it was enacted to give benefit to a private
company. The levy was imposed to pay the corporate debt of PPI. Fertiphil also argues that, even if the
LOI is enacted under the police power, it is still unconstitutional because it did not promote the general
welfare of the people or public interest.
Police power and the power of taxation are inherent powers of the State. These powers are distinct and
have different tests for validity. Police power is the power of the State to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare,39 while the power of
taxation is the power to levy taxes to be used for public purpose. The main purpose of police power is
the regulation of a behavior or conduct, while taxation is revenue generation. The "lawful subjects" and
"lawful means" tests are used to determine the validity of a law enacted under the police power.40 The
power of taxation, on the other hand, is circumscribed by inherent and constitutional limitations.
We agree with the RTC that the imposition of the levy was an exercise by the State of its taxation power. While the categories of what may constitute a public purpose are continually expanding in light of the
While it is true that the power of taxation can be used as an implement of police power,41 the primary expansion of government functions, the inherent requirement that taxes can only be exacted for a public
purpose of the levy is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, purpose still stands. Public purpose is the heart of a tax law. When a tax law is only a mask to exact funds
one of the real and substantial purposes, then the exaction is properly called a tax.42 from the public when its true intent is to give undue benefit and advantage to a private enterprise, that
law will not satisfy the requirement of "public purpose."
In Philippine Airlines, Inc. v. Edu,43 it was held that the imposition of a vehicle registration fee is not an
exercise by the State of its police power, but of its taxation power, thus: The purpose of a law is evident from its text or inferable from other secondary sources. Here, We agree
with the RTC and that CA that the levy imposed under LOI No. 1465 was not for a public purpose.
It is clear from the provisions of Section 73 of Commonwealth Act 123 and Section 61 of the Land
Transportation and Traffic Code that the legislative intent and purpose behind the law requiring owners First, the LOI expressly provided that the levy be imposed to benefit PPI, a private company. The purpose
of vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of is explicit from Clause 3 of the law, thus:
highways and to a much lesser degree, pay for the operating expenses of the administering agency. x x
x Fees may be properly regarded as taxes even though they also serve as an instrument of regulation.
3. The Administrator of the Fertilizer Pesticide Authority to include in its fertilizer pricing formula
a capital contribution component of not less than ₱10 per bag. This capital contribution shall be
Taxation may be made the implement of the state's police power (Lutz v. Araneta, 98 Phil. 148). If the collected until adequate capital is raised to make PPI viable. Such capital contribution shall be applied by
purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the FPA to all domestic sales of fertilizers in the Philippines.48 (Underscoring supplied)
exaction is properly called a tax. Such is the case of motor vehicle registration fees. The same provision
appears as Section 59(b) in the Land Transportation Code. It is patent therefrom that the legislators had
It is a basic rule of statutory construction that the text of a statute should be given a literal meaning. In
in mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership
this case, the text of the LOI is plain that the levy was imposed in order to raise capital for PPI. The
of a motor vehicle as a "tax or fee." x x x Simply put, if the exaction under Rep. Act 4136 were merely a
framers of the LOI did not even hide the insidious purpose of the law. They were cavalier enough to
regulatory fee, the imposition in Rep. Act 5448 need not be an "additional" tax. Rep. Act 4136 also
name PPI as the ultimate beneficiary of the taxes levied under the LOI. We find it utterly repulsive that a
speaks of other "fees" such as the special permit fees for certain types of motor vehicles (Sec. 10) and
tax law would expressly name a private company as the ultimate beneficiary of the taxes to be levied
additional fees for change of registration (Sec. 11). These are not to be understood as taxes because such
from the public. This is a clear case of crony capitalism.
fees are very minimal to be revenue-raising. Thus, they are not mentioned by Sec. 59(b) of the Code as
taxes like the motor vehicle registration fee and chauffeurs’ license fee. Such fees are to go into the
expenditures of the Land Transportation Commission as provided for in the last proviso of Sec. Second, the LOI provides that the imposition of the ₱10 levy was conditional and dependent upon PPI
61.44 (Underscoring supplied) becoming financially "viable." This suggests that the levy was actually imposed to benefit PPI. The LOI
notably does not fix a maximum amount when PPI is deemed financially "viable." Worse, the liability of
Fertiphil and other domestic sellers of fertilizer to pay the levy is made indefinite. They are required to
The ₱10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The levy, no doubt,
continuously pay the levy until adequate capital is raised for PPI.
was a big burden on the seller or the ultimate consumer. It increased the price of a bag of fertilizer by as
much as five percent.45 A plain reading of the LOI also supports the conclusion that the levy was for
revenue generation. The LOI expressly provided that the levy was imposed "until adequate capital is Third, the RTC and the CA held that the levies paid under the LOI were directly remitted and deposited
raised to make PPI viable." by FPA to Far East Bank and Trust Company, the depositary bank of PPI.49 This proves that PPI benefited
from the LOI. It is also proves that the main purpose of the law was to give undue benefit and advantage
to PPI.
Taxes are exacted only for a public purpose. The ₱10 levy is unconstitutional because it was not for a
public purpose. The levy was imposed to give undue benefit to PPI.
Fourth, the levy was used to pay the corporate debts of PPI. A reading of the Letter of
Understanding50 dated May 18, 1985 signed by then Prime Minister Cesar Virata reveals that PPI was in
An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a public
deep financial problem because of its huge corporate debts. There were pending petitions for
purpose. They cannot be used for purely private purposes or for the exclusive benefit of private
rehabilitation against PPI before the Securities and Exchange Commission. The government guaranteed
persons.46 The reason for this is simple. The power to tax exists for the general welfare; hence, implicit in
payment of PPI’s debts to its foreign creditors. To fund the payment, President Marcos issued LOI No.
its power is the limitation that it should be used only for a public purpose. It would be a robbery for the
1465. The pertinent portions of the letter of understanding read:
State to tax its citizens and use the funds generated for a private purpose. As an old United States case
bluntly put it: "To lay with one hand, the power of the government on the property of the citizen, and
with the other to bestow it upon favored individuals to aid private enterprises and build up private Republic of the Philippines
fortunes, is nonetheless a robbery because it is done under the forms of law and is called taxation."47 Office of the Prime Minister
Manila
The term "public purpose" is not defined. It is an elastic concept that can be hammered to fit modern
standards. Jurisprudence states that "public purpose" should be given a broad interpretation. It does not LETTER OF UNDERTAKING
only pertain to those purposes which are traditionally viewed as essentially government functions, such
as building roads and delivery of basic services, but also includes those purposes designed to promote May 18, 1985
social justice. Thus, public money may now be used for the relocation of illegal settlers, low-cost housing
and urban or agrarian reform.
TO: THE BANKING AND FINANCIAL INSTITUTIONS
LISTED IN ANNEX A HERETO WHICH ARE
CREDITORS (COLLECTIVELY, THE "CREDITORS")
OF PLANTERS PRODUCTS, INC. ("PLANTERS")
Gentlemen:
This has reference to Planters which is the principal importer and distributor of fertilizer, pesticides and
agricultural chemicals in the Philippines. As regards Planters, the Philippine Government confirms its
awareness of the following: (1) that Planters has outstanding obligations in foreign currency and/or
pesos, to the Creditors, (2) that Planters is currently experiencing financial difficulties, and (3) that there
are presently pending with the Securities and Exchange Commission of the Philippines a petition filed at
Planters’ own behest for the suspension of payment of all its obligations, and a separate petition filed by
Manufacturers Hanover Trust Company, Manila Offshore Branch for the appointment of a rehabilitation
receiver for Planters.
In connection with the foregoing, the Republic of the Philippines (the "Republic") confirms that it
considers and continues to consider Planters as a major fertilizer distributor. Accordingly, for and in
consideration of your expressed willingness to consider and participate in the effort to rehabilitate
Planters, the Republic hereby manifests its full and unqualified support of the successful rehabilitation
and continuing viability of Planters, and to that end, hereby binds and obligates itself to the creditors and
Planters, as follows:
xxxx
2. Upon the effective date of this Letter of Undertaking, the Republic shall cause FPA to include in its
fertilizer pricing formula a capital recovery component, the proceeds of which will be used initially for
the purpose of funding the unpaid portion of the outstanding capital stock of Planters presently held in
trust by Planters Foundation, Inc. ("Planters Foundation"), which unpaid capital is estimated at
approximately ₱206 million (subject to validation by Planters and Planters Foundation) such unpaid
portion of the outstanding capital stock of Planters being hereafter referred to as the "Unpaid Capital"),
and subsequently for such capital increases as may be required for the continuing viability of Planters.
xxxx
The capital recovery component shall continue to be charged and collected until payment in full of (a)
the Unpaid Capital and/or (b) any shortfall in the payment of the Subsidy Receivables, (c) any carrying
cost accruing from the date hereof on the amounts which may be outstanding from time to time of the
Unpaid Capital and/or the Subsidy Receivables, and (d) the capital increases contemplated in paragraph
2 hereof. For the purpose of the foregoing clause (c), the "carrying cost" shall be at such rate as will
represent the full and reasonable cost to Planters of servicing its debts, taking into account both its peso
and foreign currency-denominated obligations.
REPUBLIC OF THE PHILIPPINES
By:
(signed)
CESAR E. A. VIRATA
Prime Minister and Minister of Finance51
It is clear from the Letter of Understanding that the levy was imposed precisely to pay the corporate
debts of PPI. We cannot agree with PPI that the levy was imposed to ensure the stability of the fertilizer
industry in the country. The letter of understanding and the plain text of the LOI clearly indicate that the
levy was exacted for the benefit of a private corporation.
All told, the RTC and the CA did not err in holding that the levy imposed under LOI No. 1465 was not for a
public purpose. LOI No. 1465 failed to comply with the public purpose requirement for tax laws.
The LOI is still unconstitutional even if enacted under the police power; it did not promote public
interest.
Even if We consider LOI No. 1695 enacted under the police power of the State, it would still be invalid for
failing to comply with the test of "lawful subjects" and "lawful means." Jurisprudence states the test as
follows: (1) the interest of the public generally, as distinguished from those of particular class, requires
its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals.52
For the same reasons as discussed, LOI No. 1695 is invalid because it did not promote public interest. The
law was enacted to give undue advantage to a private corporation. We quote with approval the CA
ratiocination on this point, thus:
It is upon applying this established tests that We sustain the trial court’s holding LOI 1465
unconstitutional.1awphil To be sure, ensuring the continued supply and distribution of fertilizer in the
country is an undertaking imbued with public interest. However, the method by which LOI 1465 sought
to achieve this is by no means a measure that will promote the public welfare. The government’s
commitment to support the successful rehabilitation and continued viability of PPI, a private
corporation, is an unmistakable attempt to mask the subject statute’s impartiality. There is no way to
treat the self-interest of a favored entity, like PPI, as identical with the general interest of the country’s
farmers or even the Filipino people in general. Well to stress, substantive due process exacts fairness and
equal protection disallows distinction where none is needed. When a statute’s public purpose is spoiled
by private interest, the use of police power becomes a travesty which must be struck down for being an
arbitrary exercise of government power. To rule in favor of appellant would contravene the general
principle that revenues derived from taxes cannot be used for purely private purposes or for the
exclusive benefit of private individuals. (Underscoring supplied)
The general rule is that an unconstitutional law is void; the doctrine of operative fact is inapplicable.
PPI also argues that Fertiphil cannot seek a refund even if LOI No. 1465 is declared unconstitutional. It
banks on the doctrine of operative fact, which provides that an unconstitutional law has an effect before
being declared unconstitutional. PPI wants to retain the levies paid under LOI No. 1465 even if it is
subsequently declared to be unconstitutional.
We cannot agree. It is settled that no question, issue or argument will be entertained on appeal, unless it
has been raised in the court a quo.53 PPI did not raise the applicability of the doctrine of operative fact
with the RTC and the CA. It cannot belatedly raise the issue with Us in order to extricate itself from the
dire effects of an unconstitutional law.
At any rate, We find the doctrine inapplicable. The general rule is that an unconstitutional law is void. It
produces no rights, imposes no duties and affords no protection. It has no legal effect. It is, in legal
contemplation, inoperative as if it has not been passed.54 Being void, Fertiphil is not required to pay the
levy. All levies paid should be refunded in accordance with the general civil code principle against unjust
enrichment. The general rule is supported by Article 7 of the Civil Code, which provides:
ART. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse or custom or practice to the contrary.
The factual antecedents:
Petitioner Angeles University Foundation (AUF) is an educational institution established on May 25, 1962
and was converted into a non-stock, non-profit education foundation under the provisions of Republic
Act (R.A.) No. 60554 on December 4, 1975.

When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the Sometime in August 2005, petitioner filed with the Office of the City Building Official an application for a
latter shall govern. building permit for the construction of an 11-storey building of the Angeles University Foundation
Medical Center in its main campus located at MacArthur Highway, Angeles City, Pampanga. Said office
issued a Building Permit Fee Assessment in the amount of P126,839.20. An Order of Payment was also
The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and
issued by the City Planning and Development Office, Zoning Administration Unit requiring petitioner to
fair play.55 It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute
pay the sum of P238,741.64 as Locational Clearance Fee.5
prior to a determination of unconstitutionality is an operative fact and may have consequences which
cannot always be ignored. The past cannot always be erased by a new judicial declaration.56
In separate letters dated November 15, 2005 addressed to respondents City Treasurer Juliet G. Quinsaat
and Acting City Building Official Donato N. Dizon, petitioner claimed that it is exempt from the payment
The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on
of the building permit and locational clearance fees, citing legal opinions rendered by the Department of
those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of
Justice (DOJ). Petitioner also reminded the respondents that they have previously issued building permits
unconstitutionality would put the accused in double jeopardy57 or would put in limbo the acts done by a
acknowledging such exemption from payment of building permit fees on the construction of petitioner’s
municipality in reliance upon a law creating it.58
4-storey AUF Information Technology Center building and the AUF Professional Schools building on July
27, 2000 and March 15, 2004, respectively.6
Here, We do not find anything iniquitous in ordering PPI to refund the amounts paid by Fertiphil under
LOI No. 1465. It unduly benefited from the levy. It was proven during the trial that the levies paid were
Respondent City Treasurer referred the matter to the Bureau of Local Government Finance (BLGF) of the
remitted and deposited to its bank account. Quite the reverse, it would be inequitable and unjust not to
Department of Finance, which in turn endorsed the query to the DOJ. Then Justice Secretary Raul M.
order a refund. To do so would unjustly enrich PPI at the expense of Fertiphil. Article 22 of the Civil Code
Gonzalez, in his letter-reply dated December 6, 2005, cited previous issuances of his office (Opinion No.
explicitly provides that "every person who, through an act of performance by another comes into
157, s. 1981 and Opinion No. 147, s. 1982) declaring petitioner to be exempt from the payment of
possession of something at the expense of the latter without just or legal ground shall return the same
building permit fees. Under the 1st Indorsement dated January 6, 2006, BLGF reiterated the aforesaid
to him." We cannot allow PPI to profit from an unconstitutional law. Justice and equity dictate that PPI
opinion of the DOJ stating further that "xxx the Department of Finance, thru this Bureau, has no
must refund the amounts paid by Fertiphil.
authority to review the resolution or the decision of the DOJ."7

WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated November 28, 2003 is
Petitioner wrote the respondents reiterating its request to reverse the disputed assessments and
AFFIRMED.
invoking the DOJ legal opinions which have been affirmed by Secretary Gonzalez. Despite petitioner’s
plea, however, respondents refused to issue the building permits for the construction of the AUF
SO ORDERED. Medical Center in the main campus and renovation of a school building located at Marisol Village.
Petitioner then appealed the matter to City Mayor Carmelo F. Lazatin but no written response was
G.R. No. 189999 June 27, 2012 received by petitioner.8

ANGELES UNIVERSITY FOUNDATION, Petitioner, Consequently, petitioner paid under protest9 the following:
vs.
CITY OF ANGELES, JULIET G. QUINSAAT, in her capacity as Treasurer of Angeles City and ENGR. Medical Center (new construction)
DONATO N. DIZON, in his capacity as Acting Angeles City Building Official, Respondents.

DECISION
Building Permit and Electrical Fee P 217,475.20
VILLARAMA, JR., J.: Locational Clearance Fee 283,741.64
Fire Code Fee 144,690.00
Total - P 645,906.84
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, which seeks to reverse and set aside the Decision1 dated July 28, 2009 and Resolution2 dated
October 12, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 90591. The CA reversed the
Decision3 dated September 21, 2007 of the Regional Trial Court of Angeles City, Branch 57 in Civil Case
School Building (renovation)
No. 12995 declaring petitioner exempt from the payment of building permit and other fees and ordering
respondents to refund the same with interest at the legal rate.

Building Permit and Electrical Fee P 37,857.20
Locational Clearance Fee 6,000.57
Fire Code Fee 5,967.74
Total - P 49,825.51
Petitioner likewise paid the following sums as required by the City Assessor’s Office:
Real Property Tax – Basic Fee
SEF
Locational Clearance Fee
By reason of the above payments, petitioner was issued the corresponding Building Permit, Wiring
Permit, Electrical Permit and Sanitary Building Permit. On June 9, 2006, petitioner formally requested the
respondents to refund the fees it paid under protest. Under letters dated June 15, 2006 and August 7,
2006, respondent City Treasurer denied the claim for refund.11
On August 31, 2006, petitioner filed a Complaint12 before the trial court seeking the refund of
P826,662.99 plus interest at the rate of 12% per annum, and also praying for the award of attorney’s
fees in the amount of P300,000.00 and litigation expenses.
In its Answer,13 respondents asserted that the claim of petitioner cannot be granted because its
structures are not among those mentioned in Sec. 209 of the National Building Code as exempted from
the building permit fee. Respondents argued that R.A. No. 6055 should be considered repealed on the
basis of Sec. 2104 of the National Building Code. Since the disputed assessments are regulatory in
nature, they are not taxes from which petitioner is exempt. As to the real property taxes imposed on
petitioner’s property located in Marisol Village, respondents pointed out that said premises will be used
as a school dormitory which cannot be considered as a use exclusively for educational activities.
Petitioner countered that the subject building permit are being collected on the basis of Art. 244 of
the Implementing Rules and Regulations of the Local Government Code, which impositions are really
taxes considering that they are provided under the chapter on "Local Government Taxation" in reference
to the "revenue raising power" of local government units (LGUs). Moreover, petitioner contended that,
as held in Philippine Airlines, Inc. v. Edu,14 fees may be regarded as taxes depending on the purpose of its
exaction. In any case, petitioner pointed out that the Local Government Code of 1991 provides in Sec.
193 that non-stock and non-profit educational institutions like petitioner retained the tax exemptions or
incentives which have been granted to them. Under Sec. 8 of R.A. No. 6055 and applicable jurisprudence
and DOJ rulings, petitioner is clearly exempt from the payment of building permit fees.15
On September 21, 2007, the trial court rendered judgment in favor of the petitioner and against the
respondents. The dispositive portion of the trial court’s decision16 reads:
WHEREFORE, premises considered, judgment is rendered as follows:
a. Plaintiff is exempt from the payment of building permit and other fees Ordering the
Defendants to refund the total amount of Eight Hundred Twenty Six Thousand Six Hundred
Sixty Two Pesos and 99/100 Centavos (P826,662.99) plus legal interest thereon at the rate of
twelve percent (12%) per annum commencing on the date of extra-judicial demand or June
14, 2006, until the aforesaid amount is fully paid.
P 86,531.10
b. Finding the Defendants liable for attorney’s fees in the amount of Seventy Thousand Pesos
43,274.54 (Php70,000.00), plus litigation expenses.
1,125.00 c. Ordering the Defendants to pay the costs of the suit.
Total – P130,930.6410
SO ORDERED.17
[GRAND TOTAL - P 826,662.99]
Respondents appealed to the CA which reversed the trial court, holding that while petitioner is a tax-free
entity, it is not exempt from the payment of regulatory fees. The CA noted that under R.A. No. 6055,
petitioner was granted exemption only from income tax derived from its educational activities and real
property used exclusively for educational purposes. Regardless of the repealing clause in the National
Building Code, the CA held that petitioner is still not exempt because a building permit cannot be
considered as the other "charges" mentioned in Sec. 8 of R.A. No. 6055 which refers to impositions in the
nature of tax, import duties, assessments and other collections for revenue purposes, following the
ejusdem generisrule. The CA further stated that petitioner has not shown that the fees collected were
excessive and more than the cost of surveillance, inspection and regulation. And while petitioner may be
exempt from the payment of real property tax, petitioner in this case merely alleged that "the subject
property is to be used actually, directly and exclusively for educational purposes," declaring merely that
such premises is intended to house the sports and other facilities of the university but by reason of the
occupancy of informal settlers on the area, it cannot yet utilize the same for its intended use. Thus, the
CA concluded that petitioner is not entitled to the refund of building permit and related fees, as well as
real property tax it paid under protest.
Petitioner filed a motion for reconsideration which was denied by the CA.
Hence, this petition raising the following grounds:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION OF SUBSTANCE IN
A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT
AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
NECESSITATING THE HONORABLE COURT’S EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING
THAT:
I. IN REVERSING THE TRIAL COURT’S DECISION DATED 21 SEPTEMBER 2007, THE COURT OF APPEALS
EFFECTIVELY WITHDREW THE PRIVILEGE OF EXEMPTION GRANTED TO NON-STOCK, NON-PROFIT
EDUCATIONAL FOUNDATIONS BY VIRTUE OF RA 6055 WHICH WITHDRAWAL IS BEYOND THE AUTHORITY
OF THE COURT OF APPEALS TO DO.
 A. INDEED, RA 6055 REMAINS VALID AND IS IN FULL FORCE AND EFFECT. HENCE, THE COURT
OF APPEALS ERRED WHEN IT RULED IN THE QUESTIONED DECISION THAT NON-STOCK, NON-
PROFIT EDUCATIONAL FOUNDATIONS ARE NOT EXEMPT.
B. THE COURT OF APPEALS’ APPLICATION OF THE PRINCIPLE OF EJUSDEM GENERIS IN RULING
IN THE QUESTIONED DECISION THAT THE TERM "OTHER CHARGES IMPOSED BY THE
GOVERNMENT" UNDER SECTION 8 OF RA 6055 DOES NOT INCLUDE BUILDING PERMIT AND
OTHER RELATED FEES AND/OR CHARGES IS BASED ON ITS ERRONEOUS AND UNWARRANTED
ASSUMPTION THAT THE TAXES, IMPORT DUTIES AND ASSESSMENTS AS PART OF THE
PRIVILEGE OF EXEMPTION GRANTED TO NON-STOCK, NON-PROFIT EDUCATIONAL
FOUNDATIONS ARE LIMITED TO COLLECTIONS FOR REVENUE PURPOSES.
C. EVEN ASSUMING THAT THE BUILDING PERMIT AND OTHER RELATED FEES AND/OR
CHARGES ARE NOT INCLUDED IN THE TERM "OTHER CHARGES IMPOSED BY THE
GOVERNMENT" UNDER SECTION 8 OF RA 6055, ITS IMPOSITION IS GENERALLY A TAX
MEASURE AND THEREFORE, STILL COVERED UNDER THE PRIVILEGE OF EXEMPTION.
II. THE COURT OF APPEALS’ DENIAL OF PETITIONER AUF’S EXEMPTION FROM REAL PROPERTY TAXES
CONTAINED IN ITS QUESTIONED DECISION AND QUESTIONED RESOLUTION IS CONTRARY TO APPLICABLE
LAW AND JURISPRUDENCE.18
Petitioner stresses that the tax exemption granted to educational stock corporations which have
converted into non-profit foundations was broadened to include any other charges imposed by the
Government as one of the incentives for such conversion. These incentives necessarily included
exemption from payment of building permit and related fees as otherwise there would have been no
incentives for educational foundations if the privilege were only limited to exemption from taxation,
which is already provided under the Constitution.
Petitioner further contends that this Court has consistently held in several cases that the primary
purpose of the exaction determines its nature. Thus, a charge of a fixed sum which bears no relation to
the cost of inspection and which is payable into the general revenue of the state is a tax rather than an
exercise of the police power. The standard set by law in the determination of the amount that may be
imposed as license fees is such that is commensurate with the cost of regulation, inspection and
licensing. But in this case, the amount representing the building permit and related fees and/or charges
is such an exorbitant amount as to warrant a valid imposition; such amount exceeds the probable cost of
regulation. Even with the alleged criteria submitted by the respondents (e.g., character of occupancy or
use of building/structure, cost of construction, floor area and height), and the construction by petitioner
of an 11-storey building, the costs of inspection will not amount to P645,906.84, presumably for the
salary of inspectors or employees, the expenses of transportation for inspection and the preparation and
reproduction of documents. Petitioner thus concludes that the disputed fees are substantially and
mainly for purposes of revenue rather than regulation, so that even these fees cannot be deemed
"charges" mentioned in Sec. 8 of R.A. No. 6055, they should properly be treated as tax from which
petitioner is exempt.
In their Comment, respondents maintain that petitioner is not exempt from the payment of building
permit and related fees since the only exemptions provided in the National Building Code are public
buildings and traditional indigenous family dwellings. Inclusio unius est exclusio alterius. Because the law
did not include petitioner’s buildings from those structures exempt from the payment of building permit
fee, it is therefore subject to the regulatory fees imposed under the National Building Code.
Respondents assert that the CA correctly distinguished a building permit fee from those "other charges"
mentioned in Sec. 8 of R.A. No. 6055. As stated by petitioner itself, charges refer to pecuniary liability, as
rents, and fees against persons or property. Respondents point out that a building permit is classified
under the term "fee." A fee is generally imposed to cover the cost of regulation as activity or privilege
and is essentially derived from the exercise of police power; on the other hand, impositions for services
rendered by the local government units or for conveniences furnished, are referred to as "service
charges".
Respondents also disagreed with petitioner’s contention that the fees imposed and collected are
exorbitant and exceeded the probable expenses of regulation. These fees are based on computations
and assessments made by the responsible officials of the City Engineer’s Office in accordance with the
Schedule of Fees and criteria provided in the National Building Code. The bases of assessment cited by
petitioner (e.g. salary of employees, expenses of transportation and preparation and reproduction of
documents) refer to charges and fees on business and occupation under Sec. 147 of the Local
Government Code, which do not apply to building permit fees. The parameters set by the National
Building Code can be considered as complying with the reasonable cost of regulation in the assessment
and collection of building permit fees. Respondents likewise contend that the presumption of regularity
in the performance of official duty applies in this case. Petitioner should have presented evidence to
prove its allegations that the amounts collected are exorbitant or unreasonable.
For resolution are the following issues: (1) whether petitioner is exempt from the payment of building
permit and related fees imposed under the National Building Code; and (2) whether the parcel of land
owned by petitioner which has been assessed for real property tax is likewise exempt.
R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which converted to non-
stock, non-profit educational foundations. Section 8 of said law provides:
SECTION 8. The Foundation shall be exempt from the payment of all taxes, import duties, assessments,
and other charges imposed by the Government onall income derived from or property, real or personal,
used exclusively for the educational activities of the Foundation.(Emphasis supplied.)
On February 19, 1977, Presidential Decree (P.D.) No. 1096 was issued adopting the National Building
Code of the Philippines. The said Code requires every person, firm or corporation, including any agency
or instrumentality of the government to obtain a building permit for any construction, alteration or
repair of any building or structure.19 Building permit refers to "a document issued by the Building Official
x x x to an owner/applicant to proceed with the construction, installation, addition, alteration,
renovation, conversion, repair, moving, demolition or other work activity of a specific
project/building/structure or portions thereof after the accompanying principal plans, specifications and
other pertinent documents with the duly notarized application are found satisfactory and substantially
conforming with the National Building Code of the Philippines x x x and its Implementing Rules and
Regulations (IRR)."20 Building permit fees refers to the basic permit fee and other charges imposed under
the National Building Code.
Exempted from the payment of building permit fees are: (1) public buildings and (2) traditional
indigenous family dwellings.21 Not being expressly included in the enumeration of structures to which the
building permit fees do not apply, petitioner’s claim for exemption rests solely on its interpretation of
the term "other charges imposed by the National Government" in the tax exemption clause of R.A. No.
6055.
A "charge" is broadly defined as the "price of, or rate for, something," while the word "fee" pertains to a
"charge fixed by law for services of public officers or for use of a privilege under control of
government."22 As used in the Local Government Code of 1991 (R.A. No. 7160), charges refers to
pecuniary liability, as rents or fees against persons or property, while fee means a charge fixed by law or
ordinance for the regulation or inspection of a business or activity.23
That "charges" in its ordinary meaning appears to be a general term which could cover a specific "fee"
does not support petitioner’s position that building permit fees are among those "other charges" from
which it was expressly exempted. Note that the "other charges" mentioned in Sec. 8 of R.A. No. 6055 is
qualified by the words "imposed by the Government on all x x x property used exclusively for the
educational activities of the foundation." Building permit fees are not impositions on property but on the
activity subject of government regulation. While it may be argued that the fees relate to particular
properties, i.e., buildings and structures, they are actually imposed on certain activities the owner may
conduct either to build such structures or to repair, alter, renovate or demolish the same. This is evident
from the following provisions of the National Building Code:
A charge of a fixed sum which bears no relation at all to the cost of inspection and regulation may be
held to be a tax rather than an exercise of the police power.26 In this case, the Secretary of Public Works
and Highways who is mandated to prescribe and fix the amount of fees and other charges that the
Building Official shall collect in connection with the performance of regulatory functions,27 has
promulgated and issued the Implementing Rules and Regulations28 which provide for the bases of
assessment of such fees, as follows:
1. Character of occupancy or use of building

2. Cost of construction " 10,000/sq.m (A,B,C,D,E,G,H,I), 8,000 (F), 6,000 (J)

Section 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare,
consistent with theprinciples of sound environmental management and control; and tothis end, make it
the purpose of this Code to provide for allbuildings and structures, a framework of minimum standards
and requirements to regulate and control their location, site, design quality of materials, construction,
use, occupancy, and maintenance.
Section 103. Scope and Application
(a) The provisions of this Code shall apply to the design,location, sitting, construction, alteration,
repair,conversion, use, occupancy, maintenance, moving, demolitionof, and addition to public and
private buildings andstructures, except traditional indigenous family dwellingsas defined herein.
xxxx
Section 301. Building Permits
3. Floor area
4. Height
Petitioner failed to demonstrate that the above bases of assessment were arbitrarily determined or
unrelated to the activity being regulated. Neither has petitioner adduced evidence to show that the rates
of building permit fees imposed and collected by the respondents were unreasonable or in excess of the
cost of regulation and inspection.
In Chevron Philippines, Inc. v. Bases Conversion Development Authority,29 this Court explained:
In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of
the implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even
though the measure results in some form of regulation. On the other hand, if the purpose is primarily to
regulate, then it is deemed a regulation and an exercise of the police power of the state, even though
incidentally, revenue is generated. Thus, in Gerochi v. Department of Energy, the Court stated:

No person, firm or corporation, including any agency orinstrumentality of the government shall erect,
"The conservative and pivotal distinction between these two (2) powers rests in the purpose for which
construct, alter, repair, move, convert or demolish any building or structure or causethe same to be
the charge is made. If generation of revenue is the primary purpose and regulation is merely incidental,
done without first obtaining a building permittherefor from the Building Official assigned in the place
the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally
where thesubject building is located or the building work is to be done. (Italics supplied.)
raised does not make the imposition a tax."30 (Emphasis supplied.)

That a building permit fee is a regulatory imposition is highlighted by the fact that in processing an
Concededly, in the case of building permit fees imposed by the National Government under the National
application for a building permit, the Building Official shall see to it that the applicant satisfies and
Building Code, revenue is incidentally generated for the benefit of local government units. Thus:
conforms with approved standard requirements on zoning and land use, lines and grades, structural
design, sanitary and sewerage, environmental health, electrical and mechanical safety as well as with
other rules and regulations implementing the National Building Code.24 Thus, ancillary permits such as Section 208. Fees
electrical permit, sanitary permit and zoning clearance must also be secured and the corresponding fees
paid before a building permit may be issued. And as can be gleaned from the implementing rules and Every Building Official shall keep a permanent record and accurate account of all fees and other charges
regulations of the National Building Code, clearances from various government authorities exercising and fixed and authorized by the Secretary to be collected and received under this Code.
enforcing regulatory functions affecting buildings/structures, like local government units, may be further
required before a building permit may be issued.25
Subject to existing budgetary, accounting and auditing rules and regulations, the Building Official is
hereby authorized to retain not more than twenty percent of his collection for the operating expenses of
Since building permit fees are not charges on property, they are not impositions from which petitioner is his office.
exempt.

The remaining eighty percent shall be deposited with the provincial, city or municipal treasurer and shall
As to petitioner’s argument that the building permit fees collected by respondents are in reality taxes accrue to the General Fund of the province, city or municipality concerned.
because the primary purpose is to raise revenues for the local government unit, the same does not hold
water.
Petitioner’s reliance on Sec. 193 of the Local Government Code of 1991 is likewise misplaced. Said
provision states:
SECTION 193. Withdrawal of Tax Exemption Privileges. -- Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code. (Emphasis supplied.)
Considering that exemption from payment of regulatory fees was not among those "incentives" granted
to petitioner under R.A. No. 6055, there is no such incentive that is retained under the Local Government
Code of 1991. Consequently, no reversible error was committed by the CA in ruling that petitioner is
liable to pay the subject building permit and related fees.
Now, on petitioner’s claim that it is exempted from the payment of real property tax assessed against its
real property presently occupied by informal settlers.
Section 28(3), Article VI of the 1987 Constitution provides:
"Exclusive" is defined as possessed and enjoyed to the exclusion of others; debarred from participation
or enjoyment; and "exclusively" is defined, "in a manner to exclude; as enjoying a privilege exclusively."
If real property is used for one or more commercial purposes, it is not exclusively used for the exempted
purposes but is subject to taxation. The words "dominant use" or "principal use" cannot be substituted
for the words "used exclusively" without doing violence to the Constitutions and the law. Solely is
synonymous with exclusively.1âwphi1
What is meant by actual, direct and exclusive use of the property for charitable purposes is the direct
and immediate and actual application of the property itself to the purposes for which the charitable
institution is organized. It is not the use of the income from the real property that is determinative of
whether the property is used for tax-exempt purposes.32 (Emphasis and underscoring supplied.)
Petitioner failed to discharge its burden to prove that its real property is actually, directly and exclusively
used for educational purposes. While there is no allegation or proof that petitioner leases the land to its
present occupants, still there is no compliance with the constitutional and statutory requirement that
said real property is actually, directly and exclusively used for educational purposes. The respondents
correctly assessed the land for real property taxes for the taxable period during which the land is not
being devoted solely to petitioner’s educational activities. Accordingly, the CA did not err in ruling that
petitioner is likewise not entitled to a refund of the real property tax it paid under protest.

xxxx WHEREFORE, the petition is DENIED. The Decision dated July 28, 2009 and Resolution dated October 12,
2009 of the Court of Appeals in CA-G.R. CV No. 90591 are AFFIRMED.
(3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-
profit cemeteries, and all lands, buildings, and improvements, actually, directly and exclusively used for No pronouncement as to costs.
religious, charitable or educational purposes shall be exempt from taxation.
SO ORDERED.
x x x x (Emphasis supplied.)
G.R. No. 166408 October 6, 2008
Section 234(b) of the Local Government Code of 1991 implements the foregoing constitutional provision
by declaring that --
QUEZON CITY and THE CITY TREASURER OF QUEZON CITY, petitioners,
vs.
SECTION 234. Exemptions from Real Property Tax.– The following are exempted from payment of the ABS-CBN BROADCASTING CORPORATION, respondent.
real property tax:
DECISION
xxxx
REYES, R.T., J.:
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit
or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used
CLAIMS for tax exemption must be based on language in law too plain to be mistaken. It cannot be made
for religious, charitable or educational purposes;
out of inference or implication.

x x x x (Emphasis supplied.)
In Lung Center of the Philippines v. Quezon City,31 this Court held that only portions of the hospital
actually, directly and exclusively used for charitable purposes are exempt from real property taxes, while
those portions leased to private entities and individuals are not exempt from such taxes. We explained
the condition for the tax exemption privilege of charitable and educational institutions, as follows:
The principle is relevant in this petition for review on certiorari of the Decision1 of the Court of Appeals
(CA) and that2 of the Regional Trial Court (RTC) ordering the refund and declaring invalid the imposition
and collection of local franchise tax by the City Treasurer of Quezon City on ABS-CBN Broadcasting
Corporation (ABS-CBN).
The Facts

Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to be entitled to the exemption,
Petitioner City Government of Quezon City is a local government unit duly organized and existing by
the petitioner is burdened to prove, by clear and unequivocal proof, that (a) it is a charitable institution;
virtue of Republic Act (R.A.) No. 537, otherwise known as the Revised Charter of Quezon City. Petitioner
and (b) its real properties are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable purposes.
City Treasurer of Quezon City is primarily responsible for the imposition and collection of taxes within Three Thousand Five Hundred Eighty-Two and 29/100 centavos (P14,233,582.29) broken down as
the territorial jurisdiction of Quezon City. follows:

Under Section 31, Article 13 of the Quezon City Revenue Code of 1993,3 a franchise tax was imposed on O.R. No. Date Amount Paid
businesses operating within its jurisdiction. The provision states:
2536134 1-22-96 P 2,880,975.65
8354906 1-23-97 8,621,470.83
Section 31. Imposition of Tax. - Any provision of special laws or grant of tax exemption to the
contrary notwithstanding, any person, corporation, partnership or association enjoying a 0048756 1-23-97 2,731,135.81
franchise whether issued by the national government or local government and, doing Total P14,233,582.296
business in Quezon City, shall pay a franchise tax at the rate of ten percent (10%) of one
percent (1%) for 1993-1994, twenty percent (20%) of one percent (1%) for 1995, and thirty
percent (30%) of one percent (1%) for 1996 and the succeeding years thereafter, of gross
In a letter dated March 3, 1997 to the Quezon City Treasurer, ABS-CBN reiterated its claim for refund of
receipts and sales derived from the operation of the business in Quezon City during the
local franchise taxes paid.
preceding calendar year.

On June 25, 1997, for failure to obtain any response from the Quezon City Treasurer, ABS-CBN filed a
On May 3, 1995, ABS-CBN was granted the franchise to install and operate radio and television
complaint before the RTC in Quezon City seeking the declaration of nullity of the imposition of local
broadcasting stations in the Philippines under R.A. No. 7966.4 Section 8 of R.A. No. 7966 provides the tax
franchise tax by the City Government of Quezon City for being unconstitutional. It likewise prayed for the
liabilities of ABS-CBN which reads:
refund of local franchise tax in the amount of Nineteen Million Nine Hundred Forty-Four Thousand Six
Hundred Seventy-Two and 66/100 centavos (P19,944,672.66) broken down as follows:
Section 8. Tax Provisions. - The grantee, its successors or assigns, shall be liable to pay the
same taxes on their real estate, buildings and personal property, exclusive of this franchise, as
other persons or corporations are now hereafter may be required by law to pay. In addition O.R. No. Date Amount Paid
thereto, the grantee, its successors or assigns, shall pay a franchise tax equivalent to three 2464274 7-18-95 P 1,489,977.28
percent (3%) of all gross receipts of the radio/television business transacted under this 2484651 10-20-95 1,489,977.28
franchise by the grantee, its successors or assigns, and the said percentage tax shall be in
2536134 1-22-96 2,880,975.65
lieu of all taxes on this franchise or earnings thereof; Provided that the grantee, its
successors or assigns shall continue to be liable for income taxes under Title II of the National 8354906 1-23-97 8,621,470.83
Internal Revenue Code pursuant to Section 2 of Executive No. 72 unless the latter enactment 0048756 1-23-97 2,731,135.81
is amended or repealed, in which case the amendment or repeal shall be applicable thereto.
0067352 4-03-97 2,731,135.81
(Emphasis added)
Total P19,944,672.667

ABS-CBN had been paying local franchise tax imposed by Quezon City. However, in view of the above
provision in R.A. No. 9766 that it "shall pay a franchise tax x x x in lieu of all taxes," the corporation
developed the opinion that it is not liable to pay the local franchise tax imposed by Quezon City. Quezon City argued that the "in lieu of all taxes" provision in R.A. No. 9766 could not have been intended
Consequently, ABS-CBN paid under protest the local franchise tax imposed by Quezon City on the dates, to prevail over a constitutional mandate which ensures the viability and self-sufficiency of local
in the amounts and under the official receipts as follows: government units. Further, that taxes collectible by and payable to the local government were distinct
from taxes collectible by and payable to the national government, considering that the Constitution
specifically declared that the taxes imposed by local government units "shall accrue exclusively to the
O.R. No. Date Amount Paid local governments." Lastly, the City contended that the exemption claimed by ABS-CBN under R.A. No.
2464274 7/18/1995 P 1,489,977.28 7966 was withdrawn by Congress when the Local Government Code (LGC) was passed.8 Section 193 of
2484651 10/20/1995 1,489,977.28 the LGC provides:

2536134 1/22/1996 2,880,975.65

Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this
8354906 1/23/1997 8,621,470.83 Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether
48756 1/23/1997 2,731,135.81 natural or juridical, including government-owned or -controlled corporations, except local
67352 4/3/1997 2,731,135.81 water districts, cooperatives duly registered under R.A. 6938, non-stock and non-profit
hospitals and educational institutions, are hereby withdrawn upon the effectivity of this
Total P19,944,672.665
Code. (Emphasis added)

On August 13, 1997, ABS-CBN filed a supplemental complaint adding to its claim for refund the local
On January 29, 1997, ABS-CBN filed a written claim for refund for local franchise tax paid to Quezon City
franchise tax paid for the third quarter of 1997 in the amount of Two Million Seven Hundred Thirty-One
for 1996 and for the first quarter of 1997 in the total amount of Fourteen Million Two Hundred Thirty-
Thousand One Hundred Thirty-Five and 81/100 centavos (P2,731,135.81) and of other amounts of local
franchise tax as may have been and will be paid by ABS-CBN until the resolution of the case.
Quezon City insisted that the claim for refund must fail because of the absence of a prior written claim
for it.
Two and 29/100 centavos (P14,233,582.29) was the only amount stated in the letter to the Quezon City
Treasurer claiming refund, ABS-CBN should nonetheless be also refunded of all payments made after the
effectivity of R.A. No. 7966. The inaction of the City Treasurer on the claim for refund of ABS-CBN legally
rendered any further claims for refund on the part of plaintiff absurd and futile in relation to the
succeeding payments.

The City of Quezon and its Treasurer filed a motion for reconsideration which was subsequently denied
RTC and CA Dispositions
by the RTC. Thus, appeal was made to the CA. On September 1, 2004, the CA dismissed the petition of
Quezon City and its Treasurer. According to the appellate court, the issues raised were purely legal
On January 20, 1999, the RTC rendered judgment declaring as invalid the imposition on and collection questions cognizable only by the Supreme Court. The CA ratiocinated:
from ABS-CBN of local franchise tax paid pursuant to Quezon City Ordinance No. SP-91, S-93, after the
enactment of R.A. No. 7966, and ordered the refund of all payments made. The dispositive portion of the
For another, the issues which appellants submit for this Court's consideration are more of
RTC decision reads:
legal query necessitating a legal opinion rather than a call for adjudication on the matter in
dispute.
WHEREFORE, judgment is hereby rendered declaring the imposition on and collection from
plaintiff ABS-CBN BROADCASTING CORPORATION of local franchise taxes pursuant to Quezon
xxxx
City Ordinance No. SP-91, S-93 after the enactment of Republic Act No. 7966 to be invalid,
and, accordingly, the Court hereby orders the defendants to refund all its payments made
after the effectivity of its legislative franchise on May 3, 1995. The first issue has earlier been categorized in Province of Misamis Oriental v. Cagayan Electric
and Power Co., Inc. to be a legal one. There is no more argument to this.
SO ORDERED.9
The next issue although it may need the reexamination of the pertinent provisions of the local
franchise and the legislative franchise given to appellee, also needs no evaluation of facts. It
In its decision, the RTC ruled that the "in lieu of all taxes" provision contained in Section 8 of R.A. No.
suffices that there may be a conflict which may need to be reconciled, without regard to the
7966 absolutely excused ABS-CBN from the payment of local franchise tax imposed under Quezon City
factual backdrop of the case.
Ordinance No. SP-91, S-93. The intent of the legislature to excuse ABS-CBN from payment of local
franchise tax could be discerned from the usage of the "in lieu of all taxes" provision and from the
absence of any qualification except income taxes. Had Congress intended to exclude taxes imposed from The last issue deals with a legal question, because whether or not there is a prior written
the exemption, it would have expressly mentioned so in a fashion similar to the proviso on income taxes. claim for refund is no longer in dispute. Rather, the question revolves on whether the said
requirement may be dispensed with, which obviously is not a factual issue.13
The RTC also based its ruling on the 1990 case of Province of Misamis Oriental v. Cagayan Electric Power
and Light Company, Inc. (CEPALCO).10 In said case, the exemption of respondent electric company On September 23, 2004, petitioner moved for reconsideration. The motion was, however, denied by the
CEPALCO from payment of provincial franchise tax was upheld on the ground that the franchise of CA in its Resolution dated December 16, 2004. Hence, the present recourse.
CEPALCO was a special law, while the Local Tax Code, on which the provincial ordinance imposing the
local franchise tax was based, was a general law. Further, it was held that whenever there is a conflict
Issues
between two laws, one special and particular and the other general, the special law must be taken as
intended to constitute an exception to the general act.
Petitioner submits the following issues for resolution:
The RTC noted that the legislative franchise of ABS-CBN was granted years after the effectivity of the
LGC. Thus, it was unavoidable to conclude that Section 8 of R.A. No. 7966 was an exception since the I.
legislature ought to be presumed to have enacted it with the knowledge and awareness of the existence
and prior enactment of Section 13711 of the LGC. Whether or not the phrase "in lieu of all taxes" indicated in the franchise of the respondent
appellee (Section 8 of RA 7966) serves to exempt it from the payment of the local franchise
In addition, the RTC, again citing the case of Province of Misamis Oriental v. Cagayan Electric Power and tax imposed by the petitioners-appellants.
Light Company, Inc. (CEPALCO),12 ruled that the imposition of the local franchise tax was an impairment
of ABS-CBN's contract with the government. The imposition of another franchise on the corporation by II.
the local authority would constitute an impairment of the former's charter, which is in the nature of a
private contract between it and the government.
Whether or not the petitioners-appellants raised factual and legal issues before the Honorable Court of
Appeals.14
As to the amounts to be refunded, the RTC rejected Quezon City's position that a written claim for
refund pursuant to Section 196 of the LGC was a condition sine qua non before filing the case in court.
The RTC ruled that although Fourteen Million Two Hundred Thirty-Three Thousand Five Hundred Eighty- Our Ruling
The second issue, being procedural in nature, shall be dealt with immediately. But there are other
resultant issues linked to the first.
I. The dismissal by the CA of petitioners' appeal is in order because it raised purely legal issues,
namely:
1) Whether appellee, whose franchise expressly provides that its payment of franchise tax
shall be in lieu of all taxes in this franchise or earnings thereof, is absolutely excused from
paying the franchise tax imposed by appellants;
2) Whether appellants' imposition of local franchise tax is a violation of appellee's legislative
franchise; and
3) Whether one can do away with the requirement on prior written claim for refund.15
Obviously, these are purely legal questions, cognizable by this Court, to the exclusion of all other courts.
There is a question of law when the doubt or difference arises as to what the law is pertaining to a
certain state of facts.16
Section 2, Rule 50 of the Rules of Court provides that an appeal taken to the CA under Rule 41 raising
only questions of law is erroneous and shall be dismissed, issues of pure law not being within its
jurisdiction.17 Consequently, the dismissal by the CA of petitioners' appeal was in order.
In the recent case of Sevilleno v. Carilo,18 this Court ruled that the dismissal of the appeal of petitioner
was valid, considering the issues raised there were pure questions of law, viz.:
Petitioners interposed an appeal to the Court of Appeals but it was dismissed for being the
wrong mode of appeal. The appellate court held that since the issue being raised is whether
the RTC has jurisdiction over the subject matter of the case, which is a question of law, the
appeal should have been elevated to the Supreme Court under Rule 45 of the 1997 Rules of
Civil Procedure, as amended. Section 2, Rule 41 of the same Rules which governs appeals
from judgments and final orders of the RTC to the Court of Appeals, provides:
SEC. 2. Modes of appeal. -
(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing
a notice of appeal with the court which rendered the judgment or final order
appealed from and serving a copy thereof upon the adverse party. No record on
appeal shall be required except in special proceedings and other cases of multiple
or separate appeals where the law or these Rules so require. In such cases, the
record on appeal shall be filed and served in like manner.
(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition
for review in accordance with Rule 42.
(c) Appeal by certiorari. - In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45.
In Macawili Gold Mining and Development Co., Inc. v. Court of Appeals, we summarized the
rule on appeals as follows:
(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal
may be made to the Court of Appeals by mere notice of appeal where the
appellant raises questions of fact or mixed questions of fact and law;
(2) In all cases decided by the RTC in the exercise of its original jurisdiction where
the appellant raises only questions of law, the appeal must be taken to the
Supreme Court on a petition for review on certiorari under Rule 45;
(3) All appeals from judgments rendered by the RTC in the exercise of its appellate
jurisdiction, regardless of whether the appellant raises questions of fact, questions
of law, or mixed questions of fact and law, shall be brought to the Court of Appeals
by filing a petition for review under Rule 42.
It is not disputed that the issue brought by petitioners to the Court of Appeals involves the
jurisdiction of the RTC over the subject matter of the case. We have a long standing rule that
a court's jurisdiction over the subject matter of an action is conferred only by the Constitution
or by statute. Otherwise put, jurisdiction of a court over the subject matter of the action is a
matter of law. Consequently, issues which deal with the jurisdiction of a court over the
subject matter of a case are pure questions of law. As petitioners' appeal solely involves a
question of law, they should have directly taken their appeal to this Court by filing a petition
for review on certiorari under Rule 45, not an ordinary appeal with the Court of Appeals under
Rule 41. Clearly, the appellate court did not err in holding that petitioners pursued the wrong
mode of appeal.
Indeed, the Court of Appeals did not err in dismissing petitioners' appeal. Section 2, Rule 50 of
the same Rules provides that an appeal from the RTC to the Court of Appeals raising only
questions of law shall be dismissed; and that an appeal erroneously taken to the Court of
Appeals shall be dismissed outright, x x x.19 (Emphasis added)
However, to serve the demands of substantial justice and equity, the Court opts to relax procedural rules
and rule upon on the merits of the case. In Ong Lim Sing Jr. v. FEB Leasing and Finance Corporation,20 this
Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the
parties' right to due process. In numerous cases, this Court has allowed liberal construction of
the rules when to do so would serve the demands of substantial justice and equity. In Aguam
v. Court of Appeals, the Court explained:
"The court has the discretion to dismiss or not to dismiss an appellant's appeal. It
is a power conferred on the court, not a duty. The "discretion must be a sound
one, to be exercised in accordance with the tenets of justice and fair play, having
in mind the circumstances obtaining in each case." Technicalities, however, must
be avoided. The law abhors technicalities that impede the cause of justice. The
court's primary duty is to render or dispense justice. "A litigation is not a game of
technicalities." "Lawsuits unlike duels are not to be won by a rapier's thrust.
Technicality, when it deserts its proper office as an aid to justice and becomes its
great hindrance and chief enemy, deserves scant consideration from courts."
 Litigations must be decided on their merits and not on technicality. Every party
litigant must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the unacceptable plea of technicalities. Thus,
dismissal of appeals purely on technical grounds is frowned upon where the policy
of the court is to encourage hearings of appeals on their merits and the rules of
procedure ought not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure, not override substantial justice. It is a far
better and more prudent course of action for the court to excuse a technical lapse
and afford the parties a review of the case on appeal to attain the ends of justice
rather than dispose of the case on technicality and cause a grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice.21
II. The "in lieu of all taxes" provision in its franchise does not exempt ABS-CBN from payment of local
franchise tax.
A. The present controversy essentially boils down to a dispute between the inherent taxing power of
Congress and the delegated authority to tax of local governments under the 1987 Constitution and
effected under the LGC of 1991.
The power of the local government of Quezon City to impose franchise tax is based on Section 151 in
relation to Section 137 of the LGC, to wit:
Section 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other
special law, the province may impose a tax on businesses enjoying a franchise, at the rate not
exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or realized within its territorial
jurisdiction. x x x
xxxx
Section 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city may
levy the taxes, fees and charges which the province or municipality may impose: Provided,
however, That the taxes, fees and charges levied and collected by highly urbanized and
component cities shall accrue to them and distributed in accordance with the provisions of
this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the
province or municipality by not more than fifty percent (50%) except the rates of professional
and amusement taxes. (Emphasis supplied)
Such taxing power by the local government, however, is limited in the sense that Congress can enact
legislation granting exemptions. This principle was upheld in City Government of Quezon City, et al. v.
Bayan Telecommunications, Inc.22 Said this Court:
This thus raises the question of whether or not the City's Revenue Code pursuant to which
the city treasurer of Quezon City levied real property taxes against Bayantel's real properties
located within the City effectively withdrew the tax exemption enjoyed by Bayantel under its
franchise, as amended.
Bayantel answers the poser in the negative arguing that once again it is only "liable to pay the
same taxes, as any other persons or corporations on all its real or personal properties,
exclusive of its franchise."
Bayantel's posture is well-taken. While the system of local government taxation has changed
with the onset of the 1987 Constitution, the power of local government units to tax is still
limited. As we explained in Mactan Cebu International Airport Authority:
"The power to tax is primarily vested in the Congress; however, in our jurisdiction,
it may be exercised by local legislative bodies, no longer merely be virtue of a valid
delegation as before, but pursuant to direct authority conferred by Section 5,
Article X of the Constitution. Under the latter, the exercise of the power may be
subject to such guidelines and limitations as the Congress may provide which,
however, must be consistent with the basic policy of local autonomy. x x x"
Clearly then, while a new slant on the subject of local taxation now prevails in the sense that
the former doctrine of local government units' delegated power to tax had been effectively
modified with Article X, Section 5 of the 1987 Constitution now in place, the basic doctrine on
local taxation remains essentially the same. For as the Court stressed in Mactan, "the power
to tax is [still] primarily vested in the Congress."
This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner
of the 1986 Constitutional Commission which crafted the 1987 Constitution, thus:
"What is the effect of Section 5 on the fiscal position of municipal corporations?
Section 5 does not change the doctrine that municipal corporations do not possess
inherent powers of taxation. What it does is to confer municipal corporations a
general power to levy taxes and otherwise create sources of revenue. They no
longer have to wait for a statutory grant of these powers. The power of the
legislative authority relative to the fiscal powers of local governments has been
reduced to the authority to impose limitations on municipal powers. Moreover,
these limitations must be "consistent with the basic policy of local autonomy." The
important legal effect of Section 5 is thus to reverse the principle that doubts are
resolved against municipal corporations. Henceforth, in interpreting statutory
provisions on municipal fiscal powers, doubts will be resolved in favor of municipal
corporations. It is understood, however, that taxes imposed by local government
must be for a public purpose, uniform within a locality, must not be confiscatory,
and must be within the jurisdiction of the local unit to pass."
In net effect, the controversy presently before the Court involves, at bottom, a clash between
the inherent taxing power of the legislature, which necessarily includes the power to exempt,
and the local government's delegated power to tax under the aegis of the 1987 Constitution.
Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real
properties within the city's territory and removed exemptions theretofore "previously
granted to, or presently enjoyed by all persons, whether natural or juridical [x x x]" there can
really be no dispute that the power of the Quezon City Government to tax is limited by Section
232 of the LGC which expressly provides that "a province or city or municipality within the
Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land,
building, machinery, and other improvement not hereinafter specifically exempted." Under
this law, the Legislature highlighted its power to thereafter exempt certain realties from the
taxing power of local government units. An interpretation denying Congress such power to
 exempt would reduce the phrase "not hereinafter specifically exempted" as a pure jargon,
without meaning whatsoever. Needless to state, such absurd situation is unacceptable.
For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this
Court has upheld the power of Congress to grant exemptions over the power of local
government units to impose taxes. There, the Court wrote:
"Indeed, the grant of taxing powers to local government units under the
Constitution and the LGC does not affect the power of Congress to grant
exemptions to certain persons, pursuant to a declared national policy. The legal
effect of the constitutional grant to local governments simply means that in
interpreting statutory provisions on municipal taxing powers, doubts must be
resolved in favor of municipal corporations."23 (Emphasis supplied)
In the case under review, the Philippine Congress enacted R.A. No. 7966 on March 30, 1995, subsequent
to the effectivity of the LGC on January 1, 1992. Under it, ABS-CBN was granted the franchise to install
and operate radio and television broadcasting stations in the Philippines. Likewise, Section 8 imposed on
ABS-CBN the duty of paying 3% franchise tax. It bears stressing, however, that payment of the
percentage franchise tax shall be "in lieu of all taxes" on the said franchise.24
Congress has the inherent power to tax, which includes the power to grant tax exemptions. On the other
hand, the power of Quezon City to tax is prescribed by Section 151 in relation to Section 137 of the LGC
which expressly provides that notwithstanding any exemption granted by any law or other special law,
the City may impose a franchise tax. It must be noted that Section 137 of the LGC does not prohibit grant
of future exemptions. As earlier discussed, this Court in City Government of Quezon City v. Bayan
Telecommunications, Inc.25 sustained the power of Congress to grant tax exemptions over and above the
power of the local government's delegated power to tax.
B. The more pertinent issue now to consider is whether or not by passing R.A. No. 7966, which contains
the "in lieu of all taxes" provision, Congress intended to exempt ABS-CBN from local franchise tax.
Petitioners argue that the "in lieu of all taxes" provision in ABS-CBN's franchise does not expressly
exempt it from payment of local franchise tax. They contend that a tax exemption cannot be created by
mere implication and that one who claims tax exemptions must be able to justify his claim by clearest
grant of organic law or statute.
Taxes are what civilized people pay for civilized society. They are the lifeblood of the nation. Thus,
statutes granting tax exemptions are construed stricissimi juris against the taxpayer and liberally in favor
of the taxing authority. A claim of tax exemption must be clearly shown and based on language in law
too plain to be mistaken. Otherwise stated, taxation is the rule, exemption is the exception.26 The burden
of proof rests upon the party claiming the exemption to prove that it is in fact covered by the exemption
so claimed.27
The basis for the rule on strict construction to statutory provisions granting tax exemptions or
deductions is to minimize differential treatment and foster impartiality, fairness and equality of
treatment among taxpayers.28 He who claims an exemption from his share of common burden must
justify his claim that the legislature intended to exempt him by unmistakable terms. For exemptions
from taxation are not favored in law, nor are they presumed. They must be expressed in the clearest and
most unambiguous language and not left to mere implications. It has been held that "exemptions are
never presumed, the burden is on the claimant to establish clearly his right to exemption and cannot be
made out of inference or implications but must be laid beyond reasonable doubt. In other words, since
taxation is the rule and exemption the exception, the intention to make an exemption ought to be
expressed in clear and unambiguous terms.29
Section 8 of R.A. No. 7966 imposes on ABS-CBN a franchise tax equivalent to three (3) percent of all gross
receipts of the radio/television business transacted under the franchise and the franchise tax shall be "in
lieu of all taxes" on the franchise or earnings thereof.
The "in lieu of all taxes" provision in the franchise of ABS-CBN does not expressly provide what kind of
taxes ABS-CBN is exempted from. It is not clear whether the exemption would include both local,
whether municipal, city or provincial, and national tax. What is clear is that ABS-CBN shall be liable to pay
three (3) percent franchise tax and income taxes under Title II of the NIRC. But whether the "in lieu of all
taxes provision" would include exemption from local tax is not unequivocal.
As adverted to earlier, the right to exemption from local franchise tax must be clearly established and
cannot be made out of inference or implications but must be laid beyond reasonable doubt. Verily, the
uncertainty in the "in lieu of all taxes" provision should be construed against ABS-CBN. ABS-CBN has the
burden to prove that it is in fact covered by the exemption so claimed. ABS-CBN miserably failed in this
regard.
ABS-CBN cites the cases Carcar Electric & Ice Plant v. Collector of Internal Revenue,30 Manila Railroad v.
Rafferty,31 Philippine Railway Co. v. Collector of Internal Revenue,32 and Visayan Electric Co. v. David33 to
support its claim that that the "in lieu of all taxes" clause includes exemption from all taxes.
However, a review of the foregoing case law reveals that the grantees' respective franchises expressly
exempt them from municipal and provincial taxes. Said the Court in Manila Railroad v. Rafferty:34
On the 7th day of July 1906, by an Act of the Philippine Legislature, a special charter was
granted to the Manila Railroad Company. Subsection 12 of Section 1 of said Act (No. 1510)
provides that:
"In consideration of the premises and of the granting of this concession or
franchise, there shall be paid by the grantee to the Philippine Government,
annually, for the period of thirty (30) years from the date hereof, an amount equal
to one-half (1/2) of one per cent of the gross earnings of the grantee in respect of
the lines covered hereby for the preceding year; after said period of thirty (30)
years, and for the fifty (50) years thereafter, the amount so to be paid annually
shall be an amount equal to one and one-half (1 1/2) per cent of such gross
earnings for the preceding year; and after such period of eighty (80) years, the
percentage and amount so to be paid annually by the grantee shall be fixed by the
Philippine Government.
Such annual payments, when promptly and fully made by the grantee, shall be in
lieu of all taxes of every name and nature - municipal, provincial or central - upon
its capital stock, franchises, right of way, earnings, and all other property owned or
operated by the grantee under this concession or franchise."35 (Underscoring
supplied)
In the case under review, ABS-CBN's franchise did not embody an exemption similar to those in Carcar,
Manila Railroad, Philippine Railway, and Visayan Electric. Too, the franchise failed to specify the taxing
authority from whose jurisdiction the taxing power is withheld, whether municipal, provincial, or
national. In fine, since ABS-CBN failed to justify its claim for exemption from local franchise tax, by a
grant expressed in terms "too plain to be mistaken" its claim for exemption for local franchise tax must
fail.
C. The "in lieu of all taxes" clause in the franchise of ABS-CBN has become functus officio with the
abolition of the franchise tax on broadcasting companies with yearly gross receipts exceeding Ten Million
Pesos.
In its decision dated January 20, 1999, the RTC held that pursuant to the "in lieu of all taxes" provision
contained in Section 8 of R.A. No. 7966, ABS-CBN is exempt from the payment of the local franchise tax.
The RTC further pronounced that ABS-CBN shall instead be liable to pay a franchise tax of 3% of all gross
receipts in lieu of all other taxes.
On this score, the RTC ruling is flawed. In keeping with the laws that have been passed since the grant of
ABS-CBN's franchise, the corporation should now be subject to VAT, instead of the 3% franchise tax.
At the time of the enactment of its franchise on May 3, 1995, ABS-CBN was subject to 3% franchise tax
under Section 117(b) of the 1977 National Internal Revenue Code (NIRC), as amended, viz.:
SECTION 117. Tax on franchises. - Any provision of general or special laws to the contrary
notwithstanding, there shall be levied, assessed and collected in respect to all franchise, upon
the gross receipts from the business covered by the law granting the franchise, a tax in
accordance with the schedule prescribed hereunder:
(a) On electric utilities, city gas, and water supplies Two (2%) percent
(b) On telephone and/or telegraph systems, radio and/or broadcasting stations
Three (3%) percent
(c) On other franchises Five (5%) percent. (Emphasis supplied)
On January 1, 1996, R.A. No. 7716, otherwise known as the Expanded Value Added Tax Law,36 took effect
and subjected to VAT those services rendered by radio and/or broadcasting stations. Section 3 of R.A.
No. 7716 provides:
Section 3. Section 102 of the National Internal Revenue Code, as amended is hereby further
amended to read as follows:
SEC. 102. Value-added tax on sale of services and use or lease of properties.
- (a) Rate and base of tax. - There shall be levied, assessed and collected, as value-
added tax equivalent to 10% of gross receipts derived from the sale or exchange of
services, including the use or lease of properties.
The phrase "sale or exchange of services" means the performance of all kinds of
services in the Philippines, for others for a fee, remuneration or consideration,
including those performed or rendered by construction and service contractors; x x
x services of franchise grantees of telephone and telegraph, radio and television
broadcasting and all other franchise grantees except those under Section 117 of
this Code; x x x (Emphasis supplied)
Notably, under the same law, "telephone and/or telegraph systems, broadcasting stations and other
franchise grantees" were omitted from the list of entities subject to franchise tax. The impression was
that these entities were subject to 10% VAT but not to franchise tax. Only the franchise tax on "electric,
gas and water utilities" remained. Section 12 of R.A. No. 7716 provides:
Section 12. Section 117 of the National Internal Revenue Code, as amended, is hereby further
amended to read as follows:
SEC. 117. Tax on Franchises. - Any provision of general or special law to the
contrary notwithstanding there shall be levied, assessed and collected in respect to
all franchises on electric, gas and water utilities a tax of two percent (2%) on the
gross receipts derived from the business covered by the law granting the franchise.
(Emphasis added)
Subsequently, R.A. No. 824137 took effect on January 1, 199738 containing more amendments to the
NIRC. Radio and/or television companies whose annual gross receipts do not exceed P10,000,000.00
were granted the option to choose between paying 3% national franchise tax or 10% VAT. Section 9 of
R.A. No. 8241 provides:
SECTION 9. Section 12 of Republic Act No. 7716 is hereby amended to read as follows:
"Sec. 12. Section 117 of the National Internal Revenue Code, as amended, is hereby further
amended to read as follows:
"Sec. 117. Tax on franchise. - Any provision of general or special law to the
contrary, notwithstanding, there shall be levied, assessed and collected in respect
to all franchises on radio and/or television broadcasting companies whose annual
gross receipts of the preceding year does not exceed Ten million pesos
(P10,000,000.00), subject to Section 107(d) of this Code, a tax of three percent
(3%) and on electric, gas and water utilities, a tax of two percent (2%) on the gross
receipts derived from the business covered by the law granting the franchise:
Provided, however, That radio and television broadcasting companies referred to
in this section, shall have an option to be registered as a value-added tax payer and
pay the tax due thereon: Provided, further, That once the option is exercised, it
shall not be revoked. (Emphasis supplied)
On the other hand, radio and/or television companies with yearly gross
receipts exceeding P10,000,000.00 were subject to 10% VAT, pursuant to Section 102 of the NIRC.
On January 1, 1998, R.A. No. 842439 was passed confirming the 10% VAT liability of radio and/or
television companies with yearly gross receipts exceeding P10,000,000.00.
R.A. No. 9337 was subsequently enacted and became effective on July 1, 2005. The said law further
amended the NIRC by increasing the rate of VAT to 12%. The effectivity of the imposition of the 12% VAT
was later moved from January 1, 2006 to February 1, 2006.
In consonance with the above survey of pertinent laws on the matter, ABS-CBN is subject to the payment
of VAT. It does not have the option to choose between the payment of franchise tax or VAT since it is a
broadcasting company with yearly gross receipts exceeding Ten Million Pesos (P10,000,000.00).
VAT is a percentage tax imposed on any person whether or not a franchise grantee, who in the course of
trade or business, sells, barters, exchanges, leases, goods or properties, renders services. It is also levied
on every importation of goods whether or not in the course of trade or business. The tax base of the VAT
is limited only to the value added to such goods, properties, or services by the seller, transferor or lessor.
Further, the VAT is an indirect tax and can be passed on to the buyer.
The franchise tax, on the other hand, is a percentage tax imposed only on franchise holders. It is imposed
under Section 119 of the Tax Code and is a direct liability of the franchise grantee.
The clause "in lieu of all taxes" does not pertain to VAT or any other tax. It cannot apply when what is
paid is a tax other than a franchise tax. Since the franchise tax on the broadcasting companies with
yearly gross receipts exceeding ten million pesos has been abolished, the "in lieu of all taxes" clause has
now become functus officio, rendered inoperative.
In sum, ABS-CBN's claims for exemption must fail on twin grounds. First, the "in lieu of all taxes" clause in
its franchise failed to specify the taxes the company is sought to be exempted from. Neither did it
particularize the jurisdiction from which the taxing power is withheld. Second, the clause has
become functus officio because as the law now stands, ABS-CBN is no longer subject to a franchise tax. It
is now liable for VAT.
WHEREFORE, the petition is GRANTED and the appealed Decision REVERSED AND SET ASIDE. The
petition in the trial court for refund of local franchise tax is DISMISSED.
SO ORDERED.
G.R. No. 170574 January 30, 2009
PHILIPPINE BANKING CORPORATION (NOW: GLOBAL BUSINESS BANK, INC.), Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
CARPIO, J.:
The Case
The Philippine Banking Corporation, now, Global Business Bank, Inc., (petitioner) filed this Petition for
Review1 to reverse the Court of Tax Appeals’ Decision2 dated 23 November 2005 in CTA EB No. 63 (C.T.A.
Case No. 6395). In the assailed decision, the Court of Tax Appeals En Banc ordered petitioner to pay
₱17,595,488.75 and ₱47,767,756.24 as deficiency documentary stamp taxes for the taxable years 1996
and 1997, respectively, on its bank product called "Special/Super Savings Deposit Account" (SSDA).
The Facts
Petitioner is a domestic corporation duly licensed as a banking institution.3 For the taxable years 1996
and 1997, petitioner offered its SSDA to its depositors. The SSDA is a form of a savings deposit evidenced
by a passbook and earning a higher interest rate than a regular savings account. Petitioner believes that
the SSDA is not subject to Documentary Stamp Tax (DST) under Section 180 of the 1977 National Internal
Revenue Code (NIRC), as amended.4
On 10 January 2000, the Commissioner of Internal Revenue (respondent) sent petitioner a Final
Assessment Notice assessing deficiency DST based on the outstanding balances of its SSDA, including
increments, in the total sum of ₱17,595,488.75 for 1996 and ₱47,767,756.24 for 1997. These
assessments were based on the outstanding balances of the SSDA appearing in the schedule attached to
petitioner’s audited financial statements for the taxable years 1996 and 1997.5
Petitioner claims that the SSDA is in the nature of a regular savings account since both types of accounts
have the following common features:
a. They are both evidenced by a passbook;
b. The depositors can make deposits or withdrawals anytime which are not subject to penalty;
and
c. Both can have an Automatic Transfer Agreement (ATA) with the depositor’s current or
checking account.6
Petitioner alleges that the only difference between the regular savings account and the SSDA is that the
SSDA is for depositors who maintain savings deposits with a substantial average daily balance, and as an
incentive, they are given higher interest rates than regular savings accounts. These deposits are classified
separately in petitioner’s financial statements in order to maintain a separate record for savings deposits
with substantial balances entitled to higher interest rates.7
Petitioner maintains that the tax assessments are erroneous because Section 180 of the 1977 NIRC does
not include deposits evidenced by a passbook among the enumeration of instruments subject to DST.
Petitioner asserts that the language of the law is clear and requires no interpretation.8 Section 180 of the
1977 NIRC, as amended,9 provides:
Sec. 180. Stamp tax on all loan agreements, promissory notes, bills of exchange, drafts, instruments
and securities issued by the government or any of its instrumentalities, certificates of deposit bearing
interest and others not payable on sight or demand. — On all loan agreements signed abroad wherein
the object of the contract is located or used in the Philippines; bills of exchange (between points within
the Philippines), drafts, instruments and securities issued by the Government or any of its
instrumentalities or certificates of deposits drawing interest, or orders for the payment of any sum of
money otherwise than at the sight or on demand, or on all promissory notes, whether negotiable or non-
negotiable, except bank notes issued for circulation, and on each renewal of any such note, there shall
be collected a documentary stamp tax of Thirty centavos (₱0.30) on each Two hundred pesos, or
fractional part thereof, of the face value of any such agreement, bill of exchange, draft, certificate of
deposit, or note: provided, that only one documentary stamp tax shall be imposed on either loan
agreement, or promissory note issued to secure such loan, whichever will yield a higher tax: provided,
however, that loan agreements or promissory notes the aggregate of which does not exceed Two
hundred fifty thousand pesos (₱250,000) executed by an individual for his purchase on installment for
his personal use or that of his family and not for business, resale, barter or hire of a house, lot, motor
vehicle, appliance or furniture shall be exempt from the payment of the documentary stamp tax
provided under this section. (Boldfacing supplied)
Petitioner insists that the SSDA, being issued in the form of a passbook, cannot be construed as a
certificate of deposit subject to DST under Section 180 of the 1977 NIRC. Petitioner explains that the
 SSDA is a necessary offshoot of the deregulated interest rate regime in bank deposits.10 Petitioner
elucidates:
With the removal of the respective interest rate ceilings on savings and time deposit, banks are enabled
to legitimately offer higher rates on savings account which may even be at par with rates on time
deposit. Practically, the distinction between a savings and a time deposit was removed insofar as interest
rates are concerned. This being so, and for the legitimate purpose of further enticing deposits for savings
account, banks have evolved a product – the Super/Special Savings Account – which offers the flexibility
of a savings deposit but does away with the rigidity of a time deposit account and with interest rate at
par with the latter. This is offered as an incentive for depositors who maintain or who wish to maintain
deposits with substantial average daily balance. Such depositors will be entitled to an attractive interest
rate, a rate higher than that to which the regular savings account is entitled. Just like an ordinary savings,
Super/Special Savings Deposits can be withdrawn anytime. Of course, to be entitled to preferential
interest rate, such account must conform to a stated minimum deposit balance within a specified
holding period. Otherwise, the depositor will lose the incentive of a higher interest rate and the account
will revert to an ordinary savings account and be entitled only to prevailing rates of interest applicable to
regular savings account. And unlike a time deposit account, the Super/Special Savings Account comes in
the form of a passbook, hence need not be formally renewed in the manner that a time deposit
certificate has to be formally surrendered and renewed upon maturity.11
Petitioner argues that the DST is imposed on the basis of a mere inference or perceived implication of
what the SSDA is supposed to be and not on the basis of what the law specifically states. Petitioner
points out the differences between the SSDA and time deposits:12
Time Deposits SSDA
The holding period is fixed beforehand.
1. The holding period floats at the option of the depositor. It can
be 30, 60, 90 or 120 days or more and as an incentive for
maintaining a longer holding period, the depositor earns higher and 249 of the Tax Code.23
interest.
There is pre-termination because there is no partial 2. No pre-termination and the passbook account is simply
hdrawal of a certificate. Pre-termination results in the reverted to an ordinary savings status in case of early or partial
render and cancellation of the certificate of deposit. withdrawal or if the required holding period is not met.
Petitioner also argues that even on the assumption that a passbook evidencing the SSDA is a certificate
of deposit, no DST will be imposed because only negotiable certificates of deposits are subject to tax
under Section 180 of the 1977 NIRC.13 Petitioner reasons that a savings passbook is not a negotiable
instrument and it cannot be denied that savings passbooks have never been taxed as certificates of
deposits.14
Petitioner alleges that prior to the passage of Republic Act No. 924315 (RA 9243), there was no law
subjecting SSDA to DST during the taxable years 1996 and 1997. The amendatory provision in RA 9243
now specifically includes "certificates or other evidences of deposits that are either drawing interest
significantly higher than the regular savings deposit taking into consideration the size of the deposit and
the risks involved or drawing interest and having a specific maturity date."16 Petitioner admits that with
this new taxing clause, its SSDA is now subject to DST. However, the fact remains that this provision was
non-existent during the taxable years 1996 and 1997 subject of the assessments in the present case.17
Respondent, through the Office of the Solicitor General, contends that the SSDA is substantially the same
and identical to that of a time deposit account because in order to avail of the SSDA, one has to deposit a
minimum of ₱50,000 and this amount must be maintained for a required period of time to earn higher
interest rates.18 In a time deposit account, the minimum deposit requirement is ₱20,000 and this amount
must be maintained for the agreed period to earn the agreed interest rate. If a time deposit is pre-
terminated, a penalty will be imposed resulting in a lower interest income. In a regular savings account,
the interest rate is fixed and there is no penalty imposed for as long as the required minimum balance is
maintained. Thus, respondent asserts that the SSDA is a time deposit account, albeit in the guise of a
regular savings account evidenced by a passbook.19
Respondent explains that under Section 180 of the 1977 NIRC, certificates of deposits deriving interest
are subject to the payment of DST. Petitioner’s passbook evidencing its SSDA is considered a certificate
of deposit, and being very similar to a time deposit account, it should be subject to the payment of DST.20
Respondent also argues that Section 180 of the 1977 NIRC categorically states that certificates of deposit
deriving interest are subject to DST without limiting the enumeration to negotiable certificates of
deposit. Based on the definition of a certificate of deposit in Far East Bank and Trust Company v.
Querimit,21 a certificate of deposit may or may not be negotiable, since it may be payable only to the
depositor.22
The Ruling of the Court of Tax Appeals
On 23 November 2005, the Court of Tax Appeals En Banc (CTA) affirmed the Decision and Resolution of
the CTA’s Second Division. The dispositive portion reads:
WHEREFORE, the instant petition is DENIED for lack of merit. Accordingly, the petitioner is
hereby ORDERED to PAY the amounts of ₱17,595,488.75 and ₱47,767,756.24 as deficiency documentary
stamp taxes for the taxable years 1996 and 1997, plus 25% surcharge for late payment and 20% annual
delinquency interest for late payment from January 20, 2002 until fully paid pursuant to Sections 248
The CTA ruled that a deposit account with the same features as a time deposit, i.e., a fixed term in order
to earn a higher interest rate, is subject to DST imposed in Section 180 of the 1977 NIRC.24 It is clear that
"certificates of deposit drawing interest" are subject to DST. The CTA, citing Far East Bank and Trust
Company v. Querimit,25 defined a certificate of deposit as "a written acknowledgment by a bank or
banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the
depositor, to the order of the depositor, or some other person or his order, whereby the relation of
debtor and creditor between the bank and the depositor is created."26
The CTA pointed out that this Court neither referred to a particular form of deposit nor limited the
coverage to time deposits only. This Court used the term "written acknowledgment" which means that
for as long as there is some written memorandum of the fact that the bank accepted a deposit of a sum
of money from a depositor, the writing constitutes a certificate of deposit. The CTA held that a passbook
representing an interest-earning deposit account issued by a bank qualifies as a certificate of deposit
drawing interest.27
The CTA emphasized that Section 180 of the 1977 NIRC imposes DST on documents, whether the
documents are negotiable or non-negotiable.28 The CTA held that petitioner’s argument that Section 180
of the 1977 NIRC imposes the DST only on negotiable certificates of deposit as implied from the old tax
provision is erroneous.29 Section 217 of Commonwealth Act No. 466, as amended (old NIRC) reads:
Sec. 217. Stamp tax on negotiable promissory notes, bills of exchange, drafts, certificate of deposit are merely regular savings account which concededly are not subject to DST. So what are "certificates of
bearing interest and others not payable on sight or demand. - On all bills of exchange (between points deposits drawing interest," and how do they differ from a regular savings account?
within the Philippines), drafts or certificates of deposit drawing interest, or orders for the payment of
any sum of money otherwise than at sight or on demand, or all negotiable promissory notes, except
Section 180 of the 1977 NIRC, as amended, provides:
bank notes issued for circulation, and on each renewal of any such note, there shall be collected a
documentary stamp tax of four centavos on each two hundred pesos, or fractional part thereof, of the
face value of any such bill of exchange, draft, certificate of deposit, or note. (As amended by Sec. 6, Sec. 180. Stamp tax on all loan agreements, promissory notes, bills of exchange, drafts, instruments
Republic Act No. 40)30 (Emphasis in the original) and securities issued by the government or any of its instrumentalities, certificates of deposit bearing
interest and others not payable on sight or demand. — On all loan agreements signed abroad wherein
the object of the contract is located or used in the Philippines; bills of exchange (between points within
The CTA observed that the requirement of negotiability pertains to promissory notes only. Such
the Philippines), drafts, instruments and securities issued by the Government or any of its
intention is disclosed by the fact that the word negotiable was written before promissory notes followed
instrumentalities or certificates of deposits drawing interest, or orders for the payment of any sum of
by a comma, hence, the word negotiable modifies promissory notes only. Therefore, with respect to all
money otherwise than at the sight or on demand, or on all promissory notes, whether negotiable or non-
other documents mentioned in Section 217 of the old NIRC, the attribute of negotiability is not
negotiable, except bank notes issued for circulation, and on each renewal of any such note, there shall
required.31 The CTA added that the applicable provision is Section 180 of the 1977 NIRC and not Section
be collected a documentary stamp tax of Thirty centavos (₱0.30) on each Two hundred pesos, or
217 of the old NIRC.32 Section 180 of the 1977 NIRC provides that the following are subject to DST, to wit:
fractional part thereof, of the face value of any such agreement, bill of exchange, draft, certificate of
(1) Loan Agreements; (2) Bills of Exchange; (3) Drafts; (4) Instruments and Securities issued by the
deposit, or note: provided, that only one documentary stamp tax shall be imposed on either loan
Government or any of its instrumentalities; (5) Certificates of Deposits drawing interest; (6) Orders for
agreement, or promissory note issued to secure such loan, whichever will yield a higher tax: provided,
the payment of any sum of money otherwise than at sight or on demand; and (7) Promissory Notes,
however, that loan agreements or promissory notes the aggregate of which does not exceed Two
whether negotiable or non-negotiable. Therefore, the DST is imposed on all certificates of deposit
hundred fifty thousand pesos (₱250,000) executed by an individual for his purchase on installment for
drawing interest without any qualification.33
his personal use or that of his family and not for business, resale, barter or hire of a house, lot, motor
vehicle, appliance or furniture shall be exempt from the payment of the documentary stamp tax
The CTA held that a certificate of time deposit, a type of a certificate of deposit drawing interest, is provided under this section. lavvphil.zw+(Boldfacing and underscoring supplied)
subject to DST. The CTA observed that the SSDA has the same nature and characteristics as a time
deposit.34 The CTA discussed the similarities of a time deposit account with an SSDA:
In Far East Bank and Trust Company v. Querimit,39 the Court defined a certificate of deposit as "a written
acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or
In order for the depositor to earn the agreed higher interest rate in a Special/Super Savings Account, the banker promises to pay to the depositor, to the order of the depositor, or to some other person or his
required minimum amount of deposit must not only be met but should also be maintained for a definite order, whereby the relation of debtor and creditor between the bank and the depositor is created." A
period. Thus, the Special/Super Savings Account is a deposit with a fixed term. Withdrawal before the certificate of deposit is also defined as "a receipt issued by a bank for an interest-bearing time deposit
expiration of said fixed term results to the reduction of the interest rate. The fixed term and reduction of coming due at a specified future date."40
interest rate in case of pre-termination are essentially the features of a time deposit. Hence, this Court
concurs with the conclusion reached in the assailed Decision that petitioner’s Special/Super Savings
The deposit operations of a bank as listed in the Bangko Sentral ng Pilipinas Manual of Regulations for
Deposits and certificates of time deposit are substantially the same, if not one and the same product,
Banks41 consist of the following:
and therefore both are subject to the DST on certificates of deposit.35

1. Demand Deposits – are deposits, subject to withdrawal either by check or thru the
The CTA stated that the fact that the SSDA is evidenced by a passbook is immaterial because in
automated tellering machines which are otherwise known as current or checking accounts.
determining whether certain instruments are subject to DST, substance would control over form and
The Bank may or may not pay interest on these accounts.42
labels.36

On 14 December 2005, petitioner appealed to this Court the CTA decision. 37
The Issue
Petitioner submits this sole issue for our consideration: whether petitioner’s product called
Special/Super Savings Account is subject to DST under Section 180 of the 1977 NIRC prior to the passage
of RA 9243 in 2004.38
The Ruling of the Court
The issue in the present case is whether petitioner’s SSDAs are "certificates of deposits drawing interest"
as used in Section 180 of the 1977 NIRC. If they are, then the SSDAs are subject to DST. If not, then they
2. Savings Deposits – are interest-bearing deposits which are withdrawable either upon
presentation of a properly accomplished withdrawal slip together with the corresponding
passbook or thru the automated tellering machines.43
3. Negotiable Order of Withdrawal Accounts – are interest-bearing savings deposit which are
withdrawable by means of Negotiable Orders of Withdrawal.44
4. Time Deposits – are interest-bearing deposits with specific maturity dates and evidenced
by certificates issued by the bank.45
Petitioner treats the SSDA as a regular savings deposit account since it is evidenced by a passbook and
allows withdrawal. Respondent treats the SSDA as a time deposit account because of the higher interest
rates and holding period. It is then significant to differentiate a regular savings deposit and a time
deposit vis-à-vis the SSDA to determine if the SSDA is a certificate of deposit drawing interest referred to
 in Section 180 of the 1977 NIRC. A comparison of a savings account, time deposit account, and SSDA is Petitioner argues that a deposit account evidenced by a passbook cannot be construed as a certificate of
shown in the table below: deposit subject to DST under Section 180 of the 1977 NIRC. In International Exchange Bank v.
Commissioner of Internal Revenue,47 this Court categorically ruled that a passbook representing an
interest earning deposit account issued by a bank qualifies as a certificate of deposit drawing interest
Savings Account Time Deposit SSDA and should be subject to DST. The Court added that "a document to be deemed a certificate of deposit
requires no specific form as long as there is some written memorandum that the bank accepted a
deposit of a sum of money from a depositor."48
rest rate Regular savings interest Higher interest rate Higher interest rate
Petitioner also argues that prior to the passage of RA 9243, there was no law subjecting SSDA to DST.
od None Fixed Term Fixed Term In International Exchange Bank v. Commissioner of Internal Revenue,49 the Court held that the
amendment to include "other evidences of deposits that are drawing interest significantly higher than
the regular savings deposit" was intended to eliminate the ambiguity. The Court explained:
enced by: Passbook Certificate of Time Deposit Passbook
If at all, the further amendment was intended to eliminate precisely the scheme used by banks of issuing
termination None With penalty With penalty passbooks to "cloak" its time deposits as regular savings deposits. This is reflected from the following
exchanges between Mr. Miguel Andaya of the Bankers Association of the Philippines and Senator Ralph
Recto, Senate Chairman of the Committee on Ways and Means, during the deliberations on Senate Bill
ding Period None Yes Yes No. 2518 which eventually became RA 9243:

MR. MIGUEL ANDAYA (Bankers Association of the Philippines). Just to clarify. Savings deposit at the
hdrawal Allowed Withdrawal amounts to pre- Allowed provided the minimum present is not subject to DST.
termination amount to earn the higher
interest rate is maintained,
THE CHAIRMAN. That’s right.
otherwise, the regular savings
interest rate will apply.
MR. ANDAYA. Time deposit is subject. I agree with you in principle that if we are going to encourage
deposits, whether savings or time...

Based on the definition and comparison, it is clear that a certificate of deposit drawing interest as used in
THE CHAIRMAN. Uh-huh.
Section 180 of the 1977 NIRC refers to a time deposit account. As the Bureau of Internal Revenue (BIR)
explained in Revenue Memorandum Circular No. 16-2003,46 the distinct features of a certificate of
deposit from a technical point of view are as follows: MR. ANDAYA. ...it’s questionable whether we should tax it with DST at all, even the question of imposing
final withholding tax has been raised as an issue.
a. Minimum deposit requirement;
THE CHAIRMAN. If I had it my way, I'll cut it by half.
b. Stated maturity period;
MR. ANDAYA. Yeah, but I guess concerning the constraint of government revenue, even the industry
itself right now is not pushing in that direction, but in the long term, when most of us in this room are
c. Interest rate is higher than the ordinary savings account;
gone, we hope that DST will disappear from the face of this earth, no.

d. Not payable on sight or demand, but upon maturity or in case of pre-termination, prior
Now, I think the move of the DOF to expand the coverage of or to add that phrase, "Other evidence of
notice is required; and
indebtedness," it just removed ambiguity. When we testified earlier in the House on this very same bill,
we did not interpose any objections if only for the sake of avoiding further ambiguity in the
e. Early withdrawal penalty in the form of partial loss or total loss of interest in case of pre- implementation of DST on deposits. Because of what has happened so far is, we don't know whether the
termination. examiner is gonna come in and say, "This savings deposit is not savings but it’s time deposit." So, I think
what DOF has done is to eliminate any confusion. They said that a deposit that has a maturity...
The SSDA is for depositors who maintain savings deposits with substantial average daily balance and
which earn higher interest rates. The holding period of an SSDA floats at the option of the depositor at THE CHAIRMAN. Uh-huh.
30, 60, 90, 120 days or more and for maintaining a longer holding period, the depositor earns higher
interest rates. There is no pre-termination of accounts in an SSDA because the account is simply reverted
MR. ANDAYA. ...which is time, in effect, regardless of what form it takes should be subject to DST.
to an ordinary savings status in case of early or partial withdrawal or if the required holding period is not
met. Based on the foregoing, the SSDA has all of the distinct features of a certificate of deposit.
THE CHAIRMAN. Would you include savings deposit now?
MR. ANDAYA. So that if we cloaked a deposit as savings deposit but it has got a fixed maturity...
THE CHAIRMAN. Uh-huh.
MR. ANDAYA. ..that would fall under the purview. (Italics in the original)
DST is imposed on Certificates of Deposits Bearing Interest
including a special savings account evidenced by a passbook.
Documentary stamp tax is a tax on documents, instruments, loan agreements, and papers evidencing the
acceptance, assignment, sale or transfer of an obligation, right or property incident thereto. A DST is
actually an excise tax because it is imposed on the transaction rather than on the document.50 A DST is
also levied on the exercise by persons of certain privileges conferred by law for the creation, revision, or
termination of specific legal relationships through the execution of specific instruments.51 Hence, in
imposing the DST, the Court considers not only the document but also the nature and character of the
transaction.
Section 180 of the 1977 NIRC imposes a DST of ₱0.30 on each ₱200 of the face value of any certificate of
deposit drawing interest. As correctly observed by the CTA, a certificate of deposit is a written
acknowledgment by a bank of the receipt of a sum of money on deposit which the bank promises to pay
to the depositor, to the order of the depositor, or to some other person or his order, whereby the
relation of debtor or creditor between the bank and the depositor is created.52
Petitioner’s SSDA has the following features:
1. Although the money placed in the SSDA can be withdrawn anytime, the money is subject to
a holding period in order to earn a higher interest rate. Otherwise, in case of premature
withdrawal, the depositor will not earn the preferred interest ranging from 8% or higher but
only the normal interest rate on regular savings deposit.
2. In order to qualify for an SSDA, the depositor must place a substantial amount of money of
not less than ₱50,000. This amount is even larger than what is needed to open a time deposit
which is ₱20,000. Aside from the substantial amount of money required, this amount must be
maintained within a certain period just like a time deposit.
3. On the issue of penalty, in an SSDA, if the depositor withdraws the money and the balance
falls below the "minimum balance" of ₱50,000, the interest is reduced. This condition is
identical to that imposed on a time deposit that is withdrawn before maturity. 53
Based on these features, it is clear that the SSDA is a certificate of deposit drawing interest subject to
DST even if it is evidenced by a passbook and non-negotiable in character. In International Exchange
Bank v. Commissioner of Internal Revenue,54 we held that:
A document to be deemed a certificate of deposit requires no specific form as long as there is some
written memorandum that the bank accepted a deposit of a sum of money from a depositor. What is
important and controlling is the nature or meaning conveyed by the passbook and not the particular
label or nomenclature attached to it, inasmuch as substance, not form, is paramount.lavvph!l.net
Moreover, a certificate of deposit may be payable to the depositor, to the order of the depositor, or to
some other person or his order. From the use of the conjunction or, instead of and, the negotiable
character of a certificate of deposit is immaterial in determining the imposition of DST.55
In Banco de Oro Universal Bank v. Commissioner of Internal Revenue,56 this Court upheld the CTA’s
decision and ruled:
The CTA en banc likewise declared that in practice, a time deposit transaction is covered by a certificate
of deposit while petitioner's Investment Savings Account (ISA) transaction is through a passbook. Despite
the differences in the form of any documents, the CTA en banc ruled that a time deposit and ISA have
essentially the same attributes and features. It explained that like time deposit, ISA transactions bear a
fixed term or maturity because the bank acknowledges receipt of a sum of money on deposit which the
bank promises to pay the depositor, bearer or to the order of a bearer on a specified period of time.
Section 180 of the 1997 NIRC does not prescribed the form of a certificate of deposit. It may be any
'written acknowledgment by a bank of the receipt of money on deposit.' The definition of a certificate of
deposit is all encompassing to include a savings account deposit such as ISA. (Emphasis supplied)
Availment of the Tax Amnesty Program
On 24 May 2007, during the pendency of this case before this Court, Republic Act No. 9480 or "An Act
Enhancing Revenue Administration and Collection by Granting an Amnesty on All Unpaid Internal
Revenue Taxes Imposed by the National Government for Taxable Year 2005 and Prior Years" (RA 9480),
lapsed into law.
The pertinent provisions of RA 9480 are:
Section 1. Coverage. There is hereby authorized and granted a tax amnesty which shall cover all national
internal revenue taxes for the taxable year 2005 and prior years, with or without assessments duly
issued therefor, that have remained unpaid as of December 31, 2005: Provided, however, That the
amnesty hereby authorized and granted shall not cover persons or cases enumerated under Section 8
hereof.
xxx
Sec. 6. Immunities and Privileges. Those who availed themselves of the tax amnesty under Section 5
hereof, and have fully complied with all its conditions shall be entitled to the following immunities and
privileges:
1. The taxpayer shall be immune from the payment of taxes, as well as addition thereto, and the
appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of
1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year
2005 and prior years.
xxx
Sec. 8. Exceptions. The tax amnesty provided in Section 5 hereof shall not extend to the following
persons or cases existing as of the effectivity of this Act:
1. Withholding agents with respect to their withholding tax liabilities;
 2. Those with pending cases falling under the jurisdiction of the Presidential Commission on
Good Government;
3. Those with pending cases involving unexplained or unlawfully acquired wealth or under the
Anti-Graft and Corrupt Practices Act;
4. Those with pending cases filed in court involving violation of the Anti-Money Laundering
Law;
5. Those with pending criminal cases for tax evasion and other criminal offenses under
Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the
felonies of frauds, illegal exactions and transactions, and malversation of public funds and
property under Chapters III and IV of Title VII of the Revised Penal Code; and
6. Tax cases subject of final and executory judgment by the courts. (Emphasis supplied)
The Department of Finance (DOF) issued DOF Department Order No. 29-07 (DO 29-07).57 Section 6 of DO
29-07 provides:
SEC. 6. Method of Availment of Tax Amnesty. -
1. Forms/Documents to be filed. - To avail of the general tax amnesty, concerned taxpayers shall file the
following documents/requirements:
a. Notice of Availment in such form as may be prescribed by the BIR;
b. Statements of Assets, Liabilities and Networth (SALN) as of December 31, 2005 in such
form, as may be prescribed by the BIR;
c. Tax Amnesty Return in such form as may be prescribed by the BIR.
xxx
The Acceptance of Payment Form, the Notice of Availment, the SALN, and the Tax Amnesty Return shall
be submitted to the RDO, which shall be received only after complete payment. The completion of these
requirements shall be deemed full compliance with the provisions of RA 9480. (Emphasis supplied)
58
The BIR issued Revenue Memorandum Circular No. 19-2008 (RMC 19-2008). The pertinent provisions
are:
Who may avail of the amnesty?
The following taxpayers may avail of the Tax Amnesty Program:
P Individuals
P Estates and Trusts
P Corporations
P Cooperatives and tax-exempt entities that have become taxable as of December 31, 2005
P Other juridical entities including partnerships.
Ø Fiscal year taxpayers may likewise avail of the tax amnesty using their Financial Statement ending in
any month of 2005.
EXCEPT:
Q Withholding agents with respect to their withholding tax liabilities
Q Those with pending cases:
Q Under the jurisdiction of the PCGG
Q Involving violations of the Anti-Graft and Corrupt Practices Act
Q Involving violations of the Anti-Money Laundering Law
Q For tax evasion and other criminal offenses under the NIRC and/or the RPC
Q Issues and cases which were ruled by any court (even without finality) in favor of the BIR prior to
amnesty availment of the taxpayer. (e.g. Taxpayers who have failed to observe or follow BOI and/or
PEZA rules on entitlement to Income Tax Holiday Incentives and other incentives)
Q Cases involving issues ruled with finality by the Supreme Court prior to the effectivity of RA 9480
(e.g. DST on Special Savings Account)
Q Taxes passed on and collected from customers for remittance to the BIR
Q Delinquent Accounts/Accounts Receivable considered as assets of the BIR/Government, including self-
assessed tax. (Emphasis supplied)
The BIR also issued Revenue Memorandum Circular No. 69-2007 (RMC 69-2007).59 The pertinent portion
provides:
Q-32 May surviving or new corporations avail of the tax amnesty in behalf of the corporations
absorbed or dissolved pursuant to a merger or consolidation that took effect prior to Taxable Year
2005? Can they avail of the Tax Amnesty?
A-32 Yes, these companies can avail of the tax amnesty for purposes of obtaining tax clearances for the
dissolved or absorbed corporations. (Emphasis supplied)
On 21 September 2007, Metropolitan Bank and Trust Company (Metrobank), the surviving entity that
absorbed petitioner’s banking business, filed a Tax Amnesty Return,60 paid the amnesty tax and fully
complied with all the requirements61 of the Tax Amnesty Program under RA 9480. Petitioner alleges that
by virtue of this availment, petitioner is now deemed "immune from the payment of taxes as well as
additions thereto," and is statutorily discharged from paying all internal revenue tax liabilities for the
taxable year 2005 and prior years. Petitioner contends that the availment includes all deficiency tax
assessments of the BIR subject of this petition.
A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose
penalties on persons otherwise guilty of violation of a tax law. It partakes of an absolute waiver by the
government of its right to collect what is due it and to give tax evaders who wish to relent a chance to
start with a clean slate. A tax amnesty, much like a tax exemption, is never favored nor presumed in law.
The grant of a tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer
and liberally in favor of the taxing authority.62
The DST is one of the taxes covered by the Tax Amnesty Program under RA 9480.63 As discussed above,
petitioner is clearly liable to pay the DST on its SSDA for the years 1996 and 1997. However, petitioner,
as the absorbed corporation, can avail of the tax amnesty benefits granted to Metrobank.
Records show that Metrobank, a qualified tax amnesty applicant,64 has duly complied with the
requirements enumerated in RA 9480, as implemented by DO 29-07 and RMC 19-2008.65 Considering
that the completion of these requirements shall be deemed full compliance with the tax amnesty
program,66 the law mandates that the taxpayer shall thereafter be immune from the payment of taxes,
and additions thereto, as well as the appurtenant civil, criminal or administrative penalties under the
NIRC of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable
year 2005 and prior years.67
The BIR’s inclusion of "issues and cases which were ruled by any court (even without finality) in favor of
the BIR prior to amnesty availment of the taxpayer" as one of the exceptions in RMC 19-2008 is
misplaced. RA 9480 is specifically clear that the exceptions to the tax amnesty program include "tax
cases subject of final and executory judgment by the courts." The present case has not become final and
executory when Metrobank availed of the tax amnesty program.
Wherefore, we GRANT the petition, and SET ASIDE the Court of Tax Appeals’ Decision dated 23
November 2005 in CTA EB No. 63 solely in view of petitioner’s availment of the Tax Amnesty Program.
SO ORDERED.
G.R. No. 199669
SOUTHERN LUZON DRUG CORPORATION, Petitioner,
vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL COUNCIL FOR THE
WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF FINANCE, and THE BUREAU OF INTERNAL
REVENUE, Respondents
DECISION
REYES, J.:
Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court, assailing the
Decision2 dated June 17, 2011, and Resolution3 dated November 25, 2011 of the Court of Appeals (CA) in
CA-G.R. SP No. 102486, which dismissed the petition for prohibition filed by Southern Luzon Drug
Corporation (petitioner) against the Department of1 Social Welfare and Development (DSWD), the
National Council for the Welfare of Disabled Persons (NCWDP) (now National Council on Disability Affairs
or NCDA), the Department of Finance (DOF) and the Bureau of: Internal Revenue (collectively, the
respondents), which sought to prohibit the implementation of Section 4(a) of Republic Act (R.A.) No.
9257, otherwise known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No. 9442,
which amends the "Magna Carta for Disabled Persons," particularly the granting of 20% discount on the
purchase of medicines by senior citizens and persons with disability (PWD),: respectively, and treating
them as tax deduction.
The petitioner is a domestic corporation engaged in the business of: drugstore operation in the
Philippines while the respondents are government' agencies, office and bureau tasked to monitor
compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules and regulations for their
effective implementation, as well as prosecute and revoke licenses of erring1 establishments.
Factual Antecedents
On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens to
Nation-Building, Grant Benefits and Special Privileges and For Other Purposes," was enacted. Under the
said law, a senior citizen, who must be at least 60 years old and has an annual income of not more than
P60,000.00,4 may avail of the privileges provided in Section 4 thereof, one of which is 20% discount on
the purchase of medicines. The said provision states:
Sec. 4. Privileges for the Senior Citizen. - x x x:
a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment, restaurants and recreation centers and
purchase of medicine anywhere in the country: Provided, That private establishments may claim the
cost as tax credit[.]
x x x x (Emphasis ours)
To recoup the amount given as discount to qualified senior citizens, covered establishments can claim an
equal amount as tax credit which can be applied against the income tax due from them.
On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257, amending some
provisions of R.A. No. 7432. The new law retained the 20% discount on the purchase of medicines but
removed the annual income ceiling thereby qualifying all senior citizens to the privileges under the law.
Further, R.A. No. 9257 modified the tax treatment of the discount granted to senior citizens, from tax
credit to tax deduction from gross income, computed based on the net cost of goods sold or services
rendered. The pertinent provision, as amended by R.A. No. 9257, reads as follows:
SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and purchase
of medicines in all establishments for the exclusive use or enjoyment of senior citizens, including funeral
and burial services for the death of senior citizens;
xxxx
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based on
the net cost of the goods sold or services rendered: Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year that the discount is
granted. Provided, further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as amended. (Emphasis
ours)
On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of R.A. No. 9257.
Article 8 of Rule VI of the said IRR provides:
Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts granted under
Rule V, Section 4 - Discounts for Establishments; Section 9, Medical and Dental Services in Private
Facilities and Sections 10 and 11 -Air, Sea and Land Transportation as tax deduction based on the net
cost of the goods sold or services rendered. Provided, That the cost of the discount shall be allowed as
deduction from gross income for the same taxable year that the discount is granted; Provided, further,
That the total amount of the claimed tax deduction net of value-added tax if applicable, shall be included
in their gross sales receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended; Provided, finally, that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be issued by the
Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF). (Emphasis ours)
The change in the tax treatment of the discount given to senior citizens did not sit well with some drug
store owners and corporations, claiming it affected the profitability of their business. Thus, on January
13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug), together with other. corporation and
proprietors operating drugstores in the Philippines, filed a Petition for Prohibition with Prayer for
Temporary Restraining Order (TRO) I and/or Preliminary Injunction before this Court, entitled Carlos
Superdrug I Corporation v. DSWD,5docketed as G.R. No. 166494, assailing the constitutionality of Section
4(a) of R.A. No. 9257 primarily on the ground that it amounts to taking of private property without
payment of just compensation. In a Decision dated June 29, 2007, the Court upheld the constitutionality
of the assailed provision, holding that the same is a legitimate exercise of police power. The relevant
portions of the decision read, thus:
The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but 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 to conditions and circumstances, thus assuring the greatest
benefits. Accordingly, it has been described as "the most essential, insistent and the least limitable of
powers, extending as it does to all the great public needs." It is "[t]he power vested in the legislature by
the constitution to make, ordain, and establish all manner of wholesome and reasonable laws, statutes,
and ordinances, either with penalties or without, not repugnant to the constitution, as they shall judge
to be for the good and welfare of the commonwealth, and of the subjects of the same."
For this reason, when the conditions so demand as determined by the legislature, property rights must
bow to the primacy of police power because property rights, though sheltered by due process, must
yield to general welfare.
xxxx
Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the
precept for the protection of property, various laws and jurisprudence, particularly on agrarian reform
and the regulation of contracts and public utilities, continuously serve as a reminder that the right to
property can be relinquished upon the command of the State for the promotion of public good.
Undeniably, the success of the senior citizens program rests largely on the support imparted by
petitioners and the other private establishments concerned. This being the case, the means employed in
invoking the active participation of the private sector, in order to achieve the purpose or objective of the
law, is reasonably and directly related. Without sufficient proof that Section 4(a) of RA. No. 9257 is
arbitrary, and that the continued implementation of the same would be unconscionably detrimental to
petitioners, the Court will refrain from quashing a legislative act.
WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations omitted)
On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing decision.
Subsequently, the Court issued Resolution dated August 21, 2007, denying the said motion with finality. 7
Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for Disabled Persons" was
enacted, codifying the rights and privileges of PWDs. Thereafter, on April 30, 2007, R.A. No. 9442 was
enacted, amending R.A. No. 7277. One of the salient amendments in the law is the insertion of Chapter 8
in Title 2 thereof, which enumerates the other privileges and incentives of PWDs, including the grant of
20% discount on the purchase of medicines. Similar to R.A. No. 9257, covered establishments shall claim
the discounts given to PWDs as tax deductions from the gross income, based on the net cost of goods
sold or services rendered. Section 32 ofR.A. No. 9442 reads:
CHAPTER 8. Other Privileges and Incentives
SEC. 32. Persons with disability shall be entitled to the following:
xxxx
(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for the
exclusive use or enjoyment of persons with disability;
xxxx
The establishments may claim the discounts granted in subsections (a), (b), (c), (e), (t) and (g) as
taxdeductions based on the net cost of the goods sold or services rendered: Provided, however, That
the cost of the discount shall be allowed as deduction from gross income for the same taxable year that
the discount is granted: Provided, further, That the total amount of the claimed tax deduction net of
value-added tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue Code (NIRC), as
amended. (Emphasis ours)
Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD, Department of
Education, DOF, Department of Tourism and the Department of Transportation and
Communications.8Sections 5 .1 and 6.1.d thereof provide:
Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are defined as
follows:
5.1. Persons with Disability are those individuals defined under Section 4 of RA 7277, "An Act
Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability
as amended and their integration into the Mainstream of Society and for Other Purposes."
 This is defined as a person suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in a manner or within the
range considered normal for human being. Disability shall mean: (1) a physical or mental
impairment that substantially limits one or more psychological, physiological or anatomical
function of an individual or activities of such individual; (2) a record of such an impairment; or
(3) being regarded as having such an impairment.
xxxx
6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the purchase of
medicine for the exclusive use and enjoyment of persons with disability. All drug stores,
hospital, pharmacies, clinics and other similar establishments selling medicines are required
to provide at least twenty percent (20%) discount subject to the guidelines issued by DOH and
PHILHEALTH.
On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for TRO and/or Writ
of Preliminary Injunction9 with the CA, seeking to declare as unconstitutional (a) Section 4(a) of R.A. No.
9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR, insofar as these provisions only allow
tax deduction on the gross income based on the net cost of goods sold or services rendered as
compensation to private establishments for the 20% discount that they are required to grant to senior
citizens and PWDs. Further, the petitioner prayed that the respondents be permanently enjoined from
implementing the assailed provisions.
Ruling of the CA
On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
Superdrug10particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police power. Moreover,
the CA held that considering that the same question had been raised by parties similarly situated and
was resolved in Carlos Superdrug, the rule of stare decisis stood as a hindrance to any further attempt to
relitigate the same issue. It further noted that jurisdictional considerations also compel the dismissal of
the action. It particularly emphasized that it has no original or appellate jurisdiction to pass upon the
constitutionality of the assailed laws, 11 the same pertaining to the Regional Trial Court (RTC). Even
assuming that it had concurrent jurisdiction with the RTC, the principle of hierarchy of courts mandates
that the case be commenced and heard by the lower court. 12 The CA further ruled that the petitioner
resorted to the wrong remedy as a petition for prohibition will not lie to restrain the actions of the
respondents for the simple reason that they do not exercise judicial, quasi-judicial or ministerial duties
relative to the issuance or implementation of the questioned provisions. Also, the petition was wanting
of the allegations of the specific acts committed by the respondents that demonstrate the exercise of
these powers which may be properly challenged in a petition for prohibition.13
The petitioner filed its Motion for Reconsideration 14 of the Decision dated June 17, 2011 of the CA, but
the same was denied in a Resolution 15 dated November 25, 2011.
Unyielding, the petitioner filed the instant petition, raising the following assignment of errors, to wit:
I was also recognized as a proper remedy to prohibit or nullify acts of executive officials that amount to
THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR PROHIBITION FILED WITH THE CA IS
AN IMPROPER REMEDY TO ASSAIL THE CONSTITUTIONALITY OF THE 20%, SALES DISCOUNT FOR
SENIOR CITIZENS AND PWDs;
II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME COURT'S RULING IN CARLOS
SUPERDRUG CONSTITUTES STARE DECISIS;
III
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE 20%, SALES
DISCOUNT FOR SENIOR CITIZENS AND PWDs IS A VALID EXERCISE OF POLICE POWER. ON THE
CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT DOMAIN BECAUSE IT FAILS TO
PROVIDE JUST COMPENSATION TO THE PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;
IV
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE 20°/o SALES
DISCOUNT FOR SENIOR CITIZENS AND PWDs DOES NOT VIOLATE THE PETITIONER'S RIGHT TO EQUAL
PROTECTION OF THE LAW; and
V
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE DEFINITIONS OF
DISABILITIES AND PWDs ARE NOT VAGUE AND DO NOT VIOLATE THE PETITIONER'S RIGHT TO DUE
PROCESS OF LAW.16
Ruling of the Court
Prohibition may be filed to question
the constitutionality of a law
In the assailed decision, the CA noted that the action, although denominated as one for prohibition,
seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No. 9257 and Section 32 of R.A.
No.9442. It held that in such a case, the proper remedy is not a special civil 1 action but a petition for
declaratory relief, which falls under the exclusive original jurisdiction of the RTC, in the first instance, and
of the Supreme Court, on appeal. 17
The Court clarifies.
Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of authority and is
directed against proceedings that are done without or in excess of jurisdiction, or with grave abuse of
discretion, there being no appeal or other plain, speedy, and adequate remedy in the ordinary course of
law. It is the remedy to prevent inferior courts, corporations, boards, or persons from usurping or
exercising a jurisdiction or power with which they have not been vested by law. 18 This is, however, not
the lone office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance, et al., 19 prohibition
usurpation of legislative authority. 20 And, in a number of jurisprudence, prohibition was allowed as a
proper action to assail the constitutionality of a law or prohibit its implementation.
In Social Weather Stations, Inc. v. Commission on Elections,21therein petitioner filed a petition for
prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or the "Fair Elections
Act," which prohibited the publication of surveys within 15 days before an election for national
candidates, and seven days for local candidates. Included in the petition is a prayer to prohibit the
Commission on Elections from enforcing the said provision. The Court granted the Petition and struck
down the assailed provision for being unconstitutional. 22
In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,23 therein petitioner assailed the
constitutionality of paragraphs (c ), (d), (f) and (g) of Section 36 of R.A. No. 9165, otherwise known as
the "Comprehensive Dangerous Drugs Act of 2002," on the ground that they constitute undue delegation
of legislative power for granting unbridled discretion to schools and private employers in determining
the manner of drug 'testing of their employees, and that the law constitutes a violation of the right
against unreasonable searches and seizures. It also sought to enjoin the Dangerous Drugs Board and the
Philippine Drug Enforcement Agency from enforcing the challenged provision.24 The Court partially
granted the petition by declaring Section 36(f) and (g) of R.A. No. 9165 unconstitutional, and
permanently enjoined the concerned agencies from implementing them. 25
In another instance, consolidated petitions for prohibitions26 questioning the constitutionality of the
Priority Development Assistance Fund were deliberated upon by this Court which ultimately granted the
same.
Clearly, prohibition has been found an appropriate remedy to challenge the constitutionality of various
laws, rules, and regulations.
There is also no question regarding the jurisdiction of the CA to hear and decide a petition for
prohibition. By express provision of the law, particularly Section 9(1) of Batas Pambansa Bilang 129,27 the
CA was granted "original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas
corpus, and quo warranto, and auxiliary writs or I processes, whether or not in aid of its appellate
jurisdiction." This authority· the CA enjoys concurrently with RTCs and this Court.
In the same manner, the supposed violation of the principle of the ·. hierarchy of courts does not pose
any hindrance to the full deliberation of the issues at hand. It is well to remember that "the judicial
hierarchy of courts is not an iron-clad rule. It generally applies to cases involving warring factual
allegations. For this reason, litigants are required to [refer] to the trial courts at the first instance to
determine the truth or falsity of these contending allegations on the basis of the evidence of the parties.
Cases which depend on disputed facts for decision cannot be brought immediately before appellate
courts as they are not triers of facts. Therefore, a strict application of the rule of hierarchy of courts is
not necessary when the cases brought before the appellate courts do not involve factual but legal
questions."28
Moreover, the principle of hierarchy of courts may be set aside for special and important reasons, such
as when dictated by public welfare and ' the advancement of public policy, or demanded by the broader
interest of justice.29 Thus, when based on the good judgment of the court, the urgency and significance
of the issues presented calls for its intervention, it should not hesitate to exercise its duty to resolve.
The instant petition presents an exception to the principle as it basically raises a legal question on the
constitutionality of the mandatory discount and the breadth of its rightful beneficiaries. More
importantly, the resolution of the issues will redound to the benefit of the public as it will put to rest the
questions on the propriety of the granting of discounts to senior citizens and PWDs amid the fervent
insistence of affected establishments that the measure transgresses their property rights. The Court,
therefore, finds it to the best interest of justice that the instant petition be resolved.
The instant case is not barred by
stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos Superdrug constitutes
as stare decisis or law of the case which bars the relitigation of the issues that had been resolved therein
and had been raised anew in the instant petition. It argues that there are substantial differences
between Carlos Superdrug and the circumstances in the instant case which take it out from the
operation of the doctrine of stare decisis. It cites that in Carlos Superdrug, the Court denied the petition
because the petitioner therein failed to prove the confiscatory effect of the tax deduction scheme as no
proof of actual loss was submitted. It believes that its submission of financial statements for the years
2006 and 2007 to prove the confiscatory effect of the law is a material fact that distinguishes the instant
case from that of Carlos Superdrug. 30
The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the instant case,
not because of the petitioner's submission of financial statements which were wanting in the first case,
but because it had the good sense of including questions that had not been raised or deliberated in the
former case of Carlos Superdrug, i.e., validity of the 20% discount granted to PWDs, the supposed
vagueness of the provisions of R.A. No. 9442 and violation of the equal protection clause.
Nonetheless, the Court finds nothing in the instant case that merits a reversal of the earlier ruling of the
Court in Carlos Superdrug. Contrary to the petitioner's claim, there is a very slim difference between the
issues in Carlos Superdrug and the instant case with respect to the nature of the senior citizen discount.
A perfunctory reading of the circumstances of the two cases easily discloses marked similarities in the
issues and the arguments raised by the petitioners in both cases that semantics nor careful play of words
can hardly obscure.
In both cases, it is apparent that what the petitioners are ultimately questioning is not the grant of the
senior citizen discount per se, but the manner by which they were allowed to recoup the said discount. In
particular, they are protesting the change in the tax treatment of the senior citizen discount from tax
credit to being merely a deduction from gross income which they claimed to have significantly reduced
their profits.
This question had been settled in Carlos Superdrug, where the Court ruled that the change in the tax
treatment of the discount was a valid exercise of police power, thus:
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of the
gross sales of the private establishments, were it not for R.A. No. 9257.
xxxx
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
meet the definition of just compensation.
Having said that, this raises the question of whether the State, in promoting the health and welfare of a
special group of citizens, can impose upon private establishments the burden of partly subsidizing a
government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-
building, and to grant benefits and privileges to them for their improvement and well-being as the State
considers them an integral part of our society.
The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself. Thus,
the Act provides:
SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV, Section 4 of the Constitution, it is
the duty of the family to take care of its elderly members while the State may design programs of social
security for them. In addition to this, Section 10 in the Declaration of Principles and State Policies
provides: "The State shall provide social justice in all phases of national development." Further, Article
XIII, Section 11, provides: "The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social services available to
all the people at affordable cost. There shall be priority for the needs of the underprivileged sick, elderly,
disabled, women and children." Consonant with these constitutional principles the following are the
declared policies of this Act:
xxxx
(f) To recognize the important role of the private sector in the improvement of the welfare of senior
citizens and to actively seek their partnership.
To implement the above policy, the law grants a twenty percent discount to senior citizens for medical
and dental services, and diagnostic and laboratory fees; admission fees charged by theaters, concert
halls, circuses, carnivals, and other similar places of culture, leisure and amusement; fares for domestic
land, air and sea travel; utilization of services in hotels and similar lodging establishments, restaurants
and recreation centers; and purchases of medicines for the exclusive use or enjoyment of senior citizens.
As a form of reimbursement, the law provides that business establishments extending the twenty
percent discount to senior citizens may claim the discount as a tax deduction.
The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but 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 to conditions and circumstances, thus assuring the greatest
benefits. Accordingly, it has been described as "the most essential, insistent and the least limitable of
powers, extending as it does to all the great public needs." It is "[t]he power vested in the legislature by
the constitution to make, ordain, and establish all manner of wholesome and reasonable laws, statutes,
and ordinances, either with penalties or without, not repugnant to the constitution, as they shall judge
to be for the good and welfare of the commonwealth, and of the subjects of the same."
For this reason, when the conditions so demand as determined by the legislature, property rights must
bow to the primacy of police power because proper rights, though sheltered by due process, must yield
to general welfare. 31 (Citations omitted and emphasis in the original)
Verily, it is the bounden duty of the State to care for the elderly as they reach the point in their lives
when the vigor of their youth has diminished and resources have become scarce. Not much because of
choice, they become needing of support from the society for whom they presumably spent their
productive days and for whose betterment they' exhausted their energy, know-how and experience to
make our days better to live.
In the same way, providing aid for the disabled persons is an equally important State responsibility. Thus,
the State is obliged to give full support to the improvement of the total well-being of disabled persons
and their integration into the mainstream of society. 32This entails the creation of opportunities for them
and according them privileges if only to balance the playing field which had been unduly tilted against
them because of their limitations.
The duty to care for the elderly and the disabled lies not only upon the State, but also on the community
and even private entities. As to the State, the duty emanates from its role as parens patriae which holds
it under obligation to provide protection and look after the welfare of its people especially those who
cannot tend to themselves. Parens patriae means parent of his or her country, and refers to the State in
its role as "sovereign", or the State in its capacity as a provider of protection to those unable to care for
themselves. 33 In fulfilling this duty, the State may resort to the exercise of its inherent powers: police
power, eminent domain and power of taxation.
In Gerochi v. Department of Energy,34the Court passed upon one of the inherent powers of the state, the
police power, where it emphasized, thus:
[P]olice power is the power of the state to promote public welfare by restraining and regulating the use
of liberty and property. It is the most pervasive, the least limitable, and the most demanding of the three
fundamental powers of the State. The justification is found in the Latin maxim salus populi est suprema
lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas (so use your
property as not to injure the property of others). As an inherent attribute of sovereignty which virtually
extends to all public needs, police power grants a wide panoply of instruments through which the State,
as parens patriae, gives effect to a host of its regulatory powers. We have held that the power to
"regulate" means the power to protect, foster, promote, preserve, and control, with due regard for the
interests, first and foremost, of the public, then of the utility and of its patrons. 35 (Citations omitted)
It is in the exercise of its police power that the Congress enacted R.A. Nos. 9257 and 9442, the laws
mandating a 20% discount on purchases of medicines made by senior citizens and PWDs. It is also in
further exercise of this power that the legislature opted that the said discount be claimed as tax
deduction, rather than tax credit, by covered establishments.
The petitioner, however, claims that the change in the tax treatment of the discount is illegal as it
constitutes taking without just compensation. It even submitted financial statements for the years 2006
and 2007 to support its claim of declining profits when the change in the policy was implemented.
The Court is not swayed.
To begin with, the issue of just compensation finds no relevance in the instant case as it had already
been made clear in Carlos Superdrug that the power being exercised by the State in the imposition of
senior citizen discount was its police power. Unlike in the exercise of the power of eminent domain, just
compensation is not required in wielding police power. This is precisely because there is no taking
involved, but only an imposition of burden.
In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., 36 the Court ruled that by examining
the nature and the effects of R.A. No. 9257, it becomes apparent that the challenged governmental act
was an exercise of police power. It was held, thus:
[W]e now look at the nature and effects of the 20% discount to determine if it constitutes an exercise of
police power or eminent domain.
The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less likely to
be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need of subsidy in
purchasing basic commodities. It may not be amiss to mention also that the discount serves to honor
senior citizens who presumably spent the productive years of their lives on contributing to the
development and progress of the nation. This distinct cultural Filipino practice of honoring the elderly is
an integral part of this law.
As to its nature and effects, the 20% discount is a regulation affecting the ability of private
establishments to price their products and services relative to a special class of individuals, senior
citizens, for which the Constitution affords preferential concern. In turn, this affects the amount of
profits or income/gross sales that a private establishment can derive from senior citizens. In other words,
the subject regulation affects the pricing, and, hence, the profitability of a private establishment.
However, it does not purport to appropriate or burden specific properties, used in the operation or
conduct of the business of private establishments, for the use or benefit of the public, or senior citizens
for that matter, but merely regulates the pricing of goods and services relative to, and the amount of
profits or income/gross sales that such private establishments may derive from, senior citizens.
The subject regulation may be said to be similar to, but with substantial distinctions from, price control
or rate of 'return on investment control laws which are traditionally regarded as police power measures.
x x x.37 (Citations omitted)
In the exercise of police power, "property rights of private individuals are subjected to restraints and
burdens in order to secure the general comfort, health, and prosperity of the State."38 Even then, the
State's claim of police power cannot be arbitrary or unreasonable. After all, the overriding purpose of the
exercise of the power is to promote general welfare, public health and safety, among others. It is a
measure, which by sheer necessity, the State exercises, even to the point of interfering with personal
liberties or property rights in order to advance common good. To warrant such interference, two
requisites must concur: (a) the interests of the public generally, as distinguished from those of a
particular class, require the interference of the! State; and (b) the means employed are reasonably
necessary to the: attainment of the object sought to be accomplished and not unduly oppressive upon
individuals. In other words, the proper exercise of the police power requires the concurrence of a lawful
subject and a lawful method.39
The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are individuals whose well-being
is a recognized public duty. As a public duty, the responsibility for their care devolves upon the concerted
efforts of the State, the family and the community. In Article XIII, Section 1 of the Constitution, the State
is mandated to give highest priority to the enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power1 for the common good. The more apparent
manifestation of these social inequities is the unequal distribution or access to healthcare services. To:
abet in alleviating this concern, the State is committed to adopt an integrated! and comprehensive
approach to health development which shall endeavor to make essential goods, health and other social
services available to all the people at affordable cost, with priority for the needs of the underprivileged
sick, elderly, disabled, women, and children.40
In the same manner, the family and the community have equally significant duties to perform in
reducing social inequality. The family as the basic social institution has the foremost duty to care for its
elderly members.41 On the other hand, the community, which include the private sector, is recognized as
an active partner of the State in pursuing greater causes. The private sector, being recipients of the
privilege to engage business in our land, utilize our goods as well as the services of our people for
proprietary purposes, it is only fitting to expect their support in measures that contribute to common
good. Moreover, their right to own, establish and operate economic enterprises is always subject to the
duty of the State to promote distributive justice and to intervene when the common good so demands.42
The Court also entertains no doubt on the legality of the method taken by the legislature to implement
the declared policies of the subject laws, that is, to impose discounts on the medical services and
purchases of senior citizens and PWDs and to treat the said discounts as tax deduction rather than tax
credit. The measure is fair and reasonable and no credible proof was presented to prove the claim that it
was confiscatory. To be considered confiscatory, there must be taking of property without just
compensation.
Illuminating on this point is the discussion of the Court on the concept of taking in City of Manila v. Hon.
Laguio, Jr.,43 viz.:
There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.
xxxx
No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and therefore
cannot be disposed of by general propositions." On many other occasions as well, the U.S. Supreme
Court has said that the issue of when regulation constitutes a taking is a matter of considering the facts
in each case. x x x.
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it
leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use. A regulation that permanently denies all economically beneficial or productive use
of land is, from the owner's point of view, equivalent to a "taking" unless principles of nuisance or
property law that existed when the owner acquired the land make the use prohibitable. When the owner
of real property has been called upon to sacrifice all economically beneficial uses in the name of the
common good, that is, to leave his property economically idle, he has suffered a taking.
xxxx
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.44 (Citations omitted)
The petitioner herein attempts to prove its claim that the pertinent provisions of R.A. Nos. 9257 and
9442 amount to taking by presenting financial statements purportedly showing financial losses incurred
by them due to the adoption of the tax deduction scheme.
For the petitioner's clarification, the presentation of the financial statement is not of compelling
significance in justifying its claim for just compensation. What is imperative is for it to establish that
there was taking in the constitutional sense or that, in the imposition of the mandatory discount, the
power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi,45five circumstances must be present in order
to qualify "taking" as an exercise of eminent domain. First, the expropriator must enter a private
property. Second, the entrance into private property must be for more than a momentary
period. Third, the entry into the property should be under warrant or color of legal authority. Fourth, the
property must be devoted to a public use or otherwise informally appropriated or injuriously
affected. Fifth, the utilization of the property for public use must be in such a way as to oust the owner
Drug A
and deprive him of all beneficial enjoyment of the property. 46

The first requirement speaks of entry into a private property which clearly does not obtain in this case. Acquisition cost ₱8.00
There is no private property that is; invaded or appropriated by the State. As it is, the petitioner Selling price ₱10.00
precipitately deemed future profits as private property and then proceeded to argue that the State took
it away without full compensation. This seemed preposterous considering that the subject of what the
petitioner supposed as taking was not even earned profits but merely an expectation of profits, which Number of patrons 100
may not even occur. For obvious reasons, there cannot be taking of a contingency or of a mere
possibility because it lacks physical existence that is necessary before there could be any taking. Further,
it is impossible to quantify the compensation for the loss of supposed profits before it is earned. Sales:

The supposed taking also lacked the characteristics of permanence 47 and consistency.1âwphi1 The 100 x ₱10.00 = ₱1,000.00
presence of these characteristics is significant because they can establish that the effect of the
questioned provisions is the same on all establishments and those losses are indeed its unavoidable
consequence. But apparently these indications are wanting in this case. The reason is that the impact on Profit: ₱200
the establishments varies depending on their response to the changes brought about by the subject
provisions. To be clear, establishments, are not prevented from adjusting their prices to accommodate
the effects of the granting of the discount and retain their profitability while being fully compliant to the
laws. It follows that losses are not inevitable because establishments are free to take business measures After the passage of the law, the three establishments reacted differently. Establishment 1 was passive
to accommodate the contingency. Lacking in permanence and consistency, there can be no taking in the and maintained the price of Drug A at ₱8.00 which understandably resulted in diminution of profits.
constitutional sense. There cannot be taking in one establishment and none in another, such that the
former can claim compensation but the other may not. Simply told, there is no taking to justify Establishment 1
compensation; there is only poor business decision to blame.

There is also no ousting of the owner or deprivation of ownership. Establishments are neither divested of Drug A
ownership of any of their properties nor is anything forcibly taken from them. They remain the owner of
their goods and their profit or loss still depends on the performance of their sales.
Acquisition cost ₱8.00
Selling price ;₱10.00
Apart from the foregoing, covered establishments are also provided with a mechanism to recoup the
amount of discounts they grant the senior citizens and PWDs. It is provided in Section 4(a) of R.A. No.
9257 and Section 32 of R.A. No. 9442 that establishments may claim the discounts as "tax deduction Number of patrons 100
based on the net cost of the goods sold or services rendered." Basically, whatever amount was given as Senior Citizens/PWD 50
discount, covered establishments may claim an equal amount as an expense or tax deduction. The
trouble is that the petitioner, in protesting the change in the tax treatment of the discounts, apparently
seeks tax incentive and not merely a return of the amount given as discounts. It premised its Sales
interpretation of financial losses in terms of the effect of the change in the tax treatment of the discount
on its tax liability; hence, the claim that the measure was confiscatory. However, as mentioned earlier in
the discussion, loss of profits is not the inevitable result of the change in tax treatment of the discounts; 100 x ₱10.00 = ₱1,000.00
it is more appropriately a consequence of poor business decision.
Deduction: ₱100.00
It bears emphasizing that the law does not place a cap on the amount of mark up that covered
establishments may impose on their items. This rests on the discretion of the establishment which, of
course, is expected to put in the price of the overhead costs, expectation of profits and other Profit: ₱100.00
considerations into the selling price of an item. In a simple illustration, here is Drug A, with acquisition
cost of ₱8.00, and selling price of ₱10.00. Then comes a law that imposes 20% on senior citizens and
PWDs, which affected Establishments 1, 2 and 3. Let us suppose that the approximate number of patrons
who purchases Drug A is 100, half of which are senior citizens and PWDs. Before the passage of the law, On the other hand, Establishment 2, mindful that the new law will affect the profitability of the business,
all of the establishments are earning the same amount from profit from the sale of Drug A, viz.: made a calculated decision by increasing the mark up of Drug A to ₱3.20, instead of only ₱2.00. This
brought a positive result to the earnings of the company.

Before the passage of the law:

Establishment 2
 The foregoing demonstrates that it is not the law per se which occasioned the losses in the covered
Drug A
establishments but bad business I judgment. One of the main considerations in making business
decisions is the law because its effect is widespread and inevitable. Literally, anything can be a subject of
Acquisition cost ;₱8.00 legislation. It is therefore incumbent upon business managers to cover this contingency and consider it in
making business strategies. As shown in the illustration, the better responses were exemplified by
Selling price ₱11.20
Establishments 2 and 3 which promptly put in the additional costs brought about by the law into the
price of Drug A. In doing so, they were able to maintain the profitability of the business, even earning
Number of patron 100 some more, while at the same time being fully compliant with the law. This is not to mention that the
Senior Citizens/PWDs 50 illustration is even too simplistic and not' the most ideal since it dealt only with a single drug being
purchased by both regular patrons and senior citizens and PWDs. It did not consider the accumulated
profits from the other medical and non-medical products being sold by the establishments which are
Sales expected to further curb the effect of the granting of the discounts in the business.

It is therefore unthinkable how the petitioner could have suffered losses due to the mandated discounts
100 x ₱10.00 = ₱1,000.00
in R.A. Nos. 9257 and 9442, when a fractional increase in the prices of items could bring the business
standing at a balance even with the introduction of the subject laws. A level adjustment in the pricing of
Deduction: ₱112.00 items is a reasonable business measure to take in order to adapt to the contingency. This could even
make establishments earn more, as shown in the illustration, since every fractional increase in the price
of covered items translates to a wider cushion to taper off the effect of the granting of discounts and
Profit: ₱208.00 ultimately results to additional profits gained from the purchases of the same items by regular patrons
who are not entitled to the discount. Clearly, the effect of the subject laws in the financial standing of
covered companies depends largely on how they respond and forge a balance between profitability and
their sense of social responsibility. The adaptation is entirely up to them and they are not powerless to
For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just to even out the effect of the make adjustments to accommodate the subject legislations.
law. This measure left a negligible effect on its profit, but Establishment 3 took it as a social duty: to
share in the cause being promoted by the government while still maintaining profitability. Still, the petitioner argues that the law is confiscatory in the sense that the State takes away a portion of
its supposed profits which could have gone into its coffers and utilizes it for public purpose. The
Establishment 3 petitioner claims that the action of the State amounts to taking for which it should be compensated.

To reiterate, the subject provisions only affect the petitioner's right to profit, and not earned profits.
Drug A Unfortunately for the petitioner, the right to profit is not a vested right or an entitlement that has
accrued on the person or entity such that its invasion or deprivation warrants compensation. Vested
Acquisition cost ₱8.00 rights are "fixed, unalterable, or irrevocable."48 More extensively, they are depicted as follows:
Selling price ₱11.20
Rights which have so completely and definitely accrued to or settled in a person that they are not
subject to be defeated or cancelled by the act of any other private person, and which it is right and
Number of patrons 100 equitable that the government should recognize and protect, as being lawful in themselves, and settled
Senior Citizens/PWD 50 according to the then current rules of law, and of which the individual could not be deprived arbitrarily
without injustice, or of which he could not justly be deprived otherwise than by the established methods
of procedure and for the public welfare. x x x A right is not 'vested' unless it is more than a mere
Sales expectation based on the anticipated continuance of present laws; it must be an established interest in
property, not open to doubt. x x x To be vested in its accurate legal sense, a right must be complete and
consummated, and one of which the person to whom it belongs cannot be divested without his
100 x ₱10.00 = ₱1,000.00 consent.x x x.49 (Emphasis ours)

Deduction: ₱110.00 Right to profits does not give the petitioner the cause of action to ask for just compensation, it being
only an inchoate right or one that has not fully developed50 and therefore cannot be claimed as one's
own. An inchoate right is a mere expectation, which may or may not come into existence. It is contingent
Profit: ₱190.00 as it only comes "into existence on an event or condition which may not happen or be performed until
some other event may prevent their vesting."51 Certainly, the petitioner cannot claim confiscation or
taking of something that has yet to exist. It cannot claim deprivation of profit before the consummation
of a sale and the purchase by a senior citizen or PWD.
Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not come into
being until the occurrence or realization of a condition precedent. It is a mere "contingency that might
never eventuate into a right. It stands for a mere possibility of profit but nothing might ever be payable
under it."52
The inchoate nature of the right to profit precludes the possibility of compensation because it lacks the
quality or characteristic which is necessary before any act of taking or expropriation can be effected.
Moreover, there is no yardstick fitting to quantify a contingency or to determine compensation for a
mere possibility. Certainly, "taking" presupposes the existence of a subject that has a quantifiable or
determinable value, characteristics which a mere contingency does not possess.
Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say that it is within
the province of Congress to do so in the exercise of its legislative power. It has the authority to choose
the subject of legislation, outline the effective measures to achieve its declared policies and even impose
penalties in case of non-compliance. It has the sole discretion to decide which policies to pursue and
devise means to achieve them, and courts often do not interfere in this exercise for as long as it does not
transcend constitutional limitations. "In performing this duty, the legislature has no guide but its
judgment and discretion and the wisdom of experience."53 In Carter v. Carter Coal Co.,54legislative
discretion has been described as follows:
Legislative congressional discretion begins with the choice of means, and ends with the adoption of
methods and details to carry the delegated powers into effect. x x x [W]hile the powers are rigidly
limited to the enumerations of the Constitution, the means which may be employed to carry the powers
into effect are not restricted, save that they must be appropriate, plainly adapted to the end, and not
prohibited by, but consistent with, the letter and spirit of the Constitution. x x x. 55 (Emphasis ours)
Corollary, whether to treat the discount as a tax deduction or tax credit is a matter addressed to the
wisdom of the legislature. After all, it is within its prerogative to enact laws which it deems sufficient to
address a specific public concern. And, in the process of legislation, a bill goes through rigorous tests of
validity, necessity and sufficiency in both houses of Congress before enrolment. It undergoes close
scrutiny of the members of Congress and necessarily had to surpass the arguments hurled against its
passage. Thus, the presumption of validity that goes with every law as a form of deference to the process
it had gone through and also to the legislature's exercise of discretion. Thus, in lchong, etc., et
al. v. Hernandez) etc., and Sarmiento,56the Court emphasized, thus:
It must not be overlooked, in the first place, that the legislature, which is the constitutional repository of
police power and exercises the prerogative of determining the policy of the State, is by force of
circumstances primarily the judge of necessity, adequacy or reasonableness and wisdom, of any law
promulgated in the exercise of the police power, or of the measures adopted to implement the public
policy or to achieve public interest.x x x.57 (Emphasis ours)
The legislature may also grant rights and impose additional burdens: It may also regulate industries, in
the exercise of police power, for the protection of the public. R.A. Nos. 9257 and 9442 are akin to
regulatory laws, the issuance of which is within the ambit of police power. The minimum wage law,
zoning ordinances, price control laws, laws regulating the operation of motels and hotels, laws limiting
the working hours to eight, and the like fall under this category. 58
Indeed, regulatory laws are within the category of police power measures from which affected persons
or entities cannot claim exclusion or compensation. For instance, private establishments cannot protest
that the imposition of the minimum wage is confiscatory since it eats up a considerable chunk of its
profits or that the mandated remuneration is not commensurate for the work done. The compulsory
nature of the provision for minimum wages underlies the effort of the State; as R.A. No. 672759 expresses
it, to promote productivity-improvement and gain-sharing measures to ensure a decent standard of
living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through industry dispersal; and to
allow business and industry reasonable returns on investment, expansion and growth, and as the
Constitution expresses it, to affirm labor as a primary social economic force. 60
Similarly, the imposition of price control on staple goods in R.A. No. 758161 is likewise a valid exercise of
police power and affected establishments cannot argue that the law was depriving them of supposed
gains. The law seeks to ensure the availability of basic necessities and prime commodities at reasonable
prices at all times without denying legitimate business a fair return on investment. It likewise aims to
provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with
respect to the supply, distribution, marketing and pricing of said goods, especially during periods of
calamity, emergency, widespread illegal price manipulation and other similar situations.62
More relevantly, in Manila Memorial Park, Inc.,63it was ruled that it is within the bounds of the police
power of the state to impose burden on private entities, even if it may affect their profits, such as in the
imposition of price control measures. There is no compensable taking but only a recognition of the fact
that they are subject to the regulation of the State and that all personal or private interests must bow
down to the more paramount interest of the State.
This notwithstanding, the regulatory power of the State does not authorize the destruction of the
business. While a business may be regulated, such regulation must be within the bounds of
reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably interfered with even by the
exercise of police power. 64 After all, regulation only signifies control or restraint, it does not mean
suppression or absolute prohibition. Thus, in Philippine Communications Satellite
Corporation v. Alcuaz, 65 the Court emphasized:
The power to regulate is not the power to destroy useful and harmless enterprises, but is the power to
protect, foster, promote, preserve, and control with due regard for the interest, first and foremost, of
the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an effective
confiscation of private property or constitutes an arbitrary or unreasonable infringement of property
rights is void, because it is repugnant to the constitutional guaranties of due process and equal
protection of the laws. 66 (Citation omitted)
Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of regulation, allow
undue interference in an otherwise legitimate business.1avvphi1 On the contrary, it was shown that the
questioned laws do not meddle in the business or take anything from it but only regulate its realization
of profits.
The subject laws do not violate the
equal protection clause
The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause in that it
failed to distinguish between those who have the capacity to pay and those who do not, in granting the
20% discount. R.A. No. 9257, in particular, removed the income qualification in R.A. No. 7432
of'₱60,000.00 per annum before a senior citizen may be entitled to the 20o/o discount.
The contention lacks merit.
The petitioner's argument is dismissive of the reasonable qualification on which the subject laws were
based. In City of Manila v. Hon. Laguio, Jr., 67 the Court emphasized:
Equal protection requires that all persons or things similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed. Similar subjects, in other words, should not be treated
differently, so as to give undue favor to some and unjustly discriminate against others. The guarantee
means that no person or class of persons shall be denied the same protection of laws which is enjoyed
by other persons or other classes in like circumstances.68 (Citations omitted)
"The equal protection clause is not infringed by legislation which applies only to those persons falling
within a specified class. If the groupings are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from another."69 For a classification to be
valid, (1) it must be based upon substantial distinctions, (2) it must be germane to the purposes of the
law, (3) it must not be limited to existing conditions only, and (4) it must apply equally to all members of
the same class. 70
To recognize all senior citizens as a group, without distinction as to income, is a valid classification. The
Constitution itself considered the elderly as a class of their own and deemed it a priority to address their
needs. When the Constitution declared its intention to prioritize the predicament of the underprivileged
sick, elderly, disabled, women, and children,71 it did not make any reservation as to income, race, religion
or any other personal circumstances. It was a blanket privilege afforded the group of citizens in the
enumeration in view of the vulnerability of their class.
R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures that
protect and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities. 72 Specifically, it caters to the welfare of all senior citizens. The classification is based on age
and therefore qualifies all who have attained the age of 60. Senior citizens are a class of their own, who
are in need and should be entitled to government support, and the fact that they may still be earning for
their own sustenance should not disqualify them from the privilege.
It is well to consider that our senior citizens have already reached the age when work opportunities have
dwindled concurrently as their physical health.1âwphi1 They are no longer expected to work, but there
are still those who continue to work and contribute what they can to the country. Thus, to single them
out and take them out of the privileges of the law for continuing to strive and earn income to fend for
themselves is inimical to a welfare state that the Constitution envisions. It is tantamount to penalizing
them for their persistence. It is commending indolence rather than rewarding diligence. It encourages
them to become wards of the State rather than productive partners.
Our senior citizens were the laborers, professionals and overseas contract workers of the past. While
some may be well to do or may have the capacity to support their sustenance, the discretion to avail of
the privileges of the law is up to them. But to instantly tag them. as undeserving of the privilege would
be the height of ingratitude; it is an outright discrimination.
The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442 and in granting
them discounts.1âwphi1 It needs no further explanation that PWDs have special needs which, for most,'
last their entire lifetime. They constitute a class of their own, equally deserving of government support
as our elderlies. While some of them maybe willing to work and earn income for themselves, their
disability deters them from living their full potential. Thus, the need for assistance from the government
to augment the reduced income or productivity brought about by their physical or intellectual
limitations.
There is also no question that the grant of mandatory discount is germane to the purpose of R.A. Nos.
9257 and 9442, that is, to adopt an integrated and comprehensive approach to health development and
make essential goods and other social services available to all the people at affordable cost, with special
priority given to the elderlies and the disabled, among others. The privileges granted by the laws ease
their concerns and allow them to live more comfortably.
The subject laws also address a continuing concern of the government for the welfare of the senior
citizens and PWDs. It is not some random predicament but an actual, continuing and pressing concern
that requires preferential attention. Also, the laws apply to all senior citizens and PWDs, respectively,
without further distinction or reservation. Without a doubt, all the elements for a valid classification
were met.
The definitions of "disabilities" and
"PWDs" are clear and unequivocal
Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in defining the terms
"disability" and "PWDs," such that it lack comprehensible standards that men of common intelligence
must guess at its meaning. It likewise bewails the futility of the given safeguards to prevent abuse since
government officials who are neither experts nor practitioners of medicine are given the authority to
issue identification cards that authorizes the granting of the privileges under the law.
The Court disagrees.
Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in the manner or within the range considered
normal for a human being[.]
On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as follows:
5.1. PersonswithDisability are those individuals defined under Section 4 of [R.A. No.] 7277 [or] An Act
Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability as
amended and their integration into the Mainstream of Society and for Other Purposes. This is defined as
a person suffering from restriction or different abilities, as a result of a mental, physical or sensory
impairment, to perform an activity in a manner or within the range considered normal for human being.
Disability shall mean (1) a physical 1or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment.
The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of
the United Nations Convention on the Rights of Persons with Disabilities which reads:
Persons with disabilities include those who have long-term physical, mental, intellectual or sensory
impairments which in interaction with various barriers may hinder their full and effective participation in
society on an equal basis with others. (Emphasis and italics ours)
The seemingly broad definition of the terms was not without good reasons. It recognizes that "disability
is an evolving concept"73 and appreciates the "diversity of PWDs."74 The terms were given
comprehensive definitions so as to accommodate the various forms of disabilities, and not confine it to a
particular case as this would effectively exclude other forms of physical, intellectual or psychological 3. Document to confirm the medical or disability condition 78
impairments.
To confirm his disability, the person must obtain a medical certificate or assessment, as the case maybe,
Moreover, in Estrada v. Sandiganbayan, 75 it was declared, thus: issued by a licensed private or government physician, licensed teacher or head of a business
establishment attesting to his impairment. The issuing entity depends on whether the disability is
apparent or non-apparent. NCDAA.O. No. 001 further provides:79
A statute is not rendered uncertain and void merely because general terms are used therein, or because
of the employment of terms without defining them; much less do we have to define every word we use.
Besides, there is no positive constitutional or statutory command requiring the legislature to define each DISABILITY DOCUMENT ISSUING ENTITY
and every word in an enactment. Congress is not restricted in the form of expression of its will, and its
inability to so define the words employed in a statute will not necessarily result in the vagueness or
ambiguity of the law so long as the legislative will is clear, or at least, can be gathered from the whole act Apparent Medical Licensed Private or
x x x.76 (Citation omitted) Disability Certificate Government Physician

At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As regards the petitioner's
claim that the law lacked reasonable standards in determining the persons entitled to the discount,
School Licensed Teacher duly
Section 32 thereof is on point as it identifies who may avail of the privilege and the manner of its
Assessment signed by the School
availment. It states:
Principal

Sec. 32. x x x
Certificate of  Head of the Business
Disability
The abovementioned privileges are available only to persons with disability who are Filipino citizens
upon submission of any of the following as proof of his/her entitlement thereto:
Establishment
(I) An identification card issued by the city or municipal mayor or the barangay captain of the
place where the persons with disability resides;
 Head of Non-Government
Organization
(II) The passport of the persons with disability concerned; or

(III) Transportation discount fare Identification Card (ID) issued by the National Council for the Non-Apparent Medical Licensed Private or
Welfare of Disabled Persons (NCWDP). Disability Certificate Government Physician

It is, however, the petitioner's contention that the foregoing authorizes government officials who had no
medical background to exercise discretion in issuing identification cards to those claiming to be PWDs. It
To provide further safeguard, the Department of Health issued A.O. No. 2009-0011, providing guidelines
argues that the provision lends to the indiscriminate availment of the privileges even by those who are
for the availment of the 20% discount on the purchase of medicines by PWDs. In making a purchase, the
not qualified.
individual must present the documents enumerated in Section VI(4)(b ), to wit:

The petitioner's apprehension demonstrates a superficial understanding of the law and its implementing
rules. To be clear, the issuance of identification cards to PWDs does not depend on the authority of the
city or municipal mayor, the DSWD or officials of the NCDA (formerly NCWDP). It is well to remember
that what entitles a person to the privileges of the law is his disability, the fact of which he must prove to
qualify. Thus, in NCDA Administrative Order (A.O.) No. 001, series of 2008, 77 it is required that the
person claiming disability must submit the following requirements before he shall be issued a PWD
Identification Card:
1. Two "1 x l" recent ID pictures with the names, and signatures or thumb marks at the back of the
picture.
2. One (1) Valid ID
i. PWD identification card x x x
ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic name of
the medicine, dosage form, dosage strength, quantity, signature over printed name of
physician, physician's address, contact number of physician or dentist, professional license
number, professional tax receipt number and narcotic license number, if applicable. To
safeguard the health of PWDs and to prevent abuse of [R.A. No.] 9257, a doctor's prescription
is required in the purchase of over-the-counter medicines. x x x.
iii. Purchase booklet issued by the local social/health office to PWDs for free containing the
following basic information:

a) PWD ID number
 b) Booklet control number WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and Section 32
of Republic Act No. 9442 are hereby declared CONSTITUTIONAL.
c) Name of PWD
<<page>>
d) Sex
SO ORDERED.
e) Address
G.R. No. 199802
f) Date of Birth
CONGRESSMAN HERMILANDO I. MANDANAS; MAYOR EFREN B. DIONA; MAYOR ANTONINO A.
AURELIO; KAGA WAD MARIOILAGAN;BARANGAY CHAIR PERLITO MANALO; BARANGA Y CHAIR MEDEL
g) Picture
MEDRANO;BARANGAY KAGA WAD CRIS RAMOS; BARANGA Y KAGA WAD ELISA D. BALBAGO, and
ATTY. JOSE MALVAR VILLEGAS, Petitioners
h) Signature of PWD vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; SECRETARY CESAR PURISIMA, Department of Finance;
i) Information of medicine purchased: SECRETARY FLORENCIO H. ABAD, Department of Budget and Management; COMMISSIONER KIM
JACINTO-HENARES, Bureau of Internal Revenue; and NATIONAL TREASURER ROBERTO TAN, Bureau of
the Treasury, Respondents
i.1 Name of medicine

G.R. No. 208488

i.2 Quantity

HONORABLE ENRIQUE T. GARCIA, JR., in his personal and official capacity as Representative of the
i.3 Attending Physician 2nd District of the Province of Bataan, Petitioner
vs.
i.4 License Number HONORABLE [PAQUITO) N. OCHOA, JR., Executive Secretary; HONORABLE CESAR V. PURISIMA,
Secretary, Department of Finance; HONORABLE FLORENCIO H. ABAD, Secretary, Department of Budget
and Management; HONORABLE KIM S. JACINTO-HENARES, Commissioner, Bureau of Internal Revenue;
i.5 Servicing drug store name and HONORABLE ROZZANO RUFINO B. BIAZON, Commissioner, Bureau of Customs, Respondents

i.6 Name of dispensing pharmacist DECISION

j) Authorization letter of the PWD x x x in case the medicine is bought BERSAMIN, J.:
by the representative or caregiver of the PWD.

The PWD identification card also has a validity period of only three years which facilitate in the
monitoring of those who may need continued support and who have been relieved of their disability,
and therefore may be taken out of the coverage of the law.
At any rate, the law has penal provisions which give concerned establishments the option to file a case
against those abusing the privilege Section 46(b) of R.A. No. 9442 provides that "[a]ny person who
abuses the privileges granted herein shall be punished with imprisonment of not less than six months or
a fine of not less than Five Thousand pesos (₱5,000.00), but not more than Fifty Thousand pesos
(₱50,000.00), or both, at the discretion of the court." Thus, concerned establishments, together with the
proper government agencies, must actively participate in monitoring compliance with the law so that
only the intended beneficiaries of the law can avail of the privileges.
The petitioners hereby challenge the manner in which the just share in the national taxes of the local
government units (LGUs) has been computed.
Antecedents
One of the key features of the 1987 Constitution is its push towards decentralization of government and
local autonomy. Local autonomy has two facets, the administrative and the fiscal. Fiscal autonomy
means that local governments have the power to create their own sources of revenue in addition to their
equitable share in the national taxes released by the National Government, as well as the power to
allocate their resources in accordance with their own priorities.1 Such autonomy is as indispensable to
the viability of the policy of decentralization as the other.

Indubitably, the law is clear and unequivocal, and the petitioner claim of vagueness to cast uncertainty in Implementing the constitutional mandate for decentralization and local autonomy, Congress enacted
the validity of the law does not stand. Republic Act No. 7160, otherwise known as the Local Government Code (LGC), in order to guarantee the
fiscal autonomy of the LGUs by specifically providing that:
SECTION 284. Allotment of Internal Revenue Taxes. - Local government units shall have a share in the
national internal revenue taxes based on the collection of the third fiscal year preceding the current
fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent (30%); (b) On the second year, thirty-
five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
Provided, That in the event that the National Government incurs an unmanageable public sector deficit,
the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance,
Secretary of Interior and Local Government, and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to
make the necessary adjustments in the internal revenue allotment of local government units but in no
case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue
taxes of the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of
the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%)
internal revenue allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved personal services.
The share of the LGUs, heretofore known as the Internal Revenue Allotment (IRA), has been regularly
released to the LGUs. According to the implementing rules and regulations of the LGC, the IRA is
determined on the basis of the actual collections of the National Internal Revenue Taxes (NIRTs) as
certified by the Bureau of Internal Revenue (BIR).2
G.R. No. 199802 (Mandanas, et al.) is a special civil action for certiorari, prohibition
and mandamus assailing the manner the General Appropriations Act (GAA) for FY 2012 computed the
IRA for the LGUs.
Mandanas, et al. allege herein that certain collections of NIR Ts by the Bureau of Customs (BOC) -
specifically: excise taxes, value added taxes (VATs) and documentary stamp taxes (DSTs) - have not been
included in the base amounts for the computation of the IRA; that such taxes, albeit collected by the
BOC, should form part of the base from which the IRA should be computed because they constituted
NIRTs; that, consequently, the release of the additional amount of ₱60,750,000,000.00 to the LGUs as
their IRA for FY 2012 should be ordered; and that for the same reason the LGUs should also be released
their unpaid IRA for FY 1992 to FY 2011, inclusive, totaling ₱438,103,906,675.73.
In G.R. No. 208488, Congressman Enrique Garcia, Jr., the lone petitioner, seeks the writ of mandamus to
compel the respondents thereat to compute the just share of the LGUs on the basis of all national
taxes. His petition insists on a literal reading of Section 6, Article X of the 1987 Constitution. He avers
that the insertion by Congress of the words internal revenue in the phrase national taxes found in
Section 284 of the LGC caused the diminution of the base for determining the just share of the LGUs, and
should be declared unconstitutional; that, moreover, the exclusion of certain taxes and accounts
pursuant to or in accordance with special laws was similarly constitutionally untenable; that the VA Ts
and excise taxes collected by the BOC should be included in the computation of the IRA; and that the
respondents should compute the IRA on the basis of all national tax collections, and thereafter distribute
any shortfall to the LGUs.
It is noted that named as common respondents were the then incumbent Executive Secretary, Secretary
of Finance, the Secretary of the Department of Budget and Management (DBM), and the Commissioner
of Internal Revenue. In addition, Mandanas, et al. impleaded the National Treasurer, while Garcia added
the Commissioner of Customs.
The cases were consolidated on October 22, 2013. 3 In the meanwhile, Congressman Garcia, Jr. passed
away. Jose Enrique Garcia III, who was subsequently elected to the same congressional post, was
substituted for Congressman Garcia, Jr. as the petitioner in G.R. No. 208488 under the resolution
promulgated on August 23, 2016.4
In response to the petitions, the several respondents, represented by the Office of the Solicitor General
(OSG), urged the dismissal of the petitions upon procedural and substantive considerations.
Anent the procedural considerations, the OSG argues that the petitions are procedurally defective
because, firstly, mandamus does not lie in order to achieve the reliefs sought because Congress may not
be compelled to appropriate the sums allegedly illegally withheld for to do so will violate the doctrine of
separation of powers; and, secondly, mandamus does not also lie to compel the DBM to release the
amounts to the LGUs because such disbursements will be contrary to the purposes specified in the GAA;
that Garcia has no clear legal right to sustain his suit for mandamus; that the filing of Garcia's suit
violates the doctrine of hierarchy of courts; and that Garcia's petition seeks declaratory relief but the
Court cannot grant such relief in the exercise of its original jurisdiction.
On the substantive considerations, the OSG avers that Article 284 of the LGC is consistent with the
mandate of Section 6, Article X of the 1987 Constitution to the effect that the LGUs shall have a just
share in the national taxes; that the determination of the just share is within the discretion of Congress;
that the limitation under the LGC of the basis for the just share in the NIRTs was within the powers
granted to Congress by the 1987 Constitution; that the LGUs have been receiving their just share in the
national taxes based on the correct base amount; that Congress has the authority to exclude certain
taxes from the base amount in computing the IRA; that there is a distinction between the VA Ts, excise
taxes and DSTs collected by the BIR, on one hand, and the VA Ts, excise taxes and DSTs collected by the
BOC, on the other, thereby warranting their different treatment; and that Development Budget
Coordination Committee (DBCC) Resolution No. 2003-02 dated September 4, 2003 has limited the base
amount for the computation of the IRA to the "cash collections based on the BIR data as reconciled with
the Bureau of Treasury;" and that the collection of such national taxes by the BOC should be excluded.
Issues
The issues for resolution are limited to the following, namely:
I.
Whether or not Mandamus is the proper vehicle to assail the constitutionality of the relevant provisions
of the GAA and the LGC;
II.
Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6, Article X of
the 1987 Constitution;
III.
Whether or not the existing shares given to the LGUs by virtue of the GAA is consistent with the
constitutional mandate to give LGUs a 'just share" to national taxes following Article X, Section 6 of the
1987 Constitution;
IV.
Whether or not the petitioners are entitled to the reliefs prayed for.
Simply stated, the petitioners raise the novel question of whether or not the exclusion of certain national
taxes from the base amount for the computation of the just share of the LGUs in the national taxes is
constitutional.
Ruling of the Court
The petitions are partly meritorious.
I in the second paragraph of Section 1, Article VIII of the Constitution can be asserted:
Mandamus is an improper remedy
Mandanas, et al. seek the writs of certiorari, prohibition and mandamus, while Garcia prays for the writ
of mandamus. Both groups of petitioners impugn the validity of Section 284 of the LGC.
The remedy of mandamus is defined in Section 3, Rule 65 of the Rules of Court, which provides:
Section 3. Petition for mandamus. - When any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an office,
trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which
such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of
law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent, immediately or at some
other time to be specified by the court, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the
respondent.
The petition shall also contain a sworn certification of non-forum shopping as provided in the third
paragraph of section 3, Rule 46.
For the writ of mandamus to issue, the petitioner must show that the act sought to be performed or
compelled is ministerial on the part of the respondent. An act is ministerial when it does not require the
exercise of judgment and the act is performed pursuant to a legal mandate. The burden of proof is on
the mandamus petitioner to show that he is entitled to the performance of a legal right, and that the
respondent has a corresponding duty to perform the act. The writ of mandamus may not issue to compel
an official to do anything that is not his duty to do, or that is his duty not to do, or to obtain for the
petitioner anything to which he is not entitled by law. 5
Considering that its determination of what constitutes the just share of the LGUs in the national taxes
under the 1987 Constitution is an entirely discretionary power, Congress cannot be compelled by writ
of mandamus to act either way. The discretion of Congress thereon, being exclusive, is not subject to
external direction; otherwise, the delicate balance underlying our system of government may be unduly
disturbed. This conclusion should at once then demand the dismissal of the Garcia petition in G.R. No.
208488, but we do not dismiss it. Garcia has attributed the non-release of some portions of their IRA
balances to an alleged congressional indiscretion - the diminution of the base amount for computing the
LGU's just share. He has asserted that Congress altered the constitutional base not only by limiting the
base to the NIRTs instead of including therein all national taxes, but also by excluding some national
taxes and revenues that only benefitted a few LGUs to the detriment of the rest of the LGUs.
Garcia's petition, while dubbed as a petition for mandamus, is also a petition for certiorari because it
alleges that Congress thereby committed grave abuse of discretion amounting to lack or excess of
jurisdiction. It is worth reminding that the actual nature of every action is determined by the allegations
in the body of the pleading or the complaint itself, not by the nomenclature used to designate the
same. 6 Moreover, neither should the prayer for relief be controlling; hence, the courts may still grant
the proper relief as the facts alleged in the pleadings and the evidence introduced may warrant even
without a prayer for specific remedy.7
In this regard, Garcia's allegation of the unconstitutionality of the insertion by Congress of the
words internal revenue in the phrase national taxes justifies treating his petition as one for certiorari. It
becomes our duty, then, to assume jurisdiction over his petition. In Araullo v. Aquino III,8 the Court has
emphatically opined that the Court's certiorari jurisdiction under the expanded judicial power as stated
xxxx to set right and undo any act of grave abuse of discretion amounting to lack or excess of jurisdiction
by any branch or instrumentality of the Government, the Court is not at all precluded from making the
inquiry provided the challenge was properly brought by interested or affected parties. The Court has
been thereby entrusted expressly or by necessary implication with both the duty and the obligation of
determining, in appropriate cases, the validity of any assailed legislative or executive action. This
entrustment is consistent with the republican system of checks and balances. 9
Further, observing that one of the reliefs being sought by Garcia is identical to the main relief sought by
Mandanas, et al., the Court should rightly dwell on the substantive arguments posited by Garcia to the
extent that they are relevant to the ultimate resolution of these consolidated suits.
II.
Municipal corporations and their relationship with Congress
The correct resolution and fair disposition of the issues interposed for our consideration require a review
of the basic principles underlying our system of local governments, and of the extent of the autonomy
granted to the LGUs by the 1987 Constitution.
Municipal corporations are now commonly known as local governments. They are the bodies politic
established by law partly as agencies of the State to assist in the civil governance of the country. Their
chief purpose has been to regulate and administer the local and internal affairs of the cities,
municipalities or districts. They are legal institutions formed by charters from the sovereign power,
whereby the populations within communities living within prescribed areas have formed themselves into
bodies politic and corporate, and assumed their corporate names with the right of continuous succession
and for the purposes and with the authority of subordinate self-government and improvement and the
local administration of the affairs of the State. 10
Municipal corporations, being the mere creatures of the State, are subject to the will of Congress, their
creator. Their continued existence and the grant of their powers are dependent on the discretion of
Congress. On this matter, Judge John F. Dillon of the State of Iowa in the United States of America
enunciated in Merriam v. Moody's Executors11 the rule of statutory construction that came to be oft-
mentioned as Dillon's Rule, to wit:
[A] municipal corporation possesses and can exercise the following powers and no others: First, those
granted in express words; second, those necessarily implied or necessarily incident to the powers
expressly granted; third, those absolutely essential to the declared objects and purposes of the
corporation-not simply convenient but indispensible; fourth, any fair doubt as to the existence of a
power is resolved by the courts against the corporation-against the existence of the powers. 12
The formulation of Dillon's Rule has since undergone slight modifications. Judge Dillon himself
introduced some of the modifications through his post-Merriam writings with the objective of alleviating
the original formulation's harshness. The word fairly was added to the second proviso; the
word absolutely was deleted from the third proviso; and the words reasonable and substantial were
added to the fourth proviso, thusly:
x x x second, those necessarily or fairly implied in or incident to the powers expressly granted; third,
those essential to x x x. Any fair, reasonable, doubt. 13
The modified Dillon's Rule has been followed in this jurisdiction, and has remained despite both the 1973
Constitution and the 1987 Constitution mandating autonomy for local governments. This has been made
evident in several rulings of the Court, one of which was that handed down in Magtajas v. Pryce
Properties Corporation, lnc.: 14
In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the
petitioners that the ordinances in question are valid. On the contrary, we find that the ordinances violate
P.D. 1869, which has the character and force of a statute, as well as the public policy expressed in the
decree allowing the playing of certain games of chance despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is
obvious. Municipal governments are only agents of the national government. Local councils exercise
only delegated legislative powers conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of Congress, from which they have
derived their power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so it
may destroy. As it may destroy, it may abridge and control. Unless there is some constitutional
limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so
great a folly and so great a wrong, sweep from existence all of the municipal corporations in the State,
and the corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the
legislature.
This basic relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.
Without meaning to detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than under our previous
Constitutions. The power to create still includes the power to destroy. The power to grant still includes
the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the direct conferment on the local
government units of the power to tax, which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units, which cannot defy
its will or modify or violate it. [Bold underscoring supplied for emphasis]
Also, in the earlier ruling in Ganzon v. Court of Appeals, 15 the Court has pointed out that the 1987
Constitution, in mandating autonomy for the LGUs, did not intend to deprive Congress of its authority
and prerogatives over the LGUs.
Nonetheless, the LGC has tempered the application of Dillon's Rule in the Philippines by providing a
norm of interpretation in favor of the LGUs in its Section 5(a), to wit:
xxxx
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in
case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the local
government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted
in favor of the local government unit concerned; [Bold underscoring supplied for emphasis]
xxxx
III.
The extent of local autonomy in the Philippines
Regardless, there remains no question that Congress possesses and wields plenary power to control and
direct the destiny of the LGUs, subject only to the Constitution itself, for Congress, just like any branch of
the Government, should bow down to the majesty of the Constitution, which is always supreme.
The 1987 Constitution limits Congress' control over the LGUs by ordaining in Section 25 of its Article II
that: "The State shall ensure the autonomy of local governments." The autonomy of the LGUs as thereby
ensured does not contemplate the fragmentation of the Philippines into a collection of mini-states, 16 or
the creation of imperium in imperio. 17 The grant of autonomy simply means that Congress will allow the
LGUs to perform certain functions and exercise certain powers in order not for them to be overly
dependent on the National Government subject to the limitations that the 1987 Constitution or Congress
may impose. 18 Local autonomy recognizes the wholeness of the Philippine society in its ethnolinguistic,
cultural, and even religious diversities.19
The constitutional mandate to ensure local autonomy refers to decentralization.20 In its broad or general
sense, decentralization has two forms in the Philippine setting, namely: the decentralization of power
and the decentralization of administration. The decentralization of power involves the abdication of
political power in favor of the autonomous LGUs as to grant them the freedom to chart their own
destinies and to shape their futures with minimum intervention from the central government. This
amounts to self-immolation because the autonomous LGUs thereby become accountable not to the
central authorities but to their constituencies. On the other hand, the decentralization of administration
occurs when the central government delegates administrative powers to the LGUs as the means of
broadening the base of governmental powers and of making the LGUs more responsive and accountable
in the process, and thereby ensure their fullest development as self-reliant communities and more
effective partners in the pursuit of the goals of national development and social progress. This form of
decentralization further relieves the central government of the burden of managing local affairs so that it
can concentrate on national concerns.21
Two groups of LGUs enjoy decentralization in distinct ways. The decentralization of power has been
given to the regional units (namely, the Autonomous Region for Muslim Mindanao [ARMM] and the
constitutionally-mandated Cordillera Autonomous Region [CAR]). The other group of
LGUs (i.e., provinces, cities, municipalities and barangays) enjoy the decentralization of
administration.22 The distinction can be reasonably understood. The provinces, cities, municipalities and
barangays are given decentralized administration to make governance at the local levels more directly
responsive and effective. In turn, the economic, political and social developments of the smaller political
units are expected to propel social and economic growth and development. 23 In contrast, the regional
autonomy of the ARMM and the CAR aims to permit determinate groups with common traditions and
shared social-cultural characteristics to freely develop their ways of life and heritage, to exercise their
rights, and to be in charge of their own affairs through the establishment of a special governance regime
for certain member communities who choose their own authorities from within themselves, and exercise
the jurisdictional authority legally accorded to them to decide their internal community affairs. 24
It is to be underscored, however, that the decentralization of power in favor of the regional units is not
unlimited but involves only the powers enumerated by Section 20, Article X of the 1987 Constitution and
by the acts of Congress. For, with various powers being devolved to the regional units, the grant and
exercise of such powers should always be consistent with and limited by the 1987 Constitution and the
national laws. 25 In other words, the powers are guardedly, not absolutely, abdicated by the National
Government.
Illustrative of the limitation is what transpired in Serna v. Commission on Elections,26 where the Court
struck down Section 19, Article VI of Republic Act No. 9054 (An Act to Strengthen and Expand the
Organic Act for the Autonomous Region in Muslim Mindanao, Amending for the Purpose Republic Act No.
6734, entitled "An Act Providing for the Autonomous Region in Muslim Mindanao," as Amended) insofar
as the provision granted to the ARMM the power to create provinces and cities, and consequently
declared as void Muslim Mindanao Autonomy Act No. 201 creating the Province of Shariff Kabunsuan for
being contrary to Section 5, Article VI and Section 20, Article X of the 1987 Constitution, as well as
Section 3 of the Ordinance appended to the 1987 Constitution. The Court clarified therein that only
Congress could create provinces and cities. This was because the creation of provinces and cities
necessarily entailed the creation of legislative districts, a power that only Congress could exercise
pursuant to Section 5, Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to
the Constitution; as such, the ARMM would be thereby usurping the power of Congress to create
legislative districts and national offices.27
The 1987 Constitution has surely encouraged decentralization by mandating that a system of
decentralization be instituted through the LGC in order to enable a more responsive and accountable
local government structure.28 It has also delegated the power to tax to the LGUs by authorizing them to
create their own sources of income that would make them self-reliant.29 It further ensures that each and
every LGU will have a just share in national taxes as well in the development of the national wealth.30
The LGC has further delineated in its Section 3 the different operative principles of decentralization to be
adhered to consistently with the constitutional policy on local autonomy, viz.:
Sec. 3. Operative Principles of Decentralization-
The formulation and implementation of policies and measures on local autonomy shall be guided by the
following operative principles:
(a) There shall be an effective allocation among the different local government units of their
respective powers, functions, responsibilities, and resources;
(b) There shall be established in every local government unit an accountable, efficient, and
dynamic organizational structure and operating mechanism that will meet the priority needs
and service requirements of its communities;
(c) Subject to civil service law, rules and regulations, local officials and employees paid wholly
or mainly from local funds shall be appointed or removed, according to merit and fitness, by
the appropriate appointing authority;
(d) The vesting of duty, responsibility, and accountability in local government units shall be
accompanied with provision for reasonably adequate resources to discharge their powers and
effectively carry out their functions: hence, they shall have the power to create and broaden
their own sources of revenue and the right to a just share in national taxes and an equitable
share in the proceeds of the utilization and development of the national wealth within their
respective areas;
(e) Provinces with respect to component cities and municipalities, and cities and
municipalities with respect to component barangays, shall ensure that the acts of their
component units are within the scope of their prescribed powers and functions;
(f) Local government units may group themselves, consolidate or coordinate their efforts,
services, and resources commonly beneficial to them;
(g) The capabilities of local government units, especially the municipalities and barangays,
shall be enhanced by providing them with opportunities to participate actively in the
implementation of national programs and projects;
(h) There shall be a continuing mechanism to enhance local autonomy not only by legislative
enabling acts but also by administrative and organizational reforms;
(i) Local government units shall share with the national government the responsibility in the
management and maintenance of ecological balance within their territorial jurisdiction,
subject to the provisions of this Code and national policies;
(j) Effective mechanisms for ensuring the accountability of local government units to their
respective constituents shall be strengthened in order to upgrade continually the quality of
local leadership;
(k) The realization of local autonomy shall be facilitated through improved coordination of
national government policies and programs an extension of adequate technical and material
assistance to less developed and deserving local government units;
(l) The participation of the private sector in local governance, particularly in the delivery of
basic services, shall be encouraged to ensure the viability of local autonomy as an alternative
strategy for sustainable development; and
(m) The national government shall ensure that decentralization contributes to the continuing
improvement of the performance of local government units and the quality of community
life.
Based on the foregoing delineation, decentralization can be considered as the decision by the central share in the national taxes is but the consequence of the constitutional mandate for fiscal
government to empower its subordinates, whether geographically or functionally constituted, to decentralization. 45
exercise authority in certain areas. It involves decision-making by subnational units, and is typically a
delegated power, whereby a larger government chooses to delegate authority to more local
For sure, fiscal decentralization does not signify the absolute freedom of the LGUs to create their own
governments.31 It is also a process, being the set of policies, electoral or constitutional reforms that
sources of revenue and to spend their revenues unrestrictedly or upon their individual whims and
transfer responsibilities, resources or authority from the higher to the lower levels of government.32 It is
caprices. Congress has subjected the LGUs' power to tax to the guidelines set in Section 130 of the LGC
often viewed as a shift of authority towards local governments and away from the central government,
and to the limitations stated in Section 133 of the LGC. The concept of local fiscal autonomy does not
with total government authority over society and economy imagined as fixed.33
exclude any manner of intervention by the National Government in the form of supervision if only to
ensure that the local programs, fiscal and otherwise, are consistent with the national goals.46
As a system of transferring authority and power from the National Government to the LGUs,
decentralization in the Philippines may be categorized into four, namely: (1) political decentralization or
Lastly, policy- or decision-making decentralization exists if at least one sub-national tier of government
devolution; (2) administrative decentralization or deconcentration; (3) fiscal decentralization; and (4)
has exclusive authority to make decisions on at least one policy issue.47
policy or decision-making decentralization.

Political decentralization or devolution occurs when there is a transfer of powers, responsibilities, and
resources from the central government to the LOU s for the performance of certain functions. It is a
more liberal form of decentralization because there is an actual transfer of powers and responsibilities. It
aims to grant greater autonomy to the LGUs in cognizance of their right to self-government, to make
them self-reliant, and to improve their administrative and technical capabilities.34 It is an act by which
the National Government confers power and authority upon the various LGUs to perform specific
functions and responsibilities.35 It encompasses reforms to open sub-national representation and policies
to "devolve political authority or electoral capacities to sub-national actors. "36 Section 16 to Section 19
of the LGC characterize political decentralization in the LGC as different LGUs empowered to address the
different needs of their constituents. In contrast, devolution in favor of the regional units is more
expansive because they are given the authority to regulate a wider array of subjects, including personal,
family and property relations.
Administrative decentralization or deconcentration involves the transfer of functions or the delegation of
authority and responsibility from the national office to the regional and local offices. 37 Consistent with
this concept, the LGC has created the Local School Boards,38 the Local Health Boards39 and the Local
Development Councils,40 and has transferred some of the authority from the agencies of the National
Government, like the Department of Education and the Department of Health, to such bodies to better
cope up with the needs of particular localities.
Fiscal decentralization means that the LGUs have the power to create their own sources of revenue in
addition to their just share in the national taxes released by the National Government. It includes the
power to allocate their resources in accordance with their own priorities. It thus extends to the
preparation of their budgets, so that the local officials have to work within the constraints of their
budgets. The budgets are not formulated at the national level and imposed on local governments,
without regard as to whether or not they are relevant to local needs and resources. Hence, the necessity
of a balancing of viewpoints and the harmonization of proposals from both local and national officials,
who in any case are partners in the attainment of national goals, is recognized and addressed.41
In fine, certain limitations are and can be imposed by Congress in all the forms of decentralization, for
local autonomy, whether as to power or as to administration, is not absolute. The LGUs remain to be the
tenants of the will of Congress subject to the guarantees that the Constitution itself imposes.
IV.
Section 284 of the LGC deviates from the plain language
of Section 6 of Article X of the 1987 Constitution
Section 6, Article X the 1987 Constitution textually commands the allocation to the LGUs of a just
share in the national taxes, viz.:
Section 6. Local government units shall have a just share, as determined by law, in the national taxes
which shall be automatically released to them.
Section 6, when parsed, embodies three mandates, namely: (1) the LGUs shall have a just share in
the national taxes; (2) the just share shall be determined by law; and (3) the just share shall
be automatically released to the LGUs.48
Congress has sought to carry out the second mandate of Section 6 by enacting Section 284, Title
III (Shares of Local Government Units in the Proceeds of National Taxes), of the LGC, which is again
quoted for ready reference:
Section 284. Allotment of Internal Revenue Taxes. - Local government units shall have a share in the
national internal revenue taxes based on the collection of the third fiscal year preceding the current
fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent (30%);

Fiscal decentralization emanates from a specific constitutional mandate that is expressed in several
provisions of Article X (Local Government) of the 1987 Constitution, specifically: Section 5;42 Section
6;43 and Section 7.44
The constitutional authority extended to each and every LGU to create its own sources of income and
revenue has been formalized from Section 128 to Section 133 of the LGC. To implement the LGUs'
entitlement to the just share in the national taxes, Congress has enacted Section 284 to Section 288 of
the LGC. Congress has further enacted Section 289 to Section 294 of the LGC to define the share of the
LGUs in the national wealth. Indeed, the requirement for the automatic release to the LGUs of their just
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
Provided, That in the event that the national government incurs an unmanageable public sector deficit,
the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance,
Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to
make the necessary adjustments in the internal. revenue allotment of local government units but in no
case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue
taxes of the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of
the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%)
internal revenue allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved personal services.
There is no issue as to what constitutes the LGUs' just share expressed in percentages of the national
taxes (i.e., 30%, 35% and 40% stipulated in subparagraphs (a), (b), and (c) of Section 284 ). Yet, Section
6, supra, mentions national taxes as the source of the just share of the LGUs while Section 284 ordains
that the share of the LG Us be taken from national internal revenue taxes instead.
Has not Congress thereby infringed the constitutional provision?
Garcia contends that Congress has exceeded its constitutional boundary by limiting to the NIRTs the base
from which to compute the just share of the LGUs.
We agree with Garcia's contention.
Although the power of Congress to make laws is plenary in nature, congressional lawmaking remains
subject to the limitations stated in the 1987 Constitution.49 The phrase national internal revenue
taxes engrafted in Section 284 is undoubtedly more restrictive than the term national taxes written in
Section 6. As such, Congress has actually departed from the letter of the 1987 Constitution stating
that national taxes should be the base from which the just share of the LGU comes. Such departure is
impermissible. Verba legis non est recedendum (from the words of a statute there should be no
departure). 50 Equally impermissible is that Congress has also thereby curtailed the guarantee of fiscal
autonomy in favor of the LGUs under the 1987 Constitution.
Taxes are the enforced proportional contributions exacted by the State from persons and properties
pursuant to its sovereignty in order to support the Gove1nment and to defray all the public needs. Every
tax has three elements, namely: (a) it is an enforced proportional contribution from persons and
properties; (b) it is imposed by the State by virtue of its sovereignty; and (c) it is levied for the support of
the Government.51 Taxes are classified into national and local. National taxes are those levied by the
National Government, while local taxes are those levied by the LGUs.52
What the phrase national internal revenue taxes as used in Section 284 included are all the taxes
enumerated in Section 21 of the National Internal Revenue Code (NIRC), as amended by R.A. No.
8424, viz.:
Section 21. Sources of Revenue. - The following taxes, fees and charges are deemed to be national
internal revenue taxes:
(a) Income tax;
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes;
(e) Excise taxes;
(f) Documentary stan1p taxes; and
(g) Such other taxes as arc or hereafter may be imposed and collected by the Bureau of
Internal Revenue.
In view of the foregoing enumeration of what are the national internal revenue taxes, Section 284 has
effectively deprived the LGUs from deriving their just share from other national taxes, like the customs
duties.
Strictly speaking, customs duties are also taxes because they are exactions whose proceeds become
public funds. According to Garcia v. Executive Secretary,53 customs duties is the nomenclature given to
taxes imposed on the importation and exportation of commodities and merchandise to or from a foreign
country. Although customs duties have either or both the generation of revenue and the regulation of
economic or social activity as their moving purposes, it is often difficult to say which of the two is the
principal objective in a particular instance, for, verily, customs duties, much like internal revenue taxes,
are rarely designed to achieve only one policy objective.54 We further note that Section 102(00) of R.A.
No. 10863 (Customs Modernization and Tariff Act) expressly includes all fees and charges imposed under
the Act under the blanket term of taxes.
It is clear from the foregoing clarification that the exclusion of other national taxes like customs duties
from the base for determining the just share of the LG Us contravened the express constitutional edict in
Section 6, Article X the 1987 Constitution.
Still, the OSG posits that Congress can manipulate, by law, the base of the allocation of the just share in
the national taxes of the LGUs.
The position of the OSG cannot be sustained. Although it has the primary discretion to determine and fix
the just share of the LGUs in the national taxes (e.g., Section 284 of the LGC), Congress cannot disobey
the express mandate of Section 6, Article X of the 1987 Constitution for the just share of the LGUs to be
derived from the national taxes. The phrase as determined by law in Section 6 follows and qualifies the
phrase just share, and cannot be construed as qualifying the succeeding phrase in the national taxes. The
intent of the people in respect of Section 6 is really that the base for reckoning the just share of the LGUs
should includes all national taxes. To read Section 6 differently as requiring that the just share of LGUs in
the national taxes shall be determined by law is tantamount to the unauthorized revision of the 1987
Constitution.
V.
Congress can validly exclude taxes that will constitute the base amount for
the computation of the IRA only if a Constitutional provision allows such exclusion
Garcia submits that even assuming that the present version of Section 284 of the LGC is constitutionally
valid, the implementation thereof has been erroneous because Section 284 does not authorize any
exclusion or deduction from the collections of the NIRTs for purposes of the computation of the
allocations to the LGUs. He further submits that the exclusion of certain NIRTs diminishes the fiscal
autonomy granted to the LGUs. He claims that the following NIRTs have been illegally excluded from the
base for determining the fair share of the LGUs in the IRA, to wit:
 (1) NIRTs collected by the cities and provinces and divided exclusively among the LGUs of the
Autonomous Region for Muslim Mindanao (ARMM), the regional government and the central
government, pursuant to Section 1555 in relation to Section 9,56 Article IX of R.A. No. 9054 (An
Act to Strengthen and Expand the Organic Act for the Autonomous Region in Muslim
Mindanao, amending for the purpose Republic Act No. 6734, entitled An Act providing for an
Organic Act for the Autonomous Region in Muslim Mindanao);
(2) The shares in the excise taxes on mineral products of the different LG Us, as provided in
Section 287 of the NIRC57 in relation to Section 290 of the LGC;58
(3) The shares of the relevant LGUs in the franchise taxes paid by Manila Jockey Club,
Inc.59 and Philippine Racing Club, Inc.;60
(4) The shares of various municipalities in VAT collections under R.A. No. 7643 (An Act to
Empower the Commissioner of Internal Revenue to Require the Payment of the Value Added
Tax Every Month and to Allow Local Government Units to Share in VAT Revenue, Amending for
this Purpose Certain Sections of the National Internal Revenue Code) as embodied in Section
283 of the NIRC;61
(5) The shares of relevant LGUs in the proceeds of the sale and conversion of former military
bases in accordance with R.A. No. 7227 (Bases Conversion and Development Act of 1992);62
(6) The shares of different LGUs in the excise taxes imposed on locally manufactured Virginia
tobacco products as provided in Section 3 of R.A. No. 7171 (An Act to Promote the
Development of the Farmers in the Virginia Tobacco Producing Provinces), and as now
provided in Section 289 of the NIRC;63
(7) The shares of different LGUs in the incremental revenues from Burley and native tobacco
products under Section 8 of R.A. No. 8240 (An Act Amending Sections 138, 140 and 142 of the
National Internal Revenue Code as Amended and for Other Purposes) and as now provided in
Section 288 of the NIRC;64 and
(8) The share of the Commission of Audit (COA) in the NIRTs as provided in Section 24p) of
P.D. No. 1445 (Government Auditing Code of the Philippines) 65 in relation to Section 284 of
the NIRC.66
Garcia insists that the foregoing taxes and revenues should have been included by Congress and, by
extension, the BIR in the base for computing the IRA on the strength of the cited provisions; that the LGC
did not authorize such exclusion; and that the continued exclusion has undermined the fiscal autonomy
guaranteed by the 1987 Constitution.
The insistence of Garcia is valid to an extent.
An examination of the above-enumerated laws confirms that the following have been excluded from the
base for reckoning the just share of the LGUs as required by Section 6, Article X of the 1987 Constitution,
namely:
(a) The share of the affected LGUs in the proceeds of the sale and conversion of former military bases in
accordance with R.A. No. 7227;
(b) The share of the different LGUs in the excise taxes imposed on locally manufactured Virginia tobacco
products as provided for in Section 3, R.A. No. 7171, and as now provided in Section 289 of the NIRC;
(c) The share of the different LGU s in incremental revenues from Burley and native tobacco products
under Section 8 of R.A. No. 8240, and as now provided for in Section 288 of the NIRC;
(d) The share of the COA in the NIRTs as provided in Section 24(3) of P.D. No. 144567 in relation to Section
284 of the NIRC;
(e) The shares of the different LGUs in the excise taxes on mineral products, as provided in Section 287 of
the NIRC in relation to Section 290 of the LGC;
(f) The NIRTs collected by the cities and provinces and divided exclusively among the LGUs of the ARMM,
the regional government and the central government, pursuant to Section 1568 in relation to Section
9,69 Article IX of R. A. No. 9054; and
(g) The shares of the relevant LG Us in the franchise taxes paid by Manila Jockey Club, Inc., and the
Philippine Racing Club, Inc.
Anent the share of the affected LG Us in the proceeds of the sale and conversion of the former military
bases pursuant to R.A. No. 7227, the exclusion is warranted for the reason that such proceeds do not
come from a tax, fee or exaction imposed on the sale and conversion.
As to the share of the affected LGUs in the excise taxes imposed on locally manufactured Virginia
tobacco products under R.A. No. 7171 (now Section 289 of the NIRC); the share of the affected LGUs in
incremental revenues from Burley and native tobacco products under Section 8, R.A. No. 8240 (now
Section 288 of the NIRC); the share of the COA in the NIRTs pursuant to Section 24(3) of P.D. No. 1445 in
relation to Section 284 of the NIRC; and the share of the host LGUs in the franchise taxes paid by the
Manila Jockey Club, Inc., and Philippine Racing Club, Inc., under Section 6 of R.A. No. 6631 and Section 8
of R:A. No. 6632, respectively, the exclusion is also justified. Although such shares involved national taxes
as defined under the NIRC, Congress had the authority to exclude them by virtue of their being taxes
imposed for special purposes. A reading of Section 288 and Section 289 of the NIRC and Section 24(3) of
P.D. No. 1445 in relation to Section 284 of the NIRC reveals that all such taxes are levied and collected for
a special purpose. 70 The same is true for the franchise taxes paid under Section 6 of R.A. No. 6631 and
Section 8 of R.A. No. 6632, inasmuch as certain percentages of the franchise taxes go to different
beneficiaries. The exclusion conforms to Section 29(3), Article VI of the 1987 Constitution, which states:
Section 29. x x x
xxxx
(3) All money collected on any tax levied for a special purpose shall be treated as a special fund and
paid out for such purpose only. If the purpose for which a special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to the general funds of the Government. [Bold
emphasis supplied]
The exclusion of the share of the different LGUs in the excise taxes imposed on mineral products
pursuant to Section 287 of the NIRC in relation to Section 290 of the LGC is premised on a different
constitutional provision. Section 7, Article X of the 1987 Constitution allows affected LGUs to have an
equitable share in the proceeds of the utilization of the nation's national wealth "within their respective
areas," to wit:
Section 7. Local governments shall be entitled to an equitable share in the proceeds of the utilization and
development of the national wealth within their respective areas, in the manner provided by law,
including sharing the same with the inhabitants by way of direct benefits.
This constitutional provision is implemented by Section 287 of the NIRC and Section 290 of the LGC
thusly:
SEC. 287. Shares of Local Government Units in the Proceeds from the Development and Utilization of the
National Wealth. - Local Government units shall have an equitable share in the proceeds derived from
the utilization and development of the national wealth, within their respective areas, including sharing
the same with the inhabitants by way of direct benefits.
(A) Amount of Share of Local Government Units. - Local government units shall, in addition to the
internal revenue allotment, have a share of forty percent (40'Yo) of the gross collection derived by the
national government from the preceding fiscal year from excise taxes on mineral products, royalties, and
such other taxes, fees or charges, including related surcharges, interests or fines, and from its share in
any co-production, joint venture or production sharing agreement in the utilization and development of
the national wealth within their territorial jurisdiction.
(B) Share of the Local Governments from Any Government Agency or Government-owned or - Controlled
Corporation. - Local Government Units shall have a share, based on the preceding fiscal year, from the
proceeds derived by any government agency or government-owned or controlled corporation engaged
in the utilization and development of the national wealth based on the following formula, whichever will
produce a higher share for the local government unit:
(1) One percent (l %) of the gross sales or receipts of the preceding calendar year, or
(2) Forty percent (40%) of the excise taxes on mineral products, royalties, and such other taxes, fees or
charges, including related surcharges, interests or fines the government agency or government-owned or
-controlled corporations would have paid if it were not otherwise exempt. [Bold emphasis supplied]
SEC. 290. Amount of Share of Local Government Units. - Local government units shall, in addition to the
internal revenue allotment, have a share of forty percent ( 40%) of the gross collection derived by the
national government from the preceding fiscal year from mining taxes, royalties, forestry and fishery
charges, and such other taxes, fees, or charges, including related surcharges, interests, or fines, and from
its share in any co-production, joint venture or production sharing agreement in the utilization and
development of the national wealth within their territorial jurisdiction. [Bold emphasis supplied]
Lastly, the NIRTs collected by the provinces and cities within the ARMM whose portions are distributed
to the ARMM's provincial, city and regional governments are also properly excluded for such taxes are
intended to truly enable a sustainable and feasible autonomous region as guaranteed by the 1987
Constitution. The mandate under Section 15 to Section 21, Article X of the 1987 Constitution is to allow
the separate development of peoples with distinctive cultures and traditions in the autonomous
areas.71 The grant of autonomy to the autonomous regions includes the right of self-determination-
which in turn ensures the right of the peoples residing therein to the necessary level of autonomy that
will guarantee the support of their own cultural identities, the establishment of priorities by their
respective communities' internal decision-making processes and the management of collective matters
by themselves.72 As such, the NIRTs collected by the provinces and cities within the ARMM will ensure
local autonomy and their very existence with a continuous supply of funding sourced from their very
own areas. The ARMM will become self-reliant and dynamic consistent with the dictates of the 1987
Constitution.
The shares of the municipalities in the VATs collected pursuant to R.A. No. 7643 should be included in
determining the base for computing the just share because such VATs are national taxes, and nothing
can validly justify their exclusion.
In recapitulation, the national taxes to be included in the base for computing the just share the LGUs
shall henceforth be, but shall not be limited to, the following:
1. The NIRTs enumerated in Section 21 of the NIRC, as amended, to be inclusive of the VA Ts, excise
taxes, and DSTs collected by the BIR and the BOC, and their deputized agents;
2. Tariff and customs duties collected by the BOC;
3. 50% of the VATs collected in the ARMM, and 30% of all other national taxes collected in the ARMM;
the remaining 50% of the VA Ts and 70% of the collections of the other national taxes in the ARMM shall
be the exclusive share of the ARMM pursuant to Section 9 and Section 15 of R.A. No. 9054;
4. 60% of the national taxes collected from the exploitation and development of the national wealth; the
remaining 40% will exclusively accrue to the host LGUs pursuant to Section 290 of the LGC;
5. 85% of the excise taxes collected from locally manufactured Virginia and other tobacco products; the
remaining 15% shall accrue to the special purpose funds pursuant created in R.A. No. 7171 and R.A. No.
7227;
6. The entire 50% of the national taxes collected under Section 106, Section 108 and Section 116 of the
NIRC in excess of the increase in collections for the immediately preceding year; and
7. 5% of the franchise taxes in favor of the national government paid by franchise holders in accordance
with Section 6 of R.A. No. 6631 and Section 8 of R.A. No. 6632.
VI.
Entitlement to the reliefs sought
The petitioners' prayer for the payment of the arrears of the LGUs' just share on the theory that the
computation of the base amount had been unconstitutional all along cannot be granted.
It is true that with our declaration today that the IRA is not in accordance with the constitutional
determination of the just share of the LGUs in the national taxes, logic demands that the LGUs should
receive the difference between the just share they should have received had the LGC properly reckoned
such just share from all national taxes, on the one hand, and the share - represented by the IRA- the
LGUs have actually received since the effectivity of the IRA under the LGC, on the other. This puts the
National Government in arrears as to the just share of the LGUs. A legislative or executive act declared
void for being unconstitutional cannot give rise to any right or obligation. 73
Yet, the Court has conceded in Arau/lo v. Aquino III74that:
x x x the generality of the rule makes us ponder whether rigidly applying the rule may at times be
impracticable or wasteful. Should we not recognize the need to except from the rigid application of
the rule the instances in which the void law or executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has
been exhaustively explained in De Agbayani v. Philippine National Bank:
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an
executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of
any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the
fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of
paper. As the new Civil Code puts it: 'When the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern.' Administrative or executive acts,
orders and regulations shall be valid only when they are not contrary to the laws of the Constitution. It is
understandable why it should be so, the Constitution being supreme and paramount. Any legislative or
executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with. This is so as until
after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and
respect. Parties may have acted under it and may have changed their positions. What could be more
fitting than that in a subsequent litigation regard be had to what has been done while such legislative
or executive act was in operation and presumed to be valid in all respects. It is now accepted as a
doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the governmental organ which has the final
say on whether or not a legislative or executive measure is valid, a period of time may have elapsed
before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be
to deprive the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: ‘The actual existence of a statute, prior to such
a determination [of unconstitutionality], is an operative fact and may have consequences which cannot
justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various aspects, with respect to
particular relations, individual and corporate, and particular conduct, private and official.'
The doctrine of operative fact recognizes the existence of the law or executive act prior to the
determination of its unconstitutionality as an operative fact that produced consequences that cannot
always be erased, ignored or disregarded. In short, it nullifies the void law or executive act but sustains
its effects. It provides an exception to the general rule that a void or unconstitutional law produces no
effect.75 But its use must be subjected to great scrutiny and circumspection, and it cannot be invoked to
validate an unconstitutional law or executive act, but is resorted to only as a matter of equity and fair
play. 76 It applies only to cases where extraordinary circumstances exist, and only when the extraordinary
circumstances have met the stringent conditions that will permit its application.
Conformably with the foregoing pronouncements in Araullo v. Aquino III, the effect of our declaration
through this decision of the unconstitutionality of Section 284 of the LGC and its related laws as far as
they limited the source of the just share of the LGUs to the NIRTs is prospective. It cannot be otherwise.
VII.
Automatic release of the LGUs' just share in the National Taxes
Section 6, Article X of the 1987 Constitution commands that the just share of the LGUs in national taxes
shall be automatically released to them. The term automatic connotes something mechanical,
spontaneous and perfunctory; and, in the context of this case, the LGUs are not required to perform any
act or thing in order to receive their just share in the national taxes.77
Before anything, we must highlight that the 1987 Constitution includes several provisions that actually
deal with and authorize the automatic release of funds by the National Government.
To begin with, Section 3 of Article VIII favors the Judiciary with the automatic and regular release of its
appropriations:
Section 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced
by the legislature below the amount appropriated for the previous year and, after approval, shall be
automatically and regularly released.
Then there is Section 5 of Article IX(A), which contains the common provision in favor of the
Constitutional Commissions:
Section 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be
automatically and regularly released.
Section 14 of Article XI extends to the Office of the Ombudsman a similar privilege:
Section 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual
appropriations shall be automatically and regularly released.
Section 17(4) of Article XIII replicates the privilege in favour of the Commission on Human Rights:
Section 17(4) The approved annual appropriations of the Commission shall be automatically and
regularly released.
The foregoing constitutional provisions share two aspects. The first relates to the grant of fiscal
autonomy, and the second concerns the automatic release of funds. 78 The common denominator of the
provisions is that the automatic release of the appropriated amounts is predicated on the approval of
the annual appropriations of the offices or agencies concerned.
Directly contrasting with the foregoing provisions is Section 6, Article X of the 1987 Constitution because
the latter provision forthrightly ordains that the "(l)ocal government units shall have a just share, as
determined by law, in the national taxes which shall be automatically released to them." Section 6 does
not mention of appropriation as a condition for the automatic release of the just share to the LGUs. This
is because Congress not only already determined the just share through the LGC's fixing the percentage
of the collections of the NIRTs to constitute such fair share subject to the power of the President to
adjust the same in order to manage public sector deficits subject to limitations on the adjustments, but
also explicitly authorized such just share to be "automatically released" to the LGUs in the proportions
and regularity set under Section 28579 of the LGC without need of annual appropriation. To
operationalize the automatic release without need of appropriation, Section 286 of the LGC clearly
provides that the automatic release of the just share directly to the provincial, city, municipal or
barangay treasurer, as the case may be, shall be "without need of any further action," viz.:
Section 286. Automatic Release of Shares. - (a) The share of each local government unit shall be (d) Barangays - Twenty percent (20%)
released, without need of any further action; directly to the provincial, city, municipal or barangay
treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter,
Provided, however, That the share of each province, city, and municipality shall be determined on the
and which shall not be subject to any lien or holdback that may be imposed by the National
basis of the following formula:
Government for whatever purpose. x x x (Bold emphasis supplied)

(a) Population -- Fifty percent (50%);

The 1987 Constitution is forthright and unequivocal in ordering that the just share of the LGUs in the
national taxes shall be automatically released to them. With Congress having established the just
share through the LGC, it seems to be beyond debate that the inclusion of the just share of the LGUs in (b) Land Area-· Twenty-five percent (25%); and
the annual GAAs is unnecessary, if not superfluous. Hence, the just share of the LGUs in the national
taxes shall be released to them without need of yearly appropriation. (c) Equal sharing--Twenty-five percent (25%)

1. DECLARES the phrase "internal revenue" appearing in Section 284 of Republic Act No. 7160 (Local Provided, further. That the share of each barangay with a population of not less than one hundred (100)
Government Code) UNCONSTITUTIONAL, and DELETES the phrase from Section 284. inhabitants shall not be less than Eighty thousand (₱80,000.00) per annum chargeable against the twenty
percent (20%) share of the barangay from the allotment, and the balance to be allocated on the basis of
Section 284, as hereby modified, shall henceforth read as follows: the following formula:

Section 284. Allotment of Taxes. - Local government units shall have a share in the national taxes based (a) On the first year of the effoctivity of this Code:
on the collection of the third fiscal year preceding the current fiscal year as follows:
(1) Population - Forty percent (40%); and
(a) On the first year of the effectivity of this Code, thirty percent (30%);
(2) Equal sharing - Sixty percent (50%)
(b) On the second year, thirty-five percent (35%); and
(b) On the second year:
(c) On the third year and thereafter, forty percent (40%).
(1) Population - Fifty percent (50%); and
Provided, That in the event that the national government incurs an unmanageable public sector deficit,
the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance, (2) Equal sharing - Fifty percent (50%)
Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to
make the necessary adjustments in the allotment of local government units but in no case shall the (c) On the third year and thereafter.
allotment be less than thirty percent (30%) of the collection of national taxes of the third fiscal year
preceding the current fiscal year; Provided, further, That in the first year of the effectivity of this Code, (1) Population - Sixty percent (60%); and
the local government units shall, in addition to the thirty percent (30%) allotment which shall include the
cost of devolved functions for essential public services, be entitled to receive the amount equivalent to
the cost of devolved personal services. (2) Equal sharing - Forty percent (40%).

The phrase "internal revenue" is likewise hereby DELETED from the related sections of Republic Act No.
7160 (Local Government Code), specifically Section 285, Section 287, and Section 290, which provisions
shall henceforth read as follows:
Section 285. Allocation to Local Government Units. - The share of local government units in the allotment
shall be collected in the following manner:
(a) Provinces - Twenty-three percent (23%);
Provided, finally, That the financial requirements of barangays created by local government units after
the effectivity of this Code shall be the responsibility of the local government unit concerned.
xxxx
Sectfon 287. Local Development Projects. - Each local government unit shall appropriate in its annual
budget no less than twenty percent (20%) of its annual allotment for development projects. Copies of
the development plans of local government units shall be furnished the Department of Interior and Local
Government.

(b) Cities - Twenty-three percent (23%);

xxxx

(c) Municipalities - Thirty-four percent (34%); and

Section 290. Amount of Share of Local Government Units. - Local government units shall, in addition to The remaining 15% shall accrue to the special purpose funds created by Republic Act No.
the allotment, have a share of forty percent (40%) of the gross collection derived by the national 7171 and Republic Act No. 7227;
government from the preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and
such other taxes, fees, or charges, including related surcharges, interests, or fines, and from its share in
(f) The entire 50% of the national taxes collected under Sections 106, 108 and 116 of the NIRC
any co-production, joint venture or production sharing agreement in the utilization and development of
as provided under Section 283 of the NIRC; and
the national wealth within their territorial jurisdiction.

Article 378, Article 379, Article 380, Article 382, Article 409, Article 461, and related provisions of the
Implementing Rules and Regulations of R.A. No. 7160 are hereby MODIFIED to reflect the deletion of the
phrase "internal revenue" as directed herein.
Henceforth, any mention of "Internal Revenue Allotment" or "IRA" in Republic Act No. 7160 (Local
Government Code) and its Implementing Rules and Regulations shall be understood as pertaining to the
allotment of the Local Government Units derived from the national taxes;
2. ORDERS the SECRETARY OF THE DEPARTMENT OF FINANCE; the SECRETARY OF THE DEPARTMENT
OF BUDGET AND MANAGEMENT; the COMMISSIONER OF INTERNAL REVENUE; the COMMISSIONER OF
CUSTOMS; and the NATIONAL TREASURER to include ALL COLLECTIONS OF NATIONAL TAXES in the
computation of the base of the just share of the Local Government Units according to the ratio provided
in the now-modified Section 284 of Republic Act No. 7160 (Local Government Code) except those
accruing to special purpose funds and special allotments for the utilization and development of the
national wealth.
For this purpose, the collections of national taxes for inclusion in the base of the just share the Local
Government Units shall include, but shall not be limited to, the following:
(a) The national internal revenue taxes enumerated in Section 21 of the National Internal
Revenue Code, as amended, collected by the Bureau of Internal Revenue and the Bureau of
Customs;
(b) Tariff and customs duties collected by the Bureau of Customs;
(g) 5% of the 25% franchise taxes given to the National Government under Section 6 of
Republic Act No. 6631 and Section 8 of Republic Act No. 6632.
3. DECLARES that:
(a) The apportionment of the 25% of the franchise taxes collected from the Manila Jockey
Club and Philippine Racing Club, Inc. - that is, five percent (5%) to the National Government;
five percent (5%) to the host municipality or city; seven percent (7%) to the Philippine Charity
Sweepstakes Office; six percent (6%) to the Anti-Tuberculosis Society; and two percent (2%)
to the White Cross pursuant to Section 6 of Republic Act No. 6631 and Section 8 of Republic
Act No. 6632 - is VALID;
(b) Section 8 and Section 12 of Republic Act No. 7227 are VALID; and, ACCORDINGLY, the
proceeds from the sale of the former military bases converted to alienable lands thereunder
are EXCLUDED from the computation of the national tax allocations of the Local Government
Units; and
(c) Section 24(3) of Presidential Decree No. 1445, in relation to Section 284 of the National
Internal Revenue Code, apportioning one-half of one percent (1/2of1%) of national tax
collections as the auditing fee of the Commission on Audit is VALID;
4. DIRECTS the Bureau of Internal Revenue and the Bureau of Customs and their deputized collecting
agents to certify all national tax collections, pursuant to Article 3 78 of the Implementing Rules and
Regulations of R.A. No. 7160;

5. DISMISSES the claims of the Local Government Units for the settlement by the National Government
(c) 50% of the value-added taxes collected in the Autonomous Region in Muslim Mindanao,
of arrears in the just share on the ground that this decision shall have PROSPECTIVE APPLICATION; and
and 30% of all other national tax collected in the Autonomous Region in Muslim Mindanao.

6. COMMANDS the AUTOMATIC RELEASE WITHOUT NEED OF FURTHER ACTION of the just shares of the
The remaining 50% of the collections of value-added taxes and 70% of the collections of the
Local Government Units in the national taxes, through their respective provincial, city, municipal, or
other national taxes in the Autonomous Region in Muslim Mindanao shall be the exclusive
barangay treasurers, as the case may be, on a quarterly basis but not beyond five (5) days from the end
share of the Autonomous Region in Muslim Mindanao pursuant to Section 9 and Section 15 of
of each quarter, as directed in Section 6, Article X of the 1987 Constitution and Section 286 of Republic
Republic Act No. 9054.
Act No. 7160 (Local Government Code), and operationalized by Article 383 of the Implementing Rules
and Regulations of RA 7160.
(d) 60% of the national taxes collected from the exploitation and development of the national
wealth.
Let a copy of this decision be furnished to the President of the Republic of the Philippines, the President
of the Senate, and the Speaker of the House of Representatives for their information and guidance.
The remaining 401% of the national taxes collected from the exploitation and development of
the national wealth shall exclusively accrue to the host Local Government Units pursuant to
SO ORDERED.
Section 290 of Republic Act No. 7160 (Local Government Code);

(e) 85% of the excise taxes collected from locally manufactured Virginia and other tobacco
products.