CASE LIST

27.
28.
29.
30.
31.
32.
33.
34.
35.

Magallona v Ermita
USA v Reyes
PCGG v Sandiganbayan
The Holy See v Rosario
Liang v People
Minucher v CA
WHO v Aquino
SEAFDEC v NLRC
Callado v IRRI

36. DFA v NLRC

37. Mun of San Fernando v Firme
38. Bureau of Printing v Bureau of Printing
39.Farolan v CTA
40. PTA v Phil GOlf Devt & Equipment
41. City of Angeles v CA
42. Veterans Manpower and Protective Services Inc. V CA
43.Wylie v Rarang
44. Republic v Sandoval
45. Syquia v Almeda Lopez
46. SANDERS V VERIDIANO
47. TAN V DIRECTOR OF FORESTRY
48. UP V DIZON
49. REPUBLIC V FELICIANO

50. MUN. OF SAN FERNANDO V FIRME

51. MERRITT V GOVTOF THE PHIL ISLANDS
52. RAYO V CFI OF BULACAN
53. FROILAN V PAN ORIENTAL SHIPPING
54. USA V GUINTO
55. USA V RUIZ
56. USA V GUINTO
57. REPUBLIC V INDONESIA V VINZON
58. MINISTERIO V CFI CEBU
59. SANDERS V VERIDIANO
60. MERRITT V GOVT OF THE PHIL ISLANDS
61. FONTANILLA V MALIAMAN
62. REPUBLIC V VILLASOR
63. MUNICIPALITY OF MAKATI V CA
64. NHA V GUIVELONDO
65. UP V DIZON
56.

United States of America v. Guinto, G.R. No. 76607, 79470, 80018, 80258,

[February 26, 1990]

57.

Republic of Indonesia v. Vinzon, G.R. No. 154705, [June 26, 2003]

58.

Ministerio v. Court of First Instance of Cebu, G.R. No. L-31635, [August

31, 1971
59.

Sanders v. Veridiano II, G.R. No. L-46930, [June 10, 1988]

60.

Merritt v. Government of the Philippine Islands, G.R. No. 11154, [March

21, 1916]
61.

Spouses Fontanilla v. Maliaman, G.R. Nos. 55963 & 61045 (Resolution),

[February 27, 1991]

62.

Republic v. Villasor, G.R. No. L-30671, [November 28, 1973]

63.

Municipality

of

Makati

v.

Court

of

Appeals,

G.R.

Nos.

89898-99

(Resolution), [October 1, 1990]

64.

National Housing Authority v. Heirs of Guivelondo, G.R. No. 154411, [June

19, 2003]
65.

University of the Philippines v. Dizon, G.R. No. 171182, [August 23, 2012]

66.

Yamashita v Styer

67.

Kuroda v Jalandoni

68.

Reyes v Bagatsing

69.

Pharmaceutical and Health Care Assoc of the PH v Health Sec Duque lll

70.

Ichong v Hernandez

71.

Gonzales v Hechanova

72.

Sec of Justice v Lantion

73.

BAYAN MUNA v Romullo

74.

IBP v Zamora

75.

Kulayan v Tan

76. Gamboa v Chan

77. People v Lagman
78. Aglipay v Ruiz
79. Austria v NLRC
80. People v Caranca
81. Calalang v Williams
82. Serrano v Gallant Maritime Services
83. PLDT v NLRC
84. Roe v Wade
85. Meyer v State of Nebraska
86.

ADIONG V COMELEC

87.

PAMATONG V COMELEC

88.

OPLE V TORRES

89.

IN RE: MANZANO

90.

YOUNGSTOWN V SAWYER

91.

BOWSHER V SYNAR

92.

SENATE V ERMITA

93.

BIRAOG V PHIL TRUTH COMMISSION

94.

PANGASINAN transpo V. PSC

95.

ABAKADA V ERMITA

96.

ARANETA V DINGLASAN

97.

RODRIGUEZ V CELLA

98.

AMPATUAN V PUNO

99.

EASTERN SHIPPING LINES V POEA

100. MINERS ASSOC. V FACTORAN

101. VICTORIA MILLING V SSC

27. MAGALLONA V. ERMITA

EN BANC
PROF. MERLIN M. MAGALLONA,
AKBAYAN PARTY-LIST REP. RISA
HONTIVEROS, PROF. HARRY C.
ROQUE, JR., AND UNIVERSITY OF
THE PHILIPPINES COLLEGE OF
LAW STUDENTS, ALITHEA
BARBARA ACAS, VOLTAIRE
ALFERES, CZARINA MAY
ALTEZ, FRANCIS ALVIN ASILO,
SHERYL BALOT, RUBY AMOR
BARRACA, JOSE JAVIER BAUTISTA,
ROMINA BERNARDO, VALERIE
PAGASA BUENAVENTURA, EDAN
MARRI CAETE, VANN ALLEN
DELA CRUZ, RENE DELORINO,
PAULYN MAY DUMAN, SHARON
ESCOTO, RODRIGO FAJARDO III,
GIRLIE FERRER, RAOULLE OSEN
FERRER, CARLA REGINA GREPO,
ANNA MARIE CECILIA GO, IRISH
KAY KALAW, MARY ANN JOY LEE,
MARIA LUISA MANALAYSAY,
MIGUEL RAFAEL MUSNGI,
MICHAEL OCAMPO, JAKLYN HANNA
PINEDA, WILLIAM RAGAMAT,
MARICAR RAMOS, ENRIK FORT
REVILLAS, JAMES MARK TERRY
RIDON, JOHANN FRANTZ RIVERA IV,
CHRISTIAN RIVERO, DIANNE MARIE
ROA, NICHOLAS SANTIZO, MELISSA
CHRISTINA SANTOS, CRISTINE MAE
TABING, VANESSA ANNE TORNO,
MARIA ESTER VANGUARDIA, and
MARCELINO VELOSO III,
Petitioners,
- versus HON. EDUARDO ERMITA, IN HIS
CAPACITY AS EXECUTIVE
SECRETARY, HON. ALBERTO
ROMULO, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT
OF FOREIGN AFFAIRS, HON.
ROLANDO ANDAYA, IN HIS CAPACITY
AS SECRETARY OF THE DEPARTMENT

G.R No. 187167

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

OF BUDGET AND MANAGEMENT,

HON. DIONY VENTURA, IN HIS
CAPACITY AS ADMINISTRATOR OF
THE NATIONAL MAPPING &
RESOURCE INFORMATION
AUTHORITY, and HON. HILARIO
DAVIDE, JR., IN HIS CAPACITY AS
REPRESENTATIVE OF THE
PERMANENT MISSION OF THE
REPUBLIC OF THE PHILIPPINES
Promulgated:
TO THE UNITED NATIONS,
Respondents.
July 16, 2011
x -----------------------------------------------------------------------------------------x

DECISION
CARPIO, J.:
The Case
This original action for the writs of certiorari and prohibition assails the constitutionality
of Republic Act No. 95221 (RA 9522) adjusting the countrys archipelagic baselines and
classifying the baseline regime of nearby territories.
The Antecedents
In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the maritime
baselines of the Philippines as an archipelagic State.3 This law followed the framing of
the Convention on the Territorial Sea and the Contiguous Zone in 1958 (UNCLOS I),4
codifying, among others, the sovereign right of States parties over their territorial sea,
the breadth of which, however, was left undetermined. Attempts to fill this void during
the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile. Thus,
domestically, RA 3046 remained unchanged for nearly five decades, save for legislation
passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting typographical errors and
reserving the drawing of baselines around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under
scrutiny. The change was prompted by the need to make RA 3046 compliant with the
terms of the United Nations Convention on the Law of the Sea (UNCLOS III),5 which the
Philippines ratified on 27 February 1984.6 Among others, UNCLOS III prescribes the
water-land ratio, length, and contour of baselines of archipelagic States like the
Philippines7 and sets the deadline for the filing of application for the extended
continental shelf.8 Complying with these requirements, RA 9522 shortened one baseline,
optimized the location of some basepoints around the Philippine archipelago and
classified adjacent territories, namely, the Kalayaan Island Group (KIG) and the

Scarborough Shoal, as regimes of islands whose islands generate their own applicable
maritime zones.
Petitioners, professors of law, law students and a legislator, in their respective capacities
as citizens, taxpayers or x x x legislators,9 as the case may be, assail the
constitutionality of RA 9522 on two principal grounds, namely: (1) RA 9522 reduces
Philippine maritime territory, and logically, the reach of the Philippine states sovereign
power, in violation of Article 1 of the 1987 Constitution,10 embodying the terms of the
Treaty of Paris11 and ancillary treaties,12 and (2) RA 9522 opens the countrys waters
landward of the baselines to maritime passage by all vessels and aircrafts, undermining
Philippine sovereignty and national security, contravening the countrys nuclear-free
policy, and damaging marine resources, in violation of relevant constitutional
provisions.13
In addition, petitioners contend that RA 9522s treatment of the KIG as regime of islands
not only results in the loss of a large maritime area but also prejudices the livelihood of
subsistence fishermen.14 To buttress their argument of territorial diminution, petitioners
facially attack RA 9522 for what it excluded and included its failure to reference either
the Treaty of Paris or Sabah and its use of UNCLOS IIIs framework of regime of islands to
determine the maritime zones of the KIG and the Scarborough Shoal.
Commenting on the petition, respondent officials raised threshold issues questioning (1)
the petitions compliance with the case or controversy requirement for judicial review
grounded on petitioners alleged lack of locus standi and (2) the propriety of the writs of
certiorari and prohibition to assail the constitutionality of RA 9522. On the merits,
respondents defended RA 9522 as the countrys compliance with the terms of UNCLOS III,
preserving Philippine territory over the KIG or Scarborough Shoal. Respondents add that
RA 9522 does not undermine the countrys security, environment and economic interests
or relinquish the Philippines claim over Sabah.
Respondents also question the normative force, under international law, of petitioners
assertion that what Spain ceded to the United States under the Treaty of Paris were the
islands and all the waters found within the boundaries of the rectangular area drawn
under the Treaty of Paris.
We left unacted petitioners prayer for an injunctive writ.
The Issues
The petition raises the following issues:
1.

Preliminarily

1. Whether petitioners possess locus standi to bring this suit; and

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.
2.

On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this
suit as citizens and (2) the writs of certiorari and prohibition are proper remedies to test
the constitutionality of RA 9522. On the merits, we find no basis to declare RA 9522
unconstitutional.
On the Threshold Issues
Petitioners Possess Locus
Standi as Citizens
Petitioners themselves undermine their assertion of locus standi as legislators and
taxpayers because the petition alleges neither infringement of legislative prerogative15
nor misuse of public funds,16 occasioned by the passage and implementation of RA
9522. Nonetheless, we recognize petitioners locus standi as citizens with constitutionally
sufficient interest in the resolution of the merits of the case which undoubtedly raises
issues of national significance necessitating urgent resolution. Indeed, owing to the
peculiar nature of RA 9522, it is understandably difficult to find other litigants possessing
a more direct and specific interest to bring the suit, thus satisfying one of the
requirements for granting citizenship standing.17
The Writs of Certiorari and Prohibition
Are Proper Remedies to Test
the Constitutionality of Statutes
In praying for the dismissal of the petition on preliminary grounds, respondents seek a
strict observance of the offices of the writs of certiorari and prohibition, noting that the
writs cannot issue absent any showing of grave abuse of discretion in the exercise of
judicial, quasi-judicial or ministerial powers on the part of respondents and resulting
prejudice on the part of petitioners.18
Respondents submission holds true in ordinary civil proceedings. When this Court
exercises its constitutional power of judicial review, however, we have, by tradition,
viewed the writs of certiorari and prohibition as proper remedial vehicles to test the
constitutionality of statutes,19 and indeed, of acts of other branches of government.20
Issues of constitutional import are sometimes crafted out of statutes which, while having
no bearing on the personal interests of the petitioners, carry such relevance in the life of
this nation that the Court inevitably finds itself constrained to take cognizance of the
case and pass upon the issues raised, non-compliance with the letter of procedural rules
notwithstanding. The statute sought to be reviewed here is one such law.
RA 9522 is Not Unconstitutional
RA 9522 is a Statutory Tool
to Demarcate the Countrys
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory
Petitioners submit that RA 9522 dismembers a large portion of the national territory21
because it discards the pre-UNCLOS III demarcation of Philippine territory under the
Treaty of Paris and related treaties, successively encoded in the definition of national

territory under the 1935, 1973 and 1987 Constitutions. Petitioners theorize that this
constitutional definition trumps any treaty or statutory provision denying the Philippines
sovereign control over waters, beyond the territorial sea recognized at the time of the
Treaty of Paris, that Spain supposedly ceded to the United States. Petitioners argue that
from the Treaty of Paris technical description, Philippine sovereignty over territorial
waters extends hundreds of nautical miles around the Philippine archipelago, embracing
the rectangular area delineated in the Treaty of Paris.22
Petitioners theory fails to persuade us.
UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral
treaty regulating, among others, sea-use rights over maritime zones (i.e., the territorial
waters [12 nautical miles from the baselines], contiguous zone [24 nautical miles from
the baselines], exclusive economic zone [200 nautical miles from the baselines]), and
continental shelves that UNCLOS III delimits.23 UNCLOS III was the culmination of
decades-long negotiations among United Nations members to codify norms regulating
the conduct of States in the worlds oceans and submarine areas, recognizing coastal and
archipelagic States graduated authority over a limited span of waters and submarine
lands along their coasts.
On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States
parties to mark-out specific basepoints along their coasts from which baselines are
drawn, either straight or contoured, to serve as geographic starting points to measure
the breadth of the maritime zones and continental shelf. Article 48 of UNCLOS III on
archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf. The breadth of the territorial sea, the
contiguous zone, the exclusive economic zone and the continental shelf shall be
measured from archipelagic baselines drawn in accordance with article 47. (Emphasis
supplied)
Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties
to delimit with precision the extent of their maritime zones and continental shelves. In
turn, this gives notice to the rest of the international community of the scope of the
maritime space and submarine areas within which States parties exercise treaty-based
rights, namely, the exercise of sovereignty over territorial waters (Article 2), the
jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous
zone (Article 33), and the right to exploit the living and non-living resources in the
exclusive economic zone (Article 56) and continental shelf (Article 77).
Even under petitioners theory that the Philippine territory embraces the islands and all
the waters within the rectangular area delimited in the Treaty of Paris, the baselines of
the Philippines would still have to be drawn in accordance with RA 9522 because this is
the only way to draw the baselines in conformity with UNCLOS III. The baselines cannot
be drawn from the boundaries or other portions of the rectangular area delineated in the
Treaty of Paris, but from the outermost islands and drying reefs of the archipelago.24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement
or, as petitioners claim, diminution of territory. Under traditional international law
typology, States acquire (or conversely, lose) territory through occupation, accretion,
cession and prescription,25 not by executing multilateral treaties on the regulations of
sea-use rights or enacting statutes to comply with the treatys terms to delimit maritime
zones and continental shelves. Territorial claims to land features are outside UNCLOS III,
and are instead governed by the rules on general international law.26
RA 9522s Use of the Framework
of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines Claim of Sovereignty
Over these Areas
Petitioners next submit that RA 9522s use of UNCLOS IIIs regime of islands framework to
draw the baselines, and to measure the breadth of the applicable maritime zones of the
KIG, weakens our territorial claim over that area.27 Petitioners add that the KIGs (and
Scarborough Shoals) exclusion from the Philippine archipelagic baselines results in the
loss of about 15,000 square nautical miles of territorial waters, prejudicing the livelihood
of subsistence fishermen.28 A comparison of the configuration of the baselines drawn
under RA 3046 and RA 9522 and the extent of maritime space encompassed by each
law, coupled with a reading of the text of RA 9522 and its congressional deliberations,
vis--vis the Philippines obligations under UNCLOS III, belie this view.
The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA
9522 merely followed the basepoints mapped by RA 3046, save for at least nine
basepoints that RA 9522 skipped to optimize the location of basepoints and adjust the
length of one baseline (and thus comply with UNCLOS IIIs limitation on the maximum
length of baselines). Under RA 3046, as under RA 9522, the KIG and the Scarborough
Shoal lie outside of the baselines drawn around the Philippine archipelago. This
undeniable cartographic fact takes the wind out of petitioners argument branding RA
9522 as a statutory renunciation of the Philippines claim over the KIG, assuming that
baselines are relevant for this purpose.
Petitioners assertion of loss of about 15,000 square nautical miles of territorial waters
under RA 9522 is similarly unfounded both in fact and law. On the contrary, RA 9522, by
optimizing the location of basepoints, increased the Philippines total maritime space
(covering its internal waters, territorial sea and exclusive economic zone) by 145,216
square nautical miles, as shown in the table below:29
Extent of maritime
area using RA 3046,
as amended, taking
into account the
Treaty of Paris
delimitation (in
square nautical miles)

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

miles)
Internal or
archipelag
ic waters
Territorial
Sea

166,858

171,435

274,136

32,106

Exclusive
Economic
Zone
TOTAL

382,669
440,994

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under
RA 9522 even extends way beyond the waters covered by the rectangular demarcation
under the Treaty of Paris. Of course, where there are overlapping exclusive economic
zones of opposite or adjacent States, there will have to be a delineation of maritime
boundaries in accordance with UNCLOS III.
Further, petitioners argument that the KIG now lies outside Philippine territory because
the baselines that RA 9522 draws do not enclose the KIG is negated by RA 9522 itself.
Section 2 of the law commits to text the Philippines continued claim of sovereignty and
jurisdiction over the KIG and the Scarborough Shoal:
SEC. 2. The baselines in the following areas over which the Philippines likewise exercises
sovereignty and jurisdiction shall be determined as Regime of Islands under the Republic
of the Philippines consistent with Article 121 of the United Nations Convention on the
Law of the Sea (UNCLOS):
a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and
b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)
Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the
Philippine archipelago, adverse legal effects would have ensued. The Philippines would
have committed a breach of two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS
III requires that [t]he drawing of such baselines shall not depart to any appreciable
extent from the general configuration of the archipelago. Second, Article 47 (2) of
UNCLOS III requires that the length of the baselines shall not exceed 100 nautical miles,
save for three per cent (3%) of the total number of baselines which can reach up to 125
nautical miles.31
Although the Philippines has consistently claimed sovereignty over the KIG32 and the
Scarborough Shoal for several decades, these outlying areas are located at an
appreciable distance from the nearest shoreline of the Philippine archipelago,33 such

that any straight baseline loped around them from the nearest basepoint will inevitably
depart to an appreciable extent from the general configuration of the archipelago.
The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took
pains to emphasize the foregoing during the Senate deliberations:
What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys
and the Scarborough Shoal are outside our archipelagic baseline because if we put them
inside our baselines we might be accused of violating the provision of international law
which states: The drawing of such baseline shall not depart to any appreciable extent
from the general configuration of the archipelago. So sa loob ng ating baseline, dapat
magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi natin
masasabing malapit sila sa atin although we are still allowed by international law to
claim them as our own.
This is called contested islands outside our configuration. We see that our archipelago is
defined by the orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo
ang maliit na circle doon sa itaas, that is Scarborough Shoal, itong malaking circle sa
ibaba, that is Kalayaan Group or the Spratlys. Malayo na sila sa ating archipelago kaya
kung ilihis pa natin ang dating archipelagic baselines para lamang masama itong
dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng United
Nations because of the rule that it should follow the natural configuration of the
archipelago.34 (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS IIIs limits. The
need to shorten this baseline, and in addition, to optimize the location of basepoints
using current maps, became imperative as discussed by respondents:
[T]he amendment of the baselines law was necessary to enable the Philippines to draw
the outer limits of its maritime zones including the extended continental shelf in the
manner provided by Article 47 of [UNCLOS III]. As defined by R.A. 3046, as amended by
R.A. 5446, the baselines suffer from some technical deficiencies, to wit:
1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil
Point) is 140.06 nautical miles x x x. This exceeds the maximum length allowed under
Article 47(2) of the [UNCLOS III], which states that The length of such baselines shall not
exceed 100 nautical miles, except that up to 3 per cent of the total number of baselines
enclosing any archipelago may exceed that length, up to a maximum length of 125
nautical miles.
2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or
deleted from the baselines system. This will enclose an additional 2,195 nautical miles of
water.
3. Finally, the basepoints were drawn from maps existing in 1968, and not established
by geodetic survey methods. Accordingly, some of the points, particularly along the west
coasts of Luzon down to Palawan were later found to be located either inland or on
water, not on low-water line and drying reefs as prescribed by Article 47.35

Hence, far from surrendering the Philippines claim over the KIG and the Scarborough
Shoal, Congress decision to classify the KIG and the Scarborough Shoal as Regime[s] of
Islands under the Republic of the Philippines consistent with Article 12136 of UNCLOS III
manifests the Philippine States responsible observance of its pacta sunt servanda
obligation under UNCLOS III. Under Article 121 of UNCLOS III, any naturally formed area
of land, surrounded by water, which is above water at high tide, such as portions of the
KIG, qualifies under the category of regime of islands, whose islands generate their own
applicable maritime zones.37
Statutory Claim Over Sabah under
RA 5446 Retained
Petitioners argument for the invalidity of RA 9522 for its failure to textualize the
Philippines claim over Sabah in North Borneo is also untenable. Section 2 of RA 5446,
which RA 9522 did not repeal, keeps open the door for drawing the baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea of the Philippine
Archipelago as provided in this Act is without prejudice to the delineation of the baselines
of the territorial sea around the territory of Sabah, situated in North Borneo, over which
the Republic of the Philippines has acquired dominion and sovereignty. (Emphasis
supplied)
UNCLOS III and RA 9522 not
Incompatible with the Constitutions
Delineation of Internal Waters
As their final argument against the validity of RA 9522, petitioners contend that the law
unconstitutionally converts internal waters into archipelagic waters, hence subjecting
these waters to the right of innocent and sea lanes passage under UNCLOS III, including
overflight. Petitioners extrapolate that these passage rights indubitably expose Philippine
internal waters to nuclear and maritime pollution hazards, in violation of the
Constitution.38
Whether referred to as Philippine internal waters under Article I of the Constitution39 or
as archipelagic waters under UNCLOS III (Article 49 [1]), the Philippines exercises
sovereignty over the body of water lying landward of the baselines, including the air
space over it and the submarine areas underneath. UNCLOS III affirms this:
Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters
and of their bed and subsoil.
1. The sovereignty of an archipelagic State extends to the waters enclosed by the
archipelagic baselines drawn in accordance with article 47, described as archipelagic
waters, regardless of their depth or distance from the coast.
2. This sovereignty extends to the air space over the archipelagic waters, as well as to
their bed and subsoil, and the resources contained therein.
xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other
respects affect the status of the archipelagic waters, including the sea lanes, or the
exercise by the archipelagic State of its sovereignty over such waters and their air space,
bed and subsoil, and the resources contained therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal and
international law norms subjecting the territorial sea or archipelagic waters to necessary,
if not marginal, burdens in the interest of maintaining unimpeded, expeditious
international navigation, consistent with the international law principle of freedom of
navigation. Thus, domestically, the political branches of the Philippine government, in
the competent discharge of their constitutional powers, may pass legislation designating
routes within the archipelagic waters to regulate innocent and sea lanes passage.40
Indeed, bills drawing nautical highways for sea lanes passage are now pending in
Congress.41
In the absence of municipal legislation, international law norms, now codified in UNCLOS
III, operate to grant innocent passage rights over the territorial sea or archipelagic
waters, subject to the treatys limitations and conditions for their exercise.42
Significantly, the right of innocent passage is a customary international law,43 thus
automatically incorporated in the corpus of Philippine law.44 No modern State can validly
invoke its sovereignty to absolutely forbid innocent passage that is exercised in
accordance with customary international law without risking retaliatory measures from
the international community.
The fact that for archipelagic States, their archipelagic waters are subject to both the
right of innocent passage and sea lanes passage45 does not place them in lesser footing
vis--vis continental coastal States which are subject, in their territorial sea, to the right of
innocent passage and the right of transit passage through international straits. The
imposition of these passage rights through archipelagic waters under UNCLOS III was a
concession by archipelagic States, in exchange for their right to claim all the waters
landward of their baselines, regardless of their depth or distance from the coast, as
archipelagic waters subject to their territorial sovereignty. More importantly, the
recognition of archipelagic States archipelago and the waters enclosed by their baselines
as one cohesive entity prevents the treatment of their islands as separate islands under
UNCLOS III.46 Separate islands generate their own maritime zones, placing the waters
between islands separated by more than 24 nautical miles beyond the States territorial
sovereignty, subjecting these waters to the rights of other States under UNCLOS III.47
Petitioners invocation of non-executory constitutional provisions in Article II (Declaration
of Principles and State Policies)48 must also fail. Our present state of jurisprudence
considers the provisions in Article II as mere legislative guides, which, absent enabling
legislation, do not embody judicially enforceable constitutional rights x x x.49 Article II
provisions serve as guides in formulating and interpreting implementing legislation, as
well as in interpreting executory provisions of the Constitution. Although Oposa v.
Factoran50 treated the right to a healthful and balanced ecology under Section 16 of
Article II as an exception, the present petition lacks factual basis to substantiate the
claimed constitutional violation. The other provisions petitioners cite, relating to the
protection of marine wealth (Article XII, Section 2, paragraph 251) and subsistence
fishermen (Article XIII, Section 752), are not violated by RA 9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive
economic zone, reserving solely to the Philippines the exploitation of all living and nonliving resources within such zone. Such a maritime delineation binds the international
community since the delineation is in strict observance of UNCLOS III. If the maritime
delineation is contrary to UNCLOS III, the international community will of course reject it
and will refuse to be bound by it.
UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a
sui generis maritime space the exclusive economic zone in waters previously part of the
high seas. UNCLOS III grants new rights to coastal States to exclusively exploit the
resources found within this zone up to 200 nautical miles.53 UNCLOS III, however,
preserves the traditional freedom of navigation of other States that attached to this zone
beyond the territorial sea before UNCLOS III.
RA 9522 and the Philippines Maritime Zones
Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was
not bound to pass RA 9522.54 We have looked at the relevant provision of UNCLOS III55
and we find petitioners reading plausible. Nevertheless, the prerogative of choosing this
option belongs to Congress, not to this Court. Moreover, the luxury of choosing this
option comes at a very steep price. Absent an UNCLOS III compliant baselines law, an
archipelagic State like the Philippines will find itself devoid of internationally acceptable
baselines from where the breadth of its maritime zones and continental shelf is
measured. This is recipe for a two-fronted disaster: first, it sends an open invitation to
the seafaring powers to freely enter and exploit the resources in the waters and
submarine areas around our archipelago; and second, it weakens the countrys case in
any international dispute over Philippine maritime space. These are consequences
Congress wisely avoided.
The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and
adjacent areas, as embodied in RA 9522, allows an internationally-recognized
delimitation of the breadth of the Philippines maritime zones and continental shelf. RA
9522 is therefore a most vital step on the part of the Philippines in safeguarding its
maritime zones, consistent with the Constitution and our national interest.
WHEREFORE, we DISMISS the petition.
SO ORDERED.

2. USA V REYES
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 79253 March 1, 1993
UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners,
vs.

HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite, and
NELIA T. MONTOYA, respondents.
Luna, Sison & Manas for petitioners.
Evelyn R. Dominguez for private respondent.
DAVIDE, JR., J.:
This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court.
Petitioners would have Us annul and set aside, for having been issued with grave abuse
of discretion amounting to lack of jurisdiction, the Resolution of 17 July 1987 of Branch
22 of the Regional Trial Court (RTC) of Cavite in Civil Case No. 224-87. The said resolution
denied, for lack of merit, petitioners' motion to dismiss the said case and granted the
private respondent's motion for the issuance of a writ of preliminary attachment.
Likewise sought to be set aside is the writ of attachment subsequently issued by the RTC
on 28 July 1987.
The doctrine of state immunity is at the core of this controversy.
The readings disclose the following material operative facts:
Private respondent, hereinafter referred to as Montoya, is an American citizen who, at
the time material to this case, was employed as an identification (I.D.) checker at the
U.S. Navy Exchange (NEX) at the Joint United States Military Assistance Group (JUSMAG)
headquarters in Quezon City. She is married to one Edgardo H. Montoya, a FilipinoAmerican serviceman employed by the U.S. Navy and stationed in San Francisco,
California. Petitioner Maxine Bradford, hereinafter referred to as Bradford, is likewise an
American citizen who was the activity exchange manager at the said JUSMAG
Headquarters.
As a consequence of an incident which occurred on 22 January 1987 whereby her body
and belongings were searched after she had bought some items from the retail store of
the NEX JUSMAG, where she had purchasing privileges, and while she was already at the
parking area, Montoya filed on
7 May 1987 a complaint 1 with the Regional Trial Court of her place of residence
Cavite against Bradford for damages due to the oppressive and discriminatory acts
committed by the latter in excess of her authority as store manager of the NEX JUSMAG.
The complaint, docketed as Civil Case No. 224-87 and subsequently raffled off to Branch
22 at Imus, Cavite, alleges the following, material operative facts:
xxx xxx xxx
3. That on January 22, 1987, after working as the duty ID checker from 7:45 to 11:45
a.m., plaintiff went shopping and left the store at l2:00 noon of that day;
4. That on the way to her car while already outside the store, Mrs. Yong Kennedy, also an
ID checker, upon the instruction of the store manager, Ms. Maxine Bradford, approached
plaintiff and informed her that she needed to search her bags;
5. That plaintiff went to defendant, who was then outside the store talking to some men,
to protest the search but she was informed by the defendant that the search is to be
made on all Jusmag employees that day;
6. That the search was thereafter made on the person, car and bags of the plaintiff by
Mrs. Yong Kennedy in the presence of the defendant and numerous curious onlookers;
7. That having found nothing irregular on her person and belongings, plaintiff was
allowed to leave the premises;
8. That feeling aggrieved, plaintiff checked the records and discovered that she was the
only one whose person and belonging was (sic) searched that day contrary to

defendant's allegation as set forth in par. 5 hereof and as evidenced by the

memorandum dated January 30, 1987 made by other Filipino Jusmag employees, a
photocopy of which is hereto attached as ANNEX "A" and made integral (sic) part hereof:
9. That moreover, a check with Navy Exchange Security Manager, R.L. Roynon on January
27, 1987 was made and she was informed by Mr. Roynon that it is a matter of policy that
customers and employees of NEX Jusmag are not searched outside the store unless there
is a very strong evidence of a wrongdoing;
10. That plaintiff knows of no circumstances sufficient to trigger suspicion of a
wrongdoing on her part but on the other hand, is aware of the propensity of defendant to
lay suspicion on Filipinos for theft and/or shoplifting;
11. That plaintiff formally protested the illegal search on February 14, 1987 in a letter
addressed to Mr. R.L. Roynon, a photocopy of which is hereto attached as ANNEX "B" and
made integral (sic) part hereof; but no action was undertaken by the said officer;
12. That the illegal search on the person and belongings of the plaintiff in front of many
people has subjected the plaintiff to speculations of theft, shoplifting and such other
wrongdoings and has exposed her to contempt and ridicule which was caused her undue
embarrassment and indignity;
13. That since the act could not have been motivated by other (sic) reason than racial
discrimination in our own land, the act constitute (sic) a blow to our national pride and
dignity which has caused the plaintiff a feeling of anger for which she suffers sleepless
nights and wounded feelings;
14. That considering the above, plaintiff is entitled to be compensated by way of moral
damages in the amount of P500,000.00;
15. That to serve as a deterrent to those inclined to follow the oppressive act of the
defendant, exemplary damages in the amount of P100,000.00 should also be awarded. 2
She then prayed for judgment ordering Bradford to pay her P500,000.00 as moral
damages, P100,000.00 as exemplary damages and reasonable attorney's fees plus the
costs of the suit. 3
Summons and a copy of the complaint were served on Bradford on 13 May 1987. In
response thereto, she filed two (2) motions for extension of time to file her Answer which
were both granted by the trial court. The first was filed through Atty. Miguel Famularcano,
Jr., who asked for a 20-day extension from 28 May 1987. The second, filed through the
law firm of Luna, Sison and Manas, sought a 15-day extension from 17 June 1987. 4 Thus,
Bradford had up to 1 July 1987 to file her Answer. Instead of doing so, however, she,
together with the government of the United States of America (hereinafter referred to as
the public petitioner), filed on 25 June 1987, also through the law firm of Luna, Sison and
Manas, a Motion to Dismiss 5 based on the following grounds:
1) (This) action is in effect a suit against the United States of America, a foreign
sovereign immune from suit without its consent for the cause of action pleaded in the
complaint; and
2) Defendant, Maxine Bradford, as manager of the US Navy Exchange Branch at JUSMAG,
Quezon City, is immune from suit for act(s) done by her in the performance of her official
functions under the Philippines-United States Military Assistance Agreement of 1947 and
Military Bases Agreement of 1947, as amended. 6
In support of the motion, the petitioners claimed that JUSMAG, composed of an Army,
Navy and Air Group, had been established under the Philippine-United States Military
Assistance Agreement entered into on 21 March 1947 to implement the United States'
program of rendering military assistance to the Philippines. Its headquarters in Quezon

City is considered a temporary installation under the provisions of Article XXI of the
Military Bases Agreement of 1947. Thereunder, "it is mutually agreed that the United
States shall have the rights, power and authority within the bases which are necessary
for the establishment, use and operation and defense thereof or appropriate for the
control thereof." The 1979 amendment of the Military Bases Agreement made it clear
that the United States shall have "the use of certain facilities and areas within the bases
and shall have effective command and control over such facilities and over United States
personnel, employees, equipment and material." JUSMAG maintains, at its Quezon City
headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of purchases
at the NEX is a routine procedure observed at base retail outlets to protect and
safeguard merchandise, cash and equipment pursuant to paragraphs 2 and 4(b) of
NAVRESALEACT SUBIC INST. 5500.1. 7 Thus, Bradford's order to have purchases of all
employees checked on 22 January 1987 was made in the exercise of her duties as
Manager of the NEX-JUSMAG.
They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S.
Government, is considered essential for the performance of governmental functions. Its
mission is to provide a convenient and reliable source, at the lowest practicable cost, of
articles and services required for the well-being of Navy personnel, and of funds to be
used for the latter's welfare and recreation. Montoya's complaint, relating as it does to
the mission, functions and responsibilities of a unit of the United States Navy, cannot
then be allowed. To do so would constitute a violation of the military bases agreement.
Moreover, the rights, powers and authority granted by the Philippine government to the
United States within the U.S. installations would be illusory and academic unless the
latter has effective command and control over such facilities and over American
personnel, employees, equipment and material. Such rights, power and authority within
the bases can only be exercised by the United States through the officers and officials of
its armed forces, such as Bradford. Baer vs. Tizon 8 and United States of America vs.
Ruiz 9 were invoked to support these claims.
On 6 July 1987, Montoya filed a motion for preliminary attachment 10 on the ground that
Bradford was about to depart from the country and was in the process of removing
and/or disposing of her properties with intent to defraud her creditors. On 14 July 1987,
Montoya filed her opposition to the motion to dismiss 11 alleging therein that the
grounds proffered in the latter are bereft of merit because (a) Bradford, in ordering the
search upon her person and belongings outside the NEX JUSMAG store in the presence of
onlookers, had committed an improper, unlawful and highly discriminatory act against a
Filipino employee and had exceeded the scope of her authority; (b) having exceeded her
authority, Bradford cannot rely on the sovereign immunity of the public petitioner
because her liability is personal; (c) Philippine courts are vested with jurisdiction over the
case because Bradford is a civilian employee who had committed the challenged act
outside the U.S. Military Bases; such act is not one of those exempted from the
jurisdiction of Philippine courts; and (d) Philippine courts can inquire into the factual
circumstances of the case to determine whether or not Bradford had acted within or
outside the scope of her authority.
On 16 July 1987, public petitioner and Bradford filed a reply to Montoya's opposition and
an opposition to the motion for preliminary attachment. 12
On 17 July 1987, 13 the trial court 14 resolved both the motion to dismiss and the motion
for preliminary attachment in this wise:

On the motion to dismiss, the grounds and arguments interposed for the dismissal of this
case are determined to be not indubitable. Hence, the motion is denied for lack of merit.
The motion for preliminary attachment is granted in the interest of justice, upon the
plaintiff's filing of a bond in the sum of P50,000.00.
Upon Montoya's filing of the required bond, the trial court issued on 28 July 1987 an
Order 15 decreeing the issuance of a writ of attachment and directing the sheriff to serve
the writ immediately at the expense of the private respondent. The writ of attachment
was issued on that same date. 16
Instead of filing a motion to reconsider the last two (2) orders, or an answer insofar as
Bradford is concerned both the latter and the public petitioner filed on 6 August 1987
the instant petition to annul and set aside the above Resolution of 17 July 1987 and the
writ of attachment issued pursuant thereto. As grounds therefor, they allege that:
10. The respondent judge committed a grave abuse of discretion amounting to lack of
jurisdiction in denying the motion to dismiss the complaint in Civil Case No. 224-87 "for
lack of merit." For the action was in effect a suit against the United States of America, a
foreign sovereign immune from suit without its consent for the cause of action pleaded in
the complaint, while its co-petitioner was immune from suit for act(s) done by her in the
performance of her official functions as manager of the US Navy Exchange Branch at the
Headquarters of JUSMAG, under the Philippines-United States Military Assistance
Agreement of 1947 and Military Bases Agreement of 1947, as amended. 17
On 5 August 1987, the trial court set Civil Case No. 224-87 for pre-trial and trial on 27
August 1987 at 9:30 a.m. 18
On 12 August 1987, this Court resolved to require the respondents to comment on the
petition. 19
On 19 August 1987, petitioners filed with the trial court a Motion
to Suspend Proceedings 20 which the latter denied in its Order of 21 August 1987. 21
In the meantime, however, for failure to file an answer, Bradford was declared in default
in Civil Case No. 224-87 and Montoya was allowed to present her evidence ex-parte. 22
She thus took the witness stand and presented Mrs. Nam Thi Moore and Mrs. Miss Yu as
her witnesses.
On 10 September 1987, the trial court rendered its decision 23 in Civil Case No. 224-87,
the dispositive portion of which reads:
Prescinding from the foregoing, it is hereby determined that the unreasonable search on
the plaintiff's person and bag caused (sic) done recklessly and oppressively by the
defendant, violated, impaired and undermined the plaintiff's liberty guaranteed by the
Constitution, entitling her to moral and exemplary damages against the defendant. The
search has unduly subjected the plaintiff to intense humiliation and indignities and had
consequently ridiculed and embarrassed publicly said plaintiff so gravely and
immeasurably.
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant
Maxine Bradford assessing the latter to pay unto the former the sums of P300,000.00 for
moral damages, P100,000.00 for exemplary damages and P50,000.00 for actual
expenses and attorney's fees.
No costs.
SO ORDERED. 24
Bradford received a copy of the decision on 21 September 1987. On that same date, she
and the public petitioner filed with this Court a Petition for Restraining Order 25 which
sought to have the trial court's decision vacated and to prevent the execution of the

same; it was also prayed that the trial court be enjoined from continuing with Civil Case
No. 224-87. We noted this pleading in the Resolution of 23 September 1987. 26
In the meantime, since no motion for reconsideration or appeal had been interposed by
Bradford challenging the 10 September 1987 Decision which she had received on 21
September 1987, respondent Judge issued on 14 October 1987 an order directing that an
entry of final judgment be made. A copy thereof was received by Bradford on 21
October, 1987. 27
Also on 14 October 1987, Montoya filed her Comment with Opposition to the Petition for
Restraining Order. 28 Respondent Judge had earlier filed his own Comment to the
petition on 14 September 1987. 29
On 27 October 1987, Montoya filed before the trial court a motion for the execution of
the Decision of 10 September 1987 which petitioners opposed on the ground that
although this Court had not yet issued in this case a temporary restraining order, it had
nevertheless resolved to require the respondents to comment on the petition. It was
further averred that execution thereof would cause Bradford grave injury; moreover,
enforcement of a writ of execution may lead to regrettable incidents and unnecessarily
complicate the situation in view of the public petitioner's position on the issue of the
immunity of its employees. In its Resolution of 11 November 1987, the trial court
directed the issuance of a writ of execution. 30
Consequently, the petitioners filed on 4 December 1987, a Manifestation and Motion
reciting the foregoing incidents obtaining before the trial court and praying that their
petition for a restraining order be resolved. 31
On 7 December 1987, this Court issued a Temporary Restraining Order "ENJOINING the
respondents and the Provincial Sheriff of Pasig, Metro Manila, from enforcing the Decision
dated September 10, 1987, and the Writs of Attachment and Execution issued in Civil
Case No. 224-87." 32
On 28 November 1988, after the private respondent filed a Rejoinder to the Consolidated
Reply to the Comments filed by the petitioners, this Court gave due course to the
petition and required the parties to submit their respective memoranda-Petitioners filed
their Memorandum on 8 February
1989 33 while private respondent filed her Memorandum on 14 November
1990. 34
The kernel issue presented in this case is whether or not the trial court committed grave
abuse of discretion in denying the motion to dismiss based on the following grounds: (a)
the complaint in Civil Case No. 224-87 is in effect a suit against the public petitioner, a
foreign sovereign immune from suit which has not given consent to such suit and (b)
Bradford is immune from suit for acts done by her in the performance of her official
functions as manager of the U.S. Navy Exchange of JUSMAG pursuant to the PhilippinesUnited States Military Assistance Agreement of 1947 and the Military Bases Agreement
of 1947, as amended.
Aside from maintaining the affirmative view, the public petitioner and Bradford even go
further by asserting that even if the latter's act were ultra vires she would still be
immune from suit for the rule that public officers or employees may be sued in their
personal capacity for ultra vires and tortious acts is "domestic law" and not applicable in
International Law. It is claimed that the application of the immunity doctrine does not
turn upon the lawlessness of the act or omission attributable to the foreign national for if
this were the case, the concept of immunity would be meaningless as inquiry into the
lawlessness or illegality of the act or omission would first have to be made before

considering the question of immunity; in other words, immunity will lie only if such act or
omission is found to be lawful.
On the other hand, Montoya submits that Bradford is not covered by the protective
mantle of the doctrine of sovereign immunity from suit as the latter is a mere civilian
employee of JUSMAG performing non-governmental and proprietary functions. And even
assuming arguendo that Bradford is performing governmental functions, she would still
remain outside the coverage of the doctrine of state immunity since the act complained
of is ultra vires or outside the scope of her authority. What is being questioned is not the
fact of search alone, but also the manner in which the same was conducted as well as
the fact of discrimination against Filipino employees. Bradford's authority to order a
search, it is asserted, should have been exercised with restraint and should have been in
accordance with the guidelines and procedures laid down by the cited "NAVRESALEACT,
Subic Inst." Moreover, ultra vires acts of a public officer or employee, especially tortious
and criminal acts, are his private acts and may not be considered as acts of the State.
Such officer or employee alone is answerable for any liability arising therefrom and may
thus be proceeded against in his personal capacity.
Montoya further argues that both the acts and person of Bradford are not exempt from
the Philippine courts' jurisdiction because (a) the search was conducted in a parking lot
at Scout Borromeo, Quezon City, outside the JUSMAG store and, therefore, outside the
territorial control of the U.S. Military Bases in the Philippines; (b) Bradford does not
possess diplomatic immunity under Article 16(b) of the 1953 Military Assistance
Agreement creating the JUSMAG which provides that only the Chief of the Military
Advisory Group and not more than six (6) other senior members thereof designated by
him will be accorded diplomatic immunity; 35 and (c) the acts complained of do not fall
under those offenses where the U.S. has been given the right to exercise its jurisdiction
(per Article 13 of the 1947 Military Bases Agreement, as amended by the, Mendez-Blair
Notes of 10 August 1965). 36
Finally, Montoya maintains that at the very least, Philippine courts may inquire into the
factual circumstances of the case to determine whether petitioner Bradford is immune
from suit or exempt from Philippine jurisdiction. To rule otherwise would render the
Philippine courts powerless as they may be easily divested of their jurisdiction upon the
mere invocation of this principle of immunity from suit.
A careful review of the records of this case and a judicious scrutiny of the arguments of
both parties yield nothing but the weakness of the petitioners' stand. While this can be
easily demonstrated, We shall first consider some procedural matters.
Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No.
224-87, it nevertheless joined Bradford in the motion to dismiss on the theory that the
suit was in effect against it without, however, first having obtained leave of court to
intervene therein. This was a procedural lapse, if not a downright improper legal tack.
Since it was not impleaded as an original party, the public petitioner could, on its own
volition, join in the case only by intervening therein; such intervention, the grant of
which is discretionary upon the court, 37 may be allowed only upon a prior motion for
leave with notice to all the parties in the action. Of course, Montoya could have also
impleaded the public petitioner as an additional defendant by amending the complaint if
she so believed that the latter is an indispensible or necessary party.
Since the trial court entertained the motion to dismiss and the subsequent pleadings
filed by the public petitioner and Bradford, it may be deemed to have allowed the public

petitioner to intervene. Corollarily, because of its voluntary appearance, the public

petitioner must be deemed to have submitted itself to the jurisdiction of the trial court.
Moreover, the said motion does not specify any of the grounds for a motion to dismiss
enumerated in Section 1, Rule 16 of the Rules of Court. It merely recites state immunity
on the part of the public petitioner and immunity on the part of Bradford for the reason
that the act imputed to her was done in the performance of her official functions. The
upshot of this contention is actually lack of cause of action a specific ground for
dismissal under the aforesaid Rule because assuming arguendo that Montoya's rights
had been violated by the public petitioner and Bradford, resulting in damage or injury to
the former, both would not be liable therefor, and no action may be maintained thereon,
because of the principle of state immunity.
The test of the sufficiency of the facts to constitute a cause of action is whether or not,
admitting the facts alleged in the complaint, the court could render a valid judgment
upon the same, in accordance with the prayer in the complaint. 38
A motion to dismiss on the ground of failure to state a cause of action hypothetically
admits the truth of the allegations in the complaint.
In deciding a motion to dismiss, a court may grant, deny, allow amendments to the
pleadings or defer the hearing and determination of the same if the ground alleged does
not appear to be indubitable. 39 In the instant case, while the trial court concluded that
"the grounds and arguments interposed for the dismissal" are not "indubitable," it denied
the motion for lack of merit. What the trial court should have done was to defer there
solution on the motion instead of denying it for lack of merit.
In any event, whatever may or should have been done, the public petitioner and
Bradford were not expected to accept the verdict, making their recourse to this Court via
the instant petition inevitable. Thus, whether the trial court should have deferred
resolution on or denied outright the motion to dismiss for lack of merit is no longer
pertinent or relevant.
The complaint in Civil Case No. 224-87 is for damages arising from what Montoya
describes as an "illegal search" on her "person and belongings" conducted outside the
JUSMAG premises in front of many people and upon the orders of Bradford, who has the
propensity for laying suspicion on Filipinos for theft or shoplifting. It is averred that the
said search was directed only against Montoya.
Howsoever viewed, it is beyond doubt that Montoya's cause of action is premised on the
theory that the acts complained of were committed by Bradford not only outside the
scope of her authority or more specifically, in her private capacity but also outside
the territory where she exercises such authority, that is, outside the NEX-JUSMAG
particularly, at the parking area which has not been shown to form part of the facility of
which she was the manager. By their motion to dismiss, public petitioner and Bradford
are deemed to have hypothetically admitted the truth of the allegation in the complaint
which support this theory.
The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs.
Court of Appeals, 40 thus:
I. The rule that a state may not be sued without its consent, now expressed in Article XVI
Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935
and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of
the international community. 41

While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself although it has not
been formally impleaded. 42 It must be noted, however, that the rule is not so allencompassing as to be applicable under all circumstances.
It is a different matter where the public official is made to account in his capacity as such
for acts contrary to law and injurious to the rights of plaintiff. As was clearly set forth by
Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc.,
et al. 43 "Inasmuch as the State authorizes only legal acts by its officers, unauthorized
acts of government officials or officers are not acts of the State, and an action against
the officials or officers by one whose rights have been invaded or violated by such acts,
for the protection of his rights, is not a suit against the State within the rule of immunity
of the State from suit. In the same tenor, it has been said that an action at law or suit in
equity against a State officer or the director of a State department on the ground that,
while claiming to act or the State, he violates or invades the personal and property rights
of the plaintiff, under an unconstitutional act or under an assumption of authority which
he does not have, is not a suit against the State within
the constitutional provision that the State may not be sued without its consent." 44 The
rationale for this ruling is that the doctrinaire of state immunity cannot be used as an
instrument for perpetrating an injustice. 45
In the case of Baer, etc. vs. Tizon, etc., et al., 46 it was ruled that:
There should be no misinterpretation of the scope of the decision reached by this Court.
Petitioner, as the Commander of the United States Naval Base in Olongapo, does not
possess diplomatic immunity. He may therefore be proceeded against in his personal
capacity, or when the action taken by him cannot be imputed to the government which
he represents.
Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., 47 we held that:
. . . it is equally well-settled that where a litigation may have adverse consequences on
the public treasury, whether in the disbursements of funds or loss of property, the public
official proceeded against not being liable in his personal capacity, then the doctrine of
non-suability may appropriately be invoked. It has no application, however, where the
suit against such a functionary had to be instituted because of his failure to comply with
the duty imposed by statute appropriating public funds for the benefit of plaintiff or
petitioner. . . . .
The aforecited authorities are clear on the matter. They state that the doctrine of
immunity from suit will not apply and may not be invoked where the public official is
being sued in his private and personal capacity as an ordinary citizen. The cloak of
protection afforded the officers and agents of the government is removed the moment
they are sued in their individual capacity. This situation usually arises where the public
official acts without authority or in excess of the powers vested in him. It is a well-settled
principle of law that a public official may be liable in his personal private capacity for
whatever damage he may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or jurisdiction. 48

The agents and officials of the United States armed forces stationed in Clark Air Base are
no exception to this rule. In the case of United States of America, et al. vs. Guinto, etc.,
et al., ante, 49 we declared:
It bears stressing at this point that the above observations do not confer on the United
States of America Blanket immunity for all acts done by it or its agents in the Philippines.
Neither may the other petitioners claim that they are also insulated from suit in this
country merely because they have acted as agents of the United States in the discharge
of their official functions.
Since it is apparent from the complaint that Bradford was sued in her private or personal
capacity for acts allegedly done beyond the scope and even beyond her place of official
functions, said complaint is not then vulnerable to a motion to dismiss based on the
grounds relied upon by the petitioners because as a consequence of the hypothetical
admission of the truth of the allegations therein, the case falls within the exception to
the doctrine of state immunity.
In the recent cases of Williams vs. Rarang 50 and Minucher vs. Court of Appeals, 51 this
Court reiterated this exception. In the former, this Court observed:
There is no question, therefore, that the two (2) petitioners actively participated in
screening the features and articles in the POD as part of their official functions. Under
the rule that U.S. officials in the performance of their official functions are immune from
suit, then it should follow that petitioners may not be held liable for the questioned
publication.
It is to be noted, however, that the petitioners were sued in their personal capacities for
their alleged tortious acts in publishing a libelous article.
The question, therefore, arises are American naval officers who commit a crime or
tortious act while discharging official functions still covered by the principle of state
immunity from suit? Pursuing the question further, does the grant of rights, power, and
authority to the United States under the RP-US Bases Treaty cover immunity of its
officers from crimes and torts? Our answer is No.
In the latter, even on the claim of diplomatic immunity which Bradford does not in fact
pretend to have in the instant case as she is not among those granted diplomatic
immunity under Article 16(b) of the 1953 Military Assistance Agreement creating the
JUSMAG 52 this Court ruled:
Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions. It
reads:
1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving
State. He shall also enjoy immunity from its civil and administrative jurisdiction except in
the case of:
xxx xxx xxx
(c) an action relating to any professional or commercial activity exercised by the
diplomatic agent in the receiving State outside his official functions (Emphasis supplied).
There can be no doubt that on the basis of the allegations in the complaint, Montoya has
a sufficient and viable cause of action. Bradford's purported non-suability on the ground
of state immunity is then a defense which may be pleaded in the answer and proven at
the trial.
Since Bradford did not file her Answer within the reglementary period, the trial court
correctly declared her in default upon motion of the private respondent. The judgment
then rendered against her on 10 September 1987 after the ex parte reception of the
evidence for the private respondent and before this Court issued the Temporary

Restraining Order on 7 December 1987 cannot be impugned. The filing of the instant
petition and the knowledge thereof by the trial court did not prevent the latter from
proceeding with Civil Case No.
224-87. "It is elementary that the mere pendency of a special civil action for certiorari,
commenced in relation to a case pending before a lower Court, does not interrupt the
course of the latter when there is no writ of injunction restraining it." 53
WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining
Order of 7 December 1987 is hereby LIFTED.
Costs against petitioner Bradford.

3. PCGG V SANDIGANBAYAN
SECOND DIVISION
PRESIDENTIAL COMMISSION
G.R. No. 124772
ON GOOD GOVERNMENT and
MAGTANGGOL C. GUNIGUNDO,
in his capacity as CHAIRMAN thereof,
Petitioners,
Present:

- versus -

SANDIGANBAYAN and
OFFICECO HOLDINGS, N.V.,
Respondents.

QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:

August 14, 2007

x-----------------------------------------------------------------------------------x
DECISION

Tinga, J.:
Before this Court is a Petition for Certiorari and Prohibition with Prayer for Issuance of a
Temporary Restraining Order filed by the Presidential Commission on Good Government
(PCGG) to restrain and enjoin respondent Sandiganbayan from further proceeding with
Civil Case No. 0164, and to declare null and void the Resolutions of the Sandiganbayan
(Second Division) dated 11 January 1996 and 29 March 1996, which denied PCGGs
motion to dismiss and motion for reconsideration, respectively, in Civil Case No. 0164.
The antecedent facts follow.
On 7 April 1986, in connection with criminal proceedings initiated in the Philippines to
locate, sequester and seek restitution of alleged ill-gotten wealth amassed by the
Marcoses and other accused from the Philippine Government, 1[1] the Office of the
Solicitor General (OSG) wrote the Federal Office for Police Matters in Berne, Switzerland,
requesting assistance for the latter office to: (a) ascertain and provide the OSG with
information as to where and in which cantons the ill-gotten fortune of the Marcoses and
other accused are located, the names of the depositors and the banks and the amounts
involved; and (b) take necessary precautionary measures, such as sequestration, to
freeze the assets in order to preserve their existing value and prevent any further
transfer thereof (herein referred to as the IMAC request).2[2]
On 29 May 1986, the Office of the District Attorney in Zurich, pursuant to the OSGs
request, issued an Order directing the Swiss Banks in Zurich to freeze the accounts of
the accused in PCGG I.S. No. 1 and in the List of Companies and Foundations.3[3] In
compliance with said Order, Bankers Trust A.G. (BTAG) of Zurich froze the accounts of
Officeco Holdings, N.V. (Officeco).4[4]
Officeco appealed the Order of the District Attorney to the Attorney General of the
Canton of Zurich. The Attorney General affirmed the Order of the District Attorney. 5[5]
Officeco further appealed to the Swiss Federal Court which likewise dismissed the appeal
on 31 May 1989.6[6]
Thereafter, in late 1992, Officeco made representations with the OSG and the PCGG for
them to officially advise the Swiss Federal Office for Police Matters to unfreeze Officecos
assets.7[7] The PCGG required Officeco to present countervailing evidence to support its
request.
Instead of complying with the PCGG requirement for it to submit countervailing evidence,
on 12 September 1994, Officeco filed the complaint8[8] which was docketed as Civil
1
2
3
4
5
6
7
8

Case No. 0164 of the Sandiganbayan. The complaint prayed for the PCGG and the OSG
to officially advise the Swiss government to exclude from the freeze or sequestration
order the account of Officeco with BTAG and to unconditionally release the said account
to Officeco.
The OSG filed a joint answer9[9] on 24 November 1994 in behalf of all the defendants in
Civil Case No. 0164.10[10] On 12 May 1995, the PCGG itself filed a motion to dismiss11[11]
which was denied by the Sandiganbayan (Third Division) in its Resolution promulgated
on 11 January 1996.12[12] PCGGs motion for reconsideration was likewise denied in
another Resolution dated 29 March 1996.13[13] Hence, this petition.
On 20 May 1996, the Sandiganbayan issued an order in Civil Case No. 0164 canceling
the pre-trial scheduled on said date in deference to whatever action the Court may take
on this petition.14[14]
The issues raised by the PCGG in its Memorandum15[15] may be summarized as follows:
whether the Sandiganbayan erred in not dismissing Civil Case No. 0164 on the grounds
of (1) res judicata; (2) lack of jurisdiction on account of the act of state doctrine; (3) lack
of cause of action for being premature for failure to exhaust administrative remedies;
and (4) lack of cause of action for the reason that mandamus does not lie to compel
performance of a discretionary act, there being no showing of grave abuse of discretion
on the part of petitioners.
According to petitioners, the 31 May 1989 Decision of the Swiss Federal Court denying
Officecos appeal from the 29 May 1986 and 16 August 1988 freeze orders of the Zurich
District Attorney and the Attorney General of the Canton of Zurich, respectively, is
conclusive upon Officecos claims or demands for the release of the subject deposit
accounts with BTAG. Thus, a relitigation of the same claims or demands cannot be done
without violating the doctrine of res judicata or conclusiveness of judgment.16[16]
Next, petitioners claim that Civil Case No. 0164 in effect seeks a judicial review of the
legality or illegality of the acts of the Swiss government since the Sandiganbayan would
inevitably examine and review the freeze orders of Swiss officials in resolving the case.
This would be in violation of the act of state doctrine which states that courts of one
country will not sit in judgment on the acts of the government of another in due
deference to the independence of sovereignty of every sovereign state.17[17]

9
10
11
12
13
14
15
16
17

Furthermore, if the Sandiganbayan allowed the complaint in Civil Case No. 0164 to
prosper, this would place the Philippine government in an uncompromising position as it
would be constrained to take a position contrary to that contained in the IMAC request.
Petitioners allege that Officeco failed to exhaust the administrative remedies available
under Secs. 5 and 6 of the PCGG Rules and Regulations Implementing Executive Orders
No. 1 and No. 2. This failure, according to petitioners, stripped Officeco of a cause of
action thereby warranting the dismissal of the complaint before the Sandiganbayan.
Petitioners further contend that the complaint before the Sandiganbayan is actually one
for mandamus but the act sought by Officeco is discretionary in nature. Petitioners add
that they did not commit grave abuse of discretion in denying Officecos request to
unfreeze its account with BTAG since the denial was based on Officecos failure to present
countervailing evidence to support its claim. The action for mandamus does not lie,
petitioners conclude.
In its comment,18[18] Officeco questions the competence of the PCGG lawyers to appear
in the case since they are not properly authorized by the OSG to represent the Philippine
government and/or the PCGG in ill-gotten wealth cases such as the one in the case at
bar. However, this issue has been rendered moot by an agreement by and among the
PCGG Chairman, the Solicitor General, the Chief Presidential Legal Counsel, and the
Secretary of Justice that the PCGG lawyers would enter their appearance as counsel of
PCGG or the Republic and shall directly attend to the various cases of the PCGG, by
virtue of their deputization as active counsel.19[19] Furthermore, the Memorandum in this
case which was prepared by the OSG reiterated the arguments in support of the petition
which was initially filed by PCGG.
Nevertheless, the petition is bereft of merit. We find that the Sandiganbayan did not act
with grave abuse of discretion in denying petitioners motion to dismiss.
Res judicata
Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing
or matter settled by judgment.20[20] The doctrine of res judicata provides that a final
judgment on the merits rendered by a court of competent jurisdiction is conclusive as to
the rights of the parties and their privies and constitutes an absolute bar to subsequent
actions involving the same claim, demand, or cause of action.21[21]
For the preclusive effect of res judicata to be enforced, the following requisites must
obtain: (1) The former judgment or order must be final; (2) It must be a judgment or
order on the merits, that is, it was rendered after a consideration of the evidence or
stipulations submitted by the parties at the trial of the case; (3) It must have been
rendered by a court having jurisdiction over the subject matter and the parties; and (4)
There must be, between the first and second actions, identity of parties, of subject
matter and of cause of action. This requisite is satisfied if the two actions are
substantially between the same parties.22[22]
18
19
20
21
22

While the first three elements above are present in this case, we rule that the fourth
element is absent. Hence, res judicata does not apply to prevent the Sandiganbayan
from proceeding with Civil Case No. 0164.
Absolute identity of parties is not a condition sine qua non for res judicata to apply, a
shared identity of interest being sufficient to invoke the coverage of the principle.23[23]
In this regard, petitioners claim that while the Philippine government was not an
impleaded party respondent in Switzerland, it is undisputed that the interest of the
Philippine government is identical to the interest of the Swiss officials, harping on the
fact that the Swiss officials issued the freeze order on the basis of the IMAC request.24
[24] However, we fail to see how petitioners can even claim an interest identical to that
of the courts of Switzerland. Petitioners interest, as reflected in their legal mandate, is to
recover ill-gotten wealth, wherever the same may be located.25[25] The interest of the
Swiss court, on the other hand, is only to settle the issues raised before it, which include
the propriety of the legal assistance extended by the Swiss authorities to the Philippine
government.
Secondly, a subject matter is the item with respect to which the controversy has arisen,
or concerning which the wrong has been done, and it is ordinarily the right, the thing, or
the contract under dispute.26[26] In the case at bar, the subject matter in the Swiss
Federal Court was described in the 31 May 1989 decision itself as ruling on temporary
measures (freezing of accounts) and of taking of evidence (gathering bank
information).27[27] It was thus concerned with determining (1) whether there is a reason
of exclusion as defined in Art. 2 lit. b and [Art. ] 3 par. 1 IRSG28[28] or an applicable case
of Art. 10 Par. 2 IRSG; 29[29] (2) whether legal assistance should be refused on the basis
of Art. 2 lit. a IRSG;30[30] (3) whether Officeco should be regarded as a disinterested
party owing to the fact that its name was not included in the list accompanying the IMAC
request as well as in the order of the District Attorney of Zurich; and (4) whether the
grant of legal assistance is proper considering the actions of Gapud.31[31] In short, the
subject matter before the Swiss courts was the propriety of the legal assistance
extended to the Philippine government. On the other hand, the issue in Civil Case No.
0164 is whether the PCGG may be compelled to officially advise the Swiss government to
exclude or drop from the freeze or sequestration order the account of Officeco with BTAG
and to release the said account to Officeco. In short, the subject matter in Civil Case No.
0164 is the propriety of PCGGs stance regarding Officecos account with BTAG.

23
24
25
26
27
28
29
30
31

In arguing that there is identity of causes of action, petitioners claim that the proofs
required to sustain a judgment for [Officeco] in Switzerland is no different from the
proofs that it would offer in the Philippines. We disagree.
A cause of action is an act or omission of one party in violation of the legal right of the
other.32[32] Causes of action are identical when there is an identity in the facts essential
to the maintenance of the two actions, or where the same evidence will sustain both
actions.33[33] The test often used in determining whether causes of action are identical is
to ascertain whether the same facts or evidence would support and establish the former
and present causes of action.34[34] More significantly, there is identity of causes of
action when the judgment sought will be inconsistent with the prior judgment.35[35] In
the case at bar, allowing Civil Case No. 0164 to proceed to its logical conclusion will not
result in any inconsistency with the 31 May 1989 decision of the Swiss Federal Court.
Even if the Sandiganbayan finds for Officeco, the same will not automatically result in
the lifting of the questioned freeze orders. It will merely serve as a basis for requiring the
PCGG (through the OSG) to make the appropriate representations with the Swiss
government agencies concerned.
Act of State Doctrine
The classic American statement of the act of state doctrine, which appears to have taken
root in England as early as 1674,36[36] and began to emerge in American jurisprudence
in the late eighteenth and early nineteenth centuries, is found in Underhill v.
Hernandez,37[37] where Chief Justice Fuller said for a unanimous Court:
Every sovereign state is bound to respect the independence of every other state, and the
courts of one country will not sit in judgment on the acts of the government of another,
done within its territory. Redress of grievances by reason of such acts must be obtained
through the means open to be availed of by sovereign powers as between themselves.38
[38]
The act of state doctrine is one of the methods by which States prevent their national
courts from deciding disputes which relate to the internal affairs of another State, the
other two being immunity and non-justiciability.39[39] It is an avoidance technique that is
directly related to a States obligation to respect the independence and equality of other
States by not requiring them to submit to adjudication in a national court or to
settlement of their disputes without their consent.40[40] It requires the forum court to
exercise restraint in the adjudication of disputes relating to legislative or other
governmental acts which a foreign State has performed within its territorial limits.41[41]
32
33
34
35
36
37
38
39
40
41

It is petitioners contention that the Sandiganbayan could not grant or deny the prayers in
[Officecos] complaint without first examining and scrutinizing the freeze order of the
Swiss officials in the light of the evidence, which however is in the possession of said
officials and that it would therefore sit in judgment on the acts of the government of
another country.42[42] We disagree.
The parameters of the use of the act of state doctrine were clarified in Banco Nacional de
Cuba v. Sabbatino.43[43] There, the U.S. Supreme Court held that international law does
not require the application of this doctrine nor does it forbid the application of the rule
even if it is claimed that the act of state in question violated international law. Moreover,
due to the doctrines peculiar nation-to-nation character, in practice the usual method for
an individual to seek relief is to exhaust local remedies and then repair to the executive
authorities of his own state to persuade them to champion his claim in diplomacy or
before an international tribunal.44[44]
Even assuming that international law requires the application of the act of state doctrine,
it bears stressing that the Sandiganbayan will not examine and review the freeze orders
of the concerned Swiss officials in Civil Case No. 0164. The Sandiganbayan will not
require the Swiss officials to submit to its adjudication nor will it settle a dispute involving
said officials. In fact, as prayed for in the complaint, the Sandiganbayan will only review
and examine the propriety of maintaining PCGGs position with respect to Officecos
accounts with BTAG for the purpose of further determining the propriety of issuing a writ
against the PCGG and the OSG. Everything considered, the act of state doctrine finds no
application in this case and petitioners resort to it is utterly mislaid.
Exhaustion of Administrative Remedies
Petitioners advert to Officecos failure to exhaust the administrative remedies provided in
Secs. 5 and 6 of the PCGG Rules and Regulations Implementing Executive Orders No. 1
and No. 2.45[45] However, a reading of said provisions shows that they refer only to
sequestration orders, freeze orders and hold orders issued by the PCGG in the
Philippines. They cannot be made to apply to the freeze orders involved in this case
which were issued by the government of another country.
It was thus error for petitioners to treat Officecos request for the lifting of the freeze
orders as a request under Secs. 5 and 6 of its rules. First, the PCGG cannot even grant
the remedy embodied in the said rules, i.e., lifting of the freeze orders. Second, any
argument towards a conclusion that PCGG can grant the remedy of lifting the freeze
order is totally inconsistent with its earlier argument using the act of state doctrine.
PCGGs cognizance of such a request and treating it as a request under Secs. 5 and 6 of
its rules would require a re-examination or review of the decision of the Swiss court, a
procedure that is prohibited by the act of state doctrine.
42
43
44
45

Complaint States a Cause of Action

While the stated issue is whether mandamus lies, the real crux of the matter is whether
Officecos complaint before the Sandiganbayan states a cause of action. We uphold the
sufficiency of the complaint.
It may be recalled that Officeco had alleged that it had sent several letters to the PCGG
and the OSG for these bodies to advise the Swiss authorities to drop or exclude Officecos
account with BTAG from the freeze or sequestration, but no formal response was
received by petitioners on these letters. Copies of at least four (4) of these letters were
in fact attached as annexes to the complaint.46[46]
Section 5(a) of Republic Act No. 6713, or the Code of Conduct and Ethical Standards for
Public Officials and Employees, states:
Section 5. Duties of Public Officials and Employees. In the performance of their duties,
all public officials and employees are under obligation to:
(a) Act promptly on letters and requests. All public officials and employees shall,
within fifteen (15) working days from receipt thereof, respond to letters, telegrams or
other means of communications sent by the public. The reply must contain the action
taken on the request. [Emphasis supplied.]
Since neither the PCGG nor the OSG replied to the requests of Officeco within fifteen (15)
days as required by law, such inaction is equivalent to a denial of these requests. As
such, no other recourse was left except for judicial relief. The appreciation of the
allegations in the complaint from this standpoint allows us to see how the cause of action
precisely materialized. Even if these allegations were not cast in the framework of a
mandamus action, they still would give rise to a viable cause of action, subject to the
proof of the allegations during trial.
A motion to dismiss on the ground of failure to state a cause of action in the complaint
hypothetically admits the truth of the facts alleged therein. The hypothetical admission
extends to the relevant and material facts well pleaded in the complaint and inferences
fairly deducible therefrom. Hence, if the allegations in the complaint furnish sufficient
basis by which the complaint can be maintained, the same should not be dismissed
regardless of the defense that may be assessed by the defendants.47[47]
The following allegations culled from Officecos complaint in the Sandiganbayan would, if
proven, entitle Officeco to the main reliefs sought in its complaint in view of petitioners
refusal to exclude Officecos account with BTAG in the list of ill-gotten wealth, to wit: (1)
The freeze order has been in effect for eleven (11) years, since 1986, without any judicial
action instituted by the PCGG and the OSG against Officeco; (2) The PCGG and the OSG
have no document or proof that the account of Officeco with BTAG belongs to the
Marcoses nor their cronies. Information on this matter was even requested by the OSG
from the PCGG and the latter from Swiss authorities who, up to the present, have not
46
47

responded positively on the request;48[48] and (3) Requests49[49] by Officeco to the

PCGG and OSG to make representations with the Swiss authorities for the latter to
release Officecos account with the BTAG from the freeze order remain unacted upon
despite the mandate in Section 5(a) of Republic Act No. 6713.
The truth of the above allegations, which must be deemed hypothetically admitted for
the purpose of considering the motion to dismiss, may properly be determined only if
Civil Case No. 0164 is allowed to proceed, such that if they are found to be supported by
preponderance of evidence, adverse findings may properly be made against PCGG and
the corresponding reliefs granted in favor of Officeco.
Furthermore, Officeco claims that on two separate occasions, upon request of counsel for
Security Bank and Trust Company (SBTC), the PCGG and the OSG formally advised the
Swiss authorities to release from the freeze orders two other securities accounts with
BTAG. Because of these representations, the release of the two accounts from the freeze
order was effected. Gapud also assisted in the establishment and administration of these
accounts with BTAG.50[50] According to Officeco, the continuous refusal of the PCGG and
the OSG to act favorably on its request while acting favorably on the above two requests
of SBTC is a clear violation of its right to equal protection under the 1987 Constitution.51
[51]
The guarantee of equal protection, according to Tolentino v. Board of Accountancy, et
al.,52[52] simply means that no person or class of persons shall be deprived of the said
protection of the laws which is enjoyed by other persons or other classes in the same
place and in like circumstances.53[53] Indeed, if it were true that the PCGG and the OSG
facilitated the release of two deposit accounts upon the request of SBTC and these
accounts are similarly situated to Officecos frozen account with BTAG, the operation of
the equal protection clause of the Constitution dictates that Officecos account should
likewise be ordered released. Again, this matter can properly be resolved if Civil Case No.
0164 is allowed to proceed.
WHEREFORE, premises considered, the instant petition is DISMISSED.
No pronouncement as to costs.
SO ORDERED.

4. THE HOLY SEE V ROSARIO

EN BANC
G.R. No. 101949 December 1, 1994
48
49
50
51
52
53

THE HOLY SEE, petitioner,

vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of
Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and
set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial
Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint
in Civil Case No. 90-183, while the Order dated September 19, 1991 denied the motion
for reconsideration of the June 20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy,
and is represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged
in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square
meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality of
Paraaque, Metro Manila and registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer Certificates
of Title Nos. 271108 and 265388 respectively and registered in the name of the
Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as
agent to the sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a
dispute arose as to who of the parties has the responsibility of evicting and clearing the
land of squatters. Complicating the relations of the parties was the sale by petitioner of
Lot 5-A to Tropicana Properties and Development Corporation (Tropicana).
I
On January 23, 1990, private respondent filed a complaint with the Regional Trial Court,
Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels of land,
and specific performance and damages against petitioner, represented by the Papal
Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and
Tropicana (Civil Case No.
90-183).
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of petitioner
and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the price of
P1,240.00 per square meters; (2) the agreement to sell was made on the condition that
earnest money of P100,000.00 be paid by Licup to the sellers, and that the sellers clear
the said lots of squatters who were then occupying the same; (3) Licup paid the earnest
money to Msgr. Cirilos; (4) in the same month, Licup assigned his rights over the
property to private respondent and informed the sellers of the said assignment; (5)
thereafter, private respondent demanded from Msgr. Cirilos that the sellers fulfill their
undertaking and clear the property of squatters; however, Msgr. Cirilos informed private
respondent of the squatters' refusal to vacate the lots, proposing instead either that
private respondent undertake the eviction or that the earnest money be returned to the

latter; (6) private respondent counterproposed that if it would undertake the eviction of
the squatters, the purchase price of the lots should be reduced from P1,240.00 to
P1,150.00 per square meter; (7) Msgr. Cirilos returned the earnest money of P100,000.00
and wrote private respondent giving it seven days from receipt of the letter to pay the
original purchase price in cash; (8) private respondent sent the earnest money back to
the sellers, but later discovered that on March 30, 1989, petitioner and the PRC, without
notice to private respondent, sold the lots to Tropicana, as evidenced by two separate
Deeds of Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers'
transfer certificate of title over the lots were cancelled, transferred and registered in the
name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it and
thus enriched itself at the expense of private respondent; (10) private respondent
demanded the rescission of the sale to Tropicana and the reconveyance of the lots, to no
avail; and (11) private respondent is willing and able to comply with the terms of the
contract to sell and has actually made plans to develop the lots into a townhouse project,
but in view of the sellers' breach, it lost profits of not less than P30,000.000.00.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between
petitioner and the PRC on the one hand, and Tropicana on the other; (2) the
reconveyance of the lots in question; (3) specific performance of the agreement to sell
between it and the owners of the lots; and (4) damages.
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the complaint
petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr.
Cirilos for being an improper party. An opposition to the motion was filed by private
respondent.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's
motion to dismiss after finding that petitioner "shed off [its] sovereign immunity by
entering into the business contract in question" (Rollo, pp. 20-21).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30, 1991,
petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing Factual
Allegation for claim of Immunity as a Jurisdictional Defense." So as to facilitate the
determination of its defense of sovereign immunity, petitioner prayed that a hearing be
conducted to allow it to establish certain facts upon which the said defense is based.
Private respondent opposed this motion as well as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion
for reconsideration until after trial on the merits and directing petitioner to file its answer
(Rollo, p. 22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the
privilege of sovereign immunity only on its own behalf and on behalf of its official
representative, the Papal Nuncio.
On December 9, 1991, a Motion for Intervention was filed before us by the Department
of Foreign Affairs, claiming that it has a legal interest in the outcome of the case as
regards the diplomatic immunity of petitioner, and that it "adopts by reference, the
allegations contained in the petition of the Holy See insofar as they refer to arguments
relative to its claim of sovereign immunity from suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In
compliance with the resolution of this Court, both parties and the Department of Foreign
Affairs submitted their respective memoranda.
II

A preliminary matter to be threshed out is the procedural issue of whether the petition
for certiorari under Rule 65 of the Revised Rules of Court can be availed of to question
the order denying petitioner's motion to dismiss. The general rule is that an order
denying a motion to dismiss is not reviewable by the appellate courts, the remedy of the
movant being to file his answer and to proceed with the hearing before the trial court.
But the general rule admits of exceptions, and one of these is when it is very clear in the
records that the trial court has no alternative but to dismiss the complaint (Philippine
National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil Service Commission,
216 SCRA 114 [1992]. In such a case, it would be a sheer waste of time and energy to
require the parties to undergo the rigors of a trial.
The other procedural question raised by private respondent is the personality or legal
interest of the Department of Foreign Affairs to intervene in the case in behalf of the Holy
See (Rollo, pp. 186-190).
In Public International Law, when a state or international agency wishes to plead
sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the
state where it is sued to convey to the court that said defendant is entitled to immunity.
In the United States, the procedure followed is the process of "suggestion," where the
foreign state or the international organization sued in an American court requests the
Secretary of State to make a determination as to whether it is entitled to immunity. If the
Secretary of State finds that the defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a "suggestion" that the defendant is entitled to
immunity. In England, a similar procedure is followed, only the Foreign Office issues a
certification to that effect instead of submitting a "suggestion" (O'Connell, I International
Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and
Obligations, 50 Yale Law Journal 1088 [1941]).
In the Philippines, the practice is for the foreign government or the international
organization to first secure an executive endorsement of its claim of sovereign or
diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to
the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of
Labor and Employment, informing the latter that the respondent-employer could not be
sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48
SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of
Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of
the United States Naval Base at Olongapo City, Zambales, a "suggestion" to respondent
Judge. The Solicitor General embodied the "suggestion" in a Manifestation and
Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal
Affairs moved with this Court to be allowed to intervene on the side of petitioner. The
Court allowed the said Department to file its memorandum in support of petitioner's
claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local
courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50
[1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the
foreign states bypass the Foreign Office, the courts can inquire into the facts and make
their own determination as to the nature of the acts and transactions involved.

III
The burden of the petition is that respondent trial court has no jurisdiction over
petitioner, being a foreign state enjoying sovereign immunity. On the other hand, private
respondent insists that the doctrine of non-suability is not anymore absolute and that
petitioner has divested itself of such a cloak when, of its own free will, it entered into a
commercial transaction for the sale of a parcel of land located in the Philippines.
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its status as
a sovereign state is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch
and he, as the Holy See, was considered a subject of International Law. With the loss of
the Papal States and the limitation of the territory under the Holy See to an area of 108.7
acres, the position of the Holy See in International Law became controversial (Salonga
and Yap, Public International Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy recognized
the exclusive dominion and sovereign jurisdiction of the Holy See over the Vatican City. It
also recognized the right of the Holy See to receive foreign diplomats, to send its own
diplomats to foreign countries, and to enter into treaties according to International Law
(Garcia, Questions and Problems In International Law, Public and Private 81 [1948]).
The Lateran Treaty established the statehood of the Vatican City "for the purpose of
assuring to the Holy See absolute and visible independence and of guaranteeing to it
indisputable sovereignty also in the field of international relations" (O'Connell, I
International Law 311 [1965]).
In view of the wordings of the Lateran Treaty, it is difficult to determine whether the
statehood is vested in the Holy See or in the Vatican City. Some writers even suggested
that the treaty created two international persons the Holy See and Vatican City
(Salonga and Yap, supra, 37).
The Vatican City fits into none of the established categories of states, and the attribution
to it of "sovereignty" must be made in a sense different from that in which it is applied to
other states (Fenwick, International Law 124-125 [1948]; Cruz, International Law 37
[1991]). In a community of national states, the Vatican City represents an entity
organized not for political but for ecclesiastical purposes and international objects.
Despite its size and object, the Vatican City has an independent government of its own,
with the Pope, who is also head of the Roman Catholic Church, as the Holy See or Head
of State, in conformity with its traditions, and the demands of its mission in the world.
Indeed, the world-wide interests and activities of the Vatican City are such as to make it
in a sense an "international state" (Fenwick, supra., 125; Kelsen, Principles of
International Law 160 [1956]).
One authority wrote that the recognition of the Vatican City as a state has significant
implication that it is possible for any entity pursuing objects essentially different from
those pursued by states to be invested with international personality (Kunz, The Status of
the Holy See in International Law, 46 The American Journal of International Law 308
[1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as
the Holy See and not in the name of the Vatican City, one can conclude that in the Pope's
own view, it is the Holy See that is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign
sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic

representations with the Philippine government since 1957 (Rollo, p. 87). This appears to
be the universal practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the
generally accepted principles of International Law. Even without this affirmation, such
principles of International Law are deemed incorporated as part of the law of the land as
a condition and consequence of our admission in the society of nations (United States of
America v. Guinto, 182 SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the courts of another sovereign. According to the
newer or restrictive theory, the immunity of the sovereign is recognized only with regard
to public acts or acts jure imperii of a state, but not with regard to private acts or acts
jure gestionis
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago,
Public International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial
determination when an act may be considered as jure gestionis. The United States
passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial
activity as "either a regular course of commercial conduct or a particular commercial
transaction or act." Furthermore, the law declared that the "commercial character of the
activity shall be determined by reference to the nature of the course of conduct or
particular transaction or act, rather than by reference to its purpose." The Canadian
Parliament enacted in 1982 an Act to Provide For State Immunity in Canadian Courts. The
Act defines a "commercial activity" as any particular transaction, act or conduct or any
regular course of conduct that by reason of its nature, is of a "commercial character."
The restrictive theory, which is intended to be a solution to the host of problems
involving the issue of sovereign immunity, has created problems of its own. Legal
treatises and the decisions in countries which follow the restrictive theory have difficulty
in characterizing whether a contract of a sovereign state with a private party is an act
jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into purely
commercial activities remotely connected with the discharge of governmental functions.
This is particularly true with respect to the Communist states which took control of
nationalized business activities and international trading.
This Court has considered the following transactions by a foreign state with private
parties as acts jure imperii: (1) the lease by a foreign government of apartment buildings
for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; (2) the conduct of
public bidding for the repair of a wharf at a United States Naval Station (United States of
America v. Ruiz, supra.); and (3) the change of employment status of base employees
(Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign
state with private parties as acts jure gestionis: (1) the hiring of a cook in the recreation
center, consisting of three restaurants, a cafeteria, a bakery, a store, and a coffee and
pastry shop at the John Hay Air Station in Baguio City, to cater to American servicemen
and the general public (United States of America v. Rodrigo, 182 SCRA 644 [1990]); and
(2) the bidding for the operation of barber shops in Clark Air Base in Angeles City (United
States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the restaurants and

other facilities open to the general public is undoubtedly for profit as a commercial and
not a governmental activity. By entering into the employment contract with the cook in
the discharge of its proprietary function, the United States government impliedly
divested itself of its sovereign immunity from suit.
In the absence of legislation defining what activities and transactions shall be considered
"commercial" and as constituting acts jure gestionis, we have to come out with our own
guidelines, tentative they may be.
Certainly, the mere entering into a contract by a foreign state with a private party cannot
be the ultimate test. Such an act can only be the start of the inquiry. The logical question
is whether the foreign state is engaged in the activity in the regular course of business. If
the foreign state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a sovereign
activity, or an incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a
real estate business, surely the said transaction can be categorized as an act jure
gestionis. However, petitioner has denied that the acquisition and subsequent disposal of
Lot 5-A were made for profit but claimed that it acquired said property for the site of its
mission or the Apostolic Nunciature in the Philippines. Private respondent failed to
dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The
donation was made not for commercial purpose, but for the use of petitioner to construct
thereon the official place of residence of the Papal Nuncio. The right of a foreign
sovereign to acquire property, real or personal, in a receiving state, necessary for the
creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna
Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the
Philippine Senate and entered into force in the Philippines on November 15, 1965.
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the civil
and administrative jurisdiction of the receiving state over any real action relating to
private immovable property situated in the territory of the receiving state which the
envoy holds on behalf of the sending state for the purposes of the mission. If this
immunity is provided for a diplomatic envoy, with all the more reason should immunity
be recognized as regards the sovereign itself, which in this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof are likewise
clothed with a governmental character. Petitioner did not sell Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters
living thereon made it almost impossible for petitioner to use it for the purpose of the
donation. The fact that squatters have occupied and are still occupying the lot, and that
they stubbornly refuse to leave the premises, has been admitted by private respondent
in its complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without going
to trial in the light of the pleadings, particularly the admission of private respondent.
Besides, the privilege of sovereign immunity in this case was sufficiently established by

the Memorandum and Certification of the Department of Foreign Affairs. As the

department tasked with the conduct of the Philippines' foreign relations (Administrative
Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has formally
intervened in this case and officially certified that the Embassy of the Holy See is a duly
accredited diplomatic mission to the Republic of the Philippines exempt from local
jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic
mission or embassy in this country (Rollo, pp. 156-157). The determination of the
executive arm of government that a state or instrumentality is entitled to sovereign or
diplomatic immunity is a political question that is conclusive upon the courts
(International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]). Where
the plea of immunity is recognized and affirmed by the executive branch, it is the duty of
the courts to accept this claim so as not to embarrass the executive arm of the
government in conducting the country's foreign relations (World Health Organization v.
Aquino, 48 SCRA 242 [1972]). As in International Catholic Migration Commission and in
World Health Organization, we abide by the certification of the Department of Foreign
Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to
conduct a hearing to establish the facts alleged by petitioner in its motion. In view of
said certification, such procedure would however be pointless and unduly circuitous
(Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances.
Under both Public International Law and Transnational Law, a person who feels aggrieved
by the acts of a foreign sovereign can ask his own government to espouse his cause
through diplomatic channels.
Private respondent can ask the Philippine government, through the Foreign Office, to
espouse its claims against the Holy See. Its first task is to persuade the Philippine
government to take up with the Holy See the validity of its claims. Of course, the Foreign
Office shall first make a determination of the impact of its espousal on the relations
between the Philippine government and the Holy See (Young, Remedies of Private
Claimants Against Foreign States, Selected Readings on Protection by Law of Private
Foreign Investments 905, 919 [1964]). Once the Philippine government decides to
espouse the claim, the latter ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the
International Court of Justice:
By taking up the case of one of its subjects and by reporting to diplomatic action or
international judicial proceedings on his behalf, a State is in reality asserting its own
rights its right to ensure, in the person of its subjects, respect for the rules of
international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court
Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No.
90-183 against petitioner is DISMISSED.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan
and Mendoza, JJ., concur.
Padilla, J., took no part.
Feliciano, J., is on leave.

5. LIANG V PEOPLE
FIRST DIVISION
[G.R. No. 125865. January 28, 2000]
JEFFREY LIANG (HUEFENG), petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
DECISION
YNARES-SANTIAGO, J.:
Petitioner is an economist working with the Asian Development Bank (ADB). Sometime in
1994, for allegedly uttering defamatory words against fellow ADB worker Joyce Cabal, he
was charged before the Metropolitan Trial Court (MeTC) of Mandaluyong City with two
counts of grave oral defamation docketed as Criminal Cases Nos. 53170 and 53171.
Petitioner was arrested by virtue of a warrant issued by the MeTC. After fixing petitioners
bail at P2,400.00 per criminal charge, the MeTC released him to the custody of the
Security Officer of ADB. The next day, the MeTC judge received an "office of protocol"
from the Department of Foreign Affairs (DFA) stating that petitioner is covered by
immunity from legal process under Section 45 of the Agreement between the ADB and
the Philippine Government regarding the Headquarters of the ADB (hereinafter
Agreement) in the country. Based on the said protocol communication that petitioner is
immune from suit, the MeTC judge without notice to the prosecution dismissed the two
criminal cases. The latter filed a motion for reconsideration which was opposed by the
DFA. When its motion was denied, the prosecution filed a petition for certiorari and
mandamus with the Regional Trial Court (RTC) of Pasig City which set aside the MeTC
rulings and ordered the latter court to enforce the warrant of arrest it earlier issued. After
the motion for reconsideration was denied, petitioner elevated the case to this Court via
a petition for review arguing that he is covered by immunity under the Agreement and
that no preliminary investigation was held before the criminal cases were filed in court.
The petition is not impressed with merit.
First, courts cannot blindly adhere and take on its face the communication from the DFA
that petitioner is covered by any immunity. The DFAs determination that a certain person
is covered by immunity is only preliminary which has no binding effect in courts. In
receiving ex-parte the DFAs advice and in motu proprio dismissing the two criminal cases
without notice to the prosecution, the latters right to due process was violated. It should
be noted that due process is a right of the accused as much as it is of the prosecution.
The needed inquiry in what capacity petitioner was acting at the time of the alleged
utterances requires for its resolution evidentiary basis that has yet to be presented at

the proper time.54[1] At any rate, it has been ruled that the mere invocation of the
immunity clause does not ipso facto result in the dropping of the charges. 55[2]
Second, under Section 45 of the Agreement which provides: Jksm
"Officers and staff of the Bank including for the purpose of this Article experts and
consultants performing missions for the Bank shall enjoy the following privileges and
immunities:
a.).......immunity from legal process with respect to acts performed by them in their
official capacity except when the Bank waives the immunity."
the immunity mentioned therein is not absolute, but subject to the exception that the act
was done in "official capacity." It is therefore necessary to determine if petitioners case
falls within the ambit of Section 45(a). Thus, the prosecution should have been given the
chance to rebut the DFA protocol and it must be accorded the opportunity to present its
controverting evidence, should it so desire.
Third, slandering a person could not possibly be covered by the immunity agreement
because our laws do not allow the commission of a crime, such as defamation, in the
name of official duty.56[3] The imputation of theft is ultra vires and cannot be part of
official functions. It is well-settled principle of law that a public official may be liable in his
personal private capacity for whatever damage he may have caused by his act done with
malice or in bad faith or beyond the scope of his authority or jurisdiction.57[4] It appears
that even the governments chief legal counsel, the Solicitor General, does not support
the stand taken by petitioner and that of the DFA.
Fourth, under the Vienna Convention on Diplomatic Relations, a diplomatic agent,
assuming petitioner is such, enjoys immunity from criminal jurisdiction of the receiving
state except in the case of an action relating to any professional or commercial activity
exercised by the diplomatic agent in the receiving state outside his official functions.58[5]
As already mentioned above, the commission of a crime is not part of official duty.
Finally, on the contention that there was no preliminary investigation conducted, suffice
it to say that preliminary investigation is not a matter of right in cases cognizable by the
MeTC such as the one at bar.59[6] Being purely a statutory right, preliminary investigation
may be invoked only when specifically granted by law.60[7] The rule on criminal
procedure is clear that no preliminary investigation is required in cases falling within the
jurisdiction of the MeTC.61[8] Besides, the absence of preliminary investigation does not
affect the courts jurisdiction nor does it impair the validity of the information or
otherwise render it defective.
WHEREFORE, the petition is DENIED.
SO ORDERED.
6. MINUCHER V COURT OF APPEALS
FIRST DIVISION
G.R. No. 142396
February 11, 2003
54
55
56
57
58
59
60
61

KHOSROW MINUCHER, petitioner,

vs.
HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.
DECISION
VITUG, J.:
Sometime in May 1986, an Information for violation of Section 4 of Republic Act No.
6425, otherwise also known as the "Dangerous Drugs Act of 1972," was filed against
petitioner Khosrow Minucher and one Abbas Torabian with the Regional Trial Court,
Branch 151, of Pasig City. The criminal charge followed a "buy-bust operation" conducted
by the Philippine police narcotic agents in the house of Minucher, an Iranian national,
where a quantity of heroin, a prohibited drug, was said to have been seized. The narcotic
agents were accompanied by private respondent Arthur Scalzo who would, in due time,
become one of the principal witnesses for the prosecution. On 08 January 1988, Presiding
Judge Eutropio Migrino rendered a decision acquitting the two accused.
On 03 August 1988, Minucher filed Civil Case No. 88-45691 before the Regional Trial
Court (RTC), Branch 19, of Manila for damages on account of what he claimed to have
been trumped-up charges of drug trafficking made by Arthur Scalzo. The Manila RTC
detailed what it had found to be the facts and circumstances surrounding the case.
"The testimony of the plaintiff disclosed that he is an Iranian national. He came to the
Philippines to study in the University of the Philippines in 1974. In 1976, under the
regime of the Shah of Iran, he was appointed Labor Attach for the Iranian Embassies in
Tokyo, Japan and Manila, Philippines. When the Shah of Iran was deposed by Ayatollah
Khomeini, plaintiff became a refugee of the United Nations and continued to stay in the
Philippines. He headed the Iranian National Resistance Movement in the Philippines.
"He came to know the defendant on May 13, 1986, when the latter was brought to his
house and introduced to him by a certain Jose Iigo, an informer of the Intelligence Unit
of the military. Jose Iigo, on the other hand, was met by plaintiff at the office of Atty.
Crisanto Saruca, a lawyer for several Iranians whom plaintiff assisted as head of the antiKhomeini movement in the Philippines.
"During his first meeting with the defendant on May 13, 1986, upon the introduction of
Jose Iigo, the defendant expressed his interest in buying caviar. As a matter of fact, he
bought two kilos of caviar from plaintiff and paid P10,000.00 for it. Selling caviar, aside
from that of Persian carpets, pistachio nuts and other Iranian products was his business
after the Khomeini government cut his pension of over $3,000.00 per month. During
their introduction in that meeting, the defendant gave the plaintiff his calling card, which
showed that he is working at the US Embassy in the Philippines, as a special agent of the
Drug Enforcement Administration, Department of Justice, of the United States, and gave
his address as US Embassy, Manila. At the back of the card appears a telephone number
in defendants own handwriting, the number of which he can also be contacted.
"It was also during this first meeting that plaintiff expressed his desire to obtain a US
Visa for his wife and the wife of a countryman named Abbas Torabian. The defendant told
him that he [could] help plaintiff for a fee of $2,000.00 per visa. Their conversation,
however, was more concentrated on politics, carpets and caviar. Thereafter, the
defendant promised to see plaintiff again.
"On May 19, 1986, the defendant called the plaintiff and invited the latter for dinner at
Mario's Restaurant at Makati. He wanted to buy 200 grams of caviar. Plaintiff brought the
merchandize but for the reason that the defendant was not yet there, he requested the
restaurant people to x x x place the same in the refrigerator. Defendant, however, came

and plaintiff gave him the caviar for which he was paid. Then their conversation was
again focused on politics and business.
"On May 26, 1986, defendant visited plaintiff again at the latter's residence for 18 years
at Kapitolyo, Pasig. The defendant wanted to buy a pair of carpets which plaintiff valued
at $27,900.00. After some haggling, they agreed at $24,000.00. For the reason that
defendant did not yet have the money, they agreed that defendant would come back the
next day. The following day, at 1:00 p.m., he came back with his $24,000.00, which he
gave to the plaintiff, and the latter, in turn, gave him the pair of carpets.1awphi1.nt
"At about 3:00 in the afternoon of May 27, 1986, the defendant came back again to
plaintiff's house and directly proceeded to the latter's bedroom, where the latter and his
countryman, Abbas Torabian, were playing chess. Plaintiff opened his safe in the
bedroom and obtained $2,000.00 from it, gave it to the defendant for the latter's fee in
obtaining a visa for plaintiff's wife. The defendant told him that he would be leaving the
Philippines very soon and requested him to come out of the house for a while so that he
can introduce him to his cousin waiting in a cab. Without much ado, and without putting
on his shirt as he was only in his pajama pants, he followed the defendant where he saw
a parked cab opposite the street. To his complete surprise, an American jumped out of
the cab with a drawn high-powered gun. He was in the company of about 30 to 40
Filipino soldiers with 6 Americans, all armed. He was handcuffed and after about 20
minutes in the street, he was brought inside the house by the defendant. He was made
to sit down while in handcuffs while the defendant was inside his bedroom. The
defendant came out of the bedroom and out from defendant's attach case, he took
something and placed it on the table in front of the plaintiff. They also took plaintiff's
wife who was at that time at the boutique near his house and likewise arrested Torabian,
who was playing chess with him in the bedroom and both were handcuffed together.
Plaintiff was not told why he was being handcuffed and why the privacy of his house,
especially his bedroom was invaded by defendant. He was not allowed to use the
telephone. In fact, his telephone was unplugged. He asked for any warrant, but the
defendant told him to `shut up. He was nevertheless told that he would be able to call
for his lawyer who can defend him.
"The plaintiff took note of the fact that when the defendant invited him to come out to
meet his cousin, his safe was opened where he kept the $24,000.00 the defendant paid
for the carpets and another $8,000.00 which he also placed in the safe together with a
bracelet worth $15,000.00 and a pair of earrings worth $10,000.00. He also discovered
missing upon his release his 8 pieces hand-made Persian carpets, valued at $65,000.00,
a painting he bought for P30,000.00 together with his TV and betamax sets. He claimed
that when he was handcuffed, the defendant took his keys from his wallet. There was,
therefore, nothing left in his house.
"That his arrest as a heroin trafficker x x x had been well publicized throughout the
world, in various newspapers, particularly in Australia, America, Central Asia and in the
Philippines. He was identified in the papers as an international drug trafficker. x x x
In fact, the arrest of defendant and Torabian was likewise on television, not only in the
Philippines, but also in America and in Germany. His friends in said places informed him
that they saw him on TV with said news.
"After the arrest made on plaintiff and Torabian, they were brought to Camp Crame
handcuffed together, where they were detained for three days without food and water."1
During the trial, the law firm of Luna, Sison and Manas, filed a special appearance for
Scalzo and moved for extension of time to file an answer pending a supposed advice

from the United States Department of State and Department of Justice on the defenses
to be raised. The trial court granted the motion. On 27 October 1988, Scalzo filed
another special appearance to quash the summons on the ground that he, not being a
resident of the Philippines and the action being one in personam, was beyond the
processes of the court. The motion was denied by the court, in its order of 13 December
1988, holding that the filing by Scalzo of a motion for extension of time to file an answer
to the complaint was a voluntary appearance equivalent to service of summons which
could likewise be construed a waiver of the requirement of formal notice. Scalzo filed a
motion for reconsideration of the court order, contending that a motion for an extension
of time to file an answer was not a voluntary appearance equivalent to service of
summons since it did not seek an affirmative relief. Scalzo argued that in cases involving
the United States government, as well as its agencies and officials, a motion for
extension was peculiarly unavoidable due to the need (1) for both the Department of
State and the Department of Justice to agree on the defenses to be raised and (2) to
refer the case to a Philippine lawyer who would be expected to first review the case. The
court a quo denied the motion for reconsideration in its order of 15 October 1989.
Scalzo filed a petition for review with the Court of Appeals, there docketed CA-G.R. No.
17023, assailing the denial. In a decision, dated 06 October 1989, the appellate court
denied the petition and affirmed the ruling of the trial court. Scalzo then elevated the
incident in a petition for review on certiorari, docketed G.R. No. 91173, to this Court. The
petition, however, was denied for its failure to comply with SC Circular No. 1-88; in any
event, the Court added, Scalzo had failed to show that the appellate court was in error in
its questioned judgment.
Meanwhile, at the court a quo, an order, dated 09 February 1990, was issued (a)
declaring Scalzo in default for his failure to file a responsive pleading (answer) and (b)
setting the case for the reception of evidence. On 12 March 1990, Scalzo filed a motion
to set aside the order of default and to admit his answer to the complaint. Granting the
motion, the trial court set the case for pre-trial. In his answer, Scalzo denied the material
allegations of the complaint and raised the affirmative defenses (a) of Minuchers failure
to state a cause of action in his complaint and (b) that Scalzo had acted in the discharge
of his official duties as being merely an agent of the Drug Enforcement Administration of
the United States Department of Justice. Scalzo interposed a counterclaim of
P100,000.00 to answer for attorneys' fees and expenses of litigation.
Then, on 14 June 1990, after almost two years since the institution of the civil case,
Scalzo filed a motion to dismiss the complaint on the ground that, being a special agent
of the United States Drug Enforcement Administration, he was entitled to diplomatic
immunity. He attached to his motion Diplomatic Note No. 414 of the United States
Embassy, dated 29 May 1990, addressed to the Department of Foreign Affairs of the
Philippines and a Certification, dated 11 June 1990, of Vice Consul Donna Woodward,
certifying that the note is a true and faithful copy of its original. In an order of 25 June
1990, the trial court denied the motion to dismiss.
On 27 July 1990, Scalzo filed a petition for certiorari with injunction with this Court,
docketed G.R. No. 94257 and entitled "Arthur W. Scalzo, Jr., vs. Hon. Wenceslao Polo, et
al.," asking that the complaint in Civil Case No. 88-45691 be ordered dismissed. The case
was referred to the Court of Appeals, there docketed CA-G.R. SP No. 22505, per this
Courts resolution of 07 August 1990. On 31 October 1990, the Court of Appeals
promulgated its decision sustaining the diplomatic immunity of Scalzo and ordering the
dismissal of the complaint against him. Minucher filed a petition for review with this

Court, docketed G.R. No. 97765 and entitled "Khosrow Minucher vs. the Honorable Court
of Appeals, et. al." (cited in 214 SCRA 242), appealing the judgment of the Court of
Appeals. In a decision, dated 24 September 1992, penned by Justice (now Chief Justice)
Hilario Davide, Jr., this Court reversed the decision of the appellate court and remanded
the case to the lower court for trial. The remand was ordered on the theses (a) that the
Court of Appeals erred in granting the motion to dismiss of Scalzo for lack of jurisdiction
over his person without even considering the issue of the authenticity of Diplomatic Note
No. 414 and (b) that the complaint contained sufficient allegations to the effect that
Scalzo committed the imputed acts in his personal capacity and outside the scope of his
official duties and, absent any evidence to the contrary, the issue on Scalzos diplomatic
immunity could not be taken up.
The Manila RTC thus continued with its hearings on the case. On 17 November 1995, the
trial court reached a decision; it adjudged:
"WHEREFORE, and in view of all the foregoing considerations, judgment is hereby
rendered for the plaintiff, who successfully established his claim by sufficient evidence,
against the defendant in the manner following:
"`Adjudging defendant liable to plaintiff in actual and compensatory damages of
P520,000.00; moral damages in the sum of P10 million; exemplary damages in the sum
of P100,000.00; attorney's fees in the sum of P200,000.00 plus costs.
`The Clerk of the Regional Trial Court, Manila, is ordered to take note of the lien of the
Court on this judgment to answer for the unpaid docket fees considering that the plaintiff
in this case instituted this action as a pauper litigant."2
While the trial court gave credence to the claim of Scalzo and the evidence presented by
him that he was a diplomatic agent entitled to immunity as such, it ruled that he,
nevertheless, should be held accountable for the acts complained of committed outside
his official duties. On appeal, the Court of Appeals reversed the decision of the trial court
and sustained the defense of Scalzo that he was sufficiently clothed with diplomatic
immunity during his term of duty and thereby immune from the criminal and civil
jurisdiction of the "Receiving State" pursuant to the terms of the Vienna Convention.
Hence, this recourse by Minucher. The instant petition for review raises a two-fold issue:
(1) whether or not the doctrine of conclusiveness of judgment, following the decision
rendered by this Court in G.R. No. 97765, should have precluded the Court of Appeals
from resolving the appeal to it in an entirely different manner, and (2) whether or not
Arthur Scalzo is indeed entitled to diplomatic immunity.
The doctrine of conclusiveness of judgment, or its kindred rule of res judicata, would
require 1) the finality of the prior judgment, 2) a valid jurisdiction over the subject matter
and the parties on the part of the court that renders it, 3) a judgment on the merits, and
4) an identity of the parties, subject matter and causes of action.3 Even while one of the
issues submitted in G.R. No. 97765 - "whether or not public respondent Court of Appeals
erred in ruling that private respondent Scalzo is a diplomat immune from civil suit
conformably with the Vienna Convention on Diplomatic Relations" - is also a pivotal
question raised in the instant petition, the ruling in G.R. No. 97765, however, has not
resolved that point with finality. Indeed, the Court there has made this observation "It may be mentioned in this regard that private respondent himself, in his Pre-trial Brief
filed on 13 June 1990, unequivocally states that he would present documentary evidence
consisting of DEA records on his investigation and surveillance of plaintiff and on his
position and duties as DEA special agent in Manila. Having thus reserved his right to
present evidence in support of his position, which is the basis for the alleged diplomatic

immunity, the barren self-serving claim in the belated motion to dismiss cannot be relied
upon for a reasonable, intelligent and fair resolution of the issue of diplomatic
immunity."4
Scalzo contends that the Vienna Convention on Diplomatic Relations, to which the
Philippines is a signatory, grants him absolute immunity from suit, describing his
functions as an agent of the United States Drugs Enforcement Agency as "conducting
surveillance operations on suspected drug dealers in the Philippines believed to be the
source of prohibited drugs being shipped to the U.S., (and) having ascertained the target,
(he then) would inform the Philippine narcotic agents (to) make the actual arrest." Scalzo
has submitted to the trial court a number of documents 1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;
2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated 11 June 1990;
3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;
4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and
5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.
6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal Adviser, Department of
Foreign Affairs, dated 27 June 1990 forwarding Embassy Note No. 414 to the Clerk of
Court of RTC Manila, Branch 19 (the trial court);
7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st Indorsement (Exh. '3'); and
8. Exh. '8' - Letter dated 18 November 1992 from the Office of the Protocol, Department
of Foreign Affairs, through Asst. Sec. Emmanuel Fernandez, addressed to the Chief
Justice of this Court.5
The documents, according to Scalzo, would show that: (1) the United States Embassy
accordingly advised the Executive Department of the Philippine Government that Scalzo
was a member of the diplomatic staff of the United States diplomatic mission from his
arrival in the Philippines on 14 October 1985 until his departure on 10 August 1988; (2)
that the United States Government was firm from the very beginning in asserting the
diplomatic immunity of Scalzo with respect to the case pursuant to the provisions of the
Vienna Convention on Diplomatic Relations; and (3) that the United States Embassy
repeatedly urged the Department of Foreign Affairs to take appropriate action to inform
the trial court of Scalzos diplomatic immunity. The other documentary exhibits were
presented to indicate that: (1) the Philippine government itself, through its Executive
Department, recognizing and respecting the diplomatic status of Scalzo, formally advised
the "Judicial Department" of his diplomatic status and his entitlement to all diplomatic
privileges and immunities under the Vienna Convention; and (2) the Department of
Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo additionally
presented Exhibits "9" to "13" consisting of his reports of investigation on the
surveillance and subsequent arrest of Minucher, the certification of the Drug
Enforcement Administration of the United States Department of Justice that Scalzo was a
special agent assigned to the Philippines at all times relevant to the complaint, and the
special power of attorney executed by him in favor of his previous counsel6 to show (a)
that the United States Embassy, affirmed by its Vice Consul, acknowledged Scalzo to be
a member of the diplomatic staff of the United States diplomatic mission from his arrival
in the Philippines on 14 October 1985 until his departure on 10 August 1988, (b) that, on
May 1986, with the cooperation of the Philippine law enforcement officials and in the
exercise of his functions as member of the mission, he investigated Minucher for alleged
trafficking in a prohibited drug, and (c) that the Philippine Department of Foreign Affairs
itself recognized that Scalzo during his tour of duty in the Philippines (14 October 1985

up to 10 August 1988) was listed as being an Assistant Attach of the United States
diplomatic mission and accredited with diplomatic status by the Government of the
Philippines. In his Exhibit 12, Scalzo described the functions of the overseas office of the
United States Drugs Enforcement Agency, i.e., (1) to provide criminal investigative
expertise and assistance to foreign law enforcement agencies on narcotic and drug
control programs upon the request of the host country, 2) to establish and maintain
liaison with the host country and counterpart foreign law enforcement officials, and 3) to
conduct complex criminal investigations involving international criminal conspiracies
which affect the interests of the United States.
The Vienna Convention on Diplomatic Relations was a codification of centuries-old
customary law and, by the time of its ratification on 18 April 1961, its rules of law had
long become stable. Among the city states of ancient Greece, among the peoples of the
Mediterranean before the establishment of the Roman Empire, and among the states of
India, the person of the herald in time of war and the person of the diplomatic envoy in
time of peace were universally held sacrosanct.7 By the end of the 16th century, when
the earliest treatises on diplomatic law were published, the inviolability of ambassadors
was firmly established as a rule of customary international law.8 Traditionally, the
exercise of diplomatic intercourse among states was undertaken by the head of state
himself, as being the preeminent embodiment of the state he represented, and the
foreign secretary, the official usually entrusted with the external affairs of the state.
Where a state would wish to have a more prominent diplomatic presence in the receiving
state, it would then send to the latter a diplomatic mission. Conformably with the Vienna
Convention, the functions of the diplomatic mission involve, by and large, the
representation of the interests of the sending state and promoting friendly relations with
the receiving state.9
The Convention lists the classes of heads of diplomatic missions to include (a)
ambassadors or nuncios accredited to the heads of state,10 (b) envoys,11 ministers or
internuncios accredited to the heads of states; and (c) charges d' affairs12 accredited to
the ministers of foreign affairs.13 Comprising the "staff of the (diplomatic) mission" are
the diplomatic staff, the administrative staff and the technical and service staff. Only the
heads of missions, as well as members of the diplomatic staff, excluding the members of
the administrative, technical and service staff of the mission, are accorded diplomatic
rank. Even while the Vienna Convention on Diplomatic Relations provides for immunity to
the members of diplomatic missions, it does so, nevertheless, with an understanding
that the same be restrictively applied. Only "diplomatic agents," under the terms of the
Convention, are vested with blanket diplomatic immunity from civil and criminal suits.
The Convention defines "diplomatic agents" as the heads of missions or members of the
diplomatic staff, thus impliedly withholding the same privileges from all others. It might
bear stressing that even consuls, who represent their respective states in concerns of
commerce and navigation and perform certain administrative and notarial duties, such
as the issuance of passports and visas, authentication of documents, and administration
of oaths, do not ordinarily enjoy the traditional diplomatic immunities and privileges
accorded diplomats, mainly for the reason that they are not charged with the duty of
representing their states in political matters. Indeed, the main yardstick in ascertaining
whether a person is a diplomat entitled to immunity is the determination of whether or
not he performs duties of diplomatic nature.
Scalzo asserted, particularly in his Exhibits "9" to "13," that he was an Assistant Attach
of the United States diplomatic mission and was accredited as such by the Philippine

Government. An attach belongs to a category of officers in the diplomatic

establishment who may be in charge of its cultural, press, administrative or financial
affairs. There could also be a class of attaches belonging to certain ministries or
departments of the government, other than the foreign ministry or department, who are
detailed by their respective ministries or departments with the embassies such as the
military, naval, air, commercial, agricultural, labor, science, and customs attaches, or the
like. Attaches assist a chief of mission in his duties and are administratively under him,
but their main function is to observe, analyze and interpret trends and developments in
their respective fields in the host country and submit reports to their own ministries or
departments in the home government.14 These officials are not generally regarded as
members of the diplomatic mission, nor are they normally designated as having
diplomatic rank.
In an attempt to prove his diplomatic status, Scalzo presented Diplomatic Notes Nos.
414, 757 and 791, all issued post litem motam, respectively, on 29 May 1990, 25
October 1991 and 17 November 1992. The presentation did nothing much to alleviate
the Court's initial reservations in G.R. No. 97765, viz:
"While the trial court denied the motion to dismiss, the public respondent gravely abused
its discretion in dismissing Civil Case No. 88-45691 on the basis of an erroneous
assumption that simply because of the diplomatic note, the private respondent is clothed
with diplomatic immunity, thereby divesting the trial court of jurisdiction over his person.
"x x x x x x x x x
"And now, to the core issue - the alleged diplomatic immunity of the private respondent.
Setting aside for the moment the issue of authenticity raised by the petitioner and the
doubts that surround such claim, in view of the fact that it took private respondent one
(1) year, eight (8) months and seventeen (17) days from the time his counsel filed on 12
September 1988 a Special Appearance and Motion asking for a first extension of time to
file the Answer because the Departments of State and Justice of the United States of
America were studying the case for the purpose of determining his defenses, before he
could secure the Diplomatic Note from the US Embassy in Manila, and even granting for
the sake of argument that such note is authentic, the complaint for damages filed by
petitioner cannot be peremptorily dismissed.
"x x x x x x x x x
"There is of course the claim of private respondent that the acts imputed to him were
done in his official capacity. Nothing supports this self-serving claim other than the socalled Diplomatic Note. x x x. The public respondent then should have sustained the trial
court's denial of the motion to dismiss. Verily, it should have been the most proper and
appropriate recourse. It should not have been overwhelmed by the self-serving
Diplomatic Note whose belated issuance is even suspect and whose authenticity has not
yet been proved. The undue haste with which respondent Court yielded to the private
respondent's claim is arbitrary."
A significant document would appear to be Exhibit No. 08, dated 08 November 1992,
issued by the Office of Protocol of the Department of Foreign Affairs and signed by
Emmanuel C. Fernandez, Assistant Secretary, certifying that "the records of the
Department (would) show that Mr. Arthur W. Scalzo, Jr., during his term of office in the
Philippines (from 14 October 1985 up to 10 August 1988) was listed as an Assistant
Attach of the United States diplomatic mission and was, therefore, accredited
diplomatic status by the Government of the Philippines." No certified true copy of such
"records," the supposed bases for the belated issuance, was presented in evidence.

Concededly, vesting a person with diplomatic immunity is a prerogative of the executive

branch of the government. In World Health Organization vs. Aquino,15 the Court has
recognized that, in such matters, the hands of the courts are virtually tied. Amidst
apprehensions of indiscriminate and incautious grant of immunity, designed to gain
exemption from the jurisdiction of courts, it should behoove the Philippine government,
specifically its Department of Foreign Affairs, to be most circumspect, that should
particularly be no less than compelling, in its post litem motam issuances. It might be
recalled that the privilege is not an immunity from the observance of the law of the
territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the
exercise of territorial jurisdiction.16 The government of the United States itself, which
Scalzo claims to be acting for, has formulated its standards for recognition of a
diplomatic agent. The State Department policy is to only concede diplomatic status to a
person who possesses an acknowledged diplomatic title and "performs duties of
diplomatic nature."17 Supplementary criteria for accreditation are the possession of a
valid diplomatic passport or, from States which do not issue such passports, a diplomatic
note formally representing the intention to assign the person to diplomatic duties, the
holding of a non-immigrant visa, being over twenty-one years of age, and performing
diplomatic functions on an essentially full-time basis.18 Diplomatic missions are
requested to provide the most accurate and descriptive job title to that which currently
applies to the duties performed. The Office of the Protocol would then assign each
individual to the appropriate functional category.19
But while the diplomatic immunity of Scalzo might thus remain contentious, it was
sufficiently established that, indeed, he worked for the United States Drug Enforcement
Agency and was tasked to conduct surveillance of suspected drug activities within the
country on the dates pertinent to this case. If it should be ascertained that Arthur Scalzo
was acting well within his assigned functions when he committed the acts alleged in the
complaint, the present controversy could then be resolved under the related doctrine of
State Immunity from Suit.
The precept that a State cannot be sued in the courts of a foreign state is a longstanding rule of customary international law then closely identified with the personal
immunity of a foreign sovereign from suit20 and, with the emergence of democratic
states, made to attach not just to the person of the head of state, or his representative,
but also distinctly to the state itself in its sovereign capacity.21 If the acts giving rise to a
suit are those of a foreign government done by its foreign agent, although not
necessarily a diplomatic personage, but acting in his official capacity, the complaint
could be barred by the immunity of the foreign sovereign from suit without its consent.
Suing a representative of a state is believed to be, in effect, suing the state itself. The
proscription is not accorded for the benefit of an individual but for the State, in whose
service he is, under the maxim - par in parem, non habet imperium - that all states are
sovereign equals and cannot assert jurisdiction over one another.22 The implication, in
broad terms, is that if the judgment against an official would require the state itself to
perform an affirmative act to satisfy the award, such as the appropriation of the amount
needed to pay the damages decreed against him, the suit must be regarded as being
against the state itself, although it has not been formally impleaded.23
In United States of America vs. Guinto,24 involving officers of the United States Air Force
and special officers of the Air Force Office of Special Investigators charged with the duty
of preventing the distribution, possession and use of prohibited drugs, this Court has
ruled -

"While the doctrine (of state immunity) appears to prohibit only suits against the state
without its consent, it is also applicable to complaints filed against officials of the state
for acts allegedly performed by them in the discharge of their duties. x x x. It cannot for
a moment be imagined that they were acting in their private or unofficial capacity when
they apprehended and later testified against the complainant. It follows that for
discharging their duties as agents of the United States, they cannot be directly
impleaded for acts imputable to their principal, which has not given its consent to be
sued. x x x As they have acted on behalf of the government, and within the scope of
their authority, it is that government, and not the petitioners personally, [who were]
responsible for their acts."25
This immunity principle, however, has its limitations. Thus, Shauf vs. Court of Appeals26
elaborates:
"It is a different matter where the public official is made to account in his capacity as
such for acts contrary to law and injurious to the rights of the plaintiff. As was clearly set
forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al., vs.
Aligaen, et al. (33 SCRA 368): `Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or officers are not acts of the State,
and an action against the officials or officers by one whose rights have been invaded or
violated by such acts, for the protection of his rights, is not a suit against the State within
the rule of immunity of the State from suit. In the same tenor, it has been said that an
action at law or suit in equity against a State officer or the director of a State department
on the ground that, while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent. The rationale
for this ruling is that the doctrine of state immunity cannot be used as an instrument for
perpetrating an injustice.
"x x x x x x x x x
"(T)he doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen.
The cloak of protection afforded the officers and agents of the government is removed
the moment they are sued in their individual capacity. This situation usually arises where
the public official acts without authority or in excess of the powers vested in him. It is a
well-settled principle of law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done with malice and in
bad faith or beyond the scope of his authority and jurisdiction."27
A foreign agent, operating within a territory, can be cloaked with immunity from suit but
only as long as it can be established that he is acting within the directives of the sending
state. The consent of the host state is an indispensable requirement of basic courtesy
between the two sovereigns. Guinto and Shauf both involve officers and personnel of the
United States, stationed within Philippine territory, under the RP-US Military Bases
Agreement. While evidence is wanting to show any similar agreement between the
governments of the Philippines and of the United States (for the latter to send its agents
and to conduct surveillance and related activities of suspected drug dealers in the
Philippines), the consent or imprimatur of the Philippine government to the activities of
the United States Drug Enforcement Agency, however, can be gleaned from the facts
heretofore elsewhere mentioned. The official exchanges of communication between
agencies of the government of the two countries, certifications from officials of both the

Philippine Department of Foreign Affairs and the United States Embassy, as well as the
participation of members of the Philippine Narcotics Command in the "buy-bust
operation" conducted at the residence of Minucher at the behest of Scalzo, may be
inadequate to support the "diplomatic status" of the latter but they give enough
indication that the Philippine government has given its imprimatur, if not consent, to the
activities within Philippine territory of agent Scalzo of the United States Drug
Enforcement Agency. The job description of Scalzo has tasked him to conduct
surveillance on suspected drug suppliers and, after having ascertained the target, to
inform local law enforcers who would then be expected to make the arrest. In conducting
surveillance activities on Minucher, later acting as the poseur-buyer during the buy-bust
operation, and then becoming a principal witness in the criminal case against Minucher,
Scalzo hardly can be said to have acted beyond the scope of his official function or
duties.
All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent of the
United States Drug Enforcement Agency allowed by the Philippine government to
conduct activities in the country to help contain the problem on the drug traffic, is
entitled to the defense of state immunity from suit.
WHEREFORE, on the foregoing premises, the petition is DENIED. No costs.
7. WHO V. AQUINO
EN BANC
G.R. No. L-35131 November 29, 1972
THE WORLD HEALTH ORGANIZATION and DR. LEONCE VERSTUYFT, petitioners,
vs.
HON. BENJAMIN H. AQUINO, as Presiding Judge of Branch VIII, Court of First Instance of
Rizal, MAJOR WILFREDO CRUZ, MAJOR ANTONIO G. RELLEVE, and CAPTAIN PEDRO S.
NAVARRO of the Constabulary Offshore Action Center (COSAC), respondents.
Sycip, Salazar, Luna, Manalo and Feliciano for petitioners.
Emilio L. Baldia for respondents.
TEEHANKEE, J.:p
An original action for certiorari and prohibition to set aside respondent judge's refusal to
quash a search warrant issued by him at the instance of respondents COSAC
(Constabulary Offshore Action Center) officers for the search and seizure of the personal
effects of petitioner official of the WHO (World Health Organization) notwithstanding his
being entitled to diplomatic immunity, as duly recognized by the executive branch of the
Philippine Government and to prohibit respondent judge from further proceedings in the
matter.
Upon filing of the petition, the Court issued on June 6, 1972 a restraining order enjoining
respondents from executing the search warrant in question.
Respondents COSAC officers filed their answer joining issue against petitioners and
seeking to justify their act of applying for and securing from respondent judge the
warrant for the search and seizure of ten crates consigned to petitioner Verstuyft and
stored at the Eternit Corporation warehouse on the ground that they "contain large
quantities of highly dutiable goods" beyond the official needs of said petitioner "and the
only lawful way to reach these articles and effects for purposes of taxation is through a
search warrant." 1

The Court thereafter called for the parties' memoranda in lieu of oral argument, which
were filed on August 3, 1972 by respondents and on August 21, 1972 by petitioners, and
the case was thereafter deemed submitted for decision.
It is undisputed in the record that petitioner Dr. Leonce Verstuyft, who was assigned on
December 6, 1971 by the WHO from his last station in Taipei to the Regional Office in
Manila as Acting Assistant Director of Health Services, is entitled to diplomatic immunity,
pursuant to the Host Agreement executed on July 22, 1951 between the Philippine
Government and the World Health Organization.
Such diplomatic immunity carries with it, among other diplomatic privileges and
immunities, personal inviolability, inviolability of the official's properties, exemption from
local jurisdiction, and exemption from taxation and customs duties.
When petitioner Verstuyft's personal effects contained in twelve (12) crates entered the
Philippines as unaccompanied baggage on January 10, 1972, they were accordingly
allowed free entry from duties and taxes. The crates were directly stored at the Eternit
Corporation's warehouse at Mandaluyong, Rizal, "pending his relocation into permanent
quarters upon the offer of Mr. Berg, Vice President of Eternit who was once a patient of
Dr. Verstuyft in the Congo." 2
Nevertheless, as above stated, respondent judge issued on March 3, 1972 upon
application on the same date of respondents COSAC officers search warrant No. 72-138
for alleged violation of Republic Act 4712 amending section 3601 of the Tariff and
Customs Code 3 directing the search and seizure of the dutiable items in said crates.
Upon protest of March 6, 1972 of Dr. Francisco Dy, WHO Regional Director for the
Western Pacific with station in Manila, Secretary of Foreign Affairs Carlos P. Romulo,
personally wired on the same date respondent Judge advising that "Dr. Verstuyft is
entitled to immunity from search in respect of his personal baggage as accorded to
members of diplomatic missions" pursuant to the Host Agreement and requesting
suspension of the search warrant order "pending clarification of the matter from the
ASAC."
Respondent judge set the Foreign Secretary's request for hearing and heard the same on
March 16, 1972, but notwithstanding the official plea of diplomatic immunity interposed
by a duly authorized representative of the Department of Foreign Affairs who furnished
the respondent judge with a list of the articles brought in by petitioner Verstuyft,
respondent judge issued his order of the same date maintaining the effectivity of the
search warrant issued by him, unless restrained by a higher court. 4
Petitioner Verstuyft's special appearance on March 24, 1972 for the limited purpose of
pleading his diplomatic immunity and motion to quash search warrant of April 12, 1972
failed to move respondent judge.
At the hearing thereof held on May 8, 1972, the Office of the Solicitor General appeared
and filed an extended comment stating the official position of the executive branch of
the Philippine Government that petitioner Verstuyft is entitled to diplomatic immunity, he
did not abuse his diplomatic immunity, 5 and that court proceedings in the receiving or
host State are not the proper remedy in the case of abuse of diplomatic immunity. 6
The Solicitor General accordingly joined petitioner Verstuyft's prayer for the quashal of
the search warrant. Respondent judge nevertheless summarily denied quashal of the
search warrant per his order of May 9, 1972 "for the same reasons already stated in (his)
aforesaid order of March 16, 1972" disregarding Foreign Secretary Romulo's plea of
diplomatic immunity on behalf of Dr. Verstuyft.

Hence, the petition at bar. Petitioner Verstuyft has in this Court been joined by the World
Health Organization (WHO) itself in full assertion of petitioner Verstuyft's being entitled
"to all privileges and immunities, exemptions and facilities accorded to diplomatic
envoys in accordance with international law" under section 24 of the Host Agreement.
The writs of certiorari and prohibition should issue as prayed for.
1. The executive branch of the Philippine Government has expressly recognized that
petitioner Verstuyft is entitled to diplomatic immunity, pursuant to the provisions of the
Host Agreement. The Department of Foreign Affairs formally advised respondent judge of
the Philippine Government's official position that accordingly "Dr. Verstuyft cannot be the
subject of a Philippine court summons without violating an obligation in international law
of the Philippine Government" and asked for the quashal of the search warrant, since his
personal effects and baggages after having been allowed free entry from all customs
duties and taxes, may not be baselessly claimed to have been "unlawfully imported" in
violation of the tariff and customs code as claimed by respondents COSAC officers. The
Solicitor-General, as principal law officer of the Government, 7 likewise expressly
affirmed said petitioner's right to diplomatic immunity and asked for the quashal of the
search warrant.
It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, 8 and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law officer of the
government, the Solicitor General in this case, or other officer acting under his direction.
9 Hence, in adherence to the settled principle that courts may not so exercise their
jurisdiction by seizure and detention of property, as to embarrass the executive arm of
the government in conducting foreign relations, it is accepted doctrine that "in such
cases the judicial department of (this) government follows the action of the political
branch and will not embarrass the latter by assuming an antagonistic jurisdiction." 10
2. The unfortunate fact that respondent judge chose to rely on the suspicion of
respondents COSAC officers "that the other remaining crates unopened contain
contraband items" 11 rather than on the categorical assurance of the Solicitor-General
that petitioner Verstuyft did not abuse his diplomatic immunity, 12 which was based in
turn on the official positions taken by the highest executive officials with competence
and authority to act on the matter, namely, the Secretaries of Foreign Affairs and of
Finance, could not justify respondent judge's denial of the quashal of the search warrant.
As already stated above, and brought to respondent court's attention, 13 the Philippine
Government is bound by the procedure laid down in Article VII of the Convention on the
Privileges and Immunities of the Specialized Agencies of the United Nations 14 for
consultations between the Host State and the United Nations agency concerned to
determine, in the first instance the fact of occurrence of the abuse alleged, and if so, to
ensure that no repetition occurs and for other recourses. This is a treaty commitment
voluntarily assumed by the Philippine Government and as such, has the force and effect
of law.
Hence, even assuming arguendo as against the categorical assurance of the executive
branch of government that respondent judge had some ground to prefer respondents
COSAC officers' suspicion that there had been an abuse of diplomatic immunity, the
continuation of the search warrant proceedings before him was not the proper remedy.

He should, nevertheless, in deference to the exclusive competence and jurisdiction of the

executive branch of government to act on the matter, have acceded to the quashal of
the search warrant, and forwarded his findings or grounds to believe that there had been
such abuse of diplomatic immunity to the Department of Foreign Affairs for it to deal
with, in accordance with the aforementioned Convention, if so warranted.
3. Finally, the Court has noted with concern the apparent lack of coordination between
the various departments involved in the subject-matter of the case at bar, which made it
possible for a small unit, the COSAC, to which respondents officers belong, seemingly to
disregard and go against the authoritative determination and pronouncements of both
the Secretaries of Foreign Affairs and of Finance that petitioner Verstuyft is entitled to
diplomatic immunity, as confirmed by the Solicitor-General as the principal law officer of
the Government. Such executive determination properly implemented should have
normally constrained respondents officers themselves to obtain the quashal of the
search warrant secured by them rather than oppose such quashal up to this Court, to the
embarrassment of said department heads, if not of the Philippine Government itself vis a
vis the petitioners. 15
The seriousness of the matter is underscored when the provisions of Republic Act 75
enacted since October 21, 1946 to safeguard the jurisdictional immunity of diplomatic
officials in the Philippines are taken into account. Said Act declares as null and void writs
or processes sued out or prosecuted whereby inter alia the person of an ambassador or
public minister is arrested or imprisoned or his goods or chattels are seized or attached
and makes it a penal offense for "every person by whom the same is obtained or
prosecuted, whether as party or as attorney, and every officer concerned in executing it"
to obtain or enforce such writ or process. 16
The Court, therefore, holds that respondent judge acted without jurisdiction and with
grave abuse of discretion in not ordering the quashal of the search warrant issued by him
in disregard of the diplomatic immunity of petitioner Verstuyft.
ACCORDINGLY, the writs of certiorari and prohibition prayed for are hereby granted, and
the temporary restraining order heretofore issued against execution or enforcement of
the questioned search warrant, which is hereby declared null and void, is hereby made
permanent. The respondent court is hereby commanded to desist from further
proceedings in the matter. No costs, none having been prayed for.
The clerk of court is hereby directed to furnish a copy of this decision to the Secretary of
Justice for such action as he may find appropriate with regard to the matters mentioned
in paragraph 3 hereof. So ordered.
Concepcion, C.J., Makalintal, Zaldivar, Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.
Castro, J., reserves his vote.
8. SEAFDEAC v NLRC
SECOND DIVISION
G.R. No. 86773 February 14, 1992
SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT
(SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE
DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.
NOCON, J.:
This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the
National Labor Relations Commission sustaining the labor arbiter, in holding herein
petitioners Southeast Asian Fisheries Development Center-Aquaculture Department
(SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to pay
private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon
computed from May 16, 1986 until full payment thereof is made, as separation pay and
other post-employment benefits, and the resolution denying the petitioners' motion for
reconsideration of said decision dated January 9, 1989.
The antecedent facts of the case are as follows:
SEAFDEC-AQD is a department of an international organization, the Southeast Asian
Fisheries Development Center, organized through an agreement entered into in Bangkok,
Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand,
Vietnam, Indonesia and the Philippines with Japan as the sponsoring country (Article 1,
Agreement Establishing the SEAFDEC).
On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research
Associate an a probationary basis by the SEAFDEC-AQD and was appointed Senior
External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a
monthly allowance of P4,000.00. Thereafter, he was appointed to the position of
Professional III and designated as Head of External Affairs Office with the same pay and
benefits.
On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a
notice of termination to private respondent informing him that due to the financial
constraints being experienced by the department, his services shall be terminated at the
close of office hours on May 15, 1986 and that he is entitled to separation benefits
equivalent to one (1) month of his basic salary for every year of service plus other
benefits (Rollo, p. 153).
Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the
latter filed on March 18, 1987 a complaint against petitioners for non-payment of
separation benefits plus moral damages and attorney's fees with the Arbitration Branch
of the NLRC (Annex "C" of Petition for Certiorari).
Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction
over the case inasmuch as the SEAFDEC-AQD is an international organization and that
private respondent must first secure clearances from the proper departments for
property or money accountability before any claim for separation pay will be paid, and
which clearances had not yet been obtained by the private respondent.
A formal hearing was conducted whereby private respondent alleged that the nonissuance of the clearances by the petitioners was politically motivated and in bad faith.
On the other hand, petitioners alleged that private respondent has property
accountability and an outstanding obligation to SEAFDEC-AQD in the amount of
P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave
benefits amounting to P44,000.00 due to his failure to avail of the same during his
employment with the SEAFDEC-AQD (Annex "D", Id.).
On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of
which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16,
1986 until full payment thereof is made, as separation pay and other post-employment
benefits;
2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's
fees.
All other claims are hereby dismissed.
SO ORDERED. (Rollo, p. 51, Annex "E")
On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as
to the award of P50,000.00 as actual damages and attorney's fees for being baseless.
(Annex "A", p. 28, id.)
On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.)
which was denied on January 9, 1989. Thereafter, petitioners instituted this petition for
certiorari alleging that the NLRC has no jurisdiction to hear and decide respondent
Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its international
character and the complaint is in effect a suit against the State which cannot be
maintained without its consent.
The petition is impressed with merit.
Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department
(SEAFDEC-AQD) is an international agency beyond the jurisdiction of public respondent
NLRC.
It was established by the Governments of Burma, Kingdom of Cambodia, Republic of
Indonesia, Japan, Kingdom of Laos, Malaysia. Republic of the Philippines, Republic of
Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H", Petition).
The Republic of the Philippines became a signatory to the Agreement establishing
SEAFDEC on January 16,1968. Its purpose is as follows:
The purpose of the Center is to contribute to the promotion of the fisheries development
in Southeast Asia by mutual co-operation among the member governments of the
Center, hereinafter called the "Members", and through collaboration with international
organizations and governments external to the Center. (Agreement Establishing the
SEAFDEC, Art. 1; Annex "H" Petition) (p.310, Rollo)
SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7,
1973 in Kuala Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex
"I", id.) to be established in Iloilo for the promotion of research in aquaculture. Paragraph
1, Article 6 of the Agreement establishing SEAFDEC mandates:
1. The Council shall be the supreme organ of the Center and all powers of the Center
shall be vested in the Council.
Being an intergovernmental organization, SEAFDEC including its Departments (AQD),
enjoys functional independence and freedom from control of the state in whose territory
its office is located.
As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book,
Public International Law (p. 83, 1956 ed.):
Permanent international commissions and administrative bodies have been created by
the agreement of a considerable number of States for a variety of international purposes,
economic or social and mainly non-political. Among the notable instances are the
International Labor Organization, the International Institute of Agriculture, the
International Danube Commission. In so far as they are autonomous and beyond the
control of any one State, they have a distinct juridical personality independent of the

municipal law of the State where they are situated. As such, according to one leading
authority "they must be deemed to possess a species of international personality of their
own." (Salonga and Yap, Public International Law, 83 [1956 ed.])
Pursuant to its being a signatory to the Agreement, the Republic of the Philippines
agreed to be represented by one Director in the governing SEAFDEC Council (Agreement
Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its national laws and
regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed amount
of money, movable and immovable property and services necessary for the
establishment and operation of the Center" are concerned (Art. 11, ibid.). It expressly
waived the application of the Philippine laws on the disbursement of funds of petitioner
SEAFDEC-AQD (Section 2, P.D. No. 292).
The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction
over SEAFDEC-AQD in Opinion No. 139, Series of 1984
4. One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (See Jenks, Id., pp. 37-44) The obvious reason
for this is that the subjection of such an organization to the authority of the local courts
would afford a convenient medium thru which the host government may interfere in
there operations or even influence or control its policies and decisions of the
organization; besides, such subjection to local jurisdiction would impair the capacity of
such body to discharge its responsibilities impartially on behalf of its member-states. In
the case at bar, for instance, the entertainment by the National Labor Relations
Commission of Mr. Madamba's reinstatement cases would amount to interference by the
Philippine Government in the management decisions of the SEARCA governing board;
even worse, it could compromise the desired impartiality of the organization since it will
have to suit its actuations to the requirements of Philippine law, which may not
necessarily coincide with the interests of the other member-states. It is precisely to
forestall these possibilities that in cases where the extent of the immunity is specified in
the enabling instruments of international organizations, jurisdictional immunity from the
host country is invariably among the first accorded. (See Jenks, Id.; See also Bowett, The
Law of International Institutions, pp. 284-1285).
Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is
unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has
none over a cause of action. Jurisdiction is conferred by law. Where there is none, no
agreement of the parties can provide one. Settled is the rule that the decision of a
tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs.
Ramirez, this Court held:
A rule, that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject matter of the action is
a matter of law and may not be conferred by consent or agreement of the parties. The
lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
appeal. This doctrine has been qualified by recent pronouncements which it stemmed
principally from the ruling in the cited case of Sibonghanoy. It is to be regretted,
however, that the holding in said case had been applied to situations which were
obviously not contemplated therein. The exceptional circumstances involved in
Sibonghanoy which justified the departure from the accepted concept of non-waivability
of objection to jurisdiction has been ignored and, instead a blanket doctrine had been
repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the

exception, but rather the general rule, virtually overthrowing altogether the timehonored principle that the issue of jurisdiction is not lost by waiver or by estoppel.
(Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA 399; [1982])
Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA
286 [1987]) to justify its assumption of jurisdiction over SEAFDEC is misplaced. On the
contrary, the Court in said case explained why it took cognizance of the case. Said the
Court:
We would note, finally, that the present petition relates to a controversy between two
claimants to the same position; this is not a controversy between the SEAFDEC on the
one hand, and an officer or employee, or a person claiming to be an officer or employee,
of the SEAFDEC, on the other hand. There is before us no question involving immunity
from the jurisdiction of the Court, there being no plea for such immunity whether by or
on behalf of SEAFDEC, or by an official of SEAFDEC with the consent of SEAFDEC (Id., at
300; emphasis supplied).
WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction
of the courts or local agency of the Philippine government, the questioned decision and
resolution of the NLRC dated July 26, 1988 and January 9, 1989, respectively, are hereby
REVERSED and SET ASIDE for having been rendered without jurisdiction. No costs.
SO ORDERED.

9. CALLADO V IRRI
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 106483 May 22, 1995
ERNESTO L. CALLADO, petitioner,
vs.
INTERNATIONAL RICE RESEARCH INSTITUTE, respondent.
ROMERO, J.:
Did the International Rice Research Institute (IRRI) waive its immunity from suit in this
dispute which arose from an employer-employee relationship?

We rule in the negative and vote to dismiss the petition.

Ernesto Callado, petitioner, was employed as a driver at the IRRI from April 11, 1983 to
December 14, 1990. On February 11, 1990, while driving an IRRI vehicle on an official
trip to the Ninoy Aquino International Airport and back to the IRRI, petitioner figured in
an accident.
Petitioner was informed of the findings of a preliminary investigation conducted by the
IRRI's Human Resource Development Department Manager in a Memorandum dated
March 5, 1990. 1 In view of the aforesaid findings, he was charged with:
(1) Driving an institute vehicle while on official duty under the influence of liquor;
(2) Serious misconduct consisting of your failure to report to your supervisors the failure
of your vehicle to start because of a problem with the car battery which, you alleged,
required you to overstay in Manila for more than six (6) hours, whereas, had you
reported the matter to IRRI, Los Baos by telephone, your problem could have been
solved within one or two hours;
(3) Gross and habitual neglect of your duties. 2
In a Memorandum dated March 9, 1990, petitioner submitted his answer and defenses to
the charges against him. 3 After evaluating petitioner's answer, explanations and other
evidence, IRRI issued a Notice of Termination to petitioner on December 7, 1990. 4
Thereafter, petitioner filed a complaint on December 19, 1990 before the Labor Arbiter
for illegal dismissal, illegal suspension and indemnity pay with moral and exemplary
damages and attorney's fees.
On January 2, 1991, private respondent IRRI, through counsel, wrote the Labor Arbiter to
inform him that the Institute enjoys immunity from legal process by virtue of Article 3 of
Presidential Decree No. 1620, 5 and that it invokes such diplomatic immunity and
privileges as an international organization in the instant case filed by petitioner, not
having waived the same. 6
IRRI likewise wrote in the same tenor to the Regional Director of the Department of Labor
and Employment. 7
While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an
Order issued by the Institute on August 13, 1991 to the effect that "in all cases of
termination, respondent IRRI waives its immunity," 8 and, accordingly, considered the
defense of immunity no longer a legal obstacle in resolving the case. The dispositive
portion of the Labor arbiter's decision dated October 31, 1991, reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent to
reinstate complainant to his former position without loss or (sic) seniority rights and
privileges within five (5) days from receipt hereof and to pay his full backwages from
March 7, 1990 to October 31, 1991, in the total amount of P83,048.75 computed on the
basis of his last monthly salary. 9
The NLRC found merit in private respondent' s appeal and, finding that IRRI did not waive
its immunity, ordered the aforesaid decision of the Labor Arbiter set aside and the
complaint dismissed. 10
Hence, this petition where it is contended that the immunity of the IRRI as an
international organization granted by Article 3 of Presidential Decree No. 1620 may not
be invoked in the case at bench inasmuch as it waived the same by virtue of its
Memorandum on "Guidelines on the handling of dismissed employees in relation to P.D.
1620." 11
It is also petitioner's position that a dismissal of his complaint before the Labor Arbiter
leaves him no other remedy through which he can seek redress. He further states that

since the investigation of his case was not referred to the Council of IRRI Employees and
Management (CIEM), he was denied his constitutional right to due process.
We find no merit in petitioner's arguments.
IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal,
civil and administrative proceedings, except insofar as that immunity has been expressly
waived by the Director-General of the Institute or his authorized representatives.
In the case of International Catholic Migration Commission v. Hon. Calleja, et al. and
Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor and Employment and
IRRI, 12 the Court upheld the constitutionality of the aforequoted law. After the Court
noted the letter of the Acting Secretary of Foreign Affairs to the Secretary of Labor dated
June 17, 1987, where the immunity of IRRI from the jurisdiction of the Department of
Labor and Employment was sustained, the Court stated that this opinion constituted "a
categorical recognition by the Executive Branch of the Government that . . . IRRI enjoy(s)
immunities accorded to international organizations, which determination has been held
to be a political question conclusive upon the Courts in order not to embarass a political
department of Government. 13 We cited the Court's earlier pronouncement in WHO v.
Hon. Benjamin Aquino, et al., 14 to wit:
It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law officer of the
government . . . or other officer acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their jurisdiction . . . as to embarass the
executive arm of the government in conducting foreign relations, it is accepted doctrine
that in such cases the judicial department of (this) government follows the action of the
political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction. 15
Further, we held that "(t)he raison d'etre for these immunities is the assurance of
unimpeded performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to . . . and IRRI is clearly necessitated by
their international character and respective purposes. The objective is to avoid the
danger of partiality and interference by the host country in their internal workings. The
exercise of jurisdiction by the Department of Labor in these instances would defeat the
very purpose of immunity, which is to shield the affairs of international organizations, in
accordance with international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and to ensure the
unhampered the performance of their functions. 16
The grant of immunity to IRRI is clear and unequivocal and an express waiver by its
Director-General is the only way by which it may relinquish or abandon this immunity.
On the matter of waiving its immunity from suit, IRRI had, early on, made its position
clear. Through counsel, the Institute wrote the Labor Arbiter categorically informing him
that the Institute will not waive its diplomatic immunity. In the second place, petitioner's
reliance on the Memorandum with "Guidelines in handling cases of dismissal of

employees in relation to P.D. 1620" dated July 26, 1983, is misplaced. The Memorandum
reads, in part:
Time and again the Institute has reiterated that it will not use its immunity under P.D.
1620 for the purpose of terminating the services of any of its employees. Despite
continuing efforts on the part of IRRI to live up to this undertaking, there appears to be
apprehension in the minds of some IRRI employees. To help allay these fears the
following guidelines will be followed hereafter by the Personnel/Legal Office while
handling cases of dismissed employees.
xxx xxx xxx
2. Notification/manifestation to MOLE or labor arbiter
If and when a dismissed employee files a complaint against the Institute contesting the
legality of dismissal, IRRI's answer to the complaint will:
Indicate in the identification of IRRI that it is an international organization operating
under the laws of the Philippines including P.D. 1620. and
Base the defense on the merits and facts of the case as well as the legality of the cause
or causes for termination.
3) Waiving immunity under P.D. 1620
If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity we may reply
that the Institute will be happy to do so, as it has in the past in the formal manner
required thereby reaffirming our commitment to abide by the laws of the Philippines and
our full faith in the integrity and impartially of the legal system. 17 (Emphasis in this
paragraphs ours)
From the last paragraph of the foregoing quotation, it is clear that in cases involving
dismissed employees, the Institute may waive its immunity, signifying that such waiver
is discretionary on its part.
We agree with private respondent IRRI that this memorandum cannot, by any stretch of
the imagination, be considered the express waiver by the Director-General. Respondent
Commission has quoted IRRI's reply thus:
The 1983 . . . is an internal memo addressed to Personnel and Legal Office and was
issued for its guidance in handling those cases where IRRI opts to waive its immunity. It
is not a declaration of waiver for all cases. This is apparent from the use of the
permissive term "may" rather than the mandatory term "shall" in the last paragraph of
the memo. Certainly the memo cannot be considered as the express waiver by the
Director General as contemplated by P.D. 1620, especially since the memo was issued by
a former Director-General. At the very least, the express declaration of the incumbent
Director-general supersedes the 1983 memo and should be accorded greater respect. It
would be equally important to point out that the Personnel and Legal Office has been
non-existent since 1988 as a result of major reorganization of the IRRI. Cases of IRRI
before DOLE are handled by an external Legal Counsel as in this particular
case. 18 (Emphasis supplied)
The memorandum, issued by the former Director-General to a now-defunct division of
the IRRI, was meant for internal circulation and not as a pledge of waiver in all cases
arising from dismissal of employees. Moreover, the IRRI's letter to the Labor Arbiter in
the case at bench made in 1991 declaring that it has no intention of waiving its
immunity, at the very least, supplants any pronouncement of alleged waiver issued in
previous cases.
Petitioner's allegation that he was denied due process is unfounded and has no basis.

It is not denied that he was informed of the findings and charges resulting from an
investigation conducted of his case in accordance with IRRI policies and procedures. He
had a chance to comment thereon in a Memorandum he submitted to the Manager of the
Human Resource and Development Department. Therefore, he was given proper notice
and adequate opportunity to refute the charges and findings, hereby fulfilling the basic
requirements of due process.
Finally, on the issue of referral to the Council of IRRI Employees and Management (CIEM),
petitioner similarly fails to persuade the Court.
The Court, in the Kapisanan ng mga Manggagawa at TAC sa IRRI case, 19 held:
Neither are the employees of IRRI without remedy in case of dispute with management
as, in fact, there had been organized a forum for better management-employee
relationship as evidenced by the formation of the Council of IRRI Employees and
Management (CIEM) wherein "both management and employees were and still are
represented for purposes of maintaining mutual and beneficial cooperation between IRRI
and its employees." The existence of this Union factually and tellingly belies the
argument that Pres. Decree No. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization, deprives its employees of the
right to self-organization.
We have earlier concluded that petitioner was not denied due process, and this,
notwithstanding the non-referral to the Council of IRRI Employees and Management.
Private respondent correctly pointed out that petitioner, having opted not to seek the
help of the CIEM Grievance Committee, prepared his answer by his own self. 20 He
cannot now fault the Institute for not referring his case to the CIEM.
IN VIEW OF THE FOREGOING, the petition for certiorari is DISMISSED. No costs.
SO ORDERED.

10. DFA V NLRC

FIRST DIVISION
[G.R. No. 113191. September 18, 1996]
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and JOSE C. MAGNAYI,
respondents.
DECISION
VITUG, J.:
The questions raised in the petition for certiorari are a few coincidental matters relative
to the diplomatic immunity extended to the Asian Development Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for
his alleged illegal dismissal by ADB and the latter's violation of the "labor-only"
contracting law. Two summonses were served, one sent directly to the ADB and the other
through the Department of Foreign Affairs ("DFA"), both with a copy of the complaint.
Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well
as its President and Officers, were covered by an immunity from legal process except for
borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of
the Agreement Establishing the Asian Development Bank (the "Charter") in relation to
Section 5 and Section 44 of the Agreement Between The Bank And The Government Of
The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his
decision, dated 31 August 1993, that concluded:
"WHEREFORE, above premises considered, judgment is hereby rendered declaring the
complainant as a regular employee of respondent ADB, and the termination of his
services as illegal. Accordingly, respondent Bank is hereby ordered:
"1. To immediately reinstate the complainant to his former position effective September
16, 1993;
"2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in
the amount of P42,750.00 (P4,500.00 x 9 months);
"3. And to pay complainants other benefits and without loss of seniority rights and other
privileges and benefits due a regular employee of Asian Development Bank from the
time he was terminated on December 31, 1992;
"4. To pay 10% attorney's fees of the total entitlements."i[1]
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred
the matter to the National Labor Relations Commission ("NLRC"); in its referral, the DFA
sought a "formal vacation of the void judgment." Replying to the letter, the NLRC
Chairman, wrote:
"The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves
de Castro, by the National Labor Relations Commission, has been erroneously premised
on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering
that the provision deals with 'a question, matter or controversy within its (the
Commission) jurisdiction' obviously referring to a labor dispute within the ambit of Art.
217 (on jurisdiction of Labor Arbiters and the Commission over labor cases).
"The procedure, in the adjudication of labor cases, including raising of defenses, is
prescribed by law. The defense of immunity could have been raised before the Labor
Arbiter by a special appearance which, naturally, may not be considered as a waiver of
the very defense being raised. Any decision thereafter is subject to legal remedies,
including appeals to the appropriate division of the Commission and/or a petition for
certiorari with the Supreme Court, under Rule 65 of the Rules of Court. Except where an
appeal is seasonably and properly made, neither the Commission nor the undersigned
may review, or even question, the propriety of any decision by a Labor Arbiter.
Incidentally, the Commission sits en banc (all fifteen Commissioners) only to promulgate
rules of procedure or to formulate policies (Art. 213, Labor Code).
"On the other hand, while the undersigned exercises 'administrative supervision over the
Commission and its regional branches and all its personnel, including the Executive
Labor Arbiters and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he
does not have the competence to investigate or review any decision of a Labor Arbiter.
However, on the purely administrative aspect of the decision-making process, he may
cause that an investigation be made of any misconduct, malfeasance or misfeasance,
upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de
Castro constitutes misconduct, malfeasance or misfeasance, it is suggested that an
appropriate complaint be lodged with the Office of the Ombudsman.
"Thank you for your kind attention."ii[2]
Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's resolution of
31 January 1994, respondents were required to comment. Petitioner was later
constrained to make an application for a restraining order and/or writ of preliminary

injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a writ of
execution. In a resolution, dated 07 April 1994, the Court issued the temporary
restraining order prayed for.
The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially
assailed the claim of immunity by the ADB. Subsequently, however, it submitted a
Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough
review of the case and the records," it became convinced that ADB, indeed, was correct
in invoking its immunity from suit under the Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
The Bank shall enjoy immunity from every form of legal process, except in cases arising
out of or in connection with the exercise of its powers to borrow money, to guarantee
obligations, or to buy and sell or underwrite the sale of securities.iii[3]
Under Article 55 thereof All Governors, Directors, alternates, officers and employees of the Bank, including
experts performing missions for the Bank:
(1)shall be immune from legal process with respect of acts performed by them in their
official capacity, except when the Bank waives the immunity.iv[4]
Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:
"The Bank shall enjoy immunity from every form of legal process, except in cases arising
out of, or in connection with, the exercise of its powers to borrow money, to guarantee
obligations, or to buy and sell or underwrite the sale of securities.
And, with respect to certain officials of the bank, Section 44 of the agreement states:
Governors, other representatives of Members, Directors, the President, Vice-President
and executive officers as may be agreed upon between the Government and the Bank
shall enjoy, during their stay in the Republic of the Philippines in connection with their
official duties with the Bank:
xxx xxx xxx
(b)
Immunity from legal process of every kind in respect of words spoken or written
and all acts done by them in their official capacity.
The above stipulations of both the Charter and Headquarters Agreement should be able,
nay well enough, to establish that, except in the specified cases of borrowing and
guarantee operations, as well as the purchase, sale and underwriting of securities, the
ADB enjoys immunity from legal process of every form. The Banks officers, on their part,
enjoy immunity in respect of all acts performed by them in their official capacity. The
Charter and the Headquarters Agreement granting these immunities and privileges are
treaty covenants and commitments voluntarily assumed by the Philippine government
which must be respected.
In World Health Organization vs. Aquino,v[7] we have declared:
It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government x x x it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal law officer of the government, x x
x or other officer acting under his direction. Hence, in adherence to the settled principle
that courts may not so exercise their jurisdiction x x x as to embarrass the executive arm
of the government in conducting foreign relations, it is accepted doctrine that `in such

cases the judicial department of government follows the action of the political branch
and will not embarrass the latter by assuming an antagonistic jurisdiction.'"vi[8]
To the same effect is the decision in International Catholic Migration Commission vs.
Calleja,vii[9] which has similarly deemed the Memoranda of the Legal Adviser of the
Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of
Government that ICMC x x x enjoy(s) immunities accorded to international organizations"
and which determination must be held "conclusive upon the Courts in order not to
embarrass a political department of Government. In the instant case, the filing of the
petition by the DFA, in behalf of ADB, is itself an affirmance of the government's own
recognition of ADB's immunity.
Being an international organization that has been extended a diplomatic status, the ADB
is independent of the municipal law.viii[10] In Southeast Asian Fisheries Development
Center vs. Acosta,ix[11] the Court has cited with approval the opinionx[12] of the then
Minister of Justice; thus "One of the basic immunities of an international organization is immunity from local
jurisdiction, i.e., that it is immune from the legal writs and processes issued by the
tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason
for this is that the subjection of such an organization to the authority of the local courts
would afford a convenient medium thru which the host government may interfere in their
operations or even influence or control its policies and decisions of the organization;
besides, such subjection to local jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of its member-states."xi[13]
Contrary to private respondent's assertion, the claim of immunity is not here being
raised for the first time; it has been invoked before the forum of origin through
communications sent by petitioner and the ADB to the Labor Arbiter, as well as before
the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but
evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has
advised the NLRC:
"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration
Associate, National Labor Relations Commission, National Capital Judicial Region,
Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached
Notice of Hearing addressed to the Asian Development Bank, in connection with the
aforestated case, for the reason stated in the Department's 1st Indorsement dated 23
March 1993, copy attached, which is self-explanatory.
"In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is
sustained by the Department of Foreign Affairs, a continuous hearing of this case erodes
the credibility of the Philippine government before the international community, let alone
the negative implication of such a suit on the official relationship of the Philippine
government with the ADB.
"For the Secretary of Foreign Affairs
(Sgd.)
"SIME D. HIDALGO
Assistant Secretary"xii[14]
The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary
of Labor, viz:
"Dear Secretary Confesor,

"I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against
the Asian Development Bank and its President, Kimimasa Tarumizu, before the National
Labor Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case
No. 00-01690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro,
addressed a Notice of Resolution/Order to the Bank which brought it to the attention of
the Department of Foreign Affairs on the ground that the service of such notice was in
violation of the RP-ADB Headquarters Agreement which provided, inter-alia, for the
immunity of the Bank, its President and officers from every form of legal process, except
only, in cases of borrowings, guarantees or the sale of securities.
"The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de Castro of
this fact by letter dated March 22, copied to you.
"Despite this, the labor arbiter in question persisted to send summons, the latest dated
May 4, herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs.
Aquino, SCRA 48, it ruled that courts should respect diplomatic immunities of foreign
officials recognized by the Philippine government. Such decision by the Supreme Court
forms part of the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the
law is a ground for dismissal.
"Very truly yours,
(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB"xiii[15]
Private respondent argues that, by entering into service contracts with different private
companies, ADB has descended to the level of an ordinary party to a commercial
transaction giving rise to a waiver of its immunity from suit. In the case of Holy See vs.
Hon. Rosario, Jr.,xiv[16] the Court has held:
There are two conflicting concepts of sovereign immunity, each widely held and firmly
established. According to the classical or absolute theory, a sovereign cannot, without its
consent, be made a respondent in the Courts of another sovereign. According to the
newer or restrictive theory, the immunity of the sovereign is recognized only with regard
to public acts or acts jure imperii of a state, but not with regard to private act or acts jure
gestionis.
xxx xxx xxx
Certainly, the mere entering into a contract by a foreign state with a private party cannot
be the ultimate test. Such an act can only be the start of the inquiry. The logical question
is whether the foreign state is engaged in the activity in the regular course of business. If
the foreign state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a sovereign
activity, or an incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.xv[17]
The service contracts referred to by private respondent have not been intended by the
ADB for profit or gain but are official acts over which a waiver of immunity would not
attach.
With regard to the issue of whether or not the DFA has the legal standing to file the
present petition, and whether or not petitioner has regarded the basic rule that certiorari

can be availed of only when there is no appeal nor plain, speedy and adequate remedy
in the ordinary course of law, we hold both in the affirmative.
The DFA's function includes, among its other mandates, the determination of persons
and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the
conduct of the country's foreign relations. The DFA must be allowed to plead its case
whenever necessary or advisable to enable it to help keep the credibility of the Philippine
government before the international community. When international agreements are
concluded, the parties thereto are deemed to have likewise accepted the responsibility
of seeing to it that their agreements are duly regarded. In our country, this task falls
principally on the DFA as being the highest executive department with the competence
and authority to so act in this aspect of the international arena.xvi[18] In Holy See vs.
Hon. Rosario, Jr.,xvii[19] this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes to plead
sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the
state where it is sued to convey to the court that said defendant is entitled to immunity.
"In the United States, the procedure followed is the process of 'suggestion,' where the
foreign state or the international organization sued in an American court requests the
Secretary of State to make a determination as to whether it is entitled to immunity. If the
Secretary of State finds that the defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a 'suggestion' that the defendant is entitled to
immunity. In England, a similar procedure is followed, only the Foreign Office issues a
certification to that effect instead of submitting a 'suggestion' (O'Connell, I International
Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and
Obligations, 50 Yale Law Journal 1088 [1941]).
"In the Philippines, the practice is for the foreign government or the international
organization to first secure an executive endorsement of its claim of sovereign or
diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to
the courts varies. In International Catholic Migration Commission vs. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of
Labor and Employment, informing the latter that the respondent-employer could not be
sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino,
48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to
that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of
Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of
the United States Naval Base at Olongapo City, Zambales, a 'suggestion' to respondent
Judge. The Solicitor General embodied the 'suggestion' in a manifestation and
memorandum as amicus curiae.
"In the case at bench, the Department of Foreign Affairs, through the Office of Legal
Affairs moved with this Court to be allowed to intervene on the side of petitioner. The
Court allowed the said Department to file its memorandum in support of petitioner's
claim of sovereign immunity.
"In some cases, the defense of sovereign immunity was submitted directly to the local
courts by the respondents through their private counsels (Raquiza vs. Bradford, 75 Phil.
50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United
States of America vs. Guinto, 182 SCRA 644 [1990] and companion cases). In cases
where the foreign states bypass the Foreign Office, the courts can inquire into the facts

and make their own determination as to the nature of the acts and transactions
involved."xviii[20]
Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under
special circumstances, so allowed and entertained such a petition when (a) the
questioned order or decision is issued in excess of or without jurisdiction,xix[21] or (b)
where the order or decision is a patent nullity,xx[22] which, verily, are the circumstances
that can be said to obtain in the present case. When an adjudicator is devoid of
jurisdiction on a matter before him, his action that assumes otherwise would be a clear
nullity.
WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor
Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The temporary
restraining order issued by this Court on 07 April 1994 is hereby made permanent. No
costs.
SO ORDERED
36. DFA cv NLRC
FIRST DIVISION
[G.R. No. 113191. September 18, 1996.]
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION,
HON.LABOR ARBITER
NIEVES V.
DE
CASTRO and JOSE C. MAGNAYI, respondents.
DFA Office of Legal Affairs for petitioner.
The Solicitor General for public respondent.
Ronald E. Javier for private respondent.
SYLLABUS
1. POLITICAL LAW; PUBLIC INTERNATIONAL LAW; SOVEREIGN IMMUNITY; EXTENDED TO
ASIAN DEVELOPMENT BANK AS WELL AS TO ITS OFFICERS WITH RESPECT TO ALL ACTS
PERFORMED BY THEM IN THEIR OFFICIAL CAPACITY; EXCEPTIONS. The above
stipulations of both the Charter and Headquarters Agreement should be able, nay well
enough, to establish that, except in the specified cases of borrowing and guarantee
operations, as well as the purchase, sale and underwriting ofsecurities, the ADB enjoys
immunity from legal process of every form. The Bank's officers, on their part, enjoy
immunity in respect of all acts performed by them in their official capacity. The Charter
and the Headquarters Agreement granting these immunities and privileges are treaty

covenants and commitments voluntarily assumed by the Philippine government which

must be respected.
2. ID.; ID.; ID.; THE COURTS ARE DUTY BOUND TO ACCEPT PLEA OF DIPLOMATIC
IMMUNITY BY AN INTERNATIONAL ORGANIZATION; RECOGNIZED AND AFFIRMED BY THE
EXECUTIVE BRANCH OF THE GOVERNMENT. In World Health Organization vs. Aquino,
we have declared: "It is a recognized principle of international law and under our
system ofseparation of powers that diplomatic immunity is essentially a political question
and courts should refuse to look beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is recognized and affirmed by
the executive branch of the government . . . it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law officer of the
government, . . . or other officer acting under his direction. Hence, in adherence to the
settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the
executive armof the government in conducting foreign relations, it is accepted doctrine
that 'in such cases the judicial department ofgovernment follows the action of the
political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction."' To the same effect is the decision in International Catholic
Migration Commission vs. Calleja, which has similarly deemed the Memoranda of the
Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the
Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to
international organizations" and which determination must be held "conclusive upon the
Courts in order not to embarrass a political department of Government." In the instant
case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition of ADB's immunity.
3. ID.; ID.; ID.; REASON FOR GRANTING THEREOF TO INTERNATIONAL ORGANIZATIONS.
Being an international organization that has been extended a diplomatic status, the ADB
is independent of the municipal law. In Southeast Asian Fisheries Development
Center vs. Acosta, the Court has cited with approval the opinion of the then
Minister of Justice; thus "One of the basic immunities of an international organization
is immunity from local jurisdiction, i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country where it is found. The obvious reason for
this is that the subjection of such an organization to the authority of the local courts
would afford a convenient medium thru which the host government may interfere in their
operations or even influence or control its policies and decisions of the organization;
besides, such subjection to local jurisdiction would impair the capacity of such body to
discharge its responsibilities impartially on behalf of its member-states.
4. ID.; ID.; ID.; ACTS JURE IMPERII AND JURE GESTIONIS, DISTINGUISHED. "There are
two conflicting concepts ofsovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be
made a respondent in the Courts of another sovereign. According to the newer or
restrictive theory, the immunity of the sovereign is recognized only with regard to public

acts or acts jure imperii of a state, but not with regard to private act or acts jure
gestionis. . . . Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the start of the inquiry.
The logical question is whether the foreignstate is engaged in the activity in the regular
course of business. If the foreign state is not engaged regularly in a business or trade,
the particular act or transaction must then be tested by its nature. If the act is in
pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii,
especially when it is not undertaken for gain or profit." The service contracts referred to
by private respondent have not been intended by the ADB for profit or gain but are
official acts over which a waiver of immunity would not attach.
5. ID.; ID.; ID.; THE DEPARTMENT OF FOREIGN AFFAIRS IS IN CHARGE WITH THE
DETERMINATION OF PERSONS AND INSTITUTIONS COVERED BY DIPLOMATIC IMMUNITIES.
The DFA's function includes, among its other mandates the determination of persons
and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the
conduct of the country's foreign relations. The DFAmust be allowed to plead its case
whenever necessary or advisable to enable it to help keep the credibility of the Philippine
government before the international community. When international agreements are
concluded, the parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly regarded. In our country, this
task falls principally on the DFA as being the highest executive department with the
competence and authority to so act in this aspect of the international arena.
6. ID.; ID.; ID.; PROCEDURE IN INVOLVING IT. In Holy See vs. Hon. Rosario, Jr., this
Court has explained the matter in good detail; viz: "In Public International Law, when a
state or international agency wishes to plead sovereign or diplomatic immunity in
a foreign court, it requests the Foreign Office of the state where it is sued to convey to
the court that said defendant is entitled to immunity. "In the United States, the procedure
followed is the process of 'suggestion,' where theforeign state or the international
organization sued in an American court requests the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary of State finds that
the defendant is immune from suit, he, in turn, asks the Attorney General to submit to
the court a 'suggestion' that the defendant is entitled to immunity. In England, a similar
procedure is followed, only the Foreign Office issues a certification to that effect
instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965]; Note:
Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law
Journal 1088 [1941]). In the Philippines, the practice is for the foreign government or the
international
organization
to
first
secure
an
executive
endorsement of its
claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys
its
endorsement
to
the
courts
varies.
In International
Catholic
Migration Commission vs.Calleja,
190
SCRA
130
(1990),
the
Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be sued

because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48

SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U. S. Embassy asked the
Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the
Commander of the United States Naval Base at Olongapo City, Zambales, a 'suggestion'
to respondent Judge. The Solicitor General embodied the 'suggestion' in a manifestation
and
memorandum
asamicus
curiae.
In
the
case
at
bench,
the Department of Foreign Affairs, through the Office of Legal Affairs moved with this
Court to be allowed to intervene on the side of petitioner. The Court allowed the
said Department to file its memorandum in support of petitioner's claim of sovereign
immunity. In some cases, the defense of sovereign immunity was submitted directly to
the local courts by the respondents through their private counsels (Raquiza vs. Bradford,
75 Phil. 50 [1945]; Miquiabas vs.Philippine-Ryukyus Command, 80 Phil. 262
[1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and companion
cases). In cases where the foreign states bypass the Foreign Office, the courts can
inquire into the facts and make their own determination as to the nature of the acts and
transactions involved.
7. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; CAN BE AVAILED OF ONLY WHEN
THERE IS NO APPEAL NOR PLAIN, SPEEDY AND ADEQUATE REMEDY IN ORDINARY
COURSE OF LAW. Relative to the propriety of the extraordinary remedy of certiorari,
the Court has, under special circumstances, so allowed and entertained such a petition
when (a) the questioned order or decision is issued in excess of or without jurisdiction, or
(b) where the order or decision is a patent nullity, which, verily, are the circumstances
that can be said to obtain in the present case. When an adjudicator is
devoid ofjurisdiction on a matter before him, his action that assumes otherwise would be
a clear nullity.

DECISION

VITUG, J p:
The questions raised in the petition for certiorari are a few coincidental matters relative
to the diplomatic immunity extended to the Asian Development Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for
his alleged illegal dismissal by ADB and the latter's violation of the "labor-only"
contracting law. Two summonses were served, one sent directly to the ADB and the other
through the Department of Foreign Affairs ("DFA"), both with a copy of the complainant.
Forthwith, the ADB and theDFA notified respondent Labor Arbiter that the ADB, as well as

its President and Officers, were covered by an immunity from legal process except for
borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article
55 of theAgreement Establishing the Asian Development Bank (the "Charter") in relation
to Section 5 and Section 44 of the Agreement Between The Bank And The
Government Of The Philippines Regarding The Bank's Headquarters (the "Headquarters
Agreement").
The Labor Arbiter took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his
decision, dated 31 August 1993, that concluded:
"WHEREFORE, above premises considered, judgment is hereby rendered
declaring the complainant as a regular employee of respondent ADB, and
the termination of his services as illegal. Accordingly, respondent Bank is
hereby ordered:
"1. To immediately reinstate the complainant to his former position
effective September 16, 1993;
"2. To pay complainant full backwages from December 1, 1992 to
September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months);
"3. And to pay complainants other benefits and without loss of seniority
rights and other privileges and benefits due a regular employee of Asian
Development Bank from the time he was terminated on December 31,
1992;
"4. To pay 10% attorney's fees of the total entitlements." 1
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred
the matter to the National LaborRelations Commission ("NLRC"); in its referral,
the DFA sought a "formal vacation of the void judgment." Replying to the letter,
the NLRC Chairman, wrote:
"The
undersigned
submits
that
the
request
for
the
'investigation' of Labor Arbiter
Nieves
de
Castro,
by
the National LaborRelations Commission, has been erroneously premised
on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla,
considering that the provision deals with 'a question, matter or
controversy within its (the Commission) jurisdiction' obviously referring
to a labor dispute within
the
ambit of Art.
217
(on
jurisdiction of Labor Arbiters and theCommission over labor cases).
"The
procedure,
in
the
adjudication of labor cases,
including
raising of defenses, is prescribed by law. The defense ofimmunity could
have been raised before the Labor Arbiter by a special appearance which,
naturally, may not be considered as a waiver of the very defense being
raised. Any decision thereafter is subject to legal remedies, including

appeals to the appropriate division of the Commission and/or a petition

for certiorari with the Supreme Court, under Rule 65 of the Rules of Court.
Except where an appeal is seasonably and properly made, neither
the Commission nor the undersigned may review, or even question, the
propriety of any
decision
by
a Labor Arbiter.
Incidentally,
the Commissionsits en banc (all fifteen Commissioners) only to promulgate
rules of procedure or to formulate policies (Art. 213, LaborCode).
"On the other hand, while the undersigned exercises 'administrative
supervision over the Commission and its regional branches and all its
personnel, including the Executive Labor Arbiters and Labor Arbiters'
(penultimate paragraph, Art. 213, Labor Code), he does not have the
competence to investigate or review any decision of a Labor Arbiter.
However, on the purely administrative aspect of the decision-making
process, he may cause that an investigation be made of any misconduct,
malfeasance or misfeasance, upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter
Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is
suggested that an appropriate complaint be lodged with the Office of the
Ombudsman.
"Thank you for your kind attention." 2
Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's
resolution of 31 January 1994, respondents were required to comment. Petitioner was
later constrained to make an application for a restraining order and/or writ ofpreliminary
injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a
writ of execution. In a resolution, dated 07 April 1994, the Court issued the temporary
restraining order prayed for.
The Office of the Solicitor General ("OSG"), in its comment of 26 May 1994, initially
assailed the claim of immunity by the ADB. Subsequently, however, it submitted a
Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough
review of the case and the records," it became convinced that ADB, indeed, was correct
in invoking its immunity from suit under the Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
"The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of or in connection with the exercise of its powers to
borrow money, to guarantee obligations, or to buy and sell or underwrite
the sale of securities."3
Under Article 55 thereof

"All Governors, Directors, alternates, officers and employees of the Bank,

including experts performing missions for the Bank:
"(1) shall be immune from legal process with respect of acts performed by
them in their official capacity, except when the Bank waives the
immunity." 4
Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:
"The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of, or in connection with, the exercise of its powers to
borrow money, to guarantee obligations, or to buy and sell or underwrite
the sale of securities."5
And, with respect to certain officials of the bank, Section 44 of the agreement states:
"Governors, other representatives of Members, Directors, the President,
Vice-President and executive officers as may be agreed upon between the
Government and the Bank shall enjoy, during their stay in the
Republic of the Philippines in connection with their official duties with the
Bank:
"xxx xxx xxx
"(b) Immunity from legal process of every kind in respect of words spoken
or written and all acts done by them in their official capacity." 6
The above stipulations of both the Charter and Headquarters Agreement should be
able, nay well enough, to establish that, except in the specified cases of borrowing
and guarantee operations, as well as the purchase, sale and underwritingof securities,
the ADB enjoys immunity from legal process of every form. The Bank's officers, on
their part, enjoy immunity in respect of all acts performed by them in their official
capacity. The Charter and the Headquarters Agreement granting these immunities
and privileges are treaty covenants and commitments voluntarily assumed by the
Philippine government which must be respected.
In World Health Organization vs. Aquino, 7 we have declared:
"It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is essentially a
political question and courts should refuse to look beyond a determination
by
the
executive
branch of the
government,
and
where
the
plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government. . . it is then the duty of the courts to accept the
claim of immunity upon appropriate suggestion by the principal law
officer of the government, . . . or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may not so exercise
their jurisdiction . . . as to embarrass the executive arm of the government
in conducting foreign relations, it is accepted doctrine that 'in such cases

the judicial department of government follows the action of the political

branch and will not embarrass the latter by assuming an antagonistic
jurisdiction." 8
To
the
same
effect
is
the
decision
in International
Catholic
Migration Commission vs. Calleja, 9 which has similarly deemed the Memoranda of the
Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the
Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to
international organizations" and which determination must be held "conclusive upon the
Courts in order not to embarrass a political department of Government." In the instant
case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition ofADB's immunity.
Being an international organization that has been extended a diplomatic status, the ADB
is independent of the municipal law.10 In Southeast Asian Fisheries Development
Center vs. Acosta, 11 the Court has cited with approval the opinion 12 of the then
Minister of Justice; thus
"One of the basic immunities of an international organization is immunity
from local jurisdiction, i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country where it is found. (See
Jenks, Id., pp. 3744). The obvious reason for this is that the
subjection of such an organization to the authority of the local courts would
afford a convenient medium thru which the host government may interfere
in their operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local jurisdiction
would impair the capacity of such body to discharge its responsibilities
impartially on behalf of its member-states." 13

Contrary to private respondent's assertion, the claim of immunity is not here being
raised for the first time; it has been invoked before the forum of origin through
communications sent by petitioner and the ADB to the Labor Arbiter, as well as before
the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but
evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has
advised the NLRC:
"Respectfully
returned
to
the
Honorable
Domingo
B.
Mabazza, Labor Arbitration
Associate, National Labor RelationsCommission, National Capital
Judicial
Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita,
Manila, the attached Notice of Hearing addressed to the Asian Development
Bank, in connection with the aforestated case, for the reason stated in

the Department's 1st Indorsement dated 23 March 1993, copy attached,

which is self-explanatory.
"In view of the fact that the Asian Development Bank (ADB) invokes its
immunity which is sustained by the Department ofForeign Affairs, a
continuous hearing of this case erodes the credibility of the Philippine
government before the international community, let alone the negative
implication of such a suit on the official relationship of the Philippine
government with the ADB.
"For the Secretary of Foreign Affairs.
(Sgd.)
"SIME D. HIDALGO
Assistant Secretary" 14
The Office of the President, likewise, has issued on 18 May 1993 a letter to the
Secretary of Labor, viz:
"Dear Secretary Confesor,
"I am writing to draw your attention to a case filed by a certain Jose C.
Magnayi against the Asian Development Bank and its President, Kimimasa
Tarumizu, before the National Labor Relations Commission, National Capital
Region Arbitration Board (NLRC NCR Case No. 00-01690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de
Castro, addressed a Notice of Resolution/Order to the Bank which brought it
to the attention of the Department of Foreign Affairs on the ground that the
service of such notice was in violation of the RP-ADB Headquarters
Agreement which provided, inter-alia, for the immunity of the Bank, its
President and officers from every form of legal process, except only, in
cases of borrowings, guarantees or the sale ofsecurities.
"The Department of Foreign Affairs,
in
turn,
informed Labor Arbiter
Nieves V. de Castro of this fact by letter dated March 22, copied to you.
"Despite this, the labor arbiter in question persisted to send summons, the
latest dated May 4, herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities.
In WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic
immunities of foreign officials recognized by the Philippine government.
Such decision by the Supreme Court forms part of the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that
ignorance of the law is a ground for dismissal.
"Very truly yours,

(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB" 15
Private respondent argues that, by entering into service contracts with different private
companies, ADB has descended to the level of an ordinary party to a commercial
transaction giving rise to a waiver of its immunity from suit. In the case of Holy
See vs. Hon. Rosario, Jr., 16 the Court has held:
"There are two conflicting concepts of sovereign immunity, each widely
held and firmly established. According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a respondent in the
Courts of another sovereign. According to the newer or restrictive theory,
the immunity of the sovereign is recognized only with regard to public acts
or acts jure imperii of a state, but not with regard to private act or acts jure
gestionis.
"xxx xxx xxx
"Certainly, the mere entering into a contract by a foreign state with a
private party cannot be the ultimate test. Such an act can only be the
start of the inquiry. The logical question is whether the foreign state is
engaged in the activity in the regular course of business. If the foreign state
is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii,
especially when it is not undertaken for gain or profit." 17
The service contracts referred to by private respondent have not been intended by the
ADB for profit or gain but are official acts over which a waiver of immunity would not
attach.
With regard to the issue of whether or not the DFA has the legal standing to file
the present petition, and whether or not petitioner has regarded the basic rule
that certiorari can be availed of only when there is no appeal nor plain, speedy and
adequate remedy in the ordinary course of law, we hold both in the affirmative.
The DFA's function includes, among its other mandates, the determination of persons
and institutions covered by diplomatic immunities, a determination which, when
challenged, entitles it to seek relief from the court so as not to seriously impair the
conduct of the country's foreign relations. The DFA must be allowed to plead its case
whenever necessary or advisable to enable it to help keep the credibility of the Philippine
government before the international community. When international agreements are
concluded, the parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly regarded. In our country, this
task falls principally on the DFA as being the highest executivedepartment with the

competence and authority to so act in this aspect of the international arena. 18 In Holy
See vs. Hon.Rosario, Jr., 19 this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes to
plead sovereign or diplomatic immunity in aforeign court, it requests
the Foreign Office of the state where it is sued to convey to the court that
said defendant is entitled to immunity.
"In the United States, the procedure followed is the process of 'suggestion,'
where the foreign state or the international organization sued in an
American court requests the Secretary of State to make a determination as
to whether it is entitled to immunity. If the Secretary of State finds that the
defendant is immune from suit, he, in turn, asks the Attorney General to
submit to the court a 'suggestion' that the defendant is entitled to
immunity. In England, a similar procedure is followed, only
the Foreign Office issues a certification to that effect instead of submitting
a 'suggestion' (O'Connell, I International Law 130 [1965]; Note: Immunity
from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale
Law Journal 1088 [1941]).
"In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of its
claim of sovereign
or
diplomatic
immunity.
But
how
the
Philippine Foreign Office conveys its endorsement to the courts varies.
In International Catholic Migration Commission vs. Calleja, 190 SCRA 130
(1990), the Secretary of Foreign Affairs just sent a letter directly to the
Secretary of Labor and Employment, informing the latter that the
respondent-employer could not be sued because it enjoyed diplomatic
immunity. In World Health Organization vs.Aquino, 48 SCRA 242 (1972), the
Secretary of Foreign Affairs sent the trial court a telegram to that effect.
In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the
Secretary of Foreign Affairs to request the Solicitor General to make, in
behalf of the Commander of the United States Naval Base at Olongapo City,
Zambales, a 'suggestion' to respondent Judge. The Solicitor General
embodied the 'suggestion' in a manifestation and memorandum as amicus
curiae.
"In the case at bench, the Department of Foreign Affairs, through the
Office of Legal Affairs moved with this Court to be allowed to intervene on
the side of petitioner. The Court allowed the said Department to file its
memorandum in supportof petitioner's claim of sovereign immunity.
"In some cases, the defense of sovereign immunity was submitted directly
to the local courts by the respondents through their private counsels
(Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus

Command, 80 Phil. 262 [1948]; United States of America vs. Guinto, 182
SCRA 644 [1990] and companion cases). In cases where the foreign states
bypass the Foreign Office, the courts can inquire into the facts and make
their own determination as to the nature of the acts and transactions
involved." 20
Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under
special circumstances, so allowed and entertained such a petition when (a) the
questioned order or decision is issued in excess of or without jurisdiction, 21 or (b) where
the order or decision is a patent nullity, 22 which, verily, are the circumstances that can
be said to obtain in the present case. When an adjudicator is devoid of jurisdiction on a
matter before him, his action that assumes otherwise would be a clear nullity.
WHEREFORE,
the
petition
for certiorari is
GRANTED,
and
the
decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND
VOID. The temporary restraining order issued by this Court on 07 April 1994 is hereby
made permanent. No costs.
SO ORDERED.
||| (Department of Foreign Affairs v. National Labor Relations Commission, G.R. No.
113191, [September 18, 1996], 330 PHIL 573-590)

37. Mun of San Fernando v Firme

FIRST DIVISION
[G.R. No. 52179. April 8, 1991.]
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner, vs. HON. JUDGE ROMEO
N. FIRME, JUANA RIMANDO-BANIA, LAUREANO BANIA, JR., SOR MARIETA
BANIA, MONTANO BANIA ORJA BANIA AND LYDIA R. BANIA, respondents.
Mauro C . Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.
DECISION
MEDIALDEA, J p:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
mandatory injunction seeking the nullification or modification of the proceedings and the
orders issued by the respondent Judge Romeo N. Firme, in his capacity as the presiding
judge of the Court of First Instance of La Union, Second Judicial District, Branch IV,
Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Bania, et al. vs.
Macario Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23, 1976;
February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7,
1979 and December 3, 1979 and the decision dated October 10, 1979 ordering

defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and
severally, the plaintiffs for funeral expenses, actual damages consisting of the
loss of earning capacity of the deceased, attorney's fees and costs of suit and dismissing
the complaint against the Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing
under and in accordance with the lawsof the Republic of the Philippines. Respondent
Honorable Judge Romeo N. Firme is impleaded in his official capacity as the presiding
judge of the Court of First Instance of La Union, Branch IV, Bauang, La Union. While
private respondents Juana Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania,
Montano Bania, Orja Bania and Lydia R. Bania are heirs ofthe deceased Laureano
Bania Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario
Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino
Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by
Alfredo Bislig. Due to the impact, several passengers of the jeepney including Laureano
Bania Sr. died as a result of the injuries they sustained and four (4) others suffered
varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a complaint for damages
against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver,
respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in the
Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the
aforesaid defendants filed a Third Party Complaint against the petitioner and the
driver of a dump truck of petitioner. llcd
Thereafter, the case was subsequently transferred to Branch IV, presided over by
respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By
virtue of a court order dated May 7, 1975, the private respondents amended the
complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded
for the first time as defendants. Petitioner filed its answer and raised affirmative
defenses
such
as
lack of cause of action,
non-suability of the
State,
prescription of cause of action and the negligence of the owner and driver of the
passenger jeepney as the proximate causeof the collision. cdll
In the course of the proceedings, the respondent judge issued the following questioned
orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;
(2) Order
dated
July
13,
1976
admitting
the
Amended
Answer of the Municipality of San Fernando, La Union and Bislig and setting the hearing
on the affirmative defenses only with respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring the resolution of the grounds for the Motion to
Dismiss until the trial;

(4) Order dated February 23, 1977 denying the motion for reconsideration of the
order of July 13, 1976 filed by theMunicipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for
reconsideration of the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it
appearing that parties have not yet submitted their respective memoranda despite the
court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration
and or order to recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is
hereunder quoted as follows:
"IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs,
and defendants Municipality ofSan Fernando, La Union and Alfredo Bislig are ordered to
pay jointly and severally, plaintiffs Juana Rimando-Bania, Mrs. Priscilla B. Surell,
Laureano Bania, Jr., Sor Marietta Bania, Mrs. Fe B. Soriano, Montano Bania, Orja
Bania and Lydia B. Bania the sums of P1,500.00 as funeral expenses and P24,744.24
as the lost expected earnings of the late Laureano Bania Sr., P30,000.00 as moral
damages, and P2,500.00 as attorney's fees. Costs against said defendants. cdasia
"The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo
Balagot.
"SO ORDERED." (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice to
another motion which was then pending. However, respondent judge issued another
order dated November 7, 1979 denying the motion for reconsideration of the
order of September 7, 1979 for having been filed out of time.
Finally, the respondent judge issued an order dated December 3, 1979 providing that if
defendants municipality and Bislig further wish to pursue the matter disposed of in the
order of July 26, 1979, such should be elevated to a higher court in accordance with the
Rules of Court. Hence, this petition.
Petitioner maintains that the respondent judge committed grave abuse of discretion
amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a
decision. Furthermore, petitioner asserts that while appeal of the decision may be
available, the same is not the speedy and adequate remedy in the ordinary
course of law.
On the other hand, private respondents controvert the position of the petitioner and
allege that the petition is devoid ofmerit, utterly lacking the good faith which is
indispensable in a petition for certiorari and prohibition. (Rollo, p. 42.) In addition, the
private respondents stress that petitioner has not considered that every court, including
respondent court, has the inherent power to amend and control its process and orders so
as to make them conformable to law and justice. (Rollo, p. 43.)

The controversy boils down to the main issue of whether or not the respondent court
committed grave abuse of discretion when it deferred and failed to resolve the
defense of non-suability of the State amounting to lack of jurisdiction in a motion to
dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of nonsuability of the State amounting to lack of jurisdiction until trial. However, said
respondent judge failed to resolve such defense, proceeded with the trial and thereafter
rendered a decision against the municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the
exercise of its judgment it arbitrarily failed to resolve the vital issue of nonsuability of the State in the guise of the municipality. However, said judge acted in
excess of his jurisdiction when in his decision dated October 10, 1979 he held
the municipality liable for the quasi-delict committed by its regular employee. cdll
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section
3 of the Constitution, to wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State may not be sued except
when it gives consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. The standing
consent of the State to be sued in case ofmoney claims involving liability arising from
contracts is found in Act No. 3083. A special law may be passed to enable a person to
sue the government for an alleged quasi-delict, as in Merritt v. Government of the
Philippine Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607,
February 26, 1990, 182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts, thereby
descending to the level of the other contracting party, and also when the State files a
complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of the State
when they are engaged in governmental functions and therefore should enjoy the
sovereign immunity from suit. Nevertheless, they are subject to suit even in the
performance of such functions because their charter provided that they can sue and be
sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability depends on
the consent of the state to be sued, liability on the applicable law and the established
facts. The circumstance that a state is suable does not necessarily mean that it is liable;
on the other hand, it can never be held liable if it does not first consent to be sued.
Liability is not conceded by the mere fact that the state has allowed itself to be sued.
When the state does waive its sovereign immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable." (United States of America v.
Guinto, supra, p. 659-660).
Anent the issue of whether or not the municipality is liable for the torts committed by its
employee, the test of liability of themunicipality depends on whether or not the driver,
acting in behalf of the municipality, is performing governmental or proprietary functions.
As emphasized in the case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85

SCRA
599,
606),
the
distinction of powers
becomes
important
for
purposes of determining the liability of the municipality for the acts of its agents which
result in an injury to third persons.
Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme
Court of Indiana in 1916, thus:
"Municipal corporations exist in a dual capacity, and their functions are twofold. In one
they exercise the right springing from sovereignty, and while in the performance of the
duties pertaining thereto, their acts are political and governmental. Their officers and
agents in such capacity, though elected or appointed by them, are nevertheless public
functionaries performing a public service, and as such they are officers, agents, and
servants of the state. In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence as legal persons and not as
public agencies. Their officers and agents in the performance of such functions act in
behalf of the municipalities in their corporate or individual capacity, and not for the state
or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable because their
charters grant them the competence to sue and be sued. Nevertheless, they are
generally not liable for torts committed by them in the discharge of governmental
functions and can be held answerable only if it can be shown that they were acting in a
proprietary capacity. In permitting such entities to be sued, the State merely gives the
claimant the right to show that the defendant was not acting in its governmental
capacity when the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the municipality insists that "he was
on his way to the Naguilian river to get a load of sand and gravel for the
repair of San Fernando's municipal streets." (Rollo, p. 29.)
In
the
absence of any
evidence
to
the
contrary,
the
regularity of the
performance of official duty is presumed pursuant toSection 3(m) of Rule 131 of the
Revised Rules of Court. Hence, We rule that the driver of the dump truck was performing
duties or tasks pertaining to his office. LexLib
We already stressed in the case of Palafox, et al. v. Province of Ilocos Norte, the District
Engineer, and the Provincial Treasurer(102 Phil 1186) that "the construction or
maintenance of roads in which the truck and the driver worked at the time of the
accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the
conclusion that the municipality cannot be held liable for the torts committed by its
regular employee, who was then engaged in the discharge of governmental functions.
Hence, the death of the passenger tragic and deplorable though it may be imposed on
the municipality no duty to pay monetary compensation.
All premises considered, the Court is convinced that the respondent judge's dereliction in
failing to resolve the issue of non-suability did not amount to grave abuse of discretion.
But said judge exceeded his jurisdiction when it ruled on the issue ofliability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is

hereby modified, absolving the petitionermunicipality of any liability in favor of private

respondents.
SO ORDERED.
||| (Municipality of San Fernando, La Union v. Firme, G.R. No. 52179, [April 8, 1991], 273
PHIL 56-65)

38. Bureau of Printing v Bureau of Printing

EN BANC
[G.R. No. L-15751. January 28, 1961.]
BUREAU OF PRINTING,
SERAFIN
SALVADOR
and
MARIANO
LEDESMA, petitioners, vs. THE BUREAU OFPRINTING EMPLOYEES
ASSOCIATION
(NLU), PACIFICO ADVINCULA, ROBERTO MENDOZA, PONCIANO ARGANDA and
TEODULO TOLERAN, respondents.
Solicitor General for petitioner.
Eulogio Lerum for respondents.
SYLLABUS
1. JURISDICTION; FUNCTIONS OF BUREAU OF PRINTING NOT EXCLUSIVELY PROPRIETARY
IN NATURE; COURT OFINDUSTRIAL RELATIONS WITHOUT JURISDICTION OVER UNFAIR
LABOR PRACTICE BROUGHT AGAINST THE BUREAU. TheBureau of Printing is primarily
a service bureau and is not engaged in business or occupation for pecuniary benefit.
Although it receives outside jobs and many of its employees are paid for overtime work
on regular working days and on holidays, these facts do not justify the conclusion that its
functions are "exclusively proprietary in nature." Hence, the Court of Industrial Relations
is without jurisdiction to hear and determine complaints for unfair labor practice filed
against the Bureau ofPrinting.
2. ADMINISTRATIVE LAW; SUITS AGAINST THE STATE; BUREAU OF PRINTING NOT SUBJECT
TO SUIT WITHOUT ITS CONSENT. As an office of the Government, without any
corporate or juridical personality, the Bureau of Printing cannot be sued without its
consent, much less over its objection. (Angat River Irrigation System, et. al. vs. Angat
River Workers' Union, et. al., 102 Phil., 789.)
DECISION
GUTIERREZ DAVID, J p:
This is a petition for certiorari and prohibition with preliminary injunction to annul certain
orders of the respondent Court ofIndustrial Relations and to restrain it from further
proceeding in the action for unfair labor practice pending before it on the

ground of lack of jurisdiction. Giving due course to the petition, this Court ordered the
issuance of the writ of preliminary injunction prayed for without bond.
The
action
in
question
was

upon
complaint of the
respondent Bureau of Printing Employees Association (NLU), Pacifico Advincula, Roberto
Mendoza, Ponciano Arganda and Teodulo Toleran filed by an acting prosecutor of the
Industrial Court against herein petitioners Bureau of Printing, Serafin Salvador, the Acting
Secretary of the Department of General Services, and Mariano Ledesma, the
Director of the Bureau of Printing. The complaint alleged that Serafin Salvador and
Mariano Ledesma have been engaging in unfair labor practice by interfering with, or
coercing the employees of the Bureau of Printing, particularly the members of the
complaining association, in the exercise of their right to self-organization and
discriminating in regard to hire and tenure of their employment in order to discourage
them from pursuing their union activities.
Answering the complaint, the petitioners Bureau of Printing, Serafin Salvador and
Mariano Ledesma denied the charges ofunfair labor practices attributed to them and, by
way of affirmative defenses, alleged, among other things, that respondents Pacifico
Advincula, Roberto Mendoza, Ponciano Arganda and Teodulo Toleran were suspended
pending result of an administrative investigation against them for breach of Civil Service
rules and regulations; that the Bureau of Printing has no juridical personality to sue and
be sued; that said Bureau of Printing is not an industrial concern engaged for the
purpose ofgain but is an agency of the Republic performing governmental functions. For
relief, they prayed that the case be dismissed for lack of jurisdiction. Thereafter, before
the case could be heard, petitioners filed an "Omnibus Motion" asking for a preliminary
hearing on the question of jurisdiction raised by them in their answer and for
suspension of the trial of the case on the merits pending the determination of such
jurisdictional question. The motion was granted, but after hearing, the trial judge of the
Industrial Court in an order dated January 27, 1959 sustained the jurisdiction of the court
on the theory that the functions of the Bureau of Printing are "exclusively proprietary in
nature," and, consequently, denied the prayer for dismissal. Reconsideration of this order
having been also denied by the court en banc, the petitioners brought the case to this
court through the present petition for certiorari and prohibition.
We find the petition to be meritorious.
The Bureau of Printing is an office of the Government created by the Administrative
Code of 1916 (Act No. 2657). As such instrumentality of the Government, it operates
under the direct supervision of the Executive Secretary, Office of the President, and is
"charged with the execution of all printing and binding, including work incidental to those
processes, required by the National Government and such other work of the same
character as said Bureau may, by law or by order ofthe (Secretary of Finance) Executive
Secretary, be authorized to undertake . . .." (Sec. 1644, Rev. Adm. Code.) It has no
corporate existence, and its appropriations are provided for in the General Appropriations
Act. Designed to meet the printingneeds of the Government, it is primarily a
service bureau and is obviously, not engaged in business or occupation for pecuniary
profit.
It is true, as stated in the order complained of, that the Bureau of Printing receives
outside jobs and that many of its employees are paid for overtime work on regular

working days and on holidays, but these facts do not justify the conclusion that its
functions
are
"exclusively
proprietary
in
nature."
Overtime
work
in
the Bureau of Printing is done only when the interest of the service so requires (sec. 566,
Rev. Adm. Code). As a matter of administrative policy, the overtime compensation may
be paid, but such payment is discretionary with the head of the Bureau depending upon
its current appropriations, so that it cannot be the basis for holding that the
functions of said Bureau are wholly proprietary in character. Anent the additional work it
executes for private persons, we find that such work is done upon request, as
distinguished from those solicited, and only "as the requirements of Government work
will permit" (sec. 1654, Rev. Adm. Code), and "upon terms fixed by the
Director of Printing, with the approval of the Department Head" (sec. 1665, id.). As
shown by the uncontradicted evidence of the petitioners, most of these works
consist of orders for greeting cards during Christmas from government officials, and
for printing of checks of private banking institutions. On those greeting cards, the
Government seal, of which only the Bureau of Printing is authorized to use, is embossed,
and on the bank checks, only the Bureau of Printing can print the reproduction of the
official documentary stamps appearing thereon. The volume of private jobs done, in
comparison with government jobs, is only one-half of 1 per cent, and in computing the
costs for work done for private parties, the Bureau does not include profit, because it is
not allowed to make any. Clearly, while the Bureau of Printing is allowed to undertake
privateprinting jobs, it cannot be pretended that it is thereby an industrial or business
concern. The additional work it executes for private parties is merely incidental to its
function, and although such work may be deemed proprietary in character, there is no
showing that the employees performing said proprietary function are separate and
distinct from those employed in its general governmental functions.
From what has been stated, it is obvious that the Court of Industrial Relations did not
acquire jurisdiction over the respondent Bureau of Printing, and is thus devoid of any
authority to take cognizance of the case. This Court has already held in a long
line of decisions that the Industrial Court has no jurisdiction to hear and determine the
complaint for unfair labor practice filed against institutions or corporations not organized
for profit and, consequently, not an industrial or business organization. This is so
because the Industrial Peace Act was intended to apply only to industrial employment,
and to govern the relations between employers engaged in industry and occupations for
purposes of gain, and their industrial employees. (University of the Philippines, et
al. vs. CIR, et al., G.R No. L-15416, April 28, 1960; University of Sto. Tomas vs. Villanueva,
et al., G.R No. L-13282, April 22, 1960; See also the cases cited therein.)
Indeed, as an office of the Government, without any corporate or juridical personality,
the Bureau of Printing cannot be sued. (Sec. 1, Rule 3, Rules of Court.) Any suit, action or
proceeding against it, if it were to produce any effect, would actually be a suit, action or
proceeding against the Government itself, and the rule is settled that the Government
cannot be sued without its consent, much less over its objection. (See
Metran vs. Paredes, 45 Off. Gaz., 2835; Angat River Irrigation System, et al. vs.Angat
River Workers' Union, et al., G.R. Nos. L-10943-44, December 28, 1957).
The record also discloses that the instant case arose from the filing of administrative
charges
against
some
officers of the
respondent Bureau of Printing Employees'
Association by the Acting Secretary of General Services. Said administrative charges are

for insubordination, grave misconduct and acts prejudicial to public service committed
by inciting the employeesof the Bureau of Printing to walk out of their jobs against the
order of the duly constituted officials. Under the law, the Headsof Departments and
Bureaus are authorized to institute and investigate administrative charges against erring
subordinates. For the Industrial Court now to take cognizance of the case filed before it,
which is in effect a review of the acts of executive officials having to do with the
discipline of government employees under them, would be to interfere with the
discharge ofsuch functions by said officials.
WHEREFORE, the petition for a writ of prohibition is granted. The orders
complained of are set aside and the complaint for unfair labor practice against the
petitioners is dismissed, with costs against respondents other than the respondent court.

||| (Bureau of Printing v. Bureau of Printing Employees Association, G.R. No. L-15751,
[January 28, 1961], 110 PHIL 952-958)

39. Farolan v CTA

THIRD DIVISION
[G.R. No. L-42204. January 21, 1993.]
HON.
RAMON
J. FAROLAN,
JR.,
in
his
capacity
as
Commissioner of Customs, petitioner, vs. COURT OF TAXAPPEALS and
BAGONG
BUHAY TRADING, respondents.
The Solicitor General for petitioner.
Jorge G. Macapagal counsel for respondent.
Aurea Aragon-Casiano for Bagong Buhay Trading.
SYLLABUS
1. ADMINISTRATIVE LAW; TARIFF AND CUSTOMS CODE; FORFEITURE UNDER SECTION
2530, PARAGRAPH M, SUBPARAGRAPHS 3, 4 AND 5; REQUISITES FOR FORFEITURE UNDER
SUBPARAGRAPHS 3 AND 4; CASE AT BAR. SEC. 2530.Property Subject to Forfeiture
Under Tariff and Customs Law. Any vehicle, vessel or aircraft, cargo, article and other
objects shall, under the following conditions be subjected to forfeiture. m. Any article
sought to be imported or exported. (3) On the strength of a false declaration or affidavit
or affidavit executed by the owner, importer, exporter or consignee concerning the
importation of such article; (4) On the strength of a false invoice or other document
executed by the owner, importer, exporter or consignee concerning the importation or
exportation of such article; and (5) Through any other practice or device contrary to
law by means of which such articles were entered through a customhouse to the
prejudice of government. Under Section 2530, paragraph m, subparagraphs (3) and (4),

the requisites for forfeiture are: (1) the wrongful making by the owner, importer, exporter
or consignee of any declaration or affidavit, or the wrongful making or delivery by the
same persons ofany invoice, letter or paper all touching on the importation or
exportation of merchandise; and (2) that such declaration, affidavit, invoice, letter or
paper is false. In the case at bar, although it cannot be denied that private respondent
caused to be prepared through its customs broker a false import entry or declaration, it
cannot be charged with the wrongful making thereof because such entry or declaration
merely restated faithfully the data found in the corresponding certificate of origin,
certificate of manager of the shipper, the packing lists and the bill of lading which were
all prepared by its suppliers abroad. If, at all, the wrongful making or falsity of the
documents above-mentioned can only be attributed to Bagong Buhay's foreign suppliers
or shippers. With regard to the second requirement on falsity, it bears mentioning that
the evidence on record, specifically, the decisions of the Collector of Customs and the
Commissioner of Customs, do not reveal that the importer or consignee, Bagong Buhay
Trading had any knowledge of any falsity on the subject importation. Since private
respondent's misdeclaration can be traced directly to its foreign suppliers, Section 2530,
paragraph m, subparagraphs (3) and (4) cannot find application.
2. ID.; ID.; ID.; FRAUD UNDER SUBPARAGRAPH 5 MUST BE INTENTIONAL; ACTUAL AND
NOT CONSTRUCTIVE, AND COMMITTED BY IMPORTER OR CONSIGNEE TO EVADE
PAYMENT OF DUTIES DUE. Applying subparagraph (5), fraud must be committed by an
importer/consignee to evade payment of the duties due. We support the
stance of the Court of TaxAppeals that the Commissioner of Customs failed to show that
fraud had been committed by the private respondent. The fraud contemplated by law
must be actual and not constructive. It must be intentional fraud, consisting of deception
willfully and deliberately done or resorted to in order to induce another to give up some
right. As explained earlier, the import entry was prepared on the basis of the shipping
documents provided by the foreign supplier or shipper. Hence, Bagong Buhay Trading
can be considered to have acted in good faith when it relied on these documents.
3. POLITICAL LAW; STATE IMMUNITY FROM SUIT; BUREAU OF CUSTOMS ENJOYS IMMUNITY
FROM SUIT; CASE AT BAR. We opine that the Bureau of Customs cannot be held liable
for actual damages that the private respondent sustained with regard to its goods.
Otherwise, to permit private respondent's claim to prosper would violate the
doctrine of sovereign immunity. Since it demands that the Commissioner of Customs be
ordered to pay for actual damages it sustained, for which ultimately liability will fall on
the government, it is obvious that this case has been converted technically into a suit
against the state.
DECISION
ROMERO, J p:
This is a petition for review on certiorari which seeks to annul and set aside the
decision of the Court of Tax Appeals dated December 27, 1974 (CTA Case No. 2490)
reversing the decision of the Commissioner of Customs which affirmed the decisionof the
Collector of Customs. 1
The undisputed facts are as follows:

On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170 arrived at the
Port of Manila carrying, among others, 80 bales of screen net consigned to Bagong
Buhay Trading (Bagong Buhay). Said importation was declared through a customs broker
under Entry No. 8651-72 as 80 bales of screen net of 500 rolls with a gross
weight of 12,777 kilograms valued at $3,750.00 and classified under Tariff Heading No.
39.06-B of the Tariff and Customs Code 2 at 35% ad valorem. Since the customs
examiner found the subject shipment reflective of the declaration, Bagong Buhay paid
the duties and taxes due in the amount of P11,350.00 which was paid through the
Bank of Asia under Official Receipt No. 042787 dated February 1, 1972. Thereafter, the
customs appraiser made a return of duty. llcd
Acting on the strength of an information that the shipment consisted of "mosquito net"
made of nylon dutiable under Tariff Heading No. 62.02 of the Tariff and Customs Code,
the Office of the Collector of Customs ordered a re-examination of the shipment. A report
on the re-examination revealed that the shipment consisted of 80 bales of screen net,
each bale containing 20 rolls or a total of 1,600 rolls. 3 Re-appraised, the shipment was
valued at $37,560.00 or $0.15 per yard insteadof $.075 per yard as previously declared.
Furthermore, the Collector of Customs determined the subject shipment as
made ofsynthetic (polyethylene) woven fabric classifiable under Tariff Heading No. 51.04B at 100% ad valorem. Thus, Bagong Buhay Trading was assessed P272,600.00 as duties
and taxes due on the shipment in question. 4 Since the shipment was also misdeclared
as to quantity and value, the Collector of Customs forfeited the subject shipment in
favor of the government. 5
Private respondent then appealed the decision of the Collector of Customs by filing a
petition for review with the Commissioner of Customs. On November 25, 1972 the
Commissioner affirmed the Collector of Customs. 6 Private respondent moved for
reconsideration but the same was denied on January 22, 1973. 7
From the Commissioner of Customs, private respondent elevated his case before
the Court of Tax Appeals.
Upon
review,
theCourt of Tax Appeals reversed
the
decision of the Commissioner of Customs. It ruled that the Commissioner erred in
imputing fraud upon private respondent because fraud is never presumed and thus
concluded that the forfeiture of the articles in question was not in accordance with law.
Moreover, the appellate court stated that the imported articles in question should be
classified as "polyethylene plastic" at the rate of 35% ad valorem instead of "synthetic
(polyethylene) woven fabric" at the rate of 100% ad valorem based upon the results
conducted
by
the
Bureau of Customs
Laboratory.
Consequently,
the Court of Tax Appeals ordered the release of the said article upon payment of the
corresponding duties and taxes.(C.T.A. Case No. 2490) 8
Thereafter, the Commissioner of Customs moved for reconsideration. On November 19,
1975, the Court of Tax Appealsdenied said motion for reconsideration. 9
On August 20, 1976, private respondent filed a petition asking for the release of the
questioned goods which this Courtdenied. After several motions for the early
resolution of this case and for the release of goods and in view of the fact that the goods
were being exposed to the natural elements, we ordered the release of the goods on
June 2, 1986. Consequently, on July 26, 1986, private respondent posted a cash

bond of P149,443.36 to secure the release of 64 bales 10 out of the 80 bales 11

originally delivered on January 30, 1972. Sixteen bales 12 remain missing. LLphil
Private respondent alleges that of the 143,454 yards (64 bales) released to Bagong
Buhay, only 116,950 yards were in good condition and the 26,504 yards were in bad
condition. Consequently, private respondent demands that the Bureau ofCustoms be
ordered to pay for damages for the 43,050 yards 13 it actually lost. 14
Hence, this petition, the issues being: a) whether or not the shipment in question is
subject to forfeiture under Section 2530-M subparagraphs (3), (4) and (5) of the Tariff
and Customs Code; b) whether or not the shipment in question falls under Tariff Heading
No. 39.06-B (should be 39.02-B) of the Tariff and Customs Code subject to ad
valorem duty of 35% instead of Tariff Heading No. 51.04-B with ad valorem of 100% and
c) whether or not the Collector of Customs may be held liable for the 43,050 yards
actually lost by private respondent.
Section 2530, paragraph m, subparagraphs(3), (4) and (5) states:
"SECTION 2530. Property Subject to Forfeiture Under Tariff and Customs Law. Any
vehicle, vessel or aircraft, cargo, article and other objects shall, under the following
conditions be subjected to forfeiture.
xxx xxx xxx
m. Any article sought to be imported or exported.
xxx xxx xxx
(3) On the strength of a false declaration or affidavit or affidavit executed by the owner,
importer, exporter or consignee concerning the importation of such article;
(4) On the strength of a false invoice or other document executed by the owner,
importer, exporter or consignee concerning the importation or exportation of such
article; and

(5) Through any other practice or device contrary to law by means of which such articles
was entered through a customhouse to the prejudice of government. (Emphasis
supplied).
Petitioner contends that there has been a misdeclaration as to the quantity in rolls of the
shipment in question, the undisputed fact being that the said shipment
consisted of 1,600 rolls and not 500 rolls as declared in the import entry. We agree with
the contention of the petitioner. In declaring the weight of its shipment in an import
entry, through its customs broker as 12,777 kilograms when in truth and in fact the
actual weight is 13,600 kilograms, an apparent misdeclaration as to the weight of the
questioned goods was committed by private respondent. Had it not been for a reexamination and re-appraisal of the shipment by the Collector of Customs which yielded
a difference of 823 kilograms, the government would have lost revenue derived from
customs duties.

Although it is admitted that indeed there was a misdeclaration, such violation, however,
does not warrant forfeiture for suchact was not committed directly by the owner,
importer, exporter or consignee as set forth in Section 2530, paragraph m, subparagraph
(3), and/or (4).
In defense of its position denying the commission of misdeclaration, private respondent
contends that its import entry was based solely on the shipping documents and that it
had no knowledge of any flaw in the said documents at the time the entry was filed. For
this reason, private respondent believes that if there was any discrepancy in the
quantity of the goods as declared and as examined, such discrepancy should not be
attributed to Bagong Buhay. 15
Private respondent's argument is persuasive. Under Section 2530, paragraph m,
subparagraphs (3) and (4), the requisites for forfeiture are: (1) the wrongful making by
the owner, importer, exporter or consignee of any declaration or affidavit, or the
wrongful making or delivery by the same persons of any invoice, letter or paper all
touching on the importation or exportation of merchandise; and (2) that such
declaration, affidavit, invoice, letter or paper is false. 16
In the case at bar, although it cannot be denied that private respondent caused to be
prepared through its customs broker a false import entry or declaration, it cannot be
charged with the wrongful making thereof because such entry or declaration merely
restated faithfully the data found in the corresponding certificate of origin, 17
certificate of manager of the shipper, 18 the packing lists 19 and the bill of lading 20
which were all prepared by its suppliers abroad. If, at all, the wrongful making or
falsity of the documents above-mentioned can only be attributed to Bagong Buhay's
foreign suppliers or shippers.
With regard to the second requirement on falsity, it bears mentioning that the evidence
on
record,
specifically,
the
decisionsof the
Collector of Customs
and
the
Commissioner of Customs, do not reveal that the importer or consignee, Bagong Buhay
Trading had any knowledge of any falsity on the subject importation.
Since private respondent's misdeclaration can be traced directly to its foreign suppliers,
Section 2530, paragraph m, subparagraphs (3) and (4) cannot find application.
Applying subparagraph (5), fraud must be committed by an importer/consignee to evade
payment of the duties due. 21 We support the stance of the Court of Tax Appeals that
the Commissioner of Customs failed to show that fraud had been committed by the
private respondent. The fraud contemplated by law must be actual and not constructive.
It must be intentional fraud, consisting of deception willfully and deliberately done or
resorted to in order to induce another to give up some right. 22 As explained earlier, the
import entry was prepared on the basis of the shipping documents provided by the
foreign supplier or shipper. Hence, Bagong Buhay Trading can be considered to have
acted in good faith when it relied on these documents.
Proceeding now to the question of the correct classification of the questioned shipments,
petitioner contends that the same falls under Tariff Heading No. 51.04 being a "synthetic
(polyethylene) woven fabric." On the other hand, private respondent contends that these

fall under Tariff Heading No. 39.06 (should be 39.02), having been found to be
made of polyethylene plastic. LexLib
Heading No. 39.02 of the Tariff and Customs Code provides:
"39.02 Polymerisation and copolymerisation products (for example, polyethylene,
polytetrahaloethylene, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl
acetate, polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and
polymethacrylic derivatives, coumaroneindene resins).
The principal products included in this heading are:
(1) Polymerization products of ethylene or its substitution derivatives, particularly the
halogen derivatives.
Examples of these are polyethylene, polytetrafluro-ethylene and polychlorotrifluroethylene. Their characteristic is that they are transluscent, flexible and light in weight.
They are used largely for insulating electric wire." 23
On the other hand, Tariff Heading No. 51.04 provides:
"51.04 Woven fabrics of man-made fibers (continuous)
fabrics of monofil or strip of heading No. 51.01 or 51.02"

including

woven

"This heading covers woven fabrics (as described in Part [I] [C] of the General
Explanatory Note on Section XI) made ofyarns of continuous man-made fibers,
or of monofil or strip of heading 51.01 and 51.02; it includes a very large variety ofdress
fabrics, linings, curtain materials, furnishing fabrics, tyre fabrics, tent fabrics, parachute
fabrics, etc. 24 (Emphasis supplied)
To correctly classify the subject importation, we need to refer to chemical analysis
submitted before the Court of Tax Appeals. Mr. Norberto Z. Manuel, an Analytical
Chemist of the Bureau of Customs and an Assistant to the Chief of the Customs
Laboratory, testified that a chemical test was conducted on the sample 25 and "the
result is that the attached sample submitted under Entry No. 8651 was found to be
made wholly of polyethylene plastic." 26
A similar result conducted by the Adamson University Testing Laboratories provides as
follows:
"The submitted sample, being insoluble in 10% sodium carbonate; hydrochloric acid,
glacial acetic acid, toluene, acetone, formic acid, and nitric acid, does not belong to the
man-made fibers, i.e., cellulosic and alginate rayons, poly (vinyl chloride),
polyacrylonitrile, copolymer or polyester silicones including Dolan, Dralon, Orlin, PAN,
Redon, Courtelle, etc., Tarylene, Dacron; but it is a type of plastic not possessing the
properties of the man-made fibers. 27 (Emphasis supplied)LibLex
Consequently, the Court of Tax Appeals, relying on the laboratory findings of the
Bureau of Customs and Adamson University correctly classified the questioned shipment
as polyethylene plastic taxable under Tariff Heading No. 39.02 instead ofsynthetic
(polyethylene) woven fabric under Tariff Heading 51.04, to wit:

"While it is true that the finding and conclusion of the Collector of Customs with respect
to classification of imported articles are presumptively correct, yet as matters that
require laboratory tests or analysis to arrive at the proper classification, the
opinion of the Collector must yield to the finding of an expert whose opinion is based on
such laboratory test or analysis unless such laboratory analysis is shown to be
erroneous. And this is especially so in this case where the test and analysis were made in
the laboratory of the Bureau of Customs itself. It has not been shown why such
laboratory finding was disregarded. There is no claim or pretense that an error was
committed by the laboratory technician. Significantly, the said finding of the Chief,
Customs Laboratory finds support in the 'REPORT OF ANALYSIS' submitted by the
Adamson University Testing Laboratories, dated September 21, 1966." 28
On the third issue, we opine that the Bureau of Customs cannot be held liable for actual
damages that the private respondent sustained with regard to its goods. Otherwise, to
permit private respondent's claim to prosper would violate the doctrine of sovereign
immunity. Since it demands that the Commissioner of Customs be ordered to pay for
actual damages it sustained, for which ultimately liability will fall on the government, it is
obvious that this case has been converted technically into a suit against the state. 29
On this point, the political doctrine that "the state may not be sued without its consent,"
categorically applies. 30 As an unincorporated government agency without any separate
juridical personality of its own, the Bureau of Customs enjoys immunity from suit. Along
with the Bureau of Internal Revenue, it is invested with an inherent power of sovereignty,
namely, taxation. As an agency, the Bureau of Customs performs the governmental
function of collecting revenues which is definitely not a proprietary function. Thus,
private respondent's claim for damages against the Commissioner of Customs must
fail. prLL
WHEREFORE, the decision of the respondent Court of Tax Appeals is AFFIRMED. The
Collector of Customs is directed to expeditiously re-compute the customs duties applying
Tariff
Heading
39.02
at
the
rate of 35% ad
valorem on
the
13,600
kilograms of polyethylene plastic imported by private respondent.
SO ORDERED.
||| (Farolan v. Court of Tax Appeals, G.R. No. L-42204, [January 21, 1993])

40. PTA v Phil GOlf Devt & Equipment

SECOND DIVISION
[G.R. No. 176628. March 19, 2012.]
PHILIPPINE
TOURISM
AUTHORITY, petitioner, vs.
DEVELOPMENT & EQUIPMENT, INC.,respondent.
RESOLUTION

PHILIPPINE

GOLF

BRION, J p:
Before this Court is a petition for certiorari, under Rule 65 of the 1997 Rules of Civil
Procedure, to annul the decision 1 dated December 13, 2006 of the Court of
Appeals (CA) in CA G.R. SP No. 90402. This CA decision dismissed the petition for
annulment of judgment which sought to set aside the decision 2 of the Regional Trial
Court (RTC) of Muntinlupa City, Branch 203, in Civil Case No. 03-212. The RTC held the
Philippine Tourism Authority (PTA) liable for its unpaid obligation to Philippine Golf
Development & Equipment, Inc. (PHILGOLF). HAICET
FACTUAL BACKGROUND
On April 3, 1996, PTA, an agency of the Department of Tourism, whose main function is
to bolster and promote tourism, entered into a contract with Atlantic Erectors,
Inc. (AEI) for the construction of the Intramuros Golf Course Expansion Projects (PAR 6066) for a contract price of Fifty-Seven Million Nine Hundred Fifty-Four Thousand Six
Hundred Forty-Seven and 94/100 Pesos (P57,954,647.94).
The civil works of the project commenced. Since AEI was incapable of constructing the
golf course aspect of the project, it entered into a sub-contract agreement with
PHILGOLF, a duly organized domestic corporation, to build the golf course amounting to
Twenty-Seven Million Pesos (P27,000,000.00). The sub-contract agreement also provides
that PHILGOLF shall submit its progress billings directly to PTA and, in turn, PTA shall
directly pay PHILGOLF. 3
On October 2, 2003, PHILGOLF filed a collection suit against PTA amounting to Eleven
Million Eight Hundred Twenty Thousand Five Hundred Fifty and 53/100 Pesos
(P11,820,550.53), plus interest, for the construction of the golf course. Within the period
to file a responsive pleading, PTA filed a motion for extension of time to file an answer.
On October 30, 2003, the RTC granted the motion for extension of time. PTA filed another
motion for extension of time to file an answer. The RTC again granted the motion.
Despite the RTC's liberality of granting two successive motions for extension of time, PTA
failed to answer the complaint. Hence, on April 6, 2004, the RTC rendered a judgment of
default, ruling as follows:
WHEREFORE, judgment is hereby rendered, ordering the defendant to pay plaintiff:
1. The amount of Eleven Million, Eight Hundred Twenty Thousand, Five Hundred Fifty
Pesos and Fifty Three Centavos (P11,820,550.53), representing defendant's outstanding
obligation, plus interest thereon of twelve percent (12%) per annum from the time the
unpaid billings of plaintiff were due for payment by the defendant, until they are fully
paid.
2. The amount of Two Hundred Thousand Pesos (P200,000.00), as attorney's fees. CacEIS
3. The amount of One Hundred Twenty Eight Thousand, Five Hundred Twenty Nine Pesos
and Fourteen Centavos (P128,529.14), as filing fees and other costs of litigation.
4. The amount of Three Hundred Thousand Pesos (P300,000.00), as moral damages.

5. The amount of One Hundred Fifty Thousand Pesos (P150,000.00), as nominal

damages, and
6. The amount of Two Hundred Fifty Thousand Pesos (P250,000.00), as exemplary
damages.
SO ORDERED. 4
On July 11, 2005, PTA seasonably appealed the case to the CA. But before the appeal of
PTA could be perfected, PHILGOLF already filed a motion for execution pending appeal
with the RTC. The RTC, in an Order dated June 2, 2004, granted the motion and a writ of
execution pending appeal was issued against PTA. On June 3, 2004, a notice of
garnishment was issued against PTA's bank account at the Land Bank of the Philippines,
NAIA-BOC Branch to fully satisfy the judgment.
PTA filed a petition for certiorari with the CA, imputing grave abuse of discretion on the
part of the RTC for granting the motion for execution pending appeal. The CA ruled in
favor of PTA and set aside the order granting the motion for execution pending appeal.
On July 11, 2005, PTA withdrew its appeal of the RTC decision and, instead, filed a
petition 5 for annulment of judgment under Rule 47 of the Rules of Court. The petition for
annulment of judgment was premised on the argument that the gross negligence of
PTA's counsel prevented the presentation of evidence before the RTC.
On December 13, 2006, the CA dismissed the petition for annulment of judgment for lack
of merit. PTA questions this CA action in the present petition for certiorari. ASaTCE
THE PETITION
The petition cites three arguments: first, that the negligence of PTA's counsel amounted
to an extrinsic fraud warranting an annulment of judgment; second, that since PTA is a
government entity, it should not be bound by the inactions or negligence of its counsel;
and third, that there were no other available remedies left for PTA but a petition for
annulment of judgment.
OUR RULING
We find the petition unmeritorious.
The Rules of Court specifically provides for deadlines in actions before the court to
ensure an orderly disposition of cases. PTA cannot escape these legal technicalities by
simply invoking the negligence of its counsel. This practice, if allowed, would defeat the
purpose of the Rules on periods since every party would merely lay the blame on its
counsel to avoid any liability. The rule is that "a client is bound by the acts, even
mistakes, of his counsel in the realm of procedural technique[,] and unless such acts
involve gross negligence that the claiming party can prove, the acts of a counsel bind
the client as if it had been the latter's acts." 6
In LBC Express Metro Manila, Inc. v. Mateo, 7 the Court held that "[g]ross negligence is
characterized by want of even slight 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." This cannot be

invoked in cases where the counsel is merely negligent in submitting his required
pleadings within the period that the rules mandate.
It is not disputed that the summons together with a copy of the complaint was personally
served upon, and received by PTA through its Corporate Legal Services Department, on
October 10, 2003. 8 Thus, in failing to submit a responsive pleading within the required
time despite sufficient notice, the RTC was correct in declaring PTA in default.
There was no extrinsic fraud
"Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which
is committed outside of the trial of the case, whereby the unsuccessful party has been
prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent." 9 Under the doctrine of this cited case, we do not see the acts of PTA's
counsel to be constitutive of extrinsic fraud. aHCSTD
The records reveal that the judgment of default 10 was sent via registered mail to PTA's
counsel. However, PTA never availed of the remedy of a motion to lift the order of
default. 11 Since the failure of PTA to present its evidence was not a product of any
fraudulent acts committed outside trial, the RTC did not err in declaring PTA in default.
Annulment
the proper remedy

of

judgment

is

not

PTA's appropriate remedy was only to appeal the RTC decision. "Annulment of Judgment
under Rule 47 of the Rules of Court is a recourse equitable in character and allowed only
in exceptional cases where the ordinary remedies of new trial, appeal, petition for relief
or other appropriate remedies are no longer available through no fault of petitioner." 12
In this case, appeal was an available remedy. There was also no extraordinary reason for
a petition for annulment of judgment, nor was there any adequate explanation on why
the remedy for new trial or petition for relief could not be used. The Court is actually at a
loss why PTA had withdrawn a properly filed appeal and substituted it with another
petition, when PTA could have merely raised the same issues through an ordinary
appeal.
PTA
character

was

acting

in

proprietary

PTA also erred in invoking state immunity simply because it is a government entity. The
application of state immunity is proper only when the proceedings arise out of sovereign
transactions and not in cases of commercial activities or economic affairs. The State, in
entering into a business contract, descends to the level of an individual and is deemed to
have tacitly given its consent to be sued. 13
Since the Intramuros Golf Course Expansion Projects partakes of a proprietary character
entered into between PTA and PHILGOLF, PTA cannot avoid its financial liability by merely
invoking immunity from suit.
A
under

special
Rule

civil
65

is

action
proper

for
only

certiorari
when

there
is
adequate remedy

no

other

plain,

speedy,

and

Lastly, a special civil action under Rule 65 of the Rules of Court is only available in cases
when a tribunal, board or officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law. It is not a mode of appeal, and cannot
also be made as a substitute for appeal. It will not lie in cases where other remedies are
available under the law. EaScHT
In Land Bank of the Philippines v. Court of Appeals, 14 the Court had the occasion to
state:
The general rule is that a [certiorari] will not issue where the remedy of appeal is
available to the aggrieved party. The remedies of appeal in the ordinary course of law
and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive
and not alternative or cumulative. Hence, the special civil action for certiorari under Rule
65 is not and cannot be a substitute for an appeal, where the latter remedy is available. .
..
xxx xxx xxx
The proper recourse of the aggrieved party from a decision of the CA is a petition for
review on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the
error subject of the recourse is one of jurisdiction, or the act complained of was
perpetrated by a quasi-judicial officer or agency with grave abuse of discretion
amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved
party is a petition for certiorari under Rule 65 of the said Rules. [emphases supplied;
citations omitted]
In sum, PTA had the remedy of appealing the RTC decision to the CA and, thereafter, to
us. Under the circumstances, we find no adequate reason to justify the elevation of this
case to the CA and then to us, under Rule 65 of the Rules of Court. IHCSTE
WHEREFORE, premises considered, we hereby DISMISS the petition for certiorari. No
costs.
SO ORDERED.
Carpio, Perez, Sereno and Reyes, JJ., concur.
||| (Philippine Tourism Authority v. Philippine Golf Development & Equipment, Inc., G.R.
No. 176628 (Resolution), [March 19, 2012], 684 PHIL 429-437)

41. City of Angeles v CA

THIRD DIVISION
[G.R. No. 97882. August 28, 1996.]
THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his capacity as
MAYOR of Angeles City,
and
the
SANGGUNIANG
PANLUNGSOD OF THE CITY OF ANGELES, petitioners, vs. COURT OF APPEALS and
TIMOG SILANGAN DEVELOPMENT CORPORATION, respondents.
Quiason Makalintal Barot Torres Ibarra & Sison for petitioners.
Angara Abello Concepcion Regala & Cruz for private respondent.
SYLLABUS
1. CIVIL LAW; PROPERTY; [PD 957 AS AMENDED BY PD 1216] SUBDIVISION DEVELOPERS
ARE LEGALLY BOUND TO DONATE OPEN SPACE TO THE LOCAL GOVERNMENT. Pursuant
to the wording of Sec. 31 of P.D. 957 as amended by P.D. No. 1216, private respondent is
under legal obligation to donate the open space exclusively allocated for parks,
playgrounds, and recreational use to the petitioner. This can be clearly established by
referring to the original provision of Sec. 31 of P.D. 957. It will be noted that under the
original provision, it was optional on the part of the owner or developer to donate the
roads and open spaces found within the project to the city or municipality where the
project is located. Elsewise stated, there was no legal obligation to make the donation.
However, said Sec. 31 as amended now states in its last paragraph that it is no longer
optional on the part of the subdivision owner/developer to donate the open space for
parks and playgrounds, rather there is now a legal obligation to donate the same.
Although there is a proviso that the donation of the parks and playgrounds may be made
to the homeowners association of the project with the consent of the city or municipality
concerned, nonetheless, the owner/developer is still obligated under the law to donate.
Such option does not change the mandatory character of the provision. The donation has
to be made regardless of which donee is picked by the owner/developer. The consent
requirement before the same can be donated to the homeowners' association
emphasizes this point. ADEHTS
2. ID.; ID.; ID.; ID.; THE PERCENTAGE OF AREA FOR PARKS AND PLAYGROUND IS TO BE
BASED ON THE GROSS AREA OFTHE SUBDIVISION. The language of Section 31 of P.D.
957 as amended by Section 2 of P.D. 1216 is wanting in clarity and exactitude, but it can
be easily inferred that the phrase "gross area" refers to the entire subdivision area. The
said phrase was used four times in the same section in two sentences, the first of which

reads: ". . . For subdivision projects one (1) hectare or more, the owner or developer shall
reserve thirty per cent (30%) of the gross area for open space. . . . ." Here, the phrase
"30% of the gross area" refers to the total area of the subdivision, not of the open space.
Otherwise, the definition of "open space" would be circular. Thus, logic dictates that the
same basis be applied in the succeeding instances where the phrase "open space" is
used, i.e., "9% of the gross area. . . 7% of gross area. . . 3.5% of gross area. . ."
Moreover, we agree with petitioners that construing the 3.5% to 9% as applying to
the totality of the open space would result in far too small an area being devoted for
parks, playgrounds, etc., thus rendering meaningless and defeating the purpose of the
statute. This becomes clear when viewed in the light of the original requirement of P.D.
953 ("Requiring the Planting of Trees in Certain Places, etc."). To our mind, it is clear
that P.D. 1216 was an attempt to achieve a happy compromise and a realistic balance
between the imperatives of environmental planning and the need to maintain economic
feasibility in subdivision and housing development, by reducing the required area for
parks, playgrounds and recreational uses from thirty percent (30%) to only 3.5% 9% of the entire area of the subdivision.
3. ID.; ID.; ID.; ID.; THE DONEE IS BARRED FROM CONSTRUCTING A BUILDING THEREON;
EXCEPTION. In the case at bar, one of the conditions imposed in the Amended
Deed of Donation is that the donee should build a sports complex on the donated land.
Since P.D. 1216 clearly requires that the 3.5% to 9% of the gross area allotted for parks
and playgrounds is "non-buildable", then the obvious question arises whether or not such
condition was validly imposed and is binding on the donee. It is clear that the "nonbuildable" character applies only to the 3.5% to 9% area set by law. If there is any excess
land over and above the 3.5% to 9% required by the decree, which is also used or
allocated for parks, playgrounds and recreational purposes, it is obvious that such excess
area is not covered by the non-buildability restriction. In the instant case, if there be an
excess, then the donee would not be barred from developing and operating a sports
complex thereon, and the condition in the amended deed would then be considered valid
and binding. To determine if the over 50,000 square meter area donated pursuant to the
amended deed would yield an excess over the area required by the decree, it is
necessary to determine under which density category the Timog Park subdivision falls. If
the subdivision falls under the low density or open market housing category, with 20
family lots or below per gross hectare, the developer will need to allot only 3.5% ofgross
area for parks and playgrounds, and since the donated land constitutes "more than five
(5) percent of the total land area of the subdivision, there would therefore be an
excess of over 1.5% of gross area which would not be non-buildable. Petitioners, on the
other hand, alleged (and private respondent did not controvert) that the subdivision in
question is a "medium-density or economic housing" subdivision based on the
sizes of the family lots donated in the amended deed, for which category the decree
mandates that not less than 7% of gross area be set aside. Since the donated land
constitutes only a little more than 5% of the gross area of the subdivision, which is less
than the area required to be allocated for non-buildable open space, therefore there is no
"excess land" to speak of. This then means that the condition to build a sports complex
on the donated land is contrary to law and should be considered as not imposed. HCaIDS
4. ID.; ID.; MODES OF ACQUIRING OWNERSHIP; DONATION; CONDITIONS MAY BE
IMPOSED THEREON PROVIDED THAT THE SAME IS NOT CONTRARY TO LAW, MORALS,
GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY. The general law on donations

does not prohibit the imposition of conditions on a donation so long as the conditions are
not illegal or impossible. In regard to donations of open spaces, P.D. 1216 itself requires
among other things that the recreational areas to be donated be based, is
aforementioned, on a percentage (3.5%, 7%, or 9%) of the total area of the subdivision
depending on whether the subdivision is low-, medium-, or high-density. It further
declares that such open space devoted to parks, playgrounds and recreational areas are
non-alienable public land and non-buildable. However, there is no prohibition in
either P.D. 957 or P.D. 1216 against imposing conditions on such donation. We hold that
any condition may be imposed in the donation, so long as the same is not contrary to
law, morals, good customs, public order or public policy. The contention of petitioners
that the donation should be unconditional because it is mandatory has no basis in
law. P.D. 1216 does not provide that the donation should be unconditional. To rule that it
should be so is tantamount to unlawfully expanding the provisions of the decree.
5. ID., CONTRACTS; VOID OR INEXISTENT; EFFECT OF PARI-DELICTO. Article
1412 of the Civil Code which provides that: "If the act in which the unlawful or forbidden
cause consists does not constitute a criminal offense, the following rules shall be
observed: "(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtue ofthe contract, or demand the performance of the
other's undertaking" comes into play here. Both petitioners and private respondents are
in violation of P.D. 957 as amended, for donating and accepting a donation of open space
less than that required by law, and for agreeing to build and operate a sports complex on
the non-buildable open space so donated, and petitioners, for constructing a drug
rehabilitation center on the same non-buildable area. Moreover, since the condition to
construct a sports complex on the donated land has previously been shown to be
contrary to law, therefore, stipulation no. 8of the amended deed cannot be implemented
because (1) no valid stipulation of the amended deed had been breached, and (2) it is
highly improbable that the decree would have allowed the return of the donated land for
open space under any circumstance, considering the non-alienable character of such
open space, in the light of the second Whereas clause of P.D. 1216 which declares that
". . . such open spaces, roads, alleys and sidewalks in residential subdivisions are for
public use and are, therefore, beyond the commerce of men." Further, as a
matter of public policy, private respondent cannot be allowed to evade its statutory
obligation to donate the required open space through the expediency of invoking
petitioners' breach ofthe aforesaid condition. It is a familiar principle that the courts will
not aid either party to enforce an illegal contract, but will leave them both where they
find them. Neither party can recover damages from the other arising from
the act contrary to law, or plead the same as a cause of action or as a defense. Each
must bear the consequences of his own acts.
6. REMEDIAL LAW; CIVIL PROCEDURE; EXECUTION OF JUDGMENT; A JUDGMENT
RESTRAINING A PARTY FROM DOING A CERTAIN ACT IS ENFORCEABLE AND SHALL
REMAIN IN FULL FORCE AND EFFECT EVEN PENDING APPEAL. ". . . When a
writof preliminary injunction was sought for by the appellee [private respondent] to
enjoin the appellants [petitioners herein] from further continuing with the
construction of the said center, the latter resisted and took refuge under the
provisions ofPresidential Decree No. 1818 (which prohibits writs of preliminary injunction)
to continue with the construction of the building. Yet, the appellants also
presented City Council Resolution No. 227, which allegedly repealed the previous

Resolution authorizing the City Government to construct a Drug Rehabilitation Center on

the donated property, by 'changing the purpose and usage of the Drug Rehabilitation
Center to Sports Development and Youth Center to make it conform to the Sports
Complex Project therein.' Under this Resolution No. 227, the appellants claimed that they
have abandoned all plans for the construction of the Drug Rehabilitation Center.
Nonetheless, when judgment was finally rendered on February 15, 1989, the appellants
were quick to state that they have not after all abandoned their plans for the center as
they have in fact inaugurated the same on April 15, 1989. In plain and simple terms,
this act is a mockery of our judicial system perperated by the appellants. For them to
argue that the court cannot deal, on their Drug Rehabilitation Center is not only
preposterous but also ridiculous. It is interesting to observe that under the appealed
decision the appellants and their officers, employees and all other persons acting on
their behalf were perpetually enjoined to cease and desist from constructing a Drug
Rehabilitation Center on the donated property. Under Section 4 of Rule 39 of the
Rules of Court, it is provided that: "Section 4 A judgment in an action for injunction
shall not be stayed after its rendition and before an appeal is taken or during the
pendency of an appeal." Accordingly, a judgment restraining a party from doing a
certain act is enforceable and shall remain in full force and effect even pending appeal.
In the case at bar, the cease and desist order therefore still stands. Appellants'
persistence and continued construction and, subsequent, operation of the Drug
Rehabilitation Center violate the express terms of the writ ofinjunction lawfully issued by
the lower court."

7. ADMINISTRATIVE LAW; LOCAL GOVERNMENT CODE; A PUBLIC OFFICIAL IS LIABLE FOR

DAMAGES CAUSED BY HIS ACTDONE WITH MALICE AND IN BAD FAITH OR BEYOND THE
SCOPE OF HIS AUTHORITY OR JURISDICTION. In theory, the costof such demolition, and
the reimbursement of the public funds expended in the construction thereof, should be
borne by the officials of the City of Angeles who ordered and directed such construction.
This Court has time and again ruled that public officials are not immune from damages in
their personal capacities arising from acts done in bad faith. Otherwise stated, a public
official may be liable in his personal capacity for whatever damage he may have caused
by his act done with malice and in bad faith or beyond the scope of his authority or
jurisdiction. In the instant case, the public officials concerned deliberately violated the
law and persisted in their violations, going so far as attempting to deceive the courts by
their pretended change of purpose and usage for the center, and "making a
mockery of the judicial system." Indisputably, said public officials acted beyond the
scope of their authority and jurisdiction and with evident bad faith. However, as noted by
the
trial court,
the
petitioners
mayor
and
members of the
Sangguniang
Panlungsod of Angeles City were sued only in theirofficial capacities, hence, they could
not be held personally liable without first giving them their day in court. Prevailing
jurisprudence holding that public officials are personally liable for damages arising from
illegal acts done in bad faith are premised on said officials having been sued both in their
official and personal capacities. STIcEA
DECISION
PANGANIBAN, J p:

In resolving this petition, the Court addressed the questions of whether a donor of open
spaces in a residential subdivision can validly impose conditions on the said donation;
whether the city government as donee can build and operate a drug rehabilitation center
on the donated land intended for open space; and whether the said donation may be
validly rescinded by the donor.
Petitioners claim they have the right to construct and operate a drug rehabilitation
center on the donated land in question, contrary to the provisions stated in the amended
Deed of Donation.
On the other hand, private respondent, owner/developer of the Timog Park residential
subdivision in Angeles City, opposed the construction and now, the operation of the said
center on the donated land, which is located within said residential subdivision.
Before
us
is
a
petition
for
review
on
certiorari
assailing
the
Decision 1 of the Court of Appeals 2 dated October 31, 1990, which affirmed the
decision 3 of the Regional Trial Court of Angeles City Branch 56, 4 dated February 15,
1989.
The Antecedents
In a Deed of Donation dated March 9, 1984, subsequently superseded by a
Deed of Donation dated September 27, 1984, which in turn was superseded by an
Amended Deed of Donation dated November 26, 1984, private respondent donated to
the City of Angeles, 51 parcels of land situated in Barrio Pampang, City of Angeles, with
an aggregate area of 50,676 square meters, more or less, part of a bigger area also
belonging to private respondent. The amended deed 5 provided, among others, that:
"2. The properties donated shall be devoted and utilized solely for the
site of the Angeles City Sports Center (which excludes cockfighting) pursuant to the
plans to be submitted within six (6) months by the DONEE to the DONOR for the latter's
approval, which approval shall not be unreasonably withheld as long as entire properties
donated are developed as a Sports Complex. Any change or modification in the basic
design or concept of said Sports Center must have the prior written consent of the
DONOR.
3. No commercial building, commercial complex, market or any other similar complex,
mass or tenement (sic) housing/buildings(s) shall be constructed in the properties
donated nor shall cockfighting, be allowed in the premises.
4. The construction of the Sports Center shall commence within a period of one (1) year
from 09 March 1984 and shall be completed within a period of five (5) years from 09
March 1984.
xxx xxx xxx
6. The properties donated (which is
area of the DONOR's subdivision) shall
subdivision and all other lands or areas
1 and Lot 2A of Block 72 and the whole

more than five (5) percent of the total land

constitute the entire open space for DONOR's
previously reserved or designated, including Lot
Block 29 are dispensed with, and rendered free,

as open spaces, and the DONEE hereby agrees to execute and deliver all necessary
consents, approvals, endorsements, and authorizations to effect the foregoing.
7. The properties donated are devoted and described as 'open spaces' of the DONOR's
subdivision, and to this effect, the DONEE, upon acceptance of this donation, releases
the DONOR and/or assumes any and all obligations and liabilities appertaining to the
properties donated.
8. Any substantial breach of the foregoing provisos shall entitle the DONOR to revoke or
rescind this Deed ofDonation, and in such eventuality, the DONEE agrees to vacate and
return the premises, together with all improvements, to the DONOR peacefully without
necessity of judicial action."
On July 19, 1988, petitioners started the construction of a drug rehabilitation center on a
portion of the donated land. Upon learning thereof, private respondent protested such
action for being violative of the terms and conditions of the amended deed and
prejudicial to its interest and to those of its clients and residents. Private respondent also
offered another site for the rehabilitation center. However, petitioners ignored the
protest, maintaining that the construction was not violative of the terms of the donation.
The alternative site was rejected because, according to petitioners, the site was too
isolated and had no electric and water facilities.
On August 8, 1988, private respondent filed a complaint with the Regional Trial Court,
Branch 56, in Angeles City against the petitioners, alleging breach of the conditions
imposed in the amended deed of donation and seeking the revocation of the donation
and damages, with preliminary injunction and/or temporary restraining order to halt the
construction of the said center.
On August 10, 1988, the trial court issued a temporary restraining order to enjoin the
petitioners from further proceeding with the construction of the center, which at that
time was already 40% complete.
However, the trial court denied the prayer for preliminary injunction based on the
prohibition in Presidential Decree No. 1818.
In their Answer with counterclaim, petitioners admitted the commencement of the
construction but alleged inter alia that the conditions imposed in the amended deed
were contrary to Municipal Ordinance No. 1, Series of 1962, otherwise known as the
Subdivision Ordinance of the Municipality of Angeles. 6
On October 15, 1988, private respondent filed a Motion for Partial Summary Judgment on
the ground that the main defenseof the petitioners was anchored on a pure
question of law and that their legal position was untenable.
The petitioners opposed, contending that they had a meritorious defense as (1) private
respondents had no right to dictate upon petitioners what to do with the donated land
and how to do it so long as the purpose remains for public use; and (2) the
cause of action of the private respondent became moot and academic when
the Angeles City Council repealed the resolution providing for the construction of said
drug
rehabilitation
center
and
adopted
a
new
resolution
changing

thepurpose and usage of said center to a 'sports development and youth center' in order
to conform with the sports complex project constructed on the donated land.
On February 15, 1989, the trial court rendered its decision, in relevant part reading as
follows:
". . . the Court finds no inconsistency between the conditions imposed in the
Deeds of Donation
and
the
provision of the
Subdivision
Ordinance of the City of Angeles requiring subdivisions in Angeles City to reserve at least
one (1) hectare in the subdivision as suitable sites known as open spaces for parks,
playgrounds, playlots and/or other areas to be dedicated to public use. On the contrary,
the condition requiring the defendant city of Angeles to devote and utilize the properties
donated to it by the plaintiff for the site of the Angeles City Sports Center conforms with
the requirement in the Subdivision Ordinance that the subdivision of the plaintiff shall be
provided with a playground or playlot, among others.
On the other hand the term "public use" in the Subdivision Ordinance should not be
construed to include a Drug Rehabilitation Center as that would be contrary to the
primary purpose of the Subdivision Ordinance requiring the setting aside of a portion
known as "Open Space" for park, playground and playlots, since these are intended
primarily for the benefit of the residents of the subdivision. While laudable to the general
public, a Drug Rehabilitation Center in a subdivision will be a cause of concern and
constant worry to its residents.
As to the third issue in paragraph (3), the passage of the Ordinance changing the
purpose of the building constructed in the donated properties from a Drug Rehabilitation
Center to a Sports Center comes too late. It should have been passed upon the
demand of the plaintiff to the defendant City of Angeles to stop the construction of the
Drug Rehabilitation Center, not after the complaint was filed.
Besides, in seeking the revocation of the Amended Deed of Donation, plaintiff also relies
on the failure of the defendantCity of Angeles to submit the plan of the proposed Sports
Center within six (6) months and construction of the same within five years from March
9, 1984, which are substantial violations of the conditions imposed in the Amended
Deed ofDonation."

The dispositive portion of the RTC decision reads:

"WHEREFORE, judgment is hereby rendered:
(1) Enjoining defendants, its officers, employees and all persons acting on their behalf to
perpetually cease and desist from constructing a Drug Rehabilitation Center or any other
building or improvement on the Donated Land.
(2) Declaring the amended Deed of Donation revoked and rescinded and ordering
defendants to peacefully vacate and return the Donated Land to plaintiff, together with
all the improvements existing thereon. And,
(3) Denying the award of compensatory or actual and exemplary damages including
attorney's fees.

NO PRONOUNCEMENT AS TO COST."
In March 1989, petitioners filed their Notice of Appeal. On April 15, 1989, while the
appeal was pending, petitioners inaugurated the Drug Rehabilitation Center. 7
On April 26, 1991, the respondent Court rendered the assailed Decision affirming the
ruling of the trial court. Subsequently, the petitioners' motion for reconsideration was
also denied for lack of merit.
Consequently, this Petition for Review.
The Issues
The key issues 8 raised by petitioners may be restated as follows:
I. Whether a subdivision owner/developer is legally bound under Presidential Decree No.
1216 to donate to the cityor municipality the "open space" allocated exclusively for
parks, playground and recreational use.
II. Whether the percentage of the "open space" allocated exclusively for parks,
playgrounds and recreational use is to be based on the "gross area" of the subdivision or
on the total area reserved for "open space".
III. Whether private respondent as subdivision owner/developer may validly impose
conditions in the Amended Deedof Donation regarding the use of the "open space"
allocated exclusively for parks and playgrounds.
IV. Whether or not the construction of the Drug Rehabilitation Center on the donated
"open space" may be enjoined.
V. Whether the donation by respondent as subdivision owner/developer of the "open
space" of its subdivision in favor of petitioner City of Angeles may be revoked for alleged
violation of the Amended Deed of Donation.
Central to this entire controversy is the question of whether the donation of the open
space may be revoked at all.
First Issue: Developer Legally Bound to Donate Open Space
The law involved in the instant case is Presidential Decree No. 1216, dated October 14,
1977, 9 which reads:
"PRESIDENTIAL DECREE NO. 1216
Defining 'Open Space' In Residential Subdivisions And Amending Section
31 Of Presidential Decree No. 957 Requiring Subdivision Owners To Provide Roads, Alleys,
Sidewalks And Reserve Open Space For Parks Or Recreational Use.
WHEREAS, there is a compelling need to create and maintain a healthy environment in
human settlements by providing open spaces, roads, alleys and sidewalks as may be
deemed suitable to enhance the quality of life of the residents therein;

WHEREAS, such open spaces, roads, alleys and sidewalks in residential subdivisions are
for public use and are, therefore, beyond the commerce of men;
WHEREAS, pursuant to Presidential Decree No. 953 at least thirty per cent (30%) of the
total area of a subdivision must be reserved, developed and maintained as open space
for parks and recreational areas, the cost of which will ultimately be borne by the lot
buyers which thereby increase the acquisition price of subdivision lots beyond the
reach of the common mass;
WHEREAS, thirty percent (30%) required open space can be reduced to a level that will
make the subdivision industry viable and the price of residential lots within the
means of the low income group at the same time preserve the environmental and
ecological balance through rational control of land use and proper design of space and
facilities;
WHEREAS, pursuant to Presidential Decree No. 757, government efforts in housing,
including resources, functions and activities to maximize results have been concentrated
into one single agency, namely, the National Housing Authority;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
virtue of the powers vested in me by the Constitution, do hereby order and decree:

by

SECTION 1. For purposes of this Decree, the term 'open space' shall mean an area
reserved exclusively for parks, playgrounds, recreational uses, schools, roads,
places of worship, hospitals, health centers, barangay centers and other similar facilities
and amenities.
SECTION 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as
follows:
'Section 31. Roads, Alleys, Sidewalks and Open Spaces. The owner as developer of a
subdivision shall provide adequate roads, alleys and sidewalks. For subdivision projects
one (1) hectare or more, the owner or developer shall reserve thirty per cent
(30%) of the gross area for open space. Such open space shall have the following
standards allocated exclusively for parks, playgrounds and recreational use:
a. 9% of gross area for high density or social housing (66 to 100 family lots per gross
hectare).
b. 7% of gross area for medium-density or economic housing (21 to 65 family lots per
gross hectare).
c. 3.5% of gross area for low-density or open market housing (20 family lots and below
per gross hectare).
These areas reserved for parks, playgrounds and recreational use shall be non-alienable
public lands, and non-buildable. The plans of the subdivision project shall include tree
planting on such parts of the subdivision as may be designated by the Authority.
Upon their completion certified to by the Authority, the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or municipality and it
shall be mandatory for the local governments to accept provided, however, that the

parks and playgrounds may be donated to the Homeowners Association ofthe project
with the consent of the city or municipality concerned. No portion of the parks and
playgrounds donated thereafter shall be converted to any other purpose or purposes.'
SECTION 3. Sections 2 and 5 of Presidential Decree No. 953 are hereby repealed and
other laws, decrees, executive orders, institutions, rules and regulations or parts thereof
inconsistent with these provisions are also repealed or amended accordingly.
SECTION 4. This Decree shall take effect immediately."
Pursuant to the wording of Sec. 31 of P.D. 957 as above amended by the aforequoted P.D.
No. 1216, private respondent is under legal obligation to donate the open space
exclusively allocated for parks, playgrounds and recreational use to the petitioner.
This can be clearly established by referring to the original provision of Sec. 31 of P.D.
957, which reads as follows:
"SECTION 31. Donation of roads and open spaces to local government. The registered
owner or developer of the subdivision or condominium project, upon completion of the
development of said project may, at his option, convey by way of donation the roads and
open spaces found within the project to the city or municipality wherein the project is
located. Upon acceptance of the donation by the city or municipality concerned, no
portion of the area donated shall thereafter be converted to any other purpose or
purposes unless after hearing, the proposed conversion is approved by the Authority."
(Emphasis supplied)
It will be noted that under the aforequoted original provision, it was optional on the
part of the owner or developer to donate the roads and open spaces found within the
project to the city or municipality where the project is located. Elsewise stated, there
was no legal obligation to make the donation.
However, said Sec. 31 as amended now states in its last paragraph:
"Upon their completion . . ., the roads, alleys, sidewalks and playgrounds shall be
donated by the owner or developer to the city or municipality and it shall be mandatory
for the local government to accept; provided, however, that the parks and playgrounds
may be donated to the Homeowners Association of the project with the
consent of the city or municipality concerned. . . ."
It is clear from the aforequoted amendment that it is no longer optional on the
part of the subdivision owner/developer to donate the open space for parks and
playgrounds; rather there is now a legal obligation to donate the same. Although there is
a proviso that the donation of the parks and playgrounds may be made to the
homeowners association of the project with the consent of the city of municipality
concerned, nonetheless, the owner/developer is still obligated under the law to donate.
Such option does not change the mandatory character of the provision. The donation has
to be made regardless of which donee is picked by the owner/developer. The consent
requirement before the same can be donated to the homeowners' association
emphasizes this point.
Second Issue: Percentage of Area for Parks and Playgrounds

Petitioners contend that the 3.5% to 9% allotted by Sec. 31 for parks, playgrounds and
recreational uses should be based on the gross area of the entire subdivision, and not
merely on the area of the open space alone, as contended by private respondent and as
decided by the respondent Court. 10
The
petitioners
are
correct.
The
language of Section
31 of P.D.
957
as
amended by Section 2 of P.D. 1216 is wanting in clarity and exactitude, but it can be
easily inferred that the phrase "gross area" refers to the entire subdivision area. The said
phrase was used four times in the same section in two sentences, the first of which
reads:
". . . For subdivision projects one (1) hectare or more, the owner or developer shall
reserve thirty per cent (30%) of thegross area for open space. . . ."
Here, the phrase "30% of the gross area" refers to the total area of the subdivision,
not of the open space. Otherwise, the definition of "open space" would be circular. Thus,
logic dictates that the same basis be applied in the succeeding instances where the
phrase "open space" is used, i.e., "9% of gross area . . . 7% of gross area . . .
3.5% of gross area . . ." Moreover, we agree with petitioners that construing the 3.5% to
9% as applying to the totality of the open spacewould result in far too small an area
being devoted for parks, playgrounds, etc., thus rendering meaningless and defeating
the purpose of the statute. This becomes clear when viewed in the light of the original
requirement of P.D. 953 ("Requiring the Planting of Trees in Certain Places, etc."), section
2 of which reads:

"Sec. 2. Every owner of land subdivided into residential/commercial/industrial lots after

the effectivity of this Decree shall reserve, develop and maintain not less than thirty
percent (30%) of the total area of the subdivision, exclusive ofroads, service streets and
alleys, as open space for parks and recreational areas.
No plan for a subdivision shall be approved by the Land Registration Commission or any
office or agency of the government unless at least thirty percent (30%) of the total
area of the subdivision, exclusive of roads, service streets and alleys, is reserved as open
space for parks and recreational areas . . ."
To our mind, it is clear that P.D 1216 was an attempt to achieve a happy compromise and
a realistic balance between the imperatives of environmental planning and the need to
maintain economic feasibility in subdivision and housing development, by reducing the
required area for parks, playgrounds and recreational uses from thirty percent (30%) to
only 3.5% - 9% of the entire area of the subdivision.
Third Issue: Imposition of Conditions in Donation of Open Space
Petitioners argue that since the private respondent is required by law to donate the parks
and playgrounds, it has no right to impose the condition in the Amended
Deed of Donation that "the properties donated shall be devoted and utilized solely for
the site of the Angeles City Sports Center." It cannot prescribe any condition as to the
use of the area donated because the use of the open spaces is already governed by P.D.
1216. In other words, the donation should be absolute. Consequently, the conditions in

the amended deed which were allegedly violated are deemed not written. Such being the
case, petitioners cannot be considered to have committed any violation of the terms and
conditions of the said amended deed, as the donation is deemed unconditional, and it
follows that there is no basis for revocation of the donation.
However, the general law on donations does not prohibit the imposition of conditions on
a donation so long as the conditions are not illegal or impossible. 11
In regard to donations of open spaces, P.D. 1216 itself requires among other things that
the recreational areas to be donated be based, as aforementioned, on a percentage
(3.5%, 7%, or 9%) of the total area of the subdivision depending on whether the
subdivision is low-, medium-, or high-density. It further declares that such open space
devoted to parks, playgrounds and recreational areas are non-alienable public land and
non-buildable. However, there is no prohibition in either P.D. 957 or P.D. 1216 against
imposing conditions on such donation.
We hold that any condition may be imposed in the donation, so long as the same is not
contrary to law, morals, good customs, public order or public policy. The
contention of petitioners that the donation should be unconditional because it is
mandatory has no basis in law. P.D. 1216 does not provide that the donation of the open
space for parks and playgrounds should be unconditional. To rule that it should be so is
tantamount to unlawfully expanding the provisions of the decree. 12
In the case at bar, one of the conditions imposed in the Amended Deed of Donation is
that the donee should build a sports complex on the donated land. Since P.D.
1216 clearly requires that the 3.5% to 9% of the gross area allotted for parks and
playgrounds is "non-buildable", then the obvious question arises whether or not such
condition was validly imposed and is binding on the donee. It is clear that the "nonbuildable" character applies only to the 3.5% to 9% area set by law. If there is any excess
land over and above the 3.5% to 9% required by the decree, which is also used or
allocated for parks, playgrounds and recreational purposes, it is obvious that such excess
area is not covered by the non-buildability restriction. In the instant case, if there be an
excess, then the donee would not be barred from developing and operating a sports
complex thereon, and the condition in the amended deed would then be considered valid
and binding.
To determine if the over 50,000 square meter area donated pursuant to the amended
deed would yield an excess over the area required by the decree, it is necessary to
determine under which density category the Timog Park subdivision falls.
If the subdivision falls under the low density or open market housing category, with 20
family lots or below per gross hectare, the developer will need to allot only 3.5% of gross
area for parks and playgrounds, and since the donated land constitutes "more than five
(5) percent of the total land area of the subdivision, 13 there would therefore be an
excess of over 1.5% ofgross area which would not be non-buildable. Petitioners, on the
other hand, alleged (and private respondent did not controvert) that the subdivision in
question is a "medium-density or economic housing" subdivision based on the
sizes of the family lots donated in the amended deed, 14 for which category the decree
mandates that not less than 7% of gross area be set aside. Since the donated land
constitutes only a little more than 5% of the gross area of the subdivision, which is less

than the area required to be allocated for non-buildable open space, therefore there is no
"excess land" to speak of. This then means that the condition to build a sports complex
on the donated land is contrary to law and should be considered as not imposed.
Fourth Issue: Injunction vs. Construction of the Drug Rehabilitation Center
Petitioners argue that the court cannot enjoin the construction of the drug rehabilitation
center because the decision of the trial court came only after the construction of the
center was completed and, based on jurisprudence, there can be no injunction of events
that have already transpired. 15
Private respondent, on the other hand, counters that the operation of the center is a
continuing act which would clearly cause injury to private respondent, its clients, and
residents of the subdivision, and thus, a proper subject of injunction. 16Equity should
move in to warrant the granting of the injunctive relief if persistent repetition of the
wrong is threatened. 17
In light of Sec. 31 of P.D. 957, as amended, declaring the open space for parks,
playgrounds and recreational area as non-buildable, it appears indubitable that the
construction and operation of a drug rehabilitation center on the land in question is a
continuing violation of the law and thus should be enjoined.
Furthermore, the factual background of this case warrants that this Court rule against
petitioners on this issue. We agree with and affirm the respondent Court's finding that
petitioners committed acts mocking the judicial system. 18
". . . When a writ of preliminary injunction was sought for by the appellee [private
respondent] to enjoin the appellants [petitioners herein] from further continuing with the
construction of the said center, the latter resisted and took refuge under the
provisions of Presidential Decree No. 1818 (which prohibits writs of preliminary
injunction) to continue with the construction of the building. Yet, the appellants also
presented 'City Council Resolution No. 227 which allegedly repealed the previous
Resolution authorizing the City Government to construct a Drug Rehabilitation Center on
the donated property, by 'changing the purpose and usage of the Drug Rehabilitation
Center to Sports Development and Youth Center to make it conform to the Sports
Complex Project therein'. Under this Resolution No. 227, the appellants claimed that they
have abandoned all plans for the construction of the Drug Rehabilitation Center.
Nonetheless, when judgment was finally rendered on February 15, 1989, the appellants
were quick to state that they have not after all abandoned their plans for the center as
they have in fact inaugurated the same on April 15, 1989. In plain and simple terms,
this act is a mockery of our judicial system perpetrated by the appellants. For them to
argue that the court cannot deal on their Drug Rehabilitation Center is not only
preposterous but also ridiculous.
It is interesting to observe that under the appealed decision the appellants and their
officers, employees and all other persons acting on their behalf were perpetually
enjoined to cease and desist from constructing a Drug Rehabilitation Center on the
donated property. Under Section 4 of Rule 39 of the Rules of Court, it is provided that:
"Section 4 A judgment in an action for injunction shall not be stayed after its rendition
and before an appeal is taken or during the pendency of an appeal."

Accordingly, a judgment restraining a party from doing a certain act is enforceable and
shall remain in full force and effect even pending appeal. In the case at bar, the cease
and desist order therefore still stands. Appellants' persistence and continued
construction and, subsequent, operation of the Drug Rehabilitation Center violate the
express terms ofthe writ of injunction lawfully issued by the lower court."
This Court finds no cogent reason to reverse the above mentioned findings of the
respondent court. The allegation of the petitioners that the construction of the center
was finished before the judgment of the trial court was rendered deserves scant
consideration because it is self-serving and is completely unsupported by other
evidence.
The fact remains that the trial court rendered judgment enjoining the construction of the
drug rehabilitation center, revoking the donation and ordering the return of the donated
land. In spite of such injunction, petitioners publicly flaunted their disregard thereof with
the subsequent inauguration of the center on August 15, 1989. The operation of the
center, after inauguration, is even more censurable.
Fifth
Issue:
Revocation of a
Because of Non-compliance With an Illegal Condition

Mandatory

Donation

The private respondent contends that the building of said drug rehabilitation center is
violative of the Amended Deed ofDonation. Therefore, under Article 764 of the New Civil
Code and stipulation no. 8 of the amended deed, private respondent is empowered to
revoke the donation when the donee has failed to comply with any of the conditions
imposed in the deed.

We disagree. Article 1412 of the Civil Code which provides that:

"If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:
"(1) When the fault is on the part of both contracting parties, neither may recover what
he has given by virtueof the contract, or demand the performance of the other's
undertaking;"
comes into play here. Both petitioners and private respondents are in violation of P.D.
957 as amended, for donating and accepting a donation of open space less than that
required by law, and for agreeing to build and operate a sports complex on the nonbuildable open space so donated; and petitioners, for constructing a drug rehabilitation
center on the same non-buildable area.
Moreover, since the condition to construct a sports complex on the donated land has
previously been shown to be contrary to law, therefore, stipulation no. 8 of the amended
deed cannot be implemented because (1) no valid stipulation of the amended deed had
been breached, and (2) it is highly improbable that the decree would have allowed the
return of the donated land for open space under any circumstance, considering the nonalienable character of such open space, in the light of the second Whereas clause of P.D.
1216 which declares that ". . . such open spaces, roads, alleys and sidewalks in

residential subdivisions
commerce of men."

are

for

public

use

and

are, therefore,

beyond

the

Further, as a matter of public policy, private respondent cannot be allowed to evade its
statutory
obligation
to
donate
the
required
open
space
through
the
expediency of invoking petitioners' breach of the aforesaid condition. It is a familiar
principle that the courts will not aid either party to enforce an illegal contract, but will
leave them both where they find them. Neither party can recover damages from the
other arising from the act contrary to law, or plead the same as a cause ofaction or as a
defense. Each must bear the consequences of his own acts. 19
There is therefore no legal basis whatsoever to revoke the donation of the subject open
space and to return the donated land to private respondent. The donated land should
remain with the donee as the law clearly intended such open spaces to be perpetually
part of the public domain, non-alienable and permanently devoted to public use as such
parks, playgrounds or recreation areas.
Removal/Demolition of Drug Rehabilitation Center
Inasmuch as the construction and operation of the drug rehabilitation center has been
established to be contrary to law, the said center should be removed or demolished. At
this juncture, we hasten to add that this Court is and has always been four-square behind
the government's efforts to eradicate the drug scourge in this country. But the end never
justifies the means, and however laudable the purpose of the construction in question,
this Court cannot and will not countenance an outright and continuing violation of the
laws of the land, especially when committed by public officials.
In theory, the cost of such demolition, and the reimbursement of the public funds
expended
in
the
construction
thereof,
should
be
borne
by
the
officials of the City of Angeles who
ordered
and
directed
such
construction.
This Court has time and again ruled that public officials are not immune from damages in
their personal capacities arising from acts done in bad faith. Otherwise stated, a public
official may be liable in his personal capacity for whatever damage he may have caused
by his actdone with malice and in bad faith or beyond the scope of his authority or
jurisdiction. 20 In the instant case, the public officials concerned deliberately violated the
law and persisted in their violations, going so far as attempting to deceive the courts by
their pretended change of purpose and usage for the center, and "making a
mockery of the judicial system". Indisputably, said public officials acted beyond the
scope of their authority and jurisdiction and with evident bad faith. However, as noted by
the
trial court, 21 the
petitioners
mayor
and
members of the
Sangguniang
Panlungsod of Angeles City were sued only in their official capacities, hence, they could
not be held personally liable without first giving them their day in court. Prevailing
jurisprudence 22 holding that public officials are personally liable for damages arising
from illegal acts done in bad faith are premised on said officials having been sued both in
their official and personal capacities.
After due consideration of the circumstances, we believe that the fairest and most
equitable solution is to have the City ofAngeles, donee of the subject open space and,
ostensibly, the main beneficiary of the construction and operation of the proposed drug

rehabilitation center, undertake the demolition and removal of said center, and if
feasible, recover the cost thereof from the city officials concerned.
WHEREFORE, the assailed Decision of the Court of Appeals is hereby MODIFIED as
follows:
(1) Petitioners are hereby ENJOINED perpetually from operating the drug rehabilitation
center or any other such facility on the donated open space.
(2) Petitioner City of Angeles is
ORDERED
to
undertake
the
demolition
and
removal of said drug rehabilitation center within a period of three (3) months from
finality of this Decision, and thereafter, to devote the said open space for public use as a
park, playground or other recreational use.
(3) The Amended Deed of Donation dated November 26, 1984 is hereby declared valid
and subsisting, except that the stipulations or conditions therein concerning the
construction of the Sports Center or Complex are hereby declared void and as if not
imposed, and therefore of no force and effect.
No costs.
SO ORDERED.
||| (City of Angeles v. Court of Appeals, G.R. No. 97882, [August 28, 1996], 329 PHIL 812840)

42. Veterans Manpower and Protective Services Inc. V CA

FIRST DIVISION
[G.R. No. 91359. September 25, 1992.]
VETERANS MANPOWER AND PROTECTIVE SERVICES, INC., petitioner, vs. THE CO
URT OF APPEALS, THE CHIEFOF PHILIPPINE CONSTABULARY and PHILIPPINE
CONSTABULARY SUPERVISORY UNIT FOR SECURITY AND INVESTIGATION
AGENCIES (PC-SUSIA), respondents.
Franciso A. Lava, Jr. and Andresito X. Fornier for petitioner.
SYLLABUS
1. POLITICAL LAW; IMMUNITY FROM SUIT; THE PHILIPPINE CONSTABULARY CHIEF AND
THE PC-SUSIA MAY NOT BE SUED WITHOUT THE CONSENT OF THE STATE. The State
may not be sued without its consent (Article XVI, Section 3, of the 1987 Constitution).
Invoking this rule, the PC Chief and PC-SUSIA contend that, being instrumentalities of the
national government exercising a primarily governmental function of regulating the
organization and operation of private detective, watchmen, or security guard agencies,

said official (the PC Chief) and agency (PC-SUSIA) may not be sued without the
Government's consent, especially in this case because VMPSI's complaint seeks not only
to compel the public respondents to act in a certain way, but worse, because VMPSI
seeks actual and compensatory damages in the sum of P1,000,000.00, exemplary
damages in the same amount, and P200,000.00 as attorney's fees from said public
respondents. Even if its action prospers, the paymentof its monetary claims may not be
enforced because the State did not consent to appropriate the necessary funds for that
purpose.
2. ID.; ID.; PUBLIC OFFICIAL MAY BE SUED IN HIS PERSONAL CAPACITY IF HE ACTS,
AMONG OTHERS BEYOND THE SCOPEOF HIS AUTHORITY; CASE AT BAR. A public official
may sometimes be held liable in his personal or private capacity if he acts in bad faith, or
beyond the scope of his authority or jurisdiction (Shauf vs. Court of Appeals, supra),
however, since the acts for which the PC Chief and PC-SUSIA are being called to account
in this case, were performed by them as part of their official duties, without malice, gross
negligence, or bad faith, no recovery may be had against them in their private
capacities.
3. ID.; ID.; CONSENT TO BE SUED MUST EMANATE FROM A LEGISLATIVE ACT.
Waiver of the State's immunity from suit, being a derogation of sovereignty, will not be
lightly inferred, but must be construed strictissimi juris (Republic vs. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence,
from a legislative act, not from a mere memorandum. Without such consent, the
trial court did not acquire jurisdiction over the public respondents.
4. ID.; ID.; REASONS BEHIND. The state immunity doctrine rests upon reasons of public
policy and the inconvenience and danger which would flow from a different rule. "It is
obvious that public service would be hindered, and public safety endangered, if the
supreme authority could be subjected to suits at the instance of every citizen, and,
consequently, controlled in the use and disposition of the means required for the proper
administration of the government" (Siren vs. U.S. Wall, 152, 19 L. ed. 129, as cited in 78
SCRA 477).
DECISION
GRIO-AQUINO, J p:
This is a petition for review on certiorari of the decision dated August 11,
1989, of the Court of Appeals in CA-G.R. SP No. 15990, entitled "The Chief of Philippine
Constabulary (PC) and Philippine Constabulary Supervisor Unit for Security and
Investigation
Agencies
(PC-SUSIA) vs.
Hon.
Omar
U.
Amin
and Veterans Manpower and Protective Services, Inc.
(VMPSI),"
lifting
the
writ of preliminary injunction which the Regional Trial Court had issued to the PC-SUSIA
enjoining them from committing acts that would result in the cancellation or nonrenewal of the license of VMPSI to operate as a security agency. Cdpr
On March 28, 1988, VMPSI filed a complaint in the Regional Trial Court at Makati, Metro
Manila, praying the court to:

"A. Forthwith issue a temporary restraining order to preserve the status quo, enjoining
the defendants, or any one acting in their place or stead, to refrain from committing acts
that would result in the cancellation or non-renewal ofVMPSI's license;
"B. In due time, issue a writ of preliminary injunction to the same effect;
"C. Render decision and judgment declaring null and void the amendment of Section
4 of R.A. No. 5487, by PD No. 11exempting organizations like PADPAO from the
prohibition that no person shall organize or have an interest in more than one agency,
declaring PADPAO as an illegal organization existing in violation of said prohibition,
without the illegal exemption provided in PD No. 11; declaring null and void Section
17 of R.A. No. 5487 which provides for the issuance ofrules and regulations in
consultation with PADPAO, declaring null and void the February 1, 1982 directive of Col.
Sabas V. Edadas, in the name of the then PC Chief, requiring all private security
agencies/security forces such as VMPSI to join PADPAO as a prerequisite to secure/renew
their licenses, declaring that VMPSI did not engage in 'cut-throat competition' in its
contract with MWSS, ordering defendants PC Chief and PC-SUSIA to renew the
license of VMPSI; ordering the defendants to refrain from further harassing VMPSI and
from threatening VMPSI with cancellations or non-renewal oflicense, without legal and
justifiable cause; ordering the defendants to pay to VMPSI the sum of P1,000,000.00 as
actual and compensatory damages, P1,000,000.00 as exemplary damages, and
P200,000.00 as attorney's fees and expenses oflitigation; and granting such further or
other reliefs to VMPSI as may be deemed lawful, equitable and just." (pp. 55-56, Rollo.)
The constitutionality of the following provisions of R.A. 5487 (otherwise known as the
"Private Security Agency Law"), as amended, is questioned by VMPSI in its
complaint: prLL
"SECTION 4. Who may Organize a Security or Watchman Agency. Any Filipino citizen or
a corporation, partnership, or association, with a minimum capital of five thousand
pesos, one hundred per cent of which is owned and controlled by Filipino citizens may
organize a security or watchman agency: Provided, That no person shall organize or
have an interest in, more than one such agency except those which are already existing
at the promulgation of this Decree: . . ." (As amended by P.D. Nos. 11 and 100.)
"SECTION 17. Rules and Regulations by Chief, Philippine Constabulary. The
Chief of the
Philippine
Constabulary,
in
consultation
with
the
Philippine
Association of Detective and Protective Agency Operators, Inc. and subject to the
provision of existing laws, is hereby authorized to issue the rules and regulations
necessary to carry out the purpose ofthis Act."
VMPSI
alleges
that
the
above
provisions of R.A.
No.
5487 violate
the
provisions of the 1987 Constitution against monopolies, unfair competition and
combinations in restraint of trade, and tend to favor and institutionalize the Philippine
Association ofDetective and Protective Agency Operators, Inc. (PADPAO) which is
monopolistic because it has an interest in more than one security agency.
Respondent VMPSI likewise questions the validity of paragraph 3, subparagraph
(g) of the Modifying Regulations on the Issuance of License to Operate and Private
Security Licenses and Specifying Regulations for the Operation of PADPAO issued by then

PC Chief Lt. Gen. Fidel V. Ramos, through Col. Sabas V. Edades, requiring that "all private
security agencies/company security forces must register as members of any PADPAO
Chapter organized within the Region where their main offices are located . . ." (pp. 5-6,
Complaint in Civil Case No. 88-471). As such membership requirement in PADPAO is
compulsory in nature, it allegedly violates legal and constitutional provisions against
monopolies, unfair competition and combinations in restraint of trade. prcd
On May 12, 1986, a Memorandum of Agreement was executed by PADPAO and the PC
Chief, which fixed the minimum monthly contract rate per guard for eight (8)
hours of security service per day at P2,255.00 within Metro Manila and P2,215.00
outside of Metro Manila (Annex B, Petition).
On June 29, 1987, Odin Security Agency (Odin) filed a complaint with PADPAO accusing
VMPSI of cut-throat
competition
by
undercutting
its
contract
rate
for
security services rendered to the Metropolitan Waterworks and Sewerage System
(MWSS), charging said customer lower than the standard minimum rates provided in the
Memorandum of Agreement dated May 12, 1986.
PADPAO found VMPSI guilty of cut-throat competition, hence, the PADPAO Committee on
Discipline recommended the expulsion of VMPSI from PADPAO and the cancellation of its
license to operate a security agency (Annex D, Petition).
The
PC-SUSIA
made
similar
findings
and
cancellation of VMPSI's license (Annex E, Petition).

likewise

recommended

the

As a result, PADPAO refused to issue a clearance/certificate of membership to VMPSI

when it requested one.
VMPSI wrote the PC Chief on March 10, 1988, requesting him to set aside or disregard
the findings of PADPAO and consider VMPSI's application for renewal of its license, even
without a certificate of membership from PADPAO (Annex F, Petition).
As the PC Chief did not reply, and VMPSI's license was expiring on March 31, 1988, VMPSI
filed Civil Case No. 88-471 in the RTC-Makati, Branch 135, on March 28, 1988 against the
PC Chief and PC-SUSIA. On the same date, the court issued a restraining order enjoining
the PC Chief and PC-SUSIA "from committing acts that would result in the cancellation or
non-renewal of VMPSI's license" (Annex G, Petition).
The PC chief and PC-SUSIA filed a "Motion to Dismiss, Opposition to the
Issuance of Writ of Preliminary Injunction, and Motion to Quash the Temporary
Restraining Order," on the grounds that the case is against the State which had not given
consent thereto and that VMPSI's license already expired on March 31, 1988, hence, the
restraining order or preliminary injunction would not serve any purpose because there
was no more license to be cancelled (Annex H, Petition). Respondent VMPSI opposed the
motion.

On April 18, 1988, the lower court denied VMPSI's application for a writ of preliminary
injunction for being premature because it "has up to May 31, 1988 within which to file its

application for renewal pursuant to Section 2 (e) of Presidential Decree No. 199, . . ." (p.
140, Rollo.). prcd
On May 23, 1988, VMPSI reiterated its application for the issuance of a writ of preliminary
injunction because PC-SUSIA had rejected payment of the penalty for its failure to submit
its application for renewal of its license and the requirements therefor within the
prescribed period in Section 2(e) of the Revised Rules and Regulations Implementing R.A.
5487, as amended by P.D. 1919 (Annex M, Petition).
On June 10, 1998, the RTC-Makati issued a writ of preliminary injunction upon a
bond of P100,000.00, restraining the defendants, or any one acting in their behalf, from
cancelling or denying renewal of VMPSI's license, until further orders from the court.
The PC Chief and PC-SUSIA filed a Motion for Reconsideration of the above order, but it
was denied by the court in its Orderof August 10, 1988 (Annex R, Petition).
On November 3, 1988, the PC Chief and PC-SUSIA sought relief by a petition for certiorari
in the Court of Appeals.
On August 11, 1989, the Court of Appeals granted
portion of its decision reads:

the

petition.

The

dispositive

"WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PC-SUSIA is
hereby GRANTED, and the RTC-Makati, Branch 135, is ordered to dismiss the complaint
filed by respondent VMPSI in Civil Case No. 88-471, insofar as petitioners PC Chief and
PC-SUSIA are concerned, for lack of jurisdiction. The writ of preliminary injunction issued
on June 10, 1988, is dissolved." (pp. 295-296, Rollo.)
VMPSI came to us with this petition for review.
The primary issue in this case is whether or not VMPSI's complaint against the PC Chief
and PC-SUSIA is a suit against the State without its consent.
The answer is yes.
The State may not be sued without its consent (Article XVI, Section 3, of the 1987
Constitution). Invoking this rule, the PC Chief and PC-SUSIA contend that, being
instrumentalities of the national government exercising a primarily governmental
functionof regulating the organization and operation of private detective, watchmen, or
security guard agencies, said official (the PC Chief) and agency (PC-SUSIA) may not be
sued without the Government's consent, especially in this case because VMPSI's
complaint seeks not only to compel the public respondents to act in a certain way, but
worse, because VMPSI seeks actual and compensatory damages in the
sum of P1,000,000.00, exemplary damages in the same amount, and P200,000.00 as
attorney's fees from said public respondents. Even if its action prospers, the
payment of its monetary claims may not be enforced because the State did not consent
to appropriate the necessary funds for that purpose. cdll
Thus did we hold in Shauf vs. Court of Appeals, 191 SCRA 713:
"While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly

performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself although it has not
been formally impleaded." (Emphasis supplied.)
A public official may sometimes be held liable in his personal or private capacity if he
acts in bad faith, or beyond the scope ofhis authority or jurisdiction
(Shauf vs. Court of Appeals, supra), however, since the acts for which the PC Chief and
PC-SUSIA are being called to account in this case, were performed by them as
part of their official duties, without malice, gross negligence, or bad faith, no recovery
may be had against them in their private capacities.
We
agree
with
the
observation of the Court of Appeals that
the
Memorandum of Agreement dated May 12, 1986 does not constitute an implied consent
by the State to be sued:
"The Memorandum of Agreement dated May 12, 1986 was entered into by the PC Chief
in relation to the exercise of a function sovereign in nature. The correct test for the
application of state immunity is not the conclusion of a contract by the State but the
legal nature of the act. This was clearly enunciated in the case of United
States of America vs. Ruiz where the Hon. Supreme Court held:
"'The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the
level of an individual and can thus be deemed to have tacitly given its consent to be
sued only when it enters into a business contract. It does not apply where the contract
relates to the exercise ofits functions.' (136 SCRA 487, 492.)
"In the instant case, the Memorandum of Agreement entered into by the PC Chief and
PADPAO was intended to professionalize the industry and to standardize the
salaries of security guards as well as the current rates of securityservices, clearly, a
governmental function. The execution of the said agreement is incidental to the
purpose of R.A. 5487, as amended, which is to regulate the organization and
operation of private detective, watchmen or security guard agencies. (Emphasis Ours.)"
(pp. 258-259, Rollo.)
Waiver of the State's immunity from suit, being a derogation of sovereignty, will not be
lightly inferred, but must be construedstrictissimi juris (Republic vs. Feliciano, 148 SCRA
424). The consent of the State to be sued must emanate from statutory authority, hence,
from a legislative act, not from a mere memorandum. Without such consent, the
trial court did not acquire jurisdiction over the public respondents.
The state immunity doctrine rests upon reasons of public policy and the inconvenience
and danger which would flow from a different rule. "It is obvious that public service
would be hindered, and public safety endangered, if the supreme authority could be
subjected to suits at the instance of every citizen, and, consequently, controlled in the
use and disposition of the means required for the proper administration of the

government" (Siren vs. U.S. Wall, 152, 19 L. ed. 129, as cited in 78 SCRA 477). In the
same vein, this Court in Republic vs. Purisima (78 SCRA 470, 473) rationalized:
"Nonetheless, a continued adherence to the doctrine of nonsuability is not to be deplored
for as against the inconvenience that may be cause [by] private parties, the
loss of governmental efficiency and the obstacle to the performance of its multifarious
functions are far greater if such a fundamental principle were abandoned and the
availability of judicial remedy were not thus restricted. With the well known propensity on
the part of our people to go tocourt, at the least provocation, the loss of time and energy
required to defend against law suits, in the absence of such a basic principle that
constitutes such an effective obstacles, could very well be imagined." (citing Providence
Washington Insurance Co. vs. Republic, 29 SCRA 598.) LexLib
WHEREFORE, the petition for review is DENIED and the judgment appealed from is
AFFIRMED in toto. No costs.
SO ORDERED
||| (Veterans Manpower and Protective Services, Inc. v. Court of Appeals, G.R. No. 91359,
[September 25, 1992], 288 PHIL 1067-1075)

43.Wylie v Rarang
THIRD DIVISION
[G.R. No. 74135. May 28, 1992.]
M. H. WYLIE and CAPT. JAMES WILLIAMS, petitioners, vs. AURORA I. RARANG and
THE HONORABLE INTERMEDIATE APPELLATE COURT, respondents.
SYLLABUS
1. POLITICAL LAW; STATE IMMUNITY FROM SUIT; BASIS AND JUSTIFICATION FOR
ENFORCEMENT OF DOCTRINE. In the case of United States of America v. Guinto (182
SCRA 644 [1990]), we discussed the principle of the state immunity from suit as follows:
"The rule that a state may not be sued without its consent, now expressed in Article XVI,
Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2. . . . Even without such affirmation, we would still be bound by the generally
accepted principles of international law under the doctrine of incorporation. Under this
doctrine, as accepted by the majority of states, such principles are deemed incorporated
in the law of every civilized state as a condition and consequence of its membership in
the society of nations. Upon its admission to such society, the state is automatically
obligated to comply with these principles in its relations with other states. As applied to
the local state, the doctrine of state immunity is based on the justification given by
Justice Holmes that 'there can be no legal right against the authority which makes the
law on which the right depends.' (Kawanakoa v. Polybank, 205 U.S. 349) There are other
practical reasons for the enforcement of the doctrine. In the case of the foreign state

sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the
maxim par in parem, non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary disposition would, in the language of a
celebrated case, 'unduly vex the peace of nations.' (Da Haber v. Queen of Portugal, 17
Q.B. 171)
2. ID.; ID.; PROHIBITED SUITS; GENERAL RULE; EXCEPTIONS; QUALIFICATION OF RULES.
While the doctrine appears to prohibit only suits against the state without its consent,
it is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself although it has not
been formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the
state may move to dismiss the complaint on the ground that it has been filed without its
consent. The doctrine is sometimes derisively called 'the royal prerogative of dishonesty'
because of the privilege it grants the state to defeat any legitimate claim against it by
simply invoking its non-suability. That is hardly fair, at least in democratic societies, for
the state is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact,
the doctrine is not absolute and does not say the state may not be sued under any
circumstance. On the contrary, the rule says that the state may not be sued without its
consent, which clearly imports that it may be sued if it consents. The consent of the
state to be sued may be manifested expressly or impliedly. Express consent may be
embodied in a general law or a special law. Consent is implied when the state enters into
a contract it itself commences litigation. . . . The above rules are subject to qualification.
Express consent is effected only by the will of the legislature through the medium of a
duly enacted statute. (Republic v. Purisima, 78 SCRA 470) We have held that not all
contracts entered into by the government will operate as a waiver of its non-suability;
distinction must be made between its sovereign and proprietary acts. (United States of
America v. Ruiz, 136 SCRA 487) As for the filing of a complaint by the government,
suability will result only where the government is claiming affirmative relief from the
defendant. (Lim v. Brownell, 107 Phil. 345)"
3. ID.; ID.; IMMUNITY FROM SUIT OF UNITED STATES AND ITS PERSONNEL STATIONED IN
PHILIPPINE TERRITORY; NATURE AND EXTENT; WAIVER OF IMMUNITY. "In the case of
the United States of America, the customary rule of international law on state immunity
is expressed with more specificity in the RP-US Bases Treaty. Article III thereof provides as
follows: 'It is mutually agreed that the United States shall have the rights, power and
authority within the bases which are necessary for the establishment, use, operation and
defense thereof or appropriate for the control thereof and all the rights, power and
authority within the limits of the territorial waters and air space adjacent to, or in the
vicinity of, the bases which are necessary to provide access to them or appropriate for
their control.'" . . . It bears stressing at this point that the above observations do not
confer on the United States of America a blanket immunity for all acts done by it or its
agents in the Philippines. Neither may the other petitioners claim that they are also
insulated from suit in this country merely because they have acted as agents of the
United States in the discharge of their official functions. There is no question that the
United States of America, like any other state, will be deemed to have impliedly waived
its non-suability if it has entered into a contract in its proprietary or private capacity. It is

only when the contract involves its sovereign or governmental capacity that no such
waiver may be implied. This was our ruling in United States of America v. Ruiz, (136
SCRA 487) where the transaction in question dealt with the improvement of the wharves
in the naval installation at Subic Bay. As this was a clearly governmental function, we
held that the contract did not operate to divest the United States of its sovereign
immunity from suit.
4. ID.; ID.; ID.; MERE ASSERTION OF NON-SUABILITY NOT GROUND FOR SUMMARY
DISMISSAL OF CHARGES. The other petitioners in the cases before us all aver they
have acted in the discharge of their official functions as officers or agents of the United
States. However, this is a matter of evidence. The charges against them may not be
summarily dismissed on their mere assertion that their acts are imputable to the United
States of America, which has not given its consent to be sued. In fact, the defendants are
sought to be held answerable for personal torts in which the United States itself is not
involved. If found liable, they and they alone must satisfy the judgment."
5. ID.; ID.; ID.; TORTS AND CRIMES NOT COVERED BY IMMUNITY AGREEMENT. Pursuing
the question further, does the grant of rights, power, and authority to the United States
under the RP-US Bases Treaty cover immunity of its officers from crimes and torts? Our
answer is No. Killing a person in cold blood while on patrol duty, running over a child
while driving with reckless imprudence on an official trip, or slandering a person during
office hours could not possibly be covered by the immunity agreement. Our laws and, we
presume, those of the United States do not allow the commission of crimes in the name
of official duty.
6. ID.; ID.; PUBLIC OFFICIALS PERSONALLY ACCOUNTABLE FOR ULTRA VIRES ACTS;
IMMUNITY FROM SUIT NOT GRANT OF PRIVILEGED STATUS. The case of Chavez v.
Sandiganbayan, 193 SCRA 282 [1991] gives the law on immunity from suit of public
officials: "The general rule is that public officials can be held personally accountable for
acts claimed to have been performed in connection with official duties where they have
acted ultra vires or where there is showing of bad faith. . . . "Moreover, the petitioner's
argument that the immunity proviso under Section 4(a) of Executive Order No. 1 also
extends to him is not well-taken. A mere invocation of the immunity clause does not ipso
facto result in the charges being automatically dropped. . . . . "Immunity from suit cannot
institutionalize irresponsibility and non-accountability nor grant a privileged status not
claimed by any other official of the Republic. "Where the petitioner exceeds his authority
as Solicitor General, acts in bad faith, or, as contended by the private respondent,
'maliciously conspir(es) with the PCGG commissioners in persecuting respondent Enrile
by filing against him an evidently baseless suit in derogation of the latter's constitutional
rights and liberties,' there can be no question that a complaint for damages does not
confer a license to persecute or recklessly injure another. The actions governed by
Articles 19, 20, 21, and 32 of the Civil Code on Human Relations may be taken against
public officers or private citizens alike. . . ."
7. CIVIL LAW; DAMAGES; "FAULT" OR NEGLIGENCE INCLUDES CRIMINAL ACTS. Article
2176 of the Civil Code prescribes a civil liability for damages caused by a person's act or
omission constituting fault or negligence, to wit: "Article 2176. Whoever by act or
omission, causes damage to another, there being fault or negligence is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the provisions of this

Chapter." "Fault" or "negligence" in this Article covers not only acts "not punishable by
law" but also acts criminal in character, whether intentional or voluntary or negligent."
(Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]).
8. ID.; ID.; MORAL DAMAGES RECOVERABLE IN CASE OF LIBEL, SLANDER OR OTHER
DEFAMATION; ALLEGATION OF FORGERY A DEFAMATION. Article 2219(7) of the Civil
Code provides that moral damages may be recovered in case of libel, slander or any
other form of defamation. In effect, the offended party in these cases is given the right to
receive from the guilty party moral damages for injury to his feelings and reputation in
addition to punitive or exemplary damages. (Occena v.Icamina, 181 SCRA 328 [1990]. In
another case, Heirs of Basilisa Justiva v. Gustilo, 7 SCRA 72 [1963], we ruled that the
allegation of forgery of documents could be a defamation, which in the light of Article
2219(7) of the Civil Code could by analogy be ground for payment of moral damages,
considering the wounded feelings and besmirched reputation of the defendants.

9. ID.; ID.; DEFAMATION ESTABLISHED IN CASE AT BAR. Indeed the imputation of theft
contained in the POD dated February 3, 1978 is a defamation against the character and
reputation of the private respondent. Petitioner Wylie himself admitted that the Office of
the Provost Marshal explicitly recommended the deletion of the name Auring if the article
were published. The petitioners, however, were negligent because under their direction
they issued the publication without deleting the name "Auring." Such act or omission
is ultra vires and cannot be part of official duty. It was a tortious act which ridiculed the
private respondent.
DECISION
GUTIERREZ, JR., J p:
The pivotal issue in this petition centers on the extent of the "immunity from suit" of the
officials of a United States Naval Base inside Philippine territory.
In February, 1978, petitioner M. H. Wylie was the assistant administrative officer while
petitioner Capt. James Williams was the commanding officer of the U. S. Naval Base in
Subic Bay, Olongapo City. Private respondent Aurora I. Rarang was an employee in the
Office of the Provost Marshal assigned as merchandise control guard.
M. H. Wylie, in his capacity as assistant administrative officer of the U.S. Naval Station
supervised the publication of the "Plan of the Day" (POD) which was published daily at
the US Naval Base station. The POD featured important announcements, necessary
precautions, and general matters of interest to military personnel. One of the regular
features of the POD was the "action line inquiry." On February 3, 1978, the POD
published, under the "NAVSTA ACTION LINE INQUIRY" the following:
"Question: I have observed that Merchandise Control inspector/inspectress are (sic)
consuming for their own benefit things they have confiscated from Base Personnel. The
observation is even more aggravated by consuming such confiscated items as cigarettes
and food stuffs PUBLICLY. This is not to mention 'Auring' who is in herself, a disgrace to
her division and to the Office of the Provost Marshal. In lieu of this observation, may I

therefore, ask if the head of the Merchandise Control Division is aware of this
malpractice? prcd
Answer: Merchandise Control Guards and all other personnel are prohibited from
appropriating confiscated items for their own consumption or use. Two locked containers
are installed at the Main Gate area for deposit of confiscated items and the OPM
evidence custodian controls access to these containers.
Merchandise Control Guards are permitted to eat their meals at their worksite due to
heavy workload. Complaints regarding merchandise control guards procedure or actions
may be made directly at the Office of the Provost Marshal for immediate and necessary
action. Specific dates and time along with details of suspected violations would be most
appreciated. Telephone 4-3430/4-3234 for further information or to report noted or
suspected irregularities. Exhibits E & E-1." (Rollo, pp. 11-12)
The private respondent was the only one who was named "Auring" in the Office of the
Provost Marshal. That the private respondent was the same "Auring" referred to in the
POD was conclusively proven when on February 7, 1978, petitioner M. H. Wylie wrote her
a letter of apology for the "inadvertent" publication. The private respondent then
commenced an action for damages in the Court of First Instance of Zambales (now
Regional Trial Court) against M. H. Wylie, Capt. James Williams and the U. S. Naval Base.
She alleged that the article constituted false, injurious, and malicious defamation and
libel tending to impeach her honesty, virtue and reputation exposing her to public
hatred, contempt and ridicule; and that the libel was published and circulated in the
English language and read by almost all the U.S. Naval Base personnel. She prayed that
she be awarded P300,000.00 as moral damages exemplary damages which the court
may find proper; and P50,000.00 as attorney's fees.
In response to the complaint, the defendants filed a motion to dismiss anchored on three
grounds: prcd
"1. Defendants M. H. Wylie and Capt. James Williams acted in the performance of their
official functions as officers of the United States Navy and are, therefore, immune from
suit;
2. The United States Naval Base is an instrumentality of the US government which
cannot be sued without its consent; and
3. This Court has no jurisdiction over the subject matter as well as the parties in this
case." (Record on Appeal, pp. 133-134)
The motion was, however, denied.
In their answer, the defendants reiterated the lack of jurisdiction of the court over the
case.
In its decision, the trial court ruled that the acts of defendants M. H. Wylie and Capt.
James Williams were not official acts of the government of the United States of America
in the operation and control of the Base but personal and tortious acts which are
exceptions to the general rule that a sovereign country cannot be sued in the court of
another country without its consent. In short, the trial court ruled that the acts and

omissions of the two US officials were not imputable against the US government but
were done in the individual and personal capacities of the said officials. The trial court
dismissed the suit against the US Naval Base. The dispositive portion of the decision
reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants jointly and severally, as follows:
1) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff
Aurora Rarang the sum of one hundred thousand (100,000.00) pesos by way of moral
and exemplary damages;
2) Ordering defendants M. H. Wylie and Capt. James Williams to pay the plaintiff the sum
of thirty thousand (P30,000.00) pesos by way of attorney's fees and expenses of
litigation; and
3) To pay the costs of this suit.
Counterclaims are dismissed.
Likewise, the suit against the U. S. Naval Base is ordered dismissed." (Record on Appeal,
p. 154)
On appeal, the petitioners reiterated their stance that they are immune from suit since
the subject publication was made in their official capacities as officers of the U.S. Navy.
They also maintained that they did not intentionally and maliciously cause the
questioned publication. LexLib
The private respondent, not satisfied with the amount of damages awarded to her, also
appealed the trial court's decision.
Acting on these appeals, the Intermediate Appellate Court, now Court of Appeals,
modified the trial court's decision, to wit:
"WHEREFORE, the judgment of the court below is modified so that the defendants are
ordered to pay the plaintiff, jointly and severally, the sum of P175,000.00 as moral
damages and the sum of P60,000.00 as exemplary damages. The rest of the judgment
appealed from is hereby affirmed in toto. Costs against the defendants-appellants."
(Rollo, p. 44)
The appellate court denied a motion for reconsideration filed by the petitioners.
Hence, this petition.
In a resolution dated March 9, 1987, we gave due course to the petition.
The petitioners persist that they made the questioned publication in the performance of
their official functions as administrative assistant, in the case of M. H. Wylie, and
commanding officer, in the case of Capt. James Williams of the US Navy assigned to the
U. S. Naval Station, Subic Bay, Olongapo City and were, therefore, immune from suit for
their official actions.

In the case of United States of America v. Guinto (182 SCRA 644 [1990]), we discussed
the principle of the state immunity from suit as follows:
"The rule that a state may not be sued without its consent, now expressed in Article XVI,
Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2."
xxx xxx xxx
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of
every civilized state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to
comply with these principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the justification
given by Justice Holmes that 'there can be no legal right against the authority which
makes the law on which the right depends.' (Kawanakoa v. Polybank, 205 U.S. 349) There
are other practical reasons for the enforcement of the doctrine. In the case of the foreign
state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in
the maxim par in parem, non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. a contrary disposition would, in the language of a
celebrated case, 'unduly vex the peace of nations.' (Da Haber v. Queen of Portugal, 17 Q.
B. 171)
While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself although it has not
been formally impleaded. (Garcia v. Chief of Staff, 16 SCRA 120) In such a situation, the
state may move to dismiss the complaint on the ground that it has been filed without its
consent.
The doctrine is sometimes derisively called 'the royal prerogative of dishonesty' because
of the privilege it grants the state to defeat any legitimate claim against it by simply
invoking its non-suability. That is hardly fair, at least in democratic societies, for the state
is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine
is not absolute and does not say the state may not be sued under any circumstance. On
the contrary, the rule says that the state may not be sued without its consent, which
clearly imports that it may be sued if it consents. LLjur

The consent of the state to be sued may be manifested expressly or impliedly. Express
consent may be embodied in a general law or a special law. Consent is implied when the
state enters into a contract it itself commences litigation.

xxx xxx xxx

The above rules are subject to qualification. Express consent is effected only by the will
of the legislature through the medium of a duly enacted statute. (Republic v. Purisima,
78 SCRA 470) We have held that not all contracts entered into by the government will
operate as a waiver of its non-suability; distinction must be made between its sovereign
and proprietary acts. (United States of America v. Ruiz, 136 SCRA 487) As for the filing of
a complaint by the government, suability will result only where the government is
claiming affirmative relief from the defendant. (Lim v. Brownell, 107 Phil. 345)" (at pp.
652-655).
In the same case we had opportunity to discuss extensively the nature and extent of
immunity from suit of United States personnel who are assigned and stationed in
Philippine territory, to wit:
"In the case of the United States of America, the customary rule of international law on
state immunity is expressed with more specificity in the RP-US Bases Treaty. Article III
thereof provides as follows:
'It is mutually agreed that the United States shall have the rights, power and authority
within the bases which are necessary for the establishment, use, operation and defense
thereof or appropriate for the control thereof and all the rights, power and authority
within the limits of the territorial waters and air space adjacent to, or in the vicinity of,
the bases which are necessary to provide access to them or appropriate for their control.'
The petitioners also rely heavily on Baer v. Tizon, (57 SCRA 1) along with several other
decisions, to support their position that they are not suable in the cases below, the
United States not having waived its sovereign immunity from suit. It is emphasized that
in Baer, the Court held:
'The invocation of the doctrine of immunity from suit of a foreign state without its
consent is appropriate. More specifically, insofar as alien armed forces is concerned, the
starting point is Raquiza v. Bradford, a 1945 decision. In dismissing a habeas corpus
petition for the release of petitioners confined by American army authorities, Justice
Hilado, speaking for the Court, cited Coleman v. Tennessee, where it was explicitly
declared: 'It is well settled that a foreign army, permitted to march through a friendly
country or to be stationed in it, by permission of its government or sovereign, is exempt
from the civil and criminal jurisdiction of the place.' Two years later, in Tubb and
Tedrow v. Griess, this Court relied on the ruling in Raquiza v. Bradford and cited in
support thereof excepts from the works of the following authoritative writers: Vattel,
Wheaton, Hall, Lawrence, Oppenheim, Westlake, Hyde, and McNair and Lauterpacht.
Accuracy demands the clarification that after the conclusion of the Philippine-American
Military Bases Agreement, the treaty provisions should control on such matter, the
assumption being that there was a manifestation of the submission to jurisdiction on the
part of the foreign power whenever appropriate. More to the point is Syquia v. Almeda
Lopez, where plaintiffs as lessors sued the Commanding General of the United States
Army in the Philippines, seeking the restoration to them of the apartment buildings they
owned leased to the United States armed forces station in the Manila area. a motion to
dismiss on the ground of non-suability was filed and upheld by respondent Judge. The
matter was taken to this Court in a mandamus proceeding. It failed. It was the ruling that

respondent Judge acted correctly considering that the 'action must be considered as one
against the U.S. Government.' The opinion of Justice Montemayor continued: 'It is clear
that the courts of the Philippines including the Municipal Court of Manila have no
jurisdiction over the present case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very beginning of the action. The U.S.
Government has not given its consent to the filing of this suit which is essentially against
her, though not in name. Moreover, this is not only a case of a citizen filing a suit against
his own Government without the latter's consent but it is of a citizen filing an action
against a foreign government without said government's consent, which renders more
obvious the lack of jurisdiction of the courts of his country. The principles of law behind
this rule are so elementary and of such general acceptance that we deem it unnecessary
to cite authorities in support thereof.'
xxx xxx xxx
It bears stressing at this point that the above observations do not confer on the United
States of America a blanket immunity for all acts done by it or its agents in the
Philippines. Neither may the other petitioners claim that they are also insulated from suit
in this country merely because they have acted as agents of the United States in the
discharge of their official functions. LLjur
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied. This was our ruling in United
States of Americav. Ruiz, (136 SCRA 487) where the transaction in question dealt with
the improvement of the wharves in the naval installation at Subic Bay. As this was a
clearly governmental function, we held that the contract did not operate to divest the
United States of its sovereign immunity from suit. In the words of Justice Vicente Abad
Santos:
'The traditional rule of immunity excepts a State from being sued in the courts of another
State without its consent or waiver. This rule is a necessary consequence of the
principles of independence and equality of States. However, the rules of International
Law are not petrified; they are constantly developing and evolving. And because the
activities of states have multiplied, it has been necessary to distinguish them - between
sovereign and governmental acts (jure imperii) and private, commercial and proprietary
acts (jure gestionis). The result is that State immunity now extends only to acts jure
imperii. The restrictive application of State immunity is now the rule in the United States,
the United Kingdom and other states in Western Europe.
xxx xxx xxx
The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the level
of an individual and can thus be deemed to have tacitly given its consent to be sued only
when it enters into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are integral part of the naval
base which is devoted to the defense of both the United States and the Philippines,

indisputably a function of the government of the highest order; they are not utilized for
nor dedicated to commercial or business purposes.'
The other petitioners in the cases before us all aver they have acted in the discharge of
their official functions as officers or agents of the United States. However, this is a matter
of evidence. The charges against them may not be summarily dismissed on their mere
assertion that their acts are imputable to the United States of America, which has not
given its consent to be sued. In fact, the defendants are sought to be held answerable for
personal torts in which the United States itself is not involved. If found liable, they and
they alone must satisfy the judgment." (At pp. 655-658)
In the light of these precedents, we proceed to resolve the present case.
The POD was published under the direction and authority of the commanding officer, U.S.
Naval Station Subic Bay. The administrative assistant, among his other duties, is tasked
to prepare and distribute the POD. On February 3, 1978, when the questioned article was
published in the POD, petitioner Capt. James Williams was the commanding officer while
petitioner M.H. Wylie was the administrative assistant of the US Naval Station of Subic
bay.
The NAVSTA ACTION LINE INQUIRY is a regular feature of the POD. It is a telephone
answering device in the office of the Administrative Assistant. The Action Line is intended
to provide personnel access to the Commanding Officer on matters they feel should be
brought to his attention for correction or investigation. The matter of inquiry may be
phoned in or mailed to the POD. (TSN, September 9, 1980, pp. 12-13, Jerry Poblon)
According to M. H. Wylie, the action line naming "Auring" was received about three (3)
weeks prior to its being published in the POD on February 3, 1978. It was forwarded
to Rarang's office of employment, the Provost Marshal, for comment. The Provost
Marshal office's response ". . . included a short note stating that if the article was
published, to remove the name." (Exhibit 8-A, p. 5) The Provost Marshal's response was
then forwarded to the executive officer and to the commanding officer for approval. The
approval of the commanding officer was forwarded to the office of the Administrative
Assistant for inclusion in the POD. A certain Mrs. Dologmodin, a clerk typist in the office
of the Administrative Assistant prepared the smooth copy of the POD. Finally, M.
H. Wylie, the administrative assistant signed the smooth copy of the POD but failed to
notice the reference to "Auring" in the action line inquiry. (Exh. 8-A, pp. 4-5, Questions
Nos. 14-15)

There is no question, therefore, that the two (2) petitioners actively participated in
screening the features and articles in the POD as part of their official functions. Under
the rule that U.S. officials in the performance of their official functions are immune from
suit, then it should follow that the petitioners may not be held liable for the questioned
publication.
It is to be noted, however, that the petitioners were sued in their personal capacities for
their alleged tortious acts in publishing a libelous article.
The question, therefore, arises are American naval officers who commit a crime or
tortious act while discharging official functions still covered by the principle of state

immunity from suit? Pursuing the question further, does the grant of rights, power, and
authority to the United States under the RP-US Bases Treaty cover immunity of its
officers from crimes and torts? Our answer is No.
Killing a person in cold blood while on patrol duty, running over a child while driving with
reckless imprudence on an official trip, or slandering a person during office hours could
not possibly be covered by the immunity agreement. Our laws and, we presume, those of
the United States do not allow the commission of crimes in the name of official duty.
The case of Chavez v. Sandiganbayan, 193 SCRA 282 [1991] gives the law on immunity
from suit of public officials:
"The general rule is that public officials can be held personally accountable for acts
claimed to have been performed in connection with official duties where they have
acted ultra vires or where there is showing of bad faith. LLphil
xxx xxx xxx
"Moreover, the petitioner's argument that the immunity proviso under Section 4(a)
of Executive Order No. 1 also extends to him is not well-taken. A mere invocation of the
immunity clause does not ipso facto result in the charges being automatically dropped.
"In the case of Presidential Commission on Good Government v. Pea (159 SCRA 556
[1988] then Chief Justice Claudio Teehankee, added a clarification of the immunity
accorded PCGG officials under Section 4(a) of Executive Order No. 1 as follows:
"'With respect to the qualifications expressed by Mr. Justice Feliciano in his separate
opinion, I just wish to point out two things: First, the main opinion does not claim
absolute immunity for he members of the Commission. The cited section of Executive
Order No. 1 provides the Commission's members immunity from suit thus: 'No civil action
shall lie against the Commission or any member thereof for anything done or omitted in
the discharge of the task contemplated by this order.' No absolute immunity like that
sought by Mr. Marcos in hisConstitution for himself and his subordinates is herein
involved. It is understood that the immunity granted the members of the Commission by
virtue of the unimaginable magnitude of its task to recover the plundered wealth and the
State's exercise of police power was immunity from liability for damages in the official
discharge of the task granted the members of the Commission much in the same
manner that judges are immune from suit in the official discharge of the functions of
their office. . . . (at pp. 581-582).
xxx xxx xxx
"Immunity from suit cannot institutionalize irresponsibility and non-accountability nor
grant a privileged status not claimed by any other official of the Republic. (id., at page
586)
"Where the petitioner exceeds his authority as Solicitor General, acts in bad faith, or, as
contended by the private respondent, 'maliciously conspir(es) with the PCGG
commissioners in persecuting respondent Enrile by filing against him an evidently
baseless suit in derogation of the latter's constitutional rights and liberties' (Rollo, p.
417), there can be no question that a complaint for damages does not confer a license to

persecute or recklessly injure another. The actions governed by Articles 19, 20, 21 and
32 of the Civil Code on Human Relations may be taken against public officers or private
citizens alike. . . ." (pp. 289-291).
We apply the same ruling to this case.
The subject article in US Newsletter POD dated February 3, 1978 mentions a certain
"Auring" as ". . . a disgrace to her division and to the Office of the Provost Marshal." The
same article explicitly implies that Auring was consuming and appropriating for herself
confiscated items like cigarettes and foodstuffs. There is no question that the Auring
alluded to in the Article was the private respondent as she was the only Auring in the
Office of the Provost Marshal. Moreover, as a result of this article, the private respondent
was investigated by her supervisor. Before the article came out, the private respondent
had been the recipient of commendations by her superiors for honesty in the
performance of her duties.
It may be argued that Captain James Williams as commanding officer of the naval base is
far removed in the chain of command from the offensive publication and it would be
asking too much to hold him responsible for everything which goes wrong on the base.
This may be true as a general rule. In this particular case, however, the records show
that the offensive publication was sent to the commanding officer for approval and he
approved it. The factual findings of the two courts below are based on the records. The
petitioners have shown no convincing reasons why our usual respect for the findings of
the trial court and the respondent court should be withheld in this particular case and
why their decisions should be reversed.
Article 2176 of the Civil Code prescribes a civil liability for damages caused by a person's
act or omission constituting fault or negligence, to wit:
"Article 2176. Whoever by act or omission, causes damage to another, there being fault
or negligence is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter."
"Fault" or "negligence" in this Article covers not only acts "not punishable by law" but
also acts criminal in character, whether intentional or voluntary or negligent."
(Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]).
Moreover, Article 2219(7) of the Civil Code provides that moral damages may be
recovered in case of libel, slander or any other form of defamation. In effect, the
offended party in these cases is given the right to receive from the guilty party moral
damages for injury to his feeling and reputation in addition to punitive or exemplary
damages. (Occena v. Icamina, 181 SCRA 328 [1990]. In another case, Heirs of Basilisa
Justiva v. Gustilo, 7 SCRA 72 [1963], we ruled that the allegation of forgery of documents
could be a defamation, which in the light of Article 2219(7) of the Civil Code could by
analogy be ground for payment of moral damages, considering the wounded feelings
and besmirched reputation of the defendants. LLjur
Indeed the imputation of theft contained in the POD dated February 3, 1978 is a
defamation against the character and reputation of the private respondent.
Petitioner Wylie himself admitted that the Office of the Provost Marshal explicitly

recommended the deletion of the name Auring if the article were to be published. The
petitioners, however, were negligent because under their direction they issued the
publication without deleting the name "Auring". Such act or omission is ultra vires and
cannot be part of official duty. it was a tortious act which ridiculed the private
respondent. As a result of the petitioner's act, the private respondent, according to the
record, suffered besmirched reputation, serious anxiety, wounded feeling and social
humiliation, specially so, since the article was baseless and false. The petitioners, alone,
in their personal capacities are liable for the damages they caused the private
respondent.
WHEREFORE, the petition is hereby DISMISSED. The questioned decision and resolution
of the then Intermediate Appellate Court, now Court of Appeals, are AFFIRMED.
Bidin, Davide, Jr. and Romero, JJ., concur.
||| (Wylie v. Rarang, G.R. No. 74135, [May 28, 1992])

44. Republic v Sandoval

EN BANC
[G.R. No. 84607. March 19, 1993.]
REPUBLIC OF THE PHILIPPINES, GEN. RAMON MONTANO, GEN. ALFREDO LIM,
GEN. ALEXANDER AGUIRRE, COL. EDGAR DULA TORRES, COL. CEZAR
NAZARENO, MAJ. FILEMON GASMEN, PAT. NICANOR ABANDO, PFC SERAPIN
CEBU, JR., GEN. BRIGIDO PAREDES, COL. ROGELIO MONFORTE, PFC ANTONIO
LUCERO, PAT. JOSE MENDIOLA, PAT. NELSON TUAZON, POLICE CORPORAL
PANFILO ROGOS, POLICE LT. JUAN B. BELTRAN, PAT. NOEL MANAGBAO, MARINE
THIRD CLASS TRAINEE (3CT) NOLITO NOGATO, 3CT ALEJANDRO B. NAGUIO, JR.,
EFREN ARCILLAS, 3CT AGERICO LUNA, 3CT BASILIO BORJA, 3CT MANOLITO
LUSPO, 3CT CRISTITUTO GERVACIO, 3CT MANUEL DELA CRUZ, JR., MARINE
(CDC) BN., (CIVIL DISTURBANCE CONTROL), MOBILE DISPERSAL TEAM (MDT),
LT. ROMEO PAQUINTO, LT. LAONGLAANG GOCE, MAJ. DEMETRIO DE LA CRUZ,
POLICE CAPTAIN RODOLFO NAVAL, JOHN DOE, RICHARD DOE, ROBERTO DOE
AND OTHER DOES,petitioners, vs. HON. EDILBERTO G. SANDOVAL, Regional Trial
Court of Manila, Branch IX, ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ,
MYRNA BAUTISTA, CIPRIANA EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ,
NEMESIO LAKINDANUM, PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA,
RONALDO CAMPOMANES AND CARMENCITA ARDONI VDA. DE CAMPOMANES,
ROGELIO DOMUNICO, in their capacity as heirs of the deceased (ROBERTO C.
CAYLAO, SONNY "BOY" PEREZ, DIONESIO BAUTISTA, DANTE EVANGELIO, ADELFA
ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO)
respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO,
FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA,
ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO
LABAMBA, JR., EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO
TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO,
BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY,

JOSE PERRAS, TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS,

FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA,
ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO
TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA
ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO,
FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS
SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO
SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO,
ARMANDO MATIENZO, CARLO MEDINA, LITO NOVENARIO, and ROSELLA
ROBALE, respondents.
[G.R. No. 84645. March 19, 1993.]
ERLINDA C. CAYLAO, ANATALIA ANGELES PEREZ, MYRNA BAUTISTA, CIPRIANA
EVANGELIO, ELMA GRAMPA, AMELIA GUTIERREZ, NEMESIO LAKINDANUM,
PURITA YUMUL, MIGUEL ARABE, TERESITA ARJONA, RONALDO CAMPOMANES
AND CARMENCITA ARDONI VDA. DE CAMPOMANES, ROGELIO DOMUNICO, in
their capacity as heirs of the deceased (ROBERTO C. CAYLAO, SONNY "BOY"
PEREZ, DIONESIO BAUTISTA, DANTE EVANGELIO, RODRIGO GRAMPA, ANGELITO
GUTIERREZ, BERNABE LAKINDANUM, ROBERTO YUMUL, LEOPOLDO ALONZO,
ADELFA ARIBE, DANILO ARJONA, VICENTE CAMPOMANES, RONILO DOMUNICO)
respectively; and (names of sixty-two injured victims) EDDIE AGUINALDO,
FELICISIMO ALBASIA, NAPOLEON BAUTISTA, DANILO CRUZ, EDDIE MENSOLA,
ALBERT PITALBO, VICENTE ROSEL, RUBEN CARRIEDO, JOY CRUZ, HONORIO
LABAMBA, JR. EFREN MACARAIG, SOLOMON MANALOTO, ROMEO DURAN, NILO
TAGUBAT, JUN CARSELLAR, JOEY CLEMENTE, GERARDO COYOCA, LUISITO DACO,
BENJAMIN DELA CRUZ, ARTHUR FONTANILLA, WILSON GARCIA, CARLOS SIRAY,
JOSE PERRAS, TOMAS VALLOS, ARNOLD ENAJE, MARIANITA DIMAPILIS,
FRANCISCO ANGELES, MARCELO ESGUERRA, JOSE FERRER, RODEL DE GUIA,
ELVIS MENDOZA, VICTORINO QUIJANO, JOEY ADIME, RESIENO ADUL, ALBERTO
TARSONA, CARLOS ALCANTARA, MAMERTO ALIAS, EMELITO ALMONTE, BENILDA
ALONUEVO, EMMA ABADILLO, REYNALDO CABALLES, JR., JAIME CALDETO,
FABIAN CANTELEJO, RODRIGO CARABARA, ENRIQUE DELGADO, JUN DELOS
SANTOS, MARIO DEMASACA, FRANCISCO GONZALES, ERNESTO GONZALES,
RAMIRO JAMIL, JUAN LUCENA, PERLITO SALAYSAY, JOHNNY SANTOS, MARCELO
SANTOS, EMIL SAYAO, BAYANI UMALI, REMIGIO MAHALIN, BONG MANLULO,
ARMANDO
MATIENZO,
CARLO
MEDINA,
LITO
NOVENARIO,
ROSELLA
ROBALE, petitioners, vs. REPUBLIC OF THE PHILIPPINES, and HONORABLE
EDILBERTO G. SANDOVAL, Regional Trial Court of Manila, Branch 9, respondents.
SYLLABUS
1. POLITICAL LAW; PRINCIPLE OF STATE'S IMMUNITY FROM SUIT; CONSTRUED. Under
our Constitution the principle of immunity of the government from suit is expressly
provided in Article XVI, Section 3. The principle is based on the very essence of
sovereignty, and on the practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. It also rests on reasons of
public policy that public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every citizen and

consequently controlled in the uses and dispositions of the means required for the proper
administration of the government.
2. ID.; ID.; NOT DEEMED WAIVED WHEN THE GOVERNMENT AUTHORIZES THE
INDEMNIFICATION FOR THE VICTIM OR THROUGH PUBLIC ADDRESSES MADE BY THE
PRESIDENT. Petitioners (Caylao group) advance the argument that the State has
impliedly waived its sovereign immunity from suit. It is their considered view that by the
recommendation made by the Commission for the government to indemnity the heirs
and victims of the Mendiola incident and by the public addresses made by then President
Aquino in the aftermath of the killings, the State has consented to be sued. This is not a
suit against the State with its consent. Firstly, the recommendation made by the
Commission regarding indemnification of the heirs of the deceased and the victims of the
incident by the government does not in any way mean that liability automatically
attaches to the State. It is important to note that A.O. 11 expressly states that the
purpose of creating the Commission was to have a body that will conduct an
"investigation of the disorder, deaths and casualties that took place." In the exercise of
its functions, A.O. 11 provides guidelines, and what is relevant to Our discussion reads:
"1. Its conclusions regarding the existence of probable cause for the commission of any
offense and of the persons probably guilty of the same shall be sufficient compliance
with the rules on preliminary investigation and the charges arising therefrom may be
filed directly with the proper court." In effect, whatever may be the findings of the
Commission, the same shall only serve as the cause of action in the event that any party
decides to litigate his/her claim. Therefore, the Commission is merely a preliminary
venue. The Commission is not the end in itself. Whatever recommendation it makes
cannot in any way bind the State immediately, such recommendation not having become
final and executory. This is precisely the essence of it being a fact-finding body.Secondly,
whatever acts or utterances that then President Aquino may have done or said, the same
are not tantamount to the State having waived its immunity from suit. The President's
act of joining the marchers, days after the incident, does not mean that there was an
admission by the State of any liability. In fact to borrow the words of petitioners (Caylao
group), "it was an act of solidarity by the government with the people." Moreover,
petitioners rely on President Aquino's speech promising that the government would
address the grievances of the rallyists. By this alone, it cannot be inferred that the State
has admitted any liability, much less can it be inferred that it has consented to the suit.
3. ID.; ID.; WHEN AVAILABLE; RULE; CASE AT BAR. Some instances when a suit against
the State is proper are" (1) When the Republic is sued by name; (2) When the suit is
against an unincorporated government agency; (3) When the suit is on its face against a
government officer but the case is such that ultimate liability will belong not to the
officer but to the government. While the Republic in this case is sued by name, the
ultimate liability does not pertain to the government. Although the military officers and
personnel, then party defendants, were discharging their official functions when the
incident occurred, their functions ceased to be official the moment they exceeded their
authority. Based on the Commission findings, there was lack of justification by the
government forces in the use of firearms. Moreover, the members of the police and
military crowd dispersal units committed a prohibited act under B.P. Blg. 880 as there
was unnecessary firing by them in dispersing the marchers.

4. ID.; ID.; CANNOT INSTITUTIONALIZE IRRESPONSIBILITY AND NON-ACCOUNTABILITY

NOR GRANT A PRIVILEGE STATUS NOT CLAIMED BY ANY OTHER OFFICIAL OF
THE REPUBLIC. As early as 1954, this Court has pronounced that an officer cannot
shelter himself by the plea that he is a public agent acting under the color of his office
when his acts are wholly without authority. Until recently in 1991, this doctrine still found
application, this Court saying that immunity from suit cannot institutionalize
irresponsibility and non-accountability nor grant a privileged status not claimed by any
other official of theRepublic. The military and police forces were deployed to ensure that
the rally would be peaceful and orderly as well as to guarantee the safety of the very
people that they are duty-bound to protect. However, the facts as found by the trial court
showed that they fired at the unruly crowd to disperse the latter.
5. ID.; ID.; DOES NOT APPLY WHEN THE RELIEF DEMANDED BY THE SUIT REQUIRES NO
AFFIRMATIVE OFFICIAL ACTION ON THE PART OF THE STATE NOR THE AFFIRMATIVE
DISCHARGE OF ANY OBLIGATION WHICH BELONGS TO THE STATE IN ITS POLITICAL
CAPACITY. While it is true that nothing is better settled than the general rule that a
sovereign state and its political subdivisions cannot be sued in the courts except when it
has given its consent, it cannot be invoked by both the military officers to release them
from any liability, and by the heirs and victims to demand indemnification from the
government. The principle of state immunity from suit does not apply, as in this case,
when the relief demanded by the suit requires no affirmative official action on the part of
the State nor the affirmative discharge of any obligation which belongs to the State in its
political capacity, even though the officers or agents who are made defendants claim to
hold or act only by virtue of a title of the state and as its agents and servants . This Court
has made it quite clear that even a "high position in the government does not confer a
license to persecute or recklessly injure another."

DECISION
CAMPOS, JR., J p:
People may have already forgotten the tragedy that transpired on January 22, 1987. It is
quite ironic that then, some journalists called it a Black Thursday, as a grim reminder to
the nation of the misfortune that befell twelve (12) rallyists. But for most Filipinos now,
the Mendiola massacre may now just as well be a chapter in our history books. For those
however, who have become widows and orphans, certainly they would not settle for just
that. They seek retribution for the lives taken that will never be brought back to life
again. LLjur
Hence, the heirs of the deceased, together with those injured(Caylao group), instituted
this petition, docketed as G.R. No. 84645, under Section 1 of Rule 65 of the Rules of
Court, seeking the reversal and setting aside of the Orders of respondent
Judge Sandoval, 1 dated May 31 and August 8, 1988, dismissing the complaint for
damages of herein petitioners against theRepublic of the Philippines in Civil Case. No. 8843351.

Petitioner, the Republic of the Philippines, through a similar remedy, docketed as G.R. No.
84607, seeks to set aside the Order of respondent Judge dated May 31, 1988, in Civil
Case No. 88-43351 entitled "Erlinda Caylao, et al. vs. Republic of the Philippines, et al."
The pertinent portion of the questioned Order 2 dated May 31, 1988, reads as follows:
"With respect however to the other defendants, the impleaded Military Officers, since
they are being charged in their personal and official capacity, and holding them liable, if
at all, would not result in financial responsibility of the government, the principle of
immunity from suit can not conveniently and correspondingly be applied to them.
WHEREFORE, the case as against the defendant Republic of the Philippines is hereby
dismissed. As against the rest of the defendants the motion to dismiss is denied. They
are given a period of ten (10) days from receipt of this order within which to file their
respective pleadings."
On the other hand, the Order 3 , dated August 8, 1988, denied the motions filed by both
parties, for a reconsideration of the abovecited Order, respondent Judge finding no
cogent reason to disturb the said order.
The massacre was the culmination of eight days and seven nights of encampment by
members of the militant Kilusang Magbubukid sa Pilipinas (KMP) at the then Ministry
(now Department) of Agrarian Reform (MAR) at the Philippine Tobacco Administration
Building along Elliptical Road in Diliman, Quezon City.
The farmers and their sympathizers presented their demands for what they called
"genuine agrarian reform". The KMP, led by its national president, Jaime Tadeo,
presented their problems and demands, among which were: (a) giving lands for free to
farmers; (b) zero retention of lands by landlords; and (c) stop amortizations of land
payments.
The dialogue between the farmers and the MAR officials began on January 15, 1987. The
two days that followed saw a marked increase in people at the encampment. It was only
on January 19, 1987 that Jaime Tadeo arrived to meet with then Minister Heherson
Alvarez, only to be informed that the Minister can only meet with him the following day.
On January 20, 1987, the meeting was held at the MAR conference room. Tadeo
demanded that the minimum comprehensive land reform program be granted
immediately. Minister Alvarez, for his part, can only promise to do his best to bring the
matter to the attention of then President Aquino, during the cabinet meeting on January
21, 1987.
Tension mounted the following day. The farmers, now on their seventh day of
encampment, barricaded the MAR premises and prevented the employees from going
inside their offices. They hoisted the KMP flag together with the Philippine flag.
At around 6:30 p.m. of the same day, Minister Alvarez, in a meeting with Tadeo and his
leaders, advised the latter to instead wait for the ratification of the 1987
Constitution and just allow the government to implement its comprehensive land reform
program. Tadeo, however, countered by saying that he did not believe in the Constitution
and that a genuine land reform cannot be realized under a landlord-controlled Congress.
A heated discussion ensued between Tadeo and Minister Alvarez. This notwithstanding,

Minister Alvarez suggested a negotiating panel from each side to meet again the
following day.
On January 22, 1987, Tadeo's group instead decided to march to Malacaang to air their
demands. Before the march started, Tadeo talked to the press and TV media. He uttered
fiery words, the most telling of which were: ". . . inalis namin ang barikada bilang
kahilingan ng ating Presidente, pero kinakailangan alisin din niya ang barikada sa
Mendiola sapagkat bubutasin din namin iyon at dadanak ang dugo . . ." 4
The farmers then proceeded to march to Malacaang, from Quezon Memorial Circle, at
10:00 a.m. They were later joined by members of other sectoral organizations such as
the Kilusang Mayo Uno (KMU), Bagong Alyansang Makabayan (BAYAN), League of Filipino
Students (LFS) and Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML).
At around 1:00 p.m., the marchers reached Liwasang Bonifacio where they held a brief
program. It was at this point that some of the marchers entered the eastern side of the
Post Office Building, and removed the steel bars surrounding the garden. Thereafter,
they joined the march to Malacaang. At about 4:30 p.m., they reached C.M. Recto
Avenue.
In anticipation of a civil disturbance, and acting upon reports received by the Capital
Regional Command (CAPCOM) that the rallyists would proceed to Mendiola to break
through the police lines and rush towards Malacaang, CAPCOM Commander General
Ramon E. Montao inspected the preparations and adequacy of the government forces
to quell impending attacks.
OPLAN YELLOW (Revised) was put into effect. Task Force Nazareno under the command
of Col. Cesar Nazareno was deployed at the vicinity of Malacaang. The civil disturbance
control units of the Western Police District under Police Brigadier General Alfredo S. Lim
were also activated.
Intelligence reports were also received that the KMP was heavily infiltrated by CPP/NPA
elements and that an insurrection was impending. The threat seemed grave as there
were also reports that San Beda College and Centro Escolar University would be forcibly
occupied.
In its report, the Citizens' Mendiola Commission (a body specifically tasked to investigate
the facts surrounding the incident, Commission for short) stated that the government
anti-riot forces were assembled at Mendiola in a formation of three phalanges, in the
following manner:
"(1) The first line was composed of policemen from police stations Nos. 3, 4, 6, 7, 8, 9
and 10 and the Chinatown detachment of the Western Police District. Police Colonel
Edgar Dula Torres, Deputy Superintendent of the Western Police District, was designated
as ground commander of the CDC first line of defense. The WPD CDC elements were
positioned at the intersection of Mendiola and Legarda Streets after they were ordered to
move forward from the top of Mendiola bridge. The WPD forces were in khaki uniform
and carried the standard CDC equipment aluminum shields, truncheons and gas
masks.

(2) At the second line of defense about ten (10) yards behind the WPD policemen were
the elements of the Integrated National Police (INP) Field Force stationed at Fort
Bonifacio from the 61st and 62nd INP Field Force, who carried also the standard CDC
equipment truncheons, shields and gas masks. The INP Field Force was under the
command of Police Major Demetrio dela Cruz.
(3) Forming the third line was the Marine Civil Disturbance Control Battalion composed of
the first and second companies of the Philippine Marines stationed at Fort Bonifacio. The
marines were all equipped with shields, truncheons and M-16 rifles (armalites) slung at
their backs, under the command of Major Felimon B. Gasmin. The Marine CDC Battalion
was positioned in line formation ten (10) yards farther behind the INP Field Force.
At the back of the marines were four (4) 6 x 6 army trucks, occupying the entire width of
Mendiola street, followed immediately by two water cannons, one on each side of the
street and eight fire trucks, four trucks on each side of the street. The eight fire trucks
from Fire District I of Manila under Fire Superintendent Mario C. Tanchanco, were to
supply water to the two water cannons.
Stationed farther behind the CDC forces were the two Mobile Dispersal Teams (MDT)
each composed of two tear gas grenadiers, two spotters, an assistant grenadier, a driver
and the team leader.
In front of the College of the Holy Spirit near Gate 4 of Malacaang stood the VOLVO
Mobile Communications Van of theCommanding General of CAPCOM/INP, General Ramon
E. Montao. At this command post, after General Montao had conferred with TF
Nazareno Commander, Colonel Cezar Nazareno, about the adequacy and readiness of his
forces, it was agreed that Police General Alfredo S. Lim would designate Police Colonel
Edgar Dula Torres and Police Major Conrado Francisco as negotiators with the marchers.
Police General Lim then proceeded to the WPD CDC elements already positioned at the
foot of Mendiola bridge to relay to Police Colonel Torres and Police Major Francisco the
instructions that the latter would negotiate with the marchers." 5 (Emphasis supplied)
The marchers, at around 4:30 p.m., numbered about 10,000 to 15,000. From C.M. Recto
Avenue, they proceeded toward the police lines. No dialogue took place between the
marchers and the anti-riot squad. It was at this moment that a clash occurred and,
borrowing the words of the Commission "pandemonium broke loose". The Commission
stated in its findings, to wit:
". . . There was an explosion followed by throwing of pillboxes, stones and bottles. Steel
bars, wooden clubs and lead pipes were used against the police. The police fought back
with their shields and truncheons. The police line was breached. Suddenly shots were
heard. The demonstrators disengaged from the government forces and retreated
towards C.M. Recto Avenue. But sporadic firing continued from the government forces.

After the firing ceased, two MDTs headed by Lt. Romeo Paguinto and Lt. Laonglaan
Goce sped towards Legarda Street and lobbed tear gas at the remaining rallyist still
grouped in the vicinity of Mendiola. After dispersing the crowd, the two MDTs, together
with the two WPD MDTs, proceeded to Liwasang Bonifacio upon order of General
Montao to disperse the rallyists assembled thereat. Assisting the MDTs were a number

of policemen from the WPD, attired in civilian clothes with white head bands, who were
armed with long firearms." 6 (Emphasis ours)
After the clash, twelve (12) marchers were officially confirmed dead, although according
to Tadeo, there were thirteen (13) dead, but he was not able to give the name and
address of said victim. Thirty-nine (39) were wounded by gunshots and twelve (12)
sustained minor injuries, all belonging to the group of the marchers.
Of the police and military personnel, three (3) sustained gunshot wounds and twenty
(20) suffered minor physical injuries such as abrasions, contusions and the like.
In the aftermath of the confrontation, then President Corazon C. Aquino
issued Administrative Order No. 11, 7 (A.O. 11, for brevity) dated January 22, 1987,
which created the Citizens' Mendiola Commission. The body was composed of retired
Supreme Court Justice Vicente Abad Santos as Chairman, retired Supreme Court Justice
Jose Y. Feria and Mr. Antonio U. Miranda, both as members. A.O. 11 stated that the
Commission was created precisely for the "purpose of conducting an investigation of the
disorder, deaths, and casualties that took place in the vicinity of Mendiola Bridge and
Mendiola Street and Claro M. Recto Avenue, Manila, in the afternoon of January 22,
1987". The Commission was expected to have submitted its findings not later than
February 6, 1987. But it failed to do so. Consequently, the deadline was moved to
February 16, 1987 byAdministrative Order No. 13. Again, the Commission was unable to
meet this deadline. Finally, on February 27, 1987, it submitted its report, in accordance
with Administrative Order No. 17, issued on February 11, 1987.
In its report, the Commission recapitulated its findings, to wit:
"(1) The march to Mendiola of the KMP led by Jaime Tadeo, together with the other
sectoral groups, was not covered by any permit as required under Batas Pambansa Blg.
880, the Public Assembly Act of 1985, in violation of paragraph (a) Section 13,
punishable under paragraph (a), Section 14 of said law.
(2) The crowd dispersal control units of the police and the military were armed with .38
and .45 caliber handguns, and M-16 armalites, which is a prohibited act under paragraph
4(g), Section 13, and punishable under paragraph (b), Section 14 of Batas Pambansa Blg.
880.
(3) The security men assigned to protect the WPD, INP Field Force, the Marines and
supporting military units, as well as the security officers of the police and military
commanders were in civilian attire in violation of paragraph (a), Section 10, Batas
Pambansa 880.
(4) There was unnecessary firing by the police and military crowd dispersal control units
in dispersing the marchers, a prohibited act under paragraph (e), Section 13, and
punishable under paragraph (b), Section 14, Batas Pambansa Blg. 880.
(5) The carrying and use of steel bars, pillboxes, darts, lead pipe, wooden clubs with
spikes, and guns by the marchers as offensive weapons are prohibited acts punishable
under paragraph (g), Section 13, and punishable under paragraph (e), Section 14 of
Batas Pambansa Blg. 880.

(6) The KMP farmers broke off further negotiations with the MAR officials and were
determined to march to Malacaang, emboldened as they are, by the inflammatory and
incendiary utterances of their leader, Jaime Tadeo "bubutasin namin ang barikada.
Dadanak and dugo . . . Ang nagugutom na magsasaka ay gagawa ng sariling butas . . ."
(7) There was no dialogue between the rallyists and the government forces. Upon
approaching the intersections of Legarda and Mendiola, the marchers began pushing the
police lines and penetrated and broke through the first line of the CDC contingent.
(8) The police fought back with their truncheons and shields. They stood their ground but
the CDC line was breached. There ensued gunfire from both sides. It is not clear who
started the firing.
(9) At the onset of the disturbance and violence, the water cannons and tear gas were
not put into effective use to disperse the rioting crowd.
(10) The water cannons and fire trucks were not put into operation because (a) there was
no order to use them; (b) they were incorrectly prepositioned; and (c) they were out of
range of the marchers.
(11) Tear gas was not used at the start of the disturbance to disperse the rioters. After
the crowd had dispersed and the wounded and dead were being carried away, the MDTs
of the police and the military with their tear gas equipment and components conducted
dispersal operations in the Mendiola area and proceeded to Liwasang Bonifacio to
disperse the remnants of the marchers.
(12) No barbed wire barricade was used in Mendiola but no official reason was given for
its absence." 8
From the results of the probe, the Commission recommended 9 the criminal prosecution
of four unidentified, uniformed individuals, shown either on tape or in pictures, firing at
the direction of the marchers. In connection with this, it was the Commission's
recommendation that the National Bureau of Investigation (NBI) be tasked to undertake
investigations regarding the identities of those who actually fired their guns that resulted
in the death of or injury to the victims of the incident. The Commission also suggested
that all the commissioned officers of both the Western Police District and the INP Field
Force, who were armed during the incident, be prosecuted for violation of paragraph 4(g)
of Section 13, Batas Pambansa Blg. 880, the Public Assembly Act of 1985. The
Commission's recommendation also included the prosecution of the marchers, for
carrying deadly or offensive weapons, but whose identities have yet to be established.
As for Jaime Tadeo, the Commission said that he should be prosecuted both for violation
of paragraph (a), Section 13, Batas Pambansa Blg. 880 for holding the rally without a
permit and for violation of Article 142, as amended, of the Revised Penal Code for
inciting to sedition. As for the following officers, namely: (1) Gen. Ramon E. Montao; (2)
Police Gen. Alfredo S. Lim; (3) Police Gen. Edgar Dula Torres; (4) Police Maj. Demetrio
dela Cruz; (5) Col. Cezar Nazareno; and (5) Maj. Felimon Gasmin, for their failure to make
effective use of their skill and experience in directing the dispersal operations in
Mendiola, administrative sanctions were recommended to be imposed. LLpr
The last and the most significant recommendation of the Commission was for the
deceased and wounded victims of the Mendiola incident to be compensated by the

government. It was this portion that petitioners (Caylao group) invoke in their claim for
damages from the government.
Notwithstanding such recommendation, no concrete form of compensation was received
by the victims. Thus, on July 27, 1987, herein petitioners, (Caylao group) filed a formal
letter of demand for compensation from the Government. 10 This formal demand was
indorsed by the office of the Executive Secretary to the Department of Budget and
Management (DBM) on August 13, 1987. The House Committee on Human Rights, on
February 10, 1988, recommended the expeditious payment of compensation to the
Mendiola victims. 11
After almost a year, on January 20, 1988, petitioners (Caylao group) were constrained to
institute an action for damages against the Republic of the Philippines, together with the
military officers, and personnel involved in the Mendiola incident, before the trial court.
The complaint was docketed as Civil Case No. 88-43351.
On February 23, 1988, the Solicitor General filed a Motion to Dismiss on the ground that
the State cannot be sued without its consent. Petitioners opposed said motion on March
16, 1988, maintaining that the State has waived its immunity from suit and that the
dismissal of the instant action is contrary to both the Constitution and the International
Law on Human Rights.
Respondent Judge Sandoval, in his first questioned Order, dismissed the complaint as
against the Republic of the Philippines on the ground that there was no waiver by the
State. Petitioners (Caylao group) filed a Motion for Reconsideration therefrom, but the
same was denied by respondent judge in his Order dated August 8, 1988. Consequently,
Caylao and her co-petitioners filed the instant petition.
On the other hand, the Republic of the Philippines, together with the military officers and
personnel impleaded as defendants in the court below, filed its petition for certiorari.
Having arisen from the same factual beginnings and raising practically identical issues,
the two (2) petitions were consolidated and will therefore be jointly dealt with and
resolved in this Decision.
The resolution of both petitions revolves around the main issue of whether or not the
State has waived its immunity from suit.
Petitioners (Caylao group) advance the argument that the State has impliedly waived its
sovereign immunity from suit. It is their considered view that by the recommendation
made by the Commission for the government to indemnify the heirs and victims of the
Mendiola incident and by the public addresses made by then President Aquino in the
aftermath of the killings, the State has consented to be sued.
Under our Constitution the principle of immunity of the government from suit is expressly
provided in Article XVI, Section 3. The principle is based on the very essence of
sovereignty, and on the practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. 12 It also rests on reasons of
public policy that public service would be hindered, and the public endangered, if the
sovereign authority could be subjected to law suits at the instance of every citizen and

consequently controlled in the uses and dispositions of the means required for the proper
administration of the government. 13

This is not a suit against the State with its consent.

Firstly, the recommendation made by the Commission regarding indemnification of the
heirs of the deceased and the victims of the incident by the government does not in any
way mean that liability automatically attaches to the State. It is important to note that
A.O. 11 expressly states that the purpose of creating the Commission was to have a body
that will conduct an "investigation of the disorder, deaths and casualties that took
place." 14 In the exercise of its functions, A.O. 11 provides guidelines, and what is
relevant to Our discussion reads:
"1. Its conclusions regarding the existence of probable cause for the commission of any
offense and of the persons probably guilty of the same shall be sufficient compliance
with the rules on preliminary investigation and the charges arising therefrom may be
filed directly with the proper court." 15
In effect, whatever may be the findings of the Commission, the same shall only serve as
the cause of action in the event that any party decides to litigate his/her claim.
Therefore, the Commission is merely a preliminary venue. The Commission is not the end
in itself. Whatever recommendation it makes cannot in any way bind the State
immediately, such recommendation not having become final and executory. This is
precisely the essence of it being a fact-finding body.
Secondly, whatever acts or utterances that then President Aquino may have done or
said, the same are not tantamount to the State having waived its immunity from suit.
The President's act of joining the marchers, days after the incident, does not mean that
there was an admission by the State of any liability. In fact to borrow the words of
petitioners (Caylao group), "it was an act of solidarity by the government with the
people". Moreover, petitioners rely on President Aquino's speech promising that the
government would address the grievances of the rallyists. By this alone, it cannot be
inferred that the State has admitted any liability, much less can it be inferred that it has
consented to the suit.
Although consent to be sued may be given impliedly, still it cannot be maintained that
such consent was given considering the circumstances obtaining in the instant case.
Thirdly, the case does not qualify as a suit against the State.
Some instances when a suit against the State is proper are: 16
(1) When the Republic is sued by name;
(2) When the suit is against an unincorporated government agency;
(3) When the suit is on its face against a government officer but the case is such that
ultimate liability will belong not to the officer but to the government.

While the Republic in this case is sued by name, the ultimate liability does not pertain to
the government. Although the military officers and personnel, then party defendants,
were discharging their official functions when the incident occurred, their functions
ceased to be official the moment they exceeded their authority. Based on the
Commission findings, there was lack of justification by the government forces in the use
of firearms. 17 Moreover, the members of the police and military crowd dispersal units
committed a prohibited act under B.P. Blg. 880 18 as there was unnecessary firing by
them in dispersing the marchers. 19
As early as 1954, this Court has pronounced that an officer cannot shelter himself by the
plea that he is a public agent acting under the color of his office when his acts are wholly
without authority. 20 Until recently in 1991, 21 this doctrine still found application, this
Court saying that immunity from suit cannot institutionalize irresponsibility and nonaccountability nor grant a privileged status not claimed by any other official of
the Republic. The military and police forces were deployed to ensure that the rally would
be peaceful and orderly as well as to guarantee the safety of the very people that they
are duty-bound to protect. However, the facts as found by the trial court showed that
they fired at the unruly crowd to disperse the latter.
While it is true that nothing is better settled than the general rule that a sovereign state
and its political subdivisions cannot be sued in the courts except when it has given its
consent, it cannot be invoked by both the military officers to release them from any
liability, and by the heirs and victims to demand indemnification from the government.
The principle of state immunity from suit does not apply, as in this case, when the relief
demanded by the suit requires no affirmative official action on the part of the State nor
the affirmative discharge of any obligation which belongs to the State in its political
capacity, even though the officers or agents who are made defendants claim to hold or
act only by virtue of a title of the state and as its agents and servants. 22 This Court has
made it quite clear that even a "high position in the government does not confer a
license to persecute or recklessly injure another." 23
The inescapable conclusion is that the State cannot be held civilly liable for the deaths
that followed the incident. Instead, the liability should fall on the named defendants in
the lower court. In line with the ruling of this court in Shauf vs. Court of
Appeals, 24 herein public officials, having been found to have acted beyond the scope of
their authority, may be held liable for damages.
WHEREFORE, finding no reversible error and no grave abuse of discretion committed by
respondent Judge in issuing the questioned orders, the instant petitions are hereby
DISMISSED.
SO ORDERED.
||| (Republic v. Sandoval, G.R. No. 84607, 84645, [March 19, 1993])

45. Syquia v Almeda Lopez

FIRST DIVISION
[G.R. No. L-1648. August 17, 1949.]
PEDRO SYQUIA, GONZALO SYQUIA, and LEOPOLDO SYQUIA, petitioners, vs.
NATIVIDAD ALMEDA LOPEZ, Judge of Municipal Court of Manila, CONRADO V.
SANCHEZ, Judge of Court of First Instance of Manila, GEORGE F. MOORE ET
AL., respondents.
Gibbs, Gibbs, Chuidian & Quasha for petitioners.
J. A. Wolfson for respondent.
SYLLABUS
1. COURTS; JURISDICTIONS; CLAIM OF TITLE AND POSSESSION OF PROPERTY BY PRIVATE
CITIZEN; AGAINST OFFICERS AND AGENTS OF THE GOVERNMENT. A private citizen
claiming title and right of possession of a certain property may, to recover possession of
said property, sue as individuals, officers and agents of the Government who are said to
be illegally withholding the same from him, though in doing so, said officers and agents
claim that they are acting for the Government, and the courts may entertain such a suit
although the Government itself is not included as a party-defendant.
2. ID.; ID.; ID.; IF JUDGMENT WILL INVOLVE FINANCIAL LIABILITY OF GOVERNMENT, SUIT
CANNOT PROSPER OR BE ENTERTAINED EXCEPT WITH GOVERNMENT'S CONSENT. But
where the judgment in the suit by the private citizen against the officers and agents of
the government would result not only in the recovery of possession of property in favor
of said citizen but also in a charge against or financial liability to the Government, then
the suit should be regarded as one against the Government itself, and, consequently, it
cannot prosper or be entertained by courts except with the consent of said government
3. ID.; ID.; SUIT BY CITIZEN AGAINST FOREIGN GOVERNMENT WITHOUT LATTER'S
CONSENT; COURTS LACK OF JURISDICTION. This is not only a case of a citizen filing a
suit against his own Government without the latter's consent but it is of citizen filing an
action against a foreign government without said government's consent, which renders
more obvious the lack of jurisdiction of the courts of his country.
DECISION
MONTEMAYOR, J p:
For the purposes of this decision, the following facts gathered from and based on the
pleadings, may be stated. The plaintiffs named Pedro, Gonzalo, and Leopoldo, all
surnamed Syquia, are the undivided joint owners of three apartment buildings situated in
the City of Manila known as the North Syquia Apartments, South Syquia Apartments and
Michel Apartments located at 1131 M. H. del Pilar, 1151 M. H. del Pilar and 1188 A.
Mabini Streets, respectively.
About the middle of the year 1945, said plaintiffs executed three lease contracts, one for
each of the three apartments, in favor of the United States of America at a monthly
rental
of
P1,775
for
the
North Syquia Apartments,
P1,890
for
the
South Syquia Apartments, and P3,335 for the Michel Apartments. The term or period for

the three leases was to be "for the duration of the war and six months thereafter, unless
sooner terminated by the United States of America." The apartment buildings were used
for billeting and quartering officers of the U. S. armed forces stationed in the Manila area.
In March, 1947, when these court proceedings were commenced, George F. Moore was
the Commanding General, United States Army, Philippine Ryukus Command, Manila, and
as Commanding General of the U. S. Army in the Manila Theatre, was said to control the
occupancy of the said apartment houses and had authority in the name of the United
States Government to assign officers of the U. S. Army to said apartments or to order
said officers to vacate the same. Erland A. Tillman was the Chief, Real Estate Division,
Office of the District Engineers, U. S. Army, Manila, who, under the command of
defendant Moore was in direct charge and control of the lease and occupancy of said
three apartment buildings. Defendant Moore and Tillman themselves did not occupy any
part of the premises in question.
Under the theory that said leases terminated six months after September 2, 1945, when
Japan surrendered, plaintiffs sometime in March, 1946, approached the predecessors in
office of defendants Moore and Tillman and requested the return of the apartment
buildings to them, but they were advised that the U. S. Army wanted to continue
occupying the premises. On May 11, 1946, said plaintiffs requested the predecessors in
office of Moore and Tillman to renegotiate said leases, execute lease contracts for a
period of three years and to pay a reasonable rental higher than those payable under the
old contracts. The predecessor in office of Moore in a letter dated June 6, 1946, refused
to execute new leases but advised that "it is contemplated that the United States Army
will vacate subject properties prior to 1 February 1947." Not being in conformity with the
continuance of the old leases because of the alleged comparatively low rentals being
paid thereunder, plaintiffs formally requested Tillman to cancel said three leases and to
release the apartment buildings on June 28, 1946. Tillman refused to comply with the
request. Because of the alleged representation and assurance that the U. S. Government
would vacate the premises before February 1, 1947, the plaintiffs took no further steps to
secure possession of the buildings and accepted the monthly rentals tendered by the
predecessors in office of Moore and Tillman on the basis of a month to month lease
subject to cancellation upon thirty days notice. Because of the failure to comply with the
alleged representation and assurance that the three apartment buildings will be vacated
prior to February 1, 1947, plaintiffs on February 17, 1947, served formal notice upon
defendants Moore and Tillman and 64 other army officers or members of the United
States Armed Forces who were then occupying apartments in said three buildings,
demanding (a) cancellation of said leases; (b) increase in rentals to P300 per month per
apartment effective thirty days from notice; (c) execution of new leases for the three or
any one or two of the said apartment buildings for a definite term, otherwise, (d) release
of said apartment buildings within thirty days of said notice in the event of the failure to
comply with the foregoing demands. The thirty-day period having expired without any of
the defendants having complied with plaintiffs' demands, the plaintiffs commenced the
present action in the Municipal Court of Manila in the form of an action for unlawful
detainer (desahucio) against Moore and Tillman and the 64 persons occupying
apartments in the three buildings for the purpose of having them vacate the apartments,
each occupant to pay P300 a month for his particular apartment from January 1, 1947
until each of said particular defendant had vacated said apartment; to permit plaintiffs
access to said apartment buildings for the purpose of appraising the damages sustained

as the result of the occupancy by defendants; that defendants be ordered to pay

plaintiffs whatever damages may have been actually caused on said property; and that
in the event said occupants are unable to pay said P300 a month and/or the damages
sustained by said property, the defendants Moore and Tillman jointly and severally be
made to pay said monthly rentals of P300 per month per apartment from January 1, 1947
to March 19, 1947, inclusive, and/or the damages sustained by said apartments, and that
defendants Moore and Tillman be permanently enjoined against ordering any additional
parties in the future from entering and occupying said premises.
Acting upon a motion to dismiss filed through the Special Assistant of the Judge
Advocate, Philippine Ryukus Command on the ground that the court had no jurisdiction
over the defendants and over the subject matter of the action, because the real party in
interest was the U. S. Government and not the individual defendants named in the
complaint, and that the complaint did not state a cause of action, the municipal court of
Manila in an order dated April 29, 1947, found that the war between the United States of
America and her allies on one side and Germany and Japan on the other, had not yet
terminated and, consequently, the period or term of the three leases had not yet
expired; that under the well settled rule of International Law, a foreign government like
the United States Government cannot be sued in the courts of another state without its
consent; that it was clear from the allegations of the complaint that although the United
States of America has not been named therein as defendant, it is nevertheless the real
defendant in this case, as the parties named as defendants are officers of the United
States Army and were occupying the buildings in question as such and pursuant to
orders received from that Government. The municipal court dismissed the action with
costs against the plaintiffs with the suggestion or opinion that a citizen of the Philippines,
who feels aggrieved by the acts of the Government of a foreign country has the right to
demand that the Philippine Government study his claim and if found meritorious, take
such diplomatic steps as may be necessary for the vindication of the rights of that
citizen, and that the matter included or involved in the action should be a proper subject
matter of representations between the Government of the United States of America and
the Philippines. Not being satisfied with the order, plaintiffs appealed to the Court of First
Instance of Manila, where the motion to dismiss was renewed.
The Court of First Instance of Manila in an order dated July 12, 1947, affirmed the order
of the municipal court dismissing plaintiffs' complaint. It conceded that under the
doctrine laid down in the case of U. S. vs. Lee, 106 U. S., 196 and affirmed in the case of
Tindal vs. Wesley, 167 U. S., 204, ordinarily, courts have jurisdiction over cases where
private parties sue to recover possession of property being held by officers or agents
acting in the name of the U. S. Government even though no suit can be brought against
the Government itself, but inasmuch as the plaintiffs in the present case are bringing
this action against officers and agents of the U. S. Government not only to recover the
possession of the three apartment houses supposedly being held illegally by them in the
name of their government, but also to collect back rents, not only at the rate agreed
upon in the lease contracts entered into by the United States of America but in excess of
said rate, to say nothing of the damages claimed, as a result of which, a judgment in
these proceedings may become a charge against the U. S. Treasury, then under the rule
laid down in the case of Land vs. Dollar, 91 Law. ed., 1209, the present suit must be
regarded as one against the United States Government itself, which cannot be sued
without its consent, specially by citizens of another country.

The plaintiffs as petitioners have brought this case before us on a petition for a writ of
mandamus seeking to order the Municipal Court of Manila to take jurisdiction over the
case. On October 30, 1947, counsel for respondents AlmedaLopez, Sanchez, Moore and
Tillman filed a motion to dismiss on several grounds. The case was orally argued on
November 26, 1947. On March 4, 1948, petitioners filed a petition which, among other
things,
informed
this
Court
that
the
NorthSyquia Apartments,
the
South Syquia Apartments and Michel Apartments would be vacated by their occupants
on February 29, March 31, and May 31, 1948, respectively. As a matter of fact, said
apartments were actually vacated on the dates already mentioned and were received by
the plaintiffs-owners.
On the basis of this petition and because of the return of the three apartment houses to
the owners, counsel for respondents Almeda Lopez, Sanchez, Moore and Tillman filed a
petition to dismiss the present case on the ground that it is moot. Counsel for the
petitioners answering the motion, claimed that the plaintiffs and petitioners accepted
possession of the three apartment houses, reserving all of their rights against
respondents including the right to collect rents and damages; that they have not been
paid rents since January 1, 1947; that respondents admitted that there is a total of
P109,895 in rentals due and owing to petitioners; that should this case be now
dismissed, the petitioners will be unable to enforce collection; that the question of law
involved in this case may again come up before the courts when conflicts arise between
Filipino civilian property owners and the U. S. Army authorities concerning contracts
entered into in the Philippines between said Filipinos and the U. S. Government.
Consequently, this Court, according to the petitioners, far from dismissing the case,
should decide it, particularly the question of jurisdiction.
On June 18, 1949, through a "petition to amend complaint" counsel for the petitioners
informed this court that petitioners had already received from the U. S. Army Forces in
the Western Pacific the sum of P109,895 as rentals for the three apartments, but with the
reservation that said acceptance should not be construed as jeopardizing the rights of
the petitioners in the case now pending in the courts of the Philippines or their rights
against the U. S. Government with respect to the three apartment houses. In view of this
last petition, counsel for respondents alleging that both respondents Moore and Tillman
had long left the Islands for other Army assignments, and now that both the possession
of the three apartments in question as well as the rentals for their occupation have
already been received by the petitioners renew their motion for dismissal on the ground
that this case has now become moot.
The main purpose of the original action in the municipal court was to recover the
possession of the three apartment houses in question. The recovery of rentals as
submitted by the very counsel for the petitioners was merely incidental to the main
action. Because the prime purpose of the action had been achieved, namely, the
recovery of the possession of the premises, apart from the fact that the rentals
amounting to P109,895 had been paid to the petitioners and accepted by them though
under reservations, this Court may now well dismiss the present proceedings on the
ground that the questions involved therein have become academic and moot. Counsel
for the petitioners however, insists that a decision be rendered on the merits, particularly
on the question of jurisdiction of the municipal court over the original action, not only for

the satisfaction of the parties involved but also to serve as a guide in future cases
involving cases of similar nature such as contracts of lease entered into between the
Government of the United States of America on one side and Filipino citizens on the
other regarding properties of the latter. We accept the suggestion of petitioners and shall
proceed to discuss the facts and law involved and rule upon them.
We shall concede as correctly did the Court of First Instance, that following the doctrine
laid down in the cases of U. S. vs. Lee and U. S. vs. Tindal, supra, a private citizen
claiming title and right of possession of a certain property may, to recover possession of
said property, sue as individuals, officers and agents of the Government who are said to
be illegally withholding the same from him, though in doing so, said officers and agents
claim that they are acting for the Government, and the courts may entertain such a suit
altho the Government itself is not included as a party-defendant. Of course, the
Government is not bound or concluded by the decision. The philosophy of this ruling is
that unless the courts are permitted to take cognizance and to assume jurisdiction over
such a case, a private citizen would be helpless and without redress and protection of his
rights which may have been invaded by the officers of the government professing to act
in its name. In such a case the officials or agents asserting rightful possession must
prove and justify their claim before the courts, when it is made to appear in the suit
against them that the title and right of possession is in the private citizen. However, and
this is important, where the judgment in such a case would result not only in the
recovery of possession of the property in favor of said citizen but also in a charge against
or financial liability to the Government, then the suit should be regarded as one against
the government itself, and, consequently, it cannot prosper or be validly entertained by
the courts except with the consent of said Government. (See case of Land vs. Dollar, 91
Law. ed., 1209.)
From a careful study of this case, considering the facts involved therein as well as those
of public knowledge of which we take judicial cognizance, we are convinced that the real
party in interest as defendant in the original case is the United States of America. The
lessee in each of the three lease agreements was the United States of America and the
lease agreements themselves were executed in her name by her officials acting as her
agents. The consideration or rentals was always paid by the U. S. Government. The
original action in the municipal court was brought on the basis of these three lease
contracts and it is obvious in the opinion of this court that any back rentals or increased
rentals will have to be paid by the U. S. Government not only because, as already stated,
the contracts of lease were entered into by such Government but also because the
premises were used by officers of her armed forces during the war and immediately after
the termination of hostilities.
We cannot see how the defendants and respondents Moore and Tillman could be held
individually responsible for the payment of rentals or damages in relation to the
occupancy of the apartment houses in question. Both of these army officials had no
intervention whatsoever in the execution of the lease agreements nor in the initial
occupancy of the premises both of which were effected thru the intervention of and at
the instance of their predecessors in office. The original request made by the petitioners
for the return of the apartment buildings after the supposed termination of the leases,
was made to, and denied not by Moore and Tillman but by their predecessors in office.
The notice and decision that the U. S. Army wanted and in fact continued to occupy the

premises was made not by Moore and Tillman but by their predecessors in office. The
refusal to renegotiate the leases as requested by the petitioners was made not by Moore
but by his predecessors in office according to the very complaint filed in the municipal
court. The assurance that the U. S. Army will vacate the premises prior to February 29,
1947, was also made by the predecessors in office of Moore.
As to the defendant Tillman, according to the complaint he was Chief, Real Estate
Division, Office of the District Engineer, U.S. Army, and was in direct charge and control
of the leases and occupancy of the apartment buildings, but he was under the command
of defendant Moore, his superior officer. We cannot see how said defendant Tillman in
assigning new officers to occupy apartments in the three buildings, in obedience to order
or direction from his superior, defendant Moore, could be held personally liable for the
payment of rentals or increase thereof, or damages said to have been suffered by the
plaintiffs.
With respect to defendant General Moore, when he assumed his command in Manila,
these lease agreements had already been negotiated and executed and were in actual
operation. The three apartment buildings were occupied by army officers assigned
thereto by his predecessors in office. All that he must have done was to assign or billet
incoming army officers to apartments as they were vacated by outgoing officers due to
changes in station. He found these apartment buildings occupied by his government and
devoted to the use and occupancy of army officers stationed in Manila under his
command, and he had reason to believe that he could continue holding and using the
premises theretofore assigned for that purpose and under contracts previously entered
into by his government, as long as and until orders to the contrary were received by him.
It is even to be presumed that when demand was made by the plaintiffs for the payment
of increased rentals or for vacating the three apartment buildings, defendant Moore, not
a lawyer by profession but a soldier, must have consulted and sought the advise of his
legal department, and that his action in declining to pay the increased rentals or to eject
all his army officers from the three buildings must have been in pursuance to the advice
and counsel of his legal division. At least, he was not in a position to pay increased
rentals above those set and stipulated in the lease agreements, without the approval of
his government, unless he personally assumed financial responsibility therefor. Under
these circumstances, neither do we believe nor find that defendant Moore can be held
personally liable for the payment of back or increased rentals and alleged damages.

As to the army officers who actually occupied the apartments involved, there is less
reason for holding them personally liable for rentals and supposed damages as sought by
the plaintiffs. It must be remembered that these army officers when coming to their
station in Manila were not given the choice of their dwellings. They were merely assigned
quarters in the apartment buildings in question. Said assignments or billets may well be
regarded as orders, and all that those officers did was to obey them, and, accordingly,
occupied the rooms assigned to them. Under such circumstances, can it be supposed or
conceived that such army officers would first inquire whether the rental being paid by
their government for the rooms or apartments assigned to them by order of their
superior officer was fair and reasonable or not, and whether the period of lease between
their government and the owners of the premises had expired, and whether their
occupancy of their rooms or apartments was legal or illegal? And if they dismissed these

seemingly idle speculations, assuming that they ever entered their minds, and continued
to live in their apartments unless and until orders to the contrary were received by them,
could they later be held personally liable for any back rentals which their government
may have failed to pay to the owners of the buildings, or for any damages to the
premises incident to all leases of property, specially in the absence of proof that such
damages to property had been caused by them and not by the previous occupants, also
army officers who are not now parties defendant to this suit? Incidentally it may be
stated that both defendants Moore and Tillman have long left these Islands to assume
other commands or assignments and in all probability none of their 64 co-defendants is
still within this jurisdiction.
On the basis of the foregoing considerations we are of the belief and we hold that the
real party defendant in interest is the Government of the United States of America; that
any judgment for back or increased rentals or damages will have to be paid not by
defendants Moore and Tillman and their 64 co-defendants but by the said U.S.
Government. On the basis of the ruling in the case of Land vs. Dollar already cited, and
on what we have already stated, the present action must be considered as one against
the U.S. Government. It is clear that the courts of the Philippines including the Municipal
Court of Manila have no jurisdiction over the present case for unlawful detainer. The
question of lack of jurisdiction was raised and interposed at the very beginning of the
action. The U.S. Government has not given its consent to the filing of this suit which is
essentially against her, though not in name. Moreover, this is not only a case of a citizen
filing a suit against his own Government without the latter's consent but it is of citizen
filing an action against a foreign government without said government's consent, which
renders more obvious the lack of jurisdiction of the courts of his country. The principles
of law behind this rule are so elementary and of such general acceptance that we deem
it unnecessary to cite authorities in support thereof.
In conclusion we find that the Municipal Court of Manila committed no error in dismissing
the case for lack of jurisdiction and that the Court of First Instance acted correctly in
affirming the municipal court's order of dismissal. Case dismissed, without
pronouncements as to costs.
Moran, C.J., Paras, Feria, Bengzon, Tuason and Reyes, JJ., concur.
||| (Syquia v. Lopez, G.R. No. L-1648, [August 17, 1949], 84 PHIL 312-326)

46. SANDERS V VERIDIANO

FIRST DIVISION
[G.R. No. L-46930. June 10, 1988.]
DALE SANDERS, and A.S. MOREAU, JR., petitioners, vs. HON. REGINO T. VERIDIANO II, as
Presiding Judge, Branch I, Court of First Instance of Zambales, Olongapo City, ANTHONY
M. ROSSI and RALPH L. WYERS,respondents.

DECISION
CRUZ, J p:
The basic issue to be resolved in this case is whether or not the petitioners were
performing their official duties when they did the acts for which they have been sued for
damages by the private respondents. Once this question is decided, the other answers
will fall into place and this petition need not detain us any longer than it already has.
Petitioner Sanders was, at the time the incident in question occurred, the special services
director of the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the
commanding officer of the Subic Naval Base, which includes the said station. 2 Private
respondent Rossi is an American citizen with permanent residence in the Philippines, 3 as
so was private respondent Wyer, who died two years ago. 4 They were both employed as
gameroom attendants in the special services department of the NAVSTA, the former
having been hired in 1971 and the latter in 1969. 5
On October 3, 1975, the private respondents were advised that their employment had
been converted from permanent full-time to permanent part-time, effective October 18,
1975. 6 Their reaction was to protest this conversion and to institute grievance
proceedings conformably to the pertinent rules and regulations of the U.S. Department of
Defense. The result was a recommendation from the hearing officer who conducted the
proceedings for the reinstatement of the private respondents to permanent full-time
status plus backwages. The report on the hearing contained the observation that
"Special Services management practices an autocratic form of supervision." 7
In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint),
Sanders disagreed with the hearing officer's report and asked for the rejection of the
abovestated recommendation. The letter contained the statements that: a) "Mr. Rossi
tends to alienate most co-workers and supervisors;" b) "Messrs. Rossi and Wyers have
proven, according to their immediate supervisors, to be difficult employees to
supervise;" and c) "even though the grievants were under oath not to discuss the case
with anyone, (they) placed the records in public places where others not involved in the
case could hear."
On November 7, 1975, before the start of the grievance hearings, a letter (Annex "B" of
the complaint) purportedly coming from petitioner Moreau as the commanding general
of the U.S. Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining
the change of the private respondent's employment status and requesting concurrence
therewith. The letter did not carry his signature but was signed by W.B. Moore, Jr. "by
direction," presumably of Moreau.
On the basis of these antecedent facts, the private respondent filed in the Court of First
Instance of Olongapo City a complaint for damages against the herein petitioners on
November 8, 1976. 8 The plaintiffs claimed that the letters contained libelous
imputations that had exposed them to ridicule and caused them mental anguish and that
the prejudgment of the grievance proceedings was an invasion of their personal and
proprietary rights.
The private respondents made it clear that the petitioners were being sued in their
private or personal capacity. However, in a motion to dismiss filed under a special

appearance, the petitioners argued that the acts complained of were performed by them
in the discharge of their official duties and that, consequently, the court had no
jurisdiction over them under the doctrine of state immunity.
After extensive written arguments between the parties, the motion was denied in an
order dated March 8, 1977, 9 on the main ground that the petitioners had not presented
any evidence that their acts were official in nature and not personal torts, moreover, the
allegation in the complaint was that the defendants had acted maliciously and in bad
faith. The same order issued a writ of preliminary attachment, conditioned upon the filing
of a P10,000.00 bond by the plaintiffs, against the properties of petitioner Moreau, who
allegedly was then about to leave the Philippines. Subsequently, to make matters worse
for the defendants, petitioner Moreau was declared in default by the trial court in its
order dated August 9, 1977. The motion to lift the default order on the ground that
Moreau's failure to appear at the pre-trial conference was the result of some
misunderstanding, and the motion for reconsideration of the denial of the motion to
dismiss, which was filed by the petitioner's new lawyers, were denied by the respondent
court on September 7, 1977.
This petition for certiorari, prohibition and preliminary injunction was thereafter filed
before this Court, on the contention that the above-narrated acts of the respondent court
are tainted with grave abuse of discretion amounting to lack of jurisdiction.
We return now to the basic question of whether the petitioners were acting officially or
only in their private capacities when they did the acts for which the private respondents
have sued them for damages.
It is stressed at the outset that the mere allegation that a government functionary is
being sued in his personal capacity will not automatically remove him from the
protection of the law of public officers and, if appropriate, the doctrine of state immunity.
By the same token, the mere invocation of official character will not suffice to insulate
him from suability and liability for an act imputed to him as a personal tort committed
without or in excess of his authority. These well-settled principles are applicable not only
to the officers of the local state but also where the person sued in its courts pertains to
the government of a foreign state, as in the present case.
The respondent judge, apparently finding that the complained acts were prima facie
personal and tortious, decided to proceed to trial to determine inter alia their precise
character on the strength of the evidence to be submitted by the parties. The petitioners
have objected, arguing that no such evidence was needed to substantiate their claim of
jurisdictional immunity. Pending resolution of this question, we issued a temporary
restraining order on September 26, 1977, that has since then suspended the proceedings
in this case in the court a quo. LLjur
In past cases, this Court has held that where the character of the act complained of can
be determined from the pleadings exchanged between the parties before the trial, it is
not necessary for the court to require them to belabor the point at a trial still to be
conducted. Such a proceeding would be superfluous, not to say unfair to the defendant
who is subjected to unnecessary and avoidable inconvenience.

Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the
commanding general of the Olongapo Naval Base should not have been denied because
it had been sufficiently shown that the act for which he was being sued was done in his
official capacity on behalf of the American government. The United States had not given
its consent to be sued. It was the reverse situation in Syquia v. Almeda Lopez, 11 where
we sustained the order of the lower court granting a motion to dismiss a complaint
against certain officers of the U.S. armed forces also shown to be acting officially in the
name of the American government. The United States had also not waived its immunity
from suit. Only three years ago, in United States of America v. Ruiz, 12 we set aside the
denial by the lower court of a motion to dismiss a complaint for damages filed against
the United States and several of its officials, it appearing that the act complained of was
governmental rather than proprietary, and certainly not personal. In these and several
other cases, 13 the Court found it redundant to prolong the proceedings after it had
become clear that the suit could not prosper because the acts complained of were
covered by the doctrine of state immunity.
It is abundantly clear in the present case that the acts for which the petitioners are being
called to account were performed by them in the discharge of their official duties.
Sanders, as director of the special services department of NAVSTA, undoubtedly had
supervision over its personnel, including the private respondents, and had a hand in their
employment, work assignments, discipline, dismissal and other related matters. It is not
disputed that the letter he had written was in fact a reply to a request from his superior,
the other petitioner, for more information regarding the case of the private respondents.
14 Moreover, even in the absence of such request, he still was within his rights in
reacting to the hearing officer's criticism in effect a direct attack against him that
Special Services was practicing "an autocratic form of supervision."
As for Moreau, what he is claimed to have done was write the Chief of Naval Personnel
for concurrence with the conversion of the private respondents' type of employment
even before the grievance proceedings had even commenced. Disregarding for the
nonce the question of its timeliness, this act is clearly official in nature, performed by
Moreau as the immediate superior of Sanders and directly answerable to Naval Personnel
in matters involving the special services department of NAVSTA. In fact, the letter dealt
with the financial and budgetary problems of the department and contained
recommendations for their solution, including the re-designation of the private
respondents. There was nothing personal or private about it.
Given the official character of the above-described letters, we have to conclude that the
petitioners were, legally speaking, being sued as officers of the United States
government. As they have acted on behalf of that government, and within the scope of
their authority, it is that government, and not the petitioners personally, that is
responsible for their acts. Assuming that the trial can proceed and it is proved that the
claimants have a right to the payment of damages, such award will have to be satisfied
not by the petitioners in their personal capacities but by the United States government
as their principal. This will require that government to perform an affirmative act to
satisfy the judgment, viz., the appropriation of the necessary amount to cover the
damages awarded, thus making the action a suit against that government without its
consent. cdrep

There should be no question by now that such complaint cannot prosper unless the
government sought to be held ultimately liable has given its consent to be sued. So we
have ruled not only in Baer but in many other decisions where we upheld the doctrine of
state immumity as applicable not only to our own government but also to foreign states
sought to be subjected to the jurisdiction of our courts. 15
The practical justification for the doctrine, as Holmes put it, is that "there can be no legal
right against the authority which makes the law on which the right depends." 16 In the
case of foreign states, the rule is derived from the principle of the sovereign equality of
states which wisely admonishes that par in parem non habet imperium and that a
contrary attitude would "unduly vex the peace of nations." 17 Our adherence to this
precept is formally expressed in Article II, Section 2, of our Constitution, where we
reiterate from our previous charters that the Philippines "adopts the generally accepted
principles of international law as part of the law of the land."
All this is not to say that in no case may a public officer be sued as such without the
previous consent of the state. To be sure, there are a number of well-recognized
exceptions. It is clear that a public officer may be sued as such to compel him to do an
act required by law, as where, say, a register of deeds refuses to record a deed of sale;
18 or to restrain a Cabinet member, for example, from enforcing a law claimed to be
unconstitutional; 19 or to compel the national treasurer to pay damages from an already
appropriated assurance fund; 20 or the commissioner of internal revenue to refund tax
overpayments from a fund already available for the purpose; 21 or, in general, to secure
a judgment that the officer impleaded may satisfy by himself without the government
itself having to do a positive act to assist him. We have also held that where the
government itself has violated its own laws, the aggrieved party may directly implead
the government even without first filing his claim with the Commission on Audit as
normally required, as the doctrine of state immunity "cannot be used as an instrument
for perpetrating an injustice." 22
This case must also be distinguished from such decisions as Festejo v. Fernando, 23
where the Court held that a bureau director could be sued for damages on a personal
tort committed by him when he acted without or in excess of authority in forcibly taking
private property without paying just compensation therefor although he did convert it
into a public irrigation canal. It was not necessary to secure the previous consent of the
state, nor could it be validly impleaded as a party defendant, as it was not responsible
for the defendant's unauthorized act.
The case at bar, to repeat, comes under the rule and not under any of the recognized
exceptions. The government of the United States has not given its consent to be sued for
the official acts of the petitioners, who cannot satisfy any judgment that may be
rendered against them. As it is the American government itself that will have to perform
the affirmative act of appropriating the amount that may be adjudged for the private
respondents, the complaint must be dismissed for lack of jurisdiction.
The Court finds that, even under the law of public officers, the acts of the petitioners are
protected by the presumption of good faith, which has not been overturned by the
private respondents. Even mistakes concededly committed by such public officers are
not actionable as long as it is not shown that they were motivated by malice or gross
negligence amounting to bad faith. 24 This, too, is well-settled. 25 Furthermore, applying

now our own penal laws, the letters come under the concept of privileged
communications and are not punishable, 26 let alone the fact that the resented remarks
are not defamatory by our standards. It seems the private respondents have overstated
their case.
A final consideration is that since the questioned acts were done in the Olongapo Naval
Base by the petitioners in the performance of their official duties and the private
respondents are themselves American citizens, it would seem only proper for the courts
of this country to refrain from taking cognizance of this matter and to treat it as coming
under the internal administration of the said base.
The petitioners' counsel have submitted a memorandum replete with citations of
American cases, as if they were arguing before a court of the United States. The Court is
bemused by such attitude. While these decisions do have persuasive effect upon us,
they can at best be invoked only to support our own jurisprudence, which we have
developed and enriched on the basis of our own persuasions as a people, particularly
since we became independent in 1946. LLjur
We appreciate the assistance foreign decisions offer us, and not only from the United
States but also from Spain and other countries from which we have derived some if not
most of our own laws. But we should not place undue and fawning reliance upon them
and regard them as indispensable mental crutches without which we cannot come to our
own decisions through the employment of our own endowments. We live in a different
ambience and must decide our own problems in the light of our own interests and needs,
and of our qualities and even idiosyncrasies as a people, and always with our own
concept of law and justice.
The private respondents must, if they are still so minded, pursue their claim against the
petitioners in accordance with the laws of the United States, of which they are all citizens
and under whose jurisdiction the alleged offenses were committed. Even assuming that
our own laws are applicable, the United States government has not decided to give its
consent to be sued in our courts, which therefore has not acquired the competence to
act on the said claim.
WHEREFORE, the petition is GRANTED. The challenged orders dated March 8, 1977,
August 9, 1977, and September 7, 1977, are SET ASIDE. The respondent court is directed
to DISMISS Civil Case No. 2077-O. Our Temporary restraining order of September 26,
1977, is made PERMANENT. No costs.
SO ORDERED||| (Sanders v. Veridiano II, G.R. No. L-46930, [June 10, 1988], 245 PHIL 6376)

47. TAN V DIRECTOR OF FORESTRY

[G.R. No. L-24548. October 27, 1983.]
WENCESLAO VINZONS TAN, petitioner-appellant, vs. THE DIRECTOR OF FORESTRY,
APOLONIO RIVERA, THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES JOSE Y.
FELICIANO, respondents-appellees,RAVAGO COMMERCIAL CO., JORGE LAO HAPPICK and
ATANACIO MALLARI, intervenors.
Camito V. Pefianco, Jr. for petitioner-appellant.
Solicitor General for respondent Director.
Estelito P. Mendoza for respondent Ravago Comm'l Co.
Anacleto Badoy for respondent Atanacio Mallari.
Mariano de Joya, Jr. for respondent Jorge Lao Happick, Jr.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS; WHEN TRIAL COURT CAN
PROPERLY DISMISS A COMPLAINT THEREON DUE TO LACK OF CAUSE OF ACTION EVEN
WITHOUT A HEARING. In Llanto vs. Ali Dimaporo, et al. (16 SCRA 601, March 31,
1966), this Court, thru Justice Conrado V. Sanchez, held that the trial court can properly
dismiss a complaint on a motion to dismiss due to lack of cause of action even without a
hearing, by taking into consideration the discussion in said motion and the opposition
thereto.
2. ID.; ID.; APPEAL; ISSUES NOT RAISED IN THE TRIAL COURT CANNOT BE RAISED FOR
THE FIRST TIME ON APPEAL. Petitioner appellant did not interpose any objection
thereto, nor presented new arguments in his motion for reconsideration. This omission
means conformity to said observation, and a waiver of his right to object, estopping him
from raising this question for the first tune on appeal. "Issues not raised in the trial court
cannot be raised for the first time on appeal" (Matienzo vs. Servidad, Sept. 10, 1981, 107
SCRA 276).
3. ID.; RULES OF PROCEDURE; NOT TO BE APPLIED IN A VERY RIGID, TECHNICAL SENSE.
Petitioner-appellant cannot invoke the rule that, when the ground for asking dismissal
is that the complaint states no cause of action, its sufficiency must be determined only
from the allegations in the complaint. "The rules of procedure are not to be applied in a

very rigid, technical sense; rules of procedure are used only to help secure substantial
justice. If a technical and rigid enforcement of the rules is made, their aim would be
defeated. Where the rules are merely secondary in importance are made to override the
ends of justice; the technical rules had been misapplied to the prejudice of the
substantial right of a party, said rigid application cannot be countenanced."
4. ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE REMEDIES; FAILURE TO
APPEAL ORDER OF SECRETARY OFAGRICULTURE AND NATURAL RESOURCES TO THE
PRESIDENT OF THE PHILIPPINES, A FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES.
Petitioner-appellant did not appeal the order of the respondent Secretary of Agriculture
and Natural Resources to the President of the Philippines, who issued Executive
Proclamation No. 238 withdrawing the area from private exploitation, and establishing it
as the Olongapo Watershed Forest Reserve. Considering that the President has the power
to review on appeal the orders or acts of the respondents-appellees, the failure of the
petitioner-appellant to take that appeal is failure on his part to exhaust his administrative
remedies.
5. REMEDIAL LAW; SPECIAL CIVIL ACTION; CERTIORARI; NOT A SUBSTITUTE FOR APPEAL.
This being a special civil action, petitioner-appellant must allege and prove that he has
no other speedy and adequate remedy (Diego vs. The Court ofAppeals, et al., 54 Off.
Gaz., No. 4, 956). In the case at bar, petitioner-appellant's speedy and adequate remedy
is an appeal to the President of the Philippines. Certiorari is not a substitute for appeal as
held time and again by this Court (People vs. Villanueva, 110 SCRA 463), "it being a time
honored and well known principle that before seeking judicial redress, a party must first
exhaust the administrative remedies available'' (Garcia vs. Teehankee, 27 SCRA 944,
April 18, 1969).
6. POLITICAL LAW; STATE; IMMUNITY FROM SUIT; WHEN STATE'S IMMUNITY MAY BE
VALIDLY INVOKED. "The rule establishing State exemption from suits may not be
circumvented by directing the action against the officers of the State instead of against
the State itself. In such cases the State's immunity may be validly invoked against the
action as long as it can be shown that the suit really affects the property, rights, or
interests of the State and not merely those of the officer nominally made party
defendant" (SINCO, Phil. Politicial Law, 10th ed., p. 35; Salgado vs. Ramos, 64 Phil. 724
and other cases cited).
7. MUNICIPAL CORPORATIONS; TIMBER LICENSE; CON- STRUED. A timber license is an
instrument by which the State regulates the utilization and disposition of forest resources
to the end that public welfare is promoted. A timber license is not a contract within the
purview of the due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this case.
8. ID.; LICENSE; GRANT THEREOF DOES NOT CREATE IRREVOCABLE RIGHT, NEITHER IS IT
PROPERTY OR A PROPERTY RIGHT. "A license is merely a permit or privilege to do what
otherwise would be unlawful, and is not a contract between the authority, federal, state,
or municipal, granting it and the person to whom it is granted; neither is it property or a
property right nor, does it create a vested right; nor is it taxation" (37 C.J., 168). Thus,
this Court held that the granting of license does not create irrevocable rights, neither is it
property or property rights (People vs. Ong Tin, 54 O.G. 7576).

9. POLITICAL LAW; POLICE POWER; PROPER EXERCISE THEREOF CANNOT BE DEFEATED

BY ANY FRANCHISE OR RIGHT. The welfare of the people is the supreme law. Thus, no
franchise or right can be availed of to defeat the proper exercise ofpolice power (Surigao
Electric Co., Inc. vs. Municipality of Surigao, 24 SCRA 898, Aug. 30, 1968). The State has
inherent power enabling it to prohibit all things hurtful to comfort, safety, and welfare of
society (Edu vs. Ericta, 35 SCRA 481, Oct. 24, 1970).
10. ID.; EXECUTIVE DEPARTMENT; POWER OF CONTROL; SECRETARY OF AGRICULTURE
AND NATURAL RESOURCES HAS AUTHORITY TO REVOKE, ON VALID GROUNDS, TIMBER
LICENSES ISSUED BY DIRECTOR OF FORESTRY. The utilization and disposition of forest
resources is directly under the control and supervision of the Director of Forestry.
However, "while Section 1831 of the Revised Administrative Code provides that forest
products shall be cut, gathered and removed from any forest only upon license from the
Director of Forestry, it is no less true that as a subordinate officer, the Director of
Forestry is subject to the control of the Department Head or the Secretary of Agriculture
and Natural Resources (Sec, 79 [c], Rev. Adm. Code), who, therefore, may impose
reasonable regulations in the exercise of the powers of the subordinate officer"
(Directorof Forestry vs. Benedicto, 104 SCRA 309, May 3, 1981). The power of control of
the Department Head over bureaus and offices includes the power to modify, reverse or
set aside acts of subordinate officials (Province of Pangasinan vs. Secretary ofPublic
Works and Communications, 30 SCRA 134, Oct. 31, 1969; Montano vs. Silvosa, 97 Phil.
143, 144, 147-148). Accordingly, respondent-appellant Secretary of Agriculture and
Natural Resources has the authority to revoke, on valid grounds, timber licenses issued
by the Director of Forestry. There being supporting evidence, the revocation of petitionerappellant's timber license was a wise exercise of the power of the respondent-appellee
(Secretary of Agriculture and Natural Resources) and therefore, valid.
DECISION
MAKASIAR, J p:
This is an appeal from the order dated January 20, 1965 of the then Court of First
Instance of Manila, Branch VII, in Civil Case No. 56813, a petition for certiorari,
prohibition and mandamus with preliminary prohibitory injunction (p. 2, rec.), which
dismissed the petition of petitioner-appellant Wenceslao Vinzons Tan on the ground that
it does not state a sufficient causeof action, and upon the respondents-appellees'
(Secretary of Agriculture and Natural Resources and the Director of Forestry) motion to
dismiss (p. 28, rec.).
Sometime in April 1961, the Bureau of Forestry issued Notice No. 2087, advertising for
public bidding a certain tract of public forest land situated in Olongapo, Zambales,
provided tenders were received on or before May 22, 1961 (p. 15, CFI rec.). This public
forest land, consisting of 6,420 hectares, is located within the former U.S. Naval
Reservation comprising 7,252 hectaresof timberland, which was turned over by the
United States Government to the Philippine Government (p. 99, CFI rec.).
On May 5, 1961, petitioner-appellant Wenceslao Vinzons Tan submitted his application in
due form after paying the necessary fees and posting the required bond therefor. Nine
other applicants submitted their offers before the deadline (p. 29, rec.).

Thereafter, questions arose as to the wisdom of having the area declared as a forest
reserve or allow the same to be awarded to the most qualified bidder. On June 7, 1961,
then President Carlos P. Garcia issued a directive to the Director ofthe Bureau of Forestry,
which read as follows:
"It is desired that the area formerly covered by the Naval Reservation be made a forest
reserve for watershed purposes. Prepare and submit immediately a draft of a
proclamation establishing the said area as a watershed forest reserve for Olongapo,
Zambales. It is also desired that the bids received by the Bureau of Forestry for the
issuance of the timber license in the area during the public bidding conducted last May
22, 1961 be rejected in order that the area may be reserved as above stated . . .
(SGD.) CARLOS P. GARCIA"
(p. 98, CFI rec.)
On August 3, 1961, Secretary Cesar M. Fortich of Agriculture and Natural Resources
sustained the findings and recommendations of the Director of Forestry who concluded
that "it would be beneficial to the public interest if the area is made available for
exploitation under certain conditions," and We quote:

"Respectfully forwarded to the Honorable, the Executive Secretary, Malacaang, Manila,

inviting particular attention to the comment and recommendation of the Director of
Forestry in the preceding indorsement in which this Office fully concurs.
"The observations of responsible forest officials are most revealing of their zeal to
promote forest conservation and watershed protection especially in Olongapo, Zambales
area. In convincing fashion, they have demonstrated that to declare the forest area
involved as a forest reserve rather than open it for timber exploitation under license and
regulation would do more harm than good to the public interest. To convert the area into
a forest reserve without an adequate forest protection force, would make of it a 'Free
Zone and Logging Paradise,' to the ever 'Problem Loggers' ofDinalupihan, Bataan . . . an
open target of timber smugglers, kaingineros and other forms of forest vandals and
despoilers. On the other hand, to award the area, as planned, to a reputable and
responsible licensee who shall conduct logging operations therein under the selective
logging method and who shall be obliged to employ a sufficient number offorest guards
to patrol and protect the forest conservation and watershed protection.
"Worthy of mention is the fact that the Bureau of Forestry had already conducted a
public bidding to determine the most qualified bidder to whom the area advertised
should be awarded. Needless to stress, the decision of the Director ofForestry to dispose
of the area thusly, was arrived at after much thought and deliberation and after having
been convinced that to do so would not adversely affect the watershed in that sector.
The result of the bidding only have to be announced. To be sure, some of the
participating bidders like Mr. Edgardo Pascual, went to much expense in the hope
ofwinning a virgin forest concession. To suddenly make a turn about of this decision
without strong justifiable grounds, would cause the Bureau of Forestry and this Office no
end of embarrassment.

"In view of the foregoing, it is earnestly urged that the Director of Forestry be allowed to
proceed with the announcementof the results of the bidding for the subject forest area"
(p. 13, CFI rec.)
The Office of the President in its 4th Indorsement dated February 2, 1962, signed by Atty.
Juan Cancio, Acting Legal Officer, "respectfully returned to the Honorable Secretary of
the Department of Agriculture and Natural Resources for appropriate action," the papers
subject of Forestry Notice No. 2087 which was referred to the Bureau of Forestry for
decision (p. 14, CFI rec.)
Finally, of the ten persons who submitted proposals, the area was awarded to herein
petitioner-appellant Wenceslao VinzonsTan, on April 15, 1963 by the Bureau of Forestry
(p. 17, CFI rec.). Against this award, bidders Ravago Commercial Company and Jorge Lao
Happick filed motions for reconsideration which were denied by the Director of Forestry
on December 6, 1963.
On May 30, 1963, the Secretary of Agriculture and Natural Resources Benjamin M. Gozon
who succeeded Secretary Cesar M. Fortich in office issued General Memorandum
Order No. 46, series of 1963, pertinent portions of which state:
xxx xxx xxx
"SUBJECT: . . .
(D)elegation of authority to the Director of Forestry to grant ordinary timber licenses.
"1. . . .
"2. The Director of Forestry is hereby authorized to grant (a) new ordinary timber
licenses where the area covered thereby is not more than 3,000 hectares each; and (b)
the extension of ordinary timber licenses for areas not exceeding 5,000 hectares each;
"3. This Order shall take effect immediately" (p. 267, CFI rec.)
Thereafter, Jose Y. Feliciano was appointed as Acting Secretary of Agriculture and Natural
Resources, replacing Secretary Benjamin M. Gozon. Upon assumption of office, he
immediately promulgated on December 19, 1963 General Memorandum Order No. 60,
revoking the authority delegated to the Director of Forestry, under General Memorandum
Order No. 46, to grant ordinary timber licenses, which order took effect on the same day,
December 19, 1963. Pertinent portions of the said Order read as follows:
xxx xxx xxx
"SUBJECT: Revocation of General Memorandum Order No. 46 dated May 30, 1963
"1. In order to acquaint the undersigned with the volume and nature of the work of the
Department, the authority delegated to the Director of Forestry under General
Memorandum Order No. 46, dated May 30, 1963, to grant (a) new ordinary timber
licenses where the area covered thereby is not more than 3,000 hectares each; and (b)
the extension ofordinary timber licenses for areas not exceeding 5,000 hectares each is
hereby revoked. Until further notice, the issuanceof new licenses and renewals of

licenses, including amendments thereto, shall be signed by the Secretary of Agriculture

and Natural Resources.
"2. This Order shall take effect immediately and all other previous orders, directives,
circulars, memoranda, rules and regulations inconsistent with this Order are hereby
revoked" (p. 268, CFI rec.; italics supplied).
On the same date that the above-quoted memorandum took effect, December 19, 1963,
Ordinary Timber License No. 20-'64 (NEW) dated April 22, 1963, in the name of
Wenceslao Vinzons Tan, was signed by then Acting Director of Forestry Estanislao R.
Bernal without the approval of the Secretary of Agriculture and Natural Resources. On
January 6, 1964, the license was released by the Office of the Director of Forestry (p. 30,
CFI rec.; p. 77, rec.). It was not signed by the Secretary of Agriculture and Natural
Resources as required by Order No. 60 aforequoted.
On February 12, 1964, Ravago Commercial Company wrote a letter to the Secretary of
Agriculture and Natural Resources praying that, pending resolution of the appeal filed by
Ravago Commercial Company and Jorge Lao Happick from the order ofthe Director of
Forestry denying their motion for reconsideration, O.T.L. No. 20-'64 in the name of
Wenceslao V. Tan be cancelled or revoked on the ground that the grant thereof was
irregular, anomalous and contrary to existing forestry laws, rules and regulations.
On March 9, 1964, acting on the said representation made by Ravago Commercial
Company, the Secretary of Agriculture and Natural Resources promulgated an order
declaring Ordinary Timber License No. 20-'64 issued in the name of Wenceslao Vinzons
Tan, as having been issued by the Director of Forestry without authority, and is therefore
void ab initio. The dispositive portion of said order reads as follows:
"WHEREFORE, premises considered, this Office is of the opinion and so holds that O.T.
License No. 20-'64 in the name ofWenceslao Vinzons Tan should be, as hereby it is,
REVOKED AND DECLARED without force and effect whatsoever from the issuance
thereof.
"The Director of Forestry is hereby directed to stop the logging operations of Wenceslao
Vinzons Tan, if there be any, in the area in question and shall see to it that the appellee
shall not introduce any further improvements thereon pending the disposition of the
appeals filed by Ravago Commercial Company and Jorge Lao Happick in this case" (pp.
30-31, CFI rec.)
Petitioner-appellant moved for a reconsideration of the order, but the Secretary of
Agriculture and Natural Resources denied the motion in an Order dated March 25, 1964,
wherein this paragraph appears:
"In this connection, it has been observed by the Acting Director of Forestry in his 2nd
indorsement of February 12, 1964, that the area in question composes of water basin
overlooking Olongapo, including the proposed Olongapo Watershed Reservation; and
that the United States as well as the Bureau of Forestry has earmarked this entire
watershed for a watershed pilot forest for experiment treatment concerning erosion and
water conservation and flood control in relation to wise utilization of the forest,
denudation, shifting cultivation, increase or decrease of crop harvest of agricultural areas
influenced by the watershed, etc . . ." (pp. 38-39, CFI rec.; p. 78, rec.)

On April 11, 1964, the Secretary of Agriculture and Natural Resources, acting on the
separate appeals filed by Jorge Lao Happick and Ravago Commercial Company, from the
order of the Director of Forestry dated April 15, 1963, awarding to Wenceslao Vinzons Tan
the area under Notive No. 2087, and rejecting the proposals of the other applicants
covering the same area, promulgated an order commenting that in view of the
observations of the Director of Forestry just quoted, "to grant the area in question to any
of the parties herein, would undoubtedly adversely affect public interest which is
paramount to private interests," and concluding that, "for this reason, this Office is of the
opinion and so holds, that without the necessity of discussing the appeals of the herein
appellants, the said appeals should be, as hereby they are, dismissed and this case is
considered a closed matter insofar as this Office is concerned" (p. 78, rec.)
On April 18, 1964, on the basis of the denial of his motion for reconsideration by the
Secretary of Agriculture and Natural Resources, petitioner-appellant filed the instant case
before the court a quo (Court of First Instance, Manila), Special Civil Action No. 56813, a
petition for certiorari, prohibition and mandamus with preliminary prohibitory injunction
(pp. 1-12, CFI rec.). Petitioner-appellant claims that the respondents-appellees
"unlawfully, illegally, whimsically, capriciously and arbitrarily acted without or in excess
of their jurisdiction, and/or with grave abuse of discretion by revoking a valid and
existing timber license without just cause, by denying petitioner-appellant of the equal
protection of the laws, by depriving him of his constitutional right to property without
due process of law, and in effect, by impairing the obligation of contracts" (p. 6, CFI rec.).
Petitioner-appellant prayed for judgment making permanent the writ of preliminary
injunction against the respondents-appellees; declaring the orders of the Secretary of
Agriculture and Natural Resources dated March 9, March 25, and April 11, 1964, as well
as all his acts and those of the Director of Forestry implementing said orders, and all the
proceedings in connection therewith, null and void, unlawful and of no force and effect;
ordering the Director of Forestry to renew O.T.L. No. 20-'64 upon expiration, and
sentencing the respondents, jointly and severally, to pay the petitioner-appellant the
sum of Two Hundred Thousand Pesos (P200,000.000) by way of pecuniary damage, One
Hundred Thousand Pesos (P100,000.00) by wayof moral and exemplary damages, and
Thirty Thousand Pesos (P30,000,00) as attorney's fees and costs. The respondentsappellees separately filed oppositions to the issuance of the writ of preliminary
injunction, Ravago Commercial Company, Jorge Lao Happick and Atanacio Mallari,
presented petitions for intervention which were granted, and they too opposed the writ.

The Director of Forestry in his motion to dismiss dated April 24, 1964, alleges the
following grounds: (1) that the court has no jurisdiction; (2) that the respondents may not
be sued without their consent; (3) that the petitioner has not exhausted all available
administrative remedies; (4) that the petition does not state a cause of action; and (5)
that purely administrative and discretionary functions of administrative officials may not
be interfered with by the courts. The Secretary of Agriculture and Natural Resources
joined the motion to dismiss when in his answer of May 18, 1964, he avers the following
special and affirmative defenses: (1) that the court has no jurisdiction to entertain the
action for certiorari, prohibition and mandamus; (2) that the petitioner has no cause of
action; (3) that venue is improperly laid; (4) that the State is immune from suit without
its consent; (5) that the court has no power to interfere in purely administrative

functions; and (6) that the cancellation ofpetitioner's license was dictated by public
policy (pp. 172-177, rec.). Intervenors also filed their respective answers in intervention
with special and affirmative defenses (pp. 78-79, rec.). A hearing was held on the
petition for the issuance of writof preliminary injunction, wherein evidence was
submitted by all the parties including the intervenors, and extensive discussion was held
both orally and in writing.
After the said hearing, on January 20, 1965, the court a quo, from the evidence received,
resolved not only the question on the issuance of a writ of preliminary injunction but also
the motion to dismiss, declared that the petition did not state a sufficient cause of
action, and dismissed the same accordingly. To justify such action, the trial court, in its
order dismissing the petition, stated that "the court feels that the evidence presented
and the extensive discussion on the issuance of the writof preliminary mandatory and
prohibitory injunction should also be taken into consideration in resolving not only this
question but also the motion to dismiss, because there is no reason to believe that the
parties will change their stand, arguments and evidence" (p. 478, CFI rec.). His motion
for reconsideration having been denied (p. 488, CFI rec.), petitioner-appellant Wenceslao
Vinzons Tan appealed directly to this Court.
I.
Petitioner-appellant now comes before this Court, claiming that the trial court erred in:
(1) holding that the petition does not state a sufficient cause of action; and
(2) dismissing the petition [p. 27, rec.]
He argues that the sole issue in the present case is, whether or not the facts in the
petition constitute a sufficient cause ofaction (p. 31, rec.). Petitioner-appellant, in his
brief, presented a lengthy discussion on the definition of the term cause ofaction wherein
he contended that the three essential elements thereof namely, the legal right of the
plaintiff, the correlative obligation of the defendants and the act or omission of the
defendant in violation of that right are satisfied in the averments of this petition (pp.
31-32, rec.). He invoked the rule that when the ground for dismissal is that the complaint
states no cause of action, such fact can be determined only from the facts alleged in the
complaint and from no other, and the court cannot consider other matters aliunde. He
further invoked the rule that in a motion to dismiss based on insufficiency of cause of
action, the facts alleged in the complaint are deemed hypothetically admitted for the
purpose of the motion (pp. 32-33, rec.)
A perusal of the records of the case shows that petitioner-appellant's contentions are
untenable. As already observed, this case was presented to the trial court upon a motion
to dismiss for failure of the petition to state a claim upon which relief could be granted
(Rule 16 [g], Revised Rules of Court), on the ground that the timber license relied upon
by the petitioner-appellant in his petition was issued by the Director of Forestry without
authority and is therefore void ab initio. This motion supplanted the general demurrer in
an action at law and, as a rule admits, for the purpose of the motion, all facts which are
well pleaded. However, while the court must accept as true all well pleaded facts, the
motion does not admit allegations ofwhich the court will take judicial notice are not true,
nor does the rule apply to legally impossible facts, nor to facts inadmissible in evidence,

nor to facts which appear by record or document included in the pleadings to be

unfounded (Vol. 1, Moran's Comments on the Rules of Court, 1970 ed., p. 505, citing
cases).
It must be noted that there was a hearing held in the instant case wherein answers were
interposed and evidence introduced. In the course of the hearing, petitioner-appellant
had the opportunity to introduce evidence in support of the allegations in his petition,
which he readily availed of. Consequently, he is estopped from invoking the rule that to
determine the sufficiency of a cause of action on a motion to dismiss, only the facts
alleged in the complaint must be considered. If there were no hearing held, as in the
case of Cohen vs. U.S. (C.C.A. Minn., 1942, 129 F. 2d 733), "where the case was
presented to District Court upon a motion to dismiss because of alleged failure of
complaint to state a claim upon which relief could be granted, and no answer was
interposed and no evidence introduced, the only facts which the court could properly
consider in passing upon the motion were those facts appearing in the complaint,
supplemented by such facts as the court judicially knew.
In Llanto vs. Ali Dimaporo, et al. (16 SCRA 601, March 31, 1966), this Court, thru Justice
Conrado V. Sanchez, held that the trial court can properly dismiss a complaint on a
motion to dismiss due to lack of cause of action even without a hearing, by taking into
consideration the discussion in said motion and the opposition thereto. Pertinent portion
of said decision is hereby quoted:
"Respondents moved to dismiss. Ground therefor is lack of cause of action. The Court
below granted the motion, dismissed the petition. The motion to reconsider failed.
Offshoot is this appeal.
"1. The threshold questions are these: Was the dismissal order issued 'without any
hearing on the motion to dismiss'? Is it void?
"WE go to the record. The motion to dismiss was filed on February 1, 1961 and set for
hearing on February 10 following. On February 8, 1961 petitioner's counsel telegraphed
the court, '(r)equest postponement motion dismissal till written opposition filed.' He did
not appear at the scheduled hearing. But on March 4, 1961, he followed up his wire, with
his written opposition to the motion to dismiss. Adverting to the 5-page motion to
dismiss and the 6-page opposition thereto, we find that the arguments pro and con on
the question of the board's power to abolish petitioner's position minutely discussed the
problem and profusely cited authorities. The May 15, 1961 8-page court order recited at
length the said arguments and concluded that petitioner made no case.
"One good reason for the statutory requirement of hearing on a motion as to enable the
suitors to adduce evidence in support of their opposing claims. But here the motion to
dismiss is grounded on lack of cause of action. Existence of a cause of action or lack of it
is determined by a reference to the facts averred in the challenged pleading. The
question raised in the motion is purely one of law. This legal issue was fully discussed in
said motion and the opposition thereto. In this posture, oral arguments on the motion are
reduced to an unnecessary ceremony and should be overlooked. And, correctly so,
because the other intendment of the law in requiring hearing on a motion, i.e., `to avoid
surprises upon the opposite party and to give to the latter time to study and meet the

arguments of the motion,' has been sufficiently met. And then, courts do not exalt form
over substance" (emphasis supplied).
Furthermore, "even if the complaint stated a valid cause of action, a motion to dismiss
for insufficiency of cause of action will be granted if documentary evidence admitted by
stipulation disclosing facts sufficient to defeat the claim enabled the court to go beyond
disclosure in the complaint" (LOCALS No. 1470, No. 1469, and No. 1512 of the
International Longshoremen's Association vs. Southern Pacific Co., 6 Fed. Rules Service,
p. 107; U.S. Circuit Court of Appeals, Fifth Circuit, Dec. 7, 1952; 131 F. 2d 605). Thus,
although the evidence of the parties were presented on the question of granting or
denying petitioner-appellant's application for a writ of preliminary injunction, the trial
court correctly applied said evidence in the resolution ofthe motion to dismiss. Moreover,
in applying said evidence in the resolution of the motion to dismiss, the trial court, in its
order dismissing the petition, pointed out that, "there is no reason to believe that the
parties will change their stand, arguments and evidence" (p. 478, CFI rec.). Petitionerappellant did not interpose any objection thereto, nor presented new arguments in his
motion for reconsideration (pp. 482-484, CFI rec.). This omission means conformity to
said observation, and a waiver of his right to object, estopping him from raising this
question for the first time on appeal. "Issues not raised in the trial court cannot be raised
for the first time on appeal" (Matienzo vs. Servidad, Sept. 10, 1981, 107 SCRA 276).
Moreover, petitioner-appellant cannot invoke the rule that, when the ground for asking
dismissal is that the complaint states no cause of action, its sufficiency must be
determined only from the allegations in the complaint. "The rules of procedure are not to
be applied in a very rigid, technical sense; rules of procedure are used only to help
secure substantial justice. If a technical and rigid enforcement of the rules is made, their
aim would be defeated. Where the rules are merely secondary in importance are made
to override the ends of justice; the technical rules had been misapplied to the prejudice
of the substantial right of a party, said rigid application cannot be countenanced" (Vol. 1,
Francisco, Civil Procedure, 2 ed., 1973, p. 157, citing cases)

What more can be of greater importance than the interest of the public at large, more
particularly the welfare of the inhabitants of Olongapo City and Zambales province,
whose lives and properties are directly and immediately imperilled by forest denudation.
LLphil
The are covered by petitioner-appellant's timber license practically comprises the entire
Olongapo watershed (p. 265, CFI rec.). It is of public knowledge the watersheds serves as
a defense against soil erosion and guarantees the steady supply ofwater. As a matter of
general policy, the Philippine Constitution expressly mandated the conservation and
proper utilizationof natural resources, which includes the country's watershed.
Watersheds in the Philippines had been subjected to rampant abusive treatment due to
various unscientific and destructive land use practices. Once lush watersheds were
wantonly deforested due to uncontrolled timer cutting by licensed concessionaries and
illegal loggers. This is one reason why, in paragraph 27 of the rules and regulations
included in the ordinary timer license it is stated:

"The terms and conditions of this license are subject to change at the discretion of the
Director of Forestry, and that this license may be made to expire at an earlier date, when
public interests so require" (Exh. D, p. 22, CFI rec.)
Considering the overriding public interest involved in the instant case, We therefore take
judicial notice of the fact that, on April 30, 1964, the area covered by petitionerappellant's timber license has been established as the Olongapo Watershed Forest
Reserve by virtue of Executive Proclamation No. 238 by then President Diosdado
Macapagal which in parts read as follows:
"Pursuant to the provisions of Section 1824 of the Revised Administrative Code, as
amended, I, Diosdado Macapagal, President of the Philippines do hereby withdraw from
entry, sale, or settlement and establish as Olongapo Watershed Forest Reserve for
watershed, soil protection, and timber production purposes, subject to private rights, if
any there be, under the administration and control of the Director of Forestry, . . . the
following parcels of land of the public domain situated in the municipality of Olongapo,
province of Zambales, described in the Bureau of Forestry map No. FR-132, to wit: . . ."
(60 O.G. No. 23, 3198)
Petitioner-appellant relies on Ordinary Timber License No. 20-'64 (NEW) for his alleged
right over the timber concession in question. He argues thus: "The facts alleged in the
petition show: (1) the legal right of the petitioner to log in the area covered by his timber
license; (2) the legal or corresponding obligation on the part of the respondents to give
effect, recognize and respect the very timber license they issued to the petitioner; and
(3) the act of the respondents in arbitrarily revoking the timber license of the petitioner
without giving him his day in court and in preventing him from using and enjoying the
timber license issued to him in the regular course of official business" (p. 32, rec.).
In the light of petitioner-appellant's arguments, it is readily seen that the whole
controversy hinges on the validity or invalidityof his timber license.
WE fully concur with the findings of the trial court that petitioner-appellant's timber
license was signed and released without authority by then Acting Director Estanislao R.
Bernal of Forestry, and is therefore void ab initio. WE hereby quote such findings: cdphil
"In the first place, in general memorandum order No. 46 dated May 30, 1963, the
Director of Forestry was authorized to grant a new ordinary timber license only where the
area covered thereby was not more than 3,000 hectares; the tract ofpublic forest
awarded to the petitioner contained 6,420 hectares (Exhs. 2-A and 2-B Ravago,
embodied in Annex B; Exh. B). The petitioner contends that only 1,756 hectares of the
said area contain commercial and operable forest; the authority given to the Director of
Forestry to grant a new ordinary timber license of not more than 3,000 hectares does not
state that the whole area should be commercial and operable forest. It should be taken
into consideration that the 1,756 hectares containing commercial and operable forest
must have been distributed in the whole area of 6,420 hectares. Besides the license
states, 'Please see attached sketch and technical description,' gives an area of 6,420
hectares and does not state what is the area covered of commercial and operable forest
(Exh. 1-Ravago). Also Annex B ofthe petition, which was marked as Exhibit B, states:

" 'Under Notice No. 2087, a tract of public forest containing 6,420 hectares located in
Olongapo, Zambales was declared available for timber utilization and development.
Pursuant to this Notice, there were received bid proposals from the following persons: . . .
" 'Wherefore, confirming the findings of said Committee, the area described in Notice No.
2087 shall be awarded, as it is hereby awarded to Wenceslao Vinzons Tan, subject to the
following conditions: . . .'
"In the second place, at the time it was released to the petitioner, the Acting Director of
Forestry had no more authority to grant any license. The license was signed by the
Acting Director of Forestry on December 19, 1963, and released to the petitioner on
January 6, 1964 (Exh. 1-Ravago). The authority delegated to the Director of Forestry to
grant a new ordinary timber license was contained in general memorandum order No. 46
dated May 30, 1963. This was revoked by general memorandum order No. 60, which was
promulgated on December 19, 1963. In view thereof, the Director of Forestry had no
longer any authority to release the license on January 6, 1964, and said license is
therefore void ab initio" (pp. 479-480, CFI rec.)
The release of the license on January 6, 1964, gives rise to the impression that it was
ante-dated to December 19, 1963 on which date the authority of the Director of Forestry
was revoked. But, what is of greatest importance is the date of the release or issuance,
and not the date of the signing of the license. While petitioner-appellant's timber license
might have been signed on December 19, 1963 it was released only on January 6, 1964.
Before its release, no right is acquired by the licensee. As pointed out by the trial court,
the Director of Forestry had no longer any authority to release the license on January 6,
1964. Therefore, petitioner-appellant had not acquired any legal right under such void
license. This is evident on the face of his petition as supplemented by its annexes which
includes Ordinary Timber License No. 20-'64 (NEW). Thus, in the case of World Wide
Insurance & Surety Co., Inc. vs. Macrohon, et al. (105 Phil. 250, Feb. 28, 1959), this Court
held that if from the face of the complaint, as supplemented by its annexes, plaintiff is
not the owner, or entitled to the properties it claims to have been levied upon and sold
at public auction by the defendants and for which it now seeks indemnity, the said
complaint does not give plaintiff any right of action against the defendants. In the same
case, this Court further held that, in acting on a motion to dismiss, the court cannot
separate the complaint from its annexes where it clearly appears that the claim of the
plaintiff to be the owner of the properties in question is predicated on said annexes.
Accordingly, petitioner-appellant's petition must be dismissed due to lack of cause of
action.
II.
Petitioner-appellant, in his petition, alleged that he has exhausted all his administrative
remedies to no avail as respondents-appellees have failed, neglected, refused and
continue to refuse to allow petitioner-appellant to continue operation in the area covered
by his timber license. He further alleged that he has neither recourse by way of appeal,
nor any plain, speedy and adequate remedy in the ordinary course of law except thru
this special civil action, as the last official act of the respondent-appellee Secretary of
Agriculture and Natural Resources in declaring void the timber license referred to above
after denying petitioner-appellant's motion for reconsideration, is the last administrative
act. Petitioner-appellant relies on the case of Demaisip vs. The Court of Appeals, et al.

(106 Phil. 237, Sept. 24, 1959), wherein it was held that the failure of the plaintiff to
appeal from the adverse decision of the Secretary to the President cannot preclude the
plaintiff from taking court action in view of the theory that the Secretary of a department
is merely an alter-ego of the President. The presumption is that the action of the
Secretary bears the implied sanction of the President unless the same is disapproved by
the latter (Villena vs. the Secretary of Interior, 67 Phil. 451; p. 7, CFI rec.)
To this We cannot agree. Petitioner-appellant did not appeal the order of the respondent
Secretary of Agriculture and Natural Resources to the President of the Philippines, who
issued Executive Proclamation No. 238 withdrawing the area from private exploitation,
and establishing it as the Olongapo Watershed Forest Reserve. Considering that the
President has the power to review on appeal the orders or acts of the respondentsappellees, the failure of the petitioner-appellant to take that appeal is failure on his part
to exhaust his administrative remedies. Thus, this Court, in the case of Calo vs. Fuertes
(5 SCRA 399, 400, June 29, 1962), held that:
"At any rate, the appellant's contention that, as the Secretary of Agriculture and Natural
Resources is the alter ego of the President and his acts or decisions are also those of the
latter, he need not appeal from the decision or opinion of the former to the latter, and
that, such being the case, after he had appealed to the Secretary of Agriculture and
Natural Resources from the decision or opinion of the Director of Lands he had exhausted
all the administrative remedies, is untenable.
"The withdrawal of the appeal taken to the President of the Philippines is tantamount to
not appealing all thereto. Such withdrawal is fatal, because the appeal to the President is
the last step he should take in an administrative case."

In 1912, in the case of Lamb vs. Phipps (22 Phil. 491-92, July 22, 1912), this Court
stressed the doctrine of exhaustion ofadministrative remedies, thus:
"When a plain, adequate and speedy remedy is afforded by and within the executive
department of the government the courts will not interfere until at least that remedy has
been exhausted. (Jao Igco vs. Shuster, 10 Phil. Rep. 448; Ekiu vs. U.S., 142 U.S. 651; U.S.
vs. Sing Tuck, 194 U.S. 161; U.S. vs. Ju Toy, 198 U.S. 253; Chiu Yow vs. U.S., 28 Sup. Ct.
Rep. 201).The administrative remedies afforded by law must first be exhausted before
resort can be had to the courts, especially when the administrative remedies are by law
exclusive and final. Some matters and some questions are by law delegated entirely and
absolutely to the discretion of particular branches of the executive department of the
government. When the law confers exclusive and final jurisdiction upon the executive
department of the government to dispose of particular questions, their judgments or the
judgments of that particular department are no more reviewable by the courts than the
final judgment or decisions of the courts are subject to be reviewed and modified by
them" (emphasis supplied)
Moreover, this being a special civil action, petitioner-appellant must allege and prove
that he has no other speedy and adequate remedy (Diego vs. The Court of Appeals, et
al., 54 Off. Gaz., No. 4, 956). In the case at bar, petitioner-appellant's speedy and
adequate remedy is an appeal to the President of the Philippines. prcd

Accordingly, "it is settled to the point of being elementary that the only question
involved in certiorari is jurisdiction, either want of jurisdiction or excess thereof, and
abuse of discretion shall warrant the issuance of the extraordinary remedy ofcertiorari
when the same is so grave as when the power is exercised in an arbitrary or despotic
manner by reason of passion, prejudice or personal hostility, and it must be so patent
and gross as to amount to an evasion of positive duty, or to a virtual refusal to perform a
duty enjoined, or to act at all in contemplation of law" (F.S. Divinagracia AgroCommercial Inc. vs. Courtof Appeals, 104 SCRA 191 [April 21, 1981]). The foregoing is on
the assumption that there is any irregularity, albeit there is none in the acts or omissions
of the respondents-appellees. Certiorari is not a substitute for appeal as held time and
again by this Court (People vs. Villanueva, 110 SCRA 465), "it being a time honored and
well known principle that before seeking judicial redress, a party must first exhaust the
administrative remedies available" (Garcia vs. Teehankee, 27 SCRA 944, April 18, 1969).
"Moreover, from the decision of the Secretary of Agriculture and Natural Resources
complained of, petitioners had a plain, speedy and adequate remedy by appealing
therefrom to the Chief Executive. In other words, before filing the present action for
certiorari in the court below, they should have availed of this administrative remedy and
their failure to do so must be deemed fatal to their case [Calo vs. Fuertes, et al., G.R. No.
L-16537, June 29, 1962]. To place petitioners' case beyond the paleof this rule, they must
show that their case falls which it does not within the cases where, in accordance
with our decisions, the aggrieved party need not exhaust administrative remedies within
his reach in the ordinary course of the law [Tapales vs. The President and the Board of
Regents of the U.P., G.R. No. L-17532, March 30, 1963; Mangubat vs. Osmea, G.R. No. L12837, April 30, 1959; Baguio vs. Hon. Jose Rodriguez, G.R. No. L-11078, May 27, 1959;
Pascual vs. Provincial Board, G.R. No. L-11959, Oct. 31, 1959; Marinduque Iron Mines,
etc. vs. Secretary of Public Works, G.R. No. L-15982, May 31, 1963; Alzate vs. Aldaba,
G.R. No. L-14407, Feb. 29, 1960 and Demaisip vs. Court of Appeals, G.R. No. L-13000,
Sept. 25, 1959]" (Ganob vs. Ramas, 27 SCRA 1178, April 28, 1969).
III.
Petitioner-appellant not only failed to exhaust his administrative remedies, but also failed
to note that his action is a suit against the State which, under the doctrine of State
immunity from suit, cannot prosper unless the State gives its consent to be sued
(Kawananakoa vs. Polybank, 205 U.S. 349; Siren vs. U.S., 7 Wall. 152; Sec. 16, Art. XV,
1973 Constitution)
The respondents-appellees, in revoking the petitioner-appellant's timber license, were
acting within the scope of their authority. Petitioner-appellant contends that "this case is
not a suit against the State but an application of a sound principleof law whereby
administrative decisions or actuations may be reviewed by the courts as a protection
afforded the citizens against oppression" (p. 122, CFI rec.). But, piercing the shard of his
contention, We find that petitioner-appellant's action is just an attempt to circumvent the
rule establishing State exemption from suits. He cannot use that principle of law to profit
at the expense and prejudice of the State and its citizens. The promotion of public
welfare and the protection of the inhabitants near the public forest are property, rights
and interest of the State. Accordingly, "the rule establishing State exemption from suits
may not be circumvented by directing the action against the officers of the State instead
of against the State itself. In such cases the State's immunity may be validly invoked

against the action as long as it can be shown that the suit really affects the property,
rights, or interests of the State and not merely those of the officer nominally made party
defendant" (SINCO, Phil. Political Law, 10th ed., p. 35; Salgado vs. Ramos, 64 Phil. 724;
see also Angat River Irrigation System vs. Angat River Workers' Union, G.R. No. L-1094344, Dec. 28, 1957, 102 Phil. 789, 800-802; Mobil Phil. vs. Customs Arrastre Service, 18
SCRA 1120, 1121-1125; Bureau of Printing vs. Bureau of Printing Employees' Association,
1 SCRA 340, 341, 343).
Both the Secretary of Agriculture and Natural Resources and the Director of Forestry
acted in their capacity as officers of the State, representatives of the sovereign authority
discharging governmental powers. A private individual cannot issue a timber license. cdll
Consequently, a favorable judgment for the petitioner-appellant would result in the
government losing a substantial part ofits timber resources. This being the case,
petitioner-appellant's action cannot prosper unless the State gives its consent to be
sued.
IV.
Granting arguendo, that petitioner-appellant's timber license is valid, still respondentsappellees can validly revoke his timber license. As pointed out earlier, paragraph 27 of
the rules and regulations included in the ordinary timber license states: "The terms and
conditions of this license are subject to change at the discretion of the Director of
Forestry, and that this license may be made to expire at an earlier date, when public
interests so require" (Exh. D, p. 22, CFI rec.). A timber license is an instrument by which
the State regulates the utilization and disposition of forest resources to the end that
public welfare is promoted. A timber license is not a contract, within the purview of the
due process clause; it is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this case.
"A license is merely a permit or privilege to do what otherwise would be unlawful, and is
not a contract between the authority, federal, state, or municipal, granting it and the
person to whom it is granted; neither is it property or a property right, nor does it create
a vested right; nor is it taxation" (37 C.J. 168). Thus, this Court held that the granting of
license does not create irrevocable rights, neither is it property or property rights (People
vs. Ong Tin, 54 O.G. 7576). In the case of Pedrovs. Provincial Board of Rizal (56 Phil. 123),
it was held that:
"A license authorizing the operation and exploitation of a cockpit is not property of which
the holder may not be deprived without due process of law, but a mere privilege which
may be revoked when public interests so require."
The welfare of the people is the supreme law. Thus, no franchise or right can be availed
of to defeat the proper exercise ofpolice power (Surigao Electric Co., Inc. vs. Municipality
of Surigao, 24 SCRA 898, Aug. 30, 1968). The State has inherent power enabling it to
prohibit all things hurtful to comfort, safety, and welfare of society (Edu vs. Ericta, 35
SCRA 481, Oct. 24, 1970)
V.

As provided in the aforecited provision, timber licenses are subject to the authority of the
Director of Forestry. The utilization and disposition of forest resources is directly under
the control and supervision of the Director of Forestry. However, "while Section 1831 of
the Revised Administrative Code provides that forest products shall be cut, gathered and
removed from any forest only upon license from the Director of Forestry, it is no less true
that as a subordinate officer, the Director of Forestry is subject to the control of the
Department Head or the Secretary of Agriculture and Natural Resources (Sec. 79[c], Rev.
Adm. Code), who, therefore, may impose reasonable regulations in the exercise of the
powers of the subordinate officer" (Directorof Forestry vs. Benedicto, 104 SCRA 309, May
5, 1981). The power of control of the Department Head over bureaus and offices includes
the power to modify, reverse or set aside acts of subordinate officials (Province of
Pangasinan vs. Secretary ofPublic Works and Communications, 30 SCRA 134, Oct. 31,
1969; Montano vs. Silvosa, 97 Phil. 143, 144, 147-148). Accordingly, respondent-appellee
Secretary of Agriculture and Natural Resources has the authority to revoke, on valid
grounds, timber licenses issued by the Director of Forestry. There being supporting
evidence, the revocation of petitioner-appellant's timber license was a wise exercise of
the power of the respondent-appellee (Secretary of Agriculture and Natural Resources)
and therefore, valid. prLL

Thus, "this Court had rigorously adhered to the principle of conserving forest resources,
as corollary to which the alleged right to them of private individuals or entities was
meticulously inquired into and more often than not rejected. We do so again" (Director of
Forestry vs. Benedicto, supra). WE reiterate Our fidelity to the basic policy of conserving
the national patrimony as ordained by the Constitution.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, THE ORDER APPEALED FROM IS HEREBY
AFFIRMED IN TOTO. COSTS AGAINST PETITIONER-APPELLANT.
SO ORDERED.
Concepcion Jr., Guerrero, Abad Santos and Escolin, JJ., concur.
Aquino, J., concurs in the result.
De Castro, J., is on leave.
||| (Tan v. Director of Forestry, G.R. No. L-24548, [October 27, 1983], 210 PHIL 244-267)

48. UP V DIZON
[G.R. No. 171182. August 23, 2012.]
UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA, RAUL P. DE GUZMAN, RUBEN P.
ASPIRAS, EMMANUEL P. BELLO, WILFREDO P. DAVID, CASIANO S. ABRIGO, and JOSEFINA
R. LICUANAN, petitioners, vs. HON. AGUSTIN S. DIZON, in his capacity as Presiding Judge

of the Regional Trial Court of Quezon City, Branch 80, STERN BUILDERS, INC., and
SERVILLANO DELA CRUZ, respondents.
DECISION
BERSAMIN, J p:
Trial judges should not immediately issue writs of execution or garnishment against the
Government or any of its subdivisions, agencies and instrumentalities to enforce money
judgments. 1 They should bear in mind that the primary jurisdiction to examine, audit
and settle all claims of any sort due from the Government or any of its subdivisions,
agencies and instrumentalities pertains to the Commission on Audit (COA) pursuant to
Presidential Decree No. 1445 (Government Auditing Code of the Philippines).
The Case
On appeal by the University of the Philippines and its then incumbent officials
(collectively, the UP) is the decision promulgated on September 16, 2005, 2 whereby the
Court of Appeals (CA) upheld the order of the Regional Trial Court (RTC), Branch 80, in
Quezon City that directed the garnishment of public funds amounting to P16,370,191.74
belonging to the UP to satisfy the writ of execution issued to enforce the already final
and executory judgment against the UP.
Antecedents
On August 30, 1990, the UP, through its then President Jose V. Abueva, entered into a
General Construction Agreement with respondent Stern Builders Corporation (Stern
Builders), represented by its President and General Manager Servillano dela Cruz, for the
construction of the extension building and the renovation of the College of Arts and
Sciences Building in the campus of the University of the Philippines in Los Baos (UPLB).
3 IASTDE
In the course of the implementation of the contract, Stern Builders submitted three
progress billings corresponding to the work accomplished, but the UP paid only two of
the billings. The third billing worth P273,729.47 was not paid due to its disallowance by
the Commission on Audit (COA). Despite the lifting of the disallowance, the UP failed to
pay the billing, prompting Stern Builders and dela Cruz to sue the UP and its corespondent officials to collect the unpaid billing and to recover various damages. The
suit, entitled Stern Builders Corporation and Servillano R. Dela Cruz v. University of
thePhilippines Systems, Jose V. Abueva, Raul P. de Guzman, Ruben P. Aspiras, Emmanuel
P. Bello, Wilfredo P. David, Casiano S. Abrigo, and Josefina R. Licuanan, was docketed as
Civil Case No. Q-93-14971 of the Regional Trial Court in Quezon City (RTC). 4
After trial, on November 28, 2001, the RTC rendered its decision in favor of the plaintiffs,
5 viz.:
Wherefore, in the light of the foregoing, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering the latter to pay plaintiff, jointly and
severally, the following, to wit:
1. P503,462.74 amount of the third billing, additional accomplished work and retention
money

2. P5,716,729.00 in actual damages

3. P10,000,000.00 in moral damages
4. P150,000.00 and P1,500.00 per appearance as attorney's fees; and
5. Costs of suit.
SO ORDERED.
Following the RTC's denial of its motion for reconsideration on May 7, 2002, 6 the UP filed
a notice of appeal on June 3, 2002. 7Stern Builders and dela Cruz opposed the notice of
appeal on the ground of its filing being belated, and moved for the execution of the
decision. The UP countered that the notice of appeal was filed within the reglementary
period because the UP's Office of Legal Affairs (OLS) in Diliman, Quezon City received the
order of denial only on May 31, 2002. On September 26, 2002, the RTC denied due
course to the notice of appeal for having been filed out of time and granted the private
respondents' motion for execution. 8 CDESIA
The RTC issued the writ of execution on October 4, 2002, 9 and the sheriff of the RTC
served the writ of execution and noticeof demand upon the UP, through its counsel, on
October 9, 2002. 10 The UP filed an urgent motion to reconsider the order dated
September 26, 2002, to quash the writ of execution dated October 4, 2002, and to
restrain the proceedings. 11However, the RTC denied the urgent motion on April 1, 2003.
12
On June 24, 2003, the UP assailed the denial of due course to its appeal through a
petition for certiorari in the Court ofAppeals (CA), docketed as CA-G.R. No. 77395. 13
On February 24, 2004, the CA dismissed the petition for certiorari upon finding that the
UP's notice of appeal had been filed late, 14 stating:
Records clearly show that petitioners received a copy of the Decision dated November
28, 2001 and January 7, 2002, thus, they had until January 22, 2002 within which to file
their appeal. On January 16, 2002 or after the lapse of nine (9) days, petitioners through
their counsel Atty. Nolasco filed a Motion for Reconsideration of the aforesaid decision,
hence, pursuant to the rules, petitioners still had six (6) remaining days to file their
appeal. As admitted by the petitioners in their petition (Rollo, p. 25), Atty. Nolasco
received a copy of the Order denying their motion for reconsideration on May 17, 2002,
thus, petitioners still has until May 23, 2002 (the remaining six (6) days) within which to
file their appeal. Obviously, petitioners were not able to file their Notice of Appeal on May
23, 2002 as it was only filed on June 3, 2002.
In view of the said circumstances, We are of the belief and so holds that the Notice of
Appeal filed by the petitioners was really filed out of time, the same having been filed
seventeen (17) days late of the reglementary period. By reason ofwhich, the decision
dated November 28, 2001 had already become final and executory. "Settled is the rule
that the perfection of an appeal in the manner and within the period permitted by law is
not only mandatory but jurisdictional, and failure to perfect that appeal renders the
challenged judgment final and executory. This is not an empty procedural rule but is
grounded on fundamental considerations of public policy and sound practice." (Ram's

Studio and Photographic Equipment, Inc. vs. Court of Appeals, 346 SCRA 691, 696).
Indeed, Atty. Nolasco received the order of denialof the Motion for Reconsideration on
May 17, 2002 but filed a Notice of Appeal only on June 3, 3003. As such, the decisionof
the lower court ipso facto became final when no appeal was perfected after the lapse of
the reglementary period. This procedural caveat cannot be trifled with, not even by the
High Court. 15 TDEASC
The UP sought a reconsideration, but the CA denied the UP's motion for reconsideration
on April 19, 2004. 16
On May 11, 2004, the UP appealed to the Court by petition for review on certiorari (G.R.
No. 163501).
On June 23, 2004, the Court denied the petition for review. 17 The UP moved for the
reconsideration of the denial of its petition for review on August 29, 2004, 18 but the
Court denied the motion on October 6, 2004. 19 The denial became final and executory
on November 12, 2004. 20
In the meanwhile that the UP was exhausting the available remedies to overturn the
denial of due course to the appeal and the issuance of the writ of execution, Stern
Builders and dela Cruz filed in the RTC their motions for execution despite their previous
motion having already been granted and despite the writ of execution having already
issued. On June 11, 2003, the RTC granted another motion for execution filed on May 9,
2003 (although the RTC had already issued the writ of execution on October 4, 2002). 21
On June 23, 2003 and July 25, 2003, respectively, the sheriff served notices of
garnishment on the UP's depository banks, namely: Land Bank of the Philippines
(Buendia Branch) and the Development Bank of the Philippines (DBP), Commonwealth
Branch. 22 The UP assailed the garnishment through an urgent motion to quash the
notices of garnishment; 23 and a motion to quash the writ of execution dated May 9,
2003. 24
On their part, Stern Builders and dela Cruz filed their ex parte motion for issuance of a
release order. 25
On October 14, 2003, the RTC denied the UP's urgent motion to quash, and granted Stern
Builders and dela Cruz's ex partemotion for issuance of a release order. 26
The UP moved for the reconsideration of the order of October 14, 2003, but the RTC
denied the motion on November 7, 2003. 27
On January 12, 2004, Stern Builders and dela Cruz again sought the release of the
garnished funds. 28 Despite the UP's opposition, 29 the RTC granted the motion to
release the garnished funds on March 16, 2004. 30 On April 20, 2004, however, the RTC
held in abeyance the enforcement of the writs of execution issued on October 4, 2002
and June 3, 2003 and all the ensuing notices of garnishment, citing Section 4, Rule 52,
Rules of Court, which provided that the pendency of a timely motion for reconsideration
stayed the execution of the judgment. 31 cDCIHT
On December 21, 2004, the RTC, through respondent Judge Agustin S. Dizon, authorized
the release of the garnished funds ofthe UP, 32 to wit:

WHEREFORE, premises considered, there being no more legal impediment for the release
of the garnished amount in satisfaction of the judgment award in the instant case, let the
amount garnished be immediately released by the Development Bank of the Philippines,
Commonwealth Branch, Quezon City in favor of the plaintiff.
SO ORDERED.
The UP was served on January 3, 2005 with the order of December 21, 2004 directing
DBP to release the garnished funds. 33
On January 6, 2005, Stern Builders and dela Cruz moved to cite DBP in direct contempt of
court for its non-compliance with the order of release. 34
Thereupon, on January 10, 2005, the UP brought a petition for certiorari in the CA to
challenge the jurisdiction of the RTC in issuing the order of December 21, 2004 (CA-G.R.
CV No. 88125). 35 Aside from raising the denial of due process, the UP averred that the
RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in
ruling that there was no longer any legal impediment to the release of the garnished
funds. The UP argued that government funds and properties could not be seized by
virtue of writs of execution or garnishment, as held in Department of Agriculture v.
National Labor Relations Commission, 36 and citing Section 84 of Presidential Decree No.
1445 to the effect that "[r]evenue funds shall not be paid out of any public treasury or
depository except in pursuance of an appropriation law or other specific statutory
authority;" and that the order of garnishment clashed with the ruling in University of the
Philippines Board of Regents v. Ligot-Telan 37 to the effect that the funds belonging to
the UP were public funds.
On January 19, 2005, the CA issued a temporary restraining order (TRO) upon application
by the UP. 38
On March 22, 2005, Stern Builders and dela Cruz filed in the RTC their amended motion
for sheriff's assistance to implement the release order dated December 21, 2004, stating
that the 60-day period of the TRO of the CA had already lapsed. 39 The UP opposed the
amended motion and countered that the implementation of the release order be
suspended. 40
On May 3, 2005, the RTC granted the amended motion for sheriff's assistance and
directed the sheriff to proceed to the DBP to receive the check in satisfaction of the
judgment. 41
The UP sought the reconsideration of the order of May 3, 2005. 42
On May 16, 2005, DBP filed a motion to consign the check representing the judgment
award and to dismiss the motion to cite its officials in contempt of court. 43
On May 23, 2005, the UP presented a motion to withhold the release of the payment of
the judgment award. 44 HSDIaC
On July 8, 2005, the RTC resolved all the pending matters, 45 noting that the DBP had
already delivered to the sheriff Manager's Check No. 811941 for P16,370,191.74
representing the garnished funds payable to the order of Stern Builders and dela Cruz as
its compliance with the RTC's order dated December 21, 2004. 46 However, the RTC

directed in the same order that Stern Builders and dela Cruz should not encash the check
or withdraw its amount pending the final resolution of the UP's petition for certiorari, to
wit: 47
To enable the money represented in the check in question (No. 00008119411) to earn
interest during the pendency ofthe defendant University of the Philippines application for
a writ of injunction with the Court of Appeals the same may now be deposited by the
plaintiff at the garnishee Bank (Development Bank of the Philippines), the disposition of
the amount represented therein being subject to the final outcome of the case of the
University of the Philippines, et al. vs. Hon. Agustin S. Dizon, et al., (CA G.R. 88125)
before the Court of Appeals.
Let it be stated herein that the plaintiff is not authorized to encash and withdraw the
amount represented in the check in question and enjoy the same in the fashion of an
owner during the pendency of the case between the parties before the Court of Appeals
which may or may not be resolved in plaintiff's favor.
With the end in view of seeing to it that the check in question is deposited by the plaintiff
at the Development Bank of thePhilippines (garnishee bank), Branch Sheriff Herlan
Velasco is directed to accompany and/or escort the plaintiff in making the deposit of the
check in question.
SO ORDERED.
On September 16, 2005, the CA promulgated its assailed decision dismissing the UP's
petition for certiorari, ruling that the UP had been given ample opportunity to contest the
motion to direct the DBP to deposit the check in the name of Stern Builders and dela
Cruz; and that the garnished funds could be the proper subject of garnishment because
they had been already earmarked for the project, with the UP holding the funds only in a
fiduciary capacity, 48 viz.:
Petitioners next argue that the UP funds may not be seized for execution or garnishment
to satisfy the judgment award. Citing Department of Agriculture vs. NLRC, University of
the Philippines Board of Regents vs. Hon. Ligot-Telan, petitioners contend that UP
deposits at Land Bank and the Development Bank of the Philippines, being government
funds, may not be released absent an appropriations bill from Congress. TcIAHS
The argument is specious. UP entered into a contract with private respondents for the
expansion and renovation of the Arts and Sciences Building of its campus in Los Baos,
Laguna. Decidedly, there was already an appropriations earmarked for the said project.
The said funds are retained by UP, in a fiduciary capacity, pending completion of the
construction project.
We agree with the trial Court [sic] observation on this score:
"4. Executive Order No. 109 (Directing all National Government Agencies to Revert
Certain Accounts Payable to the Cumulative Result of Operations of the National
Government and for Other Purposes) Section 9. Reversion ofAccounts Payable, provides
that, all 1995 and prior years documented accounts payable and all undocumented
accounts regardless of the year they were incurred shall be reverted to the Cumulative
Result of Operations of the National Government (CROU). This shall apply to accounts

payable of all funds, except fiduciary funds, as long as the purpose for which the funds
were created have not been accomplished and accounts payable under foreign assisted
projects for the duration of the said project. In this regard, the Department of Budget and
Management issued Joint-Circular No. 99-6 4.0 (4.3) Procedural Guidelines which
provides that all accounts payable that reverted to the CROU may be considered for
payment upon determination thru administrative process, of the existence, validity and
legality of the claim. Thus, the allegation of the defendants that considering no
appropriation for the payment of any amount awarded to plaintiffs appellee the funds of
defendant-appellants may not be seized pursuant to a writ of execution issued by the
regular court is misplaced. Surely when the defendants and the plaintiff entered into the
General Construction of Agreement there is an amount already allocated by the latter for
the said project which is no longer subject of future appropriation." 49
After the CA denied their motion for reconsideration on December 23, 2005, the
petitioners appealed by petition for review.
Matters Arising During the Pendency of the Petition
On January 30, 2006, Judge Dizon of the RTC (Branch 80) denied Stern Builders and dela
Cruz's motion to withdraw the deposit, in consideration of the UP's intention to appeal to
the CA, 50 stating:
Since it appears that the defendants are intending to file a petition for review of the
Court of Appeals resolution in CA-G.R. No. 88125 within the reglementary period of
fifteen (15) days from receipt of resolution, the Court agrees with the defendants stand
that the granting of plaintiffs' subject motion is premature.
Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in
part that the "disposition of the amount represented therein being subject to the final
outcome of the case of the University of the Philippines, et al. vs. Hon. Agustin S. Dizon,
et al., (CA G.R. No. 88125 before the Court of Appeals) is that the judgment or resolution
of said court has to be final and executory, for if the same will still be elevated to the
Supreme Court, it will not attain finality yet until the highest court has rendered its own
final judgment or resolution. 51 CAScIH
However, on January 22, 2007, the UP filed an Urgent Application for A Temporary
Restraining Order and/or A Writ ofPreliminary Injunction, 52 averring that on January 3,
2007, Judge Maria Theresa dela Torre-Yadao (who had meanwhile replaced Judge Dizon
upon the latter's appointment to the CA) had issued another order allowing Stern
Builders and dela Cruz to withdraw the deposit, 53 to wit:
It bears stressing that defendants' liability for the payment of the judgment obligation
has become indubitable due to the final and executory nature of the Decision dated
November 28, 2001. Insofar as the payment of the [sic] judgment obligation is
concerned, the Court believes that there is nothing more the defendant can do to escape
liability. It is observed that there is nothing more the defendant can do to escape liability.
It is observed that defendant U.P. System had already exhausted all its legal remedies to
overturn, set aside or modify the decision (dated November 28, 2001 (rendered against
it. The way the Court sees it, defendant U.P. System's petition before the Supreme Court
concerns only with the manner by which said judgment award should be satisfied. It has

nothing to do with the legality or propriety thereof, although it prays for the deletion of
[sic] reduction of the award of moral damages.
It must be emphasized that this Court's finding, i.e., that there was sufficient
appropriation earmarked for the project, was upheld by the Court of Appeals in its
decision dated September 16, 2005. Being a finding of fact, the Supreme Court will,
ordinarily, not disturb the same was said Court is not a trier of fact. Such being the case,
defendants' arguments that there was no sufficient appropriation for the payment of the
judgment obligation must fail.
While it is true that the former Presiding Judge of this Court in its Order dated January 30,
2006 had stated that:
Let it be stated that what the Court meant by its Order dated July 8, 2005 which states in
part that the "dispositionof the amount represented therein being subject to the final
outcome of the case of the University of thePhilippines, et al. vs. Hon. Agustin S. Dizon,
et al., (CA G.R. No. 88125 before the Court of Appeals) is that the judgment or resolution
of said court has to be final and executory, for if the same will still be elevated to the
Supreme Court, it will not attain finality yet until the highest court has rendered its own
final judgment or resolution. ITDHcA
it should be noted that neither the Court of Appeals nor the Supreme Court issued a
preliminary injunction enjoining the release or withdrawal of the garnished amount. In
fact, in its present petition for review before the Supreme Court, U.P. System has not
prayed for the issuance of a writ of preliminary injunction. Thus, the Court doubts
whether such writ is forthcoming.
The Court honestly believes that if defendants' petition assailing the Order of this Court
dated December 31, 2004 granting the motion for the release of the garnished amount
was meritorious, the Court of Appeals would have issued a writ of injunction enjoining
the same. Instead, said appellate [c]ourt not only refused to issue a wit of preliminary
injunction prayed for by U.P. System but denied the petition, as well. 54
The UP contended that Judge Yadao thereby effectively reversed the January 30, 2006
order of Judge Dizon disallowing the withdrawal of the garnished amount until after the
decision in the case would have become final and executory.
Although the Court issued a TRO on January 24, 2007 to enjoin Judge Yadao and all
persons acting pursuant to her authority from enforcing her order of January 3, 2007, 55
it appears that on January 16, 2007, or prior to the issuance of the TRO, she had already
directed the DBP to forthwith release the garnished amount to Stern Builders and dela
Cruz; 56 and that DBP had forthwith complied with the order on January 17, 2007 upon
the sheriff's service of the order of Judge Yadao. 57
These intervening developments impelled the UP to file in this Court a supplemental
petition on January 26, 2007, 58 alleging that the RTC (Judge Yadao) gravely erred in
ordering the immediate release of the garnished amount despite the pendency ofthe
petition for review in this Court.
The UP filed a second supplemental petition 59 after the RTC (Judge Yadao) denied the
UP's motion for the redeposit of the withdrawn amount on April 10, 2007, 60 to wit:

This resolves defendant U.P. System's Urgent Motion to Redeposit Judgment Award
praying that plaintiffs be directed to redeposit the judgment award to DBP pursuant to
the Temporary Restraining Order issued by the Supreme Court. Plaintiffs opposed the
motion and countered that the Temporary Restraining Order issued by the Supreme
Court has become moot and academic considering that the act sought to be restrained
by it has already been performed. They also alleged that the redeposit of the judgment
award was no longer feasible as they have already spent the same.
It bears stressing, if only to set the record straight, that this Court did not in its Order
dated January 3, 2007 (the implementation of which was restrained by the Supreme
Court in its Resolution dated January 24, 2002) direct that that garnished amount "be
deposited with the garnishee bank (Development Bank of the Philippines)". In the first
place, there was no need to order DBP to make such deposit, as the garnished amount
was already deposited in the account ofplaintiffs with the DBP as early as May 13, 2005.
What the Court granted in its Order dated January 3, 2007 was plaintiff's motion to allow
the release of said deposit. It must be recalled that the Court found plaintiff's motion
meritorious and, at that time, there was no restraining order or preliminary injunction
from either the Court of Appeals or the Supreme Court which could have enjoined the
release of plaintiffs' deposit. The Court also took into account the following
factors:DCASIT
a) the Decision in this case had long been final and executory after it was rendered on
November 28, 2001;
b) the propriety of the dismissal of U.P. System's appeal was upheld by the Supreme
Court;
c) a writ of execution had been issued;
d) defendant U.P. System's deposit with DBP was garnished pursuant to a lawful writ of
execution issued by the Court; and
e) the garnished amount had already been turned over to the plaintiffs and deposited in
their account with DBP.
The garnished amount, as discussed in the Order dated January 16, 2007, was already
owned by the plaintiffs, having been delivered to them by the Deputy Sheriff of this
Court pursuant to par. (c), Section 9, Rule 39 of the 1997 Rules ofCivil Procedure.
Moreover, the judgment obligation has already been fully satisfied as per Report of the
Deputy Sheriff.
Anent the Temporary Restraining Order issued by the Supreme Court, the same has
become functus oficio, having been issued after the garnished amount had been
released to the plaintiffs. The judgment debt was released to the plaintiffs on January 17,
2007, while the Temporary Restraining Order issued by the Supreme Court was received
by this Court on February 2, 2007. At the time of the issuance of the Restraining Order,
the act sought to be restrained had already been done, thereby rendering the said Order
ineffectual.
After a careful and thorough study of the arguments advanced by the parties, the Court
is of the considered opinion that there is no legal basis to grant defendant U.P. System's

motion to redeposit the judgment amount. Granting said motion is not only contrary to
law, but it will also render this Court's final executory judgment nugatory. Litigation must
end and terminate sometime and somewhere, and it is essential to an effective
administration of justice that once a judgment has become final the issue or cause
involved therein should be laid to rest. This doctrine of finality of judgment is grounded
on fundamental considerations of public policy and sound practice. In fact, nothing is
more settled in law than that once a judgment attains finality it thereby becomes
immutable and unalterable. It may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact
or law, and regardless of whether the modification is attempted to be made by the court
rendering it or by the highest court of the land.
WHEREFORE, premises considered, finding defendant U.P. System's Urgent Motion to
Redeposit Judgment Award devoidof merit, the same is hereby DENIED. AScHCD
SO ORDERED.
Issues
The UP now submits that:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISMISSING THE PETITION,
ALLOWING IN EFFECT THE GARNISHMENT OF UP FUNDS, WHEN IT RULED THAT FUNDS
HAVE ALREADY BEEN EARMARKED FOR THE CONSTRUCTION PROJECT; AND THUS, THERE
IS NO NEED FOR FURTHER APPROPRIATIONS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN ALLOWING GARNISHMENT OF A
STATE UNIVERSITY'S FUNDS IN VIOLATION OF ARTICLE XIV, SECTION 5(5) OF THE
CONSTITUTION.
III
IN THE ALTERNATIVE, THE UNIVERSITY INVOKES EQUITY AND THE REVIEW POWERS OF
THIS HONORABLE COURT TO MODIFY, IF NOT TOTALLY DELETE THE AWARD OF P10
MILLION AS MORAL DAMAGES TO RESPONDENTS.
IV
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE
OF THE JUDGMENT AWARD IN ITS ORDER DATED 3 JANUARY 2007 ON THE GROUND OF
EQUITY AND JUDICIAL COURTESY. IHDCcT
V
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN ORDERING THE IMMEDIATE RELEASE
OF THE JUDGMENT AWARD IN ITS ORDER DATED 16 JANUARY 2007 ON THE GROUND
THAT PETITIONER UNIVERSITY STILL HAS A PENDING MOTION FOR RECONSIDERATION OF
THE ORDER DATED 3 JANUARY 2007.

VI
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN NOT ORDERING THE REDEPOSIT OF
THE GARNISHED AMOUNT TO THE DBP IN VIOLATION OF THE CLEAR LANGUAGE OF THE
SUPREME COURT RESOLUTION DATED 24 JANUARY 2007.
The UP argues that the amount earmarked for the construction project had been
purposely set aside only for the aborted project and did not include incidental matters
like the awards of actual damages, moral damages and attorney's fees. In support of its
argument, the UP cited Article 12.2 of the General Construction Agreement, which
stipulated that no deductions would be allowed for the payment of claims, damages,
losses and expenses, including attorney's fees, in case ofany litigation arising out of the
performance of the work. The UP insists that the CA decision was inconsistent with the
rulings in Commissioner of Public Highways v. San Diego 61 and Department of
Agriculture v. NLRC 62 to the effect that government funds and properties could not be
seized under writs of execution or garnishment to satisfy judgment awards.
Furthermore, the UP contends that the CA contravened Section 5, Article XIV of the
Constitution by allowing the garnishmentof UP funds, because the garnishment resulted
in a substantial reduction of the UP's limited budget allocated for the remuneration, job
satisfaction and fulfillment of the best available teachers; that Judge Yadao should have
exhibited judicial courtesy towards the Court due to the pendency of the UP's petition for
review; and that she should have also desisted from declaring that the TRO issued by
this Court had become functus officio.
Lastly, the UP states that the awards of actual damages of P5,716,729.00 and moral
damages of P10 million should be reduced, if not entirely deleted, due to its being
unconscionable, inequitable and detrimental to public service. aECSHI
In contrast, Stern Builders and dela Cruz aver that the petition for review was fatally
defective for its failure to mention the other cases upon the same issues pending
between the parties (i.e., CA-G.R. No. 77395 and G.R. No. 163501); that the UP was
evidently resorting to forum shopping, and to delaying the satisfaction of the final
judgment by the filing of its petition for review; that the ruling in Commissioner of Public
Works v. San Diego had no application because there was an appropriation for the
project; that the UP retained the funds allotted for the project only in a fiduciary
capacity; that the contract price had been meanwhile adjusted to P22,338,553.25, an
amount already more than sufficient to cover the judgment award; that the UP's prayer
to reduce or delete the award of damages had no factual basis, because they had been
gravely wronged, had been deprived of their source of income, and had suffered untold
miseries, discomfort, humiliation and sleepless years; that dela Cruz had even been
constrained to sell his house, his equipment and the implements of his trade, and
together with his family had been forced to live miserably because of the wrongful
actuations of the UP; and that the RTC correctly declared the Court's TRO to be already
functus officio by reason of the withdrawal of the garnished amount from the DBP.
The decisive issues to be considered and passed upon are, therefore: (a) whether the
funds of the UP were the proper subject of garnishment in order to satisfy the judgment
award; and (b) whether the UP's prayer for the deletion of the awardsof actual damages
of P5,716,729.00, moral damages of P10,000,000.00 and attorney's fees of P150,000.00

plus P1,500.00 per appearance could be granted despite the finality of the judgment of
the RTC.
Ruling
The petition for review is meritorious.
I.
UP's funds, being government funds,
are not subject to garnishment
The UP was founded on June 18, 1908 through Act 1870 to provide advanced instruction
in literature, philosophy, the sciences, and arts, and to give professional and technical
training to deserving students. 63 Despite its establishment as a body corporate, 64 the
UP remains to be a "chartered institution" 65 performing a legitimate government
function. It is an institution of higher learning, not a corporation established for profit and
declaring any dividends. 66 In enacting Republic Act No. 9500 (The University of the
Philippines Charter of 2008), Congress has declared the UP as the national university
67"dedicated to the search for truth and knowledge as well as the development of future
leaders." 68 ASIDTa
Irrefragably, the UP is a government instrumentality, 69 performing the State's
constitutional mandate of promoting quality and accessible education. 70 As a
government instrumentality, the UP administers special funds sourced from the fees and
income enumerated under Act No. 1870 and Section 1 of Executive Order No. 714, 71
and from the yearly appropriations, to achieve the purposes laid down by Section 2 of
Act 1870, as expanded in Republic Act No. 9500. 72 All the funds going into the
possession of the UP, including any interest accruing from the deposit of such funds in
any banking institution, constitute a "special trust fund," the disbursement of which
should always be aligned with the UP's mission and purpose, 73 and should always be
subject to auditing by the COA. 74
Presidential Decree No. 1445 defines a "trust fund" as a fund that officially comes in the
possession of an agency of the government or of a public officer as trustee, agent or
administrator, or that is received for the fulfillment of some obligation.75 A trust fund
may be utilized only for the "specific purpose for which the trust was created or the
funds received." 76
The funds of the UP are government funds that are public in character. They include the
income accruing from the use of real property ceded to the UP that may be spent only
for the attainment of its institutional objectives. 77 Hence, the funds subjectof this action
could not be validly made the subject of the RTC's writ of execution or garnishment. The
adverse judgment rendered against the UP in a suit to which it had impliedly consented
was not immediately enforceable by execution against the UP, 78 because suability of
the State did not necessarily mean its liability. 79
A marked distinction exists between suability of the State and its liability. As the Court
succinctly stated in Municipality of San Fernando, La Union v. Firme: 80

A distinction should first be made between suability and liability. "Suability depends on
the consent of the state to be sued, liability on the applicable law and the established
facts. The circumstance that a state is suable does not necessarily mean that it is liable;
on the other hand, it can never be held liable if it does not first consent to be sued.
Liability is not conceded by the mere fact that the state has allowed itself to be sued.
When the state does waive its sovereign immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable.
Also, in Republic v. Villasor, 81 where the issuance of an alias writ of execution directed
against the funds of the Armed Forcesof the Philippines to satisfy a final and executory
judgment was nullified, the Court said: CDaTAI
. . . The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant's action "only up to the
completion of proceedings anterior to the stage of execution" and that the power of the
Courts ends when the judgment is rendered, since government funds and properties may
not be seized under writs of execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The functions and public
services rendered by the State cannot be allowed to be paralyzed or disrupted by the
diversion ofpublic funds from their legitimate and specific objects, as appropriated by
law.
The UP correctly submits here that the garnishment of its funds to satisfy the judgment
awards of actual and moral damages (including attorney's fees) was not validly made if
there was no special appropriation by Congress to cover the liability. It was, therefore,
legally unwarranted for the CA to agree with the RTC's holding in the order issued on
April 1, 2003 that no appropriation by Congress to allocate and set aside the payment of
the judgment awards was necessary because "there (were) already an appropriations
(sic) earmarked for the said project." 82 The CA and the RTC thereby unjustifiably
ignored the legal restriction imposed on the trust funds of the Government and its
agencies and instrumentalities to be used exclusivelyto fulfill the purposes for which the
trusts were created or for which the funds were received except upon express
authorization by Congress or by the head of a government agency in control of the
funds, and subject to pertinent budgetary laws, rules and regulations. 83
Indeed, an appropriation by Congress was required before the judgment that rendered
the UP liable for moral and actual damages (including attorney's fees) would be satisfied
considering that such monetary liabilities were not covered by the "appropriations
earmarked for the said project." The Constitution strictly mandated that "(n)o money
shall be paid out of the Treasury except in pursuance of an appropriation made by law."
84 TEacSA
II
COA must adjudicate private respondents' claim
before execution should proceed

The execution of the monetary judgment against the UP was within the primary
jurisdiction of the COA. This was expressly provided in Section 26 of Presidential Decree
No. 1445, to wit:
Section 26. General jurisdiction. The authority and powers of the Commission shall
extend to and comprehend all matters relating to auditing procedures, systems and
controls, the keeping of the general accounts ofthe Government, the preservation of
vouchers pertaining thereto for a period of ten years, the examination and inspection of
the books, records, and papers relating to those accounts; and the audit and settlement
of the accounts ofall persons respecting funds or property received or held by them in an
accountable capacity, as well as the examination, audit, and settlement of all debts and
claims of any sort due from or owing to the Government or any of its subdivisions,
agencies and instrumentalities. The said jurisdiction extends to all government-owned or
controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agenciesof the Government, and as herein prescribed, including nongovernmental entities subsidized by the government, those funded by donations through
the government, those required to pay levies or government share, and those for which
the government has put up a counterpart fund or those partly funded by the
government.
It was of no moment that a final and executory decision already validated the claim
against the UP. The settlement of the monetary claim was still subject to the primary
jurisdiction of the COA despite the final decision of the RTC having already validated the
claim. 85 As such, Stern Builders and dela Cruz as the claimants had no alternative
except to first seek the approval of the COA of their monetary claim.
On its part, the RTC should have exercised utmost caution, prudence and judiciousness in
dealing with the motions for execution against the UP and the garnishment of the UP's
funds. The RTC had no authority to direct the immediate withdrawal of any portion of the
garnished funds from the depository banks of the UP. By eschewing utmost caution,
prudence and judiciousness in dealing with the execution and garnishment, and by
authorizing the withdrawal of the garnished funds of the UP, the RTC acted beyond its
jurisdiction, and all its orders and issuances thereon were void and of no legal effect,
specifically: (a) the order Judge Yadao issued on January 3, 2007 allowing Stern Builders
and dela Cruz to withdraw the deposited garnished amount; (b) the order Judge Yadao
issued on January 16, 2007 directing DBP to forthwith release the garnish amount to
Stern Builders and dela Cruz; (c) the sheriff's report of January 17, 2007 manifesting the
full satisfaction of the writ of execution; and (d) the order of April 10, 2007 deying the
UP's motion for the redeposit of the withdrawn amount. Hence, such orders and
issuances should be struck down without exception. ScHADI
Nothing extenuated Judge Yadao's successive violations of Presidential Decree No. 1445.
She was aware of Presidential Decree No. 1445, considering that the Court circulated to
all judges its Administrative Circular No. 10-2000, 86 issued on October 25, 2000,
enjoining them "to observe utmost caution, prudence and judiciousness in the issuance
of writs ofexecution to satisfy money judgments against government agencies and local
government units" precisely in order to prevent the circumvention of Presidential Decree
No. 1445, as well as of the rules and procedures of the COA, to wit:

In order to prevent possible circumvention of the rules and procedures of the

Commission on Audit, judges are hereby enjoined to observe utmost caution, prudence
and judiciousness in the issuance of writs of execution to satisfy money judgments
against government agencies and local government units.
Judges should bear in mind that in Commissioner of Public Highways v. San Diego (31
SCRA 617, 625 [1970]), this Court explicitly stated:
"The universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit claimant's action 'only up to the completion
of proceedings anterior to the stage of execution' and that the power of the Court ends
when the judgment is rendered, since government funds and properties may not be
seized under writs of execution or garnishment to satisfy such judgments, is based on
obvious considerationsof public policy. Disbursements of public funds must be covered
by the corresponding appropriation as required by law. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as appropriated by law. IaHSCc
Moreover, it is settled jurisprudence that upon determination of State liability, the
prosecution, enforcement or satisfaction thereof must still be pursued in accordance with
the rules and procedures laid down in P.D. No. 1445, otherwise known as the
Government Auditing Code of the Philippines (Department of Agriculture v. NLRC, 227
SCRA 693, 701-02 [1993] citing Republic vs. Villasor, 54 SCRA 84 [1973]). All money
claims against the Government must first be filed with the Commission on Audit which
must act upon it within sixty days. Rejection of the claim will authorize the claimant to
elevate the matter to the Supreme Court on certiorari and in effect, sue the State
thereby (P.D. 1445, Sections 49-50).
However, notwithstanding the rule that government properties are not subject to levy
and execution unless otherwise provided for by statute (Republic v. Palacio, 23 SCRA 899
[1968]; Commissioner of Public Highways v. San Diego, supra) or municipal ordinance
(Municipality of Makati v. Court of Appeals, 190 SCRA 206 [1990]), the Court has, in
various instances, distinguished between government funds and properties for public use
and those not held for public use. Thus, in Viuda de Tan Toco v. Municipal Council of Iloilo
(49 Phil. 52 [1926]), the Court ruled that "[w]here property of a municipal or other public
corporation is sought to be subjected to execution to satisfy judgments recovered
against such corporation, the question as to whether such property is leviable or not is to
be determined by the usage and purposes for which it is held." The following can be
culled from Viuda de Tan Toco v. Municipal Council of Iloilo:
1. Properties held for public uses and generally everything held for governmental
purposes are not subject to levy and sale under execution against such corporation.
The same rule applies to funds in the hands ofa public officer and taxes due to a
municipal corporation.
2. Where a municipal corporation owns in its proprietary capacity, as distinguished from
its public or government capacity, property not used or used for a public purpose but for
quasi-private purposes, it is the general rule that such property may be seized and sold
under execution against the corporation.

3. Property held for public purposes is not subject to execution merely because it is
temporarily used for private purposes. If the public use is wholly abandoned, such
property becomes subject to execution.
This Administrative Circular shall take effect immediately and the Court Administrator
shall see to it that it is faithfully implemented.
Although Judge Yadao pointed out that neither the CA nor the Court had issued as of then
any writ of preliminary injunction to enjoin the release or withdrawal of the garnished
amount, she did not need any writ of injunction from a superior court to compel her
obedience to the law. The Court is disturbed that an experienced judge like her should
look at public laws likePresidential Decree No. 1445 dismissively instead of loyally
following and unquestioningly implementing them. That she did so turned her court into
an oppressive bastion of mindless tyranny instead of having it as a true haven for the
seekers ofjustice like the UP. TaCDIc
III
Period of appeal did not start without effective
service of decision upon counsel of record;
Fresh period rule announced in
Neypes v. Court of Appeals
can be given retroactive application
The UP next pleads that the Court gives due course to its petition for review in the name
of equity in order to reverse or modify the adverse judgment against it despite its finality.
At stake in the UP's plea for equity was the return of the amount ofP16,370,191.74
illegally garnished from its trust funds. Obstructing the plea is the finality of the
judgment based on the supposed tardiness of UP's appeal, which the RTC declared on
September 26, 2002. The CA upheld the declaration of finality on February 24, 2004, and
the Court itself denied the UP's petition for review on that issue on May 11, 2004 (G.R.
No. 163501). The denial became final on November 12, 2004.
It is true that a decision that has attained finality becomes immutable and unalterable,
and cannot be modified in any respect, 87 even if the modification is meant to correct
erroneous conclusions of fact and law, and whether the modification is made by the
court that rendered it or by this Court as the highest court of the land. 88 Public policy
dictates that once a judgment becomes final, executory and unappealable, the prevailing
party should not be deprived of the fruits of victory by some subterfuge devised by the
losing party. Unjustified delay in the enforcement of such judgment sets at naught the
role and purpose of the courts to resolve justiciable controversies with finality. 89 Indeed,
all litigations must at some time end, even at the risk of occasional errors.
But the doctrine of immutability of a final judgment has not been absolute, and has
admitted several exceptions, among them: (a) the correction of clerical errors; (b) the socalled nunc pro tunc entries that cause no prejudice to any party; (c) void judgments;
and (d) whenever circumstances transpire after the finality of the decision that render its
execution unjust and inequitable. 90 Moreover, in Heirs of Maura So v. Obliosca, 91 we

stated that despite the absence of the preceding circumstances, the Court is not
precluded from brushing aside procedural norms if only to serve the higher interests
ofjustice and equity. Also, in Gumaru v. Quirino State College, 92 the Court nullified the
proceedings and the writ of execution issued by the RTC for the reason that respondent
state college had not been represented in the litigation by the Office of the Solicitor
General.
We rule that the UP's plea for equity warrants the Court's exercise of the exceptional
power to disregard the declaration offinality of the judgment of the RTC for being in clear
violation of the UP's right to due process. aAcHCT
Both the CA and the RTC found the filing on June 3, 2002 by the UP of the notice of
appeal to be tardy. They based their finding on the fact that only six days remained of
the UP's reglementary 15-day period within which to file the notice ofappeal because the
UP had filed a motion for reconsideration on January 16, 2002 vis- -vis the RTC's
decision the UP received on January 7, 2002; and that because the denial of the motion
for reconsideration had been served upon Atty. Felimon D. Nolasco of the UPLB Legal
Office on May 17, 2002, the UP had only until May 23, 2002 within which to file the notice
of appeal.
The UP counters that the service of the denial of the motion for reconsideration upon
Atty. Nolasco was defective considering that its counsel of record was not Atty. Nolasco of
the UPLB Legal Office but the OLS in Diliman, Quezon City; and that the period of appeal
should be reckoned from May 31, 2002, the date when the OLS received the order. The
UP submits that the filing of the notice of appeal on June 3, 2002 was well within the
reglementary period to appeal.
We agree with the submission of the UP.
Firstly, the service of the denial of the motion for reconsideration upon Atty. Nolasco of
the UPLB Legal Office was invalid and ineffectual because he was admittedly not the
counsel of record of the UP. The rule is that it is on the counsel and not the client that the
service should be made. 93 That counsel was the OLS in Diliman, Quezon City, which
was served with the denial only on May 31, 2002. As such, the running of the remaining
period of six days resumed only on June 1, 2002, 94 rendering the filing of the UP's
notice of appeal on June 3, 2002 timely and well within the remaining days of the UP's
period to appeal.
Verily, the service of the denial of the motion for reconsideration could only be validly
made upon the OLS in Diliman, and no other. The fact that Atty. Nolasco was in the
employ of the UP at the UPLB Legal Office did not render the service upon him effective.
It is settled that where a party has appeared by counsel, service must be made upon
such counsel. 95 Service on the party or the party's employee is not effective because
such notice is not notice in law. 96 This is clear enough from Section 2, second
paragraph, of Rule 13, Rules of Court, which explicitly states that: "If any party has
appeared by counsel, service upon him shall be made upon his counsel or one of them,
unless service upon the party himself is ordered by the court. Where one counsel
appears for several parties, he shall only be entitled to one copy of any paper served
upon him by the opposite side." As such, the period to appeal resumed only on June 1,

2002, the date following the service on May 31, 2002 upon the OLS in Diliman of the
copy of the decision of the RTC, not from the date when the UP was notified. 97 TaEIcS
Accordingly, the declaration of finality of the judgment of the RTC, being devoid of factual
and legal bases, is set aside.
Secondly, even assuming that the service upon Atty. Nolasco was valid and effective,
such that the remaining period for the UP to take a timely appeal would end by May 23,
2002, it would still not be correct to find that the judgment of the RTC became final and
immutable thereafter due to the notice of appeal being filed too late on June 3, 2002.
In so declaring the judgment of the RTC as final against the UP, the CA and the RTC
applied the rule contained in the second paragraph of Section 3, Rule 41 of the Rules of
Court to the effect that the filing of a motion for reconsideration interrupted the running
of the period for filing the appeal; and that the period resumed upon notice of the denial
of the motion for reconsideration. For that reason, the CA and the RTC might not be taken
to task for strictly adhering to the rule then prevailing.
However, equity calls for the retroactive application in the UP's favor of the fresh-period
rule that the Court first announced in mid-September of 2005 through its ruling in
Neypes v. Court of Appeals, 98 viz.:
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of
15 days within which to file the notice of appeal in the Regional Trial Court, counted from
receipt of the order dismissing a motion for a new trial or motion for reconsideration.
The retroactive application of the fresh-period rule, a procedural law that aims "to
regiment or make the appeal period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration (whether full or partial) or
any final order or resolution," 99 is impervious to any serious challenge. This is because
there are no vested rights in rules of procedure. 100 A law or regulation is procedural
when it prescribes rules and forms of procedure in order that courts may be able to
administer justice. 101 It does not come within the legal conception of a retroactive law,
or is not subject of the general rule prohibiting the retroactive operation of statutes, but
is given retroactive effect in actions pending and undetermined at the time of its
passage without violating any right of a person who may feel that he is adversely
affected. AEIcSa
We have further said that a procedural rule that is amended for the benefit of litigants in
furtherance of the administration ofjustice shall be retroactively applied to likewise favor
actions then pending, as equity delights in equality. 102 We may even relax stringent
procedural rules in order to serve substantial justice and in the exercise of this Court's
equity jurisdiction. 103Equity jurisdiction aims to do complete justice in cases where a
court of law is unable to adapt its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal jurisdiction. 104
It is cogent to add in this regard that to deny the benefit of the fresh-period rule to the
UP would amount to injustice and absurdity injustice, because the judgment in
question was issued on November 28, 2001 as compared to the judgment inNeypes that
was rendered in 1998; absurdity, because parties receiving notices of judgment and final

orders issued in the year 1998 would enjoy the benefit of the fresh-period rule but the
later rulings of the lower courts like that herein would not.105
Consequently, even if the reckoning started from May 17, 2002, when Atty. Nolasco
received the denial, the UP's filing on June 3, 2002 of the notice of appeal was not tardy
within the context of the fresh-period rule. For the UP, the fresh period of 15-days
counted from service of the denial of the motion for reconsideration would end on June 1,
2002, which was a Saturday. Hence, the UP had until the next working day, or June 3,
2002, a Monday, within which to appeal, conformably with Section 1of Rule 22, Rules of
Court, which holds that: "If the last day of the period, as thus computed, falls on a
Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall
not run until the next working day."
IV
Awards of monetary damages,
being devoid of factual and legal bases,
did not attain finality and should be deleted
Section 14 of Article VIII of the Constitution prescribes that express findings of fact and of
law should be made in the decision rendered by any court, to wit:
Section 14. No decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be
refused due course or denied without stating the legal basis therefor. cDHAES
Implementing the constitutional provision in civil actions is Section 1 of Rule 36, Rules of
Court, viz.:
Section 1. Rendition of judgments and final orders. A judgment or final order
determining the merits of the case shall be in writing personally and directly prepared by
the judge, stating clearly and distinctly the facts and the law on which it is based, signed
by him, and filed with the clerk of the court. (1a)
The Constitution and the Rules of Court apparently delineate two main essential parts of
a judgment, namely: the body and the decretal portion. Although the latter is the
controlling part, 106 the importance of the former is not to be lightly regarded because it
is there where the court clearly and distinctly states its findings of fact and of law on
which the decision is based. To state it differently, one without the other is ineffectual
and useless. The omission of either inevitably results in a judgment that violates the
letter and the spirit of the Constitution and the Rules of Court.
The term findings of fact that must be found in the body of the decision refers to
statements of fact, not to conclusions oflaw. 107 Unlike in pleadings where ultimate facts
alone need to be stated, the Constitution and the Rules of Court require not only that a
decision should state the ultimate facts but also that it should specify the supporting
evidentiary facts, for they are what are called the findings of fact.

The importance of the findings of fact and of law cannot be overstated. The reason and
purpose of the Constitution and theRules of Court in that regard are obviously to inform
the parties why they win or lose, and what their rights and obligations are. Only thereby
is the demand of due process met as to the parties. As Justice Isagani A. Cruz explained
in Nicos Industrial Corporation v. Court of Appeals: 108
It is a requirement of due process that the parties to a litigation be informed of how it
was decided, with an explanationof the factual and legal reasons that led to the
conclusions of the court. The court cannot simply say that judgment is rendered in favor
of X and against Y and just leave it at that without any justification whatsoever for its
action. The losing party is entitled to know why he lost, so he may appeal to a higher
court, if permitted, should he believe that the decision should be reversed. A decision
that does not clearly and distinctly state the facts and the law on which it is based leaves
the parties in the dark as to how it was reached and is especially prejudicial to the losing
party, who is unable to pinpoint the possible errors of the court for review by a higher
tribunal. AECacS
Here, the decision of the RTC justified the grant of actual and moral damages, and
attorney's fees in the following terse manner, viz.:
. . . The Court is not unmindful that due to defendants' unjustified refusal to pay their
outstanding obligation to plaintiff, the same suffered losses and incurred expenses as he
was forced to re-mortgage his house and lot located in Quezon City to Metrobank (Exh.
"CC") and BPI Bank just to pay its monetary obligations in the form of interest and
penalties incurred in the course of the construction of the subject project. 109
The statement that "due to defendants' unjustified refusal to pay their outstanding
obligation to plaintiff, the same suffered losses and incurred expenses as he was forced
to re-mortgage his house and lot located in Quezon City to Metrobank (Exh. "CC") and
BPI Bank just to pay its monetary obligations in the form of interest and penalties
incurred in the course of the construction of the subject project" was only a conclusion of
fact and law that did not comply with the constitutional and statutory prescription. The
statement specified no detailed expenses or losses constituting the P5,716,729.00 actual
damages sustained by Stern Builders in relation to the construction project or to other
pecuniary hardships. The omission of such expenses or losses directly indicated that
Stern Builders did not prove them at all, which then contravened Article 2199, Civil Code,
the statutory basis for the award of actual damages, which entitled a person to an
adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. As such, the actual damages allowed by the RTC, being bereft offactual support,
were speculative and whimsical. Without the clear and distinct findings of fact and law,
the award amounted only to an ipse dixit on the part of the RTC, 110 and did not attain
finality.
There was also no clear and distinct statement of the factual and legal support for the
award of moral damages in the substantial amount of P10,000,000.00. The award was
thus also speculative and whimsical. Like the actual damages, the moral damages
constituted another judicial ipse dixit, the inevitable consequence of which was to render
the award of moral damages incapable of attaining finality. In addition, the grant of moral
damages in that manner contravened the law that permitted the recovery of moral
damages as the means to assuage "physical suffering, mental anguish, fright, serious

anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury." 111 The contraventionof the law was manifest considering that Stern
Builders, as an artificial person, was incapable of experiencing pain and moral sufferings.
112 Assuming that in granting the substantial amount of P10,000,000.00 as moral
damages, the RTC might have had in mind that dela Cruz had himself suffered mental
anguish and anxiety. If that was the case, then the RTC obviously disregarded his
separate and distinct personality from that of Stern Builders. 113 Moreover, his moral
and emotional sufferings as the President of Stern Builders were not the sufferings of
Stern Builders. Lastly, the RTC violated the basic principle that moral damages were not
intended to enrich the plaintiff at the expense of the defendant, but to restore the
plaintiff to his status quo ante as much as possible. Taken together, therefore, all these
considerations exposed the substantial amount of P10,000,000.00 allowed as moral
damages not only to be factually baseless and legally indefensible, but also to be
unconscionable, inequitable and unreasonable. cSTDIC
Like the actual and moral damages, the P150,000.00, plus P1,500.00 per appearance,
granted as attorney's fees were factually unwarranted and devoid of legal basis. The
general rule is that a successful litigant cannot recover attorney's fees as part of the
damages to be assessed against the losing party because of the policy that no premium
should be placed on the right to litigate. 114 Prior to the effectivity of the present Civil
Code, indeed, such fees could be recovered only when there was a stipulation to that
effect. It was only under the present Civil Code that the right to collect attorney's fees in
the cases mentioned in Article 2208 115 of the Civil Code came to be recognized. 116
Nonetheless, with attorney's fees being allowed in the concept of actual damages, 117
their amounts must be factually and legally justified in the body of the decision and not
stated for the first time in the decretal portion. 118 Stating the amounts only in the
dispositive portion of the judgment is not enough; 119 a rendition of the factual and legal
justifications for them must also be laid out in the body of the decision. 120
That the attorney's fees granted to the private respondents did not satisfy the foregoing
requirement suffices for the Court to undo them. 121 The grant was ineffectual for being
contrary to law and public policy, it being clear that the express findings offact and law
were intended to bring the case within the exception and thereby justify the award of the
attorney's fees. Devoidof such express findings, the award was a conclusion without a
premise, its basis being improperly left to speculation and conjecture. 122
Nonetheless, the absence of findings of fact and of any statement of the law and
jurisprudence on which the awards of actual and moral damages, as well as of attorney's
fees, were based was a fatal flaw that invalidated the decision of the RTC only as to such
awards. As the Court declared in Velarde v. Social Justice Society, 123 the failure to
comply with the constitutional requirement for a clear and distinct statement of the
supporting facts and law "is a grave abuse of discretion amounting to lack or excess of
jurisdiction" and that "(d)ecisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down as void." 124 The
other item granted by the RTC (i.e., P503,462.74) shall stand, subject to the action of the
COA as stated herein.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS
ASIDE the decision of the Court ofAppeals under review; ANNULS the orders for the
garnishment of the funds of the University of the Philippines and for the release of the

garnished amount to Stern Builders Corporation and Servillano dela Cruz; and DELETES
from the decision ofthe Regional Trial Court dated November 28, 2001 for being void only
the awards of actual damages of P5,716,729.00, moral damages of P10,000,000.00, and
attorney's fees of P150,000.00, plus P1,500.00 per appearance, in favor of Stern Builders
Corporation and Servillano dela Cruz.
The Court ORDERS Stern Builders Corporation and Servillano dela Cruz to redeposit the
amount of P16,370,191.74 within 10 days from receipt of this decision.
Costs of suit to be paid by the private respondents.
SO ORDERED. TaHDAS
Leonardo-de Castro, Del Castillo, Villarama, Jr. and Perlas-Bernabe, JJ., concur.

||| (University of the Philippines v. Dizon, G.R. No. 171182, [August 23, 2012], 693 PHIL
226-268)

49. REPUBLIC V FELICIANO

[G.R. No. 70853. March 12, 1987.]
REPUBLIC OF THE PHILIPPINES, petitioner-appellee, vs.
INTERMEDIATE APPELLATE COURT, respondents-appellants.

PABLO

FELICIANO

and

DECISION
YAP, J p:
Petitioner seeks the review of the decision of the Intermediate Appellate Court dated
April 30, 1985 reversing the order of the Court of First Instance of Camarines Sur, Branch
VI, dated August 21, 1980, which dismissed the complaint of respondent Pablo Feliciano
for recovery of ownership and possession of a parcel of land on the ground of nonsuability of the State. LLpr
The background of the present controversy may be briefly summarized as follows:
On January 22, 1970, respondent Feliciano filed a complaint with the then Court of First
Instance of Camarines Sur against theRepublic of the Philippines, represented by the
Land Authority, for the recovery of ownership and possession of a parcel of land,
consisting of four (4) lots with an aggregate area of 1,364.4177 hectares, situated in the
Barrio of Salvacion, Municipality of Tinambac, Camarines Sur. Plaintiff alleged that he
bought the property in question from Victor Gardiola by virtue of a Contract of Sale dated
May 31, 1952, followed by a Deed of Absolute Sale on October 30, 1954; that Gardiola
had acquired the property by purchase from the heirs of Francisco Abrazado whose title
to the said property was evidenced by aninformacion posesoria; that upon plaintiff's
purchase of the property, he took actual possession of the same, introduced various

improvements therein and caused it to be surveyed in July 1952, which survey was
approved by the Director of Lands on October 24, 1954; that on November 1, 1954,
President Ramon Magsaysay issued Proclamation No. 90 reserving for settlement
purposes, under the administration of the National Resettlement and Rehabilitation
Administration (NARRA), a tract of land situated in the Municipalities of Tinambac and
Siruma, Camarines Sur, after which the NARRA and its successor agency, the Land
Authority, started subdividing and distributing the land to the settlers; that the property
in question, while located within the reservation established under Proclamation No. 90,
was the private property of plaintiff and should therefore be excluded therefrom. Plaintiff
prayed that he be declared the rightful and true owner of the property in question
consisting of 1,364.4177 hectares; that his title of ownership based on informacion
posesoria of his predecessor-in-interest be declared legal, valid and subsisting and that
defendant be ordered to cancel and nullify all awards to the settlers. LLphil
The defendant, represented by the Land Authority, filed an answer, raising by way of
affirmative defenses lack of sufficient cause of action and prescription.
On August 29, 1970. the trial court, through Judge Rafael S. Sison, rendered a decision
declaring Lot No. 1, with an area of 701.9064 hectares, to be the private property of the
plaintiff, "being covered by a possessory information title in the name of his predecessorin-interest" and declaring said lot excluded from the NARRA settlement reservation. The
court declared the rest of the property claimed by plaintiff, i.e. Lots 2, 3 and 4, reverted
to the public domain.
A motion to intervene and to set aside the decision of August 29, 1970 was filed by
eighty-six (86) settlers, together with the barrio council of Pag-asay, alleging among
other things that intervenors had been in possession of the land in question for more
than twenty (20) years under claim of ownership.
On January 25, 1971, the court a quo reconsidered its decision, reopened the case and
directed the intervenors to file their corresponding pleadings and present their evidence;
all evidence already presented were to remain but plaintiff, as well as the Republic of the
Philippines, could present additional evidence if they so desire. The plaintiff presented
additional evidence on July 30, 1971, and the case was set for hearing for the reception
of intervenors' evidence on August 30 and August 31, 1971.
On August 30, 1971, the date set for the presentation of the evidence for intervenors,
the latter did not appear but submitted a motion for postponement and resetting of the
hearing on the next day, August 31, 1971. The trial court denied the motion for
postponement and allowed plaintiff to offer his evidence "en ausencia," after which the
case would be deemed submitted for decision. On the following day, August 31, 1971,
Judge Sison rendered a decision reiterating his decision of August 29, 1970. prcd
A motion for reconsideration was immediately filed by the intervenors. But before this
motion was acted upon, plaintiff filed a motion for execution, dated November 18, 1971.
On December 10, 1971, the lower court, this time through Judge Miguel Navarro, issued
an order denying the motion for execution and setting aside the order denying
intervenors' motion for postponement. The case was reopened to allow intervenors to
present their evidence. Unable to secure a reconsideration of Judge Navarro's order, the
plaintiff went to the Intermediate Appellate Court on a petition for certiorari. Said petition

was, however, denied by the Intermediate Appellate Court, and petitioners brought the
matter to this Court in G.R. No. 36163, which was denied on May 3, 1973 Consequently,
the case was remanded to the court a quo for further proceedings.
On August 31, 1970, intervenors filed a motion to dismiss, principally on the ground that
the Republic of the Philippines cannot be sued without its consent and hence the action
cannot prosper. The motion was opposed by the plaintiff.
On August 21, 1980, the trial court, through Judge Esteban Lising, issued the questioned
order dismissing the case for lack of jurisdiction. Respondent moved for reconsideration,
while the Solicitor General, on behalf of the Republic of the Philippines filed its opposition
thereto, maintaining that the dismissal was proper on the ground of non-suability of the
State and also on the ground that the existence and or authenticity of the purported
possessory information title of the respondents' predecessor-in-interest had not been
demonstrated and that at any rate, the same is not evidence of title, or if it is, its efficacy
has been lost by prescription and laches. LexLib
Upon denial of the motion for reconsideration, plaintiff again went to the Intermediate
Appellate Court on petition for certiorari. On April 30, 1985, the respondent appellate
court rendered its decision reversing the order of Judge Lising and remanding the case to
the court a quo for further proceedings. Hence this petition.
We find the petition meritorious. The doctrine of non-suability of the State has proper
application in this case. The plaintiff has impleaded the Republic of the Philippines as
defendant in an action for recovery of ownership and possession of a parcel of land,
bringing the State to court just like any private person who is claimed to be usurping a
piece of property. A suit for the recovery of property is not an action in rem, but an action
in personam. 1 It is an action directed against a specific party or parties, and any
judgment therein binds only such party or parties. The complaint filed by plaintiff, the
private respondent herein, is directed against the Republic of the Philippines,
represented by the Land Authority, a governmental agency created by Republic Act No.
3844.
By its caption and its allegation and prayer, the complaint is clearly a suit against the
State, which under settled jurisprudence is not permitted, except upon a showing that
the State has consented to be sued, either expressly or by implication through the use of
statutory language too plain to be misinterpreted. 2 There is no such showing in the
instant case. Worse, the complaint itself fails to allege the existence of such consent.
This is a fatal defect, 3 and on this basis alone, the complaint should have been
dismissed.
The failure of the petitioner to assert the defense of immunity from suit when the case
was tried before the court a quo, as alleged by private respondent, is not fatal. It is now
settled that such defense "may be invoked by the courts sua sponte at any stage of the
proceedings." 4
Private respondent contends that the consent of petitioner may be read from the
Proclamation itself, when it established the reservation "subject to private rights, if any
there be." We do not agree. No such consent can be drawn from the language of the
Proclamation. The exclusion of existing private rights from the reservation established by

Proclamation No. 90 can not be construed as a waiver of the immunity of the State from
suit. Waiver of immunity, being a derogation of sovereignty, will not be inferred lightly,
but must be construed in strictissimi juris. 5 Moreover, the Proclamation is not a
legislative act. The consent of the State to be sued must emanate from statutory
authority. Waiver of State immunity can only be made by an act of the legislative body.
prcd
Neither is there merit in respondent's submission. which the respondent appellate court
sustained, on the basis of our decision in the Begosa case, 6 that the present action is
not a suit against the State within the rule of State immunity from suit, because plaintiff
does not seek to divest the Government of any of its lands or its funds. It is contended
that the complaint involves land not owned by the State, but private land belonging to
the plaintiff, hence the Government is not being divested of any of its properties. There
is some sophistry involved in this argument, since the character of the land sought to be
recovered still remains to be established, and the plaintiff's action is directed against the
State precisely to compel the latter to litigate the ownership and possession of the
property. In other words, the plaintiff is out to establish that he is the owner of the land in
question based, incidentally, on an informacion posesoria of dubious value, and he seeks
to establish his claim of ownership by suing the Republic of the Philippines in an action in
personam.

The inscription in the property registry of an informacion posesoria under the Spanish
Mortgage Law was a means provided by the law then in force in the Philippines prior to
the transfer of sovereignty from Spain to the United States of America, to record a
claimant's actual possession of a piece of land, established through an ex parte
proceeding conducted in accordance with prescribed rules. 7 Such inscription merely
furnishes, at best, prima facie evidence of the fact that at the time the proceeding was
held, the claimant was in possession of the land under a claim of right as set forth in his
application. 8 The possessory information could ripen into a record of ownership after the
lapse of 20 years (later reduced to 10 years), upon the fulfillment of the requisites
prescribed in Article 393 of the Spanish Mortgage Law. 9
There is no showing in the case at bar that the informacion posesoria held by the
respondent had been converted into a record of ownership. Such possessory information,
therefore, remained at best mere prima facie evidence of possession. Using this
possessory information, the respondent could have applied for judicial confirmation of
imperfect title under the Public Land Act, which is an action in rem. However, having
failed to do so, it is rather late for him to pursue this avenue at this time. Respondent
must also contend, as the records disclose, with the fact admitted by him and stated in
the decision of the Court a quo that settlers have been occupying and cultivating the
land in question since even before the outbreak of the war, which puts in grave doubt his
own claim of possession. cdll
Worthy of note is the fact, as pointed out by the Solicitor General, that the informacion
posesoria registered in the Office of the Register of Deed of Camarines Sur on September
23, 1952 was a "reconstituted" possessory information; it was "reconstituted from the
duplicate presented to this office (Register of Deeds) by Dr. Pablo Feliciano," without the
submission of proof that the alleged duplicate was authentic or that the original thereof

was lost. Reconstitution can be validly made only in case of loss of the original. 10 These
circumstances raise grave doubts as to the authenticity and validity of the "informacion
posesoria" relied upon by respondent Feliciano. Adding to the dubiousness of said
document is the fact that "possessory information calls for an area of only 100 hectares,"
11 whereas the land claimed by respondent Feliciano comprises 1,364.4177 hectares,
later reduced to 701.9064 hectares. Courts should be wary in accepting "possessory
information" documents, as well as other purportedly old Spanish titles, as proof of
alleged ownership of lands.
WHEREFORE, judgment is hereby rendered reversing and setting aside the appealed
decision of the Intermediate Appellate Court, dated April 30, 1985, and affirming the
order of the court a quo, dated August 21, 1980, dismissing the complaint filed by
respondent Pablo Feliciano against the Republic of the Philippines. No costs. cdphil
SO ORDERED.
Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.
Melencio-Herrera, J., on leave.
||| (Republic v. Feliciano, G.R. No. 70853, [March 12, 1987], 232 PHIL 391-399)

50. MUN. OF SAN FERNANDO V FIRME

[G.R. No. 52179. April 8, 1991.]
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner, vs. HON. JUDGE ROMEO N.
FIRME, JUANA RIMANDO-BANIA, LAUREANO BANIA, JR., SOR MARIETA BANIA,
MONTANO BANIA ORJA BANIA AND LYDIA R. BANIA, respondents.

Mauro C . Cabading, Jr. for petitioner.

Simeon G. Hipol for private respondent.
DECISION
MEDIALDEA, J p:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
mandatory injunction seeking the nullification or modification of the proceedings and the
orders issued by the respondent Judge Romeo N. Firme, in his capacity as the presiding
judge of the Court of First Instance of La Union, Second Judicial District, Branch IV,
Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Bania, et al. vs.
Macario Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23, 1976;
February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7,
1979 and December 3, 1979 and the decision dated October 10, 1979 ordering
defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and
severally, the plaintiffs for funeral expenses, actual damages consisting of the loss of
earning capacity of the deceased, attorney's fees and costs of suit and dismissing the
complaint against the Estate of Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a municipal corporation existing
under and in accordance with the lawsof the Republic of the Philippines. Respondent
Honorable Judge Romeo N. Firme is impleaded in his official capacity as the presiding
judge of the Court of First Instance of La Union, Branch IV, Bauang, La Union. While
private respondents Juana Rimando-Bania, Laureano Bania, Jr., Sor Marietta Bania,
Montano Bania, Orja Bania and Lydia R. Bania are heirs ofthe deceased Laureano
Bania Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a
passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario
Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino
Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by
Alfredo Bislig. Due to the impact, several passengers of the jeepney including Laureano
Bania Sr. died as a result of the injuries they sustained and four (4) others suffered
varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted a complaint for damages
against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver,
respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in the
Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the
aforesaid defendants filed a Third Party Complaint against the petitioner and the driver
of a dump truck of petitioner. llcd
Thereafter, the case was subsequently transferred to Branch IV, presided over by
respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of
a court order dated May 7, 1975, the private respondents amended the complaint
wherein the petitioner and its regular employee, Alfredo Bislig were impleaded for the
first time as defendants. Petitioner filed its answer and raised affirmative defenses such

as lack of cause of action, non-suability of the State, prescription of cause of action and
the negligence of the owner and driver of the passenger jeepney as the proximate
causeof the collision. cdll
In the course of the proceedings, the respondent judge issued the following questioned
orders, to wit:
(1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot;
(2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San
Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only
with respect to the supposed lack of jurisdiction;
(3) Order dated August 23, 1976 deferring the resolution of the grounds for the Motion to
Dismiss until the trial;
(4) Order dated February 23, 1977 denying the motion for reconsideration of the order of
July 13, 1976 filed by theMunicipality and Bislig for having been filed out of time;
(5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of
the order of July 13, 1976;
(6) Order dated July 26, 1979 declaring the case deemed submitted for decision it
appearing that parties have not yet submitted their respective memoranda despite the
court's direction; and
(7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration
and or order to recall prosecution witnesses for cross examination.
On October 10, 1979 the trial court rendered a decision, the dispositive portion is
hereunder quoted as follows:
"IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs,
and defendants Municipality ofSan Fernando, La Union and Alfredo Bislig are ordered to
pay jointly and severally, plaintiffs Juana Rimando-Bania, Mrs. Priscilla B. Surell,
Laureano Bania, Jr., Sor Marietta Bania, Mrs. Fe B. Soriano, Montano Bania, Orja
Bania and Lydia B. Bania the sums of P1,500.00 as funeral expenses and P24,744.24
as the lost expected earnings of the late Laureano Bania Sr., P30,000.00 as moral
damages, and P2,500.00 as attorney's fees. Costs against said defendants. cdasia
"The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo
Balagot.
"SO ORDERED." (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new trial without prejudice to
another motion which was then pending. However, respondent judge issued another
order dated November 7, 1979 denying the motion for reconsideration of the order of
September 7, 1979 for having been filed out of time.
Finally, the respondent judge issued an order dated December 3, 1979 providing that if
defendants municipality and Bislig further wish to pursue the matter disposed of in the

order of July 26, 1979, such should be elevated to a higher court in accordance with the
Rules of Court. Hence, this petition.
Petitioner maintains that the respondent judge committed grave abuse of discretion
amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a
decision. Furthermore, petitioner asserts that while appeal of the decision may be
available, the same is not the speedy and adequate remedy in the ordinary course of
law.
On the other hand, private respondents controvert the position of the petitioner and
allege that the petition is devoid ofmerit, utterly lacking the good faith which is
indispensable in a petition for certiorari and prohibition. (Rollo, p. 42.) In addition, the
private respondents stress that petitioner has not considered that every court, including
respondent court, has the inherent power to amend and control its process and orders so
as to make them conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether or not the respondent court
committed grave abuse of discretion when it deferred and failed to resolve the defense
of non-suability of the State amounting to lack of jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the resolution of the defense of nonsuability of the State amounting to lack of jurisdiction until trial. However, said
respondent judge failed to resolve such defense, proceeded with the trial and thereafter
rendered a decision against the municipality and its driver.
The respondent judge did not commit grave abuse of discretion when in the exercise of
its judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in
the guise of the municipality. However, said judge acted in excess of his jurisdiction when
in his decision dated October 10, 1979 he held the municipality liable for the quasi-delict
committed by its regular employee. cdll
The doctrine of non-suability of the State is expressly provided for in Article XVI, Section
3 of the Constitution, to wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State may not be sued except
when it gives consent to be sued. Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a special law. The standing
consent of the State to be sued in case ofmoney claims involving liability arising from
contracts is found in Act No. 3083. A special law may be passed to enable a person to
sue the government for an alleged quasi-delict, as in Merritt v. Government of the
Philippine Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607,
February 26, 1990, 182 SCRA 644, 654.)
Consent is implied when the government enters into business contracts, thereby
descending to the level of the other contracting party, and also when the State files a
complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and cities, are agencies of the State
when they are engaged in governmental functions and therefore should enjoy the
sovereign immunity from suit. Nevertheless, they are subject to suit even in the

performance of such functions because their charter provided that they can sue and be
sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)
A distinction should first be made between suability and liability. "Suability depends on
the consent of the state to be sued, liability on the applicable law and the established
facts. The circumstance that a state is suable does not necessarily mean that it is liable;
on the other hand, it can never be held liable if it does not first consent to be sued.
Liability is not conceded by the mere fact that the state has allowed itself to be sued.
When the state does waive its sovereign immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable." (United States of America v.
Guinto, supra, p. 659-660).

Anent the issue of whether or not the municipality is liable for the torts committed by its
employee, the test of liability of themunicipality depends on whether or not the driver,
acting in behalf of the municipality, is performing governmental or proprietary functions.
As emphasized in the case of Torio v. Fontanilla (G.R. No. L-29993, October 23, 1978. 85
SCRA 599, 606), the distinction of powers becomes important for purposes of
determining the liability of the municipality for the acts of its agents which result in an
injury to third persons.
Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme
Court of Indiana in 1916, thus:
"Municipal corporations exist in a dual capacity, and their functions are twofold. In one
they exercise the right springing from sovereignty, and while in the performance of the
duties pertaining thereto, their acts are political and governmental. Their officers and
agents in such capacity, though elected or appointed by them, are nevertheless public
functionaries performing a public service, and as such they are officers, agents, and
servants of the state. In the other capacity the municipalities exercise a private,
proprietary or corporate right, arising from their existence as legal persons and not as
public agencies. Their officers and agents in the performance of such functions act in
behalf of the municipalities in their corporate or individual capacity, and not for the state
or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations are suable because their
charters grant them the competence to sue and be sued. Nevertheless, they are
generally not liable for torts committed by them in the discharge of governmental
functions and can be held answerable only if it can be shown that they were acting in a
proprietary capacity. In permitting such entities to be sued, the State merely gives the
claimant the right to show that the defendant was not acting in its governmental
capacity when the injury was committed or that the case comes under the exceptions
recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the municipality insists that "he was
on his way to the Naguilian river to get a load of sand and gravel for the repair of San
Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the regularity of the performance of
official duty is presumed pursuant toSection 3(m) of Rule 131 of the Revised Rules of

Court. Hence, We rule that the driver of the dump truck was performing duties or tasks
pertaining to his office. LexLib
We already stressed in the case of Palafox, et al. v. Province of Ilocos Norte, the District
Engineer, and the Provincial Treasurer(102 Phil 1186) that "the construction or
maintenance of roads in which the truck and the driver worked at the time of the
accident are admittedly governmental activities."
After a careful examination of existing laws and jurisprudence, We arrive at the
conclusion that the municipality cannot be held liable for the torts committed by its
regular employee, who was then engaged in the discharge of governmental functions.
Hence, the death of the passenger tragic and deplorable though it may be imposed on
the municipality no duty to pay monetary compensation.
All premises considered, the Court is convinced that the respondent judge's dereliction in
failing to resolve the issue of non-suability did not amount to grave abuse of discretion.
But said judge exceeded his jurisdiction when it ruled on the issue ofliability.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is
hereby modified, absolving the petitionermunicipality of any liability in favor of private
respondents.
SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
||| (Municipality of San Fernando, La Union v. Firme, G.R. No. 52179, [April 8, 1991], 273
PHIL 56-65)

51. MERRITT V GOVTOF THE PHIL ISLANDS

FIRST DIVISION
[G.R. No. 11154. March 21, 1916.]
E. MERRITT, plaintiff-appellant,
defendant-appellant.

vs.

GOVERNMENT

OF

THE

PHILIPPINE

ISLANDS,

Crossfield & O'Brien for plaintiff.

Attorney-General Avancea for defendant.
SYLLABUS
1. DAMAGES; MEASURE OF. Where the evidence shows that the plaintiff was wholly
incapacitated for six months it is an error to restrict the damages to a shorter period
during which he was confined in the hospital.
2. SPECIAL STATUTES; CONSENT OF THE STATE TO BE SUED; CONSTRUCTION. The
Government of thePhilippine Islands having been "modeled after the federal and state
governments of the United States' the decisions of thehigh courts of that country may be
used in determining the scope and purpose of a special statute.
3. ID.; ID.; ID. The state not being liable to suit except by its express consent, an act
abrogating that immunity will be strictly construed.
4. ID.; ID.; ID. An act permitting a suit against the state gives rise to no liability not
previously existing unless it is clearly expressed in the act.
5. GOVERNMENT OF THE PHILIPPINE ISLANDS; LIABILITY FOR THE NEGLIGENT ACTS OF
ITS OFFICERS, AGENTS, AND EMPLOYEES. The Government of the Philippine Islands in
only liable for the negligent acts of its officers, agents, and employees when they are
acting as special agents within the meaning of paragraph 5 of article 1903 of the Civil
code, and a chauffeur of the General Hospital is not such a special agent.
DECISION
TRENT, J p:

This is an appeal by both partied from a judgment of the Court of First Instance of the
city of Manila in favor of theplaintiff for the sum of P14,741, together with the costs of
the cause.
Counsel for the plaintiff insist that the trial court erred (1) "in limiting the general
damages which the plaintiff suffered to P5,000, instead of P25,000 as claimed in the
complaint," and (2) "in limiting the time when plaintiff was entirely disabled to two
months and twenty-one days and fixing the damage accordingly in the sum of P2,666,
instead of P6,000 as claimed by plaintiff in his complaint."
The Attorney-General on behalf of the defendant urges that the trial court erred: (a) in
finding that the collision between the plaintiff's motorcycle and the ambulance of the
General Hospital was due to the negligence of the chauffeur; (b) in holding that the
Government of the Philippine Islands is liable for the damages sustained by the plaintiff
as a resultof the collision, even if it be true that collision was due to the negligence of the
chauffeur; and (c) in rendering judgment against the defendant for the sum of P14,741.
The trial court's findings of fact, which are fully supported by the record, are as follows:
"It is a fact not disputed by counsel for the defendant that when the plaintiff, riding on a
motorcycle, was going toward the western part of Calle Padre Faura, passing along the
west side thereof at a speed of ten to twelve miles and hour, upon crossing Taft Avenue
and when he was ten feet from the southwestern intersection of said streets, theGeneral
Hospital ambulance, upon reaching said avenue, instead of turning toward the south,
after passing the center thereof, so that it would be on the left side of said avenue, as is
prescribed by the ordinance and the Motor Vehicle Act, turned suddenly and
unexpectedly and long before reaching the center of the street, into the right side of Taft
Avenue, without having sounded any whistle or horn, by which movement it struck the
plaintiff, who was already six feet from thesouthwestern point or from the post placed
there.
"By reason of the resulting collision, the plaintiff was so severely injured that, according
to Dr. Saleeby, who examined him on the very same day that he was taken to the
General Hospital, he was suffering from a depression in theleft parietal region, a wound
in the same place and in beck part of his head, while blood issued from his nose and he
was entirely unconscious.
"The marks revealed that he had one or more fractures of the skull and that the grey
matter and brain mass had suffered material injury. At ten o'clock of the night in
question, which was the time set for performing the operation, his pulse was so weak
and so irregular that, in his opinion, there was little hope that he would live. His right leg
was broken in such a way that the fracture extended to the outer skin in such manner
that it might be regarded as double and thewound would be expose to infection, for
which reason it was of the most serious nature.
"At another examination six days before the day of the trial, Dr. Saleeby notice that the
plaintiff's leg showed a contraction of an inch and a half and a curvature that made his
leg very weak and painful at the point of the fracture. Examination of his head revealed a
notable re-adjustment of the functions of the brain and nerves. The patient apparently
was slightly deaf, had a slight weakness in his eyes and in his mental condition. This

latter weakness was always noticed when the plaintiff had to do any difficult mental
labor, especially when he attempted to use his memory for mathematical calculations.
"According to the various merchants who testified as witnesses, the plaintiff's mental and
physical condition prior to the accident was excellent, and that after having received the
injuries that have been discussed, his physical condition had undergone a noticeable
depreciation, for he had lost the agility, energy, and ability that he had constantly
displayed before the accident as one of the best constructors of wooden buildings and he
could not now earn even a half of theincome that he had secured for his work because
he had lost 50 per cent of his efficiency. As a contractor, he could no longer, as he had
before done, climb up ladders and scaffoldings to reach the highest parts of the building.
"As a consequence of the loss the plaintiff suffered in the efficiency of his work as a
contractor, he had to dissolvethe partnership he had formed with the engineer, Wilson,
because he was incapacitated from making mathematical calculations on account of the
condition of his leg and of his mental faculties, and he had to give up a contract he had
forthe construction of the Uy Chaco building."
We may say at the outset that we are in full accord with the trial court to the effect that
the collision between theplaintiff's motorcycle and the ambulance of the General Hospital
was due solely to the negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which are drawn in question by
the plaintiff are (a) P5,000,the amount awarded for permanent injuries, and (b) the
P2,666, the amount allowed for the loss of wages during the timethe plaintiff was
incapacitated from pursuing his occupation. We fund nothing in the record which would
justify us in increasing the amount of the first. as to the second, the record shows, and
the trial court so found, that the plaintiff's services as a contractor were worth P1,000
per month. The court, however, limited the time to two months and twenty-one days,
which the plaintiff was actually confined in the hospital. In this we think there was error,
because it was clearly established that the plaintiff was wholly incapacitated for a period
of sex months. The mere fact that he remained in thehospital only two months and
twenty-one days while the remainder of the six months was spent in his home, would not
prevent recovery for the whole time. We, therefore, find that the amount of damages
sustained by the plaintiff, without any fault on his part, is P18,075.
As the negligence which caused the collision is a tort committed by an agent or
employee of the Government, theinquiry at once arises whether the Government is
legally liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
"An act authorizing E. Merritt to bring suit against the Government of the Philippine
Islands and authorizing theAttorney-General of said Islands to appear in said suit.
"Whereas a claim has been filed against the Government of the Philippine Islands by Mr.
E. Merritt, of Manila, for damages resulting from a collision between his motorcycle and
the ambulance of the General Hospital on March twenty-fifth, nineteen hundred and
thirteen;

"Whereas it is not known who is responsible for the accident nor is it possible to
determine the amount ofdamages, if any , to which the claimant is entitled; and
"Whereas the Director of Public Works and the Attorney-General recommend that an act
be passed by theLegislature authorizing Mr. E. Merritt to bring suit in the courts against
the Government, in order that said questions may be decided: Now, therefore,
"By authority of the United States, be it enacted by the Philippine Legislature, that:
"SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of
the city of Manila against the Government of the Philippine Islands in order to fix the
responsibility for the collision between his motorcycle and the ambulance of the General
Hospital, and to determine the amount of the damages, if any, to which Mr. E. Merrittis
entitled on account of said collision, and the attorney-General of the Philippine Islands is
hereby authorized and directed to appear at the trial on the behalf of the Government of
said Islands, to defend said Government at the same.
"SEC. 2. This Act shall take effect on its passage.
"Enacted, February 3, 1915."
Did the defendant, in enacting the above quoted act, simply waive its immunity from suit
or did it also concede its liability to the plaintiff? If only the former, then it cannot be held
that the Act created any new cause of action in favor ofthe plaintiff or extended the
defendant's liability to any case not previously recognized.
All admit that the Insular Government (the defendant) cannot be sued by an individual
without its consent. It is also admitted that the instant case is one against the
Government. As the consent of the Government to be sued by theplaintiff was entirely
voluntary on its part, it is our duty to look carefully into the terms of the consent, and
render judgment accordingly.

The plaintiff was authorized to bring this action against the Government "in order to fix
the responsibility for thecollision between his motorcycle and the ambulance of the
General Hospital and to determine the amount of thedamages, if any, to which Mr. E.
Merritt is entitled on account of said collision, . . . ." These were the two questions
submitted to the court for determination. The Act was passed "in order that said
questions may be decided." We have "decided" that the accident was due solely to the
negligence of the chauffeur, who was at the time an employee of thedefendant, and we
have also fixed the amount of damages sustained by the plaintiff as a result of the
collision. Does theAct authorize us to hold that the Government is legally liable for that
amount? If not, we must look elsewhere for such authority, if it exists.
The Government of the Philippine Islands having been "modeled after the Federal and
state Governments in theUnited States," we may look to the decisions of the high courts
of that country for aid in determining the purpose and scope of Act No. 2457.
In the United States the rule that the state is not liable for the torts committed by its
officers or agents whom it employs, except when expressly made so by legislative
enactment, is well settled. "The Government," says Justice Story, "does not undertake to

guarantee to any person the fidelity of the officers or agents whom it employs, since that
would involve it in all its operations in endless embarrassments, difficulties and losses,
which would be subversive of the public interest." (Claussen vs. City of Luverne, 103
Minn., 491, citing U.S. vs. Kirkpatrick, 9 Wheat, 720; 6 L. Ed., 199; and Beers vs.State, 20
How., 527; 15 L. Ed., 991.)
In the case of Melvin vs. State ( 121 Cal., 16), the plaintiff sought to recover damages
from the state for personal injuries received on account of the negligence of the state
officers at the state fair, a state institution created by thelegislature for the purpose of
improving agricultural and kindred industries; to disseminate information calculated to
educate and benefit the industrial classes; and to advance to educate and benefit the
industrial classes; and to advance by such means the material interests of the state,
being objects similar to those sought by the public school system. In passing upon the
question of the state's liability for the negligent acts of its officers or agents, the court
said:
"No claim arises against any government in favor of an individual, by reason of the
misfeasance, laces, or unauthorized exercise of powers by its officers or agents." (Citing
Gibbons vs. U.S., 8 Wall., 269; Clodfelter vs. State, 86 N.C., 51, 53; 41 Am. Rep., 440;
Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Green vs. State, 73 Cal., 29;
Bournvs. Hart, 93 Cal., 321; 27 Am. St. Rep., 203; Story on Agency, sec. 319.)
As to the scope of legislative enactments permitting individuals to sue the state where
the cause of action arises outof either tort or contract, the rule is stated in 36 Cyc., 915,
thus:
"By consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in his favor, or
extend its liability to any cause not previously recognized. It merely gives a remedy to
enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to
its right to interpose any lawful defense."
In Apfelbacher vs. State (152 N. W., 144, advanced sheets), decided April 16, 1915, the
Act of 1913, which authorizedthe bringing of this suit, read:
"SECTION 1. Authority is hereby given to George Apfelbacher, of the town of Summit,
Waukesha County, Wisconsin, to bring suit in such court or courts and in such form or
forms as he may be advised for the purpose ofsettling and determining all controversies
which he may now have with the State of Wisconsin, or its duly authorizes officers and
agents, relative to the mill property of said George Apfelbacher, the fish hatchery of the
State Wisconsin onthe Bark River, and the mill property of Evan Humphrey at the lower
end of Nagawicka Lake, and relative to the use of thewaters of said Bark River and
Nagawicka Lake, all in the county of Waukesha, Wisconsin."
In determining the scope of this act, the court said;
"Plaintiff claims that by the enactment of this law the legislature admitted liability on the
part of the state for theacts of its officers, and that the suit now stands just as it would
stand between private parties. It is difficult to see how theact does, or was intended to
do, more than remove the state's immunity from suit. It simply gives authority
commence suit for the purpose of settling plaintiff's controversies with the state.

Nowhere in the act is there a whisper or suggestion that the court or courts in the
disposition of the suit shall depart from well established principles of law, or that
theamount of damages is the only question to be settled. The act opened the door of the
court to the plaintiff. It did not pass upon the question of liability, but left the suit just
where it would be in the absence of the state's immunity from suit. Ifthe Legislature had
intended to change the rule that obtained in this state so long and to declare liability on
the part ofthe state, it would not have left so important a matter to mere inference but
would have done so in express terms. (Murdoc Grate Co. vs. Commonwealth, 152 Mass.,
28; 24 N. E., 854; 8 L. R.A., 399)"
In Denning vs. state (123 Cal., 316), the provisions of the Act of 1893, relied upon and
considered, are as follows:
"All persons who have, or shall hereafter have claims on contract or for negligence
against the state not allowed bythe state board of examiners, are hereby authorized, on
the terms and conditions herein contained, to bring suit thereon against the state in any
of the courts of this state of competent jurisdiction, and prosecute the same to final
judgment.The rules of practice in civil cases shall apply to such suits, except as herein
otherwise provided."
And the court said:
"This statute has been considered by this court in at least two cases, arising under
different facts, and in both it was held that said statute did not create any liability or
cause of action against the state where none existed before, but merely gave an
additional remedy to enforce such liability as would have existed if the statute had not
been enacted. (Chapman vs. State, 104 Cal., 690; 43 Am. St. Rep., 158; Melvin vs. State,
121 Cal., 16.)"
A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all
claims against thecommonwealth, whether at law or in equity," with an exception not
necessary to be here mentioned. In construing this statute the court, in Murdock Grate
Co. vs. Commonwealth (152 Mass., 28), said:
"The statute we are discussing discloses no intention to create against the state a new
and heretofore unrecognized class of liabilities, but only an intention to provide a judicial
tribunal where well recognized existing liabilities can be adjudicated."
In Sipple vs. State (99 N. Y., 284), where the board of the canal claims had, by the terms
of the statute of New York, jurisdiction of claims for damages for injuries in the
management of the canals such as the plaintiff had sustained, Chief Justice Ruger
remarks; "It must be conceded
that the state can be made liable for injuries arising from the negligence of its agents or
servants, only by force ofsome positive statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend the Government's
liability to any cause not previously recognized, we will now examine the substantive law
touching the defendant's liability for the negligent acts ofits officers, agents, and
employees. Paragraph 5 of article 1903 of the civil Code reads:

"The state is liable in this sense when it acts through a special agent, but not when the
damage should have been caused by the official to whom properly it pertained to do the
act performed, in which case the provisions of thepreceding article shall be applicable."
The supreme court of Spain in defining the scope of this paragraph said:
"That the obligation to indemnify for damages which a third person causes another by
his fault or negligence is based, as is evidenced by the same Law 3, Title 15, Partida 7,
on that the person obligated, by his own fault or negligence, takes part in the act or
omission of the third party who caused the damage. It follows therefrom that the state
by virtueof such provision of law, is not responsible for the damages suffered by private
individuals in consequence of acts performed by its employees in the discharge of the
functions pertaining to their office, because neither fault nor even negligence can be
presumed on the part of the state in the organization of branches of the public service
and in theappointment of its agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of service serves the general weal
and that of private persons interested in its operation. Between these latter and the
state therefore, no relations of a private nature governed by the civil law can arise
except in a case wherethe state acts as a judicial person capable of acquiring rights and
contracting obligations." (Supreme Court of Spain, January 7, 1898; 83 Jur. Civ., 24.)
"That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise
out of fault or negligence; and whereas in the first articles thereof, No. 1902, where the
general principle is laid down that where a person who by an act or omission causes
damage to another through fault or negligence, shall be obliged to repair the damage so
done, reference is made to acts or omissions of the persons who directly or indirectly
cause the damage, the following article refers to third persons and imposes an identical
obligation upon those who maintain fixed relations of authority and superiority over the
authors of the damage, because the law presumes that in consequence of such relations
the evil caused by their own fault or negligence is imputable to them. This legal
presumption gives way to proof, however, because, as held in the last paragraph of
article 1903, responsibility for acts of third persons ceases when the persons mentioned
in said article prove that they employed all the diligence of a good father of a family to
avoid the damage, and among these persons, called up[on to answer in a direct and not
a subsidiary manner, are found, in addition to themother or the father in a proper case,
guardians and owners or director of an establishment or enterprise, the state, but not
always, except when it acts through the agency of a special agent, doubtless because
and only in this case, the fault or negligence, which is the original basis of this kind of
objections, must be presumed to lie with the state.

"That although in some cases the state might by virtue of the general principle set forth
in article 1902 respond for all the damage that is occasioned to private parties by orders
or resolutions which by fault or negligence are made by branches of the central
administration acting in the name and representation of the state itself and as an
external expression of its sovereignty in the exercise of its executive powers, yet said
article is not applicable in the case ofdamages said to have been occasioned to the
petitioners by an executive official, acting in the exercise of his powers, in proceedings to

enforce the collections of certain property taxes owing by the owner of the property
which they hold in sublease.
"That the responsibility of the state is limited by article 1903 to the case wherein it acts
through a special agent (and a special agent, in the sense in which these words are
employed, is one who receives a definite and fixed order or commission, foreign to the
exercise of the duties of his office if he is a special official) so that in representation of
the state and being bound to act as an agent thereof he executed the trust confided to
him. this concept does not apply to any executive agent who is an employee of the
active administration and who in his own responsibility performs the functions which are
inherent in and naturally pertain to his office and which are regulated by law and the
regulations." (Supreme Court of Spain, May 18, 1904; 98 Jur. Civ., 389, 390.)
"That according to paragraph 5 of article 1903 of the Civil Code and the principle laid
down in a decision, among others, of the 18th of May, 1904, in a damage case, the
responsibility of the state is limited to that which it contracts through a special agent,
duly empowered by a definite order or commission to perform some act or charged with
some definite purpose which gives rise to the claim, and not where the claim is based on
acts or omissions imputable to a public official charge with some administrative or
technical office who can be held to the proper responsibility in themanner laid down by
the law of civil responsibility. Consequently, the trial court in not so deciding and in
sentencing thesaid entity to the payment of damages, caused by an official of the
second class referred to, has by erroneous interpretation infringed the provisions of
articles 1902 and 1903 of the Civil Code." (Supreme Court of Spain, July 30, 1911; 122
Jur. Civ., 146)
It is, therefore, evident that the State (the Government of the Philippine Islands) is only
liable, according to the above quoted decisions of the Supreme Court of Spain, for the
acts of its agents, officers and employees when they act as special agents within the
meaning of paragraph 5 of article 1903, supra, and that the chauffeur of the ambulance
of the General Hospital was not such an agent.
For the foregoing reasons, the judgment appealed from must be reversed, without costs
in this instance. Whetherthe Government intends to make itself legally liable for the
amount of damages above set forth, which the plaintiff has sustained by reason of the
negligent acts of one of its employees, by legislative enactment and by appropriating
sufficient funds therefor, we are not called upon to determine. This matter rests solely
with the Legislature and not with the courts.
Arellano, C.J., Torres, Johnson and Moreland, JJ., concur.
||| (Merritt v. Government of the Philippine Islands, G.R. No. 11154, [March 21, 1916], 34
PHIL 311-323)

52. RAYO V CFI OF BULACAN

SECOND DIVISION
[G.R. No. L-55273-83. December 19, 1981.]
GAUDENCIO RAYO, BIENVINIDO PASCUAL, TOMAS MANUEL, MARIANO CRUZ, PEDRO
BARTOLOME, BERNARDINO CRUZ, JOSE PALAD, LUCIO FAJARDO, FRANCISCO RAYOS,
ANGEL TORRES, NORBERTO TORRES, RODELIO JOAQUIN, PEDRO AQUINO, APOLINARIO
BARTOLOME, MAMERTO BERNARDO, CIRIACO CASTILLO, GREGORIO CRUZ, SIMEON
ESTRELLA, EPIFANIO MARCELO, HERMOGENES SAN PEDRO, JUAN SANTOS, ELIZABETH
ABAN, MARCELINA BERNABE, BUENAVENTURA CRUZ, ANTONIO MENESES, ROMAN SAN
PEDRO, LOPEZ ESPINOSA, GODOFREDO PUNZAL, JULIANA GARCIA, LEBERATO
SARMIENTO, INOCENCIO DE LEON, CARLOS CORREA, REYNALDO CASIMIRO, ANTONIO
GENER, GAUDENCIO CASTILLO, MATIAS PEREZ, CRISPINIANO TORRES, CRESENCIO CRUZ,
PROTACIO BERNABE, MARIANO ANDRES, CRISOSTOMO CRUZ, MARCOS EUSTAQUIO,
PABLO LEGASPI, VICENTE PASCUAL, ALEJANDRA SISON, EUFRACIO TORRES, ROGELIO
BARTOLOME, RODOLFO BERNARDO, APOLONIO CASTILLO, MARCELINO DALMACIO,
EUTIQUIO LEGASPI, LORENZO LUCIANO and GREGORIO PALAD, petitioners, vs. COURT OF
FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA, and NATIONAL POWER
CORPORATION,respondents.
Efren C. Carag for petitioners.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Reynato S. Puno and
Solicitor Jesus P. Castilo for respondent NPC.
SYNOPSIS
Separate complaints for damages arising from the precipitate and simultaneous opening
of floodgates of the Angat Dam resulting in the inundation of several Bulacan towns were
filed by petitioners before respondent Court against the National Power Corporation

(NPC) and the plant superintendent of Angat Dam. In its answer, the NPC invoked a
special and affirmative defense that in the operation of the Angat Dam, it is performing a
purely governmental function, hence it can not be sued without the express consent of
the State. It asked for dismissal of the case. Respondent court ordered the dismissal of
the complaint against the NPC over the opposition of petitioners stating that the NPC
performs governmental function with respect to the management and operation of the
Angat Dam, and that its power to sue and be sued under its Charter does not include the
power to be sued for tort. Respondent Court denied reconsideration of its order. Hence,
this petition.
The Supreme Court held that the NPC is a government owned and controlled corporation
which has a personality of its own, distinct and separate from that of the Government;
and that under the NPC Charter provision, its power to "sue and be sued in any court" is
without qualification on the cause of action, and accordingly, it can include a tort claim
such as the one instituted by the petitioner.
Petition granted.
SYLLABUS
ADMINISTRATIVE LAW; NATIONAL POWER CORPORATION, A PRIVATE CORPORATION;
POWER TO SUE AND BE SUED; INCLUDES TORT CLAIMS; CASE AT BAR. In organising
the National Power Corporation, the government has organised a private corporation, put
money in it and has allowed it to sue and to be sued in any court under its Charter (R.A.
No. 6395, Sec. 3(d)). As a government owned and controlled corporation, it has a
personality of its own, distinct and separate from that of the Government (See National
Shipyards and Steel Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA 781.) The
Charter provision that the NPC can sue and be sued in any court is without qualification
on the cause of action and accordingly it can include a tort claim.
DECISION
ABAD SANTOS, J p:
The relevant antecedents of this case are narrated in the petition and have not been
controverted, namely:
"3. At about midnight on October 26, 1978, during the height of that infamous typhoon
"KADING", the respondent corporation, acting through its plant superintendent, Benjamin
Chavez, opened or caused to be opened simultaneously all the three floodgates of the
Angat Dam. And as a direct and immediate result of the sudden, precipitate and
simultaneous opening of said floodgates several towns in Bulacan were inundated.
Hardest-hit was Norzagaray. About a hundred of its residents died or were reported to
have died and properties worth million of pesos destroyed or washed away. This flood
was unprecedented in Norzagaray.
"4. Petitioners, who were among the many unfortunate victims of that man-caused flood,
filed with the respondent Court eleven complaints for damages against the respondent
corporation and the plant superintendent of Angat Dam, Benjamin Chavez, docketed as
Civil Cases Nos. SM-950, 951, 953, 958, 959, 964, 965, 966, 981, 982 and 983. These
complaints though separately filed have a common/similar cause of action . . .

"5. Respondent corporation filed separate answers to each of these eleven complaints.
Apart from traversing the material averments in the complaints and setting forth
counterclaims for damages respondent corporation invoked in each answer a special and
affirmative defense that 'in the operation of the Angat Dam,' it is 'performing a purely
governmental function', hence it 'can not be sued without the express consent of the
State.'. . .
"6. On motion of the respondent corporation a preliminary hearing was held on its
affirmative defense as though a motion to dismiss were filed. Petitioners opposed the
prayer for dismissal and contended that respondent corporation is performing not
governmental but merely proprietary functions and that under its own organic act,
Section 3(d) ofRepublic Act No. 6395, it can 'sue and be sued in any court.' . . .
"7. On July 29, 1980 petitioners received a copy of the questioned order of the
respondent Court dated December 21, 1979 dismissing all their complaints as against
the respondent corporation thereby leaving the superintendent of the Angat Dam,
Benjamin Chavez, as the sole party-defendant . . .
"8. On August 7, 1980 petitioners filed with the respondent Court a motion for
reconsideration of the questioned order of dismissal . . .
"9. The respondent Court denied petitioners' motion for reconsideration in its order dated
October 3, 1980.. Hence, the present petition for review on certiorari under Republic Act
No. 5440." (Rollo, pp. 3-6.)
The Order of dismissal dated December 12, 1979, reads as follows:
"Under consideration is a motion to dismiss embodied as a special affirmative defense in
the answer filed by defendant NPC on the grounds that said defendant performs a purely
governmental function in the operation of the Angat Dam and cannot therefore be sued
for damages in the instant cases in connection therewith.
"Plaintiffs' opposition to said motion to dismiss, relying on Sec. 3 (d) of Republic Act 6396
which imposes on the NPC the power and liability to sue and be sued in any court, is not
tenable since the same refer to such matters only as are within the scope of the other
corporate powers of said defendant and not matters of tort as in the instant cases. It
being an agency performing a purely governmental function in the operation of the
Angat Dam, said defendant was not given any right to commit wrongs upon individuals.
To sue said defendant for tort may require the express consent of the State.
"WHEREFORE, the cases against defendant NPC are hereby dismissed." (Rollo, p. 60.)
The Order dated October 3, 1980, denying the motion for reconsideration filed by the
plaintiffs is pro forma; the motion was simply denied for lack of merit. (Rollo, p. 74.)
The petition to review the two orders of the public respondent was filed on October 16,
1980, and on October 27, 1980, We required the respondents to comment. It was only on
April 13, 1981, after a number of extensions, that the Solicitor General filed the required
comment. (Rollo, pp. 107-114.) LexLib
On May 27, 1980, We required the parties to file simultaneous memoranda within twenty
(20) days from notice. (Rollo, p. 115.) Petitioners filed their memorandum on July 22,

1981. (Rollo, pp. 118-125.) The Solicitor General filed a number of motions for extension
of time to file his memorandum. We granted the seventh extension with a warning that
there would beno further extension. Despite the warning the Solicitor General moved for
an eighth extension which We denied on November 9, 1981. A motion for a ninth
extension was similarly denied on November 18, 1981. The decision in this case is,
therefore, without the memorandum of the Solicitor General.
The parties are agreed that the Order dated December 21, 1979, raises the following
issues:
1. Whether respondent National Power Corporation performs a governmental function
with respect to the management and operation of the Angat Dam; and
2. Whether the power of respondent National Power Corporation to sue and be sued
under its organic charter includes the power to be sued for tort.
The petition is highly impressed with merit.
It is not necessary to write an extended dissertation on whether or not the NPC performs
a governmental function with respect to the management and operation of the Angat
Dam. It is sufficient to say that the government has organized a private corporation, put
money in it and has allowed it to sue and be sued in any court under its charter. (R.A. No.
6395, Sec. 3[d].) As a government owned and controlled corporation, it has a personality
of its own, distinct and separate from that of the Government. (See National Shipyards
and Steel Corp. vs. CIR, et al., L-17874, August 31, 1963, 8 SCRA 781.) Moreover, the
charter provision that the NPC can "sue and be sued in any court" is without qualification
on the cause of action and accordingly it can include a tort claim such as the one
instituted by petitioners. llcd
WHEREFORE, the petition is hereby granted; the Orders of the respondent court dated
December 12, 1979 and October 3, 1980, are set aside; and said court is ordered to
reinstate the complaints of the petitioners. Costs against the NPC.
SO ORDERED.
Barredo, (Chairman), Aquino, De Castro, Ericta and Escolin, JJ., concur.
Concepcion Jr., J., on leave, but the Chairman certified that he voted to grant the petition.
||| (Rayo v. Court of First Instance of Bulacan, G.R. No. L-55273-83, [December 19, 1981])

53. FROILAN V PAN ORIENTAL SHIPPING

EN BANC
[G.R. No. L-6060. September 30, 1954.]
FERNANDO A. FROILAN, plaintiff-appellee, vs. PAN ORIENTAL SHIPPING CO., defendantappellant, REPUBLIC OF THE PHILIPPINES, intervenor-appellee.
Quisumbing, Sycip, Quisumbing & Salazar, for appellant.
Ernesto Zaragoza, for appellee.
Hilarion U. Jarencio, for the intervenor.
SYLLABUS
1. PLEADING AND PRACTICE; COMPLAINT IN INTERVENTION; COUNTERCLAIM NOT
BARRED BY PRIOR JUDGMENT FOR FAILURE TO APPEAL FROM DISMISSAL OF COMPLAINT
IN INTERVENTION WITH RESERVATION. An order dismissing the complaint in
intervention after a counterclaim has been filed but reserving the right of the defendant
as against the intervenor, does not bar at the defendant from proceeding with its
counterclaim against the intervenor, notwithstanding the failure of the defendant to
appeal from said order.
2. ID.; ID.; ID.; COUNTERCLAIM FOR SPECIFIC PERFORMANCE STATES A CAUSE OF
ACTION. The complaint in the intervention sought to recover possession of the vessel
in question from the plaintiff, which claim is adverse to the position assumed by the
defendant that it has a better right to said possession than the plaintiff, on the theory
that the latter had already lost his rights over the same, and that, on the other hand, the
defendant is relying on the charter contract executed in its favor by the intervenor. Held:
The counterclaim calls for specific performance on the part of the intervenor and
therefore states a cause of action.
3. ID.; ID.; ID.; ID.; FILING OF COMPLAINT N INTERVENTION BY THE GOVERNMENT IS
WAIVER OF NONSUABILITY. The filing by the Government of a complaint in intervention
is in effect a wavier of its right of nonsuability.
DECISION
PARAS, C.J p:
The factual antecedents of this case are sufficiently recited in the brief filed by the
intervenor-appellee as follows:
"1. On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint against
the defendant-appellant, Pan Oriental Shipping Co., alleging that he purchased from the
Shipping Commission the vessel FS-197 for P200,000, paying P50,000 down and
agreeing to pay the balance in installments; that to secure the payment of the balance of
the purchase price, he executed a chattel mortgage of said vessel in favor of the
Shipping Commission; that for various reasons, among them the non-payment of the
installments, the Shipping Commission tool possession of said vessel and considered the

contract of sale cancelled; that the Shipping Commission chartered and delivered said
vessel to the defendant-appellant Pan Oriental Shipping Co. subject to the approval of
the President of the Philippines; that he appealed the action of the Shipping Commission
to the President of the Philippines and, in its meeting on August 25, 1950, the Cabinet
restored him to all his rights under his original contract with the Shipping Commission;
that he had repeatedly demanded from the Pan Oriental Shipping Co. the possession of
the vessel in question but the latter refused to do so. He, therefore, prayed that, upon
the approval of the bond accompanying his complaint, a writ of replevin be issued for the
seizure of said vessel with all its equipment and appurtenances, and that after hearing,
he be adjudged to have the rightful possession thereof (Rec. on App. pp. 2-8).
"2. On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan
and by virtue thereof the Pan Oriental Shipping Co. was divested of its possession of said
vessel (Rec. on App. p. 47).
"3. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right of
Froilan to the possession of the said vessel; it alleged that the action of the Cabinet on
August 25, 1950, restoring Froilan to his rights under his original contract with the
Shipping Commission was null and void; that, in any event, Froilan had not complied with
the condition precedent imposed by the Cabinet for the restoration of his rights to the
vessel under the original contract; that it suffered damages in the amount of P22, 764.59
for wrongful replevin in the month of February, 1951, and the sum of P17,651.84 a
month as damages suffered for wrongful replevin from March 1, 1951; it is alleged that it
has incurred necessary and useful expenses on the vessel amounting to P127,057.31
and claimed the right to retain said vessel until its useful and necessary expenses had
been reimbursed (Rec. on App. pp. 8-53).
"4. On November 10, 1951, after the leave of the lower court had been obtained, the
intervenor-appellee, Government of the Republic of the Philippines, filed a complaint in
intervention alleging that Froilan had failed to pay to the Shipping Commission (which
name was later changed to Shipping Administration) the balance due on the purchase
price of the vessel in question, the interest excluding the dry-docking expenses incurred
on said vessel by the session of the said vessel either under the terms of the original
contract as supplemented by Froilan's letter dated January 28, 1949, or in order that it
may cause the extrajudicial sale thereof under the Chattel Mortgage Law. It, therefore,
prayed thatFroilan be declared to be without any rights on said vessel and the amounts
he paid thereon forfeited or alternately that the said vessel be delivered to the Board of
Liquidators in order that the intervenor may have its chattel mortgage extrajudicially
foreclosed in accordance with the provisions of the Chattel Mortgage Law; and that
pending the hearing on the merits, the said vessel be delivered to its (Rec. on App. pp.
54-66).
"5. On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the
complaint in intervention alleging that the Government of the Republic of the Philippines
was obligated to deliver the vessel in question to it by virtue of a contract of bareboat
charter with option to purchase executed on June 16, 1949, by the latter in favor of the
former; it also alleged that it had made necessary and useful expenses of the vessel and
claimed the right of retention of the vessel. It, therefore, prayed that, if the Republic
vessel, to comply with its obligations of delivering to it (Pan OrientalShipping Co.) or
causing its delivery by recovering it from Froilan (Rec. on App. pp. 69-81).

"6. On November 29, 1951, Froilan tendered to the Board of Liquidators, which was
liquidating the affairs of the Shipping Administration, a check in the amount of
P162,576.96 in payment of his obligation to the ShippingAdministration for the said
vessel as claimed in the complaint in intervention of the Government of the Republic of
the Philippines. The Board of Liquidators issued an official report therefor stating that it
was a 'deposit pending the issuance of an order of the Court of First Instance of Manila'
(Rec. on App. pp. 92-93).
"7. On December 7, 1951, the Government of the Republic of the Philippines brought the
matter of said payment and the circumstances surrounding it to the attention of the
lower court 'in order that they may be taken into account by this Honorable Court in
connection with question that are now pending before it for determination' (Rec. on App.
pp. 82-86).
"8. On February 3, 1952, the lower court held that the payment by Froilan of the amount
of P162,576.96 On November 29, 1951, to the Board of Liquidators constituted a
payment and a discharge of Froilan's obligation to the Government of the Republic of the
Philippines and ordered the dismissal of the latter's complaint in intervention. In the
same order, the lower court made it very clear that said order did not pre-judge the
question involved between Froilanand the Oriental Shipping Co. which was also pending
determination in said court (Rec. on App. pp. 92-93). This order dismissing the complaint
in intervention, but reserving for future adjudication the controversy between Froilan and
thePan Oriental Shipping Co. had already become final since neither the Government of
the Republic of the Philippines nor the Pan Oriental Shipping Co. had appealed therefrom.
"9. On May 10, 1952, the Government of the Republic of the Philippines filed a motion to
dismiss the counterclaim of the Pan Oriental Shipping Co. against it on the ground that
the purpose of said counterclaim was to compel the Government of the Republic of the
Philippines to deliver the vessel to it (Pan Oriental Shipping Co.) in the event that the
Government of the Republic of the Philippines recovers the vessel in question from
Froilan. In view, however, of the order of the order of the lower court dated February 3,
1952, holding that the payment made by Froilan's obligation to the Shipping
Administration, which order had already become final, the counterclaim of the Pan
OrientalShipping Co. against the Republic of the Philippines was no longer feasible, said
counterclaim was barred by prior judgment and stated no cause of action. It was also
alleged that movant was not subject to the jurisdiction of the court in connection with
the counterclaim. (Rec. on App. pp. 94-97). This motion was opposed by the Pan Oriental
Shipping Co. in its written opposition dated June 4, 1952 (Rec. on App. pp. 19-104).
"10. In an order dated July 1, 1952, the lower court dismissed the counterclaim of the
Pan Oriental Shipping Co. as prayed for by the Republic of the Philippines (Rec. App. pp.
104-106).
"11. It is from this order of the lower court dismissing its counterclaim against the
Government of the Republic of the Philippines that Pan Oriental Shipping Co. has
perfected the present appeal (Rec. App. pp. 107)."
The order of the Court of First Instance of Manila, dismissing the counterclaim of the
defendant Pan OrientalShipping Co., from which the latter has appealed, reads as
follows:

"This is a motion to dismiss the counterclaim interposed by the defendant in its answer
to the complaint in intervention.
"The counterclaim stated as follows:
'COUNTERCLAIM
'As counterclaim against the intervenor Republic of the Philippines, the defendant
alleges:

'1. That the defendant reproduces herein all the pertinent allegations of the foregoing
answer to the complaint in intervention.
'2. That, as shown by the allegations of the foregoing answer to the complaint in
intervention, the defendant Pan Oriental Shipping Company is entitled to the possession
of the vessel and the intervenor Republic of the Philippines is bound under the contract
of charter with option to purchase it entered into with the defendant to deliver that
possession to the defendant whether it actually has the said possession from the
plaintiff Fernando A. Froilan and deliver the same to the defendant;
'3. That, notwithstanding demand, the intervenor Republic of the Philippines has not to
date complied with its obligation of delivering or causing the delivery of the vessel to the
defendant Pan Oriental ShippingCompany.
'RELIEF
'WHEREFORE, the defendant respectfully prays that judgment be rendered ordering the
intervenor Republic of the Philippines alternatively to deliver to the defendants the
possession of the said vessel, or to comply with its obligation to the defendant causing
the delivery to the latter of the said vessel by recovering the same from plaintiff, with
costs.
'The defendant prays for such other remedy as the Court may deem just and equitable in
the premises."
"The ground of the motion to dismiss are (a) That the cause of action is barred by prior
judgment; (b) That the counterclaim stated no cause of action; (c) That this Honorable
Court has no jurisdiction over the intervenor government of the Republic of the
Philippines in connection with the counterclaim of the defendant Pan Oriental Shipping
Co.
"The intervenor contends that the complaint in intervention having been dismissed and
no appeal having been taken, the dismissal of said complaint is tantamount to a
judgment.
"The complaint in intervention did not contain any claim whatsoever against the
defendant Pan Oriental ShippingCo.; hence, the counterclaim has no foundation.
"The question as to whether the Court has jurisdiction over the intervenor with regard to
the counterclaim, the Court is of the opinion that it has no jurisdiction over said
intervenor.

"It appearing, therefore, that the grounds of the motion to dismiss are well taken, the
counterclaim of the defendant is dismissed, without pronouncement as to costs."
The defendant's appeal is predicated upon the following assignments of error:
"I. The lower court erred in dismissing the counterclaim on the ground of prior judgment.
II. The lower court erred in dismissing the counterclaim on the ground that the
counterclaim had no foundation because made to a complaint in intervention that over
the intervenor Republic of the Philippines.
III. The lower court erred in dismissing the counterclaim on the ground of alleged lack of
jurisdiction over the intervenor Republic of the Philippines."
We agree with appellant's contention that its counterclaim is not barred by prior
judgment (order of February 8, 1952, dismissing the complaint in intervention), first,
because said counterclaim was filed on November 29, 1951, before the issuance of the
order invoked; and, secondly, because in said order of February 8, the court dismissed
the complaint in intervention, "without, of course, precluding the determination of the
right of the defendant in the instant case," and subject to the condition that the "release
and cancellation of the chattel mortgage does not, however, prejudge the question
involved between the plaintiff and the defendant which is still the subject of
determination in this case." It is to be noted that the first condition referred to the right
of the defendant, as distinguished from the second condition that expressly specified the
controversy between the plaintiff and the defendant. That the first condition reserved the
right of the defendant as against the intervenor, is clearly to be deduced from the fact
that the order of February 8 mentioned the circumstance that "the question of the
expenses of drydocking incurred by the counterclaim against the plaintiff," apparently as
one of the grounds for granting the motion to dismiss the complaint in intervention.
The defendant's failure to appeal from the order of February 8 cannot, therefore, be held
as barring the defendant from proceeding with its counterclaim, since, as already stated,
said order preserved its right as against the intervenor. Indeed, the maintenance of said
right is in consonance with Rule 30, section 2, of the Rules of Court providing that "if a
counterclaim has been pleaded by a defendant prior to the service upon him of the
plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's
objection unless the counterclaim can remain pending for independent adjudication by
the court."
The lower court also erred in holding that, as the intervenor had not made any claim
against the defendant, the latter's counterclaim had no foundation. The complaint in
intervention sought to recover possession of the vessel in question from the plaintiff, and
this claim is logically adverse to the position assumed by the defendant that it has a
better right to said possession than the plaintiff who alleges in his complaint that he is
entitled to recover the vessel from the defendant. At any rate a counterclaim should
judge by its own allegations, and not by the averments of the adverse party. It should be
recalled that the defendant's theory is that the plaintiff had already lost his rights under
the contract with theShipping Administration and that, on the other hand, the defendant
is relying on the charter contract executed in its favor by the intervenor which is bound
to protect the defendant in its possession of the vessel. In other words, the counter-claim

calls for specific performance on the part of the intervenor. As to whether this
counterclaim is meritorious is another question is not now before us.
The other ground for dismissing the defendant's counterclaim is that the State is immune
from suit. This is untenable, because by filing its complaint in intervention the
Government in effect waived its right of nonsuability.
"The immunity of the state from the suits does not deprive it of the right to sue private
parties in its own courts. The state as plaintiff may avail itself of the different forms of
actions open to private litigants. In short, by taking the initiative in an action against a
private party, the state surrenders its privileged position and comes down to the level of
the defendant. The latter automatically acquires, within certain limits, the right to set up
whatever claims and other defense he might have against the state. The United States
Supreme Court thus explains:
'No direct suit can be maintained against the United States. But when an action is
brought by the United States to recover money in the hands of a party who has a legal
claim against them, it would be a very rigid principle to deny to him the right of setting
up such claim in a court of justice, and turn him around to an application to Congress.'".
(Sinco, Philippine Political Law, Tenth Ed., pp. 36-37. citing U.S. vs. Ringgold, 8 Pet. 150, 8
L. ed. 899.)
It is however, contended for the intervenor that, if there was at all any waiver, it was in
favor of the plaintiff against whom the complainant in intervention was directed. This
contention is untenable. As already stated, the complaint in intervention was in a sense
in derogation of the defendant's claim over the possession of the vessel in question.
Wherefore, the appealed order is hereby reversed and set aside and the case remanded
to the lower court for further proceedings. So ordered, without costs.
Pablo, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion and Reyes,
J.B.L., JJ., concur.
||| (Froilan v. Pan Oriental Shipping Co., G.R. No. L-6060, [September 30, 1954], 95 PHIL
905-913)

54. USA V GUINTO

EN BANC
[G.R. No. 76607. February 26, 1990.]
UNITED STATES OF AMERICA, FREDERICK M. SMOUSE AND YVONNE REEVES, petitioners,
vs. HON. ELIODORO B. GUINTO, Presiding Judge, Branch LVII, Regional Trial Court,
Angeles City, ROBERTO T. VALENCIA, EMERENCIANA C. TANGLAO, AND PABLO C. DEL
PILAR, respondents.
[G.R. No. 79470. February 26, 1990.]
UNITED STATES OF AMERICA, ANTHONY LAMACHIA, T/SGT. USAF, WILFREDO BELSA,
PETER ORASCION AND ROSE CARTALLA, petitioners, vs. HON. RODOLFO D. RODRIGO, as
Presiding Judge of Branch 7, Regional Trial Court (BAGUIO CITY), La Trinidad, Benguet and
FABIAN GENOVE, respondents.
[G.R. No. 80018. February 26, 1990.]
UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D. DYE and STEVEN F. BOSTICK,
petitioners, vs. HON. JOSEFINA D. CEBALLOS, As Presiding Judge, Regional Trial Court,
Branch 66, Capas, Tarlac, and LUIS BAUTISTA,respondents.
[G.R. No. 80258. February 26, 1990.]
UNITED STATES OF AMERICA, MAJOR GENERAL MICHAEL P. C. CARNS, AIC ERNEST E.
RIVENBURGH, AIC ROBIN BLEVINS, SGT. NOEL A. GONZALES, SGT. THOMAS MITCHELL,
SGT. WAYNE L. BENJAMIN, ET AL., petitioners, vs.HON. CONCEPCION S. ALARCON
VERGARA, as Presiding Judge, Branch 62 REGIONAL TRIAL COURT, Angeles City, and
RICKY SANCHEZ, FREDDIE SANCHEZ AKA FREDDIE RIVERA, EDWIN MARIANO, AKA JESSIE
DOLORES SANGALANG, ET AL., respondents.
Luna, Sison & Manas Law Office for petitioners.
SYLLABUS

1. CONSTITUTIONAL LAW; DOCTRINE OF STATE IMMUNITY FROM SUIT; GENERALLY

ACCEPTED PRINCIPLE OF INTERNATIONAL LAW; EMBODIED IN PHILIPPINE CONSTITUTION.
The rule that a state may not be sued without its consent, now expressed in Article
XVI, Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935
and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of
the international community.
2. ID., ID., ID., PRINCIPLE DEEMED INCORPORATED IN THE LAW OF EVERY CIVILIZED
STATE; STATE IS AUTOMATICALLY OBLIGATED TO COMPLY WITH THE PRINCIPLE. Even
without such affirmation, we would still be bound by the generally accepted principles of
international law under the doctrine of incorporation. Under this doctrine, as accepted by
the majority of states, such principles are deemed incorporated in the law of every
civilized state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to
comply with these principles in its relations with other states.
3. ID.; ID.; BASIS. As applied to the local state, the doctrine of state immunity is based
on the justification given by Justice Holmes that "there can be no legal right against the
authority which makes the law on which the right depends." There are other practical
reasons for the enforcement of the doctrine. In the case of the foreign state sought to be
impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and cannot assert
jurisdiction over one another. A contrary disposition would, in the language of a
celebrated case, "unduly vex the peace of nations."
4. ID., ID., APPLIES TO OFFICIALS OF THE STATE FOR ACTS PERFORMED IN THE
DISCHARGE OF THEIR DUTIES. While the doctrine appears to prohibit only suits
against the state without its consent, it is also applicable to complaints filed against
officials of the state for acts allegedly performed by them in the discharge of their duties.
The rule is that if the judgment against such officials will require the state itself to
perform an affirmative act to satisfy the same, such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must be regarded as against
the state itself although it has not been formally impleaded. In such a situation, the state
may move to dismiss the complaint on the ground that it has been filed without its
consent.
5. ID., ID., NOT ABSOLUTE AND MAY BE SUED IF STATE GIVES CONSENT. The doctrine is
sometimes derisively called "the royal prerogative of dishonesty" because of the
privilege it grants the state to defeat any legitimate claim against it by simply invoking
its non-suability. That is hardly fair, at least in democratic societies, for the state is not an
unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine is not
absolute and does not say the state may not be sued under any circumstance. On the
contrary, the rule says that the state may not be sued without its consent, which clearly
imports that it may be sued if it consents.
6. ID., ID., ID., CONSENT MAY BE GIVEN EXPRESSLY OR IMPLIEDLY. The consent of the
state to be sued may be manifested expressly or impliedly. Express consent may be

embodied in a general law or a special law. Consent is implied when the state enters into
a contract or it itself commences litigation.
7. ID., ID., ID., ID., WAIVER OF IMMUNITY; INSTANCES. The general law waiving the
immunity of the state from suit is found in Act No. 3083, under which the Philippine
government "consents and submits to be sued upon any moneyed claim involving
liability arising from contract, express or implied, which could serve as a basis of civil
action between private parties." In Merritt v. Government of the Philippine Islands, a
special law was passed to enable a person to sue the government for an alleged tort.
When the government enters into a contract, it is deemed to have descended to the
level of the other contracting party and divested of its sovereign immunity from suit with
its implied consent. Waiver is also implied when the government files a complaint, thus
opening itself to a counterclaim.
8. ID., ID., ID., ID., ID., ID., EXCEPTIONS. The above rules are subject to qualification.
Express consent is effected only by the will of the legislature through the medium of a
duly enacted statute. We have held that not all contracts entered into by the government
will operate as a waiver of its non-suability; distinction must be made between its
sovereign and proprietary acts. As for the filing of a complaint by the government,
suability will result only where the government is claiming affirmative relief from the
defendant.
9. ID., ID., ID., ID., ID., UNITED STATES OF AMERICA DEEMED TO HAVE IMPLIEDLY WAIVED
ITS NON-SUABILITY IF IT HAS ENTERED INTO A CONTRACT IN ITS PROPRIETARY CAPACITY.
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied. This was our ruling in United
States of America v. Ruiz, where the transaction in question dealt with the improvement
of the wharves in the naval installation at Subic Bay. As this was a clearly governmental
function, we held that the contract did not operate to divest the United States of its
sovereign immunity from suit.
10. ID., ID., ID., ID., ID., CHARGES MAY NOT BE SUMMARILY DISMISSED ON MERE
ASSERTION THAT ACTS ARE IMPUTABLE TO THE UNITED STATES OF AMERICA. The
other petitioners in the cases before us all aver they have acted in the discharge of their
official functions as officers or agents of the United States. However, this is a matter of
evidence. The charges against them may not be summarily dismissed on their mere
assertion that their acts are imputable to the United States of America, which has not
given its consent to be sued. In fact, the defendants are sought to be held answerable for
personal torts in which the United States itself is not involved. If found liable, they and
they alone must satisfy the judgment.
11. ID., ID., ID., ID., ID., PETITIONERS CHARGED WITH THE ENFORCEMENT OF LAW
REGARDING PROHIBITED DRUGS ARE AGENTS OF THE UNITED STATES. It is clear from
a study of the records of G.R. No. 80018 that the individually-named petitioners therein
were acting in the exercise of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against him at his trial. The
said petitioners were in fact connected with the Air Force Office of Special Investigators
and were charged precisely with the function of preventing the distribution, possession

and use of prohibited drugs and prosecuting those guilty of such acts. It cannot for a
moment be imagined that they were acting in their private or unofficial capacity when
they apprehended and later testified against the complainant. It follows that for
discharging their duties as agents of the United States, they cannot be directly
impleaded for acts imputable to their principal, which has not given its consent to be
sued.
12. ID., ID., ID., ID., ID., SUABILITY AND LIABILITY, DIFFERENTIATED. There seems to be
a failure to distinguish between suability and liability and a misconception that the two
terms are synonymous. Suability depends on the consent of the state to be sued, liability
on the applicable law and the established facts. The circumstance that a state is suable
does not necessarily mean that it is liable; on the other hand, it can never be held liable
if it does not first consent to be sued. Liability is not conceded by the mere fact that the
state has allowed itself to be sued. When the state does waive its sovereign immunity, it
is only giving the plaintiff the chance to prove, if it can, that the defendant is liable.
13. ID., ID., ID., ID., ID., ARTICLE 2180 OF THE CIVIL CODE ESTABLISHES A RULE OF
LIABILITY. The private respondent invokes Article 2180 of the Civil Code which holds
the government liable if it acts through a special agent. The argument, it would seem, is
premised on the ground that since the officers are designated "special agents," the
United States government should be liable for their torts. The said article establishes a
rule of liability, not suability. The government may be held liable under this rule only if it
first allows itself to be sued through any of the accepted forms of consent.

14. ID., ID., ID., ID., ID., AN AGENT PERFORMING REGULAR FUNCTIONS IS NOT A SPECIAL
AGENT EVEN IF SO DENOMINATED; ARTICLE APPLIES ONLY TO PHILIPPINE GOVERNMENT.
Moreover, the agent performing his regular functions is not a special agent even if he
is so denominated, as in the case at bar. No less important, the said provision appears to
regulate only the relations of the local state with its inhabitants and, hence, applies only
to the Philippine government and not to foreign governments impleaded in our courts.
15. ID., ID., ID., ID., ID., EXPRESS WAIVER MUST BE EFFECTED THROUGH A DULYENACTED STATUTE. We reject the conclusion of the trial court that the answer filed by
the special counsel of the Office of the Sheriff Judge Advocate of Clark Air Base was a
submission by the United States government to its jurisdiction. As we noted in Republic
v. Purisima, express waiver of immunity cannot be made by a mere counsel of the
government but must be effected through a duly-enacted statute. Neither does such
answer come under the implied forms of consent as earlier discussed.
16. ID., ID., ID., ID., ID., INQUIRY MUST BE MADE AS TO WHAT CAPACITY PETITIONERS
WERE ACTING. But even as we are certain that individual petitioners in G.R. No. 80018
were acting in the discharge of their official functions, we hesitate to make the same
conclusion in G.R. No. 80258. The contradictory factual allegations in this case deserve in
our view a closer study of what actually happened to the plaintiffs. The record is too
meager to indicate if the defendants were really discharging their official duties or had
actually exceeded their authority when the incident in question occurred. Lacking this
information, this Court cannot directly decide this case. The needed inquiry must first be
made by the lower court so it may assess and resolve the conflicting claims of the

parties on the basis of the evidence that has yet to be presented at the trial. Only after it
shall have determined in what capacity the petitioners were acting at the time of the
incident in question will this Court determine, if still necessary, if the doctrine of state
immunity is applicable.
17. ID., ID., ID., ID., ID., DOCTRINE CANNOT BE INVOKED WHERE THE STATE ENTERED
INTO A CONTRACT IN THE DISCHARGE OF ITS PROPRIETARY FUNCTION; CASE AT BAR.
From the circumstances, the Court can assume that the restaurant services offered at
the John Hay Air Station partake of the nature of a business enterprise undertaken by the
United States government in its proprietary capacity. Such services are not extended to
the American servicemen for free as a perquisite of membership in the Armed Forces of
the United States. Neither does it appear that they are exclusively offered to these
servicemen; on the contrary, it is well known that they are available to the general public
as well, including the tourists in Baguio City, many of whom make it a point to visit John
Hay for this reason. All persons availing themselves of this facility pay for the privilege
like all other customers as in ordinary restaurants. Although the prices are concededly
reasonable and relatively low, such services are undoubtedly operated for profit, as a
commercial and not a governmental activity. The consequence of this finding is that the
petitioners cannot invoke the doctrine of state immunity to justify the dismissal of the
damage suit against them by Genove. Such defense will not prosper even if it be
established that they were acting as agents of the United States when they investigated
and later dismissed Genove. For that matter, not even the United States government
itself can claim such immunity. The reason is that by entering into the employment
contract with Genove in the discharge of its proprietary functions, it impliedly divested
itself of its sovereign immunity from suit.
18. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; DISMISSAL FOR
THE UNBELIEVABLY NAUSEATING ACT IS PROPER. The dismissal of the private
respondent was decided upon only after a thorough investigation where it was
established beyond doubt that he had polluted the soup stock with urine. The
investigation, in fact, did not stop there. Despite the definitive finding of Genove's guilt,
the case was still referred to the board of arbitrators provided for in the collective
bargaining agreement. This board unanimously affirmed the findings of the investigators
and recommended Genove's dismissal. There was nothing arbitrary about the
proceedings. The petitioners acted quite properly in terminating the private respondent's
employment for his unbelievably nauseating act. It is surprising that he should still have
the temerity to file his complaint for damages after committing his utterly disgusting
offense.
19. ID.; ID.; BARBERSHOPS ARE NOT AGENCIES OF THE UNITED STATES ARMED FORCES;
IMMUNITY FROM SUIT CANNOT BE INVOKED. Concerning G.R. No. 76607, we also find
that the barbershops subject of the concessions granted by the United States
government are commercial enterprises operated by private persons. They are not
agencies of the United States Armed Forces nor are their facilities demandable as a
matter of right by the American servicemen. This being the case, the petitioners cannot
plead any immunity from the complaint filed by the private respondents in the court
below. The contracts in question being decidedly commercial, the conclusion reached in
the United States of America v. Ruiz case cannot be applied here.
DECISION

CRUZ, J p:
These cases have been consolidated because they all involve the doctrine of state
immunity. The United States of America was not impleaded in the complaints below but
has moved to dismiss on the ground that they are in effect suits against it to which it has
not consented. It is now contesting the denial of its motions by the respondent judges.
cdll
In G.R. No. 76607, the private respondents are suing several officers of the U.S. Air Force
stationed in Clark Air Base in connection with the bidding conducted by them for
contracts for barbering services in the said base.
On February 24, 1986, the Western Pacific Contracting Office, Okinawa Area Exchange,
U.S. Air Force, solicited bids for such contracts through its contracting officer, James F.
Shaw. Among those who submitted their bids were private respondents Roberto T.
Valencia, Emerenciana C. Tanglao, and Pablo C. del Pilar. Valencia had been a
concessionaire inside Clark for 34 years; del Pilar for 12 years; and Tanglao for 50 years.
LLjur
The bidding was won by Ramon Dizon, over the objection of the private respondents,
who claimed that he had made a bid for four facilities, including the Civil Engineering
Area, which was not included in the invitation to bid.
The private respondents complained to the Philippine Area Exchange (PHAX). The latter,
through its representatives, petitioners Yvonne Reeves and Frederic M. Smouse,
explained that the Civil Engineering concession had not been awarded to Dizon as a
result of the February 24, 1986 solicitation. Dizon was already operating this concession,
then known as the NCO club concession, and the expiration of the contract had been
extended from June 30, 1986 to August 31, 1986. They further explained that the
solicitation of the CE barbershop would be available only by the end of June and the
private respondents would be notified. Cdpr
On June 30,1986, the private respondents filed a complaint in the court below to compel
PHAX and the individual petitioners to cancel the award to defendant Dizon, to conduct a
rebidding for the barbershop concessions and to allow the private respondents by a writ
of preliminary injunction to continue operating the concessions pending litigation. 1
Upon the filing of the complaint, the respondent court issued an ex parte order directing
the individual petitioners to maintain the status quo.
On July 22, 1986, the petitioners filed a motion to dismiss and opposition to the petition
for preliminary injunction on the ground that the action was in effect a suit against the
United States of America, which had not waived its non-suability. The individual
defendants, as officials/employees of the U.S. Air Force, were also immune from suit.
On the same date, July 22, 1986, the trial court denied the application for a writ of
preliminary injunction.
On October 10, 1988, the trial court denied the petitioners' motion to dismiss, holding in
part as follows:

From the pleadings thus far presented to this Court by the parties, the Court's attention
is called by the relationship between the plaintiffs as well as the defendants, including
the US Government in that prior to the bidding or solicitation in question, there was a
binding contract between the plaintiffs as well as the defendants, including the US
Government. By virtue of said contract of concession, it is the Court's understanding that
neither the US Government nor the herein principal defendants would become the
employer/s of the plaintiffs but that the latter are the employers themselves of the
barbers, etc. with the employer, the plaintiffs herein, remitting the stipulated percentage
of commissions to the Philippine Area Exchange. The same circumstance would become
m effect when the Philippine Area Exchange opened for bidding or solicitation the
questioned barber shop concessions. To this extent, therefore, indeed a commercial
transaction has been entered, and for purposes of the said solicitation, would necessarily
be entered between the plaintiffs as well as the defendants.
The Court, further, is of the view that Article XVIII of the RP-US Bases Agreement does
not cover such kind of services falling under the concessionaireship, such as a barber
shop concession. 2
On December 11, 1986, following the filing of the herein petition for certiorari and
prohibition with preliminary injunction, we issued a temporary restraining order against
further proceedings in the court below. 3

In G.R. No. 79470, Fabian Genove filed a complaint for damages against petitioners
Anthony Lamachia, Wilfredo Belsa, Rose Cartalla and Peter Orascion for his dismissal as
cook in the U.S. Air Force Recreation Center at the John Hay Air Station in Baguio City. It
had been ascertained after investigation, from the testimony of Belsa, Cartalla and
Orascion, that Genove had poured urine into the soup stock used in cooking the
vegetables served to the club customers. Lamachia, as club manager, suspended him
and thereafter referred the case to a board of arbitrators conformably to the collective
bargaining agreement between the Center and its employees. The board unanimously
found him guilty and recommended his dismissal. This was effected on March 5, 1986, by
Col. David C. Kimball, Commander of the 3rd Combat Support Group, PACAF Clark Air
Force Base. Genove's reaction was to file his complaint in the Regional Trial Court of
Baguio City against the individual petitioners. 4
On March 13, 1987, the defendants, joined by the United States of America, moved to
dismiss the complaint, alleging that Lamachia, as an officer of the U.S. Air Force
stationed at John Hay Air Station, was immune from suit for the acts done by him in his
official capacity. They argued that the suit was in effect against the United States, which
had not given its consent to be sued. Cdpr
This motion was denied by the respondent judge on June 4, 1987, in an order which read
in part:
It is the understanding of the Court, based on the allegations of the complaint which
have been hypothetically admitted by defendants upon the filing of their motion to
dismiss that although defendants acted initially in their official capacities, their going
beyond what their functions called for brought them out of the protective mantle of
whatever immunities they may have had in the beginning. Thus, the allegation that the

acts complained of were "illegal," done, with "extreme bad faith" and with "preconceived sinister plan to harass and finally dismiss" the plaintiff, gains significance. 5
The petitioners then came to this Court seeking certiorari and prohibition with
preliminary injunction.
In G.R. No. 80018, Luis Bautista, who was employed as a barracks boy in Camp
O'Donnell, an extension of Clark Air Base, was arrested following a buy-bust operation
conducted by the individual petitioners herein, namely, Tomi J. King, Darrel D. Dye and
Stephen F. Bostick, officers of the U.S. Air Force and special agents of the Air Force Office
of Special Investigators (AFOSI). On the basis of the sworn statements made by them, an
information for violation of R.A. 6425, otherwise known as the Dangerous Drugs Act, was
filed against Bautista in the Regional Trial Court of Tarlac. The above-named officers
testified against him at his trial. As a result of the filing of the charge, Bautista was
dismissed from his employment. He then filed a complaint for damages against the
individual petitioners herein claiming that it was because of their acts that he was
removed. 6
During the period for filing of the answer, Mariano Y. Navarro, a special counsel assigned
to the International Law Division, Office of the Staff Judge Advocate of Clark Air Base,
entered a special appearance for the defendants and moved for an extension within
which to file an "answer and/or other pleadings." His reason was that the Attorney
General of the United States had not yet designated counsel to represent the
defendants, who were being sued for their official acts. Within the extended period, the
defendants, without the assistance of counsel or authority from the U.S. Department of
Justice, filed their answer. They alleged therein as affirmative defenses that they had
only done their duty in the enforcement of the laws of the Philippines inside the
American bases pursuant to the RP-US Military Bases Agreement.
On May 7, 1987, the law firm of Luna, Sison and Manas, having been retained to
represent the defendants, filed with leave of court a motion to withdraw the answer and
dismiss the complaint. The ground invoked was that the defendants were acting in their
official capacity when they did the acts complained of and that the complaint against
them was in effect a suit against the United States without its consent. prcd
The motion was denied by the respondent judge in his order dated September 11, 1987,
which held that the claimed immunity under the Military Bases Agreement covered only
criminal and not civil cases. Moreover, the defendants had come under the jurisdiction of
the court when they submitted their answer. 7
Following the filing of the herein petition for certiorari and prohibition with preliminary
injunction, we issued on October 14, 1987, a temporary restraining order. 8
In G.R. No. 80258, a complaint for damages was filed by the private respondents against
the herein petitioners (except the United States of America), for injuries allegedly
sustained by the plaintiffs as a result of the acts of the defendants. 9 There is a conflict
of factual allegations here. According to the plaintiffs, the defendants beat them up,
handcuffed them and unleashed dogs on them which bit them in several parts of their
bodies and caused extensive injuries to them. The defendants deny this and claim the
plaintiffs were arrested for theft and were bitten by the dogs because they were

struggling and resisting arrest. The defendants stress that the dogs were called off and
the plaintiffs were immediately taken to the medical center for treatment of their
wounds.
In a motion to dismiss the complaint, the United States of America and the individually
named defendants argued that the suit was in effect a suit against the United States,
which had not given its consent to be sued. The defendants were also immune from suit
under the RP-US Bases Treaty for acts done by them in the performance of their official
functions.
The motion to dismiss was denied by the trial court in its order dated August 10, 1987,
reading in part as follows:
The defendants certainly cannot correctly argue that they are immune from suit. The
allegations, of the complaint which is sought to be dismissed, had to be hypothetically
admitted and whatever ground the defendants may have, had to be ventilated during
the trial of the case on the merits. The complaint alleged criminal acts against the
individually-named defendants and from the nature of said acts it could not be said that
they are Acts of State, for which immunity should be invoked. If the Filipinos themselves
are duty bound to respect, obey and submit themselves to the laws of the country, with
more reason, the members of the United States Armed Forces who are being treated as
guests of this country should respect, obey and submit themselves to its laws. 10
and so was the motion for reconsideration. The defendants submitted their answer as
required but subsequently filed their petition for certiorari and prohibition with
preliminary injunction with this Court. We issued a temporary restraining order on
October 27, 1987. 11
II
The rule that a state may not be sued without its consent, now expressed in Article XVI,
Section 3, of the 1987 Constitution, is one of the generally accepted principles of
international law that we have adopted as part of the law of our land under Article II,
Section 2. This latter provision merely reiterates a policy earlier embodied in the 1935
and 1973 Constitutions and also intended to manifest our resolve to abide by the rules of
the international community.
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of
every civilized state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to
comply with these principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based on the justification
given by Justice Holmes that "there can be no legal right against the authority which
makes the law on which the right depends." 12 There are other practical reasons for the
enforcement of the doctrine. In the case of the foreign state sought to be impleaded in
the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non
habet imperium. All states are sovereign equals and cannot assert jurisdiction over one

another. A contrary disposition would, in the language of a celebrated case, "unduly vex
the peace of nations." 13
While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself although it has not
been formally impleaded. 14 In such a situation, the state may move to dismiss the
complaint on the ground that it has been filed without its consent.
The doctrine is sometimes derisively called "the royal prerogative of dishonesty" because
of the privilege it grants the state to defeat any legitimate claim against it by simply
invoking its non-suability. That is hardly fair, at least in democratic societies, for the state
is not an unfeeling tyrant unmoved by the valid claims of its citizens. In fact, the doctrine
is not absolute and does not say the state may not be sued under any circumstance. On
the contrary, the rule says that the state may not be sued without its consent, which
clearly imports that it may be sued if it consents.

The consent of the state to be sued may be manifested expressly or impliedly. Express
consent may be embodied in a general law or a special law. Consent is implied when the
state enters into a contract or it itself commences litigation.
The general law waiving the immunity of the state from suit is found in Act No. 3083,
under which the Philippine government "consents and submits to be sued upon any
moneyed claim involving liability arising from contract, express or implied, which could
serve as a basis of civil action between private parties." In Merritt v. Government of the
Philippine Islands, 15 a special law was passed to enable a person to sue the government
for an alleged tort. When the government enters into a contract, it is deemed to have
descended to the level of the other contracting party and divested of its sovereign
immunity from suit with its implied consent. 16 Waiver is also implied when the
government files a complaint, thus opening itself to a counterclaim. 17
The above rules are subject to qualification. Express consent is effected only by the will
of the legislature through the medium of a duly enacted statute. 18 We have held that
not all contracts entered into by the government will operate as a waiver of its nonsuability; distinction must be made between its sovereign and proprietary acts. 19 As for
the filing of a complaint by the government, suability will result only where the
government is claiming affirmative relief from the defendant. 20
In the case of the United States of America, the customary rule of international law on
state immunity is expressed with more specificity in the RP-US Bases Treaty. Article III
thereof provides as follows:
It is mutually agreed that the United States shall have the rights, power and authority
within the bases which are necessary for the establishment, use, operation and defense
thereof or appropriate for the control thereof and all the rights, power and authority

within the limits of the territorial waters and air space adjacent to, or in the vicinity of,
the bases which are necessary to provide access to them or appropriate for their control.
The petitioners also rely heavily on Baer v. Tizon, 21 along with several other decisions,
to support their position that they are not suable in the cases below, the United States
not having waived its sovereign immunity from suit. It is emphasized that in Baer, the
Court held:
The invocation of the doctrine of immunity from suit of a foreign state without its consent
is appropriate. More specifically, insofar as alien armed forces is concerned, the starting
point is Raquiza v. Bradford, a 1945 decision. In dismissing a habeas corpus petition for
the release of petitioners confined by American army authorities, Justice Hilado, speaking
for the Court, cited Coleman v. Tennessee, where it was explicitly declared: `It is well
settled that a foreign army, permitted to march through a friendly country or to be
stationed in it, by permission of its government or sovereign, is exempt from the civil and
criminal jurisdiction of the place.' Two years later, in Tubb and Tedrow v. Griess, this Court
relied on the ruling in Raquiza v. Bradford and cited in support thereof excerpts from the
works of the following authoritative writers: Vattel, Wheaton, Hall, Lawrence, Oppenheim,
Westlake, Hyde, and McNair and Lauterpacht. Accuracy demands the clarification that
after the conclusion of the Philippine-American Military Bases Agreement, the treaty
provisions should control on such matter, the assumption being that there was a
manifestation of the submission to jurisdiction on the part of the foreign power whenever
appropriate. More to the point is Syquia v. Almeda Lopez, where plaintiffs as lessors sued
the Commanding General of the United States Army in the Philippines, seeking the
restoration to them of the apartment buildings they owned leased to the United States
armed forces stationed in the Manila area. A motion to dismiss on the ground of nonsuability was filed and upheld by respondent Judge. The matter was taken to this Court in
a mandamus proceeding. It failed. It was the ruling that respondent Judge acted correctly
considering that the `action must be considered as one against the U.S. Government.'
The opinion of Justice Montemayor continued: `It is clear that the courts of the
Philippines including the Municipal Court of Manila have no jurisdiction over the present
case for unlawful detainer. The question of lack of jurisdiction was raised and interposed
at the very beginning of the action. The U.S. Government has not given its consent to the
filing of this suit which is essentially against her, though not in name. Moreover, this is
not only a case of a citizen filing a suit against his own Government without the latter's
consent but it is of a citizen filing an action against a foreign government without said
government's consent, which renders more obvious the lack of jurisdiction of the courts
of his country. The principles of law behind this rule are so elementary and of such
general acceptance that we deem it unnecessary to cite authorities in support thereof.'
Then came Marvel Building Corporation v. Philippine War Damage Commission, where
respondent, a United States Agency established to compensate damages suffered by the
Philippines during World War II was held as falling within the above doctrine as the suit
against it `would eventually be a charge against or financial liability of the United States
Government because . . ., the Commission has no funds of its own for the purpose of
paying money judgments.' The Syquia ruling was again explicitly relied upon in Marquez
Lim v. Nelson, involving a complaint for the recovery of a motor launch, plus damages,
the special defense interposed being `that the vessel belonged to the United States
Government, that the defendants merely acted as agents of said Government, and that
the United States Government is therefore the real party in interest.' So it was in

Philippine Alien Property Administration v. Castelo, where it was held that a suit against
Alien Property Custodian and the Attorney General of the United States involving vested
property under the Trading with the Enemy Act is in substance a suit against the United
States. To the same effect is Parreno v. McGranery, as the following excerpt from the
opinion of Justice Tuazon clearly shows: `It is a widely accepted principle of international
law, which is made a part of the law of the land (Article II, Section 3 of the Constitution),
that a foreign state may not be brought to suit before the courts of another state or its
own courts without its consent.' Finally, there is Johnson v. Turner, an appeal by the
defendant, then Commanding General, Philippine Command (Air Force, with office at
Clark Field) from a decision ordering the return to plaintiff of the confiscated military
payment certificates known as scrip money. In reversing the lower court decision, this
Tribunal, through Justice Montemayor, relied on Syquia v. Almeda Lopez, explaining why
it could not be sustained. LLphil
It bears stressing at this point that the above observations do not confer on the United
States of America a blanket immunity for all acts done by it or its agents in the
Philippines. Neither may the other petitioners claim that they are also insulated from suit
in this country merely because they have acted as agents of the United States in the
discharge of their official functions.
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied. This was our ruling in United
States of America v. Ruiz, 22 where the transaction in question dealt with the
improvement of the wharves in the naval installation at Subic Bay. As this was a clearly
governmental function, we held that the contract did not operate to divest the United
States of its sovereign immunity from suit. In the words of Justice Vicente Abad Santos:
The traditional rule of immunity exempts a State from being sued in the courts of
another State without its consent or waiver. This rule is a necessary consequence of the
principles of independence and equality of States. However, the rules of International
Law are not petrified; they are constantly developing and evolving. And because the
activities of states have multiplied, it has been necessary to distinguish them between
sovereign and governmental acts (jure imperii) and private, commercial and proprietary
acts (jure gestionis). The result is that State immunity now extends only to acts jure
imperii. The restrictive application of State immunity is now the rule in the United States,
the United Kingdom and other states in Western Europe.
xxx xxx xxx
The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the level
of an individual and can thus be deemed to have tacitly given its consent to be sued only
when it enters into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are an integral part of the
naval base which is devoted to the defense of both the United States and the Philippines,
indisputably a function of the government of the highest order; they are not utilized for
nor dedicated to commercial or business purposes.

The other petitioners in the cases before us all aver they have acted in the discharge of
their official functions as officers or agents of the United States. However, this is a matter
of evidence. The charges against them may not be summarily dismissed on their mere
assertion that their acts are imputable to the United States of America, which has not
given its consent to be sued. In fact, the defendants are sought to be held answerable for
personal torts in which the United States itself is not involved. If found liable, they and
they alone must satisfy the judgment.

In Festejo v. Fernando, 23 a bureau director, acting without any authority whatsoever,

appropriated private land and converted it into public irrigation ditches. Sued for the
value of the lots invalidly taken by him, he moved to dismiss the complaint on the
ground that the suit was in effect against the Philippine government, which had not
given its consent to be sued. This Court sustained the denial of the motion and held that
the doctrine of state immunity was not applicable. The director was being sued in his
private capacity for a personal tort.
With these considerations in mind, we now proceed to resolve the cases at hand.
III
It is clear from a study of the records of G.R. No. 80018 that the individually-named
petitioners therein were acting in the exercise of their official functions when they
conducted the buy-bust operation against the complainant and thereafter testified
against him at his trial. The said petitioners were in fact connected with the Air Force
Office of Special Investigators and were charged precisely with the function of preventing
the distribution, possession and use of prohibited drugs and prosecuting those guilty of
such acts. It cannot for a moment be imagined that they were acting in their private or
unofficial capacity when they apprehended and later testified against the complainant. It
follows that for discharging their duties as agents of the United States, they cannot be
directly impleaded for acts imputable to their principal, which has not given its consent
to be sued. As we observed in Sanders v. Veridiano: 24
Given the official character of the above-described letters, we have to conclude that the
petitioners were, legally speaking, being sued as officers of the United States
government. As they have acted on behalf of that government, and within the scope of
their authority, it is that government, and not the petitioners personally, that is
responsible for their acts.
The private respondent invokes Article 2180 of the Civil Code which holds the
government liable if it acts through a special agent. The argument, it would seem, is
premised on the ground that since the officers are designated "special agents," the
United States government should be liable for their torts.
There seems to be a failure to distinguish between suability and liability and a
misconception that the two terms are synonymous. Suability depends on the consent of
the state to be sued, liability on the applicable law and the established facts. The
circumstance that a state is suable does not necessarily mean that it is liable; on the
other hand, it can never be held liable if it does not first consent to be sued. Liability is
not conceded by the mere fact that the state has allowed itself to be sued. When the

state does waive its sovereign immunity, it is only giving the plaintiff the chance to
prove, if it can, that the defendant is liable.
The said article establishes a rule of liability, not suability. The government may be held
liable under this rule only if it first allows itself to be sued through any of the accepted
forms of consent.
Moreover, the agent performing his regular functions is not a special agent even if he is
so denominated, as in the case at bar. No less important, the said provision appears to
regulate only the relations of the local state with its inhabitants and, hence, applies only
to the Philippine government and not to foreign governments impleaded in our courts.
We reject the conclusion of the trial court that the answer filed by the special counsel of
the Office of the Sheriff Judge Advocate of Clark Air Base was a submission by the United
States government to its jurisdiction. As we noted in Republic v. Purisima, 25 express
waiver of immunity cannot be made by a mere counsel of the government but must be
effected through a duly-enacted statute. Neither does such answer come under the
implied forms of consent as earlier discussed. Cdpr
But even as we are certain that the individual petitioners in G.R. No. 80018 were acting
in the discharge of their official functions, we hesitate to make the same conclusion in
G.R. No. 80258. The contradictory factual allegations in this case deserve in our view a
closer study of what actually happened to the plaintiffs. The record is too meager to
indicate if the defendants were really discharging their official duties or had actually
exceeded their authority when the incident in question occurred. Lacking this
information, this Court cannot directly decide this case. The needed inquiry must first be
made by the lower court so it may assess and resolve the conflicting claims of the
parties on the basis of the evidence that has yet to be presented at the trial. Only after it
shall have determined in what capacity the petitioners were acting at the time of the
incident in question will this Court determine, if still necessary, if the doctrine of state
immunity is applicable.
In G.R. No. 79470, private respondent Genove was employed as a cook in the Main Club
located at the U.S. Air Force Recreation Center, also known as the Open Mess Complex,
at John Hay Air Station. As manager of this complex, petitioner Lamachia is responsible
for eleven diversified activities generating an annual income of $2 million. Under his
executive management are three service restaurants, a cafeteria, a bakery, a Class VI
store, a coffee and pantry shop, a main cashier cage, an administrative office, and a
decentralized warehouse which maintains a stock level of $200,000.00 per month in
resale items. He supervises 167 employees, one of whom was Genove, with whom the
United States government has concluded a collective bargaining agreement.
From these circumstances, the Court can assume that the restaurant services offered at
the John Hay Air Station partake of the nature of a business enterprise undertaken by the
United States government in its proprietary capacity. Such services are not extended to
the American servicemen for free as a perquisite of membership in the Armed Forces of
the United States. Neither does it appear that they are exclusively offered to these
servicemen; on the contrary, it is well known that they are available to the general public
as well, including the tourists in Baguio City, many of whom make it a point to visit John
Hay for this reason. All persons availing themselves of this facility pay for the privilege

like all other customers as in ordinary restaurants. Although the prices are concededly
reasonable and relatively low, such services are undoubtedly operated for profit, as a
commercial and not a governmental activity.
The consequence of this finding is that the petitioners cannot invoke the doctrine of state
immunity to justify the dismissal of the damage suit against them by Genove. Such
defense will not prosper even if it be established that they were acting as agents of the
United States when they investigated and later dismissed Genove. For that matter, not
even the United States government itself can claim such immunity. The reason is that by
entering into the employment contract with Genove in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.
But these considerations notwithstanding, we hold that the complaint against the
petitioners in the court below must still be dismissed. While suable, the petitioners are
nevertheless not liable. It is obvious that the claim for damages cannot be allowed on
the strength of the evidence before us, which we have carefully examined.
The dismissal of the private respondent was decided upon only after a thorough
investigation where it was established beyond doubt that he had polluted the soup stock
with urine. The investigation, in fact, did not stop there. Despite the definitive finding of
Genove's guilt, the case was still referred to the board of arbitrators provided for in the
collective bargaining agreement. This board unanimously affirmed the findings of the
investigators and recommended Genove's dismissal. There was nothing arbitrary about
the proceedings. The petitioners acted quite properly in terminating the private
respondent's employment for his unbelievably nauseating act. It is surprising that he
should still have the temerity to file his complaint for damages after committing his
utterly disgusting offense.
Concerning G.R. No. 76607, we also find that the barbershops subject of the concessions
granted by the United States government are commercial enterprises operated by
private persons. They are not agencies of the United States Armed Forces nor are their
facilities demandable as a matter of right by the American servicemen. These
establishments provide for the grooming needs of their customers and offer not only the
basic haircut and shave (as required in most military organizations) but such other
amenities as shampoo, massage, manicure and other similar indulgences. And all for a
fee. Interestingly, one of the concessionaires, private respondent Valencia, was even
sent abroad to improve his tonsorial business, presumably for the benefit of his
customers . No less significantly, if not more so, all the barbershop concessionaires are,
under the terms of their contracts, required to remit to the United States government
fixed commissions in consideration of the exclusive concessions granted to them in their
respective areas.
This being the case, the petitioners cannot plead any immunity from the complaint filed
by the private respondents in the court below. The contracts in question being decidedly
commercial, the conclusion reached in the United States of America v. Ruiz case cannot
be applied here.
The Court would have directly resolved the claims against the defendants as we have
done in G.R. No. 79470, except for the paucity of the record in the case at hand. The
evidence of the alleged irregularity in the grant of the barbershop concessions is not

before us. This means that, as in G.R. No. 80258, the respondent court will have to
receive that evidence first, so it can later determine on the basis thereof if the plaintiffs
are entitled to the relief they seek. Accordingly, this case must also be remanded to the
court below for further proceedings.

IV
There are a number of other cases now pending before us which also involve the
question of the immunity of the United States from the jurisdiction of the Philippines.
This is cause for regret, indeed, as they mar the traditional friendship between two
countries long allied in the cause of democracy. It is hoped that the so-called "irritants" in
their relations will be resolved in a spirit of mutual accommodation and respect, without
the inconvenience and asperity of litigation and always with justice to both parties.
WHEREFORE, after considering all the above premises, the Court hereby renders
judgment as follows:
1. In G.R. No. 76607, the petition is DISMISSED and the respondent judge is directed to
proceed with the hearing and decision of Civil Case No. 4772. The temporary restraining
order dated December 11, 1986, is LIFTED.
2. In G.R. No. 79470, the petition is GRANTED and Civil Case No. 829-R(298) is
DISMISSED.
3. In G.R. No. 80018, the petition is GRANTED and Civil Case No. 115-C-87 is DISMISSED.
The temporary restraining order dated October 14, 1987, is made permanent.
4. In G.R. No. 80258, the petition is DISMISSED and the respondent court is directed to
proceed with the hearing and decision of Civil Case No. 4996. The temporary restraining
order dated October 27, 1987, is LIFTED. LibLex
All without any pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.
||| (United States of America v. Guinto, G.R. No. 76607, 79470, 80018, 80258, [February
26, 1990], 261 PHIL 777-802)

55. USA V RUIZ

[G.R. No. L-35645. May 22, 1985.]
UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and
ROBERT GOHIER,petitioners, vs. HON. V.M. RUIZ, Presiding Judge of Branch XV, Court of
First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.
Sycip, Salazar, Luna & Manalo & Feliciano Law Office for petitioners.
Albert, Vergara, Benares, Perlas & Dominguez Law Office for respondents.
DECISION
ABAD SANTOS, J p:
This is a petition to review, set aside certain orders and restrain the respondent judge
from trying Civil Case No. 779-M of the defunct Court of First Instance of Rizal.
The factual background is as follows:
At times material to this case, the United States of America had a naval base in Subic,
Zambales. The base was one of those provided in the Military Bases Agreement between
the Philippines and the United States.
Sometime in May, 1972, the United States invited the submission of bids for the
following projects:
1. Repair fender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines.

2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline
revetment, NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay,
Philippines. LLpr
Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent
thereto, the company received from the United States two telegrams requesting it to
confirm its price proposals and for the name of its bonding company. The company
complied with the requests. [In its complaint, the company alleges that the United States
had accepted its bids because "A request to confirm a price proposal confirms the
acceptance of a bid pursuant to defendant United States' bidding practices." (Rollo, p.
30.) The truth of this allegation has not been tested because the case has not reached
the trial stage.]
In June, 1972, the company received a letter which was signed by William I. Collins,
Director, Contracts Division, Naval Facilities Engineering Command, Southwest Pacific,
Department of the Navy of the United States, who is one of the petitioners herein. The
letter said that the company did not qualify to receive an award for the projects because
of its previous unsatisfactory performance rating on a repair contract for the sea wall at
the boat landings of the U.S. Naval Station in Subic Bay. The letter further said that the
projects had been awarded to third parties.
In the abovementioned Civil Case No. 779-M, the company sued the United States of
America and Messrs. James E. Galloway, William I. Collins and Robert Gohier all members
of the Engineering Command of the U.S. Navy. The complaint is to order the defendants
to allow the plaintiff to perform the work on the projects and, in the event that specific
performance was no longer possible, to order the defendants to pay damages. The
company also asked for the issuance of a writ of preliminary injunction to restrain the
defendants from entering into contracts with third parties for work on the projects.
The defendants entered their special appearance "for the purpose only of questioning
the jurisdiction of this court over the subject matter of the complaint and the persons of
defendants, the subject matter of the complaint being acts and omissions of the
individual defendants as agents of defendant United States of America, a foreign
sovereign which has not given her consent to this suit or any other suit for the causes of
action asserted in the complaint." (Rollo, p. 50.)
Subsequently the defendants filed a motion to dismiss the complaint which included an
opposition to the issuance of the writ of preliminary injunction. The company opposed
the motion. The trial court denied the motion and issued the writ. The defendants moved
twice to reconsider but to no avail. Hence the instant petition which seeks to restrain
perpetually the proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of
the trial court.
The petition is highly impressed with merit. LexLib
The traditional rule of State immunity exempts a State from being sued in the courts of
another State without its consent or waiver. This rule is a necessary consequence of the
principles of independence and equality of States. However, the rules of International
Law are not petrified; they are constantly developing and evolving. And because the
activities of states have multiplied, it has been necessary to distinguish them between

sovereign and governmental acts (jure imperii) and private, commercial and proprietary
acts (jure gestionis). The result is that State immunity now extends only to acts jure
imperii. The restrictive application of State immunity is now the rule in the United States,
the United Kingdom and other states in western Europe. (See Coquia and DefensorSantiago, Public International Law, pp. 207-209 [1984].) 2006cdtai
The respondent judge recognized the restrictive doctrine of State immunity when he said
in his Order denying the defendants' (now petitioners) motion: "A distinction should be
made between a strictly governmental function of the sovereign state from its private,
proprietary or non-governmental acts." (Rollo, p. 20.) However, the respondent judge
also said: "It is the Court's considered opinion that entering into a contract for the repair
of wharves or shoreline is certainly not a governmental function altho it may partake of a
public nature or character. As aptly pointed out by plaintiff's counsel in his reply citing
the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes
with approval, viz.:
'It is however contended that when a sovereign state enters into a contract with a
private person, the state can be sued upon the theory that it has descended to the level
of an individual from which it can be implied that it has given its consent to be sued
under the contract. . . .
xxx xxx xxx
'We agree to the above contention, and considering that the United States government,
through its agency at Subic Bay, entered into a contract with appellant for stevedoring
and miscellaneous labor services within the Subic Bay Area, a U.S. Naval Reservation, it
is evident that it can bring an action before our courts for any contractual liability that
political entity may assume under the contract. The trial court, therefore, has jurisdiction
to entertain this case . . .'" (Rollo, pp. 20-21.)
The reliance placed on Lyons by the respondent judge is misplaced for the following
reasons:
In Harry Lyons, Inc. vs. The United States of America supra, plaintiff brought suit in the
Court of First Instance of Manila to collect several sums of money on account of a
contract between plaintiff and defendant. The defendant filed a motion to dismiss on the
ground that the court had no jurisdiction over defendant and over the subject matter of
the action. The court granted the motion on the grounds that: (a) it had no jurisdiction
over the defendant who did not give its consent to the suit; and (b) plaintiff failed to
exhaust the administrative remedies provided in the contract. The order of dismissal was
elevated to this Court for review. cdrep
In sustaining the action of the lower court, this Court said:
"It appearing in the complaint that appellant has not complied with the procedure laid
down in Article XXI of the contract regarding the prosecution of its claim against the
United States Government, or, stated differently, it has failed to first exhaust its
administrative remedies against said Government, the lower court acted properly in
dismissing this case." (At p. 598.)

It can thus be seen that the statement in respect of the waiver of State immunity from
suit was purely gratuitous and, therefore, obiter so that it has no value as an imperative
authority.
The restrictive application of State immunity is proper only when the proceedings arise
out of commercial transactions of the foreign sovereign, its commercial activities or
economic affairs. Stated differently, a State may be said to have descended to the level
of an individual and can thus be deemed to have tacitly given its consent to be sued only
when it enters into business contracts. It does not apply where the contract relates to the
exercise of its sovereign functions. In this case the projects are an integral part of the
naval base which is devoted to the defense of both the United States and the Philippines,
indisputably a function of the government of the highest order; they are not utilized for
nor dedicated to commercial or business purposes.
That the correct test for the application of State immunity is not the conclusion of a
contract by a State but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil.
312 (1949). In that case the plaintiffs leased three apartment buildings to the United
States of America for the use of its military officials. The plaintiffs sued to recover
possession of the premises on the ground that the term of the leases had expired, They
also asked for increased rentals until the apartments shall have been vacated.
The defendants who were armed forces officers of the United States moved to dismiss
the suit for lack of jurisdiction on the part of the court. The Municipal Court of Manila
granted the motion to dismiss; sustained by the Court of First Instance, the plaintiffs
went to this Court for review on certiorari. In denying the petition, this Court said:
"On the basis of the foregoing considerations we are of the belief and we hold that the
real party defendant in interest is the Government of the United States of America; that
any judgment for back or increased rentals or damages will have to be paid not by
defendants Moore and Tillman and their 64 co-defendants but by the said U.S.
Government. On the basis of the ruling in the case of Land vs. Dollar already cited, and
on what we have already stated, the present action must be considered as one against
the U.S. Government. It is clear that the courts of the Philippines including the Municipal
Court of Manila have no jurisdiction over the present case for unlawful detainer. The
question of lack of jurisdiction was raised and interposed at the very beginning of the
action. The U.S. Government has not given its consent to the filing of this suit which is
essentially against her, though not in name. Moreover, this is not only a case of a citizen
filing a suit against his own Government without the latter's consent but it is of a citizen
filing an action against a foreign government without said government's consent, which
renders more obvious the lack of jurisdiction of the courts of his country. The principles of
law behind this rule are so elementary and of such general acceptance that we deem it
unnecessary to cite authorities in support thereof." (At p. 323.) LLphil

In Syquia, the United States concluded contracts with private individuals but the
contracts notwithstanding the United States was not deemed to have given or waived its
consent to be sued for the reason that the contracts were for jure imperii and not for jure
gestionis.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are
set aside and Civil Case No. 779-M is dismissed. Costs against the private respondent.
SO ORDERED.
Teehankee, Aquino, Concepcion, Jr., Melencio-Herrera, Plana, Escolin, Relova Gutierrez,
Jr., De la Fuente, Cuevas and Alampay, JJ., concur.
Fernando, C.J., took no part.
Separate Opinions
MAKASIAR, J., dissents:
The petition should be dismissed and the proceedings in Civil Case No. 779-M in the
defunct CFI (now RTC) of Rizal be allowed to continue therein.
In the case of Lyons vs. the United States of America (104 Phil. 593), where the contract
entered into between the plaintiff (Harry Lyons, Inc.) and the defendant (U.S.
Government) involved stevedoring and labor services within the Subic Bay area, this
Court further stated that inasmuch as ". . . the United States Government, through its
agency at Subic Bay, entered into a contract with appellant for stevedoring and
miscellaneous labor services within the Subic Bay area, a U.S. Navy Reservation, it is
evident that it can bring an action before our courts for any contractual liability that
political entity may assume under the contract."
When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance
of a bid of a private company for the repair of wharves or shoreline in the Subic Bay
area, it is deemed to have entered into a contract and thus waived the mantle of
sovereign immunity from suit and descended to the level of the ordinary citizen. Its
consent to be sued, therefore, is implied from its act of entering into a contract (Santos
vs. Santos, 92 Phil. 281, 284).
Justice and fairness dictate that a foreign government that commits a breach of its
contractual obligation in the case at bar by the unilateral cancellation of the award for
the project by the United States government, through its agency at Subic Bay should
not be allowed to take undue advantage of a party who may have legitimate claims
against it by seeking refuge behind the shield of non-suability. A contrary view would
render a Filipino citizen, as in the instant case, helpless and without redress in his own
country for violation of his rights committed by the agents of the foreign government
professing to act in its name. cdll
Appropriate are the words of Justice Perfecto in his dissenting opinion in Syquia vs.
Almeda Lopez, 84 Phil. 312, 325:
"Although, generally, foreign governments are beyond the jurisdiction of domestic courts
of justice, such rule is inapplicable to cases in which the foreign government enters into
private contracts with the citizens of the court's jurisdiction. A contrary view would
simply run against all principles of decency and violative of all tenets of morals.
"Moral principles and principles of justice are as valid and applicable as well with regard
to private individuals as with regard to governments either domestic or foreign. Once a

foreign government enters into a private contract with the private citizens of another
country, such foreign government cannot shield its non-performance or contravention of
the terms of the contract under the cloak of non-jurisdiction. To place such foreign
government beyond the jurisdiction of the domestic courts is to give approval to the
execution of unilateral contracts, graphically described in Spanish as 'contratos leoninos,'
because one party gets the lion's share to the detriment of the other. To give validity to
such contract is to sanctify bad faith, deceit, fraud. We prefer to adhere to the thesis that
all parties in a private contract, including governments and the most powerful of them,
are amenable to law, and that such contracts are enforceable through the help of the
courts of justice with jurisdiction to take cognizance of any violation of such contracts if
the same had been entered into only by private individuals."
Constant resort by a foreign state or its agents to the doctrine of State immunity in this
jurisdiction impinges unduly upon our sovereignty and dignity as a nation. Its application
will particularly discourage Filipino or domestic contractors from transacting business
and entering into contracts with United States authorities or facilities in the Philippines
whether naval, air or ground forces because the difficulty, if not impossibility, of
enforcing a validly executed contract and of seeking judicial remedy in our own courts for
breaches of contractual obligation committed by agents of the United States
government, always looms large, thereby hampering the growth of Filipino enterprises
and creating a virtual monopoly in our own country by United States contractors of
contracts for services or supplies with the various U.S. offices and agencies operating in
the Philippines.
The sanctity of upholding agreements freely entered into by the parties cannot be over
emphasized. Whether the parties are nations or private individuals, it is to be reasonably
assumed and expected that the undertakings in the contract will becomplied with in
good faith.
One glaring fact of modern day civilization is that a big and powerful nation, like the
United States of America, can always overwhelm small and weak nations. The
declaration in the United Nations Charter that its member states are equal and
sovereign, becomes hollow and meaningless because big nations wielding economic and
military superiority impose upon and dictate to small nations, subverting their
sovereignty and dignity as nations. Thus, more often than not, when U.S. interest clashes
with the interest of small nations, the American governmental agencies or its citizens
invoke principles of international law for their own benefit.
In the case at bar, the efficacy of the contract between the U.S. Naval authorities at
Subic Bay on one hand, and herein private respondent on the other, was honored more
in the breach than in the compliance. The opinion of the majority will certainly open the
floodgates of more violations of contractual obligations. American authorities or any
foreign government in the Philippines for that matter, dealing with the citizens of this
country, can conveniently seek protective cover under the majority opinion. The result is
disastrous to the Philippines. LibLex
This opinion of the majority manifests a neo-colonial mentality. It fosters economic
imperialism and foreign political ascendancy in our Republic.

The doctrine of government immunity from suit cannot and should not serve as an
instrument for perpetrating an injustice on a citizen (Amigable vs. Cuenca, L-26400,
February 29, 1972, 43 SCRA 360; Ministerio vs. Court of First Instance, L-31635, August
31, 1971, 40 SCRA 464).
Under the doctrine of implied waiver of its non-suability, the United States government,
through its naval authorities at Subic Bay, should be held amenable to lawsuits in our
country like any other juristic person.
The invocation by the petitioner United States of America is not in accord with paragraph
3 of Article III of the original RP-US Military Bases Agreement of March 14, 1947, which
states that "in the exercise of the above-mentioned rights, powers and authority, the
United States agrees that the powers granted to it will not be used unreasonably. . . ."
(italics supplied).
Nor is such posture of the petitioners herein in harmony with the amendment dated May
27, 1968 to the aforesaid RP-US Military Bases Agreement, which recognizes "the need to
promote and maintain sound employment practices which will assure equality of
treatment of all employees . . . and continuing favorable employer-employee
relations . . ." and "(B)elieving that an agreement will be mutually beneficial and will
strengthen the democratic institutions cherished by both Governments, . . . the United
States Government agrees to accord preferential employment of Filipino citizens in the
Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for civilian
employment by employing Filipino citizens, etc." (Par. 1, Art. I of the Amendment of May
27, 1968).
Neither does the invocation by petitioners of state immunity from suit express fidelity to
paragraph 1 of Article IV of the aforesaid amendment of May 27, 1968 which directs that
"contractors and concessionaires performing work for the U.S. Armed Forces shall be
required by their contract or concession agreements to comply with all applicable
Philippine labor laws and regulations," even though paragraph 2 thereof affirms that
"nothing in this Agreement shall imply any waiver by either of the two Governments of
such immunity under international law."
Reliance by petitioners on the non-suability of the United States Government before the
local courts, actually clashes with No. III on respect for Philippine law of the
Memorandum of Agreement signed on January 7, 1979, also amending RP-US Military
Bases Agreement, which stresses that "it is the duty of members of the United States
Forces, the civilian component and their dependents, to respect the laws of the Republic
of the Philippines and to abstain from any activity inconsistent with the spirit of the
Military Bases Agreement and, in particular, from any political activity in the Philippines.
The United States shall take all measures within its authority to insure that they adhere
to them" (italics supplied). cdll
The foregoing duty imposed by the amendment to the Agreement is further emphasized
by No. IV on the economic and social improvement of areas surrounding the bases, which
directs that "moreover, the United States Forces shall procure goods and services in the
Philippines to the maximum extent feasible" (italics supplied).

Under No. VI on labor and taxation of the said amendment of January 6, 1979 in
connection with the discussions on possible revisions or alterations of the Agreement of
May 27, 1968, "the discussions shall be conducted on the basis of the principles of
equality of treatment, the right to organize, and bargain collectively, and respect for the
sovereignty of the Republic of the Philippines" (italics supplied).

The majority opinion seems to mock the provision of paragraph 1 of the joint statement
of President Marcos and Vice-President Mondale of the United States dated May 4, 1978
that "the United States re-affirms that Philippine sovereignty extends over the bases and
that Its base shall be under the command of a Philippine Base Commander," which is
supposed to underscore the joint Communique of President Marcos and U.S. President
Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial
integrity and political independence of all States are fundamental principles which both
countries scrupulously respect; and that "they confirm that mutual respect for the dignity
of each nation shall characterize their friendship as well as the alliance between their
two countries."
The majority opinion negates the statement on the delineation of the powers, duties and
responsibilities of both the Philippine and American Base Commanders that "in the
performance of their duties, the Philippine Base Commander and the American Base
Commander shall be guided by full respect for Philippine sovereignty on the one hand
and the assurance of unhampered U.S. military operations on the other hand;" and that
"they shall promote cooperation, understanding and harmonious relations within the
Base and with the general public in the proximate vicinity thereof" (par. 2 & par. 3 of the
Annex covered by the exchange of notes, January 7, 1979, between Ambassador Richard
W. Murphy and Minister of Foreign Affairs Carlos P. Romulo, italics supplied).
||| (US v. V.M. Ruiz, G.R. No. L-35645, [May 22, 1985], 221 PHIL 179-191)

56. USA v Guinto SUPRA

57. REPUBLIC V INDONESIA V VINZON

[G.R. No. 154705. June 26, 2003.]
THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and
MINISTER COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON, doing business
under the name and style of VINZON TRADE AND SERVICES, respondent.

Quasha Ancheta Pena & Nolasco for petitioners.

Fornier Fornier Sao & Lagumbay Law Firm for J. Vinzon.
SYNOPSIS
In August 1995, petitioner Republic of Indonesia entered into a Maintenance Agreement
for its specified buildings in the embassy with respondent James Vinzon as sole
proprietor of Vinzon Trade and Services. The said Agreement was effective for four years
and will renew itself automatically unless cancelled by either party by giving thirty days
prior written notice from the date of expiry. Before August 1999, respondent was
informed that the renewal of the agreement shall be at the discretion of the incoming
Chief of Administration, petitioner Minister Counsellor Azhari Kasim. On August 31, 2000,
the Indonesian Embassy terminated the said agreement. Respondent claimed that the
said termination was arbitrary and unlawful. Thus, he filed a complaint against
petitioners in the Regional Trial Court of Makati, Branch 145. In response, petitioners filed
a motion to dismiss by alleging that the Republic of Indonesia has sovereign immunity
from suit and that Ambassador Soeratmin and Minister Counsellor Kasim enjoy
diplomatic immunity. The trial court denied petitioners' motion to dismiss. The Court of
Appeals likewise denied petitioners' petition for certiorari and prohibition in relation
thereto. Hence, this petition for review on certiorari.
The Court held that the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis.
In this case, there is no dispute that the establishment of a diplomatic mission is an act
jure imperii. A sovereign state does not merely establish a diplomatic mission and leave
it at that; the establishment of a diplomatic mission encompasses its maintenance and
upkeep. Hence, the State may enter into contracts with private entities to maintain the
premises, furnishings and equipment of the embassy and the living quarters of its agents
and officials. It is, therefore, clear that petitioner Republic of Indonesia was acting in
pursuit of a sovereign activity when it entered into a contract with respondent for the
upkeep or maintenance of the air conditioning units, generator sets, electrical facilities,
water heaters, and water motor pumps of the Indonesian Embassy and the official
residence of the Indonesian ambassador.
Moreover, the act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in
terminating the Maintenance Agreement is not covered by the exceptions provided in
Article 31 of the Vienna Convention on Diplomatic Relations. Accordingly, the petition
was granted and the complaint against petitioners was dismissal.
SYLLABUS
1. PUBLIC INTERNATIONAL LAW; DOCTRINE OF SOVEREIGN IMMUNITY; NECESSARY
CONSEQUENCE OF THE PRINCIPLE OF INDEPENDENCE AND EQUALITY OF STATES.
International law is founded largely upon the principles of reciprocity, comity,
independence, and equality of States which were adopted as part of the law of our land
under Article II, Section 2 of the 1987 Constitution. The rule that a State may not be sued
without its consent is a necessary consequence of the principles of independence and
equality of States. As enunciated in Sanders v. Veridiano II, the practical justification for
the doctrine of sovereign immunity is that there can be no legal right against the

authority that makes the law on which the right depends. In the case of foreign States,
the rule is derived from the principle of the sovereign equality of States, as expressed in
the maximpar in parem non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary attitude would "unduly vex the peace of
nations."
2. ID.; ID.; RECOGNIZED WITH REGARD TO PUBLIC ACTS ONLY. The rules of
International Law, however, are neither unyielding nor impervious to change. The
increasing need of sovereign States to enter into purely commercial activities remotely
connected with the discharge of their governmental functions brought about a new
concept of sovereign immunity. This concept, the restrictive theory, holds that the
immunity of the sovereign is recognized only with regard to public acts or acts jure
imperii, but not with regard to private acts or acts jure gestionis.
3. ID.; ID.; ID.; ENTERING INTO A CONTRACT BY FOREIGN STATE WITH PRIVATE PARTY
CANNOT BE THE ULTIMATE TEST OF WHETHER OR NOT IT IS A PUBLIC OR PRIVATE ACT.
In United States v. Ruiz, for instance, we held that the conduct of public bidding for the
repair of a wharf at a United States Naval Station is an act jure imperii. On the other
hand, we considered as an act jure gestionis the hiring of a cook in the recreation center
catering to American servicemen and the general public at the John Hay Air Station in
Baguio City, as well as the bidding for the operation of barber shops in Clark Air Base in
Angeles City. Apropos the present case, the mere entering into a contract by a foreign
State with a private party cannot be construed as the ultimate test of whether or not it is
an act jure imperii or jure gestionis. Such act is only the start of the inquiry. Is the foreign
State engaged in the regular conduct of a business? If the foreign State is not engaged
regularly in a business or commercial activity, and in this case it has not been shown to
be so engaged, the particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure
imperii.
4. ID.; ID.; PROVISION IN A CONTRACT THAT ANY LEGAL ACTION ARISING OUT OF THE
AGREEMENT SHALL BE SETTLED ACCORDING TO PHILIPPINE LAWS IS NOT A WAIVER OF
SOVEREIGN IMMUNITY FROM SUIT. [T]he existence alone of a paragraph in a contract
stating that any legal action arising out of the agreement shall be settled according to
the laws of the Philippines and by a specified court of the Philippines is not necessarily a
waiver of sovereign immunity from suit. The aforesaid provision contains language not
necessarily inconsistent with sovereign immunity. On the other hand, such provision may
also be meant to apply where the sovereign party elects to sue in the local courts, or
otherwise waives its immunity by any subsequent act. The applicability of Philippine laws
must be deemed to include Philippine laws in its totality, including the principle
recognizing sovereign immunity. Hence, the proper court may have no proper action, by
way of settling the case, except to dismiss it.
5. ID.; ID.; ID.; SUBMISSION BY A FOREIGN STATE TO LOCAL JURISDICTION MUST BE
CLEAR AND UNEQUIVOCAL. Submission by a foreign state to local jurisdiction must be
clear and unequivocal. It must be given explicitly or by necessary implication. CaDSHE
6. ID.; ID.; MAINTENANCE OF THE PREMISES, FURNISHINGS AND EQUIPMENT OF THE
EMBASSY AND THE LIVING QUARTERS OF THE AGENTS AND OFFICIALS OF A FOREIGN
STATE IS A PUBLIC ACT. There is no dispute that the establishment of a diplomatic

mission is an act jure imperii. A sovereign State does not merely establish a diplomatic
mission and leave it at that; the establishment of a diplomatic mission encompasses its
maintenance and upkeep. Hence, the State may enter into contracts with private entities
to maintain the premises, furnishings and equipment of the embassy and the living
quarters of its agents and officials. It is therefore clear that petitioner Republic of
Indonesia was acting in pursuit of a sovereign activity when it entered into a contract
with respondent for the upkeep or maintenance of the air conditioning units, generator
sets, electrical facilities, water heaters, and water motor pumps of the Indonesian
Embassy and the official residence of the Indonesian ambassador. cSATEH
7. ID.; VIENNA CONVENTION ON DIPLOMATIC RELATIONS; IMMUNITY FROM SUITS OF
DIPLOMATIC, AGENTS, APPLICABLE IN CASE AT BAR. On the matter of whether or not
petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in
their private capacities, Article 31 of the Vienna Convention on Diplomatic Relations
provides: " . . . 1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction
of the receiving State. He shall also enjoy immunity from its civil and administrative
jurisdiction, except in the case of: (a) a real action relating to private immovable property
situated in the territory of the receiving State, unless he holds it on behalf of the sending
State for the purposes of the mission; (b) an action relating to succession in which the
diplomatic agent is involved as executor, administrator, heir or legatee as a private
person and not on behalf of the sending State; (c) an action relating to any professional
or commercial activity exercised by the diplomatic agent in the receiving State outside
his official functions. . . . " The act of petitioners Ambassador Soeratinin and Minister
Counsellor Kasim in terminating the Maintenance Agreement is not covered by the
exceptions provided in the abovementioned provision. The Solicitor General believes that
said act may fall under subparagraph (c) thereof, but said provision clearly applies only
to a situation where the diplomatic agent engages in any professional or commercial
activityoutside official functions, which is not the case herein.
DECISION
AZCUNA, J p:
This is a petition for review on certiorari to set aside the Decision of the Court of Appeals
dated May 30, 2002 and its Resolution dated August 16, 2002, in CA-G.R. SP No. 66894
entitled "The Republic of Indonesia, His Excellency Ambassador Soeratmin and Minister
Counselor Azhari Kasim v. Hon. Cesar Santamaria, Presiding Judge, RTC Branch 145,
Makati City, and James Vinzon, doing business under the name and style of Vinzon Trade
and Services."

Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into
a Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor
of Vinzon Trade and Services. The Maintenance Agreement stated that respondent shall,
for a consideration, maintain specified equipment at the Embassy Main Building,
Embassy Annex Building and the Wisma Duta, the official residence of petitioner
Ambassador Soeratmin. The equipment covered by the Maintenance Agreement are air
conditioning units, generator sets, electrical facilities, water heaters, and water motor
pumps. It is likewise stated therein that the agreement shall be effective for a period of

four years and will renew itself automatically unless cancelled by either party by giving
thirty days prior written notice from the date of expiry. 1
Petitioners claim that sometime prior to the date of expiration of the said agreement, or
before August 1999, they informed respondent that the renewal of the agreement shall
be at the discretion of the incoming Chief of Administration, Minister Counsellor Azhari
Kasim, who was expected to arrive in February 2000. When Minister Counsellor Kasim
assumed the position of Chief of Administration in March 2000, he allegedly found
respondent's work and services unsatisfactory and not in compliance with the standards
set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the
agreement in a letter dated August 31, 2000. 2 Petitioners claim, moreover, that they
had earlier verbally informed respondent of their decision to terminate the agreement.
On the other hand, respondent claims that the aforesaid termination was arbitrary and
unlawful. Respondent cites various circumstances which purportedly negated petitioners'
alleged dissatisfaction over respondent's services: (a) in July 2000, Minister Counsellor
Kasim still requested respondent to assign to the embassy an additional full-time worker
to assist one of his other workers; (b) in August 2000, Minister Counsellor Kasim asked
respondent to donate a prize, which the latter did, on the occasion of the Indonesian
Independence Day golf tournament; and (c) in a letter dated August 22, 2000, petitioner
Ambassador Soeratmin thanked respondent for sponsoring a prize and expressed his
hope that the cordial relations happily existing between them will continue to prosper
and be strengthened in the coming years.
Hence, on December 15, 2000, respondent filed a complaint 3 against petitioners
docketed as Civil Case No. 18203 in the Regional Trial Court (RTC) of Makati, Branch 145.
On February 20, 2001, petitioners filed a Motion to Dismiss, alleging that theRepublic of
Indonesia, as a foreign sovereign State, has sovereign immunity from suit and cannot be
sued as a party-defendant in the Philippines. The said motion further alleged that
Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents as defined
under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic
immunity.4 In turn, respondent filed on March 20, 2001, an Opposition to the said motion
alleging that the Republic of Indonesia has expressly waived its immunity from suit. He
based this claim upon the following provision in the Maintenance Agreement:
"Any legal action arising out of this Maintenance Agreement shall be settled according to
the laws of the Philippines and by the proper court of Makati City, Philippines."
Respondent's Opposition likewise alleged that Ambassador Soeratmin and Minister
Counsellor Kasim can be sued and held liable in their private capacities for tortious acts
done with malice and bad faith. 5
On May 17, 2001, the trial court denied herein petitioners' Motion to Dismiss. It likewise
denied the Motion for Reconsideration subsequently filed.
The trial court's denial of the Motion to Dismiss was brought up to the Court of Appeals
by herein petitioners in a petition forcertiorari and prohibition. Said petition, docketed as
CA-G.R. SP No. 66894, alleged that the trial court gravely abused its discretion in ruling
that the Republic of Indonesia gave its consent to be sued and voluntarily submitted

itself to the laws and jurisdiction of Philippine courts and that petitioners Ambassador
Soeratmin and Minister Counsellor Kasim waived their immunity from suit.
On May 30, 2002, the Court of Appeals rendered its assailed decision denying the
petition for lack of merit. 6 On August 16, 2002, it denied herein petitioners' motion for
reconsideration. 7
Hence, this petition.
In the case at bar, petitioners raise the sole issue of whether or not the Court of Appeals
erred in sustaining the trial court's decision that petitioners have waived their immunity
from suit by using as its basis the abovementioned provision in the Maintenance
Agreement.
The petition is impressed with merit.
International law is founded largely upon the principles of reciprocity, comity,
independence, and equality of States which were adopted as part of the law of our land
under Article II, Section 2 of the 1987 Constitution. 8 The rule that a State may not be
sued without its consent is a necessary consequence of the principles of independence
and equality of States. 9 As enunciated in Sanders v. Veridiano II, 10 the practical
justification for the doctrine of sovereign immunity is that there can be no legal right
against the authority that makes the law on which the right depends. In the case of
foreign States, the rule is derived from the principle of the sovereign equality of States,
as expressed in the maxim par in parem non habet imperium. All states are sovereign
equals and cannot assert jurisdiction over one another. 11 A contrary attitude would
"unduly vex the peace of nations." 12
The rules of International Law, however, are neither unyielding nor impervious to
change. The increasing need of sovereign States to enter into purely commercial
activities remotely connected with the discharge of their governmental functions brought
about a new concept of sovereign immunity. This concept, the restrictive theory, holds
that the immunity of the sovereign is recognized only with regard to public acts or acts
jure imperii, but not with regard to private acts or acts jure gestionis. 13
In United States v. Ruiz, 14 for instance, we held that the conduct of public bidding for
the repair of a wharf at a United States Naval Station is an act jure imperii. On the other
hand, we considered as an act jure gestionis the hiring of a cook in the recreation center
catering to American servicemen and the general public at the John Hay Air Station in
Baguio City, 15 as well as the bidding for the operation of barber shops in Clark Air Base
in Angeles City. 16
Apropos the present case, the mere entering into a contract by a foreign State with a
private party cannot be construed as the ultimate test of whether or not it is an act jure
imperii or jure gestionis. Such act is only the start of the inquiry. Is the foreign State
engaged in the regular conduct of a business? If the foreign State is not engaged
regularly in a business or commercial activity, and in this case it has not been shown to
be so engaged, the particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure
imperii. 17

Hence, the existence alone, of a paragraph in a contract stating that any legal action
arising out of the agreement shall be settled according to the laws of the Philippines and
by a specified court of the Philippines is not necessarily a waiver of sovereign immunity
from suit. The aforesaid provision contains language not necessarily inconsistent with
sovereign immunity. On the other hand, such provision may also be meant to apply
where the sovereign party elects to sue in the local courts, or otherwise waives its
immunity by any subsequent act. The applicability of Philippine laws must be deemed to
include Philippine laws in its totality, including the principle recognizing sovereign
immunity. Hence, the proper court may have no proper action, by way of settling the
case, except to dismiss it. AEaSTC
Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must
be given explicitly or by necessary implication. We find no such waiver in this case.
Respondent concedes that the establishment of a diplomatic mission is a sovereign
function. On the other hand, he argues that the actual physical maintenance of the
premises of the diplomatic mission, such as the upkeep of its furnishings and equipment,
is no longer a sovereign function of the State. 18
We disagree. There is no dispute that the establishment of a diplomatic mission is an act
jure imperii. A sovereign State does not merely establish a diplomatic mission and leave
it at that; the establishment of a diplomatic mission encompasses its maintenance and
upkeep. Hence, the State may enter into contracts with private entities to maintain the
premises, furnishings and equipment of the embassy and the living quarters of its agents
and officials. It is therefore clear that petitioner Republic of Indonesia was acting in
pursuit of a sovereign activity when it entered into a contract with respondent for the
upkeep or maintenance of the air conditioning units, generator sets, electrical facilities,
water heaters, and water motor pumps of the Indonesian Embassy and the official
residence of the Indonesian ambassador.
The Solicitor General, in his Comment, submits the view that, "the Maintenance
Agreement was entered into by the Republicof Indonesia in the discharge of its
governmental functions. In such a case, it cannot be deemed to have waived its
immunity from suit." As to the paragraph in the agreement relied upon by respondent,
the Solicitor General states that it "was not a waiver of their immunity from suit but a
mere stipulation that in the event they do waive their immunity, Philippine laws shall
govern the resolution of any legal action arising out of the agreement and the proper
court in Makati City shall be the agreed venue thereof. 19

On the matter of whether or not petitioners Ambassador Soeratmin and Minister

Counsellor Kasim may be sued herein in their private capacities, Article 31 of the Vienna
Convention on Diplomatic Relations provides:
xxx xxx xxx
1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving
State. He shall also enjoy immunity from its civil and administrative jurisdiction, except in
the case of:

(a) a real action relating to private immovable property situated in the territory of the
receiving State, unless he holds it on behalf of the sending State for the purposes of the
mission;
(b) an action relating to succession in which the diplomatic agent is involved as executor,
administrator, heir or legatee as a private person and not on behalf of the sending State;
(c) an action relating to any professional or commercial activity exercised by the
diplomatic agent in the receiving State outside his official functions.
xxx xxx xxx
The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in
terminating the Maintenance Agreement is not covered by the exceptions provided in the
abovementioned provision.
The Solicitor General believes that said act may fall under subparagraph (c) thereof, 20
but said provision clearly applies only to a situation where the diplomatic agent engages
in any professional or commercial activity outside official functions, which is not the case
herein.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of
Appeals in CA G.R. SP No. 66894 are REVERSED and SET ASIDE and the complaint in Civil
Case No. 18203 against petitioners is DISMISSED. EcIaTA
No costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Corona, Carpio Morales, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., on official leave.
||| (Republic of Indonesia v. Vinzon, G.R. No. 154705, [June 26, 2003], 452 PHIL 11001111)

58. MINISTERIO V CFI CEBU

[G.R. No. L-31635. August 31, 1971.]
ANGEL MINISTERIO and ASUNCION SADAYA, petitioners, vs. THE COURT OF FIRST
INSTANCE OF CEBU, Fourth Branch, Presided by the Honorable, Judge JOSE C.
BORROMEO, THE PUBLIC HIGHWAY COMMISSIONER, and THE AUDITOR GENERAL,
respondents.
Erilerto Seno for petitioners.
Solicitor General Felix Q. Antonio, Acting First Assistant Solicitor General Antonio A. Torres
and Solicitor Norberto P. Eduardofor respondents.
SYLLABUS
1. POLITICAL LAW; STATE; IMMUNITY FROM SUIT WITHOUT CONSENT; WHEN THE
LITIGATIONS WOULD RESULT IN FINANCIAL RESPONSIBILITY. The government is
immune from suit without its consent. Nor is it indispensable that it be the party
proceeded against. If it appears that the action would in fact hold it liable, the doctrine
calls for application. It follows then that even if the defendants named were public
officials, such a principle could still be an effective bar. This is clearly so where a
litigation would result in a financial responsibility for the government, whether in the
disbursements of funds or loss of property. Under such circumstances, the liability of the
official sued is not personal. The party that could be adversely affected is the
government. Hence the defense of non-suability may be interposed.
2. ID.; ID.; ID.; UNAUTHORIZED ACTS OF GOVERNMENT OFFICIALS, NOT WITHIN THE
RULE OF IMMUNITY. It is a different matter where the public official is made to account
in his capacity as such for acts contrary to law and injurious to the rights of plaintiff. As
was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications
vs. Aligaen (33 SCRA 368): "Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or officers are not acts of the State,
and an action against the officials or officers by one whose rights have been invaded or
violated by such acts, for the protection of his rights, is not a suit against the State within
the rule of immunity of the State from suit. In the same tenor, it has been said that an
action at law or suit in equity against a State officer or the director of a State department
on the ground that, while claiming to act for the State, he violates or invades the
personal and property rights of the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent."
3. ID.; ID.; ID.; ID.; DOCTRINE CANNOT SERVE AS AN INSTRUMENT FOR PERPETRATING AN
INJUSTICE ON A CITIZEN. If the constitutional mandate that the owner be compensated
for property taken for public use were to be respected, as it should, then a suit of this
character should not be summarily dismissed. The doctrine of governmental immunity
from suit cannot serve as an instrument for perpetrating an injustice on a citizen. It is
unthinkable then that precisely because there was a failure to abide by what the law
requires, the government would stand to benefit. It is just as important, if not more so,
that there be fidelity to legal norms on the part of officialdom if the rule of law were to be
maintained. It is not too much to say that when the government takes any property for

public use, which is conditioned upon the payment of just compensation, to be judicially
ascertained, it makes manifest that it submits to the jurisdiction of a court. There is no
thought then that the doctrine of immunity from suit could still be appropriately invoked.
DECISION
FERNANDO, J p:
What is before this Court for determination in this appeal by certiorari to review a
decision of the Court of First Instance of Cebu is the question of whether or not plaintiffs,
now petitioners, seeking the just compensation to which they are entitled under the
Constitution for the expropriation of their property necessary for the widening of a street,
no condemnation proceeding having been filed, could sue defendants Public Highway
Commissioner and the Auditor General, in their capacity as public officials without
thereby violating the principle of government immunity from suit without its consent.
The lower court, relying on what it considered to be authoritative precedents, held that
they could not and dismissed the suit. The matter was then elevated to us. After a
careful consideration and with a view to avoiding the grave inconvenience, not to say
possible injustice contrary to the constitutional mandate, that would be the result if no
such suit were permitted, this Court arrives at a different conclusion and sustains the
right of the plaintiff to file a suit of this character. Accordingly, we reverse.
Petitioners as plaintiffs in a complaint filed with the Court of First Instance of Cebu, dated
April 13, 1966, sought the payment of just compensation for a registered lot, containing
an area of 1045 square meters, alleging that in 1927 the National Government through
its authorized representatives took physical and material possession of it and used it for
the widening of the Gorordo Avenue, a national road, Cebu City, without paying just
compensation and without any agreement, either written or verbal. There was an
allegation of repeated demands for the payment of its price or return of its possession,
but defendants Public Highway Commissioner and the Auditor General refused to restore
its possession. It was further alleged that on August 25, 1965, the appraisal committee
of the City of Cebu approved Resolution No. 90, appraising the reasonable and just price
of Lot No. 647-B at P50.00 per square meter or a total price of P52,250.00. Thereafter,
the complaint was amended on June 30, 1966 in the sense that the remedy prayed for
was in the alternative, either the restoration of possession or the payment of the just
compensation.
In the answer filed by defendants, now respondents, through the then Solicitor General,
now Associate Justice, Antonio P. Barredo, the principal defense relied upon was that the
suit in reality was one against the government and therefore should be dismissed, no
consent having been shown. Then on July 11, 1969, the parties submitted a stipulation of
facts to this effect: "That the plaintiffs are the registered owners of Lot 647-B of the
Banilad estate described in the Survey plan RS-600 GLRO Record No. 5988 and more
particularly described in Transfer Certificate of Title No. RT-5963 containing an area of
1,045 square meters; That the National Government in 1927 took possession of Lot 647B Banilad estate, and used the same for the widening of Gorordo Avenue; That the
Appraisal Committee of Cebu City approved Resolution No. 90, Series of 1965 fixing the
price of Lot No. 647-B at P50.00 per square meter; That Lot No. 647-B is still in the
possession of the National Government the same being utilized as part of the Gorordo

Avenue, Cebu City, and that the National Government has not as yet paid the value of
the land which is being utilized for public use." 1
The lower court decision now under review was promulgated on January 30, 1969. As is
evident from the excerpt to be cited, the plea that the suit was against the government
without its consent having been manifested met with a favorable response. Thus: "It is
uncontroverted that the land in question is used by the National Government for road
purposes. No evidence was presented whether or not there was an agreement or
contract between the government and the original owner and whether payment was paid
or not to the original owner of the land. It may be presumed that when the land was
taken by the government the payment of its value was made thereafter and no
satisfactory explanation was given why this case was filed only in 1966. But granting
that no compensation was given to the owner of the land, the case is undoubtedly
against the National Government and there is no showing that the government has
consented to be sued in this case. It may be contended that the present case is brought
against the Public Highway Commissioner and the Auditor General and not against the
National Government. Considering that the herein defendants are sued in their official
capacity the action is one against the National Government who should have been made
a party in this case, but, as stated before, with its consent." 2
Then came this petition for certiorari to review the above decision. The principal error
assigned would impugn the holding that the case being against the national government
which was sued without its consent should be dismissed, as it was in fact dismissed. As
was indicated in the opening paragraph of this opinion, this assignment of error is
justified. The decision of the lower court cannot stand. We shall proceed to explain why.
1. The government is immune from suit without its consent. 3 Nor is it indispensable that
it be the party proceeded against. If it appears that the action would in fact hold it liable,
the doctrine calls for application. It follows then that even if the defendants named were
public officials, such a principle could still be an effective bar. This is clearly so where a
litigation would result in a financial responsibility for the government, whether in the
disbursements of funds or loss of property. Under such circumstances, the liability of the
official sued is not personal. The party that could be adversely affected is the
government. Hence the defense of non-suability may be interposed. 4
So it has been categorically set forth in Syquia v. Almeda Lopez: 5 "However, and this is
important, where the judgment in such a case would result not only in the recovery of
possession of the property in favor of said citizen but also in a charge against or financial
liability to the Government, then the suit should be regarded as one against the
government itself, and, consequently, it cannot prosper or be validly entertained by the
courts except with the consent of said Government." 6

2. It is a different matter where the public official is made to account in his capacity as
such for acts contrary to law and injurious to the rights of plaintiff. As was clearly set
forth by Justice Zaldivar in Director of the Bureau of Telecommunications v. Aligean: 7
"Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of
government officials or officers are not acts of the State, and an action against the
officials or officers by one whose rights have been invaded or violated by such acts, for

the protection of his rights, is not a suit against the State within the rule of immunity of
the State from suit. In the same tenor, it has been said that an action at law or suit in
equity against a State officer or the director of a State department on the ground that,
while claiming to act for the State, he violates or invades the personal and property
rights of the plaintiff, under an unconstitutional act or under an assumption of authority
which he does not have, is not a suit against the State within the constitutional provision
that the State may not be sued without its consent." 8
3. It would follow then that the prayer in the amended complaint of petitioners being in
the alternative, the lower court, instead of dismissing the same, could have passed upon
the claim of plaintiffs there, now petitioners, for the recovery of the possession of the
disputed lot, since no proceeding for eminent domain, as required by the then Code of
Civil Procedure, was instituted. 9 However, as noted in Alfonso v. Pasay City, 10 this
Court speaking through Justice Montemayor, restoration would be "neither convenient
nor feasible because it is now and has been used for road purposes." 11 The only relief,
in the opinion of this Court, would be for the government "to make due
compensation, . . .," 12 It was made clear in such decision that compensation should
have been made "as far back as the date of the taking." Does it result, therefore, that
petitioners would be absolutely remediless since recovery of possession is in effect
barred by the above decision? If the constitutional mandate that the owner be
compensated for property taken for public use 13 were to be respected, as it should,
then a suit of this character should not be summarily dismissed. The doctrine of
governmental immunity from suit cannot serve as an instrument for perpetrating an
injustice on a citizen. Had the government followed the procedure indicated by the
governing law at the time, a complaint would have been filed by it, and only upon
payment of the compensation fixed by the judgment, or after tender to the party entitled
to such payment of the amount fixed, may it "have the right to enter in and upon the
land so condemned" to appropriate the same to the public use defined in the judgment."
14 If there were an observance of procedural regularity, petitioners would not be in the
sad plaint they are now. It is unthinkable then that precisely because there was a failure
to abide by what the law requires, the government would stand to benefit. It is just as
important, if not more so, that there be fidelity to legal norms on the part of officialdom if
the rule of law were to be maintained. It is not too much to say that when the
government takes any property for public use, which is conditioned upon the payment of
just compensation, to be judicially ascertained, it makes manifest that it submits to the
jurisdiction of a court. There is no thought then that the doctrine of immunity from suit
could still be appropriately invoked. 15
Accordingly, the lower court decision is reversed so that the court may proceed with the
complaint and determine the compensation to which petitioners are entitled, taking into
account the ruling in the above Alfonso case: "As to the value of the property, although
the plaintiff claims the present market value thereof, the rule is that to determine due
compensation for lands appropriated by the Government, the basis should be the price
or value at the time that it was taken from the owner and appropriated by the
Government." 16
WHEREFORE, the lower court decision of January 30, 1969 dismissing the complaint is
reversed and the case remanded to the lower court for proceedings in accordance with
law.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Teehankee, Villamor and Makasiar, JJ .,
concur.
Concepcion, C .J ., took no part.
Barredo, J ., did not take part.
||| (Ministerio v. Court of First Instance of Cebu, G.R. No. L-31635, [August 31, 1971], 148B PHIL 474-481)

59. SANDERS V VERIDIANO SUPRA

60. MERRITT V GOVT OF THE PHIL ISLANDS SUPRA

61. FONTANILLA V MALIAMAN

259 PHIL 302-313

SECOND DIVISION
[G.R. No. 55963. December 1, 1989.]
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA,petitioners, vs. HONORABLE
INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION, respondents.
[G.R. No. 61045. December 1, 1989.]
NATIONAL IRRIGATION ADMINISTRATION, appellant, vs. SPOUSES JOSE FONTANILLA and
VIRGINIA FONTANILLA, appellees.
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Felicisimo C. Villaflor for NIA.
SYLLABUS
1. CIVIL LAW; TORTS AND DAMAGES; ASPECTS OF THE LIABILITY OF STATE FOR
DAMAGES. The liability of the State has two aspects, namely: 1. Its public or
governmental aspects where it is liable for the tortious acts of special agents only. 2. Its
private or business aspects (as when it engages in private enterprises) where it becomes
liable as an ordinary employer. (p. 961, Civil Code of the Philippines; Annotated, Paras,
1986 Ed.). In this jurisdiction, the State assumes a limited liability for the damage caused
by the tortious acts or conduct of its special agent.
2. ID.; ID.; ID.; INSTANCES WHEN THE GOVERNMENT ASSUMES LIABILITY FOR ACTS DONE
THROUGH ITS SPECIAL AGENTS. Under paragraph 6 of Art. 2180, the State has
voluntarily assumed liability for acts done through special agents. The State's agent, if a
public official, must not only be specially commissioned to do a particular task but that
such task must be foreign to said official's usual governmental functions. If the State's
agent is not a public official, and is commissioned to perform non-govern mental
functions, then the State assumes the role of an ordinary employer and will be held liable
as such for its agent's tort. Where the government commissions a private individual for a
special governmental task, it is acting through a special agent within the meaning of the
provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.).
3.
ADMINISTRATIVE
LAW;
GOVERNMENTAL
AND
PROPRIETARY
FUNCTIONS
DINSTINGUISHED. Certain functions and activities, which can be performed only by the
government, are more or less generally agreed to be "governmental" in character, and
so the State is immune from tort liability. On the other hand, a service which might as
well be provided by a private corporation, and particularly when it collects revenues from
it, the function is considered a "proprietary" one, as to which there may be liability for
the torts of agents within the scope of their employment.
4. ID.; NATIONAL IRRIGATION ADMINISTRATION; A GOVERNMENT CORPORATION WITH
JURIDICAL PERSONALITY WHICH CAN BE HELD ANSWERABLE FOR DAMAGES. The
National Irrigation Administration is an agency of the government exercising proprietary
functions, by express provision ofRep. Act No. 3601. It is a government corporation with
juridical personality and not a mere agency of the government. Since it is a corporate

body performing non-governmental functions, it now becomes liable for the damage
caused by the accident resulting from the tortious act of its driver-employee. In this
particular case, the NIA assumes the responsibility of an ordinary employer and as such,
it becomes answerable for damages.
5. CIVIL LAW; TORTS AND DAMAGES; NEGLIGENCE IN THE SELECTION AND SUPERVISION
OF EMPLOYEE; CASE OF. It should be emphasized that the accident happened along
the Maharlika National Road within the city limits of San Jose City, an urban area.
Considering the fact that the victim was thrown 50 meters away from the point of
impact, there is a strong indication that driver Garcia was driving at a high speed. This is
confirmed by the fact that the pick-up suffered substantial and heavy damage as abovedescribed and the fact that the NIA group was then "in a hurry to reach the campsite as
early as possible", as shown by their not stopping to find out what they bumped as would
have been their normal and initial reaction. Evidently, there was negligence in the
supervision of the driver for the reason that they were travelling at a high speed within
the city limits and yet the supervisor of the group, Ely Salonga, failed to caution and
make the driver observe the proper and allowed speed limit within the city. Under the
situation, such negligence is further aggravated by their desire to reach their destination
without even checking whether or not the vehicle suffered damage from the object it
bumped, thus showing imprudence and recklessness on the part of both the driver and
the supervisor in the group.
6. ID.; ID.; ID.; INSTANCES WHEN EMPLOYER WOULD STILL BE LIABLE EVEN IN THE
ABSENCE THEREOF. This Court has ruled that even if the employer can prove the
diligence in the selection and supervision (the latter aspect has not been established
herein) of the employee, still if he ratifies the wrongful acts, or take no step to avert
further damage, the employer would still be liable. (Maxion vs. Manila Railroad Co., 44
Phil. 597).
7. ID.; ID.; FAILURE OF DRIVER TO KEEP A PROPER LOOK OUT IN THE LINE TO BE
TRAVERSED CONSTITUTES NEGLIGENCE. In the case of Vda. de Bonifacio vs. B.L.T. Bus
Co. (L-26810, August 31, 1970, 34 SCRA 618), this Court held that a driver should be
especially watchful in anticipation of others who may be using the highway, and his
failure to keep a proper look out for reasons and objects in the line to be traversed
constitutes negligence.
DECISION
PARAS, J p:
In G.R. No. 55963, the petition for review on certiorari seeks the affirmance of the
decision dated March 20, 1980 of the then Court of First Instance of Nueva Ecija, Branch
VIII, at San Jose City, and its modification with respect to the denial of petitioner's claim
for moral and exemplary damages and attorney's fees.
In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of the
aforesaid decision of the lower court. The original appeal of this case before the Court of
Appeals was certified to this Court and in the resolution of July 7, 1982, it was docketed
with the aforecited number. And in the resolution of April 3, this case was consolidated
with G.R. No. 55963.

It appears that on August 21, 1976 at about 6:30 P.M., a pick-up owned and operated by
respondent National Irrigation Administration, a government agency bearing Plate No. IN651, then driven officially by Hugo Garcia, an employee of said agency as its regular
driver, bumped a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and
Restituto Deligo, at Maasin, San Jose City along the Maharlika Highway. As a result of the
impact, Francisco Fontanilla and Restituto Deligo were injured and brought to the San
Jose City Emergency Hospital for treatment. Fontanillawas later transferred to the
Cabanatuan Provincial Hospital where he died.
Garcia was then a regular driver of respondent National Irrigation Administration who, at
the time of the accident, was a licensed professional driver and who qualified for
employment as such regular driver of respondent after having passed the written and
oral examinations on traffic rules and maintenance of vehicles given by National
Irrigation Administration authorities. prLL
The within petition is thus an offshot of the action (Civil Case No. SJC-56) instituted by
petitioners-spouses on April 17, 1978 against respondent NIA before the then Court of
First Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection with
the death of their son resulting from the aforestated accident.
After trial, the trial court rendered judgment on March 20, 1980 which directed
respondent National Irrigation Administration to pay damages (death benefits) and
actual expenses to petitioners. The dispositive portion of the decision reads thus.
". . . Judgment is hereby rendered ordering the defendant National Irrigation
Administration to pay to the heirs of the deceased P12,000.00 for the death of Francisco
Fontanilla; P3,389.00 which the parents of the deceased had spent for the hospitalization
and burial of the deceased Francisco Fontanilla; and to pay the costs." (Brief for the
petitioners spouses Fontanilla, p. 4; Rollo, p. 132).
Respondent National Irrigation Administration filed on April 21, 1980, its motion for
reconsideration of the aforesaid decision which respondent trial court denied in its Order
of June 13, 1980. Respondent National Irrigation Administration thus appealed said
decision to the Court of Appeals (C.A.-G.R. No. 67237-R) where it filed its brief for
appellant in support of its position.
Instead of filing the required brief in the aforecited Court of Appeals case, petitioners
filed the instant petition with this Court.
The sole issue for the resolution of the Court is: Whether or not the award of moral
damages, exemplary damages and attorney's fees is legally proper in a complaint for
damages based on quasi-delict which resulted in the death of the son of herein
petitioners.
Petitioners allege:
1. The award of moral damages is specifically allowable under paragraph 3 of Article
2206 of the New Civil Code which provides that the spouse, legitimate and illegitimate
descendants and ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased. Should moral damages be granted, the
award should be made to each of petitioners-spousesindividually and in varying amounts

depending upon proof of mental and depth of intensity of the same, which should not be
less than P50,000.00 for each of them.
2. The decision of the trial court had made an impression that respondent National
Irrigation Administration acted with gross negligence because of the accident and the
subsequent failure of the National Irrigation Administration personnel including the driver
to stop in order to give assistance to the victims. Thus, by reason of the gross negligence
of respondent, petitioners become entitled to exemplary damages under Arts. 2231 and
2229 of the New Civil Code.
3. Petitioners are entitled to an award of attorney's fees, the amount of which (20%) had
been sufficiently established in the hearing of May 23, 1979.

4. This petition has been filed only for the purpose of reviewing the findings of the lower
court upon which the disallowance of moral damages, exemplary damages and
attorney's fees was based and not for the purpose of disturbing the other findings of fact
and conclusions of law.
The Solicitor General, taking up the cudgels for public respondent National Irrigation
Administration, contends thus: LLphil
1. The filing of the instant petition is not proper in view of the appeal taken by
respondent National Irrigation Administration to the Court of Appeals against the
judgment sought to be reviewed. The focal issue raised in respondent's appeal to the
Court of Appeals involves the question as to whether or not the driver of the vehicle that
bumped the victims was negligent in his operation of said vehicle. It thus becomes
necessary that before petitioners' claim for moral and exemplary damages could be
resolved, there should first be a finding of negligence on the part of respondent's
employee-driver. In this regard, the Solicitor General alleges that the trial court decision
does not categorically contain such finding.
2. The filing of the "Appearance and Urgent Motion For Leave to File Plaintiff-Appellee's
Brief' dated December 28, 1981 by petitioners in the appeal (CA-G.R. No. 67237-R; and
G.R. No. 61045) of the respondent National Irrigation Administration before the Court of
Appeals, is an explicit admission of said petitioners that the herein petition, is not proper.
Inconsistent procedures are manifest because while petitioners question the findings of
fact in the Court of Appeals, they present only the questions of law before this Court
which posture confirms their admission of the facts.
3. The fact that the parties failed to agree on whether or not negligence caused the
vehicular accident involves a question of fact which petitioners should have brought to
the Court of Appeals within the reglementary period. Hence, the decision of the trial
court has become final as to the petitioners and for this reason alone, the petition should
be dismissed.
4. Respondent Judge acted within his jurisdiction, sound discretion and in conformity with
the law.

5. Respondents do not assail petitioners' claim to moral and exemplary damages by

reason of the shock and subsequent illness they suffered because of the death of their
son. Respondent National Irrigation Administration, however, avers that it cannot be held
liable for the damages because it is an agency of the State performing governmental
functions and driver Hugo Garcia was a regular driver of the vehicle, not a special agent
who was performing a job or act foreign to his usual duties. Hence, the liability for the
tortious act should not be borne by respondent government agency but by driver Garcia
who should answer for the consequences of his act.
6. Even as the trial court touched on the failure or laxity of respondent National Irrigation
Administration in exercising due diligence in the selection and supervision of its
employee, the matter of due diligence is not an issue in this case since driver Garcia was
not its special agent but a regular driver of the vehicle.
The sole legal question on whether or not petitioners may be entitled to an award of
moral and exemplary damages and attorney's fees can very well be answered with the
application of Arts. 2176 and 2180 of the New Civil Code. cdll
Art. 2176 thus provides:
"Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter."
Paragraphs 5 and 6 of Art. 2180 read as follows:
"Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry."
"The State is responsible in like manner when it acts through a special agent; but not
when the damage has been caused by the official to whom the task done properly
pertains, in which case what is provided in Art. 2176 shall be applicable."
The liability of the State has two aspects, namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special
agents only.
2 Its private or business aspects (as when it engages in private enterprises) where it
becomes liable as an ordinary employer. (p. 961, Civil Code of the Philippines; Annotated,
Paras, 1986 Ed.).
In this jurisdiction, the State assumes a limited liability for the damage caused by the
tortious acts or conduct of its special agent.
Under the aforequoted paragraph 6 of Art. 2180, the State has voluntarily assumed
liability for acts done through special agents. The State's agent, if a public official, must
not only be specially commissioned to do a particular task but that such task must be
foreign to said official's usual governmental functions. If the State's agent is not a public
official, and is commissioned to perform non-govern mental functions, then the State

assumes the role of an ordinary employer and will be held liable as such for its agent's
tort. Where the government commissions a private individual for a special governmental
task, it is acting through a special agent within the meaning of the provision. (Torts and
Damages, Sangco, p. 347, 1984 Ed.).
Certain functions and activities, which can be performed only by the government, are
more or less generally agreed to be "governmental" in character, and so the State is
immune from tort liability. On the other hand, a service which might as well be provided
by a private corporation, and particularly when it collects revenues from it, the function
is considered a "proprietary" one, as to which there may be liability for the torts of
agents within the scope of their employment. LLphil
The National Irrigation Administration is an agency of the government exercising
proprietary functions, by express provision of Rep. Act No. 3601. Section 1 of said Act
provides:
"Section 1. Name and domicile. A body corporate is hereby created which shall be
known as the National Irrigation Administration, hereinafter called the NIA for short,
which shall be organized immediately after the approval of this Act. It shall have its
principal seat of business in the City of Manila and shall have representatives in all
provinces for the proper conduct of its business.'
Section 2 of said law spells out some of the NIA's proprietary functions. Thus
"Sec. 2. Powers and objectives. The NIA shall have the following powers and
objectives:
"(a) . . .
"(b) . . .
"(c) To collect from the users of each irrigation system constructed by it such fees as may
be necessary to finance the continuous operation of the system and reimburse within a
certain period not less than twenty-five years cost of construction thereof; and
"(d) To do all such other things and to transact all such business as are directly or
indirectly necessary, incidental or conducive to the attainment of the above objectives."
Indubitably, the NIA is a government corporation with juridical personality and not a
mere agency of the government. Since it is a corporate body performing nongovernmental functions, it now becomes liable for the damage caused by the accident
resulting from the tortious act of its driver-employee. In this particular case, the NIA
assumes the responsibility of an ordinary employer and as such, it becomes answerable
for damages.
This assumption of liability, however, is predicated upon the existence of negligence on
the part of respondent NIA. The negligence referred to here is the negligence of
supervision.
At this juncture, the matter of due diligence on the part of respondent NIA becomes a
crucial issue in determining its liability since it has been established that respondent is a
government agency performing proprietary functions and as such, it assumes the

posture of an ordinary employer which, under Par. 5 of Art. 2180, is responsible for the
damages caused by its employees provided that it has failed to observe or exercise due
diligence in the selection and supervision of the driver. prcd
It will be noted from the assailed decision of the trial court that "as a result of the impact,
Francisco Fontanilla was thrown to a distance 50 meters away from the point of impact
while Restituto Deligo was thrown a little bit further away. The impact took place almost
at the edge of the cemented portion of the road." (Italics supplied) [page 26, Rollo].
The lower court further declared that "a speeding vehicle coming in contact with a
person causes force and impact upon the vehicle that anyone in the vehicle cannot fail
to notice. As a matter of fact, the impact was so strong as shown by the fact that
thevehicle suffered dents on the right side of the radiator guard, the hood, the fender
and a crack on the radiator as shown by the investigation report (Exhibit "E"). (Emphasis
supplied) [page 29, Rollo].
It should be emphasized that the accident happened along the Maharlika National Road
within the city limits of San Jose City, an urban area. Considering the fact that the victim
was thrown 50 meters away from the point of impact, there is a strong indication that
driver Garcia was driving at a high speed. This is confirmed by the fact that the pick-up
suffered substantial and heavy damage as above-described and the fact that the NIA
group was then "in a hurry to reach the campsite as early as possible", as shown by their
not stopping to find out what they bumped as would have been their normal and initial
reaction.
Evidently, there was negligence in the supervision of the driver for the reason that they
were travelling at a high speed within the city limits and yet the supervisor of the group,
Ely Salonga, failed to caution and make the driver observe the proper and allowed speed
limit within the city. Under the situation, such negligence is further aggravated by their
desire to reach their destination without even checking whether or not the vehicle
suffered damage from the object it bumped, thus showing imprudence and recklessness
on the part of both the driver and the supervisor in the group. Cdpr

Significantly, this Court has ruled that even if the employer can prove the diligence in the
selection and supervision (the latter aspect has not been established herein) of the
employee, still if he ratifies the wrongful acts, or take no step to avert further damage,
the employer would still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).
Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970,
34 SCRA 618), this Court held that a driver should be especially watchful in anticipation
of others who may be using the highway, and his failure to keep a proper look out for
reasons and objects in the line to be traversed constitutes negligence.
Considering the foregoing, respondent NIA is hereby directed to pay herein petitionersspouses the amounts of P12,000.00 for the death of Francisco Fontanilla; P3,389.00 for
hospitalization and burial expenses of the aforenamed deceased; P30,000.00 as moral
damages; P8,000.00 as exemplary damages and attorney's fees of 20% of the total
award.

SO ORDERED.
Padilla, Sarmiento and Regalado, JJ., concur.
Melencio-Herrera (Chairman), J., is on leave.
||| (Fontanilla v. Maliaman, G.R. No. 55963, 61045, [December 1, 1989], 259 PHIL 302313)

62. REPUBLIC V VILLASOR

[G.R. No. L-30671. November 28, 1973.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. GUILLERMO P. VILLASOR, as Judge of
the Court of First Instance of Cebu, Branch I, THE PROVINCIAL-SHERIFF OF RIZAL, THE
SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF MANILA, THE CLERK OF
COURT, Court of First Instance of Cebu, P.J. KIENER CO., LTD., GAVINO UNCHUAN, and
INTERNATIONAL CONSTRUCTION CORPORATION, respondents.
Solicitor General Felix V . Makasiar and Solicitor Bernardo P. Pardo for petitioner.
Andres T . Velarde & Marcelo B. Fernan for respondents.

DECISION
FERNANDO, J p:
The Republic of the Philippines in this certiorari and prohibition proceeding challenges
the validity of an order issued by respondent Judge Guillermo P. Villasor, then of the
Court of First Instance of Cebu, Branch I, 1 declaring a decision final and executory and
of an alias writ of execution directed against the funds of the Armed Forces of the
Philippines subsequently issued in pursuance thereof, the alleged ground being excess of
jurisdiction, or at the very least, grave abuse of discretion. As thus simply and tersely
put, with the facts being undisputed and the principle of law that calls for application
indisputable, the outcome is predictable. The Republic of the Philippines is entitled to the
writs prayed for. Respondent Judge ought not to have acted thus. The order thus
impugned and the alias writ of execution must be nullified.
In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts
was set forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings
No. 2156-R in favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and
International Construction Corporation, and against the petitioner herein, confirming the
arbitration award in the amount of P1,712,396.40, subject of Special Proceedings. 8. On
June 24, 1969, respondent Honorable Guillermo P.Villasor, issued an Order declaring the
aforestated decision of July 3, 1961 final and executory, directing the Sheriffs of Rizal
Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant to the
said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued]
dated June 26, 1969, . . . 10. On the strength of the afore-mentioned Alias Writ of
Execution dated June 26, 1969, the Provincial Sheriff of Rizal (respondent herein) served
notices of garnishment dated June 28, 1969 with several Banks, specially on the `monies
due the Armed Forces of the Philippines in the form of deposits, sufficient to cover the
amount mentioned in the said Writ of Execution'; the Philippine Veterans Bank received
the same notice of garnishment on June 30, 1969 . . . 11. The funds of the Armed Forces
of the Philippines on deposit with the Banks, particularly, with the Philippine Veterans
Bank and the Philippine National Bank [or] their branches are public funds duly
appropriated and allocated for the payment of pensions of retirees, pay and allowances
of military and civilian personnel and for maintenance and operations of the Armed
Forces of the Philippines, as per Certification dated July 3, 1969 by the AFP
Comptroller, . . ." 2 The paragraph immediately succeeding in such petition then alleged:
"12. Respondent Judge, Honorable Guillermo P. Villasor, acted in excess of jurisdiction
[or] with grave abuse of discretion amounting to lack of jurisdiction in granting the
issuance of an alias writ of execution against the properties of the Armed Forces of the
Philippines, hence, the Alias Writ of Execution and notices of garnishment issued
pursuant thereto are null and void." 3 In the answer filed by respondents, through
counsel Andres T. Velarde and Marcelo B. Fernan, the facts set forth were admitted with
the only qualification being that the total award was in the amount of P2,372,331.40. 4
The Republic of the Philippines, as mentioned at the outset, did right in filing this
certiorari and prohibition proceeding. What was done by respondent Judge is not in
conformity with the dictates of the Constitution.
It is a fundamental postulate of constitutionalism flowing from the juristic concept of
sovereignty that the state as well as its government is immune from suit unless it gives

its consent. It is readily understandable why it must be so. In the classic formulation of
Holmes: "A sovereign is exempt from suit, not because of any formal conception or
obsolete theory, but on the logical and practical ground that there can be no legal right
as against the authority that makes the law on which the right depends." 5 Sociological
jurisprudence supplies an answer not dissimilar. So it was indicated in a recent decision,
Providence Washington Insurance Co. v. Republic of the Philippines, 6 with its affirmation
that "a continued adherence to the doctrine of non-suability is not to be deplored for as
against the inconvenience that may be caused private parties, the loss of governmental
efficiency and the obstacle to the performance of its multifarious functions are far
greater if such a fundamental principle were abandoned and the availability of judicial
remedy were not thus restricted. With the well known propensity on the part of our
people to go to court, at the least provocation, the loss of time and energy required to
defend against law suits, in the absence of such a basic principle that constitutes such
an effective obstacle, could very well be imagined." 7
This fundamental postulate underlying the 1935 Constitution is now made explicit in the
revised charter. It is therein expressly provided: "The State may not be sued without its
consent." 8 A corollary, both dictated by logic and sound sense from such a basic
concept is that public funds cannot be the object of a garnishment proceeding even if
the consent to be sued had been previously granted and the state liability adjudged.
Thus in the recent case of Commissioner of Public Highways v. San Diego, 9 such a wellsettled doctrine was restated in the opinion of Justice Teehankee: "The universal rule that
where the State gives its consent to be sued by private parties either by general or
special law, it may limit claimant's action `only up to the completion of proceedings
anterior to the stage of execution' and that the power of the Courts ends when the
judgment is rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of
public funds from their legitimate and specific objects, as appropriated by law." 10 Such
a principle applies even to an attempted garnishment of a salary that had accrued in
favor of an employee. Director of Commerce and Industry v. Concepcion, 11 speaks to
that effect. Justice Malcolm as ponenteleft no doubt on that score. Thus: "A rule, which
has never been seriously questioned, is that money in the hands of public officers,
although it may be due government employees, is not liable to the creditors of these
employees in the process of garnishment. One reason is, that the State, by virtue of its
sovereignty, may not be sued in its own courts except by express authorization by the
Legislature, and to subject its officers to garnishment would be to permit indirectly what
is prohibited directly. Another reason is that moneys sought to be garnished, as long as
they remain in the hands of the disbursing officer of the Government, belong to the
latter, although the defendant in garnishment may be entitled to a specific portion
thereof. And still another reason which covers both of the foregoing is that every
consideration of public policy forbids it." 12
In the light of the above, it is made abundantly clear why the Republic of the Philippines
could rightfully allege a legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting
aside both the order of June 24, 1969 declaring executory the decision of July 3, 1961 as
well as the alias writ of execution issued thereunder. The preliminary injunction issued by
this Court on July 12, 1969 is hereby made permanent.
Zaldivar, Antonio, Fernandez and Aquino, JJ ., concur.
Barredo, J ., did not take part.
||| (Republic v. Villasor, G.R. No. L-30671, [November 28, 1973], 153 PHIL 356-362)

64. MUNICIPALITY OF MAKATI V CA

THIRD DIVISION

G.R. Nos. 89898-99 October 1, 1990

MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC
of Makati, Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF
SILVINO R. PASTRANA,respondents.
Defante & Elegado for petitioner.
Roberto B. Lugue for private respondent Admiral Finance Creditors' Consortium, Inc.
RESOLUTION

CORTS, J.:
The present petition for review is an off-shoot of expropriation proceedings initiated by
petitioner Municipality of Makati against private respondent Admiral Finance Creditors
Consortium, Inc., Home Building System & Realty Corporation and one Arceli P. Jo,

involving a parcel of land and improvements thereon located at Mayapis St., San Antonio
Village, Makati and registered in the name of Arceli P. Jo under TCT No. S-5499.
It appears that the action for eminent domain was filed on May 20, 1986, docketed as
Civil Case No. 13699. Attached to petitioner's complaint was a certification that a bank
account (Account No. S/A 265-537154-3) had been opened with the PNB Buendia Branch
under petitioner's name containing the sum of P417,510.00, made pursuant to the
provisions of Pres. Decree No. 42. After due hearing where the parties presented their
respective appraisal reports regarding the value of the property, respondent RTC judge
rendered a decision on June 4, 1987, fixing the appraised value of the property at
P5,291,666.00, and ordering petitioner to pay this amount minus the advanced payment
of P338,160.00 which was earlier released to private respondent.
After this decision became final and executory, private respondent moved for the
issuance of a writ of execution. This motion was granted by respondent RTC judge. After
issuance of the writ of execution, a Notice of Garnishment dated January 14, 1988 was
served by respondent sheriff Silvino R. Pastrana upon the manager of the PNB Buendia
Branch. However, respondent sheriff was informed that a "hold code" was placed on the
account of petitioner. As a result of this, private respondent filed a motion dated January
27, 1988 praying that an order be issued directing the bank to deliver to respondent
sheriff the amount equivalent to the unpaid balance due under the RTC decision dated
June 4, 1987.
Petitioner filed a motion to lift the garnishment, on the ground that the manner of
payment of the expropriation amount should be done in installments which the
respondent RTC judge failed to state in his decision. Private respondent filed its
opposition to the motion.
Pending resolution of the above motions, petitioner filed on July 20, 1988 a
"Manifestation" informing the court that private respondent was no longer the true and
lawful owner of the subject property because a new title over the property had been
registered in the name of Philippine Savings Bank, Inc. (PSB) Respondent RTC judge
issued an order requiring PSB to make available the documents pertaining to its
transactions over the subject property, and the PNB Buendia Branch to reveal the
amount in petitioner's account which was garnished by respondent sheriff. In compliance
with this order, PSB filed a manifestation informing the court that it had consolidated its
ownership over the property as mortgagee/purchaser at an extrajudicial foreclosure sale
held on April 20, 1987. After several conferences, PSB and private respondent entered
into a compromise agreement whereby they agreed to divide between themselves the
compensation due from the expropriation proceedings.
Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1)
approved the compromise agreement; (2) ordered PNB Buendia Branch to immediately
release to PSB the sum of P4,953,506.45 which corresponds to the balance of the
appraised value of the subject property under the RTC decision dated June 4, 1987, from
the garnished account of petitioner; and, (3) ordered PSB and private respondent to
execute the necessary deed of conveyance over the subject property in favor of
petitioner. Petitioner's motion to lift the garnishment was denied.

Petitioner filed a motion for reconsideration, which was duly opposed by private
respondent. On the other hand, for failure of the manager of the PNB Buendia Branch to
comply with the order dated September 8, 1988, private respondent filed two succeeding
motions to require the bank manager to show cause why he should not be held in
contempt of court. During the hearings conducted for the above motions, the general
manager of the PNB Buendia Branch, a Mr. Antonio Bautista, informed the court that he
was still waiting for proper authorization from the PNB head office enabling him to make
a disbursement for the amount so ordered. For its part, petitioner contended that its
funds at the PNB Buendia Branch could neither be garnished nor levied upon execution,
for to do so would result in the disbursement of public funds without the proper
appropriation required under the law, citing the case of Republic of the Philippines v.
Palacio [G.R. No. L-20322, May 29, 1968, 23 SCRA 899].
Respondent trial judge issued an order dated December 21, 1988 denying petitioner's
motion for reconsideration on the ground that the doctrine enunciated in Republic v.
Palacio did not apply to the case because petitioner's PNB Account No. S/A 265-537154-3
was an account specifically opened for the expropriation proceedings of the subject
property pursuant to Pres. Decree No. 42. Respondent RTC judge likewise declared Mr.
Antonio Bautista guilty of contempt of court for his inexcusable refusal to obey the order
dated September 8, 1988, and thus ordered his arrest and detention until his compliance
with the said order.
Petitioner and the bank manager of PNB Buendia Branch then filed separate petitions for
certiorari with the Court of Appeals, which were eventually consolidated. In a decision
promulgated on June 28, 1989, the Court of Appeals dismissed both petitions for lack of
merit, sustained the jurisdiction of respondent RTC judge over the funds contained in
petitioner's PNB Account No. 265-537154-3, and affirmed his authority to levy on such
funds.
Its motion for reconsideration having been denied by the Court of Appeals, petitioner
now files the present petition for review with prayer for preliminary injunction.
On November 20, 1989, the Court resolved to issue a temporary restraining order
enjoining respondent RTC judge, respondent sheriff, and their representatives, from
enforcing and/or carrying out the RTC order dated December 21, 1988 and the writ of
garnishment issued pursuant thereto. Private respondent then filed its comment to the
petition, while petitioner filed its reply.
Petitioner not only reiterates the arguments adduced in its petition before the Court of
Appeals, but also alleges for the first time that it has actually two accounts with the PNB
Buendia Branch, to wit:
xxx xxx xxx
(1) Account No. S/A 265-537154-3 exclusively for the expropriation of the subject
property, with an outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 for statutory obligations and other purposes of the
municipal government, with a balance of P170,098,421.72, as of July 12, 1989.
xxx xxx xxx

[Petition, pp. 6-7; Rollo, pp. 11-12.]

Because the petitioner has belatedly alleged only in this Court the existence of two bank
accounts, it may fairly be asked whether the second account was opened only for the
purpose of undermining the legal basis of the assailed orders of respondent RTC judge
and the decision of the Court of Appeals, and strengthening its reliance on the doctrine
that public funds are exempted from garnishment or execution as enunciated in Republic
v. Palacio [supra.] At any rate, the Court will give petitioner the benefit of the doubt, and
proceed to resolve the principal issues presented based on the factual circumstances
thus alleged by petitioner.
Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for
expropriation proceedings it had initiated over the subject property, petitioner poses no
objection to the garnishment or the levy under execution of the funds deposited therein
amounting to P99,743.94. However, it is petitioner's main contention that inasmuch as
the assailed orders of respondent RTC judge involved the net amount of P4,965,506.45,
the funds garnished by respondent sheriff in excess of P99,743.94, which are public
funds earmarked for the municipal government's other statutory obligations, are
exempted from execution without the proper appropriation required under the law.
There is merit in this contention. The funds deposited in the second PNB Account No. S/A
263-530850-7 are public funds of the municipal government. In this jurisdiction, wellsettled is the rule that public funds are not subject to levy and execution, unless
otherwise provided for by statute [Republic v. Palacio, supra.; The Commissioner of Public
Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More
particularly, the properties of a municipality, whether real or personal, which are
necessary for public use cannot be attached and sold at execution sale to satisfy a
money judgment against the municipality. Municipal revenues derived from taxes,
licenses and market fees, and which are intended primarily and exclusively for the
purpose of financing the governmental activities and functions of the municipality, are
exempt from execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49 Phil.
52 (1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950);
Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130
SCRA 56]. The foregoing rule finds application in the case at bar. Absent a showing that
the municipal council of Makati has passed an ordinance appropriating from its public
funds an amount corresponding to the balance due under the RTC decision dated June 4,
1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy
under execution may be validly effected on the public funds of petitioner deposited in
Account No. S/A 263-530850-7.
Nevertheless, this is not to say that private respondent and PSB are left with no legal
recourse. Where a municipality fails or refuses, without justifiable reason, to effect
payment of a final money judgment rendered against it, the claimant may avail of the
remedy of mandamus in order to compel the enactment and approval of the necessary
appropriation ordinance, and the corresponding disbursement of municipal funds
therefor [SeeViuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota,
107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)].
In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by
petitioner. No appeal was taken therefrom. For three years now, petitioner has enjoyed

possession and use of the subject property notwithstanding its inexcusable failure to
comply with its legal obligation to pay just compensation. Petitioner has benefited from
its possession of the property since the same has been the site of Makati West High
School since the school year 1986-1987. This Court will not condone petitioner's blatant
refusal to settle its legal obligation arising from expropriation proceedings it had in fact
initiated. It cannot be over-emphasized that, within the context of the State's inherent
power of eminent domain,
. . . [j]ust compensation means not only the correct determination of the amount to be
paid to the owner of the land but also the payment of the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be considered "just" for
the property owner is made to suffer the consequence of being immediately deprived of
his land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss [Cosculluela v. The Honorable Court of Appeals,
G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also Provincial Government of
Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291].
The State's power of eminent domain should be exercised within the bounds of fair play
and justice. In the case at bar, considering that valuable property has been taken, the
compensation to be paid fixed and the municipality is in full possession and utilizing the
property for public purpose, for three (3) years, the Court finds that the municipality has
had more than reasonable time to pay full compensation.
WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to
immediately pay Philippine Savings Bank, Inc. and private respondent the amount of
P4,953,506.45. Petitioner is hereby required to submit to this Court a report of its
compliance with the foregoing order within a non-extendible period of SIXTY (60) DAYS
from the date of receipt of this resolution.
The order of respondent RTC judge dated December 21, 1988, which was rendered in
Civil Case No. 13699, is SET ASIDE and the temporary restraining order issued by the
Court on November 20, 1989 is MADE PERMANENT.
SO ORDERED.

64. NHA v Guivelondo

[G.R. No. 166518. June 16, 2009.]

NATIONAL HOUSING AUTHORITY, petitioner, vs. HEIRS OF ISIDRO GUIVELONDO,
REGIONAL TRIAL COURT OF CEBU CITY, BRANCH 19, and the COURT OF APPEALS,
respondents.
DECISION
PUNO, C.J p:
Before us is a petition for review on certiorari under Rule 45 seeking the reversal of the
Decision 1 of the Court of Appeals (CA) in CA G.R. SP No. 85807 affirming the omnibus
order 2 of the Regional Trial Court (RTC), Branch 19, Cebu City, and the order 3 denying
the reconsideration thereof.
This case is an offshoot of G.R. No. 154411, promulgated on June 19, 2003, entitled
National Housing Authority (NHA) v. Heirs of Guivelondo, in which we resolved once and
for all the validity of the order of expropriation issued by the RTC of Cebu City, Branch
11, condemning the properties of respondents located in Barangay Carreta, Cebu City at
P11,200.00 per square meter and the propriety of the garnishment against petitioner's
funds and personal properties for the payment of just compensation to respondents.
Pending the final resolution of G.R. No. 154411, a writ of execution was issued on January
14, 2001 by the RTC, Branch 11 in the amount of P104,641,600.00, as computed from
respondents' 9,343 square meters of land valued at P11,200.00 each. Pursuant to said
writ of execution, the court sheriff of RTC, Branch 11, Mr. Pascual Abordo, commenced
levy and garnishment upon NHA properties, which included bank deposits in various
banks. Hence, on June 16, 2001, the Philippine National Bank (PNB) and the Land Bank of
the Philippines (LBP) released the amount of P24,305,774.82 to respondents, bringing
the balance of the unsatisfied just compensation to P80,335,825.18. On December 26,
2001, petitioner's account with the Philippine Veterans' Bank (PVB) was garnished in the
amount of P24,305,774.82, which then brought the computed balance of unpaid just
compensation to P80,299,506.72, though the PVB had yet to release said amount to
respondents. On July 10, 2003, the Development Bank of the Philippines (DBP) released
the garnished amount of P78,754,907.07, further bringing down the balance to
P1,544,299.65. Subsequently, on July 31, 2003, upon the release by the LBP of the
garnished amount of P1,474,299.65, the payment of respondents' just compensation
seemed to have been fully satisfied, save for the release of the earlier garnished amount
of P24,305.774.82. Finally, on August 28, 2003, the amount of P36,318.46 was remitted
to respondents by the PVB, prompting Sheriff Abordo to issue a notice of lifting or
discharge of levy/garnishment to the PNB, LBP, DBP, PVB and to the General
Manager/Property Custodian of NHA.
On October 8, 2003, Sheriff Abordo received a letter from respondents' counsel
requesting the former for the listing of the garnished and released accounts of petitioner.
In his reply letter dated October 9, 2003, Sheriff Abordo summarized said garnishments
and revealed that there was an unsatisfied amount of P70,300.00. Hence, in his progress
report to the RTC, Branch 11, dated October 14, 2003, Sheriff Abordo informed the court
to wit: cDAITS

Further, undersigned Sheriff respectfully informs the Honorable Court that when he
prepared his aforesaid Reply Letter and made a reconciliation of the garnished and
released accounts of plaintiff, he discovered that he inaccuratelyreflected in his Progress
Report dated July 14, 2003 a balance of P80,229,206.72 where it should have
beenP80,299,206.72 which, as stated in the same report "was arrived at after deducting
from the total just compensation of P104,641,600.00 the garnished and released money
deposits of NHA with PNB and Landbank in the amount of P24,305,774.82 and the
garnished but not yet released/claimed money deposit of NHA with" Philippine Veterans
Bank in the amount of P36,618.46. In other words, by mathematical computation:
P104,641,600.00 P24,305,774.82 P36,618.36 = P80,299,206.72 and not
P80,229,206.72. The balance reflected in the undersigned Sheriff's Progress Report dated
July 14, 2003 is short by P70,000.00, hence, this did not result to over satisfaction of the
judgment of the Honorable Court.
Furthermore, undersigned Sheriff respectfully informs the Honorable Court that the
amount released by Philippine Veterans Bank is only P36,318.46 albeit its letter dated
December 26, 2001 stated an amount of P36,618.46 (short by P300). 4 (emphases in the
original)
On November 6, 2003, seeking to claim the unsatisfied amount of P70,300.00,
respondents filed with the RTC a motion for the issuance of an alias writ of execution. On
November 12, 2003, respondents likewise filed a motion for payment of interest
anchored on the premise that petitioner made piecemeal payments of the judgment
amount, causing a 32-month delay in the full satisfaction thereof which entitled
respondents to the payment of a legal interest of 12% per annum. To simplify matters,
respondents confined their claim to the interest for the principal amount of
P80,335,825.18 reckoned from October 31, 2000, the date the entry of judgment was
issued, to July 2003, when the last garnishment took place, without including the
P70,300.00 yet to be satisfied in the said principal amount.
Pursuant to a motion for inhibition filed by petitioner on August 4, 2003, the case was reraffled to the RTC, Branch 19, which ordered petitioner to file its comment/opposition to
both motions. After hearing the case, the RTC, Branch 19 issued an omnibus order dated
February 16, 2004, disposing of the issues as follows:
WHEREFORE, on the Motion for Issuance of an Alias Writ of [E]xecution, the same is
GRANTED. Let an Alias Writ of Execution issue to satisfy the shortage amount of
Php70,300.00.
Defendants' Motion for Payment of Interest is likewise GRANTED. Plaintiff is hereby
directed to pay the defendants within five (5) days from receipt hereof the amount of
Php25,695,746.15 representing interest of 12% p.a. for thirty two (32) months of the
unsatisfied portion of the just compensation in the amount of Php80,299,206.72. Plaintiff
is further directed to pay interest of 12% p.a. on the Php25,695,746.15 interest from the
date the five-day period given by the Court expired until the same is paid.
xxx xxx xxx
SO ORDERED. 5

On February 24, 2004, petitioner filed a motion for reconsideration which was denied by
the RTC, Branch 19 in an order dated July 27, 2004. Aggrieved, petitioner filed a petition
for review on certiorari with the CA which was denied for lack of merit in a decision dated
December 16, 2004, ratiocinating thus:
We now come to the question on whether respondent judge was correct in imposing
interest of 12% per annum for the delay in payment of just compensation by petitioner
sans an explicit pronouncement for such provision in the decision. We rule in the
affirmative on the following reasons: HEcaIC
1) A judgment is not confined to what appears on the face of the decision but also those
necessarily included therein or necessary thereto. Where a legal provision exists
providing for legal interest, the same not only constitute judicial notice, but by operation
of law, becomes inherent in every decision.
2) The imposition of interest at the time the decision was rendered would be purely
conjectural and speculative considering that delay in the payment could only be
ascertained at the time following after the rendition of the decision. The remedy for any
delay may be ventilated during the execution stage as in this case. Delay takes the
nature of a supervening event between the rendition of the decision and its due
execution, and the judge may take cognizance of it not only for the purpose of
expediency but also to prevent multiplicity of suits. At any rate, the judge is now familiar
with the history and development of the case, and it is he who can give the most prudent
assessment over an issue such as that of delay and the concomitant damages for the
delay.
xxx xxx xxx
Conversely, [w]e also find nothing irregular in issuance of the alias writ of execution by
respondent judge covering the deficiency in the actual judgment amount. The rule is that
the execution must conform substantially to that ordained or decreed in the dispositive
part of the decision. Therefore, upon report of the sheriff of a deficiency in the execution
of the judgment amount, an alias writ of execution covering said deficiency is proper. 6
Hence, petitioner filed the instant petition for review, where it argues that the CA gravely
erred in affirming the RTC when it granted respondents' motion for issuance of an alias
writ of execution and motion for payment of interest, considering that expropriation
proceedings have already been terminated and that the order to pay respondents just
compensation was silent on the payment of interest.
We deny the petition.
As a side issue, petitioner points out that the CA erred in ruling that RTC, Branch 19 had
jurisdiction over the case, as petitioner was allegedly not notified of 1) the Order dated
October 16, 2003 where the Presiding Judge of Branch 11 inhibited himself from handling
the expropriation, 2) the Order of the Executive Judge of the RTC approving such
inhibition, and 3) the Order re-raffling the case to RTC, Branch 11. We are not convinced.
In the first place, it was petitioner which filed a Motion for Inhibition against the presiding
judge of RTC, Branch 11, Hon. Isaias Dicdican, a move that precipitated the re-raffling of
the case to Branch 19 of the same RTC. Hence, petitioner cannot deny that it had
knowledge of moves to have the case handled by another branch. Assuming arguendo

that petitioner honestly believed that the case was still pending with Branch 11,
petitioner still cannot claim that it had no knowledge of the proceedings in Branch 19. It
is well to remember that the court frowns upon the undesirable practice of a party
submitting his case for decision and then accepting the judgment only if favorable, and
attacking it for lack of jurisdiction when adverse. 7 While jurisdiction of a tribunal may be
challenged at any time, sound public policy bars petitioner from doing so after having
procured that jurisdiction himself, speculating on the fortunes of litigation. 8 In the
instant case, the fact remains that petitioner filed motions with Branch 19 and even
sought relief therefrom when it opposed the two motions subject of this petition. As such,
it is estopped from attacking the jurisdiction of RTC, Branch 19 in the instant case.

Petitioner likewise contends that the trial court erred in exercising jurisdiction in resolving
the two motions as the subject thereof constituted new, independent, separate, and
substantial matters which are foreign to the expropriation case which had already been
terminated. 9 Petitioner's contention is untenable.
It is well-settled that the jurisdiction of the court to execute its judgment continues even
after the judgment had become final for the purpose of enforcement of judgment. 10 The
present case is no exception. Therefore, notwithstanding the final resolution on the
validity of the expropriation made by this Court on June 19, 2003 in G.R. No. 154411, the
RTC, Branch 19 can still rule on the motions for the issuance of an alias writ of execution
and payment of interest. As the CA correctly stated: ". . . the duty of the court does not
end with the tender of the decision. Equal is the duty of the court to enforce said
decision to the fullest of its intent, tenor and mandate. To sustain a contrary view would
not only trivialize the decision, but would also render it meaningless; the justice sought
by the aggrieved party and supposedly conferred by the court turned inutile." 11 EAaHTI
On the issue of payment of interest, we find petitioner's theory implausible. Petitioner
insists that the payment of interest to respondents is not proper since nowhere in the
records from the orders of the RTC all the way to this Court does it state that
respondents are entitled to damages. 12 As such, petitioner asserts that respondents
had already waived its right to claim interest. We are not persuaded.
In support of its argument, petitioner cites Dalmacio Urtula v. Republic of the Philippines,
13 which ruled that:
xxx xxx xxx
Urtula's dilemma lies in his mistaken concept of the nature of the interest that he failed
to claim in the expropriation case and which he now claims in this separate case. Said
interest is not contractual, nor based on delict or quasi-delict, but one that
runs as a matter of law and follows as a matter of course from the right of the landowner
to be placed in as good a position as money can accomplish, as of the date of the taking
(30 C.J.S. 230).
Understood as such, Urtula, as defendant in the expropriation case, could have raised
the matter of interest before the trial court even if there had been no actual taking yet
by the Republic and the said court could have included the payment of interest in its

judgment but conditioned upon the actual taking, because the rate of interest upon the
amount of just compensation (6%) is a known factor, and it can reasonably be expected
that at some future time, the expropriator would take possession of the property, though
the date be not fixed. In this way, multiple suits would be avoided. Moreover, nothing
prevented appellee from calling the attention of the appellate courts (even by motion to
reconsider before judgment became final) to the subsequent taking of possession by the
condemnor, and asking for allowance of interest on the indemnity, since that followed
the taking as a matter of course, and raised no issue requiring remand of the records to
the Court of origin.
As the issue of interest could have been raised in the former case but was not raised, res
judicata blocks the recovery of interest in the present case. It is settled that a former
judgment constitutes a bar, as between the parties, not only as to matters expressly
adjudged, but all matters that could have been adjudged at the time. It follows that
interest upon the unrecoverable interest, which plaintiff also seeks, cannot, likewise, be
granted.
It is not amiss to note that Section 3 of Rule 67 of the Revised Rules of Court, in fact,
directs the defendant in an expropriation case to "present in a single motion to dismiss
or for other appropriate relief, all of his objections and defenses . . ." and if not so
presented "are waived". As it is, the judgment allowing the collection of interest, now
under appeal in effect amends the final judgment in the expropriation case, a procedure
abhorrent to orderly judicial proceedings. 14 (citations omitted)
Unfortunately for petitioner, the abovequoted doctrine is not applicable to the instant
case for the simple reason that respondents herein do not ask for interest as part of the
judgment in an expropriation case, but for interest which is imposed due to the delay in
the payment of a money judgment. As stated above, the former is imposed in order to
place the owner in a position as good as (but not better than) the position he was in
before the taking occurred, while the latter is considered as legal interest, to be
computed at 12% per annum from such finality until its satisfaction, 15 because the
interim period is deemed to be equivalent to a forebearance of credit. 16 Consequently,
the award of the former needs to be stated in the judgment, while the award of the latter
need not. 17 Moreover, the former is computed from the date of possession or filing of
the complaint for expropriation, 18 the latter is merely computed from the time the
judgment becomes final and executory.19 Therefore, we find no patent error in the
imposition of interest on petitioner.
As to the issue of the validity of the alias writ of execution, we affirm the finding of the
CA that there was no irregularity in the issuance thereof. 20 The rule is that a writ of
execution must conform substantially to every essential particular of the judgment
promulgated. 21 An execution which is not in harmony with the judgment is bereft of
validity; it must conform particularly to that ordained in the dispositive portion of the
decision. 22 In the case at bar, the sheriff himself discovered a deficiency in the
execution of the judgment in the amount of P70,300.00. Therefore, upon report of the
same by the sheriff, an alias writ of execution covering said deficiency is only proper to
preserve the tenor of the judgment and to ensure the faithful execution thereof.
IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court of Appeals is
AFFIRMED.

SO ORDERED. ACcaET
||| (NHA v. Heirs of Guivelondo, G.R. No. 166518, [June 16, 2009], 607 PHIL 184-194)

75. KULAYAN V TAN

EN BANC
G.R. No. 187298

July 03, 2012

JAMAR M. KULAYAN, TEMOGEN S. TULAWIE, HJI. MOH. YUSOP ISMI, JULHAJAN AWADI, and
SPO1 SATTAL H. JADJULI, Petitioners,
vs.
GOV. ABDUSAKUR M. TAN, in his capacity as Governor of Sulu; GEN. JUANCHO SABAN,
COL. EUGENIO CLEMEN PN, P/SUPT. JULASIRIM KASIM and P/SUPT. BIENVENIDO G. LATAG,
in their capacity as officers of the Phil. Marines and Phil. National Police, respectively,
Respondents.
DECISION
SERENO, J.:
On 15 January 2009, three members from the International Committee of the Red Cross
(ICRC) were kidnapped in the vicinity of the Provincial Capitol in Patikul, Sulu.1 Andres
Notter, a Swiss national and head of the ICRC in Zamboanga City, Eugenio Vagni, an
Italian national and ICRC delegate, and Marie Jean Lacaba, a Filipino engineer, were
purportedly inspecting a water and sanitation project for the Sulu Provincial Jail when
inspecting a water and sanitation project for the Sulu Provincial Jail when they were
seized by three armed men who were later confirmed to be members of the Abu Sayyaf
Group (ASG).2 The leader of the alleged kidnappers was identified as Raden Abu, a
former guard at the Sulu Provincial Jail. News reports linked Abu to Albader Parad, one of
the known leaders of the Abu Sayyaf.

On 21 January 2009, a task force was created by the ICRC and the Philippine National
Police (PNP), which then organized a parallel local group known as the Local Crisis
Committee.3 The local group, later renamed Sulu Crisis Management Committee,
convened under the leadership of respondent Abdusakur Mahail Tan, the Provincial
Governor of Sulu. Its armed forces component was headed by respondents General
Juancho Saban, and his deputy, Colonel Eugenio Clemen. The PNP component was
headed by respondent Police Superintendent Bienvenido G. Latag, the Police Deputy
Director for Operations of the Autonomous Region of Muslim Mindanao (ARMM).4
Governor Tan organized the Civilian Emergency Force (CEF), a group of armed male
civilians coming from different municipalities, who were redeployed to surrounding areas
of Patikul.5 The organization of the CEF was embodied in a "Memorandum of
Understanding"6 entered into between three parties: the provincial government of Sulu,
represented by Governor Tan; the Armed Forces of the Philippines, represented by Gen.
Saban; and the Philippine National Police, represented by P/SUPT. Latag. The Whereas
clauses of the Memorandum alluded to the extraordinary situation in Sulu, and the
willingness of civilian supporters of the municipal mayors to offer their services in order
that "the early and safe rescue of the hostages may be achieved."7
This Memorandum, which was labeled secret on its all pages, also outlined the
responsibilities of each of the party signatories, as follows:
Responsibilities of the Provincial Government:
1) The Provincial Government shall source the funds and logistics needed for the
activation of the CEF;
2) The Provincial Government shall identify the Local Government Units which shall
participate in the operations and to propose them for the approval of the parties to this
agreement;
3) The Provincial Government shall ensure that there will be no unilateral action(s) by the
CEF without the knowledge and approval by both parties.
Responsibilities of AFP/PNP/ TF ICRC (Task Force ICRC):
1) The AFP/PNP shall remain the authority as prescribed by law in military operations and
law enforcement;
2) The AFP/PNP shall ensure the orderly deployment of the CEF in the performance of
their assigned task(s);
3) The AFP/PNP shall ensure the safe movements of the CEF in identified areas of
operation(s);
4) The AFP/PNP shall provide the necessary support and/or assistance as called for in the
course of operation(s)/movements of the CEF.8
Meanwhile, Ronaldo Puno, then Secretary of the Department of Interior and Local
Government, announced to the media that government troops had cornered some one
hundred and twenty (120) Abu Sayyaf members along with the three (3) hostages.9
However, the ASG made

contact with the authorities and demanded that the military pull its troops back from the
jungle area.10 The government troops yielded and went back to their barracks; the
Philippine Marines withdrew to their camp, while police and civilian forces pulled back
from the terrorists stronghold by ten (10) to fifteen (15) kilometers. Threatening that
one of the hostages will be beheaded, the ASG further demanded the evacuation of the
military camps and bases in the different barangays in Jolo.11 The authorities were given
no later than 2:00 oclock in the afternoon of 31 March 2009 to comply.12
On 31 March 2009, Governor Tan issued Proclamation No. 1, Series of 2009 (Proclamation
1-09), declaring a state of emergency in the province of Sulu.13 It cited the kidnapping
incident as a ground for the said declaration, describing it as a terrorist act pursuant to
the Human Security Act (R.A. 9372). It also invoked Section 465 of the Local Government
Code of 1991 (R.A. 7160), which bestows on the Provincial Governor the power to carry
out emergency measures during man-made and natural disasters and calamities, and to
call upon the appropriate national law enforcement agencies to suppress disorder and
lawless violence.
In the same Proclamation, respondent Tan called upon the PNP and the CEF to set up
checkpoints and chokepoints, conduct general search and seizures including arrests, and
other actions necessary to ensure public safety. The pertinent portion of the
proclamation states:
NOW, THEREFORE, BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, I, ABDUSAKUR
MAHAIL TAN, GOVERNOR OF THE PROVINCE OF SULU, DO HEREBY DECLARE A STATE OF
EMERGENCY IN THE PROVINCE OF SULU, AND CALL ON THE PHILIPPINE NATIONAL POLICE
WITH THE ASSISTANCE OF THE ARMED FORCES OF THE PHILIPPINES AND THE CIVILIAN
EMERGENCY FORCE TO IMPLEMENT THE FOLLOWING:
1. The setting-up of checkpoints and chokepoints in the province;
2. The imposition of curfew for the entire province subject to such Guidelines as may be
issued by proper authorities;
3. The conduct of General Search and Seizure including arrests in the pursuit of the
kidnappers and their supporters; and
4. To conduct such other actions or police operations as may be necessary to ensure
public safety.
DONE AT THE PROVINCIAL CAPITOL, PROVINCE OF SULU THIS
31STDAY OF MARCH 2009. Sgd. Abdusakur M. Tan Governor.14
On 1 April 2009, SPO1 Sattal Jadjuli was instructed by his superior to report to
respondent P/SUPT. Julasirim Kasim.15 Upon arriving at the police station, he was
booked, and interviewed about his relationship to Musin, Jaiton, and Julamin, who were
all his deceased relatives. Upon admitting that he was indeed related to the three, he
was detained. After a few hours, former Punong Barangay Juljahan Awadi, Hadji Hadjirul
Bambra, Abdugajir Hadjirul, as well as PO2 Marcial Hajan, SPO3 Muhilmi Ismula, Punong
Barangay Alano Mohammad and jeepney driver Abduhadi Sabdani, were also arrested.16
The affidavit17 of the apprehending officer alleged that they were suspected ASG

supporters and were being arrested under Proclamation 1-09. The following day, 2 April
2009, the hostage Mary Jane Lacaba was released by the ASG.
On 4 April 2009, the office of Governor Tan distributed to civic organizations, copies of
the "Guidelines for the Implementation of Proclamation No. 1, Series of 2009 Declaring a
State of Emergency in the Province of Sulu."18 These Guidelines suspended all Permits
to Carry
Firearms Outside of Residence (PTCFORs) issued by the Chief of the PNP, and allowed
civilians to seek exemption from the gun ban only by applying to the Office of the
Governor and obtaining the appropriate identification cards. The said guidelines also
allowed general searches and seizures in designated checkpoints and chokepoints.
On 16 April 2009, Jamar M. Kulayan, Temogen S. Tulawie, Hadji Mohammad Yusop Ismi,
Ahajan Awadi, and SPO1 Sattal H. Jadjuli, residents of Patikul, Sulu, filed the present
Petition for Certiorari and Prohibition,19 claiming that Proclamation 1-09 was issued with
grave abuse of discretion amounting to lack or excess of jurisdiction, as it threatened
fundamental freedoms guaranteed under Article III of the 1987 Constitution.
Petitioners contend that Proclamation No. 1 and its Implementing Guidelines were issued
ultra vires, and thus null and void, for violating Sections 1 and 18, Article VII of the
Constitution, which grants the President sole authority to exercise emergency powers
and calling-out powers as the chief executive of the Republic and commander-in-chief of
the armed forces.20 Additionally, petitioners claim that the Provincial Governor is not
authorized by any law to create civilian armed forces under his command, nor regulate
and limit the issuances of PTCFORs to his own private army.
In his Comment, Governor Tan contended that petitioners violated the doctrine on
hierarchy of courts when they filed the instant petition directly in the court of last resort,
even if both the Court of Appeals (CA) and the Regional Trial Courts (RTC) possessed
concurrent jurisdiction with the
Supreme Court under Rule 65.21 This is the only procedural defense raised by
respondent Tan. Respondents Gen. Juancho Saban, Col. Eugenio Clemen, P/SUPT.
Julasirim Kasim, and P/SUPT. Bienvenido Latag did not file their respective
Comments.1wphi1
On the substantive issues, respondents deny that Proclamation 1-09 was issued ultra
vires, as Governor Tan allegedly acted pursuant to Sections 16 and 465 of the Local
Government Code, which empowers the Provincial Governor to carry out emergency
measures during calamities and disasters, and to call upon the appropriate national law
enforcement agencies to suppress disorder, riot, lawless violence, rebellion or sedition.22
Furthermore, the Sangguniang Panlalawigan of Sulu authorized the declaration of a state
of emergency as evidenced by Resolution No. 4, Series of 2009 issued on 31 March 2009
during its regular session.23
The threshold issue in the present case is whether or not Section 465, in relation to
Section 16, of the Local Government Code authorizes the respondent governor to declare
a state of emergency, and exercise the powers enumerated under Proclamation 1-09,
specifically the conduct of general searches and seizures. Subsumed herein is the

secondary question of whether or not the provincial governor is similarly clothed with
authority to convene the CEF under the said provisions.
We grant the petition.
I. Transcendental public Importance warrants a relaxation of the Doctrine of Hierarchy of
Courts
We first dispose of respondents invocation of the doctrine of hierarchy of courts which
allegedly prevents judicial review by this Court in the present case, citing for this specific
purpose, Montes v. Court of Appeals and Purok Bagong Silang Association, Inc. v.
Yuipco.24 Simply put, the
doctrine provides that where the issuance of an extraordinary writ is also within the
competence of the CA or the RTC, it is in either of these courts and not in the Supreme
Court, that the specific action for the issuance of such writ must be sought unless special
and important laws are clearly and specifically set forth in the petition. The reason for
this is that this Court is a court of last resort and must so remain if it is to perform the
functions assigned to it by the Constitution and immemorial tradition. It cannot be
burdened with deciding cases in the first instance.25
The said rule, however, is not without exception. In Chavez v. PEA-Amari,26 the Court
stated:
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly
from the Court. The principle of hierarchy of courts applies generally to cases involving
factual questions. As it is not a trier of facts, the Court cannot entertain cases involving
factual issues. The instant case, however, raises constitutional questions of
transcendental importance to the public. The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition for
mandamus which falls under the original jurisdiction of the Court under Section 5, Article
VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant
case.27
The instant case stems from a petition for certiorari and prohibition, over which the
Supreme Court possesses original jurisdiction.28 More crucially, this case involves acts of
a public official which pertain to restrictive custody, and is thus impressed with
transcendental public importance that would warrant the relaxation of the general rule.
The Court would be remiss in its constitutional duties were it to dismiss the present
petition solely due to claims of judicial hierarchy.
In David v. Macapagal-Arroyo,29 the Court highlighted the transcendental public
importance involved in cases that concern restrictive custody, because judicial review in
these cases serves as "a manifestation of the crucial defense of civilians in police power
cases due to the diminution of their basic liberties under the guise of a state of
emergency."30 Otherwise, the importance of the high tribunal as the court of last resort
would be put to naught, considering the nature of "emergency" cases, wherein the
proclamations and issuances are inherently short-lived. In finally disposing of the claim
that the issue had become moot and academic, the Court also cited transcendental
public importance as an exception, stating:

Sa kabila ng pagiging akademiko na lamang ng mga isyu tungkol sa mahigpit na

pangangalaga (restrictive custody) at pagmonitor ng galaw (monitoring of movements)
ng nagpepetisyon, dedesisyunan namin ito (a) dahil sa nangingibabaw na interes ng
madla na nakapaloob dito,
(b) dahil sa posibilidad na maaaring maulit ang pangyayari at (c) dahil kailangang
maturuan ang kapulisan tungkol dito.
The moot and academic principle is not a magical formula that can automatically
dissuade the courts in resolving a case. Courts will decide cases, otherwise moot and
academic, if: 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 [the]
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.
There is no question that the issues being raised affect the public interest, involving as
they do the peoples basic rights to freedom of expression, of assembly and of the press.
Moreover, the
Court has the duty to formulate guiding and controlling constitutional precepts, doctrines
or rules. It has the symbolic function of educating the bench and the bar, and in the
present petitions, the military and the police, on the extent of the protection given by
constitutional guarantees. And lastly, respondents contested actions are capable of
repetition. Certainly, the petitions are subject to judicial review.
Evidently, the triple reasons We advanced at the start of Our ruling are justified under
the foregoing exceptions. Every bad, unusual incident where police officers figure in
generates public interest and people watch what will be done or not done to them. Lack
of disciplinary steps taken against them erode public confidence in the police institution.
As petitioners themselves assert, the restrictive custody of policemen under
investigation is an existing practice, hence, the issue is bound to crop up every now and
then. The matter is capable of repetition or susceptible of recurrence. It better be
resolved now for the education and guidance of all concerned.31 (Emphasis supplied)
Hence, the instant petition is given due course, impressed as it is with transcendental
public importance.
II. Only the President is vested with calling-out powers, as the commander-in-chief of the
Republic
i. One executive, one commander-in-chief
As early as Villena v. Secretary of Interior,32 it has already been established that there is
one repository of executive powers, and that is the President of the Republic. This means
that when Section 1, Article VII of the Constitution speaks of executive power, it is
granted to the President and no one else.33 As emphasized by Justice Jose P. Laurel, in
his ponencia in Villena:
With reference to the Executive Department of the government, there is one purpose
which is crystal-clear and is readily visible without the projection of judicial searchlight,

and that is the establishment of a single, not plural, Executive. The first section of Article
VII of the Constitution, dealing with the Executive Department, begins with the
enunciation of the principle that "The executive power shall be vested in a President of
the Philippines." This means that the President of the Philippines is the Executive of the
Government of the Philippines, and no other.34
Corollarily, it is only the President, as Executive, who is authorized to exercise emergency
powers as provided under Section 23, Article VI, of the Constitution, as well as what
became known as the calling-out powers under Section 7, Article VII thereof.
ii. The exceptional character of Commander-in-Chief powers dictate that they are
exercised by one president
Springing from the well-entrenched constitutional precept of One President is the notion
that there are certain acts which, by their very nature, may only be performed by the
president as the Head of the State. One of these acts or prerogatives is the bundle of
Commander-in-Chief powers to which the "calling-out" powers constitutes a portion. The
Presidents Emergency Powers, on the other hand, is balanced only by the legislative act
of Congress, as embodied in the second paragraph of Section 23, Article 6 of the
Constitution:
Article 6, Sec 23(2). In times of war or other national emergency, the Congress may, by
law, authorize the President, for a limited period and subject to such restrictions as it
may prescribe, to exercise powers necessary and proper to carry out a declared national
policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease
upon the next adjournment thereof.35
Article 7, Sec 18. The President shall be the Commander-in-Chief of all armed forces of
the Philippines and whenever it becomes necessary, he may call out such armed forces
to prevent or suppress lawless violence, invasion or rebellion. In case of invasion or
rebellion, when the public safety requires it, he may, for a period not exceeding sixty
days, suspend the privilege of the writ of habeas corpus or place the Philippines or any
part thereof under martial law. Within forty-eight hours from the proclamation of martial
law or the suspension of the privilege of the writ of habeas corpus, the President shall
submit a report in person or in writing to the Congress. The Congress, voting jointly, by a
vote of at least a majority of all its Members in regular or special session, may revoke
such proclamation or suspension, which revocation shall not be set aside by the
President. Upon the initiative of the President, the Congress may, in the same manner,
extend such proclamation or suspension for a period to be determined by the Congress,
if the invasion or rebellion shall persist and public safety requires it.
The Congress, if not in session, shall, within twenty-four hours following such
proclamation or suspension, convene in accordance with its rules without need of a
call.36
The power to declare a state of martial law is subject to the Supreme Courts authority to
review the factual basis thereof. 37 By constitutional fiat, the calling-out powers, which is
of lesser gravity than the power to declare martial law, is bestowed upon the President
alone. As noted in Villena, "(t)here are certain constitutional powers and prerogatives of
the Chief Executive of the Nation which must be exercised by him in person and no

amount of approval or ratification will validate the exercise of any of those powers by
any other person. Such, for instance, is his power to suspend the writ of habeas corpus
and proclaim martial law x x x.38
Indeed, while the President is still a civilian, Article II, Section 339 of the Constitution
mandates that civilian authority is, at all times, supreme over the military, making the
civilian president the nations supreme military leader. The net effect of Article II, Section
3, when read with Article VII,
Section 18, is that a civilian President is the ceremonial, legal and administrative head of
the armed forces. The Constitution does not require that the President must be
possessed of military training and talents, but as Commander-in-Chief, he has the power
to direct military operations and to determine military strategy. Normally, he would be
expected to delegate the actual command of the armed forces to military experts; but
the ultimate power is his.40 As Commander-in-Chief, he is authorized to direct the
movements of the naval and military forces placed by law at his command, and to
employ them in the manner he may deem most effectual.41
In the case of Integrated Bar of the Philippines v. Zamora,42 the Court had occasion to
rule that the calling-out powers belong solely to the President as commander-in-chief:
When the President calls the armed forces to prevent or suppress lawless violence,
invasion or rebellion, he necessarily exercises a discretionary power solely vested in his
wisdom. This is clear from the intent of the framers and from the text of the Constitution
itself. The Court, thus, cannot be called upon to overrule the Presidents wisdom or
substitute its own. However, this does not prevent an examination of whether such
power was exercised within permissible constitutional limits or whether it was exercised
in a manner constituting grave abuse of discretion. In view of the constitutional intent to
give the President full discretionary power to determine the necessity of calling out the
armed forces, it is incumbent upon the petitioner to show that the Presidents decision is
totally bereft of factual basis.
There is a clear textual commitment under the Constitution to bestow on the President
full discretionary power to call out the armed forces and to determine the necessity for
the exercise of such power.43 (Emphasis supplied)
Under the foregoing provisions, Congress may revoke such proclamation or suspension
and the Court may review the sufficiency of the factual basis thereof. However, there is
no such equivalent provision dealing with the revocation or review of the Presidents
action to call out the armed forces. The distinction places the calling out power in a
different category from the power to declare martial law and the power to suspend the
privilege of the writ of habeas corpus, otherwise, the framers of the Constitution would
have simply lumped together the three powers and provided for their revocation and
review without any qualification.44
That the power to call upon the armed forces is discretionary on the president is clear
from the deliberation of the Constitutional Commission:
FR. BERNAS. It will not make any difference. I may add that there is a graduated power of
the President as Commander-in-Chief. First, he can call out such Armed Forces as may be

necessary to suppress lawless violence; then he can suspend the privilege of the writ of
habeas corpus, then he can impose martial law. This is a graduated sequence.
When he judges that it is necessary to impose martial law or suspend the privilege of the
writ of habeas corpus, his judgment is subject to review. We are making it subject to
review by the Supreme Court and subject to concurrence by the National Assembly. But
when he exercises this lesser power of calling on the Armed Forces, when he says it is
necessary, it is my opinion that his judgment cannot be reviewed by anybody.
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MR. REGALADO. That does not require any concurrence by the legislature nor is it subject
to judicial review.
The reason for the difference in the treatment of the aforementioned powers highlights
the intent to grant the President the widest leeway and broadest discretion in using the
power to call out because it is considered as the lesser and more benign power
compared to the power to suspend the privilege of the writ of habeas corpus and the
power to impose martial law, both of which involve the curtailment and suppression of
certain basic civil rights and individual freedoms, and thus necessitating safeguards by
Congress and review by this Court.
x x x Thus, it is the unclouded intent of the Constitution to vest upon the President, as
Commander-in-Chief of the Armed Forces, full discretion to call forth the military when in
his judgment it is necessary to do so in order to prevent or suppress lawless violence,
invasion or rebellion.45 (Emphasis Supplied)
In the more recent case of Constantino, Jr. v. Cuisia,46 the Court characterized these
powers as exclusive to the President, precisely because they are of exceptional import:
These distinctions hold true to this day as they remain embodied in our fundamental law.
There are certain presidential powers which arise out of exceptional circumstances, and
if exercised, would involve the suspension of fundamental freedoms, or at least call for
the supersedence of executive prerogatives over those exercised by co-equal branches
of government. The declaration of martial law, the suspension of the writ of habeas
corpus, and the exercise of the pardoning power, notwithstanding the judicial
determination of guilt of the accused, all fall within this special class that demands the
exclusive exercise by the President of the constitutionally vested power. The list is by no
means exclusive, but there must be a showing that the executive power in question is of
similar gravitas and exceptional import.47
In addition to being the commander-in-chief of the armed forces, the President also acts
as the leader of the countrys police forces, under the mandate of Section 17, Article VII
of the Constitution, which provides that, "The President shall have control of all the
executive departments, bureaus, and offices. He shall ensure that the laws be faithfully
executed." During the deliberations of the Constitutional Commission on the framing of
this provision, Fr. Bernas defended the retention of the word "control," employing the
same rationale of singularity of the office of the president, as the only Executive under
the presidential form of government.48

Regarding the countrys police force, Section 6, Article XVI of the Constitution states that:
"The State shall establish and maintain one police force, which shall be national in scope
and civilian in character, to be administered and controlled by a national police
commission. The authority of local executives over the police units in their jurisdiction
shall be provided by law."49
A local chief executive, such as the provincial governor, exercises operational supervision
over the police,50 and may exercise control only in day-to-day operations, viz:
Mr. Natividad: By experience, it is not advisable to provide either in our Constitution or
by law full control of the police by the local chief executive and local executives, the
mayors. By our experience, this has spawned warlordism, bossism and sanctuaries for
vices and abuses. If the national government does not have a mechanism to supervise
these 1,500 legally, technically separate police forces, plus 61 city police forces,
fragmented police system, we will have a lot of difficulty in presenting a modern
professional police force. So that a certain amount of supervision and control will have to
be exercised by the national government.
For example, if a local government, a town cannot handle its peace and order problems
or police problems, such as riots, conflagrations or organized crime, the national
government may come in, especially if requested by the local executives. Under that
situation, if they come in under such an extraordinary situation, they will be in control.
But if the day-to-day business of police investigation of crime, crime prevention,
activities, traffic control, is all lodged in the mayors, and if they are in complete
operational control of the day-to-day business of police service, what the national
government would control would be the administrative aspect.
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xxx

Mr. de los Reyes: so the operational control on a day-to-day basis, meaning, the usual
duties being performed by the ordinary policemen, will be under the supervision of the
local executives?
Mr. Natividad: Yes, Madam President.
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Mr. de los Reyes: But in exceptional cases, even the operational control can be taken
over by the National Police Commission?
Mr. Natividad: If the situation is beyond the capacity of the local governments.51
(Emphases supplied)
Furthermore according to the framers, it is still the President who is authorized to
exercise supervision and control over the police, through the National Police Commission:
Mr. Rodrigo: Just a few questions. The President of the Philippines is the Commander-inChief of all the armed forces.
Mr. Natividad: Yes, Madam President.

Mr. Rodrigo: Since the national police is not integrated with the armed forces, I do not
suppose they come under the Commander-in-Chief powers of the President of the
Philippines.
Mr. Natividad: They do, Madam President. By law, they are under the supervision and
control of the President of the Philippines.
Mr. Rodrigo: Yes, but the President is not the Commander-in-Chief of the national police.
Mr. Natividad: He is the President.
Mr. Rodrigo: Yes, the Executive. But they do not come under that specific provision that
the President is the Commander-in-Chief of all the armed forces.
Mr. Natividad: No, not under the Commander-in-Chief provision.
Mr. Rodrigo: There are two other powers of the President. The
President has control over ministries, bureaus and offices, and supervision over local
governments. Under which does the police fall, under control or under supervision?
Mr. Natividad: Both, Madam President.
Mr. Rodrigo: Control and supervision.
Mr. Natividad: Yes, in fact, the National Police Commission is under the Office of the
President.52
In the discussions of the Constitutional Commission regarding the above provision it is
clear that the framers never intended for local chief executives to exercise unbridled
control over the police in emergency situations. This is without prejudice to their
authority over police units in their jurisdiction as provided by law, and their prerogative
to seek assistance from the police in day to day situations, as contemplated by the
Constitutional Commission. But as a civilian agency of the government, the police,
through the NAPOLCOM, properly comes within, and is subject to, the exercise by the
President of the power of executive control.53
iii. The provincial governor does not possess the same calling-out powers as the
President
Given the foregoing, respondent provincial governor is not endowed with the power to
call upon the armed forces at his own bidding. In issuing the assailed proclamation,
Governor Tan exceeded his authority when he declared a state of emergency and called
upon the Armed Forces, the police, and his own Civilian Emergency Force. The calling-out
powers contemplated under the Constitution is exclusive to the President. An exercise by
another official, even if he is the local chief executive, is ultra vires, and may not be
justified by the invocation of Section 465 of the Local Government Code, as will be
discussed subsequently.
Respondents, however, justify this stance by stating that nowhere in the seminal case of
David v. Arroyo, which dealt squarely with the issue of the declaration of a state of
emergency, does it limit the said authority to the President alone. Respondents contend

that the ruling in David expressly limits the authority to declare a national emergency, a
condition which covers the entire country, and does not include emergency situations in
local government units.54 This claim is belied by the clear intent of the framers that in
all situations involving threats to security, such as lawless violence, invasion or rebellion,
even in localized areas, it is still the President who possesses the sole authority to
exercise calling-out powers. As reflected in the Journal of the Constitutional Commission:
Thereafter, Mr. Padilla proposed on line 29 to insert the phrase OR PUBLIC DISORDER in
lieu of "invasion or rebellion." Mr. Sumulong stated that the committee could not accept
the amendment because under the first section of Section 15, the President may call out
and make use of the armed forces to prevent or suppress not only lawless violence but
even invasion or rebellion without declaring martial law. He observed that by deleting
"invasion or rebellion" and substituting PUBLIC DISORDER, the President would have to
declare martial law before he can make use of the armed forces to prevent or suppress
lawless invasion or rebellion.
Mr. Padilla, in reply thereto, stated that the first sentence contemplates a lighter
situation where there is some lawless violence in a small portion of the country or public
disorder in another at which times, the armed forces can be called to prevent or
suppress these incidents. He noted that the Commander-in-Chief can do so in a minor
degree but he can also exercise such powers should the situation worsen. The words
"invasion or rebellion" to be eliminated on line 14 are covered by the following sentence
which provides for "invasion or rebellion." He maintained that the proposed amendment
does not mean that under such circumstances, the President cannot call on the armed
forces to prevent or suppress the same.55 (Emphasis supplied)
III. Section 465 of the Local
Government Code cannot be invoked to justify the powers enumerated under
Proclamation 1-09
Respondent governor characterized the kidnapping of the three ICRC workers as a
terroristic act, and used this incident to justify the exercise of the powers enumerated
under Proclamation 1-09.56 He invokes Section 465, in relation to Section 16, of the
Local Government Code, which purportedly allows the governor to carry out emergency
measures and call upon the appropriate national law enforcement agencies for
assistance. But a closer look at the said proclamation shows that there is no provision in
the Local Government Code nor in any law on which the broad and unwarranted powers
granted to the Governor may be based.
Petitioners cite the implementation of "General Search and Seizure including arrests in
the pursuit of the kidnappers and their supporters,"57 as being violative of the
constitutional proscription on general search warrants and general seizures. Petitioners
rightly assert that this alone would be sufficient to render the proclamation void, as
general searches and seizures are proscribed, for being violative of the rights enshrined
in the Bill of Rights, particularly:
The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue except upon probable

cause to be determined personally by the judge after examination under oath or

affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized.58
In fact, respondent governor has arrogated unto himself powers exceeding even the
martial law powers of the President, because as the Constitution itself declares, "A state
of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of
the jurisdiction on military courts and agencies over civilians where civil courts are able
to function, nor automatically suspend the privilege of the writ."59
We find, and so hold, that there is nothing in the Local Government Code which justifies
the acts sanctioned under the said Proclamation. Not even Section 465 of the said Code,
in relation to Section 16, which states:
Section 465. The Chief Executive: Powers, Duties, Functions, and Compensation.
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xxx

(b) For efficient, effective and economical governance the purpose of which is the
general welfare of the province and its inhabitants pursuant to Section 16 of this Code,
the provincial governor shall:
(1) Exercise general supervision and control over all programs, projects, services, and
activities of the provincial government, and in this connection, shall:
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(vii) Carry out such emergency measures as may be necessary during and in the
aftermath of man-made and natural disasters and calamities;
(2) Enforce all laws and ordinances relative to the governance of the province and the
exercise of the appropriate corporate powers provided for under Section 22 of this Code,
implement all approved policies, programs, projects, services and activities of the
province and, in addition to the foregoing, shall:
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(vi) Call upon the appropriate national law enforcement agencies to suppress disorder,
riot, lawless violence, rebellion or sedition or to apprehend violators of the law when
public interest so requires and the police forces of the component city or municipality
where the disorder or violation is happening are inadequate to cope with the situation or
the violators.
Section 16. General Welfare. - Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public

morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of
their inhabitants. (Emphases supplied)
Respondents cannot rely on paragraph 1, subparagraph (vii) of Article 465 above, as the
said provision expressly refers to calamities and disasters, whether man-made or
natural. The governor, as local chief executive of the province, is certainly empowered to
enact and implement emergency measures during these occurrences. But the
kidnapping incident in the case at bar cannot be considered as a calamity or a disaster.
Respondents cannot find any legal mooring under this provision to justify their actions.
Paragraph 2, subparagraph (vi) of the same provision is equally inapplicable for two
reasons. First, the Armed Forces of the Philippines does not fall under the category of a
"national law enforcement agency," to which the National Police Commission
(NAPOLCOM) and its departments belong.
Its mandate is to uphold the sovereignty of the Philippines, support the Constitution, and
defend the Republic against all enemies, foreign and domestic. Its aim is also to secure
the integrity of the national territory.60
Second, there was no evidence or even an allegation on record that the local police
forces were inadequate to cope with the situation or apprehend the violators. If they
were inadequate, the recourse of the provincial governor was to ask the assistance of the
Secretary of Interior and Local Government, or such other authorized officials, for the
assistance of national law enforcement agencies.
The Local Government Code does not involve the diminution of central powers inherently
vested in the National Government, especially not the prerogatives solely granted by the
Constitution to the President in matters of security and defense.
The intent behind the powers granted to local government units is fiscal, economic, and
administrative in nature.1wphi1 The Code is concerned only with powers that would
make the delivery of basic services more effective to the constituents,61 and should not
be unduly stretched to confer calling-out powers on local executives.
In the sponsorship remarks for Republic Act 7160, it was stated that the devolution of
powers is a step towards the autonomy of local government units (LGUs), and is actually
an experiment whose success heavily relies on the power of taxation of the LGUs. The
underpinnings of the Code can be found in Section 5, Article II of the 1973 Constitution,
which allowed LGUs to create their own sources of revenue.62 During the interpellation
made by Mr. Tirol addressed to Mr. de Pedro, the latter emphasized that "Decentralization
is an administrative concept and the process of shifting and delegating power from a
central point to subordinate levels to promote independence, responsibility, and quicker
decision-making. (I)t does not involve any transfer of final authority from the national
to field levels, nor diminution of central office powers and responsibilities. Certain
government agencies, including the police force, are exempted from the decentralization
process because their functions are not inherent in local government units."63
IV. Provincial governor is not authorized to convene CEF

Pursuant to the national policy to establish one police force, the organization of private
citizen armies is proscribed. Section 24 of Article XVIII of the Constitution mandates that:
Private armies and other armed groups not recognized by duly constituted authority shall
be dismantled. All paramilitary forces including Civilian Home Defense Forces (CHDF) not
consistent with the citizen armed force established in this Constitution, shall be dissolved
or, where appropriate, converted into the regular force.
Additionally, Section 21of Article XI states that, "The preservation of peace and order
within the regions shall be the responsibility of the local police agencies which shall be
organized, maintained, supervised, and utilized in accordance with applicable laws. The
defense and security of the regions shall be the responsibility of the National
Government."
Taken in conjunction with each other, it becomes clear that the Constitution does not
authorize the organization of private armed groups similar to the CEF convened by the
respondent Governor. The framers of the Constitution were themselves wary of armed
citizens groups, as shown in the following proceedings:
MR. GARCIA: I think it is very clear that the problem we have here is a paramilitary force
operating under the cloak, under the mantle of legality is creating a lot of problems
precisely by being able to operate as an independent private army for many regional
warlords. And at the same time, this I think has been the thrust, the intent of many of
the discussions and objections to the paramilitary units and the armed groups.
MR. PADILLA: My proposal covers two parts: the private armies of political warlords and
other armed torces not recognized by constituted authority which shall be dismantled
and dissolved. In my trips to the provinces, I heard of many abuses committed by the
CHDF (Civilian Home Defense Forces), specially in Escalante, Negros Occidental. But I do
not know whether a particular CHDF is approved or authorized by competent authority. If
it is not authorized, then the CHDF will have to be dismantled. If some CHDFs, say in
other provinces, are authorized by constituted authority, by the Armed Forces of the
Philippines, through the Chief of Staff or the Minister of National Defense, if they are
recognized and authorized, then they will not be dismantled. But I cannot give a
categorical answer to any specific CHDF unit, only the principle that if they are armed
forces which are not authorized, then they should be dismantled. 64 (Emphasis supplied)
Thus, with the discussions in the Constitutional Commission as guide, the creation of the
Civilian Emergency Force (CEF) in the present case, is also invalid.
WHEREFORE, the instant petition is GRANTED. Judgment is rendered commanding
respondents to desist from further proceedings m implementing Proclamation No. 1,
Series of 2009, and its Implementing Guidelines. The said proclamation and guidelines
are hereby declared NULL and VOID for having been issued in grave abuse of discretion,
amounting to lack or excess of jurisdiction.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice

76. Gamboa vs Chan

G.R. No. 193636

July 24, 2012

MARYNETTE R. GAMBOA, Petitioner,

vs.

P/SSUPT. MARLOU C. CHAN, in his capacity as the PNP-Provincial Director of Ilocos Norte,
and P/SUPT. WILLIAM 0. FANG, in his capacity as Chief, Intelligence Division, PNP
Provincial Office, Ilocos Norte, Respondents.

DECISION

SERENO, J.:

Before this Court is an Appeal by Certiorari (Under Rule 45 of the Rules of Court) filed
pursuant to Rule 191 of the Rule on the Writ of Habeas Data,2 seeking a review of the 9
September 2010 Decision in Special Proc. No. 14979 of the Regional Trial Court, First
Judicial Region, Laoag City, Branch 13 (RTC Br. 13).3 The questioned Decision denied
petitioner the privilege of the writ of habeas data.4

At the time the present Petition was filed, petitioner Marynette R. Gamboa (Gamboa) was
the Mayor of Dingras, Ilocos Norte.5 Meanwhile, respondent Police Senior Superintendent
(P/SSUPT.) Marlou C. Chan was the Officer-in-Charge, and respondent Police
Superintendent (P/SUPT.) William O. Fang was the Chief of the Provincial Investigation
and Detective Management Branch, both of the Ilocos Norte Police Provincial Office.6

On 8 December 2009, former President Gloria Macapagal-Arroyo issued Administrative

Order No. 275 (A.O. 275), "Creating an Independent Commission to Address the Alleged
Existence of Private Armies in the Country."7 The body, which was later on referred to as
the Zearosa Commission,8 was formed to investigate the existence of private army
groups (PAGs) in the country with a view to eliminating them before the 10 May 2010
elections and dismantling them permanently in the future.9 Upon the conclusion of its
investigation, the Zearosa Commission released and submitted to the Office of the
President a confidential report entitled "A Journey Towards H.O.P.E.: The Independent
Commission Against Private Armies Report to the President" (the Report).10

Gamboa alleged that the Philippine National Police in Ilocos Norte (PNPIlocos Norte)
conducted a series of surveillance operations against her and her aides,11 and classified
her as someone who keeps a PAG.12 Purportedly without the benefit of data verification,
PNPIlocos Norte forwarded the information gathered on her to the Zearosa
Commission,13 thereby causing her inclusion in the Reports enumeration of individuals
maintaining PAGs.14 More specifically, she pointed out the following items reflected
therein:

(a) The Report cited the PNP as its source for the portion regarding the status of PAGs in
the Philippines.15

(b) The Report stated that "x x x the PNP organized one dedicated Special Task Group
(STG) for each private armed group (PAG) to monitor and counteract their activities."16

(c) Attached as Appendix "F" of the Report is a tabulation generated by the PNP and
captioned as "Status of PAGs Monitoring by STGs as of April 19, 2010," which classifies
PAGs in the country according to region, indicates their identity, and lists the prominent
personalities with whom these groups are associated.17 The first entry in the table
names a PAG, known as the Gamboa Group, linked to herein petitioner Gamboa.18

(d) Statistics on the status of PAGs were based on data from the PNP, to wit:

The resolutions were the subject of a national press conference held in Malacaang on
March 24, 2010 at which time, the Commission was also asked to comment on the PNP
report that out of one hundred seventeen (117) partisan armed groups validated, twentyfour (24) had been dismantled with sixty-seven (67) members apprehended and more
than eighty-six (86) firearms confiscated.

Commissioner Herman Basbao qualified that said statistics were based on PNP data but
that the more significant fact from his report is that the PNP has been vigilant in
monitoring the activities of these armed groups and this vigilance is largely due to the
existence of the Commission which has continued communicating with the Armed Forces
of the Philippines (AFP) and PNP personnel in the field to constantly provide data on the
activities of the PAGs. Commissioner Basbao stressed that the Commissions efforts
have preempted the formation of the PAGs because now everyone is aware that there is
a body monitoring the PAGs movement through the PNP. Commissioner Lieutenant
General Edilberto Pardo Adan also clarified that the PAGs are being destabilized so that
their ability to threaten and sow fear during the election has been considerably
weakened.19

(e) The Report briefly touched upon the validation system of the PNP:

Also, in order to provide the Commission with accurate data which is truly reflective of
the situation in the field, the PNP complied with the Commissions recommendation that
they revise their validation system to include those PAGs previously listed as dormant. In
the most recent briefing provided by the PNP on April 26, 2010, there are one hundred

seven (107) existing PAGs. Of these groups, the PNP reported that seven (7) PAGs have
been reorganized.20

On 6 and 7 July 2010, ABS-CBN broadcasted on its evening news program the portion of
the Report naming Gamboa as one of the politicians alleged to be maintaining a PAG.21
Gamboa averred that her association with a PAG also appeared on print media.22 Thus,
she was publicly tagged as someone who maintains a PAG on the basis of the unverified
information that the PNP-Ilocos Norte gathered and forwarded to the Zearosa
Commission.23 As a result, she claimed that her malicious or reckless inclusion in the
enumeration of personalities maintaining a PAG as published in the Report also made
her, as well as her supporters and other people identified with her, susceptible to
harassment and police surveillance operations.24

Contending that her right to privacy was violated and her reputation maligned and
destroyed, Gamboa filed a Petition dated 9 July 2010 for the issuance of a writ of habeas
data against respondents in their capacities as officials of the PNP-Ilocos Norte.25 In her
Petition, she prayed for the following reliefs: (a) destruction of the unverified reports
from the PNP-Ilocos Norte database; (b) withdrawal of all information forwarded to higher
PNP officials; (c) rectification of the damage done to her honor; (d) ordering respondents
to refrain from forwarding unverified reports against her; and (e) restraining respondents
from making baseless reports.26

The case was docketed as Special Proc. No. 14979 and was raffled to RTC Br. 13, which
issued the corresponding writ on 14 July 2010 after finding the Petition meritorious on its
face.27 Thus, the trial court (a) instructed respondents to submit all information and
reports forwarded to and used by the Zearosa Commission as basis to include her in the
list of persons maintaining PAGs; (b) directed respondents, and any person acting on
their behalf, to cease and desist from forwarding to the Zearosa Commission, or to any
other government entity, information that they may have gathered against her without
the approval of the court; (c) ordered respondents to make a written return of the writ
together with supporting affidavits; and (d) scheduled the summary hearing of the case
on 23 July 2010.28

In their Return of the Writ, respondents alleged that they had acted within the bounds of
their mandate in conducting the investigation and surveillance of Gamboa.29 The
information stored in their database supposedly pertained to two criminal cases in which
she was implicated, namely: (a) a Complaint for murder and frustrated murder docketed
as NPS DOC No. 1-04-INQ-091-00077, and (b) a Complaint for murder, frustrated murder
and direct assault upon a person in authority, as well as indirect assault and multiple
attempted murder, docketed as NPS DOCKET No. 1-04-INV-10-A-00009.30

Respondents likewise asserted that the Petition was incomplete for failing to comply with
the following requisites under the Rule on the Writ of Habeas Data: (a) the manner in
which the right to privacy was violated or threatened with violation and how it affected
the right to life, liberty or security of Gamboa; (b) the actions and recourses she took to
secure the data or information; and (c) the location of the files, registers or databases,
the government office, and the person in charge, in possession or in control of the data
or information.31 They also contended that the Petition for Writ of Habeas Data, being
limited to cases of extrajudicial killings and enforced disappearances, was not the proper
remedy to address the alleged besmirching of the reputation of Gamboa.32

RTC Br. 13, in its assailed Decision dated 9 September 2010, dismissed the Petition.33
The trial court categorically ruled that the inclusion of Gamboa in the list of persons
maintaining PAGs, as published in the Report, constituted a violation of her right to
privacy, to wit:

In this light, it cannot also be disputed that by her inclusion in the list of persons
maintaining PAGs, Gamboas right to privacy indubitably has been violated. The violation
understandably affects her life, liberty and security enormously. The untold misery that
comes with the tag of having a PAG could even be insurmountable. As she essentially
alleged in her petition, she fears for her security that at any time of the day the
unlimited powers of respondents may likely be exercised to further malign and destroy
her reputation and to transgress her right to life.

By her inclusion in the list of persons maintaining PAGs, it is likewise undisputed that
there was certainly intrusion into Gamboas activities. It cannot be denied that
information was gathered as basis therefor. After all, under Administrative Order No. 275,
the Zearosa Commission was tasked to investigate the existence of private armies in
the country, with all the powers of an investigative body under Section 37, Chapter 9,
Book I of the Administrative Code of 1987.

xxx

xxx

xxx

By her inclusion in the list of persons maintaining PAGs, Gamboa alleged as she accused
respondents, who are public officials, of having gathered and provided information that
made the Zearosa Commission to include her in the list. Obviously, it was this gathering
and forwarding of information supposedly by respondents that petitioner barks at as
unlawful. x x x.34

Despite the foregoing findings, RTC Br. 13 nevertheless dismissed the Petition on the
ground that Gamboa failed to prove through substantial evidence that the subject

information originated from respondents, and that they forwarded this database to the
Zearosa Commission without the benefit of prior verification.35 The trial court also
ruled that even before respondents assumed their official positions, information on her
may have already been acquired.36 Finally, it held that the Zearosa Commission, as the
body tasked to gather information on PAGs and authorized to disclose information on her,
should have been impleaded as a necessary if not a compulsory party to the Petition.37

Gamboa then filed the instant Appeal by Certiorari dated 24 September 2010,38 raising
the following assignment of errors:

1. The trial court erred in ruling that the Zearosa Commission be impleaded as either a
necessary or indispensable party;

2. The trial court erred in declaring that Gamboa failed to present sufficient proof to link
respondents as the informant to [sic] the Zearosa Commission;

3. The trial court failed to satisfy the spirit of Habeas Data;

4. The trial court erred in pronouncing that the reliance of the Zearosa Commission to
[sic] the PNP as alleged by Gamboa is an assumption;

5. The trial court erred in making a point that respondents are distinct to PNP as an
agency.39

On the other hand, respondents maintain the following arguments: (a) Gamboa failed to
present substantial evidence to show that her right to privacy in life, liberty or security
was violated, and (b) the trial court correctly dismissed the Petition on the ground that
she had failed to present sufficient proof showing that respondents were the source of
the report naming her as one who maintains a PAG.40

Meanwhile, Gamboa argues that although A.O. 275 was a lawful order, fulfilling the
mandate to dismantle PAGs in the country should be done in accordance with due
process, such that the gathering and forwarding of unverified information on her must be
considered unlawful.41 She also reiterates that she was able to present sufficient
evidence showing that the subject information originated from respondents.42

In determining whether Gamboa should be granted the privilege of the writ of habeas
data, this Court is called upon to, first, unpack the concept of the right to privacy;
second, explain the writ of habeas data as an extraordinary remedy that seeks to protect
the right to informational privacy; and finally, contextualize the right to privacy vis--vis
the state interest involved in the case at bar.

The Right to Privacy

The right to privacy, as an inherent concept of liberty, has long been recognized as a
constitutional right. This Court, in Morfe v. Mutuc,43 thus enunciated:

The due process question touching on an alleged deprivation of liberty as thus resolved
goes a long way in disposing of the objections raised by plaintiff that the provision on the
periodical submission of a sworn statement of assets and liabilities is violative of the
constitutional right to privacy. There is much to be said for this view of Justice Douglas:
"Liberty in the constitutional sense must mean more than freedom from unlawful
governmental restraint; it must include privacy as well, if it is to be a repository of
freedom. The right to be let alone is indeed the beginning of all freedom." As a matter of
fact, this right to be let alone is, to quote from Mr. Justice Brandeis "the most
comprehensive of rights and the right most valued by civilized men."

The concept of liberty would be emasculated if it does not likewise compel respect for his
personality as a unique individual whose claim to privacy and interference demands
respect. xxx.

xxx

xxx

xxx

x x x In the leading case of Griswold v. Connecticut, Justice Douglas, speaking for five
members of the Court, stated: "Various guarantees create zones of privacy. The right of
association contained in the penumbra of the First Amendment is one, as we have seen.
The Third Amendment in its prohibition against the quartering of soldiers in any house
in time of peace without the consent of the owner is another facet of that privacy. The
Fourth Amendment explicitly affirms the right of the people to be secure in their
persons, houses, papers, and effects, against unreasonable searches and seizures. The
Fifth Amendment in its Self-Incrimination Clause enables the citizen to create a zone of
privacy which government may not force him to surrender to his detriment. The Ninth
Amendment provides: The enumeration in the Constitution, of certain rights, shall not be
construed to deny or disparage others retained by the people." After referring to various
American Supreme Court decisions, Justice Douglas continued: "These cases bear
witness that the right of privacy which presses for recognition is a legitimate one."

xxx

xxx

xxx

So it is likewise in our jurisdiction. The right to privacy as such is accorded recognition

independently of its identification with liberty; in itself, it is fully deserving of
constitutional protection. The language of Prof. Emerson is particularly apt: "The concept
of limited government has always included the idea that governmental powers stop short
of certain intrusions into the personal life of the citizen. This is indeed one of the basic
distinctions between absolute and limited government. Ultimate and pervasive control of
the individual, in all aspects of his life, is the hallmark of the absolute state. In contrast, a
system of limited government, safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the state can control.
Protection of this private sector protection, in other words, of the dignity and integrity
of the individual has become increasingly important as modern society has developed.
All the forces of a technological age industrialization, urbanization, and organization
operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the
capacity to maintain and support this enclave of private life marks the difference
between a democratic and a totalitarian society."44 (Emphases supplied)

In Ople v. Torres,45 this Court traced the constitutional and statutory bases of the right to
privacy in Philippine jurisdiction, to wit:

Indeed, if we extend our judicial gaze we will find that the right of privacy is recognized
and enshrined in several provisions of our Constitution. It is expressly recognized in
section 3 (1) of the Bill of Rights:

Sec. 3. (1) The privacy of communication and correspondence shall be inviolable except
upon lawful order of the court, or when public safety or order requires otherwise as
prescribed by law.

Other facets of the right to privacy are protected in various provisions of the Bill of
Rights, viz:

Sec. 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.

Sec. 2. The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose

shall be inviolable, and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized.

xxx

xxx

xxx

Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health as may be provided by law.

xxx

xxx

xxx

Sec. 8. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to law shall
not be abridged.

Sec. 17. No person shall be compelled to be a witness against himself.

Zones of privacy are likewise recognized and protected in our laws. The Civil Code
provides that "every person shall respect the dignity, personality, privacy and peace of
mind of his neighbors and other persons" and punishes as actionable torts several acts
by a person of meddling and prying into the privacy of another. It also holds a public
officer or employee or any private individual liable for damages for any violation of the
rights and liberties of another person, and recognizes the privacy of letters and other
private communications. The Revised Penal Code makes a crime the violation of secrets
by an officer, the revelation of trade and industrial secrets, and trespass to dwelling.
Invasion of privacy is an offense in special laws like the Anti-Wiretapping Law, the
Secrecy of Bank Deposits Act and the Intellectual Property Code. The Rules of Court on
privileged communication likewise recognize the privacy of certain information.

Unlike the dissenters, we prescind from the premise that the right to privacy is a
fundamental right guaranteed by the Constitution, hence, it is the burden of government
to show that A.O. No. 308 is justified by some compelling state interest and that it is
narrowly drawn. x x x.46 (Emphases supplied)

Clearly, the right to privacy is considered a fundamental right that must be protected
from intrusion or constraint. However, in Standard Chartered Bank v. Senate Committee
on Banks,47 this Court underscored that the right to privacy is not absolute, viz:

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, 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, there is no
infringement of the individuals 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.48

Therefore, when the right to privacy finds tension with a competing state objective, the
courts are required to weigh both notions. In these cases, although considered a
fundamental right, the right to privacy may nevertheless succumb to an opposing or
overriding state interest deemed legitimate and compelling.

The Writ of Habeas Data

The writ of habeas data is an independent and summary remedy designed to protect the
image, privacy, honor, information, and freedom of information of an individual, and to
provide a forum to enforce ones right to the truth and to informational privacy.49 It
seeks to protect a persons right to control information regarding oneself, particularly in
instances in which such information is being collected through unlawful means in order
to achieve unlawful ends.50 It must be emphasized that in order for the privilege of the
writ to be granted, there must exist a nexus between the right to privacy on the one
hand, and the right to life, liberty or security on the other. Section 1 of the Rule on the
Writ of Habeas Data reads:

Habeas data. The writ of habeas data is a remedy available to any person whose right
to privacy in life, liberty or security is violated or threatened by an unlawful act or
omission of a public official or employee, or of a private individual or entity engaged in
the gathering, collecting or storing of data information regarding the person, family,
home and correspondence of the aggrieved party.

The notion of informational privacy is still developing in Philippine law and jurisprudence.
Considering that even the Latin American habeas data, on which our own Rule on the
Writ of Habeas Data is rooted, finds its origins from the European tradition of data
protection,51 this Court can be guided by cases on the protection of personal data
decided by the European Court of Human Rights (ECHR). Of particular note is Leander v.
Sweden,52 in which the ECHR balanced the right of citizens to be free from interference
in their private affairs with the right of the state to protect its national security. In this
case, Torsten Leander (Leander), a Swedish citizen, worked as a temporary replacement
museum technician at the Naval Museum, which was adjacent to a restricted military
security zone.53 He was refused employment when the requisite personnel control
resulted in an unfavorable outcome on the basis of information in the secret police
register, which was kept in accordance with the Personnel Control Ordinance and to
which he was prevented access.54 He claimed, among others, that this procedure of
security control violated Article 8 of the European Convention of Human Rights55 on the
right to privacy, as nothing in his personal or political background would warrant his
classification in the register as a security risk.56

The ECHR ruled that the storage in the secret police register of information relating to
the private life of Leander, coupled with the refusal to allow him the opportunity to refute
the same, amounted to an interference in his right to respect for private life.57 However,
the ECHR held that the interference was justified on the following grounds: (a) the
personnel control system had a legitimate aim, which was the protection of national
security,58 and (b) the Personnel Control Ordinance gave the citizens adequate
indication as to the scope and the manner of exercising discretion in the collection,
recording and release of information by the authorities.59 The following statements of
the ECHR must be emphasized:

58. The notion of necessity implies that the interference corresponds to a pressing social
need and, in particular, that it is proportionate to the legitimate aim pursued (see, inter
alia, the Gillow judgment of 24 November 1986, Series A no. 109, p. 22, 55).

59. However, the Court recognises that the national authorities enjoy a margin of
appreciation, the scope of which will depend not only on the nature of the legitimate aim
pursued but also on the particular nature of the interference involved. In the instant
case, the interest of the respondent State in protecting its national security must be
balanced against the seriousness of the interference with the applicants right to respect
for his private life.

There can be no doubt as to the necessity, for the purpose of protecting national
security, for the Contracting States to have laws granting the competent domestic
authorities power, firstly, to collect and store in registers not accessible to the public

information on persons and, secondly, to use this information when assessing the
suitability of candidates for employment in posts of importance for national security.

Admittedly, the contested interference adversely affected Mr. Leanders legitimate

interests through the consequences it had on his possibilities of access to certain
sensitive posts within the public service. On the other hand, the right of access to public
service is not as such enshrined in the Convention (see, inter alia, the Kosiek judgment of
28 August 1986, Series A no. 105, p. 20, 34-35), and, apart from those consequences,
the interference did not constitute an obstacle to his leading a private life of his own
choosing.

In these circumstances, the Court accepts that the margin of appreciation available to
the respondent State in assessing the pressing social need in the present case, and in
particular in choosing the means for achieving the legitimate aim of protecting national
security, was a wide one.

xxx

xxx

xxx

66. The fact that the information released to the military authorities was not
communicated to Mr. Leander cannot by itself warrant the conclusion that the
interference was not "necessary in a democratic society in the interests of national
security", as it is the very absence of such communication which, at least partly, ensures
the efficacy of the personnel control procedure (see, mutatis mutandis, the abovementioned Klass and Others judgment, Series A no. 28, p. 27, 58).

The Court notes, however, that various authorities consulted before the issue of the
Ordinance of 1969, including the Chancellor of Justice and the Parliamentary
Ombudsman, considered it desirable that the rule of communication to the person
concerned, as contained in section 13 of the Ordinance, should be effectively applied in
so far as it did not jeopardise the purpose of the control (see paragraph 31 above).

67. The Court, like the Commission, thus reaches the conclusion that the safeguards
contained in the Swedish personnel control system meet the requirements of paragraph
2 of Article 8 (art. 8-2). Having regard to the wide margin of appreciation available to it,
the respondent State was entitled to consider that in the present case the interests of
national security prevailed over the individual interests of the applicant (see paragraph
59 above). The interference to which Mr. Leander was subjected cannot therefore be said
to have been disproportionate to the legitimate aim pursued. (Emphases supplied)

Leander illustrates how the right to informational privacy, as a specific component of the
right to privacy, may yield to an overriding legitimate state interest. In similar fashion,
the determination of whether the privilege of the writ of habeas data, being an
extraordinary remedy, may be granted in this case entails a delicate balancing of the
alleged intrusion upon the private life of Gamboa and the relevant state interest
involved.

The collection and forwarding of information by the PNP vis--vis the interest of the state
to dismantle private armies.

The Constitution explicitly mandates the dismantling of private armies and other armed
groups not recognized by the duly constituted authority.60 It also provides for the
establishment of one police force that is national in scope and civilian in character, and is
controlled and administered by a national police commission.61

Taking into account these constitutional fiats, it is clear that the issuance of A.O. 275
articulates a legitimate state aim, which is to investigate the existence of PAGs with the
ultimate objective of dismantling them permanently.

To enable the Zearosa Commission to achieve its goals, A.O. 275 clothed it with the
powers of an investigative body, including the power to summon witnesses, administer
oaths, take testimony or evidence relevant to the investigation and use compulsory
processes to produce documents, books, and records.62 A.O. 275 likewise authorized the
Zearosa Commission to deputize the Armed Forces of the Philippines, the National
Bureau of Investigation, the Department of Justice, the PNP, and any other law
enforcement agency to assist the commission in the performance of its functions.63

Meanwhile, the PNP, as the national police force, is empowered by law to (a) enforce all
laws and ordinances relative to the protection of lives and properties; (b) maintain peace
and order and take all necessary steps to ensure public safety; and (c) investigate and
prevent crimes.64

Pursuant to the state interest of dismantling PAGs, as well as the foregoing powers and
functions accorded to the Zearosa Commission and the PNP, the latter collected
information on individuals suspected of maintaining PAGs, monitored them and
counteracted their activities.65 One of those individuals is herein petitioner Gamboa.

This Court holds that Gamboa was able to sufficiently establish that the data contained
in the Report listing her as a PAG coddler came from the PNP. Contrary to the ruling of
the trial court, however, the forwarding of information by the PNP to the Zearosa
Commission was not an unlawful act that violated or threatened her right to privacy in
life, liberty or security.

The PNP was rationally expected to forward and share intelligence regarding PAGs with
the body specifically created for the purpose of investigating the existence of these
notorious groups. Moreover, the Zearosa Commission was explicitly authorized to
deputize the police force in the fulfillment of the formers mandate, and thus had the
power to request assistance from the latter.

Following the pronouncements of the ECHR in Leander, the fact that the PNP released
information to the Zearosa Commission without prior communication to Gamboa and
without affording her the opportunity to refute the same cannot be interpreted as a
violation or threat to her right to privacy since that act is an inherent and crucial
component of intelligence-gathering and investigation.1wphi1 Additionally, Gamboa
herself admitted that the PNP had a validation system, which was used to update
information on individuals associated with PAGs and to ensure that the data mirrored the
situation on the field.66 Thus, safeguards were put in place to make sure that the
information collected maintained its integrity and accuracy.

Pending the enactment of legislation on data protection, this Court declines to make any
further determination as to the propriety of sharing information during specific stages of
intelligence gathering. To do otherwise would supplant the discretion of investigative
bodies in the accomplishment of their functions, resulting in an undue encroachment on
their competence.

However, to accord the right to privacy with the kind of protection established in existing
law and jurisprudence, this Court nonetheless deems it necessary to caution these
investigating entities that information-sharing must observe strict confidentiality.
Intelligence gathered must be released exclusively to the authorities empowered to
receive the relevant information. After all, inherent to the right to privacy is the freedom
from "unwarranted exploitation of ones person or from intrusion into ones private
activities in such a way as to cause humiliation to a persons ordinary sensibilities."67

In this case, respondents admitted the existence of the Report, but emphasized its
confidential nature.1wphi1 That it was leaked to third parties and the media was
regrettable, even warranting reproach. But it must be stressed that Gamboa failed to
establish that respondents were responsible for this unintended disclosure. In any event,
there are other reliefs available to her to address the purported damage to her

reputation, making a resort to the extraordinary remedy of the writ of habeas data
unnecessary and improper.

Finally, this Court rules that Gamboa was unable to prove through substantial evidence
that her inclusion in the list of individuals maintaining PAGs made her and her supporters
susceptible to harassment and to increased police surveillance. In this regard,
respondents sufficiently explained that the investigations conducted against her were in
relation to the criminal cases in which she was implicated. As public officials, they enjoy
the presumption of regularity, which she failed to overcome.

It is clear from the foregoing discussion that the state interest of dismantling PAGs far
outweighs the alleged intrusion on the private life of Gamboa, especially when the
collection and forwarding by the PNP of information against her was pursuant to a lawful
mandate. Therefore, the privilege of the writ of habeas data must be denied.

WHEREFORE, the instant petition for review is DENIED. The assailed Decision in Special
Proc. No. 14979 dated 9 September 2010 of the Regional Trial Court, Laoag City, Br. 13,
insofar as it denies Gamboa the privilege of the writ of habeas data, is AFFIRMED.

SO ORDERED.

77. People vs Lagman

EN BANC

G.R. No. L-45892

July 13, 1938

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
TRANQUILINO LAGMAN, defendant-appellant.

-----------------------------

G.R. No. L-45893

July 13, 1938

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
PRIMITIVO DE SOSA, defendant-appellant.

Severino P. Izon for appellants.

Office of the Solicitor-General Tuason for appellee.

AVANCEA, J.:

In these two cases (G.R. Nos. L-45892 and 45893), the appellants Tranquilino and
Primitivo de Sosa are charged with a violation of section 60 of Commonwealth Act No. 1,
known as the National Defense Law. It is alleged that these two appellants, being
Filipinos and having reached the age of twenty years in 1936, willfully and unlawfully
refused to register in the military service between the 1st and 7th of April of said year,
notwithstanding the fact that they had been required to do so. The evidence shows that
these two appellants were duly notified by the corresponding authorities to appear
before the Acceptance Board in order to register for military service in accordance with
law, and that the said appellants, in spite of these notices, had not registered up to the
date of the filing of the information.

The appellants do not deny these facts, but they allege in defense that they have not
registered in the military service because Primitivo de Sosa is fatherless and has a
mother and a brother eight years old to support, and Tranquilino Lagman also has a
father to support, has no military learnings, and does not wish to kill or be killed.

Each of these appellants was sentenced by the Court of First Instance to one month and
one day of imprisonment, with the costs.

In this instance, the validity of the National Defense Law, under which the accused were
sentenced, is impugned on the ground that it is unconstitutional. Section 2, Article II of
the Constitution of the Philippines provides as follows:

SEC. 2. The defense of the state is a prime duty of government, and in the fulfillment of
this duty all citizens may be required by law to render personal military or civil service.

The National Defense Law, in so far as it establishes compulsory military service, does
not go against this constitutional provision but is, on the contrary, in faithful compliance
therewith. The duty of the Government to defend the State cannot be performed except
through an army. To leave the organization of an army to the will of the citizens would be
to make this duty of the Government excusable should there be no sufficient men who
volunteer to enlist therein.1vvphl.nt

In the United States the courts have held in a series of decisions that the compulsory
military service adopted by reason of the civil war and the world war does not violate the
Constitution, because the power to establish it is derived from that granted to Congress
to declare war and to organize and maintain an army. This is so because the right of the
Government to require compulsory military service is a consequence of its duty to
defend the State and is reciprocal with its duty to defend the life, liberty, and property of
the citizen. In the case of Jacobson vs. Massachusetts (197 U.S., 11; 25 Sup. Ct. Rep.,
385), it was said that, without violating the Constitution, a person may be compelled by
force, if need be, against his will, against his pecuniary interests, and even against his
religious or political convictions, to take his place in the ranks of the army of his country,
and risk the chance of being shot down in its defense. In the case of United States vs.
Olson (253 Fed., 233), it was also said that this is not deprivation of property without due
process of law, because, in its just sense, there is no right of property to an office or
employment.

The circumstance that these decisions refer to laws enacted by reason on the actual
existence of war does not make our case any different, inasmuch as, in the last analysis,
what justifies compulsory military service is the defense of the State, whether actual or
whether in preparation to make it more effective, in case of need. The circumstance that
the appellants have dependent families to support does not excuse them from their duty
to present themselves before the Acceptance Board because, if such circumstance
exists, they can ask for determent in complying with their duty and, at all events, they
can obtain the proper pecuniary allowance to attend to these family responsibilities
(secs. 65 and 69 of Commonwealth Act No. 1).

The appealed judgment rendered in these two cases is affirmed, with the costs to the
appellants. So ordered.

Villa-Real, Imperial, Diaz, Laurel and Concepcion, JJ., concur.

78. Aglipay vs Ruiz

G.R. No. L-45459

March 13, 1937

GREGORIO AGLIPAY, petitioner,

vs.
JUAN RUIZ, respondent.

Vicente Sotto for petitioner.

Office of the Solicitor-General Tuason for respondent.

LAUREL, J.:

The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine Independent
Church, seeks the issuance from this court of a writ of prohibition to prevent the
respondent Director of Posts from issuing and selling postage stamps commemorative of
the Thirty-third International Eucharistic Congress.

In May, 1936, the Director of Posts announced in the dailies of Manila that he would order
the issues of postage stamps commemorating the celebration in the City of Manila of the
Thirty-third international Eucharistic Congress, organized by the Roman Catholic Church.
The petitioner, in the fulfillment of what he considers to be a civic duty, requested
Vicente Sotto, Esq., member of the Philippine Bar, to denounce the matter to the
President of the Philippines. In spite of the protest of the petitioner's attorney, the
respondent publicly announced having sent to the United States the designs of the
postage stamps for printing as follows:

"In the center is chalice, with grape vine and stalks of wheat as border design. The
stamps are blue, green, brown, cardinal red, violet and orange, 1 inch by 1,094 inches.
The denominations are for 2, 6, 16, 20, 36 and 50 centavos." The said stamps were
actually issued and sold though the greater part thereof, to this day, remains unsold. The
further sale of the stamps is sought to be prevented by the petitioner herein.

The Solicitor-General contends that the writ of prohibition is not the proper legal remedy
in the instant case, although he admits that the writ may properly restrain ministerial
functions. While, generally, prohibition as an extraordinary legal writ will not issue to
restrain or control the performance of other than judicial or quasi-judicial functions (50 C.
J., 6580, its issuance and enforcement are regulated by statute and in this jurisdiction
may issue to . . . inferior tribunals, corporations, boards, or persons, whether excercising
functions judicial or ministerial, which are without or in excess of the jurisdiction of such
tribunal, corporation, board, or person, . . . ." (Secs. 516 and 226, Code of Civil
Procedure.) The terms "judicial" and "ministerial" used with reference to "functions" in
the statute are undoubtedly comprehensive and include the challenged act of the
respondent Director of Posts in the present case, which act because alleged to be
violative of the Constitution is a fortiorari "without or in excess of . . . jurisdiction." The
statutory rule, therefore, in the jurisdiction is that the writ of prohibition is not confined
exclusively to courts or tribunals to keep them within the limits of their own jurisdiction
and to prevent them from encroaching upon the jurisdiction of other tribunals, but will
issue, in appropriate cases, to an officer or person whose acts are without or in excess of
his authority. Not infrequently, "the writ is granted, where it is necessary for the orderly
administration of justice, or to prevent the use of the strong arm of the law in an
oppressive or vindictive manner, or a multiplicity of actions." (Dimayuga and Fajardo vs.
Fernandez [1923], 43 Phil., 304, 307.)

The more important question raised refers to the alleged violation of the Constitution by
the respondent in issuing and selling postage stamps commemorative of the Thirty-third
International Eucharistic Congress. It is alleged that this action of the respondent is
violative of the provisions of section 23, subsection 3, Article VI, of the Constitution of the
Philippines, which provides as follows:

No public money or property shall ever be appropriated, applied, or used, directly or

indirectly, for the use, benefit, or support of any sect, church, denomination, secretarian,
institution, or system of religion, or for the use, benefit, or support of any priest,
preacher, minister, or other religious teacher or dignitary as such, except when such
priest, preacher, minister, or dignitary is assigned to the armed forces or to any penal
institution, orphanage, or leprosarium.

The prohibition herein expressed is a direct corollary of the principle of separation of

church and state. Without the necessity of adverting to the historical background of this
principle in our country, it is sufficient to say that our history, not to speak of the history

of mankind, has taught us that the union of church and state is prejudicial to both, for
ocassions might arise when the estate will use the church, and the church the state, as a
weapon in the furtherance of their recognized this principle of separation of church and
state in the early stages of our constitutional development; it was inserted in the Treaty
of Paris between the United States and Spain of December 10, 1898, reiterated in
President McKinley's Instructions of the Philippine Commission, reaffirmed in the
Philippine Bill of 1902 and in the autonomy Act of August 29, 1916, and finally embodied
in the constitution of the Philippines as the supreme expression of the Filipino people. It
is almost trite to say now that in this country we enjoy both religious and civil freedom.
All the officers of the Government, from the highest to the lowest, in taking their oath to
support and defend the constitution, bind themselves to recognize and respect the
constitutional guarantee of religious freedom, with its inherent limitations and recognized
implications. It should be stated that what is guaranteed by our Constitution is religious
liberty, not mere religious toleration.

Religious freedom, however, as a constitutional mandate is not inhibition of profound

reverence for religion and is not denial of its influence in human affairs. Religion as a
profession of faith to an active power that binds and elevates man to his Creator is
recognized. And, in so far as it instills into the minds the purest principles of morality, its
influence is deeply felt and highly appreciated. When the Filipino people, in the preamble
of their Constitution, implored "the aid of Divine Providence, in order to establish a
government that shall embody their ideals, conserve and develop the patrimony of the
nation, promote the general welfare, and secure to themselves and their posterity the
blessings of independence under a regime of justice, liberty and democracy," they
thereby manifested reliance upon Him who guides the destinies of men and nations. The
elevating influence of religion in human society is recognized here as elsewhere. In fact,
certain general concessions are indiscriminately accorded to religious sects and
denominations. Our Constitution and laws exempt from taxation properties devoted
exclusively to religious purposes (sec. 14, subsec. 3, Art. VI, Constitution of the
Philippines and sec. 1, subsec. 4, Ordinance appended thereto; Assessment Law, sec.
344, par. [c]. Adm. Code). Sectarian aid is not prohibited when a priest, preacher,
minister or other religious teacher or dignitary as such is assigned to the armed forces or
to any penal institution, orphanage or leprosarium 9 sec. 13, subsec. 3, Art. VI,
Constitution of the Philippines). Optional religious instruction in the public schools is by
constitutional mandate allowed (sec. 5, Art. XIII, Constitution of the Philippines, in
relation to sec. 928, Adm. Code). Thursday and Friday of Holy Week, Thanksgiving Day,
Christmas Day, and Sundays and made legal holidays (sec. 29, Adm. Code) because of
the secular idea that their observance is conclusive to beneficial moral results. The law
allows divorce but punishes polygamy and bigamy; and certain crimes against religious
worship are considered crimes against the fundamental laws of the state (see arts. 132
and 133, Revised Penal Code).

In the case at bar, it appears that the respondent Director of Posts issued the postage
stamps in question under the provisions of Act No. 4052 of the Philippine Legislature.
This Act is as follows:

No. 4052. AN ACT APPROPRIATING THE SUM OF SIXTY THOUSAND PESOS AND MAKING
THE SAME AVAILABLE OUT OF ANY FUNDS IN THE INSULAR TREASURY NOT OTHERWISE
APPROPRIATED FOR THE COST OF PLATES AND PRINTING OF POSTAGE STAMPS WITH
NEW DESIGNS, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines in

Legislature assembled and by the authority of the same:

SECTION 1. The sum of sixty thousand pesos is hereby appropriated and made
immediately available out of any funds in the Insular Treasury not otherwise
appropriated, for the costs of plates and printing of postage stamps with new designs,
and other expenses incident thereto.

SEC. 2. The Director of Posts, with the approval of the Secretary of Public Works and
Communications, is hereby authorized to dispose of the whole or any portion of the
amount herein appropriated in the manner indicated and as often as may be deemed
advantageous to the Government.

SEC. 3. This amount or any portion thereof not otherwise expended shall not revert to
the Treasury.

SEC. 4. This act shall take effect on its approval.

Approved, February 21, 1933.

It will be seen that the Act appropriates the sum of sixty thousand pesos for the costs of
plates and printing of postage stamps with new designs and other expenses incident
thereto, and authorizes the Director of Posts, with the approval of the Secretary of Public
Works and Communications, to dispose of the amount appropriated in the manner
indicated and "as often as may be deemed advantageous to the Government". The
printing and issuance of the postage stamps in question appears to have been approved
by authority of the President of the Philippines in a letter dated September 1, 1936,
made part of the respondent's memorandum as Exhibit A. The respondent alleges that
the Government of the Philippines would suffer losses if the writ prayed for is granted.
He estimates the revenue to be derived from the sale of the postage stamps in question
at P1,618,17.10 and states that there still remain to be sold stamps worth
P1,402,279.02.

Act No. 4052 contemplates no religious purpose in view. What it gives the Director of
Posts is the discretionary power to determine when the issuance of special postage
stamps would be "advantageous to the Government." Of course, the phrase
"advantageous to the Government" does not authorize the violation of the Constitution.
It does not authorize the appropriation, use or application of public money or property for
the use, benefit or support of a particular sect or church. In the present case, however,
the issuance of the postage stamps in question by the Director of Posts and the
Secretary of Public Works and Communications was not inspired by any sectarian
denomination. The stamps were not issue and sold for the benefit of the Roman Catholic
Church. Nor were money derived from the sale of the stamps given to that church. On
the contrary, it appears from the latter of the Director of Posts of June 5, 1936,
incorporated on page 2 of the petitioner's complaint, that the only purpose in issuing and
selling the stamps was "to advertise the Philippines and attract more tourist to this
country." The officials concerned merely, took advantage of an event considered of
international importance "to give publicity to the Philippines and its people" (Letter of the
Undersecretary of Public Works and Communications to the President of the Philippines,
June 9, 1936; p. 3, petitioner's complaint). It is significant to note that the stamps as
actually designed and printed (Exhibit 2), instead of showing a Catholic Church chalice as
originally planned, contains a map of the Philippines and the location of the City of
Manila, and an inscription as follows: "Seat XXXIII International Eucharistic Congress, Feb.
3-7,1937." What is emphasized is not the Eucharistic Congress itself but Manila, the
capital of the Philippines, as the seat of that congress. It is obvious that while the
issuance and sale of the stamps in question may be said to be inseparably linked with an
event of a religious character, the resulting propaganda, if any, received by the Roman
Catholic Church, was not the aim and purpose of the Government. We are of the opinion
that the Government should not be embarassed in its activities simply because of
incidental results, more or less religious in character, if the purpose had in view is one
which could legitimately be undertaken by appropriate legislation. The main purpose
should not be frustrated by its subordinate to mere incidental results not contemplated.
(Vide Bradfield vs. Roberts, 175 U. S., 295; 20 Sup. Ct. Rep., 121; 44 Law. ed., 168.)

We are much impressed with the vehement appeal of counsel for the petitioner to
maintain inviolate the complete separation of church and state and curb any attempt to
infringe by indirection a constitutional inhibition. Indeed, in the Philippines, once the
scene of religious intolerance and prescription, care should be taken that at this stage of
our political development nothing is done by the Government or its officials that may
lead to the belief that the Government is taking sides or favoring a particular religious
sect or institution. But, upon very serious reflection, examination of Act No. 4052, and
scrutiny of the attending circumstances, we have come to the conclusion that there has
been no constitutional infraction in the case at bar, Act No. 4052 grants the Director of
Posts, with the approval of the Secretary of Public Works and Communications, discretion
to misuse postage stamps with new designs "as often as may be deemed advantageous
to the Government." Even if we were to assume that these officials made use of a poor
judgment in issuing and selling the postage stamps in question still, the case of the
petitioner would fail to take in weight. Between the exercise of a poor judgment and the

unconstitutionality of the step taken, a gap exists which is yet to be filled to justify the
court in setting aside the official act assailed as coming within a constitutional inhibition.

The petition for a writ of prohibition is hereby denied, without pronouncement as to

costs. So ordered.

Avancea, C.J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.

79. Austria vs NLRC

G.R. No. 124382

August 16, 1999

PASTOR DIONISIO V. AUSTRIA, petitioner,

vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL
PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS, ELDER
HECTOR V. GAYARES, PASTORS REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U.
DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT, ISACHAR GARSULA, ELISEO DOBLE,
PORFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO
IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA,
respondents.

KAPUNAN, J.:

Subject of the instant petition for certiorari under Rule 65 of the Rules of Court is the
Resolution1 of public respondent National Labor Relations Commission (the "NLRC"),
rendered on 23 January 1996, in NLRC Case No. V-0120-93, entitled "Pastor Dionisio V.
Austria vs. Central Philippine Union Mission Corporation of Seventh Day Adventists, et
al.," which dismissed the case for illegal dismissal filed by the petitioner against private
respondents for lack of jurisdiction.1wphi1.nt

Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day

Adventists (hereinafter referred to as the "SDA") is a religious corporation duly organized
and existing under Philippine law and is represented in this case by the other private
respondents, officers of the SDA. Petitioner, on the other hand, was a Pastor of the SDA
until 31 October 1991, when his services were terminated.

The records show that petitioner Pastor Dionisio V. Austria worked with the SDA for
twenty eight (28) years from 1963 to 1991.2 He began his work with the SDA on 15 July
1963 as a literature evangelist, selling literature of the SDA over the island of Negros.
From then on, petitioner worked his way up the ladder and got promoted several times.
In January, 1968, petitioner became the Assistant Publishing Director in the West Visayan
Mission of the SDA. In July, 1972, he was elevated to the position of Pastor in the West
Visayan Mission covering the island of Panay, and the provinces of Romblon and
Guimaras. Petitioner held the same position up to 1988. Finally, in 1989, petitioner was
promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay,
Balintawak and Toboso, Negros Occidental, with twelve (12) churches under his
jurisdiction. In January, 1991, petitioner was transferred to Bacolod City. He held the
position of district pastor until his services were terminated on 31 October 1991.

On various occasions from August up to October, 1991, petitioner received several

communications3 from Mr. Eufronio Ibesate, the treasurer of the Negros Mission asking
him to admit accountability and responsibility for the church tithes and offerings
collected by his wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10,
and to remit the same to the Negros Mission.

In his written explanation dated 11 October 1991,4 petitioner reasoned out that he
should not be made accountable for the unremitted collections since it was private
respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who authorized his wife to
collect the tithes and offerings since he was very sick to do the collecting at that time.

Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the office of
Pastor Buhat, the president of the Negros Mission. During said call, petitioner tried to
persuade Pastor Buhat to convene the Executive Committee for the purpose of settling
the dispute between him and the private respondent, Pastor David Rodrigo. The dispute
between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted
his friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for the
repair of the latter's motor vehicle which he failed to pay to Diamada.5 Due to the
assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings
against petitioner. When news reached petitioner that Pastor Rodrigo was about to file a
complaint against him with the Negros Mission, he immediately proceeded to the office
of Pastor Buhat on the date abovementioned and asked the latter to convene the
Executive Committee. Pastor Buhat denied the request of petitioner since some
committee members were out of town and there was no quorum. Thereafter, the two
exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his
way out, petitioner overheard Pastor Buhat saying, "Pastor daw inisog na ina iya (Pador
you are talking tough)."6 Irked by such remark, petitioner returned to the office of Pastor
Buhat, and tried to overturn the latter's table, though unsuccessfully, since it was heavy.
Thereafter, petitioner banged the attach case of Pastor Buhat on the table, scattered

the books in his office, and threw the phone.7 Fortunately, private respondents Pastors
Yonilo Leopoldo and Claudio Montao were around and they pacified both Pastor Buhat
and petitioner.

On 17 October 1991, petitioner received a letter8 inviting him and his wife to attend the
Executive Committee meeting at the Negros Mission Conference Room on 21 October
1991, at nine in the morning. To be discussed in the meeting were the non-remittance of
church collection and the events that transpired on 16 October 1991. A fact-finding
committee was created to investigate petitioner. For two (2) days, from October 21 and
22, the fact-finding committee conducted an investigation of petitioner. Sensing that the
result of the investigation might be one-sided, petitioner immediately wrote Pastor
Rueben Moralde, president of the SDA and chairman of the fact-finding committee,
requesting that certain members of the fact-finding committee be excluded in the
investigation and resolution of the case.9 Out of the six (6) members requested to inhibit
themselves from the investigation and decision-making, only two (2) were actually
excluded, namely: Pastor Buhat and Pastor Rodrigo. Subsequently, on 29 October 1991,
petitioner received a letter of dismissal10 citing misappropriation of denominational
funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties,
and commission of an offense against the person of employer's duly authorized
representative, as grounds for the termination of his services.

Reacting against the adverse decision of the SDA, petitioner filed a complaint11 on 14
November 1991, before the Labor Arbiter for illegal dismissal against the SDA and its
officers and prayed for reinstatement with backwages and benefits, moral and exemplary
damages and other labor law benefits.

On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in favor of

petitioner, the dispositive portion of which reads thus:

WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE UNION MISSION

CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers,
respondents herein, are hereby ordered to immediately reinstate complainant Pastor
Dionisio Austria to his former position as Pastor of Brgy. Taculing, Progreso and Banago,
Bacolod City, without loss of seniority and other rights and backwages in the amount of
ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115,830.00)
without deductions and qualificatioons.

Respondent CPUMCSDA is further ordered to pay complainant the following:

A.13th month pay

21,060.00

B.

Allowance

C.

Service Incentive

Leave Pay

D.

Moral Damages

E.

Exemplary

Damages

F.

Attorney's Fee

4,770.83

3,461.85

50,000.00

25,000.00

22,012.27

SO ORDERED.12

The SDA, through its officers, appealed the decision of the Labor Arbiter to the National
Labor Labor Relations Commission, Fourth Division, Cebu City. In a decision, dated 26
August 1994, the NLRC vacated the findings of the Labor Arbiter. The decretal portion of
the NLRC decision states:

WHEREFORE, the Decision appealed from is hereby VACATED and a new one ENTERED
dismissing this case for want of merit.

SO ORDERED.13

Petitioner filed a motion for reconsideration of the above-named decision. On 18 July

1995, the NLRC issued a Resolution reversing its original decision. The dispositive portion
of the resolution reads:

WHEREFORE, premises considered, Our decision dated August 26, 1994 is VACATED and
the decision of the Labor Arbiter dated February 15, 1993 is REINSTATED.

SO ORDERED.14

In view of the reversal of the original decision of the NLRC, the SDA filed a motion for
reconsideration of the above resolution. Notable in the motion for reconsideration filed
by private respondents is their invocation, for the first time on appeal, that the Labor
Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional
provision on the separation of church and state since the case allegedly involved an
ecclesiastical affair to which the State cannot interfere.

The NLRC, without ruling on the merits of the case, reversed itself once again, sustained
the argument posed by private respondents and, accordingly, dismissed the complaint of
petitioner. The dispositive portion of the NLRC resolution dated 23 January 1996, subject
of the present petition, is as follows:

WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby
granted. Accordingly, this case is hereby DISMISSED for lack of jurisdiction.

SO ORDERED.15

Hence, the recourse to this Court by petitioner.

After the filing of the petition, the Court ordered the Office of the Solicitor General (the
"OSG") to file its comment on behalf of public respondent NLRC. Interestingly, the OSG
filed a manifestation and motion in lieu of comment16 setting forth its stand that it
cannot sustain the resolution of the NLRC. In its manifestation, the OSG submits that the
termination of petitioner from his employment may be questioned before the NLRC as
the same is secular in nature, not ecclesiastical. After the submission of memoranda of
all the parties, the case was submitted for decision.

The issues to be resolved in this petition are:

1)
Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the
complaint filed by petitioner against the SDA;

2)
Whether or not the termination of the services of petitioner is an ecclesiastical
affair, and, as such, involves the separation of church and state; and

3)

Whether or not such termination is valid.

The first two issues shall be resolved jointly, since they are related.

Private respondents contend that by virtue of the doctrine of separation of church and
state, the Labor Arbiter and the NLRC have no jurisdiction to entertain the complaint filed
by petitioner. Since the matter at bar allegedly involves the discipline of a religious
minister, it is to be considered a purely ecclesiastical affair to which the State has no
right to interfere.

The contention of private respondents deserves scant consideration. The principle of

separation of church and state finds no application in this case.

The rationale of the principle of the separation of church and state is summed up in the
familiar saying, "Strong fences make good-neighbors."17 The idea advocated by this
principle is to delineate the boundaries between the two institutions and thus avoid
encroachments by one against the other because of a misunderstanding of the limits of
their respective exclusive jurisdictions.18 The demarcation line calls on the entities to
"render therefore unto Ceasar the things that are Ceasar's and unto God the things that
are God's."19 While the state is prohibited from interfering in purely ecclesiastical affairs,
the Church is likewise barred from meddling in purely secular matters.20

The case at bar does not concern an ecclesiastical or purely religious affair as to bar the
State from taking cognizance of the same. An ecclesiastical affair is "one that concerns
doctrine, creed, or form of worship of the church, or the adoption and enforcement within
a religious association of needful laws and regulations for the government of the
membership, and the power of excluding from such associations those deemed unworthy
of membership.21 Based on this definition, an ecclesiastical affair involves the
relationship between the church and its members and relate to matters of faith, religious
doctrines, worship and governance of the congregation. To be concrete, examples of this
so-called ecclesiastical affairs to which the State cannot meddle are proceedings for
excommunication, ordinations of religious ministers, administration of sacraments and
other activities with attached religious significance. The case at bar does not even
remotely concern any of the abovecited examples. While the matter at hand relates to
the church and its religious minister it does not ipso facto give the case a religious

significance. Simply stated, what is involved here is the relationship of the church as an
employer and the minister as an employee. It is purely secular and has no relation
whatsoever with the practice of faith, worship or doctrines of the church. In this case,
petitioner was not ex-communicated or expelled from the membership of the SDA but
was terminated from employment. Indeed, the matter of terminating an employee, which
is purely secular in nature, is different from the ecclesiastical act of expelling a member
from the religious congregation.

As pointed out by the OSG in its memorandum, the grounds invoked for petitioner's
dismissal, namely: misappropriation of denominational funds, willful breach of trust,
serious misconduct, gross and habitual neglect of duties and commission of an offense
against the person of his employer's duly authorized representative, are all based on
Article 282 of the Labor Code which enumerates the just causes for termination of
employment.22 By this alone, it is palpable that the reason for petitioner's dismissal
from the service is not religious in nature. Coupled with this is the act of the SDA in
furnishing NLRC with a copy of petitioner's letter of termination. As aptly stated by the
OSG, this again is an eloquent admission by private respondents that NLRC has
jurisdiction over the case. Aside from these, SDA admitted in a certification23 issued by
its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years.
SDA even registered petitioner with the Social Security System (SSS) as its employee. As
a matter of fact, the worker's records of petitioner have been submitted by private
respondents as part of their exhibits. From all of these it is clear that when the SDA
terminated the services of petitioner, it was merely exercising its management
prerogative to fire an employee which it believes to be unfit for the job. As such, the
State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the
case and to determine whether the SDA, as employer, rightfully exercised its
management prerogative to dismiss an employee. This is in consonance with the
mandate of the Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations, such as the SDA, in its
coverage. Article 278 of the Labor Code on post-employment states that "the provisions
of this Title shall apply to all establishments or undertakings, whether for profit or not."
Obviously, the cited article does not make any exception in favor of a religious
corporation. This is made more evident by the fact that the Rules Implementing the
Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment
and Retirement, categorically includes religious institutions in the coverage of the law, to
wit:

Sec. 1.
Coverage. This Rule shall apply to all establishments and undertakings,
whether operated for profit or not, including educational, medical, charitable and
religious institutions and organizations, in cases of regular employment with the
exception of the Government and its political subdivisions including government-owned
or controlled corporations.24

With this clear mandate, the SDA cannot hide behind the mantle of protection of the
doctrine of separation of church and state to avoid its responsibilities as an employer
under the Labor Code.

Finally, as correctly pointed out by petitioner, private respondents are estopped from
raising the issue of lack of jurisdiction for the first time on appeal. It is already too late in
the day for private respondents to question the jurisdiction of the NLRC and the Labor
Arbiter since the SDA had fully participated in the trials and hearings of the case from
start to finish. The Court has already ruled that the active participation of a party against
whom the action war brought, coupled with his failure to object to the jurisdiction of the
court or quasi-judicial body where the action is pending, is tantamount to an invocation
of that jurisdiction and a willingness to abide by the resolution of the case and will bar
said party from later on impugning the court or body's jurisdiction.25 Thus, the active
participation of private respondents in the proceedings before the Labor Arbiter and the
NLRC mooted the question on jurisdiction.

The jurisdictional question now settled, we shall now proceed to determine whether the
dismissal of petitioner was valid.

At the outset, we note that as a general rule, findings of fact of administrative bodies like
the NLRC are binding upon this Court. A review of such findings is justified, however, in
instances when the findings of the NLRC differ from those of the labor arbiter, as in this
case.26 When the findings of NLRC do not agree with those of the Labor Arbiter, this
Court must of necessity review the records to determine which findings should be
preferred as more comfortable to the evidentiary facts.27

We turn now to the crux of the matter. In termination cases, the settled rule is that the
burden of proving that the termination was for a valid or authorized cause rests on the
employer.28 Thus, private respondents must not merely rely on the weaknesses of
petitioner's evidence but must stand on the merits of their own defense.

The issue being the legality of petitioner's dismissal, the same must be measured
against the requisites for a valid dismissal, namely: (a) the employee must be afforded
due process, i.e., he must be given an opportunity to be heard and to defend himself,
and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor
Code.29 Without the concurrence of this twin requirements, the termination would, in the
eyes of the law, be illegal.30

Before the services of an employee can be validly terminated, Article 277 (b) of the
Labor Code and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code
further require the employer to furnish the employee with two (2) written notices, to wit:
(a) a written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to explain
his side; and, (b) a written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been established to
justify his termination.

The first notice, which may be considered as the proper charge, serves to apprise the
employee of the particular acts or omissions for which his dismissal is sought.31 The
second notice on the other hand seeks to inform the employee of the employer's
decision to dismiss him.32 This decision, however, must come only after the employee is
given a reasonable period from receipt of the first notice within which to answer the
charge and ample opportunity to be heard and defend himself with the assistance of a
representative, if he so desires.33 This is in consonance with the express provision of the
law on the protection to labor and the broader dictates of procedural due process.34
Non-compliance therewith is fatal because these requirements are conditions sine qua
non before dismissal may be validly effected.35

Private respondent failed to substantially comply with the above requirements. With
regard to the first notice, the letter,36 dated 17 October 1991, which notified petitioner
and his wife to attend the meeting on 21 October 1991, cannot be construed as the
written charge required by law. A perusal of the said letter reveals that it never
categorically stated the particular acts or omissions on which petitioner's impending
termination was grounded. In fact, the letter never even mentioned that petitioner would
be subject to investigation. The letter merely mentioned that petitioner and his wife were
invited to a meeting wherein what would be discussed were the alleged unremitted
church tithes and the events that transpired on 16 October 1991. Thus, petitioner was
surprised to find out that the alleged meeting turned out to be an investigation. From the
tenor of the letter, it cannot be presumed that petitioner was actually on the verge of
dismissal. The alleged grounds for the dismissal of petitioner from the service were only
revealed to him when the actual letter of dismissal was finally issued. For this reason, it
cannot be said that petitioner was given enough opportunity to properly prepare for his
defense. While admittedly, private respondents complied with the second requirement,
the notice of termination, this does not cure the initial defect of lack of the proper written
charge required by law.

In the letter of termination,37 dated 29 October 1991, private respondents enumerated

the following as grounds for the dismissal of petitioner, namely: misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual
neglect of duties, and commission of an offense against the person of employer's duly
authorized representative. Breach of trust and misappropriation of denominational funds
refer to the alleged failure of petitioner to remit to the treasurer of the Negros Mission

tithes, collections and offerings amounting to P15,078.10 which were collected by his
wife, Mrs. Thelma Austria, in the churches under his jurisdiction. On the other hand,
serious misconduct and commission of an offense against the person of the employer's
duly authorized representative pertain to the 16 October 1991 incident wherein
petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat.
The final ground invoked by private respondents is gross and habitual neglect of duties
allegedly committed by petitioner.

We cannot sustain the validity of dismissal based on the ground of breach of trust.
Private respondents allege that they have lost their confidence in petitioner for his
failure, despite demands, to remit the tithes and offerings amounting to P15,078.10,
which were collected in his district. A careful study of the voluminous records of the case
reveals that there is simply no basis for the alleged loss of confidence and breach of
trust. Settled is the rule that under Article 282 (c) of the Labor Code, the breach of trust
must be willful. A breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.38 It must rest on substantial grounds and not on the
employer's arbitrariness, whims, caprices or suspicion; otherwise the employee would
eternally remain at the mercy of the employer.39 It should be genuine and not
simulated.40 This ground has never been intended to afford an occasion for abuse,
because of its subjective nature. The records show that there were only six (6) instances
when petitioner personally collected and received from the church treasurers the tithes,
collections, and donations for the church.41 The stenographic notes on the testimony of
Naomi Geniebla, the Negros Mission Church Auditor and a witness for private
respondents, show that Pastor Austria was able to remit all his collections to the
treasurer of the Negros Mission.42

Though private respondents were able to establish that petitioner collected and received
tithes and donations several times, they were notable to establish that petitioner failed
to remit the same to the Negros Mission, and that he pocketed the amount and used it
for his personal purpose. In fact, as admitted by their own witness, Naomi Geniebla,
petitioner remitted the amounts which he collected to the Negros Mission for which
corresponding receipts were issued to him. Thus, the allegations of private respondents
that petitioner breached their trust have no leg to stand on.

In a vain attempt to support their claim of breach of trust, private respondents try to pin
on petitioner the alleged non-remittance of the tithes collected by his wife. This
argument deserves little consideration. First of all, as proven by convincing and
substantial evidence consisting of the testimonies of the witnesses for private
respondents who are church treasurers, it was Mrs. Thelma Austria who actually
collected the tithes and donations from them, and, who failed to remit the same to the
treasurer of the Negros Mission. The testimony of these church treasurers were
corroborated and confirmed by Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence,
in the absence of conspiracy and collusion, which private respondents failed to

demonstrate, between petitioner and his wife, petitioner cannot be made accountable for
the alleged infraction committed by his wife. After all, they still have separate and
distinct personalities. For this reason, the Labor Arbiter found it difficult to see the basis
for the alleged loss of confidence and breach of trust. The Court does not find any cogent
reason, therefore, to digress from the findings of the Labor Arbiter which is fully
supported by the evidence on record.

With respect to the grounds of serious misconduct and commission of an offense against
the person of the employer's duly authorized representative, we find the same
unmeritorious and, as such, do not warrant petitioner's dismissal from the service.

Misconduct has been defined as improper or wrong conduct. It is the transgression of

some established and definite rule of action, a forbidden act, a dereliction of duty, willful
in character, and implies wrongful intent and not mere error in judgment.43 For
misconduct to be considered serious it must be of such grave and aggravated character
and not merely trivial or unimportant.44 Based on this standard, we believe that the act
of petitioner in banging the attach case on the table, throwing the telephone and
scattering the books in the office of Pastor Buhat, although improper, cannot be
considered as grave enough to be considered as serious misconduct. After all, as
correctly observed by the Labor Arbiter, though petitioner committed damage to
property, he did not physically assault Pastor Buhat or any other pastor present during
the incident of 16 October 1991. In fact, the alleged offense committed upon the person
of the employer's representatives was never really established or proven by private
respondents. Hence, there is no basis for the allegation that petitioner's act constituted
serious misconduct or that the same was an offense against the person of the
employer's duly authorized representative. As such, the cited actuation of petitioner
does not justify the ultimate penalty of dismissal from employment. While the
Constitution does condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in light of the many
disadvantages that weigh heavily on him like an albatross on his neck.45 Where a
penalty less punitive would suffice, whatever missteps may have been committed by the
worker ought not be visited with a consequence so severe such as dismissal from
employment.46 For the foregoing reasons, we believe that the minor infraction
committed by petitioner does not merit the ultimate penalty of dismissal.

The final ground alleged by private respondents in terminating petitioner, gross and
habitual neglect of duties, does not require an exhaustive discussion. Suffice it to say
that all private respondents had were allegations but not proof. Aside from merely citing
the said ground, private respondents failed to prove culpability on the part of petitioner.
In fact, the evidence on record shows otherwise. Petitioner's rise from the ranks disclose
that he was actually a hard-worker. Private respondents' evidence,47 which consisted of
petitioner's Worker's Reports, revealed how petitioner travelled to different churches to
attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return,
he was rewarded with a dismissal from the service for a non-existent cause.

In view of the foregoing, we sustain the finding of the Labor Arbiter that petitioner was
terminated from service without just or lawful cause. Having been illegally dismissed,
petitioner is entitled to reinstatement to his former position without loss of seniority
right48 and the payment of full backwages without any deduction corresponding to the
period from his illegal dismissal up to actual reinstatement.46

WHEREFORE, the petition for certiorari is GRANTED. The challenged Resolution of public
respondent National Labor Relations Commission, rendered on 23 January 1996, is
NULLIFIED and SET ASIDE. The Decision of the Labor Arbiter, dated 15 February 1993, is
REINSTATED and hereby AFFIRMED.1wphi1.nt

SO ORDERED.

Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

80. People vs Caranca

G.R. No. 137268

March 26, 2001

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
EUTIQUIA CARMEN @ Mother Perpetuala, CELEDONIA FABIE @ Isabel Fabie, DELIA
SIBONGA @ Deding Sibonga, ALEXANDER SIBONGA @ Nonoy Sibonga, and REYNARIO
NUEZ @ Rey Nuez, accused-appellants.

MENDOZA, J.:

This is an appeal from the decision1 of the Regional Trial Court, Branch 14, Cebu City,
finding accused-appellants Eutiquia Carmen @ Mother Perpetuala, Celedonia Fabie @
Isabel Fabie, Delia Sibonga @ Deding Sibonga, Alexander Sibonga @ Nonoy Sibonga, and
Reynario Nuez @ Rey Nuez guilty of murder and sentencing them to suffer the penalty

of reclusion perpetua and to pay the heirs of the victim the amount of P50,000.00 as
indemnity as well as the costs.

The information2 against accused-appellants alleged:

That on or about the 27th day of January, 1997 at about 2:00 o'clock p.m., in the City of
Cebu, Philippines, and within the jurisdiction of this Honorable Court, the said accused,
conniving and confederating together and mutually helping one another, with deliberate
intent, with intent to kill, with treachery and evident premeditation, did then and there
inflict fatal physical injuries on one Randy Luntayao which injuries caused the death of
the said Randy Luntayao.

Accused-appellants pleaded not guilty to the charge, whereupon they were tried.

The prosecution presented evidence showing the following: At around 2 o'clock in the
afternoon of January 27, 1997, Honey Fe Abella, 10, and her friend Frances Claire Rivera,
7, were playing takyan in front of the house of one Bebing Lastimoso in Quiot, Pardo,
Cebu City, when suddenly they heard a child shout, "Tabang ma!" ("Help mother!"). The
cry came from the direction of the house of accused-appellant Carmen, who is also
known in their neighborhood as Mother Perpetuala. The two children ran towards Mother
Perpetuala's house.3 What Honey Fe saw on which she testified in court, is summarized
in the decision of the trial court, to wit:

While there[,] she saw a boy, whose name . . . she [later] came to know as one Randy
Luntayao, . . . being immersed head first in a drum of water. Accused Alexander Sibonga
was holding the waist of the body while accused Reynario Nuez held the hands of the
boy at the back. Accused Eutiquia Carmen, Delia Sibonga, and Celedonia Fabie were
pushing down the boy's head into the water. She heard the boy shouting "Ma, help" for
two times. Later, she saw accused Reynario or Rey Nuez tie the boy on the bench with a
green rope as big as her little finger. . . . After that Eutiquia Carmen poured [water from]
a plastic container (galon) . . . into the mouth of the boy. Each time the boy struggled to
raise his head, accused Alexander Sibonga banged the boy's head against the bench [to]
which the boy was tied down. She even heard the banging sound everytime the boy's
head hit the bench. For about five times she heard it. According to this witness after
forcing the boy to drink water, Eutiquia Carmen and accused Celedonia Fabie alias Isabel
Fabie took turns in pounding the boy's chest with their clenched fists. All the time Rey
Nuez held down the boy's feet to the bench. She also witnessed . . . Celedonia Fabie
dropped her weight, buttocks first, on the body of the boy. Later on, Eutiquia Carmen
ordered Delia or Deding Sibonga to get a knife from the kitchen. Eutiquia Carmen then
slowly plunged the stainless knife on the left side of the boy's body and with the use of a
plastic gallon container, the top portion of which was cut out, Eutiquia Carmen [caught]

the blood dripping from the left side of the boy's body. Honey Fe heard the moaning
coming from the tortured boy. Much later she saw Nonoy or Alexander Sibonga, Reynario
Nuez, Delia Sibonga, Celedonia Fabie, and Eutiquia Carmen carry the boy into the
house.4

Eddie Luntayao, father of the victim, testified that he has five children, the eldest of
whom, Randy, was 13 years old at the time of the incident. On November 20, 1996,
Randy had a "nervous breakdown" which Eddie thought was due to Randy having to skip
meals whenever he took the boy with him to the farm. According to Eddie, his son
started talking to himself and laughing. On January 26, 1997, upon the suggestion of
accused-appellant Reynario Nuez, Eddie and his wife Perlita and their three children
(Randy, Jesrel, 7, and Lesyl, 1) went with accused-appellant Nuez to Cebu. They arrived
in Cebu at around 1 o'clock in the afternoon of the same day and spent the night in
Nuez's house in Tangke, Talisay.

The following day, they went to the house of accused-appellant Carmen in Quiot, Pardo,5
where all of the accused-appellants were present. Eddie talked to accused-appellant
Carmen regarding his son's condition. He was told that the boy was possessed by a "bad
spirit," which accused-appellant Carmen said she could exorcise. She warned, however,
that as the spirit might transfer to Eddie, it was best to conduct the healing prayer
without him. Accused-appellants then led Randy out of the house, while Eddie and his
wife and two daughters were locked inside a room in the house.6

After a while, Eddie heard his son twice shout "Ma, tabang!" ("Mother, help!"). Eddie tried
to go out of the room to find out what was happening to his son, but the door was locked.
After about an hour, the Luntayaos were transferred to the prayer room which was
located near the main door of the house.7

A few hours later, at around 5 o'clock in the afternoon, accused-appellants carried Randy
into the prayer room and placed him on the altar. Eddie was shocked by what he saw.
Randy's face was bluish and contused, while his tongue was sticking out of his mouth. It
was clear to Eddie that his son was already dead. He wanted to see his son's body, but
he was stopped from doing so by accused-appellant Eutiquia Carmen who told him not to
go near his son because the latter would be resurrected at 7 o'clock that evening.8

After 7 o'clock that evening, accused-appellant Carmen asked a member of her group to
call the funeral parlor and bring a coffin as the child was already dead. It was arranged
that the body would be transferred to the house of accused-appellant Nuez. Thus, that
night, the Luntayao family, accompanied by accused-appellant Nuez, took Randy's body
to Nunez's house in Tangke, Talisay. The following day, January 28, 1997, accusedappellant Nuez told Eddie to go with him to the Talisay Municipal Health Office to report

Randy's death and told him to keep quiet or they might not be able to get the necessary
papers for his son's burial. Nuez took care of securing the death certificate which Eddie
signed.9

At around 3 o'clock in the afternoon of January 28, 1997, accused-appellant Carmen went
to Tangke, Talisay to ensure that the body was buried. Eddie and his wife told her that
they preferred to bring their son's body with them to Sikatuna, Isabela, Negros
Occidental but they were told by accused-appellant Carmen that this was not possible as
she and the other accused-appellants might be arrested. That same afternoon, Randy
Luntayao was buried in Tangke, Talisay.10

After Eddie and his family had returned home to Negros Occidental, Eddie sought
assistance from the Bombo Radyo station in Bacolod City which referred him to the
regional office of the National Bureau of Investigation (NBI) in the city. On February 3,
1997, Eddie filed a complaint for murder against accused-appellant Nuez and the other
members of his group.11 He also asked for the exhumation and autopsy of the remains
of his son.12 As the incident took place in Cebu, his complaint was referred to the NBI
office in Cebu City.

Modesto Cajita, head of NBI, Region VII (Cebu), took over the investigation of the case.
He testified that he met with Eddie Luntayao and supervised the exhumation and
autopsy of the body of Randy Luntayao.13 Cajita testified that he also met with accusedappellant Carmen and after admitting that she and the other accused-appellants
conducted a "pray-over healing" session on the victim on January 27, 1997, accusedappellant Carmen refused to give any further statement. Cajita noticed a wooden bench
in the kitchen of Carmen's house, which, with Carmen's permission, he took with him to
the NBI office for examination. Cajita admitted he did not know the results of the
examination.14

Dr. Ronaldo B. Mendez, the NBI medico-legal officer who conducted the autopsy on
Randy Luntayao, testified that he, the victim's father, and some NBI agents, exhumed
the victim's body on February 20, 1997 at Tangke Catholic Cemetery in the Tangke,
Talisay, Cebu. He conducted the autopsy on the same day and later submitted the
following report (Exhs. E and F):15

FINDINGS

Body in advanced stage of decomposition wearing a white shirt and shorts wrapped in
printed blanket (white and orange) placed in white wooden coffin and buried
underground about 4 feet deep.

Contusion, 3.0 x 4.0 cms. chest, anterior, left side.

Fracture, 3rd rib, left, mid-clavicular line.

Fracture, linear, occipital bone right side extending to the bases of middle cranial fossae
right to left down to the occipital bone, left side.

Fracture, diastatic, lamboidal suture, bilateral.

Internal organs in advanced stage of decomposition.

Cranial vault almost empty.

CAUSE OF DEATH: [The victim] could have died due to the internal effects of a traumatic
head injury and/or traumatic chest injury.

Dr. Mendez testified that the contusion on the victim's chest was caused by contact with
a hard blunt instrument. He added that the fracture on the rib was complete while that
found on the base of the skull followed a serrated or uneven pattern. He said that the
latter injury could have been caused by the forcible contact of that part of the body with
a blunt object such as a wooden bench.16

On cross-examination, Dr. Mendez admitted that he did not find any stab wound on the
victim's body but explained that this could be due to the fact that at the time the body
was exhumed and examined, it was already in an advanced state of decomposition
rendering such wound, if present, unrecognizable.17

Accused-appellants did not testify. Instead, the defense presented: (a) Ritsel Blase, an
alleged eyewitness to the incident; (b) Maria Lilina Jimenez, Visitacion Seniega, and
Josefina Abing, alleged former "patients" of accused-appellant Carmen; (c) Dr. Milagros
Carloto, the municipal health officer of Talisay, Cebu and; (d) Atty. Salvador Solima of the
Cebu City Prosecutor's Office.

Ritsel Blase, 21, testified that since 1987 she had been with the group of accusedappellant Carmen, whom she calls Mother Perpetuala. She recounted that at around 2
o'clock in the afternoon of January 27, 1997, while she was in the house of accusedappellant Carmen, she saw Eddie Luntayao talking with the latter regarding the
treatment of his son. The boy was later led to the kitchen and given a bath prior to
"treatment." After water was poured on the boy, he became unruly prompting accusedappellant Carmen to decide not to continue with the "treatment," but the boy's parents
allegedly prevailed upon her to continue. As the boy continued to resist, accusedappellant Carmen told accused-appellants Delia Sibonga and Celedonia Fabie to help her
(Carmen) lay the boy on a bench. As the child resisted all the more, Eddie Luntayao
allegedly told the group to tie the boy to the bench. Accused-appellant Delia Sibonga got
hold of a nylon rope which was used to tie the child to the bench. Then Carmen, Delia
Sibonga, and Fabie prayed over the child, but as the latter started hitting his head
against the bench, Carmen asked Nuez to place his hands under the boy's head to
cushion the impact of the blow everytime the child brought down his head. To stop the
boy from struggling, accused-appellant Fabie held the boy's legs, while accusedappellant Nuez held his shoulders. After praying over the boy, the latter was released
and carried inside the house. Accused-appellant Alexander Sibonga, who had arrived,
helped carry the boy inside. After this, Blase said she no longer knew what happened
inside the house as she stayed outside to finish the laundry.18

Blase testified that the parents of Randy Luntayao witnessed the "pray-over" of their son
from beginning to end. She denied that accused-appellants Fabie and Delia Sibonga
struck the victim on his chest with their fists. According to her, neither did accusedappellant Carmen stab the boy. She claimed that Randy was still alive when he was taken
inside the house.19

The defense presented Maria Lilia Jimenez, 20, Visitacion Seniega, 39, and Josefina
Abing, 39, who testified that accused-appellant Carmen had cured them of their illnesses
by merely praying over them and without applying any form of physical violence on
them.20

Milagros Carloto, Municipal Health Officer of Talisay, Cebu, was also presented by the
defense to testify on the death certificate she issued in which she indicated that Randy
Luntayao died of pneumonia. According to her, Eddie Luntayao came to her office on
January 28, 1997 to ask for the issuance of a death certificate for his son Randy Luntayao
who had allegedly suffered from cough and fever.21

On cross-examination, Dr. Carloto admitted that she never saw the body of the victim as
she merely relied on what she had been told by Eddie Luntayao. She said that it was a
midwife, Mrs. Revina Laviosa, who examined the victim's body.22

The last witness for the defense, Assistant City Prosecutor Salvador Solima, was
presented to identify the resolution he had prepared (Exh. 8)23 on the re-investigation of
the case in which he recommended the dismissal of the charge against accusedappellants. His testimony was dispensed with, however, as the prosecution stipulated on
the matters Solima was going to testify with the qualification that Solima's
recommendation was disapproved by City Prosecutor Primo Miro.24

The prosecution recalled Eddie Luntayao to the stand to rebut the testimonies of Ritsel
Blase and Dr. Milagros Carloto. Eddie denied having witnessed what accused-appellants
did to his son. He reiterated his earlier claim that after accused-appellants had taken
Randy, he and his wife and two daughters were locked inside a room. He disputed
Blase's statement that his son was still alive when he was brought into the prayer room.
He said he saw that his son's head slumped while being carried by accused-appellants.25

As for the testimony of Dr. Carloto, Eddie admitted having talked with her when he and
accused-appellant Nuez went to her office on January 28, 1997. However, he denied
having told her that his son was suffering from fever and cough as he told her that Randy
had a nervous breakdown. He took exception to Dr. Carloto's statement that he was
alone when he went to her office because it was Nuez who insisted that he (Eddie)
accompany him in order to secure the death certificate.26

On November 18, 1998, the trial court rendered a decision, the dispositive portion of
which states:

WHEREFORE, in view of the foregoing facts and circumstances, [the] accused are all
found guilty beyond reasonable doubt of the crime of Murder and are hereby [sentenced]
to suffer the penalty of RECLUSION PERPETUA, with the accessory penalties of the law; to
indemnify jointly and severally the heirs of the deceased Randy Luntayao in the sum of
P50,000.00; and to pay the costs. The accused, are, however, credited in full during the
whole period of their detention provided they will signify in writing that they will abide by
all the rules and regulations of the penitentiary.27

In finding accused-appellants guilty of murder, the trial court stated:

Killing a person with treachery is murder even if there is no intent to kill. When death
occurs, it is presumed to be the natural consequence of physical injuries inflicted. Since
the defendant did commit the crime with treachery, he is guilty of murder, because of
the voluntary presence of the qualifying circumstance of treachery (P v. Cagoco, 58 Phil.
530). All the accused in the case at bar had contributed different acts in mercilessly
inflicting injuries to the victim. For having immersed the head of the victim into the

barrel of water, all the herein accused should be held responsible for all the
consequences even if the result be different from that which was intended (Art. 4, par. 1,
RPC). It is pointed out that in P. v. Cagoco, 58 Phil. 524, even if there was no intent to
kill[,] in inflicting physical injuries with treachery, the accused in that case was convicted
of murder. In murder qualified by treachery, it is required only that there is treachery in
the attack, and this is true even if the offender has no intent to kill the person assaulted.
Under the guise of a ritual or treatment, the accused should not have intentionally
immersed upside down the head of Randy Luntayao into a barrel of water; banged his
head against the bench; pounded his chest with fists, or plunged a kitchen knife to his
side so that blood would come out for these acts would surely cause death to the
victim. . . .

One who commits an intentional felony is responsible for all the consequences which
may naturally and logically result therefrom, whether foreseen or intended or not.
Ordinarily, when a person commits a felony with malice, he intends the consequences of
his felonious act. In view of paragraph 1 of Art. 4, a person committing a felony is
criminally liable although the consequences of his felonious acts are not intended by
him. . . .

....

Intent is presumed from the commission of an unlawful act. The presumption of criminal
intent may arise from the proof of the criminal act and it is for the accused to rebut this
presumption. In the case at bar, there is enough evidence that the accused confederated
with one another in inflicting physical harm to the victim (an illegal act). These acts were
intentional, and the wrong done resulted in the death of their victim. Hence, they are
liable for all the direct and natural consequences of their unlawful act, even if the
ultimate result had not been intended.28

Hence, this appeal. Accused-appellants allege that the trial court erred in convicting
them of murder.29

First. It would appear that accused-appellants are members of a cult and that the bizarre
ritual performed over the victim was consented to by the victim's parents. With the
permission of the victim's parents, accused-appellant Carmen, together with the other
accused-appellants, proceeded to subject the boy to a "treatment" calculated to drive
the "bad spirit" from the boy's body. Unfortunately, the strange procedure resulted in the
death of the boy. Thus, accused-appellants had no criminal intent to kill the boy. Their
liability arises from their reckless imprudence because they ought that to know their
actions would not bring about the cure. They are, therefore, guilty of reckless
imprudence resulting in homicide and not of murder.

Art. 365 of the Revised Penal Code, as amended, states that reckless imprudence
consists in voluntarily, but without malice, doing or failing to do an act from which
material damage results by reason of inexcusable lack of precaution on the part of the
person performing such act. Compared to intentional felonies, such as homicide or
murder, what takes the place of the element of malice or intention to commit a wrong or
evil is the failure of the offender to take precautions due to lack of skill taking into
account his employment, or occupation, degree of intelligence, physical condition, and
other circumstances regarding persons, time, and place.

The elements of reckless imprudence are apparent in the acts done by accusedappellants which, because of their lack of medical skill in treating the victim of his
alleged ailment, resulted in the latter's death. As already stated, accused-appellants,
none of whom is a medical practitioner, belong to a religious group, known as the
Missionaries of Our Lady of Fatima, which is engaged in faith healing.

In United States v. Divino,30 the accused, who was not a licensed physician, in an
attempt to cure the victim of ulcers in her feet, wrapped a piece of clothing which had
been soaked in petroleum around the victim's feet and then lighted the clothing, thereby
causing injuries to the victim. The Court held the accused liable for reckless imprudence
resulting in physical injuries. It was noted that the accused had no intention to cause an
evil but rather to remedy the victim's ailment.

In another case, People v. Vda. de Golez,31 the Court ruled that the proper charge to file
against a non-medical practitioner, who had treated the victim despite the fact that she
did not possess the necessary technical knowledge or skill to do so and caused the
latter's death, was homicide through reckless imprudence.

The trial court's reliance on the rule that criminal intent is presumed from the
commission of an unlawful act is untenable because such presumption only holds in the
absence of proof to the contrary.32 The facts of the case indubitably show the absence of
intent to kill on the part of the accused-appellants. Indeed, the trial court's findings can
be sustained only if the circumstances of the case are ignored and the Court limits itself
to the time when accused-appellants undertook their unauthorized "treatment" of the
victim. Obviously, such an evaluation of the case cannot be allowed.

Consequently, treachery cannot be appreciated for in the absence of intent to kill, there
is no treachery or the deliberate employment of means, methods, and manner of
execution to ensure the safety of the accused from the defensive or retaliatory attacks
coming from the victim.33 Viewed in this light, the acts which the trial court saw as

manifestations of treachery in fact relate to efforts by accused-appellants to restrain

Randy Luntayao so that they can effect the cure on him.

On the other hand, there is no merit in accused-appellants' contention that the testimony
of prosecution eyewitness Honey Fe Abella is not credible. The Court is more than
convinced of Honey Fe's credibility. Her testimony is clear, straightforward, and is far
from having been coached or contrived. She was only a few meters away from the
kitchen where accused-appellants conducted their "pray-over" healing session not to
mention that she had a good vantage point as the kitchen had no roof nor walls but only
a pantry. Her testimony was corroborated by the autopsy findings of Dr. Mendez who,
consistent with Honey Fe's testimony, noted fractures on the third left rib and on the
base of the victim's skull. With regard to Dr. Mendez's failure to find any stab wound in
the victim's body, he himself had explained that such could be due to the fact that at the
time the autopsy was conducted, the cadaver was already in an advanced state of
decomposition. Randy Luntayao's cadaver was exhumed 24 days after it had been
buried. Considering the length of time which had elapsed and the fact that the cadaver
had not been embalmed, it was very likely that the soft tissues had so decomposed that,
as Dr. Mendez said, it was no longer possible to determine whether there was a stab
wound. As for the other points raised by accused-appellants to detract the credibility of
Honey Fe's testimony, the same appear to be only minor and trivial at best.

Accused-appellants contend that the failure of the prosecution to present the testimony
of Frances Claire Rivera as well as the knife used in stabbing Randy Luntayao puts in
doubt the prosecution's evidence. We do not think so. The presentation of the knife in
evidence is not indispensable.34

Finally, accused-appellants make much of the fact that although the case was tried under
Judge Renato C. Dacudao, the decision was rendered by Judge Galicano Arriesgado who
took over the case after the prosecution and the defense had rested their cases.35
However, the fact that the judge who wrote the decision did not hear the testimonies of
the witnesses does not make him less competent to render a decision, since his ruling is
based on the records of the case and the transcript of stenographic notes of the
testimonies of the witnesses.36

Second. The question now is whether accused-appellants can be held liable for reckless
imprudence resulting in homicide, considering that the information charges them with
murder. We hold that they can.

Rule 120 of the Revised Rules of Criminal Procedure provides in pertinent parts:

SEC. 4. Judgment in case of variance between allegation and proof. When there is
variance between the offense charged in the complaint or information and that proved,
and the offense as charged is included in or necessarily includes the offense proved, the
accused shall be convicted of the offense proved which is included in the offense
charged, or of the offense charged which is included in the offense proved.

SEC. 5. When an offense includes or is included in another. An offense charged

necessarily includes the offense proved when some of the essential elements or
ingredients of the former, as alleged in the complaint or information, constitute the
latter. And an offense charged is necessarily included in the offense proved, when the
essential ingredients of the former constitute or form part of those constituting the latter.

In Samson v. Court of Appeals,37 the accused were charged with, and convicted of,
estafa through falsification of public document. The Court of Appeals modified the
judgment and held one of the accused liable for estafa through falsification by
negligence. On appeal, it was contended that the appeals court erred in holding the
accused liable for estafa through negligence because the information charged him with
having wilfully committed estafa. In overruling this contention, the Court held:

While a criminal negligent act is not a simple modality of a willful crime, as we held in
Quizon v. Justice of the Peace of Bacolor, G.R. No. L-6641, July 28, 1955, but a distinct
crime in itself, designated as a quasi offense in our Penal Code, it may however be said
that a conviction for the former can be had under an information exclusively charging the
commission of a willful offense, upon the theory that the greater includes the lesser
offense. This is the situation that obtains in the present case. Appellant was charged with
willful falsification but from the evidence submitted by the parties, the Court of Appeals
found that in effecting the falsification which made possible the cashing of the checks in
question, appellant did not act with criminal intent but merely failed to take proper and
adequate means to assure himself of the identity of the real claimants as an ordinary
prudent man would do. In other words, the information alleges acts which charge willful
falsification but which turned out to be not willful but negligent. This is a case covered by
the rule when there is a variance between the allegation and proof. . . .

The fact that the information does not allege that the falsification was committed with
imprudence is of no moment for here this deficiency appears supplied by the evidence
submitted by appellant himself and the result has proven beneficial to him. Certainly,
having alleged that the falsification has been willful, it would be incongruous to allege at
the same time that it was committed with imprudence for a charge of criminal intent is
incompatible with the concept of negligence.

In People v. Fernando,38 the accused was charged with, and convicted of, murder by the
trial court. On appeal, this Court modified the judgment and held the accused liable for
reckless imprudence resulting in homicide after finding that he did not act with criminal
intent.

Third. Coming now to the imposable penalty, under Art. 365, reckless imprudence
resulting in homicide is punishable by arresto mayor in its maximum period to prision
correccional in its medium period. In this case, taking into account the pertinent
provisions of Indeterminate Sentence Law, the accused-appellants should suffer the
penalty of four (4) months of arresto mayor, as minimum, to four (4) years and two (2)
months of prision correccional, as maximum.

As to their civil liability, accused-appellants should pay the heirs of Randy Luntayao an
indemnity in the amount of P50,000.00 and moral damages also in the amount of
P50,000.00.39 In addition, they should pay exemplary damages in the amount of
P30,000.00 in view of accused-appellants' gross negligence in attempting to "cure" the
victim without a license to practice medicine and to give an example or correction for the
public good.40

WHEREFORE, the decision of the Regional Trial Court, Branch 14, Cebu City, is AFFIRMED
with the MODIFICATION that accused-appellants are hereby declared guilty of reckless
imprudence resulting in homicide and are each sentenced to suffer an indeterminate
prison term of four (4) months of arresto mayor, as minimum, to four (4) years and two
(2) months of prision correccional, as maximum. In addition, accused-appellants are
ORDERED jointly and severally to pay the heirs of Randy Luntayao indemnity in the
amount of P50,000.00, moral damages in the amount of P50,000.00, and exemplary
damages in the amount of P30,000.00.

SO ORDERED.

Bellosillo, Buena, and De Leon, Jr., JJ., concur

Quisumbing, J., on leave.

81. Calalang vs Williams

FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents
Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648;

DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND
REGULATIONS. The provisions of section 1 of Commonwealth Act No. 648 do not
confer legislative power upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred upon them and under which
they promulgated the rules and regulations now complained of is not to determine what
public policy demands but merely to carry out the legislative policy laid down by the
National Assembly in said Act, to wit, "to promote safe transit upon, and avoid
obstructions on, roads and streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the determination of what the
law shall be, but merely the ascertainment of the facts and circumstances upon which
the application of said law is to be predicated. To promulgate rules and regulations on
the use of national roads and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the traffic thereon and the
requirements of public convenience and interest, is an administrative function which
cannot be directly discharged by the National Assembly. It must depend on the discretion
of some other government official to whom is confided the duty of determining whether
the proper occasion exists for executing the law. But it cannot be said that the exercise
of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY.

Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the
paramount police power of the state. Said Act, by virtue of which the rules and
regulations complained of were promulgated, aims to promote safe transit upon and
avoid obstructions on national roads, in the interest and convenience of the public. In
enacting said law, therefore, the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to relieve congestion of
traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at
the bottom of the enactment of said law, and the state in order to promote the general
welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state (U.S.
v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of
the individual are subordinated. Liberty is a blessing without which life is a misery, but
liberty should not be made to prevail over authority because then society will fall into
anarchy. Neither should authority be made to prevail over liberty because then the
individual will fall into slavery. The citizen should achieve the required balance of liberty
and authority in his mind through education and, personal discipline, so that there may
be established the resultant equilibrium, which means peace and order and happiness
for all. The moment greater authority is conferred upon the government, logically so
much is withdrawn from the residuum of liberty which resides in the people. The paradox
lies in the fact that the apparent curtailment of liberty is precisely the very means of
insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither communism, nor despotism, nor
atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema
lex. Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social
and economic life, consistent with the fundamental and paramount objective of the state
of promoting the health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila,

brought before this court this petition for a writ of prohibition against the respondents, A.
D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as
Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez,
as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July
17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of
Public Works and Communications that animal-drawn vehicles be prohibited from passing
along Rosario Street extending from Plaza Calderon de la Barca to Dasmarias Street,
from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue
extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to
11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to
traffic; that the Chairman of the National Traffic Commission, on July 18, 1940
recommended to the Director of Public Works the adoption of the measure proposed in
the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No.
548 which authorizes said Director of Public Works, with the approval of the Secretary of
Public Works and Communications, to promulgate rules and regulations to regulate and
control the use of and traffic on national roads; that on August 2, 1940, the Director of
Public Works, in his first indorsement to the Secretary of Public Works and
Communications, recommended to the latter the approval of the recommendation made
by the Chairman of the National Traffic Commission as aforesaid, with the modification
that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the
portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga
Street; that on August 10, 1940, the Secretary of Public Works and Communications, in
his second indorsement addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of
animal-drawn vehicles, between the points and during the hours as above indicated, for
a period of one year from the date of the opening of the Colgante Bridge to traffic; that
the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to
be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers
in the places above-mentioned to the detriment not only of their owners but of the riding
public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director
of Public Works, with the approval of the Secretary of Public Works and Communications,
is authorized to promulgate rules and regulations for the regulation and control of the

use of and traffic on national roads and streets is unconstitutional because it constitutes
an undue delegation of legislative power. This contention is untenable. As was observed
by this court in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has
nowhere been better stated than in the early Ohio case decided by Judge Ranney, and
since followed in a multitude of cases, namely: The true distinction therefore is between
the delegation of power to make the law, which necessarily involves a discretion as to
what it shall be, and conferring an authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to the latter no
valid objection can be made. (Cincinnati, W. & Z. R. Co. v. Commrs. Clinton County, 1
Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10
Wheat., 1) may be committed by the Legislature to an executive department or official.
The Legislature may make decisions of executive departments or subordinate officials
thereof, to whom it has committed the execution of certain acts, final on questions of
fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give
prominence to the necessity of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of
the President of the Philippines, the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, shall promulgate the necessary rules
and regulations to regulate and control the use of and traffic on such roads and streets.
Such rules and regulations, with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other structures within a
reasonable distance from along the national roads. Such roads may be temporarily
closed to any or all classes of traffic by the Director of Public Works and his duly
authorized representatives whenever the condition of the road or the traffic thereon
makes such action necessary or advisable in the public convenience and interest, or for a
specified period, with the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public
Works and the Secretary of Public Works and Communications. The authority therein
conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out
the legislative policy laid down by the National Assembly in said Act, to wit, "to promote
safe transit upon and avoid obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes of traffic "whenever the
condition of the road or the traffic makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all, therefore, is not the
determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate

rules and regulations on the use of national roads and to determine when and how long a
national road should be closed to traffic, in view of the condition of the road or the traffic
thereon and the requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly. It must depend
on the discretion of some other government official to whom is confided the duty of
determining whether the proper occasion exists for executing the law. But it cannot be
said that the exercise of such discretion is the making of the law. As was said in Lockes
Appeal (72 Pa. 491): "To assert that a law is less than a law, because it is made to
depend on a future event or act, is to rob the Legislature of the power to act wisely for
the public welfare whenever a law is passed relating to a state of affairs not yet
developed, or to things future and impossible to fully know." The proper distinction the
court said was this: "The Legislature cannot delegate its power to make the law; but it
can make a law to delegate a power to determine some fact or state of things upon
which the law makes, or intends to make, its own action depend. To deny this would be
to stop the wheels of government. There are many things upon which wise and useful
legislation must depend which cannot be known to the law-making power, and, must,
therefore, be a subject of inquiry and determination outside of the halls of legislation."
(Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated
June 12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R.
No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the
principle of separation of powers has been made to adapt itself to the complexities of
modern governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation," not only in the United States and England but in practically all
modern governments. Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers
has, to a large extent, been relaxed by permitting the delegation of greater powers by
the legislative and vesting a larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the promulgation of certain
rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
unlawful interference with legitimate business or trade and abridge the right to personal
liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated,
aims to promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law, therefore, the National
Assembly was prompted by considerations of public convenience and welfare. It was
inspired by a desire to relieve congestion of traffic. which is, to say the least, a menace

to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and
the state in order to promote the general welfare may interfere with personal liberty,
with property, and with business and occupations. Persons and property may be
subjected to all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To this
fundamental aim of our Government the rights of the individual are subordinated. Liberty
is a blessing without which life is a misery, but liberty should not be made to prevail over
authority because then society will fall into anarchy. Neither should authority be made to
prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and
personal discipline, so that there may be established the resultant equilibrium, which
means peace and order and happiness for all. The moment greater authority is conferred
upon the government, logically so much is withdrawn from the residuum of liberty which
resides in the people. The paradox lies in the fact that the apparent curtailment of liberty
is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the
case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise
the police power is a continuing one, and a business lawful today may in the future,
because of the changed situation, the growth of population or other causes, become a
menace to the public health and welfare, and be required to yield to the public good."
And in People v. Pomar (46 Phil., 440), it was observed that "advancing civilization is
bringing within the police power of the state today things which were not thought of as
being within such power yesterday. The development of civilization, the rapidly
increasing population, the growth of public opinion, with an increasing desire on the part
of the masses and of the government to look after and care for the interests of the
individuals of the state, have brought within the police power many questions for
regulation which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon
the constitutional precept regarding the promotion of social justice to insure the wellbeing and economic security of all the people. The promotion of social justice, however,
is to be achieved not through a mistaken sympathy towards any given group. Social
justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all
the competent elements of society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extraconstitutionally, through the exercise of powers underlying the existence of all
governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social
and economic life, consistent with the fundamental and paramount objective of the state
of promoting the health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs
against the petitioner. So ordered.

Avancea, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.

82. Serrano vs Gallant Maritime Services

G.R. No. 167614

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO.,
INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities
out of poverty. Their earnings have built houses, provided health care, equipped schools
and planted the seeds of businesses. They have woven together the world by
transmitting ideas and knowledge from country to country. They have provided the
dynamic human link between cultures, societies and economies. Yet, only recently have
we begun to understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph
of Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of 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.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract "or for three months for every year of the
unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause
violates the OFWs' constitutional rights in that it impairs the terms of their contract,
deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA),
which applied the subject clause, entreating this Court to declare the subject clause
unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved
Contract of Employment with the following terms and conditions:
Duration of contract

12 months

Position

Chief Officer

Basic monthly salary

US$1,400.00

Hours of work

48.0 hours per week

Overtime

US$700.00 per month

Vacation leave with pay

7.00 days per month5
On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.6
Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence,
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on
May 26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998
up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served

only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for
constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:
May US$ 413.90
27/3
1,
1998
(5
days)
incl.
Leav
e pay
June 2,590.00
01/3
0,
1998
July
2,590.00
01/3
1,
1998
Augu 2,590.00
st
01/3
1,
1998
Sept. 2,590.00
01/3
0,
1998
Oct. 2,590.00
01/3
1,
1998
Nov. 2,590.00
01/3
0,
1998
Dec.
01/3
1,

2,590.00

1998
Jan.
2,590.00
01/3
1,
1999
Feb. 2,590.00
01/2
8,
1999
Mar. 1,640.00
1/19,
1999
(19
days)
incl.
leave
pay
------------------------------------------------------------------------------25,382.23
Amo
unt
adjus
ted
to
chief
mate
's
salar
y
(Marc 1,060.5010
h
19/3
1,
1998
to
April
1/30,
1998
)+
--------------------------------------------------------------------------------------------TOTA US$ 26,442.7311

L
CLAI
M
as well as moral and exemplary damages and attorney's fees.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the
dismissal of the complainant (petitioner) by the respondents in the above-entitled
case was illegal and the respondents are hereby ordered to pay the complainant
[petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing
the complainants salary for three (3) months of the unexpired portion of
the aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly
and severally, in Philippine Currency, based on the rate of exchange prevailing at
the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$
45.00),12 representing the complainants claim for a salary differential. In addition,
the respondents are hereby ordered to pay the complainant, jointly and severally,
in Philippine Currency, at the exchange rate prevailing at the time of payment, the
complainants (petitioner's) claim for attorneys fees equivalent to ten percent
(10%) of the total amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract
- applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month +
US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to
question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are
hereby ordered to pay complainant, jointly and severally, in Philippine currency, at
the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3

US$4,20

2. Salary differential

4
US$4,245.00

3. 10% Attorneys fees

42
TOTAL

US$4,66

The other findings are affirmed.

SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner
by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A.
No. 8042 "does not provide for the award of overtime pay, which should be proven to
have been actually performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional
challenge against the subject clause.24 After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as
G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction
of the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his
cause to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in
accord with applicable decision of the Supreme Court involving similar issue of granting
unto the migrant worker back wages equal to the unexpired portion of his contract of
employment instead of limiting it to three (3) months
II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying
their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court
of Appeals gravely erred in law when it failed to discharge its judicial duty to decide
questions of substance not theretofore determined by the Honorable Supreme Court,
particularly, the constitutional issues raised by the petitioner on the constitutionality of
said law, which unreasonably, unfairly and arbitrarily limits payment of the award for
back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No.
8042, the Court of Appeals gravely erred in law in excluding from petitioners award the
overtime pay and vacation pay provided in his contract since under the contract they
form part of his salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already
old and sickly, and he intends to make use of the monetary award for his medical
treatment and medication.29 Required to comment, counsel for petitioner filed a motion,
urging the court to allow partial execution of the undisputed monetary award and, at the
same time, praying that the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes
up the full merit of the petition mindful of the extreme importance of the constitutional
question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal
is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to
petitioner in all three fora. What remains disputed is only the computation of the lumpsum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out of
the unexpired portion of nine months and 23 days of his employment contract or a total
of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in
addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly rate
of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs
the freedom of OFWs to negotiate for and stipulate in their overseas employment
contracts a determinate employment period and a fixed salary package.32 It also

impinges on the equal protection clause, for it treats OFWs differently from local Filipino
workers (local workers) by putting a cap on the amount of lump-sum salary to which
OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary
award for local workers when their dismissal is declared illegal; that the disparate
treatment is not reasonable as there is no substantial distinction between the two
groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees
the protection of the rights and welfare of all Filipino workers, whether deployed locally
or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not
in line with existing jurisprudence on the issue of money claims of illegally dismissed
OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort
them out for the guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for
the acts of the foreign employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money claims was reduced
under Section 10 of R.A. No. 8042.37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the illegal
dismissal of employees, foreign employers are liable for salaries covering a maximum of
only three months of the unexpired employment contract while local employers are liable
for the full lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the
maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the
contract that can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it
deprives him of the salaries and other emoluments he is entitled to under his fixedperiod employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue
should not be entertained, for this was belatedly interposed by petitioner in his appeal

before the CA, and not at the earliest opportunity, which was when he filed an appeal
before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15,
1995, its provisions could not have impaired petitioner's 1998 employment contract.
Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are
deemed part of the minimum terms of petitioner's employment, especially on the matter
of money claims, as this was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature
of their employment, such that their rights to monetary benefits must necessarily be
treated differently. The OSG enumerates the essential elements that distinguish OFWs
from local workers: first, while local workers perform their jobs within Philippine territory,
OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to
acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and
second, as held in Coyoca v. National Labor Relations Commission43 and Millares v.
National Labor Relations Commission,44 OFWs are contractual employees who can never
acquire regular employment status, unlike local workers who are or can become regular
employees. Hence, the OSG posits that there are rights and privileges exclusive to local
workers, but not available to OFWs; that these peculiarities make for a reasonable and
valid basis for the differentiated treatment under the subject clause of the money claims
of OFWs who are illegally dismissed. Thus, the provision does not violate the equal
protection clause nor Section 18, Article II of the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power
measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government seeks to
promote. The survival of legitimate placement agencies helps [assure] the government
that migrant workers are properly deployed and are employed under decent and humane
conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its coequals, such as the Congress, it does so only when these conditions obtain: (1) that there
is an actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party48 and at
the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of
the case,50otherwise the Court will dismiss the case or decide the same on some other
ground.51
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed his

monetary award based on the salary period of three months only as provided under the
subject clause.
The constitutional challenge is also timely. It should be borne in mind that the
requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before acompetent court, such that, if the
issue is not raised in the pleadings before that competent court, it cannot be considered
at the trial and, if not considered in the trial, it cannot be considered on
appeal.52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition
forCertiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function its function in the present case is limited to determining questions of fact to
which the legislative policy of R.A. No. 8042 is to be applied and to resolving such
questions in accordance with the standards laid down by the law itself;55 thus, its
foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the
validity of its provisions. The CA, on the other hand, is vested with the power of judicial
review or the power to declare unconstitutional a law or a provision thereof, such as the
subject clause.56Petitioner's interposition of the constitutional issue before the CA was
undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its
decision.
The third condition that the constitutional issue be critical to the resolution of the case
likewise obtains because the monetary claim of petitioner to his lump-sum salary for the
entire unexpired portion of his 12-month employment contract, and not just for a period
of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject
clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his
contract on the term of his employment and the fixed salary package he will receive 57 is
not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58and cannot affect acts or contracts already perfected;59 however,

as to laws already in existence, their provisions are read into contracts and deemed a
part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in
application to laws about to be enacted that would in any way derogate from existing
acts or contracts by enlarging, abridging or in any manner changing the intention of the
parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired
the employment contract of the parties. Rather, when the parties executed their 1998
employment contract, they were deemed to have incorporated into it all the provisions of
R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be
declared unconstitutional on the ground that it impinges on the impairment clause, for
the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed.61 Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare of
the people are generally applicable not only to future contracts but even to those already
in existence, for all private contracts must yield to the superior and legitimate measures
taken by the State to promote public welfare.62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor
shall any person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne
by them in equal degree; none should be denied the protection of the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to
incorporate, when it sees fit, a system of classification into its legislation; however, to be
valid, the classification must comply with these requirements: 1) it is based on

substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to

existing conditions only; and 4) it applies equally to all members of the class. 66
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a
legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right70 or operates to the
peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the burden
is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is theleast restrictive means to protect such
interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn
along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a
provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial
institution (GFI), was challenged for maintaining its rank-and-file employees under the
Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs
had been exempted from the SSL by their respective charters. Finding that the disputed
provision contained a suspect classification based on salary grade, the Court deliberately
employed the standard of strict judicial scrutiny in its review of the constitutionality of
said provision. More significantly, it was in this case that the Court revealed the broad
outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies
should be accorded recognition and respect by the courts of justice except when they
run afoul of the Constitution. The deference stops where the classification violates a
fundamental right, or prejudices persons accorded special protection by the
Constitution. When these violations arise, this Court must discharge its primary role as
the vanguard of constitutional guaranties, and require a stricter and more exacting
adherence to constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or English
jurisprudence. Nevertheless, these foreign decisions and authorities are not per se
controlling in this jurisdiction. At best, they are persuasive and have been used to
support many of our decisions. We should not place undue and fawning reliance upon
them and regard them as indispensable mental crutches without which we cannot come
to our own decisions through the employment of our own endowments. We live in a
different ambience and must decide our own problems in the light of our own interests
and needs, and of our qualities and even idiosyncrasies as a people, and always with our

own concept of law and justice. Our laws must be construed in accordance with the
intention of our own lawmakers and such intent may be deduced from the language of
each law and the context of other local legislation related thereto. More importantly, they
must be construed to serve our own public interest which is the be-all and the end-all of
all our laws. And it need not be stressed that our public interest is distinct and different
from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities
in Philippine society. The command to promote social justice in Article II, Section 10, in
"all phases of national development," further explicitated in Article XIII, are clear
commands to the State to take affirmative action in the direction of greater equality. x x
x [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more
vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic
rights to marginalized groups of society, including labor. Under the policy of social
justice, the law bends over backward to accommodate the interests of the working class
on the humane justification that those with less privilege in life should have more in law.
And the obligation to afford protection to labor is incumbent not only on the legislative
and executive branches but also on the judiciary to translate this pledge into a living
reality. Social justice calls for the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions
of constitutionality, recognizing the broad discretion given to Congress in exercising its
legislative power. Judicial scrutiny would be based on the "rational basis" test, and the
legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right,
or the perpetuation of prejudice against persons favored by the Constitution
with special protection, judicial scrutiny ought to be more strict. A weak and
watered down view would call for the abdication of this Courts solemn duty to strike
down any law repugnant to the Constitution and the rights it enshrines. This is true
whether the actor committing the unconstitutional act is a private person or the
government itself or one of its instrumentalities. Oppressive acts will be struck down
regardless of the character or nature of the actor.
xxxx

In the case at bar, the challenged proviso operates on the basis of the salary grade or
officer-employee status. It is akin to a distinction based on economic class and status,
with the higher grades as recipients of a benefit specifically withheld from the lower
grades. Officers of the BSP now receive higher compensation packages that are
competitive with the industry, while the poorer, low-salaried employees are limited to the
rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file
employees are paid the strictly regimented rates of the SSL while employees higher in
rank - possessing higher and better education and opportunities for career advancement
- are given higher compensation packages to entice them to stay. Considering that
majority, if not all, the rank-and-file employees consist of people whose status and rank
in life are less and limited, especially in terms of job marketability, it is they - and not the
officers - who have the real economic and financial need for the adjustment . This is in
accord with the policy of the Constitution "to free the people from poverty, provide
adequate social services, extend to them a decent standard of living, and improve the
quality of life for all." Any act of Congress that runs counter to this constitutional
desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis
supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the
subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts ofone year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79 (Second Division, 1999) that the Court laid down the following
rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to
wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to
award an illegally dismissed overseas contract worker, i.e., whether his
salaries for the unexpired portion of his employment contract or three (3)
months salary for every year of the unexpired term, whichever is less, comes
into play only when the employment contract concerned has a term of at least
one (1) year or more. This is evident from the words "for every year of the
unexpired term" which follows the words "salaries x x x for three months." To

follow petitioners thinking that private respondent is entitled to three (3) months salary
only simply because it is the lesser amount is to completely disregard and overlook some
words used in the statute while giving effect to some. This is contrary to the wellestablished rule in legal hermeneutics that in interpreting a statute, care should be taken
that every part or word thereof be given effect since the law-making body is presumed to
know the meaning of the words employed in the statue and to have used them advisedly.
Ut res magis valeat quam pereat.80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his
contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting
rulings on Section 10(5). One was Asian Center for Career and Employment System and
Services v. National Labor Relations Commission(Second Division, October 1998),81 which
involved an OFW who was awarded a two-year employment contract,but was dismissed
after working for one year and two months. The LA declared his dismissal illegal and
awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired
portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent
to his three months salary, this being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion
of his employment contract or for three (3) months for every year of the unexpired term,
whichever is less.
In the case at bar, the unexpired portion of private respondents employment contract is
eight (8) months. Private respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600.82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission (Third Division, December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which was
deemed renewed for another 12 months. After serving for one year and seven-and-a-half
months, respondent Osdana was illegally dismissed, and the Court awarded her salaries
for the entire unexpired portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following
cases:
Case Title

Contrac
t Period

Period of
Service

Unexpired
Period

Period
Applied in
the
Computation
of the
Monetary
Award

Skippers v.
Maguad84

6 months

2 months

4 months

4 months

Bahia
Shipping v.
Reynaldo
Chua 85

9 months

8 months

4 months

4 months

Centennial
Transmarin
e v. dela
Cruz l86

9 months

4 months

5 months

5 months

Talidano v.
Falcon87

12
months

3 months

9 months

3 months

Univan v.
CA88

12
months

3 months

9 months

3 months

Oriental v.
CA89

12
months

more than
2 months

10 months

3 months

PCL v.
NLRC90

12
months

more than
2 months

more or less
9 months

3 months

Olarte v.
Nayona91

12
months

21 days

11 months
and 9 days

3 months

JSS
v.Ferrer92

12
months

16 days

11 months
and 24 days

3 months

9 months
and 7
days

2 months
and 23 days

2 months and
23 days

Pentagon v.
Adelantar93

12
months

Phil.
Employ v.
Paramio, et
al.94

12
months

10 months

2 months

Unexpired
portion

Flourish
Maritime v.
Almanzor 95

2 years

26 days

23 months
and 4 days

6 months or 3
months for
each year of
contract

Athenna
Manpower
v. Villanos 96

1 year,
10
months
and 28
days

1 month

1 year, 9
months and
28 days

6 months or 3
months for
each year of
contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts of
less than one year; in case of illegal dismissal, they are entitled to their salaries for the
entire unexpired portion of their contract. The second category consists of OFWs with
fixed-period employment contracts of one year or more; in case of illegal dismissal, they
are entitled to monetary award equivalent to only 3 months of the unexpired portion of
their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded
his salaries for the remaining 4 months. In contrast, the respondent OFWs
in Oriental and PCL who had also worked for about 2 months out of their 12-month
contracts were awarded their salaries for only 3 months of the unexpired portion of their
contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer
period of 3 months out of their 12-month contracts before being illegally dismissed were
awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A
with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and
a hypothetical OFW-B with an employment contract of 15 months with the same monthly
salary rate of US$1,000.00. Both commenced work on the same day and under the same
employer, and were illegally dismissed after one month of work. Under the subject
clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00,
equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of
US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00
is the lesser amount.
The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14,
1995,97 illegally dismissed OFWs, no matter how long the period of their employment
contracts, were entitled to their salaries for the entire unexpired portions of their
contracts. The matrix below speaks for itself:
Case Title

Contract
Period

Period
of
Service

Unexpire
d Period

Period Applied
in the
Computation of
the Monetary
Award

ATCI v. CA,
et al.98

2 years

2
months

22 months

22 months

Phil.
Integrated
v. NLRC99

2 years

7 days

23 months
and 23
days

23 months and
23 days

JGB v.

2 years

9 months 15 months

15 months

NLC100
Agoy v.
NLRC101

2 years

2 months 22 months

22 months

EDI v.
NLRC, et
al.102

2 years

5 months 19 months

19 months

Barros v.
NLRC, et
al.103

12
months

4 months

8 months

8 months

Philippine
Transmarin
e v.
Carilla104

12
months

6 months
and 22
days

5 months
and 18
days

5 months and 18
days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform
rule of computation: their basic salaries multiplied by the entire unexpired portion of
their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired
portion of one year or more and subjecting them to the peculiar disadvantage of having
their monetary awards limited to their salaries for 3 months or for the unexpired portion
thereof, whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contracts fall short of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court
now has misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or definite
extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is
significant in many ways: first, the unexpired term must be at least one year, for if it
were any shorter, there would be no occasion for such unexpired term to be measured
by every year; and second, the original term must be more than one year, for otherwise,
whatever would be the unexpired term thereof will not reach even a year. Consequently,
the more decisive factor in the determination of when the subject clause "for three (3)
months forevery year of the unexpired term, whichever is less" shall apply is not the
length of the original contract period as held in Marsaman,106 but the length of the
unexpired portion of the contract period -- the subject clause applies in cases when the

unexpired portion of the contract period is at least one year, which arithmetically
requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally dismissed with one
year or more remaining in their contracts shall be covered by the subject clause, and
their monetary benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject
clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month
contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the
12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months
remaining in the contract period of OFW-C, the subject clause applies to the computation
of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or
the latter's total salaries for the 12 months unexpired portion of the contract, but to the
lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month
unexpired term of the contract. On the other hand, OFW-D is spared from the effects of
the subject clause, for there are only 11 months left in the latter's contract period. Thus,
OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for
the entire 11-month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of
the Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees
should have been made of a fixed period, none of the contracting parties, without the
consent of the other, may withdraw from the fulfillment of said contract until the
termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered,
with the exception of the provisions contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to
determine the liability of a shipping company for the illegal discharge of its managers
prior to the expiration of their fixed-term employment. The Court therein held the
shipping company liable for the salaries of its managers for the remainder of their fixedterm employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the fulfillment
of their contracts, except for reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice
or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time
and for a certain work cannot leave or be dismissed without sufficient cause, before the
fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586
as a conjunctive "and" so as to apply the provision to local workers who are employed for
a time certain although for no particular skill. This interpretation of Article 1586 was
reiterated in Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and
Palomar, the Court adopted the general principle that in actions for wrongful discharge
founded on Article 1586, local workers are entitled to recover damages to the extent of
the amount stipulated to be paid to them by the terms of their contract. On the
computation of the amount of such damages, the Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been
brought to our attention to the contrary under Spanish jurisprudence, that when an
employee is wrongfully discharged it is his duty to seek other employment of the same
kind in the same community, for the purpose of reducing the damages resulting from
such wrongful discharge. However, while this is the general rule, the burden of showing
that he failed to make an effort to secure other employment of a like nature, and that
other employment of a like nature was obtainable, is upon the defendant. When an
employee is wrongfully discharged under a contract of employment his prima facie
damage is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs.
Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115 (Emphasis
supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book
IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil

Code do not expressly provide for the remedies available to a fixed-term worker who is
illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v.
Rich,117 the Court carried over the principles on the payment of damages underlying
Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal
discharge of a local worker whose fixed-period employment contract was entered into in
1952, when the new Civil Code was already in effect.118
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in
First Asian Trans & Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixedperiod employment contract as a baby sitter, was awarded salaries corresponding to the
unexpired portion of her contract. The Court arrived at the same ruling in Anderson v.
National Labor Relations Commission,121 which involved a foreman hired in 1988 in Saudi
Arabia for a fixed term of two years, but who was illegally dismissed after only nine
months on the job -- the Court awarded him salaries corresponding to 15 months, the
unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor
Relations Commission,122 a Filipino working as a security officer in 1989 in Angola was
awarded his salaries for the remaining period of his 12-month contract after he was
wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations
Commission,123 an OFW whose 12-month contract was illegally cut short in the second
month was declared entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their money
claims: they were uniformly entitled to their salaries for the entire unexpired portions of
their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the
subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in
their employment contract have since been differently treated in that their money claims
are subject to a 3-month cap, whereas no such limitation is imposed on local workers
with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in
that, in the computation of the monetary benefits of fixed-term employees
who are illegally discharged, it imposes a 3-month cap on the claim of OFWs
with an unexpired portion of one year or more in their contracts, but none on
the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a
peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive
means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history.124 It is akin to the paramount

interest of the state125 for which some individual liberties must give way, such as the
public interest in safeguarding health or maintaining medical standards,126 or in
maintaining access to information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months
[sic], Filipino seafarers have better chance of getting hired by foreign employers." The
limitation also protects the interest of local placement agencies, which otherwise may be
made to shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations are unnecessarily penalized for
the acts of the foreign employer. To protect them and to promote their continued helpful
contribution in deploying Filipino migrant workers, liability for money are reduced under
Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are employed
under decent and humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;130 but
the speech makes no reference to the underlying reason for the adoption of the subject
clause. That is only natural for none of the 29 provisions in HB 14314 resembles the
subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims,
to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an employer-employee relationship or by
virtue of the complaint, the claim arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for overseas employment
including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal and the recruitment/placement agency or any and all claims
under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims
exclusive of damages under this Section shall not be less than fifty percent (50%) of such
money claims: Provided, That any installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more than two (2) months. Any
compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this
Section shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution
within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public
office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation
of money claims.
A rule on the computation of money claims containing the subject clause was inserted
and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court
examined the rationale of the subject clause in the transcripts of the "Bicameral
Conference Committee (Conference Committee) Meetings on the Magna Carta on OCWs
(Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." However, the
Court finds no discernible state interest, let alone a compelling one, that is sought to be
protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
the employment of OFWs by mitigating the solidary liability of placement agencies, such
callous and cavalier rationale will have to be rejected. There can never be a justification
for any form of government action that alleviates the burden of one sector, but imposes
the same burden on another sector, especially when the favored sector is composed of
private businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution commands. The idea

that private business interest can be elevated to the level of a compelling state interest
is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in
place that can be employed to achieve that purpose without infringing on the
constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of LandBased Overseas Workers, dated February 4, 2002, imposes administrative disciplinary
measures on erring foreign employers who default on their contractual obligations to
migrant workers and/or their Philippine agents. These disciplinary measures range from
temporary disqualification to preventive suspension. The POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains
similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative
of the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3,131Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing, 132 there
are some which this Court has declared not judicially enforceable, Article XIII being
one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v.
National Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be
deemed as self-executing in the sense that these are automatically acknowledged and
observed without need for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical,
if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full protection to labor" and "security of
tenure", when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor against any form of
removal regardless of circumstance. This interpretation implies an unimpeachable right
to continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the
parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and
pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to
approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source

of a positive enforceable right to stave off the dismissal of an employee for just
cause owing to the failure to serve proper notice or hearing. As manifested by several
framers of the 1987 Constitution, the provisions on social justice require legislative
enactments for their enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional.
It may unwittingly risk opening the floodgates of litigation to every worker or union over
every conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working
class any actual enforceable right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or legislative action
and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the welfare
of the working class. And it was in fact consistent with that constitutional agenda that
the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v.
Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato
S. Puno, formulated the judicial precept that when the challenge to a statute is premised
on the perpetuation of prejudice against persons favored by the Constitution with special
protection -- such as the working class or a section thereof -- the Court may recognize
the existence of a suspect classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated
in Central Bank Employee Association exaggerate the significance of Section 3, Article
XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the
equal protection clause. Article XIII, by itself, without the application of the equal
protection clause, has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject clause of
limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is
to give them a better chance of getting hired by foreign employers. This is plain
speculation. As earlier discussed, there is nothing in the text of the law or the records of
the deliberations leading to its enactment or the pleadings of respondent that would
indicate that there is an existing governmental purpose for the subject clause, or even
just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is
for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1,137 Article III of
the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis
in the computation of his monetary award, because these are fixed benefits that have
been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers
like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary is understood as the basic wage,
exclusive of overtime, leave pay and other bonuses; whereas overtime pay is
compensation for all work "performed" in excess of the regular eight hours, and holiday
pay is compensation for any work "performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
there is evidence that he performed work during those periods. As the Court held
in Centennial Transmarine, Inc. v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our
ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was
actually performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly salary.
In short, the contract provision guarantees the right to overtime pay but the entitlement
to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the
contract is unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months
for every year of the unexpired term, whichever is less" in the 5th paragraph of Section
10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8,
2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the
effect that petitioner is AWARDED his salaries for the entire unexpired portion of his
employment contract consisting of nine months and 23 days computed at the rate of
US$1,400.00 per month.
No costs.
SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

83. PLDT vs NLRC

G.R. No. 80609

August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.

Nicanor G. Nuevas for petitioner.

CRUZ, J.:

The only issue presented in the case at bar is the legality of the award of financial
assistance to an employee who had been dismissed for cause as found by the public
respondent.

Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company,
was accused by two complainants of having demanded and received from them the total
amount of P3,800.00 in consideration of her promise to facilitate approval of their
applications for telephone installation. 1 Investigated and heard, she was found guilty as
charged and accordingly separated from the service. 2 She went to the Ministry of Labor
and Employment claiming she had been illegally removed. After consideration of the
evidence and arguments of the parties, the company was sustained and the complaint
was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's
decision declared:

WHEREFORE, the instant complaint is dismissed for lack of merit.

Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally
blameless in the light of the fact that the deal happened outhide the premises of
respondent company and that their act of giving P3,800.00 without any receipt is
tantamount to corruption of public officers, complainant must be given one month pay
for every year of service as financial assistance. 3

Both the petitioner and the private respondent appealed to the National Labor Relations
Board, which upheld the said decision in toto and dismissed the appeals. 4 The private
respondent took no further action, thereby impliedly accepting the validity of her
dismissal. The petitioner, however, is now before us to question the affirmance of the
above- quoted award as having been made with grave abuse of discretion.

In its challenged resolution of September 22, 1987, the NLRC said:

... Anent the award of separation pay as financial assistance in complainant's favor, We
find the same to be equitable, taking into consideration her long years of service to the
company whereby she had undoubtedly contributed to the success of respondent. While
we do not in any way approve of complainants (private respondent) mal feasance, for
which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion
that we resolve to uphold the award of financial assistance in her favor. 5

The position of the petitioner is simply stated: It is conceded that an employee illegally
dismissed is entitled to reinstatement and backwages as required by the labor laws.
However, an employee dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because his dismissal is in accordance with
law. In the case of the private respondent, she has been awarded financial assistance
equivalent to ten months pay corresponding to her 10 year service in the company
despite her removal for cause. She is, therefore, in effect rewarded rather than punished
for her dishonesty, and without any legal authorization or justification. The award is
made on the ground of equity and compassion, which cannot be a substitute for law.
Moreover, such award puts a premium on dishonesty and encourages instead of
deterring corruption.

For its part, the public respondent claims that the employee is sufficiently punished with
her dismissal. The grant of financial assistance is not intended as a reward for her
offense but merely to help her for the loss of her employment after working faithfully
with the company for ten years. In support of this position, the Solicitor General cites the
cases of Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v.
Mercantile Corporation of Davao, 7 where the employees were dismissed for cause but

were nevertheless allowed separation pay on grounds of social and compassionate

justice. As the Court put it in the Firestone case:

In view of the foregoing, We rule that Firestone had valid grounds to dispense with the
services of Lariosa and that the NLRC acted with grave abuse of discretion in ordering his
reinstatement. However, considering that Lariosa had worked with the company for
eleven years with no known previous bad record, the ends of social and compassionate
justice would be served if he is paid full separation pay but not reinstatement without
backwages by the NLRC.

In the said case, the employee was validly dismissed for theft but the NLRC nevertheless
awarded him full separation pay for his 11 years of service with the company. In Soco,
the employee was also legally separated for unauthorized use of a company vehicle and
refusal to attend the grievance proceedings but he was just the same granted one-half
month separation pay for every year of his 18-year service.

Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly
dismissed for preferring certain dealers in violation of company policy but was allowed
separation pay for his 2 years of service. In Metro Drug Corporation v. NLRC, 9 the
employee was validly removed for loss of confidence because of her failure to account
for certain funds but she was awarded separation pay equivalent to one-half month's
salary for every year of her service of 15 years. In Engineering Equipment, Inc. v. NLRC,
10 the dismissal of the employee was justified because he had instigated labor unrest
among the workers and had serious differences with them, among other grounds, but he
was still granted three months separation pay corresponding to his 3-year service. In
New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly
terminated for lack of confidence and abandonment of work but he was nonetheless
granted three months separation pay. And in San Miguel Corporation v. Deputy Minister
of Labor and Employment, et al ., 12 full separation pay for 6, 10, and 16 years service,
respectively, was also allowed three employees who had been dismissed after they were
found guilty of misappropriating company funds.

The rule embodied in the Labor Code is that a person dismissed for cause as defined
therein is not entitled to separation pay. 13 The cases above cited constitute the
exception, based upon considerations of equity. Equity has been defined as justice
outside law, 14 being ethical rather than jural and belonging to the sphere of morals
than of law. 15 It is grounded on the precepts of conscience and not on any sanction of
positive law. 16 Hence, it cannot prevail against the expressed provision of the labor laws
allowing dismissal of employees for cause and without any provision for separation pay.

Strictly speaking, however, it is not correct to say that there is no express justification for
the grant of separation pay to lawfully dismissed employees other than the abstract
consideration of equity. The reason is that our Constitution is replete with positive
commands for the promotion of social justice, and particularly the protection of the rights
of the workers. The enhancement of their welfare is one of the primary concerns of the
present charter. In fact, instead of confining itself to the general commitment to the
cause of labor in Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of social justice and
human rights with a separate sub- topic for labor. Article XIII expressly recognizes the
vital role of labor, hand in hand with management, in the advancement of the national
economy and the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more than sufficient basis
to justify the award of separation pay in proper cases even if the dismissal be for cause.

The Court notes, however, that where the exception has been applied, the decisions
have not been consistent as to the justification for the grant of separation pay and the
amount or rate of such award. Thus, the employees dismissed for theft in the Firestone
case and for animosities with fellow workers in the Engineering Equipment case were
both awarded separation pay notnvithstanding that the first cause was certainly more
serious than the second. No less curiously, the employee in the Soco case was allowed
only one-half month pay for every year of his 18 years of service, but in Filipro the award
was two months separation pay for 2 years service. In Firestone, the emplovee was
allowed full separation pay corresponding to his 11 years of service, but in Metro, the
employee was granted only one-half month separation pay for every year of her 15year
service. It would seem then that length of service is not necessarily a criterion for the
grant of separation pay and neither apparently is the reason for the dismissal.

The Court feels that distinctions are in order. We note that heretofore the separation pay,
when it was considered warranted, was required regardless of the nature or degree of
the ground proved, be it mere inefficiency or something graver like immorality or
dishonesty. The benediction of compassion was made to cover a multitude of sins, as it
were, and to justify the helping hand to the validly dismissed employee whatever the
reason for his dismissal. This policy should be re-examined. It is time we rationalized the
exception, to make it fair to both labor and management, especially to labor.

There should be no question that where it comes to such valid but not iniquitous causes
as failure to comply with work standards, the grant of separation pay to the dismissed
employee may be both just and compassionate, particularly if he has worked for some
time with the company. For example, a subordinate who has irreconcilable policy or
personal differences with his employer may be validly dismissed for demonstrated loss of
confidence, which is an allowable ground. A working mother who has to be frequently
absent because she has also to take care of her child may also be removed because of
her poor attendance, this being another authorized ground. It is not the employee's fault
if he does not have the necessary aptitude for his work but on the other hand the

company cannot be required to maintain him just the same at the expense of the
efficiency of its operations. He too may be validly replaced. Under these and similar
circumstances, however, the award to the employee of separation pay would be
sustainable under the social justice policy even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, the
generosity of the law must be more discerning. There is no doubt it is compassionate to
give separation pay to a salesman if he is dismissed for his inability to fill his quota but
surely he does not deserve such generosity if his offense is misappropriation of the
receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was in
fact not really sleeping but sleeping with a prostitute during his tour of duty and in the
company premises, the situation is changed completely. This is not only inefficiency but
immorality and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Where the reason for the
valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not
be required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that
he will commit a similar offense in his next employment because he thinks he can expect
a like leniency if he is again found out. This kind of misplaced compassion is not going to
do labor in general any good as it will encourage the infiltration of its ranks by those who
do not deserve the protection and concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it
is committed by the underprivileged. At best it may mitigate the penalty but it certainly
will not condone the offense. Compassion for the poor is an imperative of every humane
society but only when the recipient is not a rascal claiming an undeserved privilege.
Social justice cannot be permitted to be refuge of scoundrels any more than can equity
be an impediment to the punishment of the guilty. Those who invoke social justice may
do so only if their hands are clean and their motives blameless and not simply because
they happen to be poor. This great policy of our Constitution is not meant for the

protection of those who have proved they are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of their own character.

Applying the above considerations, we hold that the grant of separation pay in the case
at bar is unjustified. The private respondent has been dismissed for dishonesty, as found
by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted.
The fact that she has worked with the PLDT for more than a decade, if it is to be
considered at all, should be taken against her as it reflects a regrettable lack of loyalty
that she should have strengthened instead of betraying during all of her 10 years of
service with the company. If regarded as a justification for moderating the penalty of
dismissal, it will actually become a prize for disloyalty, perverting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of all undesirables.

The Court also rules that the separation pay, if found due under the circumstances of
each case, should be computed at the rate of one month salary for every year of service,
assuming the length of such service is deemed material. This is without prejudice to the
application of special agreements between the employer and the employee stipulating a
higher rate of computation and providing for more benefits to the discharged employee.
17

WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987,

is AFFIRMED in toto except for the grant of separation pay in the form of financial
assistance, which is hereby DISALLOWED. The temporary restraining order dated March
23, 1988, is LIFTED. It is so ordered.

Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento,

Cortes and Medialdea, JJ., concur.

Separate Opinions

FERNAN, C.J., dissenting:

The majority opinion itself declares that the reason for granting separation pay to
lawfully dismissed employees is that "our Constitution is replete with positive commands
for the promotion of social justice, and particularly the protection of the rights of the
workers." 1

It is my firm belief that providing a rigid mathematical formula for determining the
amounts of such separation pay will not be in keeping with these constitutional
directives. By computing the allowable financial assistance on the formula suggested, we
shall be closing our eyes to the spirit underlying these constitutional mandates that
"those who have less in life should have more in law." It cannot be denied that a low
salaried employee who is separated from work would suffer more hardship than a wellcompensated one. Yet, if we follow the formula suggested, we would in effect be favoring
the latter instead of the former, as it would be the low- salaried employee who would
encounter difficulty finding another job.

I am in accord with the opinion of Justice Sarmiento that we should not rationalize
compassion and that of Justice Padilla that the awards of financial assistance should be
left to the discretion of the National Labor Relations Commission as may be warranted by
the "environmental facts" of the case.

PADILIA, J., separate opinion

I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay, as
financial assistance, to the private respondent, since the ground for termination of
employment is dishonesty in the performance of her duties.

I do not, however, subscribe to the view that "the separation pay, if found due under the
circumstances of each case, should be computed at the rate of one month salary for
every year of service, assuming the length of such service is deemed material." (p.11,
Decision). It is my considered view that, except for terminations based on dishonesty and
serious misconduct involving moral turpitude-where no separation pay should be
allowed--in other cases, the grant of separation pay, i.e. the amount thereof, as financial
assistance to the terminated employee, should be left to the judgment of the
administrative agency concemed which is the NLRC. It is in such cases- where the
termination of employment is for a valid cause without, however, involving dishonesty or
serious misconduct involving moral turpitude-that the Constitutional policy of affording
protection to labor should be allowed full play; and this is achieved by leaving to the
NLRC the primary jurisdiction and judgment to determine the amount of separation pay

that should be awarded to the terminated employee in accordance with the

"environmental facts" of each case.

It is further my view that the Court should not, as a rule, disturb or alter the amount of
separation pay awarded by the NLRC in such cases of valid termination of employment
but with the financial assistance, in the absence of a demonstrated grave abuse of
discretion on the part of the NLRC.

GRIO AQUINO, J., dissent:

We should not rationalize compassion. I vote to affirm the grant of financial assistance.

84. Roe vs Wade

410 U.S. 113

Roe v. Wade (No. 70-18)

Argued: December 13, 1971

Decided: January 22, 1973

314 F.Supp. 1217, affirmed in part and reversed in part.

Syllabus
Opinion, Blackmun
Concurrence, Stewart
Dissent, Rehnquist
Syllabus

A pregnant single woman (Roe) brought a class action challenging the constitutionality of
the Texas criminal abortion laws, which proscribe procuring or attempting an abortion
except on medical advice for the purpose of saving the mother's life. A licensed
physician (Hallford), who had two state abortion prosecutions pending against him, was
permitted to intervene. A childless married couple (the Does), the wife not being
pregnant, separately attacked the laws, basing alleged injury on the future possibilities
of contraceptive failure, pregnancy, unpreparedness for parenthood, and impairment of
the wife's health. A three-judge District Court, which consolidated the actions, held that
Roe and Hallford, and members of their classes, had standing to sue and presented
justiciable controversies. Ruling that declaratory, though not injunctive, relief was
warranted, the court declared the abortion statutes void as vague and overbroadly
infringing those plaintiffs' Ninth and Fourteenth Amendment rights. The court ruled the
Does' complaint not justiciable. Appellants directly appealed to this Court on the
injunctive rulings, and appellee cross-appealed from the District Court's grant of
declaratory relief to Roe and Hallford.

Held:

1. While 28 U.S.C. 1253 authorizes no direct appeal to this Court from the grant or
denial of declaratory relief alone, review is not foreclosed when the case is properly
before the Court on appeal from specific denial of injunctive relief and the arguments as
to both injunctive and declaratory relief are necessarily identical. P. 123.

2. Roe has standing to sue; the Does and Hallford do not. Pp. 123-129.

(a) Contrary to appellee's contention, the natural termination of Roe's pregnancy did not
moot her suit. Litigation involving pregnancy, which is "capable of repetition, yet evading
review," is an exception to the usual federal rule that an actual controversy [p114] must
exist at review stages, and not simply when the action is initiated. Pp. 124-125.

(b) The District Court correctly refused injunctive, but erred in granting declaratory, relief
to Hallford, who alleged no federally protected right not assertable as a defense against
the good faith state prosecutions pending against him. Samuels v. Mackell, 401 U.S. 66.
Pp. 125-127.

(c) The Does' complaint, based as it is on contingencies, any one or more of which may
not occur, is too speculative to present an actual case or controversy. Pp. 127-129.

3. State criminal abortion laws, like those involved here, that except from criminality only
a life-saving procedure on the mother's behalf without regard to the stage of her
pregnancy and other interests involved violate the Due Process Clause of the Fourteenth
Amendment, which protects against state action the right to privacy, including a
woman's qualified right to terminate her pregnancy. Though the State cannot override
that right, it has legitimate interests in protecting both the pregnant woman's health and
the potentiality of human life, each of which interests grows and reaches a "compelling"
point at various stages of the woman's approach to term. Pp. 147-164.

(a) For the stage prior to approximately the end of the first trimester, the abortion
decision and its effectuation must be left to the medical judgment of the pregnant
woman's attending physician. Pp. 163, 164.

(b) For the stage subsequent to approximately the end of the first trimester, the State, in
promoting its interest in the health of the mother, may, if it chooses, regulate the
abortion procedure in ways that are reasonably related to maternal health. Pp. 163, 164.

(c) For the stage subsequent to viability the State, in promoting its interest in the
potentiality of human life, may, if it chooses, regulate, and even proscribe, abortion
except where necessary, in appropriate medical judgment, for the preservation of the life
or health of the mother. Pp. 163-164; 164-165.

4. The State may define the term "physician" to mean only a physician currently licensed
by the State, and may proscribe any abortion by a person who is not a physician as so
defined. P. 165.

5. It is unnecessary to decide the injunctive relief issue, since the Texas authorities will
doubtless fully recognize the Court's ruling [p115] that the Texas criminal abortion
statutes are unconstitutional. P. 166.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and DOUGLAS,
BRENNAN, STEWART, MARSHALL, and POWELL, JJ., joined. BURGER, C.J., post, p. 207,
DOUGLAS, J., post, p. 209, and STEWART, J., post, p. 167, filed concurring opinions.
WHITE, J., filed a dissenting opinion, in which REHNQUIST, J., joined, post, p. 221.
REHNQUIST, J., filed a dissenting opinion, post, p. 171. [p116]

TOP

Opinion

BLACKMUN, J., Opinion of the Court

MR. JUSTICE BLACKMUN delivered the opinion of the Court.

This Texas federal appeal and its Georgia companion, Doe v. Bolton, post, p. 179, present
constitutional challenges to state criminal abortion legislation. The Texas statutes under
attack here are typical of those that have been in effect in many States for
approximately a century. The Georgia statutes, in contrast, have a modern cast, and are
a legislative product that, to an extent at least, obviously reflects the influences of recent
attitudinal change, of advancing medical knowledge and techniques, and of new thinking
about an old issue.

We forthwith acknowledge our awareness of the sensitive and emotional nature of the
abortion controversy, of the vigorous opposing views, even among physicians, and of the
deep and seemingly absolute convictions that the subject inspires. One's philosophy,
one's experiences, one's exposure to the raw edges of human existence, one's religious
training, one's attitudes toward life and family and their values, and the moral standards
one establishes and seeks to observe, are all likely to influence and to color one's
thinking and conclusions about abortion.

In addition, population growth, pollution, poverty, and racial overtones tend to

complicate and not to simplify the problem.

Our task, of course, is to resolve the issue by constitutional measurement, free of

emotion and of predilection. We seek earnestly to do this, and, because we do, we
[p117] have inquired into, and in this opinion place some emphasis upon, medical and
medical-legal history and what that history reveals about man's attitudes toward the
abortion procedure over the centuries. We bear in mind, too, Mr. Justice Holmes'
admonition in his now-vindicated dissent in Lochner v. New York, 198 U.S. 45, 76 (1905):

[The Constitution] is made for people of fundamentally differing views, and the accident
of our finding certain opinions natural and familiar or novel and even shocking ought not
to conclude our judgment upon the question whether statutes embodying them conflict
with the Constitution of the United States.

The Texas statutes that concern us here are Arts. 1191-1194 and 1196 of the State's
Penal Code. [n1] These make it a crime to "procure an abortion," as therein [p118]
defined, or to attempt one, except with respect to "an abortion procured or attempted by
medical advice for the purpose of saving the life of the mother." Similar statutes are in
existence in a majority of the States. [n2] [p119]

Texas first enacted a criminal abortion statute in 1854. Texas Laws 1854, c. 49, 1, set
forth in 3 H. Gammel, Laws of Texas 1502 (1898). This was soon modified into language
that has remained substantially unchanged to the present time. See Texas Penal Code of
1857, c. 7, Arts. 531-536; G. Paschal, Laws of Texas, Arts. 2192-2197 (1866); Texas
Rev.Stat., c. 8, Arts. 536-541 (1879); Texas Rev.Crim.Stat., Arts. 1071-1076 (1911). The
final article in each of these compilations provided the same exception, as does the
present Article 1196, for an abortion by "medical advice for the purpose of saving the life
of the mother." [n3] [p120]

II

Jane Roe, [n4] a single woman who was residing in Dallas County, Texas, instituted this
federal action in March 1970 against the District Attorney of the county. She sought a
declaratory judgment that the Texas criminal abortion statutes were unconstitutional on
their face, and an injunction restraining the defendant from enforcing the statutes.

Roe alleged that she was unmarried and pregnant; that she wished to terminate her
pregnancy by an abortion "performed by a competent, licensed physician, under safe,
clinical conditions"; that she was unable to get a "legal" abortion in Texas because her
life did not appear to be threatened by the continuation of her pregnancy; and that she
could not afford to travel to another jurisdiction in order to secure a legal abortion under
safe conditions. She claimed that the Texas statutes were unconstitutionally vague and
that they abridged her right of personal privacy, protected by the First, Fourth, Fifth,
Ninth, and Fourteenth Amendments. By an amendment to her complaint, Roe purported
to sue "on behalf of herself and all other women" similarly situated.

James Hubert Hallford, a licensed physician, sought and was granted leave to intervene
in Roe's action. In his complaint, he alleged that he had been arrested previously for
violations of the Texas abortion statutes, and [p121] that two such prosecutions were
pending against him. He described conditions of patients who came to him seeking
abortions, and he claimed that for many cases he, as a physician, was unable to
determine whether they fell within or outside the exception recognized by Article 1196.

He alleged that, as a consequence, the statutes were vague and uncertain, in violation of
the Fourteenth Amendment, and that they violated his own and his patients' rights to
privacy in the doctor-patient relationship and his own right to practice medicine, rights
he claimed were guaranteed by the First, Fourth, Fifth, Ninth, and Fourteenth
Amendments.

John and Mary Doe, [n5] a married couple, filed a companion complaint to that of Roe.
They also named the District Attorney as defendant, claimed like constitutional
deprivations, and sought declaratory and injunctive relief. The Does alleged that they
were a childless couple; that Mrs. Doe was suffering from a "neural-chemical" disorder;
that her physician had "advised her to avoid pregnancy until such time as her condition
has materially improved" (although a pregnancy at the present time would not present
"a serious risk" to her life); that, pursuant to medical advice, she had discontinued use of
birth control pills; and that, if she should become pregnant, she would want to terminate
the pregnancy by an abortion performed by a competent, licensed physician under safe,
clinical conditions. By an amendment to their complaint, the Does purported to sue "on
behalf of themselves and all couples similarly situated."

The two actions were consolidated and heard together by a duly convened three-judge
district court. The suits thus presented the situations of the pregnant single woman, the
childless couple, with the wife not pregnant, [p122] and the licensed practicing
physician, all joining in the attack on the Texas criminal abortion statutes. Upon the filing
of affidavits, motions were made for dismissal and for summary judgment. The court
held that Roe and members of her class, and Dr. Hallford, had standing to sue and
presented justiciable controversies, but that the Does had failed to allege facts sufficient
to state a present controversy, and did not have standing. It concluded that, with respect
to the requests for a declaratory judgment, abstention was not warranted. On the merits,
the District Court held that the

fundamental right of single women and married persons to choose whether to have
children is protected by the Ninth Amendment, through the Fourteenth Amendment,

and that the Texas criminal abortion statutes were void on their face because they were
both unconstitutionally vague and constituted an overbroad infringement of the
plaintiffs' Ninth Amendment rights. The court then held that abstention was warranted
with respect to the requests for an injunction. It therefore dismissed the Does' complaint,
declared the abortion statutes void, and dismissed the application for injunctive relief.
314 F.Supp. 1217, 1225 (ND Tex.1970).

The plaintiffs Roe and Doe and the intervenor Hallford, pursuant to 28 U.S.C. 1253 have
appealed to this Court from that part of the District Court's judgment denying the

injunction. The defendant District Attorney has purported to cross-appeal, pursuant to

the same statute, from the court's grant of declaratory relief to Roe and Hallford. Both
sides also have taken protective appeals to the United States Court of Appeals for the
Fifth Circuit. That court ordered the appeals held in abeyance pending decision here. We
postponed decision on jurisdiction to the hearing on the merits. 402 U.S. 941 (1971)
[p123]

It might have been preferable if the defendant, pursuant to our Rule 20, had presented
to us a petition for certiorari before judgment in the Court of Appeals with respect to the
granting of the plaintiffs' prayer for declaratory relief. Our decisions in Mitchell v.
Donovan, 398 U.S. 427 (1970), and Gunn v. University Committee, 399 U.S. 383 (1970),
are to the effect that 1253 does not authorize an appeal to this Court from the grant or
denial of declaratory relief alone. We conclude, nevertheless, that those decisions do not
foreclose our review of both the injunctive and the declaratory aspects of a case of this
kind when it is properly here, as this one is, on appeal under 1253 from specific denial of
injunctive relief, and the arguments as to both aspects are necessarily identical. See
Carter v. Jury Comm'n, 396 U.S. 320 (1970); Florida Lime Growers v. Jacobsen, 362 U.S.
73, 80-81 (1960). It would be destructive of time and energy for all concerned were we
to rule otherwise. Cf. Doe v. Bolton, post, p. 179.

IV

We are next confronted with issues of justiciability, standing, and abstention. Have Roe
and the Does established that "personal stake in the outcome of the controversy," Baker
v. Carr, 369 U.S. 186, 204 (1962), that insures that

the dispute sought to be adjudicated will be presented in an adversary context and in a

form historically viewed as capable of judicial resolution,

Flast v. Cohen, 392 U.S. 83, 101 (1968), and Sierra Club v. Morton, 405 U.S. 727, 732
(1972)? And what effect did the pendency of criminal abortion charges against Dr.
Hallford in state court have upon the propriety of the federal court's granting relief to
him as a plaintiff-intervenor? [p124]

A. Jane Roe. Despite the use of the pseudonym, no suggestion is made that Roe is a
fictitious person. For purposes of her case, we accept as true, and as established, her
existence; her pregnant state, as of the inception of her suit in March 1970 and as late as
May 21 of that year when she filed an alias affidavit with the District Court; and her
inability to obtain a legal abortion in Texas.

Viewing Roe's case as of the time of its filing and thereafter until as late a May, there can
be little dispute that it then presented a case or controversy and that, wholly apart from
the class aspects, she, as a pregnant single woman thwarted by the Texas criminal
abortion laws, had standing to challenge those statutes. Abele v. Markle, 452 F.2d 1121,
1125 (CA2 1971); Crossen v. Breckenridge, 446 F.2d 833, 838-839 (CA6 1971); Poe v.
Menghini, 339 F.Supp. 986, 990-991 (Kan.1972). See Truax v. Raich, 239 U.S. 33 (1915).
Indeed, we do not read the appellee's brief as really asserting anything to the contrary.
The "logical nexus between the status asserted and the claim sought to be adjudicated,"
Flast v. Cohen, 392 U.S. at 102, and the necessary degree of contentiousness, Golden v.
Zwickler, 394 U.S. 103 (1969), are both present.

The appellee notes, however, that the record does not disclose that Roe was pregnant at
the time of the District Court hearing on May 22, 1970, [n6] or on the following June 17
when the court's opinion and judgment were filed. And he suggests that Roe's case must
now be moot because she and all other members of her class are no longer subject to
any 1970 pregnancy. [p125]

The usual rule in federal cases is that an actual controversy must exist at stages of
appellate or certiorari review, and not simply at the date the action is initiated. United
States v. Munsingwear, Inc., 340 U.S. 36 (1950); Golden v. Zwickler, supra; SEC v.
Medical Committee for Human Rights, 404 U.S. 403 (1972).

But when, as here, pregnancy is a significant fact in the litigation, the normal 266-day
human gestation period is so short that the pregnancy will come to term before the usual
appellate process is complete. If that termination makes a case moot, pregnancy
litigation seldom will survive much beyond the trial stage, and appellate review will be
effectively denied. Our law should not be that rigid. Pregnancy often comes more than
once to the same woman, and in the general population, if man is to survive, it will
always be with us. Pregnancy provides a classic justification for a conclusion of
nonmootness. It truly could be "capable of repetition, yet evading review." Southern
Pacific Terminal Co. v. ICC, 219 U.S. 498, 515 (1911). See Moore v. Ogilvie, 394 U.S. 814,
816 (1969); Carroll v. Princess Anne, 393 U.S. 175, 178-179 (1968); United States v. W. T.
Grant Co., 345 U.S. 629, 632-633 (1953).

We, therefore, agree with the District Court that Jane Roe had standing to undertake this
litigation, that she presented a justiciable controversy, and that the termination of her
1970 pregnancy has not rendered her case moot.

B. Dr. Hallford. The doctor's position is different. He entered Roe's litigation as a plaintiffintervenor, alleging in his complaint that he:

[I]n the past has been arrested for violating the Texas Abortion Laws and at the present
time stands charged by indictment with violating said laws in the Criminal District Court
of Dallas County, Texas to-wit: (1) The State of Texas vs. [p126] James H. Hallford, No. C69-5307-IH, and (2) The State of Texas vs. James H. Hallford, No. C-692524-H. In both
cases, the defendant is charged with abortion. . . .

In his application for leave to intervene, the doctor made like representations as to the
abortion charges pending in the state court. These representations were also repeated in
the affidavit he executed and filed in support of his motion for summary judgment.

Dr. Hallford is, therefore, in the position of seeking, in a federal court, declaratory and
injunctive relief with respect to the same statutes under which he stands charged in
criminal prosecutions simultaneously pending in state court. Although he stated that he
has been arrested in the past for violating the State's abortion laws, he makes no
allegation of any substantial and immediate threat to any federally protected right that
cannot be asserted in his defense against the state prosecutions. Neither is there any
allegation of harassment or bad faith prosecution. In order to escape the rule articulated
in the cases cited in the next paragraph of this opinion that, absent harassment and bad
faith, a defendant in a pending state criminal case cannot affirmatively challenge in
federal court the statutes under which the State is prosecuting him, Dr. Hallford seeks to
distinguish his status as a present state defendant from his status as a "potential future
defendant," and to assert only the latter for standing purposes here.

We see no merit in that distinction. Our decision in Samuels v. Mackell, 401 U.S. 66
(1971), compels the conclusion that the District Court erred when it granted declaratory
relief to Dr. Hallford instead of refraining from so doing. The court, of course, was correct
in refusing to grant injunctive relief to the doctor. The reasons supportive of that action,
however, are those expressed in Samuels v. Mackell, supra, and in Younger v. [p127]
Harris, 401 U.S. 37 (1971); Boyle v. Landry, 401 U.S. 77 (1971); Perez v. Ledesma, 401
U.S. 82 (1971); and Byrne v. Karaleis, 401 U.S. 216 (1971). See also Dombrowski v.
Pfister, 380 U.S. 479 (1965). We note, in passing, that Younger and its companion cases
were decided after the three-judge District Court decision in this case.

Dr. Hallford's complaint in intervention, therefore, is to be dismissed. [n7] He is remitted

to his defenses in the state criminal proceedings against him. We reverse the judgment
of the District Court insofar as it granted Dr. Hallford relief and failed to dismiss his
complaint in intervention.

C. The Does. In view of our ruling as to Roe's standing in her case, the issue of the Does'
standing in their case has little significance. The claims they assert are essentially the

same as those of Roe, and they attack the same statutes. Nevertheless, we briefly note
the Does' posture.

Their pleadings present them as a childless married couple, the woman not being
pregnant, who have no desire to have children at this time because of their having
received medical advice that Mrs. Doe should avoid pregnancy, and for "other highly
personal reasons." But they "fear . . . they may face the prospect of becoming [p128]
parents." And if pregnancy ensues, they "would want to terminate" it by an abortion.
They assert an inability to obtain an abortion legally in Texas and, consequently, the
prospect of obtaining an illegal abortion there or of going outside Texas to some place
where the procedure could be obtained legally and competently.

We thus have as plaintiffs a married couple who have, as their asserted immediate and
present injury, only an alleged "detrimental effect upon [their] marital happiness"
because they are forced to "the choice of refraining from normal sexual relations or of
endangering Mary Doe's health through a possible pregnancy." Their claim is that,
sometime in the future, Mrs. Doe might become pregnant because of possible failure of
contraceptive measures, and, at that time in the future, she might want an abortion that
might then be illegal under the Texas statutes.

This very phrasing of the Does' position reveals its speculative character. Their alleged
injury rests on possible future contraceptive failure, possible future pregnancy, possible
future unpreparedness for parenthood, and possible future impairment of health. Any
one or more of these several possibilities may not take place, and all may not combine.
In the Does' estimation, these possibilities might have some real or imagined impact
upon their marital happiness. But we are not prepared to say that the bare allegation of
so indirect an injury is sufficient to present an actual case or controversy. Younger v.
Harris, 401 U.S. at 41-42; Golden v. Zwickler, 394 U.S. at 109-110; Abele v. Markle, 452
F.2d at 1124-1125; Crossen v. Breckenridge, 446 F.2d at 839. The Does' claim falls far
short of those resolved otherwise in the cases that the Does urge upon us, namely,
Investment Co. Institute v. Camp, 401 U.S. 617 (1971); Data Processing Service v. Camp,
397 U.S. 150 (1970); [p129] and Epperson v. Arkansas, 393 U.S. 97 (1968). See also
Truax v. Raich, 239 U.S. 33 (1915).

The Does therefore are not appropriate plaintiffs in this litigation. Their complaint was
properly dismissed by the District Court, and we affirm that dismissal.

The principal thrust of appellant's attack on the Texas statutes is that they improperly
invade a right, said to be possessed by the pregnant woman, to choose to terminate her
pregnancy. Appellant would discover this right in the concept of personal "liberty"
embodied in the Fourteenth Amendment's Due Process Clause; or in personal, marital,
familial, and sexual privacy said to be protected by the Bill of Rights or its penumbras,
see Griswold v. Connecticut, 381 U.S. 479 (1965); Eisenstadt v. Baird, 405 U.S. 438
(1972); id. at 460 (WHITE, J., concurring in result); or among those rights reserved to the
people by the Ninth Amendment, Griswold v. Connecticut, 381 U.S. at 486 (Goldberg, J.,
concurring). Before addressing this claim, we feel it desirable briefly to survey, in several
aspects, the history of abortion, for such insight as that history may afford us, and then
to examine the state purposes and interests behind the criminal abortion laws.

VI

It perhaps is not generally appreciated that the restrictive criminal abortion laws in effect
in a majority of States today are of relatively recent vintage. Those laws, generally
proscribing abortion or its attempt at any time during pregnancy except when necessary
to preserve the pregnant woman's life, are not of ancient or even of common law origin.
Instead, they derive from statutory changes effected, for the most part, in the latter half
of the 19th century. [p130]

1. Ancient attitudes. These are not capable of precise determination. We are told that, at
the time of the Persian Empire, abortifacients were known, and that criminal abortions
were severely punished. [n8] We are also told, however, that abortion was practiced in
Greek times as well as in the Roman Era, [n9] and that "it was resorted to without
scruple." [n10] The Ephesian, Soranos, often described as the greatest of the ancient
gynecologists, appears to have been generally opposed to Rome's prevailing freeabortion practices. He found it necessary to think first of the life of the mother, and he
resorted to abortion when, upon this standard, he felt the procedure advisable. [n11]
Greek and Roman law afforded little protection to the unborn. If abortion was prosecuted
in some places, it seems to have been based on a concept of a violation of the father's
right to his offspring. Ancient religion did not bar abortion. [n12]

2. The Hippocratic Oath. What then of the famous Oath that has stood so long as the
ethical guide of the medical profession and that bears the name of the great Greek
(460(?)-377(?) B. C.), who has been described [p131] as the Father of Medicine, the
"wisest and the greatest practitioner of his art," and the "most important and most
complete medical personality of antiquity," who dominated the medical schools of his
time, and who typified the sum of the medical knowledge of the past? [n13] The Oath
varies somewhat according to the particular translation, but in any translation the
content is clear:

I will give no deadly medicine to anyone if asked, nor suggest any such counsel; and in
like manner, I will not give to a woman a pessary to produce abortion, [n14]

or

I will neither give a deadly drug to anybody if asked for it, nor will I make a suggestion to
this effect. Similarly, I will not give to a woman an abortive remedy. [n15]

Although the Oath is not mentioned in any of the principal briefs in this case or in Doe v.
Bolton, post, p. 179, it represents the apex of the development of strict ethical concepts
in medicine, and its influence endures to this day. Why did not the authority of
Hippocrates dissuade abortion practice in his time and that of Rome? The late Dr.
Edelstein provides us with a theory: [n16] The Oath was not uncontested even in
Hippocrates' day; only the Pythagorean school of philosophers frowned upon the related
act of suicide. Most Greek thinkers, on the other hand, commended abortion, at least
prior to viability. See Plato, Republic, V, 461; Aristotle, Politics, VII, 1335b 25. For the
Pythagoreans, however, it was a matter of dogma. For them, the embryo was animate
from the moment of conception, and abortion meant destruction of a living being. The
abortion clause of the Oath, therefore, "echoes Pythagorean doctrines," [p132] and "[i]n
no other stratum of Greek opinion were such views held or proposed in the same spirit of
uncompromising austerity." [n17]

Dr. Edelstein then concludes that the Oath originated in a group representing only a
small segment of Greek opinion, and that it certainly was not accepted by all ancient
physicians. He points out that medical writings down to Galen (A.D. 130-200) "give
evidence of the violation of almost every one of its injunctions." [n18] But with the end of
antiquity, a decided change took place. Resistance against suicide and against abortion
became common. The Oath came to be popular. The emerging teachings of Christianity
were in agreement with the Pythagorean ethic. The Oath "became the nucleus of all
medical ethics," and "was applauded as the embodiment of truth." Thus, suggests Dr.
Edelstein, it is "a Pythagorean manifesto, and not the expression of an absolute standard
of medical conduct." [n19]

This, it seems to us, is a satisfactory and acceptable explanation of the Hippocratic

Oath's apparent rigidity. It enables us to understand, in historical context, a longaccepted and revered statement of medical ethics.

3. The common law. It is undisputed that, at common law, abortion performed before
"quickening" -- the first recognizable movement of the fetus in utero, appearing usually
from the 16th to the 18th week of pregnancy [n20] -- was not an indictable offense.

[n21] The absence [p133] of a common law crime for pre-quickening abortion appears to
have developed from a confluence of earlier philosophical, theological, and civil and
canon law concepts of when life begins. These disciplines variously approached the
question in terms of the point at which the embryo or fetus became "formed" or
recognizably human, or in terms of when a "person" came into being, that is, infused
with a "soul" or "animated." A loose consensus evolved in early English law that these
events occurred at some point between conception and live birth. [n22] This was
"mediate animation." Although [p134] Christian theology and the canon law came to fix
the point of animation at 40 days for a male and 80 days for a female, a view that
persisted until the 19th century, there was otherwise little agreement about the precise
time of formation or animation. There was agreement, however, that, prior to this point,
the fetus was to be regarded as part of the mother, and its destruction, therefore, was
not homicide. Due to continued uncertainty about the precise time when animation
occurred, to the lack of any empirical basis for the 40-80-day view, and perhaps to
Aquinas' definition of movement as one of the two first principles of life, Bracton focused
upon quickening as the critical point. The significance of quickening was echoed by later
common law scholars, and found its way into the received common law in this country.

Whether abortion of a quick fetus was a felony at common law, or even a lesser crime, is
still disputed. Bracton, writing early in the 13th century, thought it homicide. [n23] But
the later and predominant view, following the great common law scholars, has been that
it was, at most, a lesser offense. In a frequently cited [p135] passage, Coke took the
position that abortion of a woman "quick with childe" is "a great misprision, and no
murder." [n24] Blackstone followed, saying that, while abortion after quickening had
once been considered manslaughter (though not murder), "modern law" took a less
severe view. [n25] A recent review of the common law precedents argues, however, that
those precedents contradict Coke, and that even post-quickening abortion was never
established as a common law crime. [n26] This is of some importance, because, while
most American courts ruled, in holding or dictum, that abortion of an unquickened fetus
was not criminal under their received common law, [n27] others followed Coke in stating
that abortion [p136] of a quick fetus was a "misprision," a term they translated to mean
"misdemeanor." [n28] That their reliance on Coke on this aspect of the law was uncritical
and, apparently in all the reported cases, dictum (due probably to the paucity of common
law prosecutions for post-quickening abortion), makes it now appear doubtful that
abortion was ever firmly established as a common law crime even with respect to the
destruction of a quick fetus.

4. The English statutory law. England's first criminal abortion statute, Lord Ellenborough's
Act, 43 Geo. 3, c. 58, came in 1803. It made abortion of a quick fetus, 1, a capital
crime, but, in 2, it provided lesser penalties for the felony of abortion before
quickening, and thus preserved the "quickening" distinction. This contrast was continued
in the general revision of 1828, 9 Geo. 4, c. 31, 13. It disappeared, however, together
with the death penalty, in 1837, 7 Will. 4 & 1 Vict., c. 85. 6, and did not reappear in the
Offenses Against the Person Act of 1861, 24 & 25 Vict., c. 100, 59, that formed the core
of English anti-abortion law until the liberalizing reforms of 1967. In 1929, the Infant Life
(Preservation) Act, 19 & 20 Geo. 5, c. 34, came into being. Its emphasis was upon the

destruction of "the life of a child capable of being born alive." It made a willful act
performed with the necessary intent a felony. It contained a proviso that one was not to
be [p137] found guilty of the offense

unless it is proved that the act which caused the death of the child was not done in good
faith for the purpose only of preserving the life of the mother.

A seemingly notable development in the English law was the case of Rex v. Bourne,
[1939] 1 K.B. 687. This case apparently answered in the affirmative the question whether
an abortion necessary to preserve the life of the pregnant woman was excepted from the
criminal penalties of the 1861 Act. In his instructions to the jury, Judge Macnaghten
referred to the 1929 Act, and observed that that Act related to "the case where a child is
killed by a willful act at the time when it is being delivered in the ordinary course of
nature." Id. at 691. He concluded that the 1861 Act's use of the word "unlawfully,"
imported the same meaning expressed by the specific proviso in the 1929 Act, even
though there was no mention of preserving the mother's life in the 1861 Act. He then
construed the phrase "preserving the life of the mother" broadly, that is, "in a reasonable
sense," to include a serious and permanent threat to the mother's health, and instructed
the jury to acquit Dr. Bourne if it found he had acted in a good faith belief that the
abortion was necessary for this purpose. Id. at 693-694. The jury did acquit.

Recently, Parliament enacted a new abortion law. This is the Abortion Act of 1967, 15 &
16 Eliz. 2, c. 87. The Act permits a licensed physician to perform an abortion where two
other licensed physicians agree (a)

that the continuance of the pregnancy would involve risk to the life of the pregnant
woman, or of injury to the physical or mental health of the pregnant woman or any
existing children of her family, greater than if the pregnancy were terminated,

or (b)

that there is a substantial risk that, if the child were born it would suffer from such
physical or mental abnormalities as [p138] to be seriously handicapped.

The Act also provides that, in making this determination, "account may be taken of the
pregnant woman's actual or reasonably foreseeable environment." It also permits a
physician, without the concurrence of others, to terminate a pregnancy where he is of
the good faith opinion that the abortion "is immediately necessary to save the life or to

prevent grave permanent injury to the physical or mental health of the pregnant
woman."

5. The American law. In this country, the law in effect in all but a few States until mid19th century was the preexisting English common law. Connecticut, the first State to
enact abortion legislation, adopted in 1821 that part of Lord Ellenborough's Act that
related to a woman "quick with child." [n29] The death penalty was not imposed.
Abortion before quickening was made a crime in that State only in 1860. [n30] In 1828,
New York enacted legislation [n31] that, in two respects, was to serve as a model for
early anti-abortion statutes. First, while barring destruction of an unquickened fetus as
well as a quick fetus, it made the former only a misdemeanor, but the latter seconddegree manslaughter. Second, it incorporated a concept of therapeutic abortion by
providing that an abortion was excused if it

shall have been necessary to preserve the life of such mother, or shall have been
advised by two physicians to be necessary for such purpose.

By 1840, when Texas had received the common law, [n32] only eight American States
[p139] had statutes dealing with abortion. [n33] It was not until after the War Between
the States that legislation began generally to replace the common law. Most of these
initial statutes dealt severely with abortion after quickening, but were lenient with it
before quickening. Most punished attempts equally with completed abortions. While
many statutes included the exception for an abortion thought by one or more physicians
to be necessary to save the mother's life, that provision soon disappeared, and the
typical law required that the procedure actually be necessary for that purpose. Gradually,
in the middle and late 19th century, the quickening distinction disappeared from the
statutory law of most States and the degree of the offense and the penalties were
increased. By the end of the 1950's, a large majority of the jurisdictions banned abortion,
however and whenever performed, unless done to save or preserve the life of the
mother. [n34] The exceptions, Alabama and the District of Columbia, permitted abortion
to preserve the mother's health. [n35] Three States permitted abortions that were not
"unlawfully" performed or that were not "without lawful justification," leaving
interpretation of those standards to the courts. [n36] In [p140] the past several years,
however, a trend toward liberalization of abortion statutes has resulted in adoption, by
about one-third of the States, of less stringent laws, most of them patterned after the ALI
Model Penal Code, 230.3, [n37] set forth as Appendix B to the opinion in Doe v. Bolton,
post, p. 205.

It is thus apparent that, at common law, at the time of the adoption of our Constitution,
and throughout the major portion of the 19th century, abortion was viewed with less
disfavor than under most American statutes currently in effect. Phrasing it another way,
a woman enjoyed a substantially broader right to terminate a pregnancy than she does
in most States today. At least with respect to the early stage of pregnancy, and very

possibly without such a limitation, the opportunity [p141] to make this choice was
present in this country well into the 19th century. Even later, the law continued for some
time to treat less punitively an abortion procured in early pregnancy.

6. The position of the American Medical Association. The anti-abortion mood prevalent in
this country in the late 19th century was shared by the medical profession. Indeed, the
attitude of the profession may have played a significant role in the enactment of
stringent criminal abortion legislation during that period.

An AMA Committee on Criminal Abortion was appointed in May, 1857. It presented its
report, 12 Trans. of the Am.Med.Assn. 778 (1859), to the Twelfth Annual Meeting. That
report observed that the Committee had been appointed to investigate criminal abortion
"with a view to its general suppression." It deplored abortion and its frequency and it
listed three causes of "this general demoralization":

The first of these causes is a widespread popular ignorance of the true character of the
crime -- a belief, even among mothers themselves, that the foetus is not alive till after
the period of quickening.

The second of the agents alluded to is the fact that the profession themselves are
frequently supposed careless of foetal life. . . .

The third reason of the frightful extent of this crime is found in the grave defects of our
laws, both common and statute, as regards the independent and actual existence of the
child before birth, as a living being. These errors, which are sufficient in most instances
to prevent conviction, are based, and only based, upon mistaken and exploded medical
dogmas. With strange inconsistency, the law fully acknowledges the foetus in utero and
its inherent rights, for civil purposes; while personally and as criminally affected, it fails
to recognize it, [p142] and to its life as yet denies all protection.

Id. at 776. The Committee then offered, and the Association adopted, resolutions
protesting "against such unwarrantable destruction of human life," calling upon state
legislatures to revise their abortion laws, and requesting the cooperation of state medical
societies "in pressing the subject." Id. at 28, 78.

In 1871, a long and vivid report was submitted by the Committee on Criminal Abortion. It
ended with the observation,

We had to deal with human life. In a matter of less importance, we could entertain no
compromise. An honest judge on the bench would call things by their proper names. We
could do no less.

22 Trans. of the Am.Med.Assn. 268 (1871). It proffered resolutions, adopted by the

Association, id. at 38-39, recommending, among other things, that it

be unlawful and unprofessional for any physician to induce abortion or premature labor
without the concurrent opinion of at least one respectable consulting physician, and then
always with a view to the safety of the child -- if that be possible,

and calling

the attention of the clergy of all denominations to the perverted views of morality
entertained by a large class of females -- aye, and men also, on this important question.

Except for periodic condemnation of the criminal abortionist, no further formal AMA
action took place until 1967. In that year, the Committee on Human Reproduction urged
the adoption of a stated policy of opposition to induced abortion except when there is
"documented medical evidence" of a threat to the health or life of the mother, or that
the child "may be born with incapacitating physical deformity or mental deficiency," or
that a pregnancy "resulting from legally established statutory or forcible rape or incest
may constitute a threat to the mental or physical health of the [p143] patient," two other
physicians "chosen because of their recognized professional competence have examined
the patient and have concurred in writing," and the procedure "is performed in a hospital
accredited by the Joint Commission on Accreditation of Hospitals." The providing of
medical information by physicians to state legislatures in their consideration of
legislation regarding therapeutic abortion was "to be considered consistent with the
principles of ethics of the American Medical Association." This recommendation was
adopted by the House of Delegates. Proceedings of the AMA House of Delegates 40-51
(June 1967).

In 1970, after the introduction of a variety of proposed resolutions and of a report from
its Board of Trustees, a reference committee noted "polarization of the medical
profession on this controversial issue"; division among those who had testified; a
difference of opinion among AMA councils and.committees; "the remarkable shift in
testimony" in six months, felt to be influenced "by the rapid changes in state laws and by
the judicial decisions which tend to make abortion more freely available; " and a feeling
"that this trend will continue." On June 25, 1970, the House of Delegates adopted
preambles and most of the resolutions proposed by the reference committee. The

preambles emphasized "the best interests of the patient," "sound clinical judgment," and
"informed patient consent," in contrast to "mere acquiescence to the patient's demand."
The resolutions asserted that abortion is a medical procedure that should be performed
by a licensed physician in an accredited hospital only after consultation with two other
physicians and in conformity with state law, and that no party to the procedure should be
required to violate personally held moral principles. [n38] Proceedings [p144] of the AMA
House of Delegates 220 (June 1970). The AMA Judicial Council rendered a
complementary opinion. [n39]

7. The position of the American Public Health Association. In October, 1970, the
Executive Board of the APHA adopted Standards for Abortion Services. These were five in
number:

a. Rapid and simple abortion referral must be readily available through state and local
public [p145] health departments, medical societies, or other nonprofit organizations.

b. An important function of counseling should be to simplify and expedite the provision of

abortion services; it should not delay the obtaining of these services.

c. Psychiatric consultation should not be mandatory. As in the case of other specialized

medical services, psychiatric consultation should be sought for definite indications, and
not on a routine basis.

d. A wide range of individuals from appropriately trained, sympathetic volunteers to

highly skilled physicians may qualify as abortion counselors.

e. Contraception and/or sterilization should be discussed with each abortion patient.

Recommended Standards for Abortion Services, 61 Am.J.Pub.Health 396 (1971). Among

factors pertinent to life and health risks associated with abortion were three that "are
recognized as important":

a. the skill of the physician,

b. the environment in which the abortion is performed, and above all

c. the duration of pregnancy, as determined by uterine size and confirmed by menstrual

history.

Id. at 397.

It was said that "a well equipped hospital" offers more protection

to cope with unforeseen difficulties than an office or clinic without such resources. . . .
The factor of gestational age is of overriding importance.

Thus, it was recommended that abortions in the second trimester and early abortions in
the presence of existing medical complications be performed in hospitals as inpatient
procedures. For pregnancies in the first trimester, [p146] abortion in the hospital with or
without overnight stay "is probably the safest practice." An abortion in an extramural
facility, however, is an acceptable alternative "provided arrangements exist in advance
to admit patients promptly if unforeseen complications develop." Standards for an
abortion facility were listed. It was said that, at present, abortions should be performed
by physicians or osteopaths who are licensed to practice and who have "adequate
training." Id. at 398.

8. The position of the American Bar Association. At its meeting in February, 1972, the
ABA House of Delegates approved, with 17 opposing votes, the Uniform Abortion Act that
had been drafted and approved the preceding August by the Conference of
Commissioners on Uniform State Laws. 58 A.B.A.J. 380 (1972). We set forth the Act in full
in the margin. [n40] The [p147] Opinion of the Court Conference has appended an
enlightening Prefatory Note. [n41]

VII

Three reasons have been advanced to explain historically the enactment of criminal
abortion laws in the 19th century and to justify their continued existence. [p148]

It has been argued occasionally that these laws were the product of a Victorian social
concern to discourage illicit sexual conduct. Texas, however, does not advance this
justification in the present case, and it appears that no court or commentator has taken

the argument seriously. [n42] The appellants and amici contend, moreover, that this is
not a proper state purpose, at all and suggest that, if it were, the Texas statutes are
overbroad in protecting it, since the law fails to distinguish between married and unwed
mothers.

A second reason is concerned with abortion as a medical procedure. When most criminal
abortion laws were first enacted, the procedure was a hazardous one for the woman.
[n43] This was particularly true prior to the [p149] development of antisepsis. Antiseptic
techniques, of course, were based on discoveries by Lister, Pasteur, and others first
announced in 1867, but were not generally accepted and employed until about the turn
of the century. Abortion mortality was high. Even after 1900, and perhaps until as late as
the development of antibiotics in the 1940's, standard modern techniques such as
dilation and curettage were not nearly so safe as they are today. Thus, it has been
argued that a State's real concern in enacting a criminal abortion law was to protect the
pregnant woman, that is, to restrain her from submitting to a procedure that placed her
life in serious jeopardy.

Modern medical techniques have altered this situation. Appellants and various amici
refer to medical data indicating that abortion in early pregnancy, that is, prior to the end
of the first trimester, although not without its risk, is now relatively safe. Mortality rates
for women undergoing early abortions, where the procedure is legal, appear to be as low
as or lower than the rates for normal childbirth. [n44] Consequently, any interest of the
State in protecting the woman from an inherently hazardous procedure, except when it
would be equally dangerous for her to forgo it, has largely disappeared. Of course,
important state interests in the areas of health and medical standards do remain. [p150]
The State has a legitimate interest in seeing to it that abortion, like any other medical
procedure, is performed under circumstances that insure maximum safety for the
patient. This interest obviously extends at least to the performing physician and his staff,
to the facilities involved, to the availability of after-care, and to adequate provision for
any complication or emergency that might arise. The prevalence of high mortality rates
at illegal "abortion mills" strengthens, rather than weakens, the State's interest in
regulating the conditions under which abortions are performed. Moreover, the risk to the
woman increases as her pregnancy continues. Thus, the State retains a definite interest
in protecting the woman's own health and safety when an abortion is proposed at a late
stage of pregnancy.

The third reason is the State's interest -- some phrase it in terms of duty -- in protecting
prenatal life. Some of the argument for this justification rests on the theory that a new
human life is present from the moment of conception. [n45] The State's interest and
general obligation to protect life then extends, it is argued, to prenatal life. Only when
the life of the pregnant mother herself is at stake, balanced against the life she carries
within her, should the interest of the embryo or fetus not prevail. Logically, of course, a
legitimate state interest in this area need not stand or fall on acceptance of the belief
that life begins at conception or at some other point prior to live birth. In assessing the

State's interest, recognition may be given to the less rigid claim that as long as at least
potential life is involved, the State may assert interests beyond the protection of the
pregnant woman alone. [p151]

Parties challenging state abortion laws have sharply disputed in some courts the
contention that a purpose of these laws, when enacted, was to protect prenatal life.
[n46] Pointing to the absence of legislative history to support the contention, they claim
that most state laws were designed solely to protect the woman. Because medical
advances have lessened this concern, at least with respect to abortion in early
pregnancy, they argue that with respect to such abortions the laws can no longer be
justified by any state interest. There is some scholarly support for this view of original
purpose. [n47] The few state courts called upon to interpret their laws in the late 19th
and early 20th centuries did focus on the State's interest in protecting the woman's
health, rather than in preserving the embryo and fetus. [n48] Proponents of this view
point out that in many States, including Texas, [n49] by statute or judicial interpretation,
the pregnant woman herself could not be prosecuted for self-abortion or for cooperating
in an abortion performed upon her by another. [n50] They claim that adoption of the
"quickening" distinction through received common [p152] law and state statutes tacitly
recognizes the greater health hazards inherent in late abortion and impliedly repudiates
the theory that life begins at conception.

It is with these interests, and the eight to be attached to them, that this case is
concerned.

VIII

The Constitution does not explicitly mention any right of privacy. In a line of decisions,
however, going back perhaps as far as Union Pacific R. Co. v. Botsford, 141 U.S. 250, 251
(1891), the Court has recognized that a right of personal privacy, or a guarantee of
certain areas or zones of privacy, does exist under the Constitution. In varying contexts,
the Court or individual Justices have, indeed, found at least the roots of that right in the
First Amendment, Stanley v. Georgia, 394 U.S. 557, 564 (1969); in the Fourth and Fifth
Amendments, Terry v. Ohio, 392 U.S. 1, 8-9 (1968), Katz v. United States, 389 U.S. 347,
350 (1967), Boyd v. United States, 116 U.S. 616 (1886), see Olmstead v. United States,
277 U.S. 438, 478 (1928) (Brandeis, J., dissenting); in the penumbras of the Bill of Rights,
Griswold v. Connecticut, 381 U.S. at 484-485; in the Ninth Amendment, id. at 486
(Goldberg, J., concurring); or in the concept of liberty guaranteed by the first section of
the Fourteenth Amendment, see Meyer v. Nebraska, 262 U.S. 390, 399 (1923). These
decisions make it clear that only personal rights that can be deemed "fundamental" or
"implicit in the concept of ordered liberty," Palko v. Connecticut, 302 U.S. 319, 325
(1937), are included in this guarantee of personal privacy. They also make it clear that
the right has some extension to activities relating to marriage, Loving v. Virginia, 388
U.S. 1, 12 (1967); procreation, Skinner v. Oklahoma, 316 U.S. 535, 541-542 (1942);

contraception, Eisenstadt v. Baird, 405 U.S. at 453-454; id. at 460, 463-465 [p153]
(WHITE, J., concurring in result); family relationships, Prince v. Massachusetts, 321 U.S.
158, 166 (1944); and childrearing and education, Pierce v. Society of Sisters, 268 U.S.
510, 535 (1925), Meyer v. Nebraska, supra.

This right of privacy, whether it be founded in the Fourteenth Amendment's concept of

personal liberty and restrictions upon state action, as we feel it is, or, as the District
Court determined, in the Ninth Amendment's reservation of rights to the people, is broad
enough to encompass a woman's decision whether or not to terminate her pregnancy.
The detriment that the State would impose upon the pregnant woman by denying this
choice altogether is apparent. Specific and direct harm medically diagnosable even in
early pregnancy may be involved. Maternity, or additional offspring, may force upon the
woman a distressful life and future. Psychological harm may be imminent. Mental and
physical health may be taxed by child care. There is also the distress, for all concerned,
associated with the unwanted child, and there is the problem of bringing a child into a
family already unable, psychologically and otherwise, to care for it. In other cases, as in
this one, the additional difficulties and continuing stigma of unwed motherhood may be
involved. All these are factors the woman and her responsible physician necessarily will
consider in consultation.

On the basis of elements such as these, appellant and some amici argue that the
woman's right is absolute and that she is entitled to terminate her pregnancy at
whatever time, in whatever way, and for whatever reason she alone chooses. With this
we do not agree. Appellant's arguments that Texas either has no valid interest at all in
regulating the abortion decision, or no interest strong enough to support any limitation
upon the woman's sole determination, are unpersuasive. The [p154] Court's decisions
recognizing a right of privacy also acknowledge that some state regulation in areas
protected by that right is appropriate. As noted above, a State may properly assert
important interests in safeguarding health, in maintaining medical standards, and in
protecting potential life. At some point in pregnancy, these respective interests become
sufficiently compelling to sustain regulation of the factors that govern the abortion
decision. The privacy right involved, therefore, cannot be said to be absolute. In fact, it is
not clear to us that the claim asserted by some amici that one has an unlimited right to
do with one's body as one pleases bears a close relationship to the right of privacy
previously articulated in the Court's decisions. The Court has refused to recognize an
unlimited right of this kind in the past. Jacobson v. Massachusetts, 197 U.S. 11 (1905)
(vaccination); Buck v. Bell, 274 U.S. 200 (1927) ( sterilization).

We, therefore, conclude that the right of personal privacy includes the abortion decision,
but that this right is not unqualified, and must be considered against important state
interests in regulation.

We note that those federal and state courts that have recently considered abortion law
challenges have reached the same conclusion. A majority, in addition to the District
Court in the present case, have held state laws unconstitutional, at least in part, because
of vagueness or because of overbreadth and abridgment of rights. Abele v. Markle, 342
F.Supp. 800 (Conn.1972), appeal docketed, No. 72-56; Abele v. Markle, 351 F.Supp. 224
(Conn.1972), appeal docketed, No. 72-730; Doe v. Bolton, 319 F.Supp. 1048 (ND
Ga.1970), appeal decided today, post, p. 179; Doe v. Scott, 321 F.Supp. 1385 (ND
Ill.1971), appeal docketed, No. 70-105; Poe v. Menghini, 339 F.Supp. 986 (Kan.1972);
YWCA v. Kuler, 342 F.Supp. 1048 (NJ 1972); Babbitz v. McCann, [p155] 310 F.Supp. 293
(ED Wis.1970), appeal dismissed, 400 U.S. 1 (1970); People v. Belous, 71 Cal.2d 954, 458
P.2d 194 (1969), cert. denied, 397 U.S. 915 (1970); State v. Barquet, 262 So.2d 431
(Fla.1972).

Others have sustained state statutes. Crossen v. Attorney General, 344 F.Supp. 587 (ED
Ky.1972), appeal docketed, No. 72-256; Rosen v. Louisiana State Board of Medical
Examiners, 318 F.Supp. 1217 (ED La.1970), appeal docketed, No. 70-42; Corkey v.
Edwards, 322 F.Supp. 1248 (WDNC 1971), appeal docketed, No. 71-92; Steinberg v.
Brown, 321 F.Supp. 741 (ND Ohio 1970); Doe v. Rampton (Utah 1971), appeal docketed,
No. 71-5666; Cheaney v. State, ___ Ind. ___, 285 N.E.2d 265 (1972); Spears v. State, 257
So.2d 876 (Miss. 1972); State v. Munson, 86 S.D. 663, 201 N.W.2d 123 (1972), appeal
docketed, No. 72-631.

Although the results are divided, most of these courts have agreed that the right of
privacy, however based, is broad enough to cover the abortion decision; that the right,
nonetheless, is not absolute, and is subject to some limitations; and that, at some point,
the state interests as to protection of health, medical standards, and prenatal life,
become dominant. We agree with this approach.

Where certain "fundamental rights" are involved, the Court has held that regulation
limiting these rights may be justified only by a "compelling state interest," Kramer v.
Union Free School District, 395 U.S. 621, 627 (1969); Shapiro v. Thompson, 394 U.S. 618,
634 (1969), Sherbert v. Verner, 374 U.S. 398, 406 (1963), and that legislative
enactments must be narrowly drawn to express only the legitimate state interests at
stake. Griswold v. Connecticut, 381 U.S. at 485; Aptheker v. Secretary of State, 378 U.S.
500, 508 (1964); Cantwell v. Connecticut, 310 U.S. 296, 307-308 (1940); see [p156]
Eisenstadt v. Baird, 405 U.S. at 460, 463-464 (WHITE, J., concurring in result).

In the recent abortion cases cited above, courts have recognized these principles. Those
striking down state laws have generally scrutinized the State's interests in protecting
health and potential life, and have concluded that neither interest justified broad
limitations on the reasons for which a physician and his pregnant patient might decide
that she should have an abortion in the early stages of pregnancy. Courts sustaining

state laws have held that the State's determinations to protect health or prenatal life are
dominant and constitutionally justifiable.

IX

The District Court held that the appellee failed to meet his burden of demonstrating that
the Texas statute's infringement upon Roe's rights was necessary to support a
compelling state interest, and that, although the appellee presented "several compelling
justifications for state presence in the area of abortions," the statutes outstripped these
justifications and swept "far beyond any areas of compelling state interest." 314 F.Supp.
at 1222-1223. Appellant and appellee both contest that holding. Appellant, as has been
indicated, claims an absolute right that bars any state imposition of criminal penalties in
the area. Appellee argues that the State's determination to recognize and protect
prenatal life from and after conception constitutes a compelling state interest. As noted
above, we do not agree fully with either formulation.

A. The appellee and certain amici argue that the fetus is a "person" within the language
and meaning of the Fourteenth Amendment. In support of this, they outline at length and
in detail the well known facts of fetal development. If this suggestion of personhood is
established, the appellant's case, of course, collapses, [p157] for the fetus' right to life
would then be guaranteed specifically by the Amendment. The appellant conceded as
much on reargument. [n51] On the other hand, the appellee conceded on reargument
[n52] that no case could be cited that holds that a fetus is a person within the meaning
of the Fourteenth Amendment.

The Constitution does not define "person" in so many words. Section 1 of the Fourteenth
Amendment contains three references to "person." The first, in defining "citizens,"
speaks of "persons born or naturalized in the United States." The word also appears both
in the Due Process Clause and in the Equal Protection Clause. "Person" is used in other
places in the Constitution: in the listing of qualifications for Representatives and
Senators, Art. I, 2, cl. 2, and 3, cl. 3; in the Apportionment Clause, Art. I, 2, cl. 3;
[n53] in the Migration and Importation provision, Art. I, 9, cl. 1; in the Emolument
Clause, Art. I, 9, cl. 8; in the Electors provisions, Art. II, 1, cl. 2, and the superseded cl.
3; in the provision outlining qualifications for the office of President, Art. II, 1, cl. 5; in
the Extradition provisions, Art. IV, 2, cl. 2, and the superseded Fugitive Slave Clause 3;
and in the Fifth, Twelfth, and Twenty-second Amendments, as well as in 2 and 3 of the
Fourteenth Amendment. But in nearly all these instances, the use of the word is such
that it has application only post-natally. None indicates, with any assurance, that it has
any possible pre-natal application. [n54] [p158]

All this, together with our observation, supra, that, throughout the major portion of the
19th century, prevailing legal abortion practices were far freer than they are today,
persuades us that the word "person," as used in the Fourteenth Amendment, does not
include the unborn. [n55] This is in accord with the results reached in those few cases
where the issue has been squarely presented. McGarvey v. Magee-Womens Hospital, 340
F.Supp. 751 (WD Pa.1972); Byrn v. New York City Health & Hospitals Corp., 31 N.Y.2d 194,
286 N.E.2d 887 (1972), appeal docketed, No. 72-434; Abele v. Markle, 351 F.Supp. 224
(Conn.1972), appeal docketed, No. 72-730. Cf. Cheaney v. State, ___ Ind. at ___, 285
N.E.2d at 270; Montana v. Rogers, 278 F.2d 68, 72 (CA7 1960), aff'd sub nom. Montana v.
Kennedy, 366 U.S. 308 (1961); Keeler v. Superior Court, 2 Cal.3d 619, 470 P.2d 617
(1970); State v. Dickinson, 28 [p159] Ohio St.2d 65, 275 N.E.2d 599 (1971). Indeed, our
decision in United States v. Vuitch, 402 U.S. 62 (1971), inferentially is to the same effect,
for we there would not have indulged in statutory interpretation favorable to abortion in
specified circumstances if the necessary consequence was the termination of life entitled
to Fourteenth Amendment protection.

This conclusion, however, does not of itself fully answer the contentions raised by Texas,
and we pass on to other considerations.

B. The pregnant woman cannot be isolated in her privacy. She carries an embryo and,
later, a fetus, if one accepts the medical definitions of the developing young in the
human uterus. See Dorland's Illustrated Medical Dictionary 478-479, 547 (24th ed.1965).
The situation therefore is inherently different from marital intimacy, or bedroom
possession of obscene material, or marriage, or procreation, or education, with which
Eisenstadt and Griswold, Stanley, Loving, Skinner, and Pierce and Meyer were
respectively concerned. As we have intimated above, it is reasonable and appropriate for
a State to decide that, at some point in time another interest, that of health of the
mother or that of potential human life, becomes significantly involved. The woman's
privacy is no longer sole and any right of privacy she possesses must be measured
accordingly.

Texas urges that, apart from the Fourteenth Amendment, life begins at conception and is
present throughout pregnancy, and that, therefore, the State has a compelling interest in
protecting that life from and after conception. We need not resolve the difficult question
of when life begins. When those trained in the respective disciplines of medicine,
philosophy, and theology are unable to arrive at any consensus, the judiciary, at this
point in the development of man's knowledge, is not in a position to speculate as to the
answer. [p160]

It should be sufficient to note briefly the wide divergence of thinking on this most
sensitive and difficult question. There has always been strong support for the view that
life does not begin until live' birth. This was the belief of the Stoics. [n56] It appears to be
the predominant, though not the unanimous, attitude of the Jewish faith. [n57] It may be

taken to represent also the position of a large segment of the Protestant community,
insofar as that can be ascertained; organized groups that have taken a formal position on
the abortion issue have generally regarded abortion as a matter for the conscience of
the individual and her family. [n58] As we have noted, the common law found greater
significance in quickening. Physician and their scientific colleagues have regarded that
event with less interest and have tended to focus either upon conception, upon live birth,
or upon the interim point at which the fetus becomes "viable," that is, potentially able to
live outside the mother's womb, albeit with artificial aid. [n59] Viability is usually placed
at about seven months (28 weeks) but may occur earlier, even at 24 weeks. [n60] The
Aristotelian theory of "mediate animation," that held sway throughout the Middle Ages
and the Renaissance in Europe, continued to be official Roman Catholic dogma until the
19th century, despite opposition to this "ensoulment" theory from those in the Church
who would recognize the existence of life from [p161] the moment of conception. [n61]
The latter is now, of course, the official belief of the Catholic Church. As one brief amicus
discloses, this is a view strongly held by many non-Catholics as well, and by many
physicians. Substantial problems for precise definition of this view are posed, however,
by new embryological data that purport to indicate that conception is a "process" over
time, rather than an event, and by new medical techniques such as menstrual
extraction, the "morning-after" pill, implantation of embryos, artificial insemination, and
even artificial wombs. [n62]

In areas other than criminal abortion, the law has been reluctant to endorse any theory
that life, as we recognize it, begins before live birth, or to accord legal rights to the
unborn except in narrowly defined situations and except when the rights are contingent
upon live birth. For example, the traditional rule of tort law denied recovery for prenatal
injuries even though the child was born alive. [n63] That rule has been changed in
almost every jurisdiction. In most States, recovery is said to be permitted only if the
fetus was viable, or at least quick, when the injuries were sustained, though few [p162]
courts have squarely so held. [n64] In a recent development, generally opposed by the
commentators, some States permit the parents of a stillborn child to maintain an action
for wrongful death because of prenatal injuries. [n65] Such an action, however, would
appear to be one to vindicate the parents' interest and is thus consistent with the view
that the fetus, at most, represents only the potentiality of life. Similarly, unborn children
have been recognized as acquiring rights or interests by way of inheritance or other
devolution of property, and have been represented by guardians ad litem. [n66]
Perfection of the interests involved, again, has generally been contingent upon live birth.
In short, the unborn have never been recognized in the law as persons in the whole
sense.

In view of all this, we do not agree that, by adopting one theory of life, Texas may
override the rights of the pregnant woman that are at stake. We repeat, however, that
the State does have an important and legitimate interest in preserving and protecting

the health of the pregnant woman, whether she be a resident of the State or a
nonresident who seeks medical consultation and treatment there, and that it has still
another important and legitimate interest in protecting the potentiality of human life.
These interests are separate and distinct. Each grows in substantiality as the woman
approaches [p163] term and, at a point during pregnancy, each becomes "compelling."

With respect to the State's important and legitimate interest in the health of the mother,
the "compelling" point, in the light of present medical knowledge, is at approximately the
end of the first trimester. This is so because of the now-established medical fact, referred
to above at 149, that, until the end of the first trimester mortality in abortion may be less
than mortality in normal childbirth. It follows that, from and after this point, a State may
regulate the abortion procedure to the extent that the regulation reasonably relates to
the preservation and protection of maternal health. Examples of permissible state
regulation in this area are requirements as to the qualifications of the person who is to
perform the abortion; as to the licensure of that person; as to the facility in which the
procedure is to be performed, that is, whether it must be a hospital or may be a clinic or
some other place of less-than-hospital status; as to the licensing of the facility; and the
like.

This means, on the other hand, that, for the period of pregnancy prior to this
"compelling" point, the attending physician, in consultation with his patient, is free to
determine, without regulation by the State, that, in his medical judgment, the patient's
pregnancy should be terminated. If that decision is reached, the judgment may be
effectuated by an abortion free of interference by the State.

With respect to the State's important and legitimate interest in potential life, the
"compelling" point is at viability. This is so because the fetus then presumably has the
capability of meaningful life outside the mother's womb. State regulation protective of
fetal life after viability thus has both logical and biological justifications. If the State is
interested in protecting fetal life after viability, it may go so far as to proscribe abortion
[p164] during that period, except when it is necessary to preserve the life or health of
the mother.

Measured against these standards, Art. 1196 of the Texas Penal Code, in restricting legal
abortions to those "procured or attempted by medical advice for the purpose of saving
the life of the mother," sweeps too broadly. The statute makes no distinction between
abortions performed early in pregnancy and those performed later, and it limits to a
single reason, "saving" the mother's life, the legal justification for the procedure. The
statute, therefore, cannot survive the constitutional attack made upon it here.

This conclusion makes it unnecessary for us to consider the additional challenge to the
Texas statute asserted on grounds of vagueness. See United States v. Vuitch, 402 U.S. at
67-72.

XI

To summarize and to repeat:

1. A state criminal abortion statute of the current Texas type, that excepts from
criminality only a lifesaving procedure on behalf of the mother, without regard to
pregnancy stage and without recognition of the other interests involved, is violative of
the Due Process Clause of the Fourteenth Amendment.

(a) For the stage prior to approximately the end of the first trimester, the abortion
decision and its effectuation must be left to the medical judgment of the pregnant
woman's attending physician.

(b) For the stage subsequent to approximately the end of the first trimester, the State, in
promoting its interest in the health of the mother, may, if it chooses, regulate the
abortion procedure in ways that are reasonably related to maternal health.

(c) For the stage subsequent to viability, the State in promoting its interest in the
potentiality of human life [p165] may, if it chooses, regulate, and even proscribe,
abortion except where it is necessary, in appropriate medical judgment, for the
preservation of the life or health of the mother.

2. The State may define the term "physician," as it has been employed in the preceding
paragraphs of this Part XI of this opinion, to mean only a physician currently licensed by
the State, and may proscribe any abortion by a person who is not a physician as so
defined.

In Doe v. Bolton, post, p. 179, procedural requirements contained in one of the modern
abortion statutes are considered. That opinion and this one, of course, are to be read
together. [n67]

This holding, we feel, is consistent with the relative weights of the respective interests
involved, with the lessons and examples of medical and legal history, with the lenity of
the common law, and with the demands of the profound problems of the present day.
The decision leaves the State free to place increasing restrictions on abortion as the
period of pregnancy lengthens, so long as those restrictions are tailored to the
recognized state interests. The decision vindicates the right of the physician to
administer medical treatment according to his professional judgment up to the points
where important [p166] state interests provide compelling justifications for intervention.
Up to those points, the abortion decision in all its aspects is inherently, and primarily, a
medical decision, and basic responsibility for it must rest with the physician. If an
individual practitioner abuses the privilege of exercising proper medical judgment, the
usual remedies, judicial and intra-professional, are available.

XII

Our conclusion that Art. 1196 is unconstitutional means, of course, that the Texas
abortion statutes, as a unit, must fall. The exception of Art. 1196 cannot be struck down
separately, for then the State would be left with a statute proscribing all abortion
procedures no matter how medically urgent the case.

Although the District Court granted appellant Roe declaratory relief, it stopped short of
issuing an injunction against enforcement of the Texas statutes. The Court has
recognized that different considerations enter into a federal court's decision as to
declaratory relief, on the one hand, and injunctive relief, on the other. Zwickler v. Koota,
389 U.S. 241, 252-255 (1967); Dombrowski v. Pfister, 380 U.S. 479 (1965). We are not
dealing with a statute that, on its face, appears to abridge free expression, an area of
particular concern under Dombrowski and refined in Younger v. Harris, 401 U.S. at 50.

We find it unnecessary to decide whether the District Court erred in withholding

injunctive relief, for we assume the Texas prosecutorial authorities will give full credence
to this decision that the present criminal abortion statutes of that State are
unconstitutional.

The judgment of the District Court as to intervenor Hallford is reversed, and Dr. Hallford's
complaint in intervention is dismissed. In all other respects, the judgment [p167] of the
District Court is affirmed. Costs are allowed to the appellee.

It is so ordered.

Concurrence

STEWART, J., Concurring Opinion

MR. JUSTICE STEWART, concurring.

In 1963, this Court, in Ferguson v. Skrupa, 372 U.S. 726, purported to sound the death
knell for the doctrine of substantive due process, a doctrine under which many state laws
had in the past been held to violate the Fourteenth Amendment. As Mr. Justice Black's
opinion for the Court in Skrupa put it:

We have returned to the original constitutional proposition that courts do not substitute
their social and economic beliefs for the judgment of legislative bodies, who are elected
to pass laws.

Id. at 730. [n1]

Barely two years later, in Griswold v. Connecticut, 381 U.S. 479, the Court held a
Connecticut birth control law unconstitutional. In view of what had been so recently said
in Skrupa, the Court's opinion in Griswold understandably did its best to avoid reliance on
the Due Process Clause of the Fourteenth Amendment as the ground for decision. Yet the
Connecticut law did not violate any provision of the Bill of Rights, nor any other specific
provision of the Constitution. [n2] So it was clear [p168] to me then, and it is equally
clear to me now, that the Griswold decision can be rationally understood only as a
holding that the Connecticut statute substantively invaded the "liberty" that is protected
by the Due Process Clause of the Fourteenth Amendment. [n3] As so understood,
Griswold stands as one in a long line of pre-Skrupa cases decided under the doctrine of
substantive due process, and I now accept it as such.

"In a Constitution for a free people, there can be no doubt that the meaning of liberty'
must be broad indeed." Board of Regents v. Roth, 408 U.S. 564, 572. The Constitution
nowhere mentions a specific right of personal choice in matters of marriage and family
life, but the "liberty" protected by the Due Process Clause of the Fourteenth Amendment
covers more than those freedoms explicitly named in the Bill of Rights. See Schware v.
Board of Bar Examiners, 353 U.S. 232, 238-239; Pierce v. Society of Sisters, 268 U.S. 510,
534-535; Meyer v. Nebraska, 262 U.S. 390, 399-400. Cf. Shapiro v. Thompson, 394 U.S.
618, 629-630; United States v. Guest, 383 U.S. 745, 757-758; Carrington v. Rash, 380

U.S. 89, 96; Aptheker v. Secretary of State, 378 U.S. 500, 505; Kent v. Dulles, 357 U.S.
116, 127; Bolling v. Sharpe, 347 U.S. 497, 499-500; Truax v. Raich, 239 U.S. 33, 41.
[p169]

As Mr. Justice Harlan once wrote:

[T]he full scope of the liberty guaranteed by the Due Process Clause cannot be found in
or limited by the precise terms of the specific guarantees elsewhere provided in the
Constitution. This "liberty" is not a series of isolated points pricked out in terms of the
taking of property; the freedom of speech, press, and religion; the right to keep and bear
arms; the freedom from unreasonable searches and seizures; and so on. It is a rational
continuum which, broadly speaking, includes a freedom from all substantial arbitrary
impositions and purposeless restraints . . . and which also recognizes, what a reasonable
and sensitive judgment must, that certain interests require particularly careful scrutiny of
the state needs asserted to justify their abridgment.

Poe v. Ullman, 367 U.S. 497, 543 (opinion dissenting from dismissal of appeal) (citations
omitted). In the words of Mr. Justice Frankfurter,

Great concepts like . . . "liberty" . . . were purposely left to gather meaning from
experience. For they relate to the whole domain of social and economic fact, and the
statesmen who founded this Nation knew too well that only a stagnant society remains
unchanged.

National Mutual Ins. Co. v. Tidewater Transfer Co., 337 U.S. 582, 646 (dissenting opinion).

Several decisions of this Court make clear that freedom of personal choice in matters of
marriage and family life is one of the liberties protected by the Due Process Clause of the
Fourteenth Amendment. Loving v. Virginia, 388 U.S. 1, 12; Griswold v. Connecticut,
supra; Pierce v. Society of Sisters, supra; Meyer v. Nebraska, supra. See also Prince v.
Massachusetts, 321 U.S. 158, 166; Skinner v. Oklahoma, 316 U.S. 535, 541. As recently
as last Term, in Eisenstadt v. Baird, 405 U.S. 438, 453, we recognized

the right of the individual, married or single, to be free from unwarranted governmental
intrusion into matters so fundamentally affecting a person [p170] as the decision
whether to bear or beget a child.

That right necessarily includes the right of a woman to decide whether or not to
terminate her pregnancy.

Certainly the interests of a woman in giving of her physical and emotional self during
pregnancy and the interests that will be affected throughout her life by the birth and
raising of a child are of a far greater degree of significance and personal intimacy than
the right to send a child to private school protected in Pierce v. Society of Sisters, 268
U.S. 510 (1925), or the right to teach a foreign language protected in Meyer v. Nebraska,
262 U.S. 390 (1923).

Abele v. Markle, 351 F.Supp. 224, 227 (Conn.1972).

Clearly, therefore, the Court today is correct in holding that the right asserted by Jane
Roe is embraced within the personal liberty protected by the Due Process Clause of the
Fourteenth Amendment.

It is evident that the Texas abortion statute infringes that right directly. Indeed, it is
difficult to imagine a more complete abridgment of a constitutional freedom than that
worked by the inflexible criminal statute now in force in Texas. The question then
becomes whether the state interests advanced to justify this abridgment can survive the
"particularly careful scrutiny" that the Fourteenth Amendment here requires.

The asserted state interests are protection of the health and safety of the pregnant
woman, and protection of the potential future human life within her. These are legitimate
objectives, amply sufficient to permit a State to regulate abortions as it does other
surgical procedures, and perhaps sufficient to permit a State to regulate abortions more
stringently, or even to prohibit them in the late stages of pregnancy. But such legislation
is not before us, and I think the Court today has thoroughly demonstrated that these
state interests cannot constitutionally support the broad abridgment of personal [p171]
liberty worked by the existing Texas law. Accordingly, I join the Court's opinion holding
that that law is invalid under the Due Process Clause of the Fourteenth Amendment.

1. Only Mr. Justice Harlan failed to join the Court's opinion, 372 U.S. at 733.

2. There is no constitutional right of privacy, as such.

[The Fourth] Amendment protects individual privacy against certain kinds of

governmental intrusion, but its protections go further, and often have nothing to do with
privacy at all. Other provisions of the Constitution protect personal privacy from other
forms of governmental invasion. But the protection of a person's General right to privacy
-- his right to be let alone by other people -- is, like the protection of his property and of
his very life, left largely to the law of the individual States.

Katz v. United States, 389 U.S. 347, 350-351 (footnotes omitted).

3. This was also clear to Mr. Justice Black, 381 U.S. at 507 (dissenting opinion); to Mr.
Justice Harlan, 381 U.S. at 499 (opinion concurring in the judgment); and to MR. JUSTICE
WHITE, 381 U.S. at 502 (opinion concurring in the judgment). See also Mr. Justice
Harlan's thorough and thoughtful opinion dissenting from dismissal of the appeal in Poe
v. Ullman, 367 U.S. 497, 522

TOP
Dissent

REHNQUIST, J., Dissenting Opinion

MR. JUSTICE REHNQUIST, dissenting.

The Court's opinion brings to the decision of this troubling question both extensive
historical fact and a wealth of legal scholarship. While the opinion thus commands my
respect, I find myself nonetheless in fundamental disagreement with those parts of it
that invalidate the Texas statute in question, and therefore dissent.

The Court's opinion decides that a State may impose virtually no restriction on the
performance of abortions during the first trimester of pregnancy. Our previous decisions
indicate that a necessary predicate for such an opinion is a plaintiff who was in her first
trimester of pregnancy at some time during the pendency of her lawsuit. While a party
may vindicate his own constitutional rights, he may not seek vindication for the rights of
others. Moose Lodge v. Irvis, 407 U.S. 163 (1972); Sierra, Club v. Morton, 405 U.S. 727
(1972). The Court's statement of facts in this case makes clear, however, that the record

in no way indicates the presence of such a plaintiff. We know only that plaintiff Roe at
the time of filing her complaint was a pregnant woman; for aught that appears in this
record, she may have been in her last trimester of pregnancy as of the date the
complaint was filed.

Nothing in the Court's opinion indicates that Texas might not constitutionally apply its
proscription of abortion as written to a woman in that stage of pregnancy. Nonetheless,
the Court uses her complaint against the Texas statute as a fulcrum for deciding that
States may [p172] impose virtually no restrictions on medical abortions performed
during the first trimester of pregnancy. In deciding such a hypothetical lawsuit, the Court
departs from the longstanding admonition that it should never "formulate a rule of
constitutional law broader than is required by the precise facts to which it is to be
applied." Liverpool, New York & Philadelphia S.S. Co. v. Commissioners of Emigration, 113
U.S. 33, 39 (1885). See also Ashwander v. TVA, 297 U.S. 288, 345 (1936) (Brandeis, J.,
concurring).

II

Even if there were a plaintiff in this case capable of litigating the issue which the Court
decides, I would reach a conclusion opposite to that reached by the Court. I have
difficulty in concluding, as the Court does, that the right of "privacy" is involved in this
case. Texas, by the statute here challenged, bars the performance of a medical abortion
by a licensed physician on a plaintiff such as Roe. A transaction resulting in an operation
such as this is not "private" in the ordinary usage of that word. Nor is the "privacy" that
the Court finds here even a distant relative of the freedom from searches and seizures
protected by the Fourth Amendment to the Constitution, which the Court has referred to
as embodying a right to privacy. Katz v. United States, 389 U.S. 347 (1967).

If the Court means by the term "privacy" no more than that the claim of a person to be
free from unwanted state regulation of consensual transactions may be a form of
"liberty" protected by the Fourteenth Amendment, there is no doubt that similar claims
have been upheld in our earlier decisions on the basis of that liberty. I agree with the
statement of MR. JUSTICE STEWART in his concurring opinion that the "liberty," against
deprivation of which without due process the Fourteenth [p173] Amendment protects,
embraces more than the rights found in the Bill of Rights. But that liberty is not
guaranteed absolutely against deprivation, only against deprivation without due process
of law. The test traditionally applied in the area of social and economic legislation is
whether or not a law such as that challenged has a rational relation to a valid state
objective. Williamson v. Lee Optical Co., 348 U.S. 483, 491 (1955). The Due Process
Clause of the Fourteenth Amendment undoubtedly does place a limit, albeit a broad one,
on legislative power to enact laws such as this. If the Texas statute were to prohibit an
abortion even where the mother's life is in jeopardy, I have little doubt that such a
statute would lack a rational relation to a valid state objective under the test stated in

Williamson, supra. But the Court's sweeping invalidation of any restrictions on abortion
during the first trimester is impossible to justify under that standard, and the conscious
weighing of competing factors that the Court's opinion apparently substitutes for the
established test is far more appropriate to a legislative judgment than to a judicial one.

The Court eschews the history of the Fourteenth Amendment in its reliance on the
"compelling state interest" test. See Weber v. Aetna Casualty & Surety Co., 406 U.S. 164,
179 (1972) (dissenting opinion). But the Court adds a new wrinkle to this test by
transposing it from the legal considerations associated with the Equal Protection Clause
of the Fourteenth Amendment to this case arising under the Due Process Clause of the
Fourteenth Amendment. Unless I misapprehend the consequences of this transplanting
of the "compelling state interest test," the Court's opinion will accomplish the seemingly
impossible feat of leaving this area of the law more confused than it found it. [p174]

While the Court's opinion quotes from the dissent of Mr. Justice Holmes in Lochner v. New
York, 198 U.S. 45, 74 (1905), the result it reaches is more closely attuned to the majority
opinion of Mr. Justice Peckham in that case. As in Lochner and similar cases applying
substantive due process standards to economic and social welfare legislation, the
adoption of the compelling state interest standard will inevitably require this Court to
examine the legislative policies and pass on the wisdom of these policies in the very
process of deciding whether a particular state interest put forward may or may not be
"compelling." The decision here to break pregnancy into three distinct terms and to
outline the permissible restrictions the State may impose in each one, for example,
partakes more of judicial legislation than it does of a determination of the intent of the
drafters of the Fourteenth Amendment.

The fact that a majority of the States reflecting, after all, the majority sentiment in those
States, have had restrictions on abortions for at least a century is a strong indication, it
seems to me, that the asserted right to an abortion is not "so rooted in the traditions and
conscience of our people as to be ranked as fundamental," Snyder v. Massachusetts, 291
U.S. 97, 105 (1934). Even today, when society's views on abortion are changing, the very
existence of the debate is evidence that the "right" to an abortion is not so universally
accepted as the appellant would have us believe.

To reach its result, the Court necessarily has had to find within the scope of the
Fourteenth Amendment a right that was apparently completely unknown to the drafters
of the Amendment. As early as 1821, the first state law dealing directly with abortion
was enacted by the Connecticut Legislature. Conn.Stat., Tit. 22, 14, 16. By the time of
the adoption of the Fourteenth [p175] Amendment in 1868, there were at least 36 laws
enacted by state or territorial legislatures limiting abortion. [n1] While many States have
amended or updated [p176] their laws, 21 of the laws on the books in 1868 remain in
effect today. [n2] Indeed, the Texas statute struck down today was, as the majority

notes, first enacted in 1857, [p177] and "has remained substantially unchanged to the
present time." Ante at 119.

There apparently was no question concerning the validity of this provision or of any of
the other state statutes when the Fourteenth Amendment was adopted. The only
conclusion possible from this history is that the drafters did not intend to have the
Fourteenth Amendment withdraw from the States the power to legislate with respect to
this matter.

III

Even if one were to agree that the case that the Court decides were here, and that the
enunciation of the substantive constitutional law in the Court's opinion were proper, the
actual disposition of the case by the Court is still difficult to justify. The Texas statute is
struck down in toto, even though the Court apparently concedes that, at later periods of
pregnancy Texas might impose these self-same statutory limitations on abortion. My
understanding of past practice is that a statute found [p178] to be invalid as applied to a
particular plaintiff, but not unconstitutional as a whole, is not simply "struck down" but is,
instead, declared unconstitutional as applied to the fact situation before the Court. Yick
Wo v. Hopkins, 118 U.S. 356"] 118 U.S. 356 (1886); 118 U.S. 356 (1886); Street v. New
York, 394 U.S. 576 (1969).

For all of the foregoing reasons, I respectfully dissent.

85. Meyer vs State of Nebraska

Meyer v. Nebraska, 262 U.S. 390 (1923)

Meyer v. State of Nebraska

No. 325

Argued February 23, 1923

Decided June 4, 1923

262 U.S. 390

ERROR TO THE SUPREME COURT OF THE STATE OF NEBRASKA

Syllabus

A state law forbidding, under penalty, the teaching in any private, denominational,
parochial or public school, of any modern language, other than English, to any child who
has not attained and successfully

Page 262 U. S. 391

passed the eighth grade, invades the liberty guaranteed by the Fourteenth Amendment
and exceeds the power of the State. P. 262 U. S. 399.

So held where the statute was applied in punishment of an instructor who taught reading
in German, to a child of ten years, in a parochial school.

107 Neb. 657, reversed.

ERROR to a judgment of the Supreme Court of Nebraska affirming a conviction for

infraction of a statute against teaching of foreign languages to young children in schools.

Page 262 U. S. 396

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

Plaintiff in error was tried and convicted in the District Court for Hamilton County,
Nebraska, under an information which charged that, on May 25, 1920, while an instructor
in Zion Parochial School, he unlawfully taught the subject of reading in the German
language to Raymond Parpart, a child of ten years, who had not attained

Page 262 U. S. 397

and successfully passed the eighth grade. The information is based upon "An act relating
to the teaching of foreign languages in the State of Nebraska," approved April 9, 1919,
which follows [Laws 1919, c. 249.]:

"Section 1. No person, individually or as a teacher, shall, in any private, denominational,

parochial or public school, teach any subject to any person in any language other than
the English language."

"Sec. 2. Languages, other than the English language, may be taught as languages only
after a pupil shall have attained and successfully passed the eighth grade as evidenced
by a certificate of graduation issued by the county superintendent of the county in which
the child resides."

"Sec. 3. Any person who violates any of the provisions of this act shall be deemed guilty
of a misdemeanor and upon conviction, shall be subject to a fine of not less than twentyfive dollars ($25), nor more than one hundred dollars ($100) or be confined in the county
jail for any period not exceeding thirty days for each offense."

"Sec. 4. Whereas, an emergency exists, this act shall be in force from and after its
passage and approval."

The Supreme Court of the State affirmed the judgment of conviction. 107 Neb. 657. It
declared the offense charged and established was "the direct and intentional teaching of
the German language as a distinct subject to a child who had not passed the eighth
grade," in the parochial school maintained by Zion Evangelical Lutheran Congregation, a
collection of Biblical stories being used therefor. And it held that the statute forbidding

this did not conflict with the Fourteenth Amendment, but was a valid exercise of the
police power. The following excerpts from the opinion sufficiently indicate the reasons
advanced to support the conclusion.

"The salutary purpose of the statute is clear. The legislature had seen the baneful effects
of permitting foreigners,

Page 262 U. S. 398

who had taken residence in this country, to rear and educate their children in the
language of their native land. The result of that condition was found to be inimical to our
own safety. To allow the children of foreigners, who had emigrated here, to be taught
from early childhood the language of the country of their parents was to rear them with
that language as their mother tongue. It was to educate them so that they must always
think in that language, and, as a consequence, naturally inculcate in them the ideas and
sentiments foreign to the best interests of this country. The statute, therefore, was
intended not only to require that the education of all children be conducted in the English
language, but that, until they had grown into that language and until it had become a
part of them, they should not in the schools be taught any other language. The obvious
purpose of this statute was that the English language should be and become the mother
tongue of all children reared in this state. The enactment of such a statute comes
reasonably within the police power of the state. Pohl v. State, 132 N.E. (Ohio) 20; State v.
Bartels, 181 N.W. (Ia.) 508."

"It is suggested that the law is an unwarranted restriction, in that it applies to all citizens
of the state and arbitrarily interferes with the rights of citizens who are not of foreign
ancestry, and prevents them, without reason, from having their children taught foreign
languages in school. That argument is not well taken, for it assumes that every citizen
finds himself restrained by the statute. The hours which a child is able to devote to study
in the confinement of school are limited. It must have ample time for exercise or play. Its
daily capacity for learning is comparatively small. A selection of subjects for its
education, therefore, from among the many that might be taught, is obviously necessary.
The legislature no doubt had in mind the practical operation of the law. The law affects
few citizens, except those of foreign lineage.

Page 262 U. S. 399

Other citizens, in their selection of studies, except perhaps in rare instances, have never
deemed it of importance to teach their children foreign languages before such children
have reached the eighth grade. In the legislative mind, the salutary effect of the statute

no doubt outweighed the restriction upon the citizens generally, which, it appears, was a
restriction of no real consequence."

The problem for our determination is whether the statute, as construed and applied,
unreasonably infringes the liberty guaranteed to the plaintiff in error by the Fourteenth
Amendment. "No State shall . . . deprive any person of life, liberty, or property, without
due process of law."

While this Court has not attempted to define with exactness the liberty thus guaranteed,
the term has received much consideration and some of the included things have been
definitely stated. Without doubt, it denotes not merely freedom from bodily restraint, but
also the right of the individual to contract, to engage in any of the common occupations
of life, to acquire useful knowledge, to marry, establish a home and bring up children, to
worship God according to the dictates of his own conscience, and generally to enjoy
those privileges long recognized at common law as essential to the orderly pursuit of
happiness by free men. Slaughter-House Cases, 16 Wall. 36; Butchers' Union Co. v.
Crescent City Co., 111 U. S. 746; Yick Wo v. Hopkins, 118 U. S. 356; Minnesota v. Barber,
136 U. S. 313; Allgeyer v. Louisiana, 165 U. S. 578; Lochner v. New York, 198 U. S. 45;
Twining v. New Jersey, 211 U. S. 78; Chicago, Burlington & Quincy R.R. Co. v. McGuire,
219 U. S. 549; Truax v. Raich, 239 U. S. 33; Adams v. Tanner, 244 U. S. 590; New York Life
Ins. Co. v. Dodge, 246 U. S. 357; Truax v. Corrigan, 257 U. S. 312; Adkins v. Children's
Hospital, 261 U. S. 525; Wyeth v. Cambridge Board of Health, 200 Mass. 474. The
established doctrine is that this liberty may not be interfered

Page 262 U. S. 400

with, under the guise of protecting the public interest, by legislative action which is
arbitrary or without reasonable relation to some purpose within the competency of the
State to effect. Determination by the legislature of what constitutes proper exercise of
police power is not final or conclusive, but is subject to supervision by the courts. Lawton
v. Steele, 152 U. S. 133, 152 U. S. 137.

The American people have always regarded education and acquisition of knowledge as
matters of supreme importance which should be diligently promoted. The Ordinance of
1787 declares,

"Religion, morality, and knowledge being necessary to good government and the
happiness of mankind, schools and the means of education shall forever be encouraged."

Corresponding to the right of control, it is the natural duty of the parent to give his
children education suitable to their station in life, and nearly all the States, including
Nebraska, enforce this obligation by compulsory laws.

Practically, education of the young is only possible in schools conducted by especially

qualified persons who devote themselves thereto. The calling always has been regarded
as useful and honorable, essential, indeed, to the public welfare. Mere knowledge of the
German language cannot reasonably be regarded as harmful. Heretofore it has been
commonly looked upon as helpful and desirable. Plaintiff in error taught this language in
school as part of his occupation. His right thus to teach and the right of parents to
engage him so to instruct their children, we think, are within the liberty of the
Amendment.

The challenged statute forbids the teaching in school of any subject except in English;
also the teaching of any other language until the pupil has attained and successfully
passed the eighth grade, which is not usually accomplished before the age of twelve.
The Supreme Court of the State has held that "the so-called ancient or dead languages"
are not "within the spirit or the purpose of

Page 262 U. S. 401

the act." Nebraska District of Evangelical Lutheran Synod v. McKelvie, 187 N.W. 927.
Latin, Greek, Hebrew are not proscribed; but German, French, Spanish, Italian and every
other alien speech are within the ban. Evidently the legislature has attempted materially
to interfere with the calling of modern language teachers, with the opportunities of pupils
to acquire knowledge, and with the power of parents to control the education of their
own.

It is said the purpose of the legislation was to promote civic development by inhibiting
training and education of the immature in foreign tongues and ideals before they could
learn English and acquire American ideals, and "that the English language should be and
become the mother tongue of all children reared in this State." It is also affirmed that the
foreign born population is very large, that certain communities commonly use foreign
words, follow foreign leaders, move in a foreign atmosphere, and that the children are
thereby hindered from becoming citizens of the most useful type, and the public safety is
imperiled.

That the State may do much, go very far, indeed, in order to improve the quality of its
citizens, physically, mentally and morally, is clear; but the individual has certain
fundamental rights which must be respected. The protection of the Constitution extends

to all, to those who speak other languages as well as to those born with English on the
tongue. Perhaps it would be highly advantageous if all had ready understanding of our
ordinary speech, but this cannot be coerced by methods which conflict with the
Constitution -- a desirable end cannot be promoted by prohibited means.

For the welfare of his Ideal Commonwealth, Plato suggested a law which should provide:

"That the wives of our guardians are to be common, and their children are to be
common, and no parent is to know his own child,

Page 262 U. S. 402

nor any child his parent. . . . The proper officers will take the offspring of the good
parents to the pen or fold, and there they will deposit them with certain nurses who dwell
in a separate quarter; but the offspring of the inferior, or of the better when they chance
to be deformed, will be put away in some mysterious, unknown place, as they should
be."

In order to submerge the individual. and develop ideal citizens, Sparta assembled the
males at seven into barracks and intrusted their subsequent education and training to
official guardians. Although such measures have been deliberately approved by men of
great genius, their ideas touching the relation between individual and State were wholly
different from those upon which our institutions rest, and it hardly will be affirmed that
any legislature could impose such restrictions upon the people of a State without doing
violence to both letter and spirit of the Constitution.

The desire of the legislature to foster a homogeneous people with American ideals
prepared readily to understand current discussions of civic matters is easy to appreciate.
Unfortunate experiences during the late war and aversion toward every characteristic of
truculent adversaries were certainly enough to quicken that aspiration. But the means
adopted, we think, exceed the limitations upon the power of the State and conflict with
rights assured to plaintiff in error. The interference is plain enough, and no adequate
reason therefor in time of peace and domestic tranquility has been shown.

The power of the State to compel attendance at some school and to make reasonable
regulations for all schools, including a requirement that they shall give instructions in
English, is not questioned. Nor has challenge been made of the State's power to
prescribe a curriculum for institutions which it supports. Those matters are not within the

present controversy. Our concern is with the prohibition approved by the Supreme Court.
Adams v.

Page 262 U. S. 403

Tanner, supra, p. 244 U. S. 594, pointed out that mere abuse incident to an occupation
ordinarily useful is not enough to justify its abolition, although regulation may be entirely
proper. No emergency has arisen which renders knowledge by a child of some language
other than English so clearly harmful as to justify its inhibition with the consequent
infringement of rights long freely enjoyed. We are constrained to conclude that the
statute as applied is arbitrary and without reasonable relation to any end within the
competency of the State.

As the statute undertakes to interfere only with teaching which involves a modern
language, leaving complete freedom as to other matters, there seems no adequate
foundation for the suggestion that the purpose was to protect the child's health by
limiting his mental activities. It is well known that proficiency in a foreign language
seldom comes to one not instructed at an early age, and experience shows that this is
not injurious to the health, morals or understanding of the ordinary child.

The judgment of the court below must be reversed, and the cause remanded for further
proceedings not inconsistent with this opinion.

Reversed. [See the separate opinion of MR. JUSTICE HOLMES, concurred in by MR.
JUSTICE SUTHERLAND, in the next case, at p. 262 U. S. 412, infra.]

1.

ADIONG V COMELEC

G.R. No. 103956 March 31, 1992

BLO UMPAR ADIONG, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.

GUTIERREZ, JR., J.:

The specific issue in this petition is whether or not the Commission on Elections
(COMELEC) may prohibit the posting of decals and stickers on "mobile" places, public or
private, and limit their location or publication to the authorized posting areas that it
fixes.
On January 13, 1992, the COMELEC promulgated Resolution No. 2347 pursuant to its
powers granted by the Constitution, the Omnibus Election Code, Republic Acts Nos. 6646
and 7166 and other election laws.
Section 15(a) of the resolution provides:
Sec. 15. Lawful Election Propaganda. The following are lawful election propaganda:
(a) Pamphlets, leaflets, cards, decals, stickers, handwritten or printed letters, or other
written or printed materials not more than eight and one-half (8-1/2) inches in width and
fourteen (14) inches in length. Provided, That decals and stickers may be posted only in
any of the authorized posting areasprovided in paragraph (f) of Section 21 hereof.
Section 21 (f) of the same resolution provides:
Sec. 21(f). Prohibited forms of election propaganda.
It is unlawful:
xxx xxx xxx
(f) To draw, paint, inscribe, post, display or publicly exhibit any election propaganda in
any place, whether public or private, mobile or stationary, except in the COMELEC

common posted areas and/or billboards, at the campaign headquarters of the candidate
or political party, organization or coalition, or at the candidate's own residential house or
one of his residential houses, if he has more than one: Provided, that such posters or
election propaganda shall not exceed two (2) feet by three (3) feet in size. (Emphasis
supplied)
xxx xxx xxx
The statutory provisions sought to be enforced by COMELEC are Section 82 of the
Omnibus Election Code on lawful election propaganda which provides:
Lawful election propaganda. Lawful election propaganda shall include:
(a) Pamphlets, leaflets, cards, decals, stickers or other written or printed materials of a
size not more than eight and one-half inches in width and fourteen inches in length;
(b) Handwritten or printed letters urging voters to vote for or against any particular
candidate;
(c) Cloth, paper or cardboard posters, whether framed or posted, with an area not
exceeding two feet by three feet, except that, at the site and on the occasion of a public
meeting or rally, or in announcing the holding of said meeting or rally, streamers not
exceeding three feet by eight feet in size, shall be allowed: Provided, That said streamers
may not be displayed except one week before the date of the meeting or rally and that it
shall be removed within seventy-two hours after said meeting or rally; or
(d) All other forms of election propaganda not prohibited by this Code as the Commission
may authorize after due notice to all interested parties and hearing where all the
interested parties were given an equal opportunity to be heard: Provided, That the
Commission's authorization shall be published in two newspapers of general circulation
throughout the nation for at least twice within one week after the authorization has been
granted. (Section 37, 1978 EC)
and Section 11(a) of Republic Act No. 6646 which provides:
Prohibited Forms of Election Propaganda. In addition to the forms of election
propaganda prohibited under Section 85 of Batas Pambansa Blg. 881, it shall be
unlawful: (a) to draw, paint, inscribe, write, post, display or publicly exhibit any election
propaganda in any place, whether private, or public, except in the common poster areas
and/or billboards provided in the immediately preceding section, at the candidate's own
residence, or at the campaign headquarters of the candidate or political party: Provided,
That such posters or election propaganda shall in no case exceed two (2) feet by three
(3) feet in area: Provided, Further, That at the site of and on the occasion of a public
meeting or rally, streamers, not more than two (2) and not exceeding three (3) feet by
eight (8) feet each may be displayed five (5) days before the date of the meeting or rally,

and shall be removed within twenty-four (24) hours after said meeting or rally; . . .
(Emphasis supplied)
Petitioner Blo Umpar Adiong, a senatorial candidate in the May 11, 1992 elections now
assails the COMELEC's Resolution insofar as it prohibits the posting of decals and stickers
in "mobile" places like cars and other moving vehicles. According to him such prohibition
is violative of Section 82 of the Omnibus Election Code and Section 11(a) of Republic Act
No. 6646. In addition, the petitioner believes that with the ban on radio, television and
print political advertisements, he, being a neophyte in the field of politics stands to suffer
grave and irreparable injury with this prohibition. The posting of decals and stickers on
cars and other moving vehicles would be his last medium to inform the electorate that
he is a senatorial candidate in the May 11, 1992 elections. Finally, the petitioner states
that as of February 22, 1992 (the date of the petition) he has not received any notice
from any of the Election Registrars in the entire country as to the location of the
supposed "Comelec Poster Areas."
The petition is impressed with merit. The COMELEC's prohibition on posting of decals and
stickers on "mobile" places whether public or private except in designated areas
provided for by the COMELEC itself is null and void on constitutional grounds.
First the prohibition unduly infringes on the citizen's fundamental right of free speech
enshrined in the Constitution (Sec. 4, Article III). There is no public interest substantial
enough to warrant the kind of restriction involved in this case.
There are various concepts surrounding the freedom of speech clause which we have
adopted as part and parcel of our own Bill of Rights provision on this basic freedom.
All of the protections expressed in the Bill of Rights are important but we have accorded
to free speech the status of a preferred freedom. (Thomas v. Collins, 323 US 516, 89 L.
Ed. 430 [1945]; Mutuc v. Commission on Elections, 36 SCRA 228 [1970])
This qualitative significance of freedom of expression arises from the fact that it is the
matrix, the indispensable condition of nearly every other freedom. (Palko v. Connecticut,
302 U.S. 319 [1937]; Salonga v. Pao, 134 SCRA 438 [1985]) It is difficult to imagine how
the other provisions of the Bill of Rights and the right to free elections may be
guaranteed if the freedom to speak and to convince or persuade is denied and taken
away.
We have adopted the principle that debate on public issues should be uninhibited,
robust, and wide open and that it may well include vehement, caustic and sometimes
unpleasantly sharp attacks on government and public officials. (New York Times Co. v.
Sullivan, 376 U.S. 254, 11 L. Ed. 686 [1964]; cited in the concurring opinion of then Chief
Justice Enrique Fernando in Babst v. National Intelligence Board, 132 SCRA 316 [1984])
Too many restrictions will deny to people the robust, uninhibited, and wide open debate,
the generating of interest essential if our elections will truly be free, clean and honest.

We have also ruled that the preferred freedom of expression calls all the more for the
utmost respect when what may be curtailed is the dissemination of information to make
more meaningful the equally vital right of suffrage. (Mutuc v. Commission on Elections,
supra)
The determination of the limits of the Government's power to regulate the exercise by a
citizen of his basic freedoms in order to promote fundamental public interests or policy
objectives is always a difficult and delicate task. The so-called balancing of interests
individual freedom on one hand and substantial public interests on the other is made
even more difficult in election campaign cases because the Constitution also gives
specific authority to the Commission on Elections to supervise the conduct of free,
honest, and orderly elections.
We recognize the fact that under the Constitution, the COMELEC during the election
period is granted regulatory powers vis-a-vis the conduct and manner of elections, to wit:
Sec. 4. The Commission may, during the election period supervise or regulate the
enjoyment or utilization of all franchises or permits for the operation of transportation
and other public utilities, media of communication or information, all grants special
privileges, or concessions granted by the Government or any subdivision, agency, or
instrumentality thereof, including any government-owned or controlled corporation or its
subsidiary. Such supervision or regulation shall aim to ensure equal opportunity, time,
and space, and the right to reply, including reasonable equal rates therefore, for public
information campaigns and forms among candidates in connection with the object of
holding free, orderly, honest, peaceful and credible elections. (Article IX(c) section 4)
The variety of opinions expressed by the members of this Court in the recent case of
National Press Club v. Commission on Elections (G.R. No. 102653, March 5, 1991) and its
companion cases underscores how difficult it is to draw a dividing line between
permissible regulation of election campaign activities and indefensible repression
committed in the name of free and honest elections. In the National Press Club, case, the
Court had occasion to reiterate the preferred status of freedom of expression even as it
validated COMELEC regulation of campaigns through political advertisements. The gray
area is rather wide and we have to go on a case to case basis.
There is another problem involved. Considering that the period of legitimate campaign
activity is fairly limited and, in the opinion of some, too short, it becomes obvious that
unduly restrictive regulations may prove unfair to affected parties and the electorate.
For persons who have to resort to judicial action to strike down requirements which they
deem inequitable or oppressive, a court case may prove to be a hollow remedy. The
judicial process, by its very nature, requires time for rebuttal, analysis and reflection. We
cannot act instantly on knee-jerk impulse. By the time we revoke an unallowably

restrictive regulation or ruling, time which is of the essence to a candidate may have
lapsed and irredeemable opportunities may have been lost.
When faced with border line situations where freedom to speak by a candidate or party
and freedom to know on the part of the electorate are invoked against actions intended
for maintaining clean and free elections, the police, local officials and COMELEC, should
lean in favor of freedom. For in the ultimate analysis, the freedom of the citizen and the
State's power to regulate are not antagonistic. There can be no free and honest elections
if in the efforts to maintain them, the freedom to speak and the right to know are unduly
curtailed.
There were a variety of opinions expressed in the National Press Club v. Commission on
Elections (supra) case but all of us were unanimous that regulation of election activity
has its limits. We examine the limits of regulation and not the limits of free speech. The
carefully worded opinion of the Court, through Mr. Justice Feliciano, shows that regulation
of election campaign activity may not pass the test of validity if it is too general in its
terms or not limited in time and scope in its application, if it restricts one's expression of
belief in a candidate or one's opinion of his or her qualifications, if it cuts off the flow of
media reporting, and if the regulatory measure bears no clear and reasonable nexus with
the constitutionally sanctioned objective.
Even as the Court sustained the regulation of political advertisements, with some rather
strong dissents, inNational Press Club, we find the regulation in the present case of a
different category. The promotion of a substantial Government interest is not clearly
shown.
A government regulation is sufficiently justified if it is within the constitutional power of
the Government, if it furthers an important or substantial governmental interest; if the
governmental interest is unrelated to the suppression of free expression; and if the
incidental restriction on alleged First Amendment freedoms is no greater than is essential
to the furtherance of that interest. (Id., at 377, 20 L Ed 2d 672, 88 S Ct 1673. (City
Council v. Taxpayers For Vincent, 466 US 789, 80 L Ed 2d 772, 104 S Ct 2118 [1984])
The posting of decals and stickers in mobile places like cars and other moving vehicles
does not endanger any substantial government interest. There is no clear public interest
threatened by such activity so as to justify the curtailment of the cherished citizen's right
of free speech and expression. Under the clear and present danger rule not only must
the danger be patently clear and pressingly present but the evil sought to be avoided
must be so substantive as to justify a clamp over one's mouth or a writing instrument to
be stilled:
The case confronts us again with the duty our system places on the Court to say where
the individual's freedom ends and the State's power begins. Choice on that border, now
as always delicate, is perhaps more so where the usual presumption supporting

legislation is balanced by the preferred place given in our scheme to the great, the
indispensable democratic freedom secured by the first Amendment . . . That priority
gives these liberties a sanctity and a sanction not permitting dubious intrusions and it is
the character of the right, not of the limitation, which determines what standard governs
the choice . . .
For these reasons any attempt to restrict those liberties must be justified by clear public
interest, threatened not doubtfully or remotely, but by clear and present danger. The
rational connection between the remedy provided and the evil to be curbed, which in
other context might support legislation against attack on due process grounds, will not
suffice. These rights rest on firmer foundation. Accordingly, whatever occasion would
restrain orderly discussion and persuasion, at appropriate time and place, must have
clear support in public danger, actual or impending. Only the greatest abuses,
endangering permanent interests, give occasion for permissible limitation. (Thomas V.
Collins, 323 US 516 [1945]). (Emphasis supplied)
Significantly, the freedom of expression curtailed by the questioned prohibition is not so
much that of the candidate or the political party. The regulation strikes at the freedom of
an individual to express his preference and, by displaying it on his car, to convince
others to agree with him. A sticker may be furnished by a candidate but once the car
owner agrees to have it placed on his private vehicle, the expression becomes a
statement by the owner, primarily his own and not of anybody else. If, in the National
Press Club case, the Court was careful to rule out restrictions on reporting by newspapers
or radio and television stations and commentators or columnists as long as these are not
correctly paid-for advertisements or purchased opinions with less reason can we sanction
the prohibition against a sincere manifestation of support and a proclamation of belief by
an individual person who pastes a sticker or decal on his private property.
Second the questioned prohibition premised on the statute and as couched in the
resolution is void for overbreadth.
A statute is considered void for overbreadth when "it offends the constitutional principle
that a governmental purpose to control or prevent activities constitutionally subject to
state regulations may not be achieved by means which sweep unnecessarily broadly and
thereby invade the area of protected freedoms." (Zwickler v. Koota, 19 L ed 2d 444
[1967]).
In a series of decisions this Court has held that, even though the governmental purpose
be legitimate and substantial, that purpose cannot be pursued by means that broadly
stifle fundamental personal liberties when the end can be more narrowly achieved. The
breadth of legislative abridgment must be viewed in the light of less drastic means for
achieving the same basic purpose.

In Lovell v. Griffin, 303 US 444, 82 L ed 949, 58 S Ct 666, the Court invalidated an

ordinance prohibiting all distribution of literature at any time or place in Griffin, Georgia,
without a license, pointing out that so broad an interference was unnecessary to
accomplish legitimate municipal aims. In Schneider v. Irvington, 308 US 147, 84 L ed
155, 60 S Ct. 146, the Court dealt with ordinances of four different municipalities which
either banned or imposed prior restraints upon the distribution of handbills. In holding
the ordinances invalid, the court noted that where legislative abridgment of fundamental
personal rights and liberties is asserted, "the courts should be astute to examine the
effect of the challenged legislation. Mere legislative preferences or beliefs respecting
matters of public convenience may well support regulation directed at other personal
activities, but be insufficient to justify such as diminishes the exercise of rights so vital to
the maintenance of democratic institutions," 308 US, at 161. In Cantwell v Connecticut,
310 US 296, 84 L ed 1213, 60 S Ct. 900, 128 ALR 1352, the Court said that "[c]onduct
remains subject to regulation for the protection of society," but pointed out that in each
case "the power to regulate must be so exercised as not, in attaining a permissible end,
unduly to infringe the protected freedom." (310 US at 304) (Shelton v. Tucker, 364 US
479 [1960]
The resolution prohibits the posting of decals and stickers not more than eight and onehalf (8-1/2) inches in width and fourteen (14) inches in length in any place, including
mobile places whether public or private except in areas designated by the COMELEC.
Verily, the restriction as to where the decals and stickers should be posted is so broad
that it encompasses even the citizen's private property, which in this case is a privatelyowned vehicle. In consequence of this prohibition, another cardinal rule prescribed by
the Constitution would be violated. Section 1, Article III of the Bill of Rights provides that
no person shall be deprived of his property without due process of law:
Property is more than the mere thing which a person owns, it includes the right to
acquire, use, and dispose of it; and the Constitution, in the 14th Amendment, protects
these essential attributes.
Property is more than the mere thing which a person owns. It is elementary that it
includes the right to acquire, use, and dispose of it. The Constitution protects these
essential attributes of property. Holden v. Hardy, 169 U.S. 366, 391, 41 L. ed. 780, 790,
18 Sup. Ct. Rep. 383. Property consists of the free use, enjoyment, and disposal of a
person's acquisitions without control or diminution save by the law of the land. 1
Cooley's Bl. Com. 127. (Buchanan v. Warley 245 US 60 [1917])
As earlier stated, we have to consider the fact that in the posting of decals and stickers
on cars and other moving vehicles, the candidate needs the consent of the owner of the
vehicle. In such a case, the prohibition would not only deprive the owner who consents to
such posting of the decals and stickers the use of his property but more important, in the
process, it would deprive the citizen of his right to free speech and information:

Freedom to distribute information to every citizen wherever he desires to receive it is so

clearly vital to the preservation of a free society that, putting aside reasonable police and
health regulations of time and manner of distribution, it must be fully preserved. The
danger of distribution can so easily be controlled by traditional legal methods leaving to
each householder the full right to decide whether he will receive strangers as visitors,
that stringent prohibition can serve no purpose but that forbidden by the constitution,
the naked restriction of the dissemination of ideas." (Martin v. City of Struthers, Ohio,
319 U.S. 141; 87 L. ed. 1313 [1943])
The right to property may be subject to a greater degree of regulation but when this
right is joined by a "liberty" interest, the burden of justification on the part of the
Government must be exceptionally convincing and irrefutable. The burden is not met in
this case.
Section 11 of Rep. Act 6646 is so encompassing and invasive that it prohibits the posting
or display of election propaganda in any place, whether public or private, except in the
common poster areas sanctioned by COMELEC. This means that a private person cannot
post his own crudely prepared personal poster on his own front door or on a post in his
yard. While the COMELEC will certainly never require the absurd, there are no limits to
what overzealous and partisan police officers, armed with a copy of the statute or
regulation, may do.
The provisions allowing regulation are so loosely worded that they include the posting of
decals or stickers in the privacy of one's living room or bedroom. This is delegation
running riot. As stated by Justice Cardozo in his concurrence in Panama Refining Co. v.
Ryan (293 U.S. 388; 79 L. Ed. 446 [1935), "The delegated power is unconfined and
vagrant . . . This is delegation running riot. No such plentitude of power is susceptible of
transfer."
Third the constitutional objective to give a rich candidate and a poor candidate equal
opportunity to inform the electorate as regards their candidacies, mandated by Article II,
Section 26 and Article XIII, section 1 in relation to Article IX (c) Section 4 of the
Constitution, is not impaired by posting decals and stickers on cars and other private
vehicles. Compared to the paramount interest of the State in guaranteeing freedom of
expression, any financial considerations behind the regulation are of marginal
significance.
Under section 26 Article II of the Constitution, "The State shall guarantee equal access to
opportunities for public service, . . . while under section 1, Article XIII thereof "The
Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic,
andpolitical inequalities, and remove cultural inequities by equitably diffusing wealth and
political power for the common good." (Emphasis supplied)

It is to be reiterated that the posting of decals and stickers on cars, calesas, tricycles,
pedicabs and other moving vehicles needs the consent of the owner of the vehicle.
Hence, the preference of the citizen becomes crucial in this kind of election propaganda
not the financial resources of the candidate. Whether the candidate is rich and,
therefore, can afford to doleout more decals and stickers or poor and without the means
to spread out the same number of decals and stickers is not as important as the right of
the owner to freely express his choice and exercise his right of free speech. The owner
can even prepare his own decals or stickers for posting on his personal property. To strike
down this right and enjoin it is impermissible encroachment of his liberties.
In sum, the prohibition on posting of decals and stickers on "mobile" places whether
public or private except in the authorized areas designated by the COMELEC becomes
censorship which cannot be justified by the Constitution:
. . . 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 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, either 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. (Mutuc v.
Commission on Elections, supra)
The unusual circumstances of this year's national and local elections call for a more
liberal interpretation of the freedom to speak and the right to know. It is not alone the
widest possible dissemination of information on platforms and programs which concern
us. Nor are we limiting ourselves to protecting the unfettered interchange of ideas to
bring about political change. (Cf. New York Times v. Sullivan, supra) The big number of
candidates and elective positions involved has resulted in the peculiar situation where
almost all voters cannot name half or even two-thirds of the candidates running for
Senator. The public does not know who are aspiring to be elected to public office.
There are many candidates
programs and ideologies which
sticker with such a candidate's
name; he is espousing ideas.

whose names alone evoke qualifications, platforms,

the voter may accept or reject. When a person attaches a
name on his car bumper, he is expressing more than the
Our review of the validity of the challenged regulation

includes its effects in today's particular circumstances. We are constrained to rule

against the COMELEC prohibition.
WHEREFORE, the petition is hereby GRANTED. The portion of Section 15 (a) of Resolution
No. 2347 of the Commission on Elections providing that "decals and stickers may be
posted only in any of the authorized posting areas provided in paragraph (f) of Section
21 hereof" is DECLARED NULL and VOID.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado,
Davide, Jr., Romero and Nocon, J.J., concur.
Feliciano and Bellosillo, JJ., are on leave.

Separate Opinions

CRUZ, J.: concurring:

I join Mr. Justice Gutierrez and reiterate the views expressed in my dissent in National
Press Club v. Commission on Elections. The stand taken by the Court in the case at bar is
a refreshing change from its usual deferential attitude toward authoritarianism as a
persistent vestige of the past regime. After the disappointing decision in the ad ban case,
I hope that the present decision will guide us to the opposite direction, toward liberty and
the full recognition of freedom of expression. This decision is a small step in rectifying
the errors of the past, but it is a step just the same, and on the right track this time.
Regarding the sticker ban, I think we are being swamped with regulations that unduly
obstruct the free flow of information so vital in an election campaign. The Commission on
Elections seems to be bent on muzzling the candidates and imposing all manner of silly
restraints on their efforts to reach the electorate. Reaching the electorate is precisely the
purpose of an election campaign, but the Commission on Elections obviously believes
that the candidates should be as quiet as possible.
Instead of limiting the dissemination of information on the election issues and the
qualifications of those vying for public office, what the Commission on Elections should
concentrate on is the education of the voters on the proper exercise of their suffrages.
This function is part of its constitutional duty to supervise and regulate elections and to
prevent them from deteriorating into popularity contests where the victors are chosen on
the basis not of their platforms and competence but on their ability to sing or dance, or

play a musical instrument, or shoot a basketball, or crack a toilet joke, or exhibit some
such dubious talent irrelevant to their ability to discharge a public office. The public
service is threatened with mediocrity and indeed sheer ignorance if not stupidity. That is
the problem the Commission on Elections should try to correct instead of wasting its time
on much trivialities as where posters shall be allowed and stickers should not be
attached and speeches may be delivered.
The real threat in the present election is the influx of the unqualified professional
entertainers whose only asset is the support of their drooling fans, the demagogues who
drumbeat to the clink of coins their professed present virtues and past innocence, the
opportunists for whom flexibility is a means of political survival and even of financial
gain, and, most dangerous of all, the elements of our electorate who would, with their
mindless ballots, impose these office-seekers upon the nation. These are the evils the
Commission on Elections should try to correct, not the inconsequential and inane
question of where stickers should be stuck. I have nothing but praise for the zeal of the
Commission on Elections in pursuing the ideal of democratic elections, but I am afraid it
is barking up the wrong tree.
Separate Opinions
CRUZ, J., concurring:
I join Mr. Justice Gutierrez and reiterate the views expressed in my dissent in National
Press Club v. Commission on Elections. The stand taken by the Court in the case at bar is
a refreshing change from its usual deferential attitude toward authoritarianism as a
persistent vestige of the past regime. After the disappointing decision in the ad ban case,
I hope that the present decision will guide us to the opposite direction, toward liberty and
the full recognition of freedom of expression. This decision is a small step in rectifying
the errors of the past, but it is a step just the same, and on the right track this time.
Regarding the sticker ban, I think we are being swamped with regulations that unduly
obstruct the free flow of information so vital in an election campaign. The Commission on
Elections seems to be bent on muzzling the candidates and imposing all manner of silly
restraints on their efforts to reach the electorate. Reaching the electorate is precisely the
purpose of an election campaign, but the Commission on Elections obviously believes
that the candidates should be as quiet as possible.
Instead of limiting the dissemination of information on the election issues and the
qualifications of those vying for public office, what the Commission on Elections should
concentrate on is the education of the voters on the proper exercise of their suffrages.
This function is part of its constitutional duty to supervise and regulate elections and to
prevent them from deteriorating into popularity contests where the victors are chosen on
the basis not of their platforms and competence but on their ability to sing or dance, or
play a musical instrument, or shoot a basketball, or crack a toilet joke, or exhibit some

such dubious talent irrelevant to their ability to discharge a public office. The public
service is threatened with mediocrity and indeed sheer ignorance if not stupidity. That is
the problem the Commission on Elections should try to correct instead of wasting its time
on much trivialities as where posters shall be allowed and stickers should not be
attached and speeches may be delivered.
The real threat in the present election is the influx of the unqualified professional
entertainers whose only asset is the support of their drooling fans, the demagogues who
drumbeat to the clink of coins their professed present virtues and past innocence, the
opportunists for whom flexibility is a means of political survival and even of financial
gain, and, most dangerous of all, the elements of our electorate who would, with their
mindless ballots, impose these office-seekers upon the nation. These are the evils the
Commission on Elections should try to correct, not the inconsequential and inane
question of where stickers should be stuck. I have nothing but praise for the zeal of the
Commission on Elections in pursuing the ideal of democratic elections, but I am afraid it
is barking up the wrong tree.

2.

PAMATONG V COMELEC

G.R. No. 161872

April 13, 2004

REV. ELLY CHAVEZ PAMATONG, ESQUIRE, petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
TINGA, J.:
Petitioner Rev. Elly Velez Pamatong filed his Certificate of Candidacy for President on
December 17, 2003. Respondent Commission on Elections (COMELEC) refused to give
due course to petitioners Certificate of Candidacy in its Resolution No. 6558 dated
January 17, 2004. The decision, however, was not unanimous since Commissioners
Luzviminda G. Tancangco and Mehol K. Sadain voted to include petitioner as they
believed he had parties or movements to back up his candidacy.
On January 15, 2004, petitioner moved for reconsideration of Resolution No. 6558.
Petitioners Motion for Reconsideration was docketed as SPP (MP) No. 04-001. The
COMELEC, acting on petitioners Motion for Reconsideration and on similar motions filed
by other aspirants for national elective positions, denied the same under the aegis of
Omnibus Resolution No. 6604 dated February 11, 2004. The COMELEC declared
petitioner and thirty-five (35) others nuisance candidates who could not wage a
nationwide campaign and/or are not nominated by a political party or are not supported
by a registered political party with a national constituency. Commissioner Sadain
maintained his vote for petitioner. By then, Commissioner Tancangco had retired.
In this Petition For Writ of Certiorari, petitioner seeks to reverse the resolutions which
were allegedly rendered in violation of his right to "equal access to opportunities for
public service" under Section 26, Article II of the 1987

Constitution,1 by limiting the number of qualified candidates only to those who can
afford to wage a nationwide campaign and/or are nominated by political parties. In so
doing, petitioner argues that the COMELEC indirectly amended the constitutional
provisions on the electoral process and limited the power of the sovereign people to
choose their leaders. The COMELEC supposedly erred in disqualifying him since he is the
most qualified among all the presidential candidates, i.e., he possesses all the
constitutional and legal qualifications for the office of the president, he is capable of
waging a national campaign since he has numerous national organizations under his
leadership, he also has the capacity to wage an international campaign since he has
practiced law in other countries, and he has a platform of government. Petitioner likewise
attacks the validity of the form for theCertificate of Candidacy prepared by the
COMELEC. Petitioner claims that the form does not provide clear and reasonable
guidelines for determining the qualifications of candidates since it does not ask for the
candidates bio-data and his program of government.
First, the constitutional and legal dimensions involved.
Implicit in the petitioners invocation of the constitutional provision ensuring "equal
access to opportunities for public office" is the claim that there is a constitutional right to
run for or hold public office and, particularly in his case, to seek the presidency. There is
none. What is recognized is merely a privilege subject to limitations imposed by law.
Section 26, Article II of the Constitution neither bestows such a right nor elevates the
privilege to the level of an enforceable right. There is nothing in the plain language of the
provision which suggests such a thrust or justifies an interpretation of the sort.
The "equal access" provision is a subsumed part of Article II of the Constitution, entitled
"Declaration of Principles and State Policies." The provisions under the Article are
generally considered not self-executing,2 and there is no plausible reason for according a
different treatment to the "equal access" provision. Like the rest of the policies
enumerated in Article II, the provision does not contain any judicially enforceable
constitutional right but merely specifies a guideline for legislative or executive action.3
The disregard of the provision does not give rise to any cause of action before the
courts.4
An inquiry into the intent of the framers5 produces the same determination that the
provision is not self-executory. The original wording of the present Section 26, Article II
had read, "The State shall broaden opportunities to public office and prohibit public
dynasties."6 Commissioner (now Chief Justice) Hilario Davide, Jr. successfully brought
forth an amendment that changed the word "broaden" to the phrase "ensure equal
access," and the substitution of the word "office" to "service." He explained his proposal
in this wise:
I changed the word "broaden" to "ENSURE EQUAL ACCESS TO" because what is
important would be equal access to the opportunity. If you broaden, it would necessarily

mean that the government would be mandated to create as many offices as are possible
to accommodate as many people as are also possible. That is the meaning of broadening
opportunities to public service. So, in order that we should not mandate the State to
make the government the number one employer and to limit offices only to what may be
necessary and expedient yet offering equal opportunities to access to it, I change the
word "broaden."7 (emphasis supplied)
Obviously, the provision is not intended to compel the State to enact positive measures
that would accommodate as many people as possible into public office. The approval of
the "Davide amendment" indicates the design of the framers to cast the provision as
simply enunciatory of a desired policy objective and not reflective of the imposition of a
clear State burden.
Moreover, the provision as written leaves much to be desired if it is to be regarded as the
source of positive rights. It is difficult to interpret the clause as operative in the absence
of legislation since its effective means and reach are not properly defined. Broadly
written, the myriad of claims that can be subsumed under this rubric appear to be
entirely open-ended.8 Words and phrases such as "equal access," "opportunities," and
"public service" are susceptible to countless interpretations owing to their inherent
impreciseness. Certainly, it was not the intention of the framers to inflict on the people
an operative but amorphous foundation from which innately unenforceable rights may be
sourced.
As earlier noted, the privilege of equal access to opportunities to public office may be
subjected to limitations. Some valid limitations specifically on the privilege to seek
elective office are found in the provisions9 of the Omnibus Election Code on "Nuisance
Candidates" and COMELEC Resolution No. 645210 dated December 10, 2002 outlining
the instances wherein the COMELEC may motu proprio refuse to give due course to or
cancel aCertificate of Candidacy.
As long as the limitations apply to everybody equally without discrimination, however,
the equal access clause is not violated. Equality is not sacrificed as long as the burdens
engendered by the limitations are meant to be borne by any one who is minded to file a
certificate of candidacy. In the case at bar, there is no showing that any person is exempt
from the limitations or the burdens which they create.
Significantly, petitioner does not challenge the constitutionality or validity of Section 69
of the Omnibus Election Code and COMELEC Resolution No. 6452 dated 10 December
2003. Thus, their presumed validity stands and has to be accorded due weight.
Clearly, therefore, petitioners reliance on the equal access clause in Section 26, Article II
of the Constitution is misplaced.
The rationale behind the prohibition against nuisance candidates and the disqualification
of candidates who have not evinced a bona fide intention to run for office is easy to

divine. The State has a compelling interest to ensure that its electoral exercises are
rational, objective, and orderly. Towards this end, the State takes into account the
practical considerations in conducting elections. Inevitably, the greater the number of
candidates, the greater the opportunities for logistical confusion, not to mention the
increased allocation of time and resources in preparation for the election. These practical
difficulties should, of course, never exempt the State from the conduct of a mandated
electoral exercise. At the same time, remedial actions should be available to alleviate
these logistical hardships, whenever necessary and proper. Ultimately, a disorderly
election is not merely a textbook example of inefficiency, but a rot that erodes faith in
our democratic institutions. As the United States Supreme Court held:
[T]here is surely an important state interest in requiring some preliminary showing of a
significant modicum of support before printing the name of a political organization and
its candidates on the ballot the interest, if no other, in avoiding confusion, deception
and even frustration of the democratic [process].11
The COMELEC itself recognized these practical considerations when it promulgated
Resolution No. 6558 on 17 January 2004, adopting the study Memorandum of its Law
Department dated 11 January 2004. As observed in the COMELECs Comment:
There is a need to limit the number of candidates especially in the case of candidates for
national positions because the election process becomes a mockery even if those who
cannot clearly wage a national campaign are allowed to run. Their names would have to
be printed in the Certified List of Candidates, Voters Information Sheet and the Official
Ballots. These would entail additional costs to the government. For the official ballots in
automated counting and canvassing of votes, an additional page would amount to more
or less FOUR HUNDRED FIFTY MILLION PESOS (P450,000,000.00).
xxx[I]t serves no practical purpose to allow those candidates to continue if they cannot
wage a decent campaign enough to project the prospect of winning, no matter how
slim.12
The preparation of ballots is but one aspect that would be affected by allowance of
"nuisance candidates" to run in the elections. Our election laws provide various
entitlements for candidates for public office, such as watchers in every polling place,13
watchers in the board of canvassers,14 or even the receipt of electoral
contributions.15Moreover, there are election rules and regulations the formulations of
which are dependent on the number of candidates in a given election.
Given these considerations, the ignominious nature of a nuisance candidacy becomes
even more galling. The organization of an election with bona fide candidates standing is
onerous enough. To add into the mix candidates with no serious intentions or capabilities
to run a viable campaign would actually impair the electoral process. This is not to
mention the candidacies which are palpably ridiculous so as to constitute a one-note

joke. The poll body would be bogged by irrelevant minutiae covering every step of the
electoral process, most probably posed at the instance of these nuisance candidates. It
would be a senseless sacrifice on the part of the State.
Owing to the superior interest in ensuring a credible and orderly election, the State could
exclude nuisance candidates and need not indulge in, as the song goes, "their trips to
the moon on gossamer wings."
The Omnibus Election Code and COMELEC Resolution No. 6452 are cognizant of the
compelling State interest to ensure orderly and credible elections by excising
impediments thereto, such as nuisance candidacies that distract and detract from the
larger purpose. The COMELEC is mandated by the Constitution with the administration of
elections16 and endowed with considerable latitude in adopting means and methods
that will ensure the promotion of free, orderly and honest elections.17 Moreover, the
Constitution guarantees that only bona fidecandidates for public office shall be free from
any form of harassment and discrimination.18 The determination ofbona fide candidates
is governed by the statutes, and the concept, to our mind is, satisfactorily defined in the
Omnibus Election Code.
Now, the needed factual premises.
However valid the law and the COMELEC issuance involved are, their proper application
in the case of the petitioner cannot be tested and reviewed by this Court on the basis of
what is now before it. The assailed resolutions of the COMELEC do not direct the Court to
the evidence which it considered in determining that petitioner was a nuisance
candidate. This precludes the Court from reviewing at this instance whether the
COMELEC committed grave abuse of discretion in disqualifying petitioner, since such a
review would necessarily take into account the matters which the COMELEC considered
in arriving at its decisions.
Petitioner has submitted to this Court mere photocopies of various documents
purportedly evincing his credentials as an eligible candidate for the presidency. Yet this
Court, not being a trier of facts, can not properly pass upon the reproductions as
evidence at this level. Neither the COMELEC nor the Solicitor General appended any
document to their respective Comments.
The question of whether a candidate is a nuisance candidate or not is both legal and
factual. The basis of the factual determination is not before this Court. Thus, the remand
of this case for the reception of further evidence is in order.
A word of caution is in order. What is at stake is petitioners aspiration and offer to serve
in the government. It deserves not a cursory treatment but a hearing which conforms to
the requirements of due process.

As to petitioners attacks on the validity of the form for the certificate of candidacy,
suffice it to say that the form strictly complies with Section 74 of the Omnibus Election
Code. This provision specifically enumerates what a certificate of candidacy should
contain, with the required information tending to show that the candidate possesses the
minimum qualifications for the position aspired for as established by the Constitution and
other election laws.
IN VIEW OF THE FOREGOING, COMELEC Case No. SPP (MP) No. 04-001 is hereby
remanded to the COMELEC for the reception of further evidence, to determine the
question on whether petitioner Elly Velez Lao Pamatong is a nuisance candidate as
contemplated in Section 69 of the Omnibus Election Code.
The COMELEC is directed to hold and complete the reception of evidence and report its
findings to this Court with deliberate dispatch.
SO ORDERED.
Davide, Jr., Puno, Vitug*, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ., concur.

Footnotes
* On Official Leave.
1 Sec. 26. The State shall guarantee equal access to opportunities for public service, and
prohibit political dynasties as may be defined by law.
2 See Basco v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 52, 68; Kilosbayan, Inc.
v. Morato, G.R. No. 118910, 246 SCRA 540, 564. "A provision which lays down a general
principle, such as those found in Art. II of the 1987 Constitution, is usually not selfexecuting." Manila Prince Hotel v. GSIS, G.R. No. 122156, 3 February 1997, 267 SCRA
408, 431. "Accordingly, [the Court has] held that the provisions in Article II of our
Constitution entitled "Declaration of Principles and State Policies" should generally be
construed as mere statements of principles of the State." Justice Puno, dissenting, Manila
Prince Hotel v. GSIS, Id. at 474.
3 See Kilosbayan Inc. v. Morato, G.R. No. 118910, 16 November 1995, 250 SCRA 130,
138. Manila Prince Hotel v. GSIS, supra note 2 at 436.
4 Kilosbayan, Inc. v. Morato, supra note 2.
5 "A searching inquiry should be made to find out if the provision is intended as a
present enactment, complete in itself as a definitive law, or if it needs future legislation

for completion and enforcement. The inquiry demands a micro-analysis and the context
of the provision in question." J. Puno, dissenting, Manila Prince Hotel v. GSIS, supra note
2.
6 J. Bernas, The Intent of the 1986 Constitution Writers (1995), p. 148.
7 IV Records of Proceedings and Debates, 1986 Constitutional Commission 945.
8 See J. Feliciano, concurring, Oposa v. Factoran, Jr., G.R. No. 101083, 30 July 1993, 224
SCRA 792, 815.
9 Section 69. Nuisance Candidates. The Commission may, motu proprio or upon a
verified petition of an interested party, refuse to give due course or cancel a certificate
of candidacy if it is shown that said certificate has been filed to put the election process
in mockery or disrepute or to cause confusion among the voters by the similarity of the
names of the registered candidates or by other circumstances or acts which clearly
demonstrate that the candidate has no bona fide intention to run for the office for which
the certificate of candidacy has been filed and thus prevent a faithful determination of
the true will of the electorate.
10 SEC. 6. Motu Proprio Cases. The Commission may, at any time before the election,
motu proprio refuse to give due course to or cancel a certificate of candidacy of any
candidate for the positions of President, Vice-President, Senator and Party-list:
I. The grounds:
a. Candidates who, on the face of their certificate of candidacy, do not possess the
constitutional and legal qualifications of the office to which they aspire to be elected;
b. Candidate who, on the face of said certificate, filed their certificate of candidacy to put
the election process in mockery or disrepute;
c. Candidates whose certificate of candidacy could cause confusion among the voters by
the similarity of names and surnames with other candidates; and
d. Candidates who have no bona fide intention to run for the office for which the
certificate of candidacy had been filed or acts that clearly demonstrate the lack of such
bona fide intention, such as:
d.1 Candidates who do not belong to or are not nominated by any registered political
party of national constituency;
d.2 Presidential, Vice-Presidential [candi-dates] who do not present running mates for
vice-president, respectively, nor senatorial candidates;
d.3 Candidates who do not have a platform of government and are not capable of waging
a nationwide campaign.

11 Jenness v. Fortson, 403 U.S. 431 (1971).

12 Rollo, pp. 469.
13 See Section 178, Omnibus Election Code, as amended.
14 See Section 239, Omnibus Election Code, as amended.
15 See Article XI, Omnibus Election Code, as amended.
16 See Section 2(1), Article IX, Constitution.
17 Sanchez v. COMELEC, 199 Phil. 617 (1987), citing Cauton v. COMELEC, L-25467, 27
April 1967, 19 SCRA 911.
18 See Section 9, Article IX, Constitution.

3.

OPLE V TORRES

[G.R. No. 127685. July 23, 1998]

BLAS F. OPLE, petitioner, vs. RUBEN D. TORRES, ALEXANDER AGUIRRE, HECTOR
VILLANUEVA, CIELITO HABITO, ROBERT BARBERS, CARMENCITA REODICA, CESAR
SARINO, RENATO VALENCIA, TOMAS P. AFRICA, HEAD OF THE NATIONAL COMPUTER
CENTER and CHAIRMAN OF THE COMMISSION ON AUDIT, respondents.
DECISION
PUNO, J.:
The petition at bar is a commendable effort on the part of Senator Blas F. Ople to prevent
the shrinking of the right to privacy, which the revered Mr. Justice Brandeis considered as
"the most comprehensive of rights and the right most valued by civilized men."[1]
Petitioner Ople prays that we invalidate Administrative Order No. 308 entitled "Adoption
of a National Computerized Identification Reference System" on two important
constitutional grounds, viz: one, it is a usurpation of the power of Congress to legislate,
and two, it impermissibly intrudes on our citizenry's protected zone of privacy. We grant

the petition for the rights sought to be vindicated by the petitioner need stronger
barriers against further erosion.
A.O. No. 308 was issued by President Fidel V. Ramos on December 12, 1996 and reads as
follows:
"ADOPTION OF A NATIONAL COMPUTERIZED IDENTIFICATION REFERENCE SYSTEM
WHEREAS, there is a need to provide Filipino citizens and foreign residents with the
facility to conveniently transact business with basic service and social security providers
and other government instrumentalities;
WHEREAS, this will require a computerized system to properly and efficiently identify
persons seeking basic services on social security and reduce, if not totally eradicate,
fraudulent transactions and misrepresentations;
WHEREAS, a concerted and collaborative effort among the various basic services and
social security providing agencies and other government instrumentalities is required to
achieve such a system;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by
virtue of the powers vested in me by law, do hereby direct the following:
SECTION 1. Establishment of a National Computerized Identification Reference System. A
decentralized Identification Reference System among the key basic services and social
security providers is hereby established.
SEC. 2 Inter-Agency Coordinating Committee. An Inter-Agency Coordinating Committee
(IACC) to draw-up the implementing guidelines and oversee the implementation of the
System is hereby created, chaired by the Executive Secretary, with the following as
members:
Head, Presidential Management Staff
Secretary, National Economic Development Authority
Secretary, Department of the Interior and
Local Government
Secretary, Department of Health
Administrator, Government Service Insurance
System,
Administrator, Social Security System, Administrator, National Statistics Office Managing
Director, National Computer Center.

SEC. 3. Secretariat. The National Computer Center (NCC) is hereby designated as

secretariat to the IACC and as such shall provide administrative and technical support to
the IACC.
SEC. 4. Linkage Among Agencies. The Population Reference Number (PRN) generated by
the NSO shall serve as the common reference number to establish a linkage among
concerned agencies. The IACC Secretariat shall coordinate with the different Social
Security and Services Agencies to establish the standards in the use of Biometrics
Technology and in computer application designs of their respective systems.
SEC. 5. Conduct of Information Dissemination Campaign. The Office of the Press
Secretary, in coordination with the National Statistics Office, the GSIS and SSS as lead
agencies and other concerned agencies shall undertake a massive tri-media information
dissemination campaign to educate and raise public awareness on the importance and
use of the PRN and the Social Security Identification Reference.
SEC. 6. Funding. The funds necessary for the implementation of the system shall be
sourced from the respective budgets of the concerned agencies.
SEC. 7. Submission of Regular Reports. The NSO, GSIS and SSS shall submit regular
reports to the Office of the President, through the IACC, on the status of implementation
of this undertaking.
SEC. 8. Effectivity. This Administrative Order shall take effect immediately.
DONE in the City of Manila, this 12th day of December in the year of Our Lord, Nineteen
Hundred and Ninety-Six.
(SGD.) FIDEL V. RAMOS"
A.O. No. 308 was published in four newspapers of general circulation on January 22, 1997
and January 23, 1997. On January 24, 1997, petitioner filed the instant petition against
respondents, then Executive Secretary Ruben Torres and the heads of the government
agencies, who as members of the Inter-Agency Coordinating Committee, are charged
with the implementation of A.O. No. 308. On April 8, 1997, we issued a temporary
restraining order enjoining its implementation.
Petitioner contends:
"A. THE ESTABLISHMENT OF A NATIONAL
SYSTEM REQUIRES A LEGISLATIVE ACT.
PRESIDENT OF THE REPUBLIC OF
UNCONSTITUTIONAL USURPATION OF THE
THE REPUBLIC OF THE PHILIPPINES.

COMPUTERIZED IDENTIFICATION REFERENCE

THE ISSUANCE OF A.O. NO. 308 BY THE
THE PHILIPPINES IS, THEREFORE, AN
LEGISLATIVE POWERS OF THE CONGRESS OF

B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR THE IMPLEMENTATION

OF A.O. NO. 308 IS AN UNCONSTITUTIONAL USURPATION OF THE EXCLUSIVE RIGHT OF
CONGRESS TO APPROPRIATE PUBLIC FUNDS FOR EXPENDITURE.
C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE GROUNDWORK FOR A
SYSTEM WHICH WILL VIOLATE THE BILL OF RIGHTS ENSHRINED IN THE
CONSTITUTION."[2]
Respondents counter-argue:
A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS WOULD WARRANT A JUDICIAL
REVIEW;
B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE EXECUTIVE AND ADMINISTRATIVE
POWERS OF THE PRESIDENT WITHOUT ENCROACHING ON THE LEGISLATIVE POWERS OF
CONGRESS;
C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION OF THE IDENTIFICATION
REFERENCE SYSTEM MAY BE SOURCED FROM THE BUDGETS OF THE CONCERNED
AGENCIES;
D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUAL'S INTEREST IN PRIVACY.[3]
We now resolve.
I
As is usual in constitutional litigation, respondents raise the threshold issues relating to
the standing to sue of the petitioner and the justiciability of the case at bar. More
specifically, respondents aver that petitioner has no legal interest to uphold and that the
implementing rules of A.O. No. 308 have yet to be promulgated.
These submissions do not deserve our sympathetic ear. Petitioner Ople is a distinguished
member of our Senate. As a Senator, petitioner is possessed of the requisite standing to
bring suit raising the issue that the issuance of A.O. No. 308 is a usurpation of legislative
power.[4] As taxpayer and member of the Government Service Insurance System (GSIS),
petitioner can also impugn the legality of the misalignment of public funds and the
misuse of GSIS funds to implement A.O. No. 308.[5]
The ripeness for adjudication of the petition at bar is not affected by the fact that the
implementing rules of A.O. No. 308 have yet to be promulgated.Petitioner Ople assails
A.O. No. 308 as invalid per se and as infirmed on its face. His action is not premature for
the rules yet to be promulgated cannot cure its fatal defects. Moreover, the respondents
themselves have started the implementation of A.O. No. 308 without waiting for the
rules. As early as January 19, 1997, respondent Social Security System (SSS) caused the
publication of a notice to bid for the manufacture of the National Identification (ID) card.

[6] Respondent Executive Secretary Torres has publicly announced that representatives
from the GSIS and the SSS have completed the guidelines for the national identification
system.[7] All signals from the respondents show their unswerving will to implement A.O.
No. 308 and we need not wait for the formality of the rules to pass judgment on its
constitutionality. In this light, the dissenters insistence that we tighten the rule on
standing is not a commendable stance as its result would be to throttle an important
constitutional principle and a fundamental right.
II
We now come to the core issues. Petitioner claims that A.O. No. 308 is not a mere
administrative order but a law and hence, beyond the power of the President to issue. He
alleges that A.O. No. 308 establishes a system of identification that is all-encompassing
in scope, affects the life and liberty of every Filipino citizen and foreign resident, and
more particularly, violates their right to privacy.
Petitioner's sedulous concern for the Executive not to trespass on the lawmaking domain
of Congress is understandable. The blurring of the demarcation line between the power
of the Legislature to make laws and the power of the Executive to execute laws will
disturb their delicate balance of power and cannot be allowed. Hence, the exercise by
one branch of government of power belonging to another will be given a stricter scrutiny
by this Court.
The line that delineates Legislative and Executive power is not indistinct. Legislative
power is "the authority, under the Constitution, to make laws, and to alter and repeal
them."[8] The Constitution, as the will of the people in their original, sovereign and
unlimited capacity, has vested this power in the Congress of the Philippines.[9] The grant
of legislative power to Congress is broad, general and comprehensive.[10] The legislative
body possesses plenary power for all purposes of civil government.[11] Any power,
deemed to be legislative by usage and tradition, is necessarily possessed by Congress,
unless the Constitution has lodged it elsewhere.[12] In fine, except as limited by the
Constitution, either expressly or impliedly, legislative power embraces all subjects and
extends to matters of general concern or common interest.[13]
While Congress is vested with the power to enact laws, the President executes the laws.
[14] The executive power is vested in the President.[15] It is generally defined as the
power to enforce and administer the laws.[16] It is the power of carrying the laws into
practical operation and enforcing their due observance.[17]
As head of the Executive Department, the President is the Chief Executive. He represents
the government as a whole and sees to it that all laws are enforced by the officials and
employees of his department.[18] He has control over the executive department,
bureaus and offices. This means that he has the authority to assume directly the
functions of the executive department, bureau and office, or interfere with the discretion

of its officials.[19] Corollary to the power of control, the President also has the duty of
supervising the enforcement of laws for the maintenance of general peace and public
order.Thus, he is granted administrative power over bureaus and offices under his control
to enable him to discharge his duties effectively.[20]
Administrative power is concerned with the work of applying policies and enforcing
orders as determined by proper governmental organs.[21] It enables the President to fix
a uniform standard of administrative efficiency and check the official conduct of his
agents.[22] To this end, he can issue administrative orders, rules and regulations.
Prescinding from these precepts, we hold that A.O. No. 308 involves a subject that is not
appropriate to be covered by an administrative order. An administrative order is:
"Sec. 3. Administrative Orders.-- Acts of the President which relate to particular aspects
of governmental operation in pursuance of his duties as administrative head shall be
promulgated in administrative orders."[23]
An administrative order is an ordinance issued by the President which relates to specific
aspects in the administrative operation of government. It must be in harmony with the
law and should be for the sole purpose of implementing the law and carrying out the
legislative policy.[24] We reject the argument that A.O. No. 308 implements the
legislative policy of the Administrative Code of 1987. The Code is a general law and
"incorporates in a unified document the major structural, functional and procedural
principles of governance"[25] and "embodies changes in administrative structures and
procedures designed to serve the people."[26] The Code is divided into seven (7) Books:
Book I deals with Sovereignty and General Administration, Book II with the Distribution of
Powers of the three branches of Government, Book III on the Office of the President, Book
IV on the Executive Branch, Book V on the Constitutional Commissions, Book VI on
National Government Budgeting, and Book VII on Administrative Procedure. These Books
contain provisions on the organization, powers and general administration of the
executive, legislative and judicial branches of government, the organization and
administration of departments, bureaus and offices under the executive branch, the
organization and functions of the Constitutional Commissions and other constitutional
bodies, the rules on the national government budget, as well as guidelines for the
exercise by administrative agencies of quasi-legislative and quasi-judicial powers. The
Code covers both the internal administration of government, i.e, internal organization,
personnel and recruitment, supervision and discipline, and the effects of the functions
performed by administrative officials on private individuals or parties outside
government.[27]
It cannot be simplistically argued that A.O. No. 308 merely implements the
Administrative Code of 1987. It establishes for the first time a National Computerized
Identification Reference System. Such a System requires a delicate adjustment of various
contending state policies-- the primacy of national security, the extent of privacy interest

against dossier-gathering by government, the choice of policies, etc. Indeed, the dissent
of Mr. Justice Mendoza states that the A.O. No. 308 involves the all-important freedom of
thought. As said administrative order redefines the parameters of some basic rights of
our citizenry vis-a-vis the State as well as the line that separates the administrative
power of the President to make rules and the legislative power of Congress, it ought to
be evident that it deals with a subject that should be covered by law.
Nor is it correct to argue as the dissenters do that A.O. No. 308 is not a law because it
confers no right, imposes no duty, affords no protection, and creates no office. Under
A.O. No. 308, a citizen cannot transact business with government agencies delivering
basic services to the people without the contemplated identification card. No citizen will
refuse to get this identification card for no one can avoid dealing with government. It is
thus clear as daylight that without the ID, a citizen will have difficulty exercising his
rights and enjoying his privileges. Given this reality, the contention that A.O. No. 308
gives no right and imposes no duty cannot stand.
Again, with due respect, the dissenting opinions unduly expand the limits of
administrative legislation and consequently erodes the plenary power of Congress to
make laws. This is contrary to the established approach defining the traditional limits of
administrative legislation. As well stated by Fisher:"x x x Many regulations however, bear
directly on the public. It is here that administrative legislation must be restricted in its
scope and application. Regulations are not supposed to be a substitute for the general
policy-making that Congress enacts in the form of a public law.Although administrative
regulations are entitled to respect, the authority to prescribe rules and regulations is not
an independent source of power to make laws."[28]
III
Assuming, arguendo, that A.O. No. 308 need not be the subject of a law, still it cannot
pass constitutional muster as an administrativelegislation because facially it violates the
right to privacy. The essence of privacy is the "right to be let alone."[29] In the 1965 case
of Griswold v. Connecticut,[30] the United States Supreme Court gave more substance to
the right of privacy when it ruled that the right has a constitutional foundation.It held
that there is a right of privacy which can be found within the penumbras of the First,
Third, Fourth, Fifth and Ninth Amendments,[31] viz:
"Specific guarantees in the Bill of Rights have penumbras formed by emanations from
these guarantees that help give them life and substance x x x. Various guarantees create
zones of privacy. The right of association contained in the penumbra of the First
Amendment is one, as we have seen. The Third Amendment in its prohibition against the
quartering of soldiers `in any house' in time of peace without the consent of the owner is
another facet of that privacy. The Fourth Amendment explicitly affirms the `right of the
people to be secure in their persons, houses, papers, and effects, against unreasonable
searches and seizures.' The Fifth Amendment in its Self-Incrimination Clause enables the

citizen to create a zone of privacy which government may not force him to surrender to
his detriment. The Ninth Amendment provides: `The enumeration in the Constitution, of
certain rights, shall not be construed to deny or disparage others retained by the
people.'"
In the 1968 case of Morfe v. Mutuc,[32] we adopted the Griswold ruling that there is a
constitutional right to privacy. Speaking thru Mr. Justice, later Chief Justice, Enrique
Fernando, we held:
"xxx
The Griswold case invalidated a Connecticut statute which made the use of
contraceptives a criminal offense on the ground of its amounting to an unconstitutional
invasion of the right of privacy of married persons; rightfully it stressed "a relationship
lying within the zone of privacy created by several fundamental constitutional
guarantees." It has wider implications though. The constitutional right to privacy has
come into its own.
So it is likewise in our jurisdiction. The right to privacy as such is accorded recognition
independently of its identification with liberty; in itself, it is fully deserving of
constitutional protection. The language of Prof. Emerson is particularly apt: 'The concept
of limited government has always included the idea that governmental powers stop short
of certain intrusions into the personal life of the citizen. This is indeed one of the basic
distinctions between absolute and limited government. Ultimate and pervasive control of
the individual, in all aspects of his life, is the hallmark of the absolute state. In contrast, a
system of limited government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the state can control.
Protection of this private sector-- protection, in other words, of the dignity and integrity
of the individual--has become increasingly important as modern society has developed.
All the forces of a technological age --industrialization, urbanization, and organization-operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the
capacity to maintain and support this enclave of private life marks the difference
between a democratic and a totalitarian society.'"
Indeed, if we extend our judicial gaze we will find that the right of privacy is recognized
and enshrined in several provisions of our Constitution.[33] It is expressly recognized in
Section 3(1) of the Bill of Rights:
"Sec. 3. (1) The privacy of communication and correspondence shall be inviolable except
upon lawful order of the court, or when public safety or order requires otherwise as
prescribed by law."
Other facets of the right to privacy are protected in various provisions of the Bill of
Rights, viz:[34]

"Sec. 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
Sec. 2. The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose
shall be inviolable, and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized.
x x x.
Sec. 6. The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impaired except in the interest of national security, public safety, or public
health, as may be provided by law.
x x x.
Sec. 8. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to law shall
not be abridged.
Sec. 17. No person shall be compelled to be a witness against himself."
Zones of privacy are likewise recognized and protected in our laws. The Civil Code
provides that "[e]very person shall respect the dignity, personality, privacy and peace of
mind of his neighbors and other persons" and punishes as actionable torts several acts
by a person of meddling and prying into the privacy of another.[35] It also holds a public
officer or employee or any private individual liable for damages for any violation of the
rights and liberties of another person,[36] and recognizes the privacy of letters and other
private communications.[37] The Revised Penal Code makes a crime the violation of
secrets by an officer,[38] the revelation of trade and industrial secrets,[39] and trespass
to dwelling.[40] Invasion of privacy is an offense inspecial laws like the Anti-Wiretapping
Law,[41] the Secrecy of Bank Deposit Act[42] and the Intellectual Property Code.[43] The
Rules of Court on privileged communication likewise recognize the privacy of certain
information.[44]
Unlike the dissenters, we prescind from the premise that the right to privacy is a
fundamental right guaranteed by the Constitution, hence, it is the burden of government
to show that A.O. No. 308 is justified by some compelling state interest and that it is
narrowly drawn. A.O. No. 308 is predicated on two considerations: (1) the need to
provide our citizens and foreigners with the facility to conveniently transact business
with basic service and social security providers and other government instrumentalities
and (2) the need to reduce, if not totally eradicate, fraudulent transactions and

misrepresentations by persons seeking basic services. It is debatable whether these

interests are compelling enough to warrant the issuance of A.O. No. 308. But what is not
arguable is the broadness, the vagueness, the overbreadth of A.O. No. 308 which if
implemented will put our people's right to privacy in clear and present danger.
The heart of A.O. No. 308 lies in its Section 4 which provides for a Population Reference
Number (PRN) as a "common reference number to establish a linkage among concerned
agencies" through the use of "Biometrics Technology" and "computer application
designs."
Biometry or biometrics is "the science of the application of statistical methods to
biological facts; a mathematical analysis of biological data."[45] The term "biometrics"
has now evolved into a broad category of technologies which provide precise
confirmation of an individual's identity through the use of the individual's own
physiological and behavioral characteristics.[46] A physiological characteristic is a
relatively stable physical characteristic such as a fingerprint, retinal scan, hand geometry
or facial features. A behavioral characteristic is influenced by the individual's personality
and includes voice print, signature and keystroke.[47] Most biometric identification
systems use a card or personal identification number (PIN) for initial identification. The
biometric measurement is used to verify that the individual holding the card or entering
the PIN is the legitimate owner of the card or PIN.[48]
A most common form of biological encoding is finger-scanning where technology scans a
fingertip and turns the unique pattern therein into an individual number which is called a
biocrypt. The biocrypt is stored in computer data banks[49] and becomes a means of
identifying an individual using a service. This technology requires one's fingertip to be
scanned every time service or access is provided.[50] Another method is the retinal
scan. Retinal scan technology employs optical technology to map the capillary pattern of
the retina of the eye. This technology produces a unique print similar to a finger print.
[51] Another biometric method is known as the "artificial nose." This device chemically
analyzes the unique combination of substances excreted from the skin of people.[52]
The latest on the list of biometric achievements is the thermogram. Scientists have
found that by taking pictures of a face using infra-red cameras, a unique heat
distribution pattern is seen. The different densities of bone, skin, fat and blood vessels all
contribute to the individual's personal "heat signature."[53]
In the last few decades, technology has progressed at a galloping rate. Some science
fictions are now science facts. Today, biometrics is no longer limited to the use of
fingerprint to identify an individual. It is a new science that uses various technologies in
encoding any and all biological characteristics of an individual for identification. It is
noteworthy that A.O. No. 308 does not state what specific biological characteristics and
what particular biometrics technology shall be used to identify people who will seek its
coverage. Considering the banquet of options available to the implementors of A.O. No.
308, the fear that it threatens the right to privacy of our people is not groundless.

A.O. No. 308 should also raise our antennas for a further look will show that it does not
state whether encoding of data is limited to biological information alone for identification
purposes. In fact, the Solicitor General claims that the adoption of the Identification
Reference System will contribute to the "generation of population data for development
planning."[54] This is an admission that the PRN will not be used solely for identification
but for the generation of other data with remote relation to the avowed purposes of A.O.
No. 308. Clearly, the indefiniteness of A.O. No. 308 can give the government the roving
authority to store and retrieve information for a purpose other than the identification of
the individual through his PRN.
The potential for misuse of the data to be gathered under A.O. No. 308 cannot be
underplayed as the dissenters do. Pursuant to said administrative order, an individual
must present his PRN everytime he deals with a government agency to avail of basic
services and security. His transactions with the government agency will necessarily be
recorded-- whether it be in the computer or in the documentary file of the agency. The
individual's file may include his transactions for loan availments, income tax returns,
statement of assets and liabilities, reimbursements for medication, hospitalization, etc.
The more frequent the use of the PRN, the better the chance of building a huge and
formidable information base through the electronic linkage of the files.[55] The data may
be gathered for gainful and useful government purposes; but the existence of this vast
reservoir of personal information constitutes a covert invitation to misuse, a temptation
that may be too great for some of our authorities to resist.[56]
We can even grant, arguendo, that the computer data file will be limited to the name,
address and other basic personal information about the individual.[57] Even that
hospitable assumption will not save A.O. No. 308 from constitutional infirmity for again
said order does not tell us in clear and categorical terms how these information gathered
shall be handled. It does not provide who shall control and access the data, under what
circumstances and for what purpose. These factors are essential to safeguard the privacy
and guaranty the integrity of the information.[58] Well to note, the computer linkage
gives other government agencies access to the information. Yet, there are no controls to
guard against leakage of information. When the access code of the control programs of
the particular computer system is broken, an intruder, without fear of sanction or
penalty, can make use of the data for whatever purpose, or worse, manipulate the data
stored within the system.[59]
It is plain and we hold that A.O. No. 308 falls short of assuring that personal information
which will be gathered about our people will only be processed for unequivocally
specified purposes.[60] The lack of proper safeguards in this regard of A.O. No. 308 may
interfere with the individual's liberty of abode and travel by enabling authorities to track
down his movement; it may also enable unscrupulous persons to access confidential
information and circumvent the right against self-incrimination; it may pave the way for
"fishing expeditions" by government authorities and evade the right against

unreasonable searches and seizures.[61] The possibilities of abuse and misuse of the
PRN, biometrics and computer technology are accentuated when we consider that the
individual lacks control over what can be read or placed on his ID, much less verify the
correctness of the data encoded.[62] They threaten the very abuses that the Bill of
Rights seeks to prevent.[63]
The ability of a sophisticated data center to generate a comprehensive cradle-to-grave
dossier on an individual and transmit it over a national network is one of the most
graphic threats of the computer revolution.[64] The computer is capable of producing a
comprehensive dossier on individuals out of information given at different times and for
varied purposes.[65] It can continue adding to the stored data and keeping the
information up to date. Retrieval of stored data is simple. When information of a
privileged character finds its way into the computer, it can be extracted together with
other data on the subject.[66] Once extracted, the information is putty in the hands of
any person. The end of privacy begins.
Though A.O. No. 308 is undoubtedly not narrowly drawn, the dissenting opinions would
dismiss its danger to the right to privacy as speculative and hypothetical. Again, we
cannot countenance such a laidback posture. The Court will not be true to its role as the
ultimate guardian of the people's liberty if it would not immediately smother the sparks
that endanger their rights but would rather wait for the fire that could consume them.
We reject the argument of the Solicitor General that an individual has a reasonable
expectation of privacy with regard to the National ID and the use of biometrics
technology as it stands on quicksand. The reasonableness of a person's expectation of
privacy depends on a two-part test: (1) whether by his conduct, the individual has
exhibited an expectation of privacy; and (2) whether this expectation is one that society
recognizes as reasonable.[67] The factual circumstances of the case determines the
reasonableness of the expectation.[68] However, other factors, such as customs,
physical surroundings and practices of a particular activity, may serve to create or
diminish this expectation.[69] The use of biometrics and computer technology in A.O. No.
308 does not assure the individual of a reasonable expectation of privacy.[70] As
technology advances, the level of reasonably expected privacy decreases.[71] The
measure of protection granted by the reasonable expectation diminishes as relevant
technology becomes more widely accepted.[72] The security of the computer data file
depends not only on the physical inaccessibility of the file but also on the advances in
hardware and software computer technology. A.O. No. 308 is so widely drawn that a
minimum standard for a reasonable expectation of privacy, regardless of technology
used, cannot be inferred from its provisions.
The rules and regulations to be drawn by the IACC cannot remedy this fatal defect. Rules
and regulations merely implement the policy of the law or order. On its face, A.O. No. 308
gives the IACC virtually unfettered discretion to determine the metes and bounds of the
ID System.

Nor do our present laws provide adequate safeguards for a reasonable expectation of
privacy. Commonwealth Act No. 591 penalizes the disclosure by any person of data
furnished by the individual to the NSO with imprisonment and fine.[73] Republic Act No.
1161 prohibits public disclosure of SSS employment records and reports.[74] These laws,
however, apply to records and data with the NSO and the SSS. It is not clear whether
they may be applied to data with the other government agencies forming part of the
National ID System. The need to clarify the penal aspect of A.O. No. 308 is another
reason why its enactment should be given to Congress.
Next, the Solicitor General urges us to validate A.O. No. 308's abridgment of the right of
privacy by using the rational relationship test.[75] He stressed that the purposes of A.O.
No. 308 are: (1) to streamline and speed up the implementation of basic government
services, (2) eradicate fraud by avoiding duplication of services, and (3) generate
population data for development planning. He concludes that these purposes justify the
incursions into the right to privacy for the means are rationally related to the end.[76]
We are not impressed by the argument. In Morfe v. Mutuc,[77] we upheld the
constitutionality of R.A. 3019, the Anti-Graft and Corrupt Practices Act, as a valid police
power measure. We declared that the law, in compelling a public officer to make an
annual report disclosing his assets and liabilities, his sources of income and expenses,
did not infringe on the individual's right to privacy. The law was enacted to promote
morality in public administration by curtailing and minimizing the opportunities for
official corruption and maintaining a standard of honesty in the public service.[78]
The same circumstances do not obtain in the case at bar. For one, R.A. 3019 is a statute,
not an administrative order. Secondly, R.A. 3019 itself is sufficiently detailed. The law is
clear on what practices were prohibited and penalized, and it was narrowly drawn to
avoid abuses. In the case at bar, A.O. No. 308 may have been impelled by a worthy
purpose, but, it cannot pass constitutional scrutiny for it is not narrowly drawn. And we
now hold that when the integrity of a fundamental right is at stake, this court will give
the challenged law, administrative order, rule or regulation a stricter scrutiny. It will not
do for the authorities to invoke the presumption of regularity in the performance of
official duties. Nor is it enough for the authorities to prove that their act is not irrational
for a basic right can be diminished, if not defeated, even when the government does not
act irrationally. They must satisfactorily show the presence of compelling state interests
and that the law, rule, or regulation is narrowly drawn to preclude abuses. This approach
is demanded by the 1987 Constitution whose entire matrix is designed to protect human
rights and to prevent authoritarianism. In case of doubt, the least we can do is to lean
towards the stance that will not put in danger the rights protected by the Constitution.
The case of Whalen v. Roe[79] cited by the Solicitor General is also off-line. In Whalen,
the United States Supreme Court was presented with the question of whether the State
of New York could keep a centralized computer record of the names and addresses of all
persons who obtained certain drugs pursuant to a doctor's prescription. The New York

State Controlled Substances Act of 1972 required physicians to identify patients

obtaining prescription drugs enumerated in the statute, i.e., drugs with a recognized
medical use but with a potential for abuse, so that the names and addresses of the
patients can be recorded in a centralized computer file of the State Department of
Health. The plaintiffs, who were patients and doctors, claimed that some people might
decline necessary medication because of their fear that the computerized data may be
readily available and open to public disclosure; and that once disclosed, it may
stigmatize them as drug addicts.[80] The plaintiffs alleged that the statute invaded a
constitutionally protected zone of privacy, i.e, the individual interest in avoiding
disclosure of personal matters, and the interest in independence in making certain kinds
of important decisions. The U.S. Supreme Court held that while an individual's interest in
avoiding disclosure of personal matters is an aspect of the right to privacy, the statute
did not pose a grievous threat to establish a constitutional violation. The Court found that
the statute was necessary to aid in the enforcement of laws designed to minimize the
misuse of dangerous drugs. The patient-identification requirement was a product of an
orderly and rational legislative decision made upon recommendation by a specially
appointed commission which held extensive hearings on the matter. Moreover, the
statute was narrowly drawn and contained numerous safeguards against indiscriminate
disclosure. The statute laid down the procedure and requirements for the gathering,
storage and retrieval of the information. It enumerated who were authorized to access
the data. It also prohibited public disclosure of the data by imposing penalties for its
violation. In view of these safeguards, the infringement of the patients' right to privacy
was justified by a valid exercise of police power. As we discussed above, A.O. No. 308
lacks these vital safeguards.
Even while we strike down A.O. No. 308, we spell out in neon that the Court is not per se
against the use of computers to accumulate, store, process, retrieve and transmit data to
improve our bureaucracy. Computers work wonders to achieve the efficiency which both
government and private industry seek. Many information systems in different countries
make use of the computer to facilitate important social objectives, such as better law
enforcement, faster delivery of public services, more efficient management of credit and
insurance programs, improvement of telecommunications and streamlining of financial
activities.[81] Used wisely, data stored in the computer could help good administration
by making accurate and comprehensive information for those who have to frame policy
and make key decisions.[82] The benefits of the computer has revolutionized information
technology. It developed the internet,[83] introduced the concept of cyberspace[84] and
the information superhighway where the individual, armed only with his personal
computer, may surf and search all kinds and classes of information from libraries and
databases connected to the net.
In no uncertain terms, we also underscore that the right to privacy does not bar all
incursions into individual privacy. The right is not intended to stifle scientific and
technological advancements that enhance public service and the common good. It

merely requires that the law be narrowly focused[85] and a compelling interest justify
such intrusions.[86] Intrusions into the right must be accompanied by proper safeguards
and well-defined standards to prevent unconstitutional invasions. We reiterate that any
law or order that invades individual privacy will be subjected by this Court to strict
scrutiny. The reason for this stance was laid down in Morfe v. Mutuc, to wit:
"The concept of limited government has always included the idea that governmental
powers stop short of certain intrusions into the personal life of the citizen. This is indeed
one of the basic distinctions between absolute and limited government. Ultimate and
pervasive control of the individual, in all aspects of his life, is the hallmark of the
absolute state. In contrast, a system of limited government safeguards a private sector,
which belongs to the individual, firmly distinguishing it from the public sector, which the
state can control. Protection of this private sector-- protection, in other words, of the
dignity and integrity of the individual-- has become increasingly important as modern
society has developed. All the forces of a technological age-- industrialization,
urbanization, and organization-- operate to narrow the area of privacy and facilitate
intrusion into it. In modern terms, the capacity to maintain and support this enclave of
private life marks the difference between a democratic and a totalitarian society."[87]
IV
The right to privacy is one of the most threatened rights of man living in a mass society.
The threats emanate from various sources-- governments, journalists, employers, social
scientists, etc.[88] In the case at bar, the threat comes from the executive branch of
government which by issuing A.O. No. 308 pressures the people to surrender their
privacy by giving information about themselves on the pretext that it will facilitate
delivery of basic services. Given the record-keeping power of the computer, only the
indifferent will fail to perceive the danger that A.O. No. 308 gives the government the
power to compile a devastating dossier against unsuspecting citizens. It is timely to take
note of the well-worded warning of Kalvin, Jr., "the disturbing result could be that
everyone will live burdened by an unerasable record of his past and his limitations. In a
way, the threat is that because of its record-keeping, the society will have lost its benign
capacity to forget."[89] Oblivious to this counsel, the dissents still say we should not be
too quick in labelling the right to privacy as a fundamental right. We close with the
statement that the right to privacy was not engraved in our Constitution for flattery.
IN VIEW WHEREOF, the petition is granted and Administrative Order No. 308 entitled
"Adoption of a National Computerized Identification Reference System" declared null and
void for being unconstitutional.
SO ORDERED.
4.

IN RE: MANZANO

A.M. No. 88-7-1861-RTC October 5, 1988

IN RE: DESIGNATION OF JUDGE RODOLFO U. MANZANO AS MEMBER OF THE ILOCOS
NORTE PROVINCIAL COMMITTEE ON JUSTICE.

PADILLA, J.:
On 4 July 1988, Judge Rodolfo U. Manzano, Executive Judge, RTC, Bangui, Ilocos Norte,
Branch 19, sent this Court a letter which reads:
Hon. Marcelo Fernan
Chief Justice of the Supreme Court
of the Philippines
Manila
Thru channels: Hon. Leo Medialdea
Court Administrator
Supreme Court of the Philippines
Sir:
By Executive Order RF6-04 issued on June 21, 1988 by the Honorable Provincial Governor
of Ilocos Norte, Hon. Rodolfo C. Farinas, I was designated as a member of the Ilocos
Norte Provincial Committee on Justice created pursuant to Presidential Executive Order
No. 856 of 12 December 1986, as amended by Executive Order No. 326 of June 1, 1988.
In consonance with Executive Order RF6-04, the Honorable Provincial Governor of Ilocos
Norte issued my appointment as a member of the Committee. For your ready reference, I
am enclosing herewith machine copies of Executive Order RF6-04 and the appointment.
Before I may accept the appointment and enter in the discharge of the powers and
duties of the position as member of the Ilocos (Norte) Provincial Committee on Justice,
may I have the honor to request for the issuance by the Honorable Supreme Court of a
Resolution, as follows:
(1) Authorizing me to accept the appointment and to as assume and discharge the
powers and duties attached to the said position;
(2) Considering my membership in the Committee as neither violative of the
Independence of the Judiciary nor a violation of Section 12, Article VIII, or of the second
paragraph of Section .7, Article IX (B), both of the Constitution, and will not in any way

amount to an abandonment of my present position as Executive Judge of Branch XIX,

Regional Trial Court, First Judicial Region, and as a member of the Judiciary; and
(3) Consider my membership in the said Committee as part of the primary functions of
an Executive Judge.
May I please be favored soon by your action on this request.
Very respectfully yours,
(Sgd) RODOLFO U. MANZANO
Judge
An examination of Executive Order No. 856, as amended, reveals that Provincial/City
Committees on Justice are created to insure the speedy disposition of cases of detainees,
particularly those involving the poor and indigent ones, thus alleviating jail congestion
and improving local jail conditions. Among the functions of the Committee are
3.3 Receive complaints against any apprehending officer, jail warden, final or judge who
may be found to have committed abuses in the discharge of his duties and refer the
same to proper authority for appropriate action;
3.5 Recommend revision of any law or regulation which is believed prejudicial to the
proper administration of criminal justice.
It is evident that such Provincial/City Committees on Justice perform administrative
functions. Administrative functions are those which involve the regulation and control
over the conduct and affairs of individuals for; their own welfare and the promulgation of
rules and regulations to better carry out the policy of the legislature or such as are
devolved upon the administrative agency by the organic law of its existence (Nasipit
Integrated Arrastre and Stevedoring Services Inc., vs. Tapucar, SP-07599-R, 29
September 1978, Blacks Law Dictionary).
Furthermore, under Executive Order No. 326 amending Executive Order No. 856, it is
provided that
Section 6. Supervision.The Provincial/City Committees on Justice shall be under the
supervision of the Secretary of justice Quarterly accomplishment reports shall be
submitted to the Office of the Secretary of Justice.
Under the Constitution, the members of the Supreme Court and other courts established
by law shag not be designated to any agency performing quasi- judicial or administrative
functions (Section 12, Art. VIII, Constitution).

Considering that membership of Judge Manzano in the Ilocos Norte Provincial Committee
on Justice, which discharges a administrative functions, will be in violation of the
Constitution, the Court is constrained to deny his request.
Former Chief Justice Enrique M. Fernando in his concurring opinion in the case of Garcia
vs. Macaraig (39 SCRA 106) ably sets forth:
2. While the doctrine of separation of powers is a relative theory not to be enforced with
pedantic rigor, the practical demands of government precluding its doctrinaire
application, it cannot justify a member of the judiciary being required to assume a
position or perform a duty non-judicial in character. That is implicit in the principle.
Otherwise there is a plain departure from its command. The essence of the trust reposed
in him is to decide. Only a higher court, as was emphasized by Justice Barredo, can pass
on his actuation. He is not a subordinate of an executive or legislative official, however
eminent. It is indispensable that there be no exception to the rigidity of such a norm if he
is, as expected, to be confined to the task of adjudication. Fidelity to his sworn
responsibility no less than the maintenance of respect for the judiciary can be satisfied
with nothing less.
This declaration does not mean that RTC Judges should adopt an attitude of monastic
insensibility or unbecoming indifference to Province/City Committee on Justice. As
incumbent RTC Judges, they form part of the structure of government. Their integrity and
performance in the adjudication of cases contribute to the solidity of such structure. As
public officials, they are trustees of an orderly society. Even as non-members of
Provincial/City Committees on Justice, RTC judges should render assistance to said
Committees to help promote the laudable purposes for which they exist, but only when
such assistance may be reasonably incidental to the fulfillment of their judicial duties.
ACCORDINGLY, the aforesaid request of Judge Rodolfo U. Manzano is DENIED.
SO ORDERED.
Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes, Medialdea and Regalado, JJ.,
concur.

Separate Opinions

GUTIERREZ, JR., J., dissenting:

The Constitution prohibits the designation of members of the judiciary to any agency
performing quasi-judicial or administrative functions (Section 12, Article VIII,
Constitution.).
Insofar as the term "quasi-judicial" is concerned, it has a fairly clear meaning and Judges
can confidently refrain from participating in the work of any administrative agency which
adjudicates disputes and controversies involving the rights of parties within its
jurisdiction. The issue involved in this case is where to draw the line insofar as
administrative functions are concerned.
"Administrative functions" as used in Section 12 refers to the executive machinery of
government and the performance by that machinery of governmental acts. It refers to
the management actions, determinations, and orders of executive officials as they
administer the laws and try to make government effective. There is an element of
positive action, of supervision or control.
Applying the definition given in the opinion of the majority which reads:
Administrative functions are those which involve the regulation and control over the
conduct and affairs of individuals for their own welfare and the promulgation of rules and
regulations to better carry out the policy of the legislature or such as are devolved upon
the administrative agency by the organic law of its existence (Nasipit Integrated Arrastre
and Stevedoring Services Inc. v. Tapucar, S.P-07599-R, 29 September 1978, Black's Law
Dictionary. )
we can readily see that membership in the Provincial or City Committee on Justice would
not involve any regulation or control over the conduct and affairs of individuals. Neither
will the Committee on Justice promulgate rules and regulations nor exercise any quasilegislative functions. Its work is purely advisory. I do not see anything wrong in a member
of the judiciary joining any study group which concentrates on the administration of
justice as long as the group merely deliberates on problems involving the speedy
disposition of cases particularly those involving the poor and needy litigants or
detainees, pools the expertise and experiences of the members, and limits itself to
recommendations which may be adopted or rejected by those who have the power to
legislate or administer the particular function involved in their implementation.
We who are Judges cannot operate in a vacuum or in a tight little world of our own. The
administration of justice cannot be pigeonholed into neat compartments with Judges,
Fiscals, Police, Wardens, and various other officials concerned erecting water-tight
barriers against one another and limiting our interaction to timidly peeping over these
unnecessary and impractical barriers into one another's work, all the while blaming the
Constitution for such a quixotic and unreal interpretation. As intimated in the majority
opinion, we should not be monastically insensible or indifferent to projects or movements
cogitating on possible solutions to our common problems of justice and afterwards

forwarding their findings to the people, public or private, where these findings would do
the most good.
The majority opinion suggests the giving of assistance by Judges to the work of the
Committees on Justice. Assistance is a vague term. Can Judges be designated as
observers? Advisers? Consultants? Is it the act of being "designated" which is proscribed
by the Constitution or is it participation in the prohibited functions? If judges cannot
become members, why should they be allowed or even encouraged to assist these
Committees The line drawn by the majority is vague and unrealistic.
The constitutional provision is intended to shield Judges from participating in activities
which may compromise their independence or hamper their work. Studying problems
involving the administration of justice and arriving at purely recommendatory solutions
do not in any way involve the encroachment of. the judiciary into executive or legislative
functions or into matters which are none of its concerns. Much less is it an encroachment
of the other departments into judicial affairs.
As the visible representation of the law and of justice in his community, the Judge should
not shy away from public activities which do not interfere with the prompt and proper
performance of his office, but which, in fact, enhance his effectiveness as a Judge. He
cannot stop mingling in civic intercourse or shut himself into solitary seclusion. The
Committees on Justice will also be immensely benefited by the presence of Judges in the
study groups. The work of the Committees is quite important. Let it not be said that the
Judges the officials most concerned with justice have hesitated to join in such a worthy
undertaking because of a strained interpretation of their functions.
It is well for this Court to be generally cautious, conservative or restrictive when it
interprets provisions of the Constitution or statutes vesting us with powers or delimit the
exercise of our jurisdiction and functions. However, we should not overdo it. The basic
principles of constitutional interpretation apply as well to the provisions which define or
circumscribe our powers and functions as they do to the provisions governing the other
dependents of government. The Court should not adopt a strained construction which
impairs its own efficiency to meet the responsibilities brought about by the changing
times and conditions of society. The familiar quotation is apt in this caseconstitutional
provisions are interpreted by the spirit which vivifies and not by the letter which killeth.
I, therefore, dissent from the majority opinion and vote to allow Judge Rodolfo U.
Fernan C.J., Narvasa and Grio-Aquino, JJ., join in Gutierrez dissent.
MELENCIO-HERRERA, J., dissenting:
I hesitate to give such a restrictive and impractical interpretation to Section 12, Article
VIII of the 1987 Constitution, and thus join the dissent of Justice Gutierrez, Jr.

What I believe is contemplated by the Constitutional prohibition is designation, for

example, to such quasi-judicial bodies as the SEC, or administrative agencies like the
BIR. Those are full-time positions involving running the affairs of government, which will
interfere with the discharge of judicial functions or totally remove a Judge/Justice from
the performance of his regular functions.
The Committee on Justice cannot be likened to such an administrative agency of
government. It is a study group with recommendatory functions. In fact, membership by
members of the Bench in said committee is called for by reason of the primary functions
of their position.
The matter of supervision by the Secretary of Justice provided for under E.O. No. 326
amending E.O. No. 856, need not be a cause for concern. That supervision is confined to
Committee work and will by no means extend to the performance of judicial functions
per se.
Manzano to become a member of the Ilocos Norte Provincial Committee on Justice.

Separate Opinions
GUTIERREZ, JR., J., dissenting:
The Constitution prohibits the designation of members of the judiciary to any agency
performing quasi-judicial or administrative functions (Section 12, Article VIII,
Constitution.).
Insofar as the term "quasi-judicial" is concerned, it has a fairly clear meaning and Judges
can confidently refrain from participating in the work of any administrative agency which
adjudicates disputes and controversies involving the rights of parties within its
jurisdiction. The issue involved in this case is where to draw the line insofar as
administrative functions are concerned.
"Administrative functions" as used in Section 12 refers to the executive machinery of
government and the performance by that machinery of governmental acts. It refers to
the management actions, determinations, and orders of executive officials as they
administer the laws and try to make government effective. There is an element of
positive action, of supervision or control.
Applying the definition given in the opinion of the majority which reads:
Administrative functions are those which involve the regulation and control over the
conduct and affairs of individuals for their own welfare and the promulgation of rules and
regulations to better carry out the policy of the legislature or such as are devolved upon
the administrative agency by the organic law of its existence (Nasipit Integrated Arrastre

and Stevedoring Services Inc. v. Tapucar, S.P-07599-R, 29 September 1978, Black's Law
Dictionary. )
we can readily see that membership in the Provincial or City Committee on Justice would
not involve any regulation or control over the conduct and affairs of individuals. Neither
will the Committee on Justice promulgate rules and regulations nor exercise any quasilegislative functions. Its work is purely advisory. I do not see anything wrong in a member
of the judiciary joining any study group which concentrates on the administration of
justice as long as the group merely deliberates on problems involving the speedy
disposition of cases particularly those involving the poor and needy litigants or
detainees, pools the expertise and experiences of the members, and limits itself to
recommendations which may be adopted or rejected by those who have the power to
legislate or administer the particular function involved in their implementation.
We who are Judges cannot operate in a vacuum or in a tight little world of our own. The
administration of justice cannot be pigeonholed into neat compartments with Judges,
Fiscals, Police, Wardens, and various other officials concerned erecting water-tight
barriers against one another and limiting our interaction to timidly peeping over these
unnecessary and impractical barriers into one another's work, all the while blaming the
Constitution for such a quixotic and unreal interpretation. As intimated in the majority
opinion, we should not be monastically insensible or indifferent to projects or movements
cogitating on possible solutions to our common problems of justice and afterwards
forwarding their findings to the people, public or private, where these findings would do
the most good.
The majority opinion suggests the giving of assistance by Judges to the work of the
Committees on Justice. Assistance is a vague term. Can Judges be designated as
observers? Advisers? Consultants? Is it the act of being "designated" which is proscribed
by the Constitution or is it participation in the prohibited functions? If judges cannot
become members, why should they be allowed or even encouraged to assist these
Committees The line drawn by the majority is vague and unrealistic.
The constitutional provision is intended to shield Judges from participating in activities
which may compromise their independence or hamper their work. Studying problems
involving the administration of justice and arriving at purely recommendatory solutions
do not in any way involve the encroachment of. the judiciary into executive or legislative
functions or into matters which are none of its concerns. Much less is it an encroachment
of the other departments into judicial affairs.
As the visible representation of the law and of justice in his community, the Judge should
not shy away from public activities which do not interfere with the prompt and proper
performance of his office, but which, in fact, enhance his effectiveness as a Judge. He
cannot stop mingling in civic intercourse or shut himself into solitary seclusion. The
Committees on Justice will also be immensely benefited by the presence of Judges in the

study groups. The work of the Committees is quite important. Let it not be said that the
Judges the officials most concerned with justice have hesitated to join in such a worthy
undertaking because of a strained interpretation of their functions.
It is well for this Court to be generally cautious, conservative or restrictive when it
interprets provisions of the Constitution or statutes vesting us with powers or delimit the
exercise of our jurisdiction and functions. However, we should not overdo it. The basic
principles of constitutional interpretation apply as well to the provisions which define or
circumscribe our powers and functions as they do to the provisions governing the other
dependents of government. The Court should not adopt a strained construction which
impairs its own efficiency to meet the responsibilities brought about by the changing
times and conditions of society. The familiar quotation is apt in this caseconstitutional
provisions are interpreted by the spirit which vivifies and not by the letter which killeth.
I, therefore, dissent from the majority opinion and vote to allow Judge Rodolfo U.
Manzano to become a member of the Ilocos Norte Provincial Committee on Justice.
Fernan C.J., Narvasa and Grio-Aquino, JJ., join in Gutierrez dissent.
MELENCIO-HERRERA, J., dissenting:
I hesitate to give such a restrictive and impractical interpretation to Section 12, Article
VIII of the 1987 Constitution, and thus join the dissent of Justice Gutierrez, Jr.
What I believe is contemplated by the Constitutional prohibition is designation, for
example, to such quasi-judicial bodies as the SEC, or administrative agencies like the
BIR. Those are full-time positions involving running the affairs of government, which will
interfere with the discharge of judicial functions or totally remove a Judge/Justice from
the performance of his regular functions.
The Committee on Justice cannot be likened to such an administrative agency of
government. It is a study group with recommendatory functions. In fact, membership by
members of the Bench in said committee is called for by reason of the primary functions
of their position.
The matter of supervision by the Secretary of Justice provided for under E.O. No. 326
amending E.O. No. 856, need not be a cause for concern. That supervision is confined to
Committee work and will by no means extend to the performance of judicial functions
per se.

5.

YOUNGSTOWN V SAWYER

U.S. Supreme Court

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952)

Youngstown Sheet & Tube Co. v. Sawyer

Argued May 12-13, 1952
Decided June 2, 1952*
343 U.S. 579
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Syllabus
To avert a nationwide strike of steel workers in April 1952, which he believed would
jeopardize national defense, the President issued an Executive Order directing the
Secretary of Commerce to seize and operate most of the steel mills. The Order was not
based upon any specific statutory authority, but was based generally upon all powers
vested in the President by the Constitution and laws of the United States and as
President of the United States and Commander in Chief of the Armed Forces. The
Secretary issued an order seizing the steel mills and directing their presidents to operate
them as operating managers for the United States in accordance with his regulations and
directions. The President promptly reported these events to Congress; but Congress took
no action. It had provided other methods of dealing with such situations, and had refused
to authorize governmental seizures of property to settle labor disputes. The steel
companies sued the Secretary in a Federal District Court, praying for a declaratory
judgment and injunctive relief. The District Court issued a preliminary injunction, which
the Court of Appeals stayed.
Held:
1. Although this case has proceeded no further than the preliminary injunction stage, it is
ripe for determination of the constitutional validity of the Executive Order on the record
presented. Pp. 343 U. S. 584-585.
(a) Under prior decisions of this Court, there is doubt as to the right to recover in the
Court of Claims on account of properties unlawfully taken by government officials for
public use. P. 343 U. S. 585.
(b) Seizure and governmental operation of these going businesses were bound to result
in many present and future damages of such nature as to be difficult, if not incapable, of
measurement. P. 343 U. S. 585.
Page 343 U. S. 580
2. The Executive Order was not authorized by the Constitution or laws of the United
States, and it cannot stand. Pp. 343 U. S. 585-589.

(a) There is no statute which expressly or impliedly authorizes the President to take
possession of this property as he did here. Pp. 343 U. S. 585-586.
(b) In its consideration of the Taft-Hartley Act in 1947, Congress refused to authorize
governmental seizures of property as a method of preventing work stoppages and
settling labor disputes. P. 343 U. S. 586.
(c) Authority of the President to issue such an order in the circumstances of this case
cannot be implied from the aggregate of his powers under Article II of the Constitution.
Pp. 343 U. S. 587-589.
(d) The Order cannot properly be sustained as an exercise of the President's military
power as Commander in Chief of the Armed Forces. P. 343 U. S. 587.
(e) Nor can the Order be sustained because of the several provisions of Article II which
grant executive power to the President. Pp. 343 U. S. 587-589.
(f) The power here sought to be exercised is the lawmaking power, which the
Constitution vests in the Congress alone, in both good and bad times. Pp. 343 U. S. 587589.
(g) Even if it be true that other Presidents have taken possession of private business
enterprises without congressional authority in order to settle labor disputes, Congress
has not thereby lost its exclusive constitutional authority to make the laws necessary and
proper to carry out all powers vested by the Constitution "in the Government of the
United States, or any Department or Officer thereof." Pp. 343 U. S. 588-589.
103 F.Supp. 569, affirmed.
For concurring opinion of MR. JUSTICE FRANKFURTER, see post, p. 343 U. S. 593.
For concurring opinion of MR. JUSTICE DOUGLAS, see post, p. 343 U. S. 629.
For concurring opinion of MR. JUSTICE JACKSON, see post, p. 343 U. S. 634.
For concurring opinion of MR. JUSTICE BURTON, see post, p. 343 U. S. 655.
For opinion of MR. JUSTICE CLARK, concurring in the judgment of the Court, see post, p.
343 U. S. 660.
For dissenting opinion of MR. CHIEF JUSTICE VINSON, joined by MR. JUSTICE REED and
MR. JUSTICE MINTON, see post, p. 343 U. S. 667.
The District Court issued a preliminary injunction restraining the Secretary of Commerce
from carrying out the terms of Executive Order No. 10340, 16 Fed.Reg.
Page 343 U. S. 581

3503. 103 F.Supp. 569. The Court of Appeals issued a stay. 90 U.S.App.D.C. ___, 197 F.2d
582. This Court granted certiorari. 343 U. S. 937. The judgment of the District Court is
affirmed, p. 343 U. S. 589.
Page 343 U. S. 582
MR. JUSTICE BLACK delivered the opinion of the Court.
We are asked to decide whether the President was acting within his constitutional power
when he issued an order directing the Secretary of Commerce to take possession of and
operate most of the Nation's steel mills. The mill owners argue that the President's order
amounts to lawmaking, a legislative function which the Constitution has expressly
confided to the Congress, and not to the President. The Government's position is that the
order was made on findings of the President that his action was necessary to avert a
national catastrophe which would inevitably result from a stoppage of steel production,
and that, in meeting this grave emergency, the President was acting within the
aggregate of his constitutional powers as the Nation's Chief Executive and the
Commander in Chief of the Armed Forces of the United States. The issue emerges here
from the following series of events:
In the latter part of 1951, a dispute arose between the steel companies and their
employees over terms and conditions that should be included in new collective
bargaining agreements. Long-continued conferences failed to resolve the dispute. On
December 18, 1951, the employees' representative, United Steelworkers of America,
CIO, gave notice of an intention to strike when the existing bargaining agreements
expired on December 31. The Federal Mediation and Conciliation Service then intervened
in an effort to get labor and management to agree. This failing, the President on
December 22, 1951, referred the dispute to the Federal Wage Stabilization
Page 343 U. S. 583
Board [Footnote 1] to investigate and make recommendations for fair and equitable
terms of settlement. This Board's report resulted in no settlement. On April 4, 1952, the
Union gave notice of a nationwide strike called to begin at 12:01 a.m. April 9. The
indispensability of steel as a component of substantially all weapons and other war
materials led the President to believe that the proposed work stoppage would
immediately jeopardize our national defense and that governmental seizure of the steel
mills was necessary in order to assure the continued availability of steel. Reciting these
considerations for his action, the President, a few hours before the strike was to begin,
issued Executive Order 10340, a copy of which is attached as an appendix, post, p. 343
U. S. 589. The order directed the Secretary of Commerce to take possession of most of
the steel mills and keep them running. The Secretary immediately issued his own
possessory orders, calling upon the presidents of the various seized companies to serve
as operating managers for the United States. They were directed to carry on their

activities in accordance with regulations and directions of the Secretary. The next
morning the President sent a message to Congress reporting his action. Cong.Rec. April
9, 1952, p. 3962. Twelve days later, he sent a second message. Cong.Rec. April 21, 1952,
p. 4192. Congress has taken no action.
Obeying the Secretary's orders under protest, the companies brought proceedings
against him in the District Court. Their complaints charged that the seizure was not
authorized by an act of Congress or by any constitutional provisions. The District Court
was asked to declare the orders of the President and the Secretary invalid and to issue
preliminary and permanent injunctions restraining their enforcement. Opposing the
motion for preliminary
Page 343 U. S. 584
injunction, the United States asserted that a strike disrupting steel production for even a
brief period would so endanger the wellbeing and safety of the Nation that the President
had "inherent power" to do what he had done -- power "supported by the Constitution,
by historical precedent, and by court decisions." The Government also contended that, in
any event, no preliminary injunction should be issued, because the companies had made
no showing that their available legal remedies were inadequate or that their injuries from
seizure would be irreparable. Holding against the Government on all points, the District
Court, on April 30, issued a preliminary injunction restraining the Secretary from
"continuing the seizure and possession of the plants . . . and from acting under the
purported authority of Executive Order No. 10340." 103 F.Supp. 569. On the same day,
the Court of Appeals stayed the District Court's injunction. 90 U.S.App.D.C. ___, 197 F.2d
582. Deeming it best that the issues raised be promptly decided by this Court, we
granted certiorari on May 3 and set the cause for argument on May 12. 343 U. S. 937.
Two crucial issues have developed: First. Should final determination of the constitutional
validity of the President's order be made in this case which has proceeded no further
than the preliminary injunction stage?Second. If so, is the seizure order within the
constitutional power of the President?
I
It is urged that there were nonconstitutional grounds upon which the District Court could
have denied the preliminary injunction, and thus have followed the customary judicial
practice of declining to reach and decide constitutional questions until compelled to do
so. On this basis, it is argued that equity's extraordinary injunctive relief should have
been denied because (a) seizure of the companies' properties did not inflict irreparable
damages,
Page 343 U. S. 585

and (b) there were available legal remedies adequate to afford compensation for any
possible damages which they might suffer. While separately argued by the Government,
these two contentions are here closely related, if not identical. Arguments as to both rest
in large part on the Government's claim that, should the seizure ultimately be held
unlawful, the companies could recover full compensation in the Court of Claims for the
unlawful taking. Prior cases in this Court have cast doubt on the right to recover in the
Court of Claims on account of properties unlawfully taken by government officials for
public use as these properties were alleged to have been. See e.g., Hooe v. United
States, 218 U. S. 322, 218 U. S. 335-336; United States v. North American Co., 253 U. S.
330, 253 U. S. 333. But see Larson v. Domestic & Foreign Corp., 337 U. S. 682,337 U. S.
701-702. Moreover, seizure and governmental operation of these going businesses were
bound to result in many present and future damages of such nature as to be difficult, if
not incapable, of measurement. Viewing the case this way, and in the light of the facts
presented, the District Court saw no reason for delaying decision of the constitutional
validity of the orders. We agree with the District Court, and can see no reason why that
question was not ripe for determination on the record presented. We shall therefore
consider and determine that question now.
II
The President's power, if any, to issue the order must stem either from an act of
Congress or from the Constitution itself. There is no statute that expressly authorizes the
President to take possession of property as he did here. Nor is there any act of Congress
to which our attention has been directed from which such a power can fairly be implied.
Indeed, we do not understand the Government to rely on statutory authorization for this
seizure. There are two statutes which do authorize the President
Page 343 U. S. 586
to take both personal and real property under certain conditions. [Footnote 2] However,
the Government admits that these conditions were not met, and that the President's
order was not rooted in either of the statutes. The Government refers to the seizure
provisions of one of these statutes ( 201(b) of the Defense Production Act) as "much too
cumbersome, involved, and time-consuming for the crisis which was at hand."
Moreover, the use of the seizure technique to solve labor disputes in order to prevent
work stoppages was not only unauthorized by any congressional enactment; prior to this
controversy, Congress had refused to adopt that method of settling labor disputes. When
the Taft-Hartley Act was under consideration in 1947, Congress rejected an amendment
which would have authorized such governmental seizures in cases of emergency.
[Footnote 3] Apparently it was thought that the technique of seizure, like that of
compulsory arbitration, would interfere with the process of collective bargaining.
[Footnote 4] Consequently, the plan Congress adopted in that Act did not provide for
seizure under any circumstances. Instead, the plan sought to bring about settlements by

use of the customary devices of mediation, conciliation, investigation by boards of

inquiry, and public reports. In some instances, temporary injunctions were authorized to
provide cooling-off periods. All this failing, unions were left free to strike after a secret
vote by employees as to whether they wished to accept their employers' final settlement
offer. [Footnote 5]
Page 343 U. S. 587
It is clear that, if the President had authority to issue the order he did, it must be found in
some provision of the Constitution. And it is not claimed that express constitutional
language grants this power to the President. The contention is that presidential power
should be implied from the aggregate of his powers under the Constitution. Particular
reliance is placed on provisions in Article II which say that "The executive Power shall be
vested in a President . . ."; that "he shall take Care that the Laws be faithfully executed",
and that he "shall be Commander in Chief of the Army and Navy of the United States."
The order cannot properly be sustained as an exercise of the President's military power
as Commander in Chief of the Armed Forces. The Government attempts to do so by
citing a number of cases upholding broad powers in military commanders engaged in
day-to-day fighting in a theater of war. Such cases need not concern us here. Even
though "theater of war" be an expanding concept, we cannot with faithfulness to our
constitutional system hold that the Commander in Chief of the Armed Forces has the
ultimate power as such to take possession of private property in order to keep labor
disputes from stopping production. This is a job for the Nation's lawmakers, not for its
military authorities.
Nor can the seizure order be sustained because of the several constitutional provisions
that grant executive power to the President. In the framework of our Constitution, the
President's power to see that the laws are faithfully executed refutes the idea that he is
to be a lawmaker. The Constitution limits his functions in the lawmaking process to the
recommending of laws he thinks wise and the vetoing of laws he thinks bad. And the
Constitution is neither silent nor equivocal about who shall make laws which the
President is to execute. The
Page 343 U. S. 588
first section of the first article says that "All legislative Powers herein granted shall be
vested in a Congress of the United States. . . ." After granting many powers to the
Congress, Article I goes on to provide that Congress may
"make all Laws which shall be necessary and proper for carrying into Execution the
foregoing Powers, and all other Powers vested by this Constitution in the Government of
the United States, or in any Department or Officer thereof."

The President's order does not direct that a congressional policy be executed in a
manner prescribed by Congress -- it directs that a presidential policy be executed in a
manner prescribed by the President. The preamble of the order itself, like that of many
statutes, sets out reasons why the President believes certain policies should be adopted,
proclaims these policies as rules of conduct to be followed, and again, like a statute,
authorizes a government official to promulgate additional rules and regulations
consistent with the policy proclaimed and needed to carry that policy into execution. The
power of Congress to adopt such public policies as those proclaimed by the order is
beyond question. It can authorize the taking of private property for public use. It can
make laws regulating the relationships between employers and employees, prescribing
rules designed to settle labor disputes, and fixing wages and working conditions in
certain fields of our economy. The Constitution does not subject this lawmaking power of
Congress to presidential or military supervision or control.
It is said that other Presidents, without congressional authority, have taken possession of
private business enterprises in order to settle labor disputes. But even if this be true,
Congress has not thereby lost its exclusive constitutional authority to make laws
necessary and proper to carry out the powers vested by the Constitution
Page 343 U. S. 589
"in the Government of the United States, or any Department or Officer thereof."
The Founders of this Nation entrusted the lawmaking power to the Congress alone in
both good and bad times. It would do no good to recall the historical events, the fears of
power, and the hopes for freedom that lay behind their choice. Such a review would but
confirm our holding that this seizure order cannot stand.
The judgment of the District Court is
Affirmed.
* Together with No. 745, Sawyer, Secretary of Commerce v. Youngstown Sheet & Tube Co.
et al., also on certiorari to the same court.
[Footnote 1]
This Board was established under Executive Order 10233, 16 Fed.Reg. 3503.
[Footnote 2]
The Selective Service Act of 1948, 62 Stat. 604, 625-627, 50 U.S.C. App (Supp. IV) 468;
the Defense Production Act of 1950, Tit. II, 64 Stat. 798, as amended, 65 Stat. 132.
[Footnote 3]
93 Cong.Rec. 3637-3645.

[Footnote 4]
93 Cong.Rec. 3835-3836.
[Footnote 5]
Labor Management Relations Act, 1947, 61 Stat. 136, 152-156, 29 U.S.C. (Supp.IV)
141, 171-180.
MR. JUSTICE FRANKFURTER.
Although the considerations relevant to the legal enforcement of the principle of
separation of powers seem to me more complicated and flexible than may appear from
what MR. JUSTICE BLACK has written, I join his opinion because I thoroughly agree with
the application of the principle to the circumstances of this case. Even though such
differences in attitude toward this principle may be merely differences in emphasis and
nuance, they can hardly be reflected by a single opinion for the Court. Individual
expression of views in reaching a common result is therefore important.
|343 U.S. 579app|
APPENDIX TO OPINION OF THE COURT
EXECUTIVE ORDER
Directing the Secretary of Commerce to Take Possession of and
Operate the Plants and Facilities of Certain Steel Companies
WHEREAS, on December 16, 1950, I proclaimed the existence of a national emergency
which requires that the military, naval, air, and civilian defenses of this country be
strengthened as speedily as possible to the end that we may be able to repel any and all
threats against our national
Page 343 U. S. 590
security and to fulfill our responsibilities in the efforts being made throughout the United
Nations and otherwise to bring about a lasting peace; and
WHEREAS American fighting men and fighting men of other nations of the United Nations
are now engaged in deadly combat with the forces of aggression in Korea, and forces of
the United States are stationed elsewhere overseas for the purpose of participating in
the defense of the Atlantic Community against aggression; and
WHEREAS the weapons and other materials needed by our armed forces and by those
joined with us in the defense of the free world are produced to a great extent in this
country, and steel is an indispensable component of substantially all of such weapons
and materials; and

WHEREAS steel is likewise indispensable to the carrying out of programs of the Atomic
Energy Commission of vital importance to our defense efforts; and
WHEREAS a continuing and uninterrupted supply of steel is also indispensable to the
maintenance of the economy of the United States, upon which our military strength
depends; and
WHEREAS a controversy has arisen between certain companies in the United States
producing and fabricating steel and the elements thereof and certain of their workers
represented by the United Steel Workers of America, CIO, regarding terms and conditions
of employment; and
WHEREAS the controversy has not been settled through the processes of collective
bargaining or through the efforts of the Government, including those of the Wage
Stabilization Board, to which the controversy was referred on December 22, 1951,
pursuant to Executive Order No. 10233, and a strike has been called for 12:01 A. M., April
9, 1952; and
WHEREAS a work stoppage would immediately jeopardize and imperil our national
defense and the defense
Page 343 U. S. 591
of those joined with us in resisting aggression, and would add to the continuing danger of
our soldiers, sailors, and airmen engaged in combat in the field; and
WHEREAS, in order to assure the continued availability of steel and steel products during
the existing emergency, it is necessary that the United States take possession of and
operate the plants, facilities, and other property of the said companies as hereinafter
provided:
NOW, THEREFORE, by virtue of the authority vested in me by the Constitution and laws
of the United States, and as President of the United States and Commander in Chief of
the armed forces of the United States, it is hereby ordered as follows:
1. The Secretary of Commerce is hereby authorized and directed to take possession of all
or such of the plants, facilities, and other property of the companies named in the list
attached hereto, or any part thereof, as he may deem necessary in the interests of
national defense, and to operate or to arrange for the operation thereof and to do all
things necessary for, or incidental to, such operation.
2. In carrying out this order, the Secretary of Commerce may act through or with the aid
of such public or private instrumentalities or persons as he may designate, and all
Federal agencies shall cooperate with the Secretary of Commerce to the fullest extent
possible in carrying out the purposes of this order.

3. The Secretary of Commerce shall determine and prescribe terms and conditions of
employment under which the plants, facilities, and other properties possession of which
is taken pursuant to this order shall be operated. The Secretary of Commerce shall
recognize the rights of workers to bargain collectively through representatives of their
own choosing and to engage in concerted activities for the purpose of collective
bargaining, adjustment of grievances, or other mutual aid or protection, provided
Page 343 U. S. 592
that such activities do not interfere with the operation of such plants, facilities, and other
properties.
4. Except so far as the Secretary of Commerce shall otherwise provide from time to time,
the managements of the plants, facilities, and other properties possession of which is
taken pursuant to this order shall continue their functions, including the collection and
disbursement of funds in the usual and ordinary course of business in the names of their
respective companies and by means of any instrumentalities used by such companies.
5. Except so far as the Secretary of Commerce may otherwise direct, existing rights and
obligations of such companies shall remain in full force and effect, and there may be
made, in due course, payments of dividends on stock, and of principal, interest, sinking
funds, and all other distributions upon bonds, debentures, and other obligations, and
expenditures may be made for other ordinary corporate or business purposes.
6. Whenever, in the judgment of the Secretary of Commerce, further possession and
operation by him of any plant, facility, or other property is no longer necessary or
expedient in the interest of national defense, and the Secretary has reason to believe
that effective future operation is assured, he shall return the possession and operation of
such plant, facility, or other property to the company in possession and control thereof at
the time possession was taken under this order.
7. The Secretary of Commerce is authorized to prescribe and issue such regulations and
orders not inconsistent herewith as he may deem necessary or desirable for carrying out
the purposes of this order, and he may delegate and authorize subdelegation of such of
his functions under this order as he may deem desirable.
rj:
Harry S. Truman.
lj:
The White House, April 8, 1952.
Page 343 U. S. 593
MR. JUSTICE FRANKFURTER, concurring.

Before the cares of the White House were his own, President Harding is reported to have
said that government, after all, is a very simple thing. He must have said that, if he said
it, as a fleeting inhabitant of fairyland. The opposite is the truth. A constitutional
democracy like ours is perhaps the most difficult of man's social arrangements to
manage successfully. Our scheme of society is more dependent than any other form of
government on knowledge and wisdom and self-discipline for the achievement of its
aims. For our democracy implies the reign of reason on the most extensive scale. The
Founders of this Nation were not imbued with the modern cynicism that the only thing
that history teaches is that it teaches nothing. They acted on the conviction that the
experience of man sheds a good deal of light on his nature. It sheds a good deal of light
not merely on the need for effective power if a society is to be at once cohesive and
civilized, but also on the need for limitations on the power of governors over the
governed.
To that end, they rested the structure of our central government on the system of checks
and balances. For them, the doctrine of separation of powers was not mere theory; it was
a felt necessity. Not so long ago, it was fashionable to find our system of checks and
balances obstructive to effective government. It was easy to ridicule that system as
outmoded -- too easy. The experience through which the world has passed in our own
day has made vivid the realization that the Framers of our Constitution were not
inexperienced doctrinaires. These long-headed statesmen had no illusion that our people
enjoyed biological or psychological or sociological immunities from the hazards of
concentrated power. It is absurd to see a dictator in a representative product of the
sturdy democratic traditions of the Mississippi Valley.
Page 343 U. S. 594
The accretion of dangerous power does not come in a day. It does come, however slowly,
from the generative force of unchecked disregard of the restrictions that fence in even
the most disinterested assertion of authority.
The Framers, however, did not make the judiciary the overseer of our government. They
were familiar with the revisory functions entrusted to judges in a few of the States, and
refused to lodge such powers in this Court. Judicial power can be exercised only as to
matters that were the traditional concern of the courts at Westminster, and only if they
arise in ways that to the expert feel of lawyers constitute "Cases" or "Controversies."
Even as to questions that were the staple of judicial business, it is not for the courts to
pass upon them unless they are indispensably involved in a conventional litigation -- and
then only to the extent that they are so involved. Rigorous adherence to the narrow
scope of the judicial function is especially demanded in controversies that arouse
appeals to the Constitution. The attitude with which this Court must approach its duty
when confronted with such issues is precisely the opposite of that normally manifested
by the general public. So-called constitutional questions seem to exercise a mesmeric
influence over the popular mind. This eagerness to settle -- preferably forever -- a

specific problem on the basis of the broadest possible constitutional pronouncements

may not unfairly be called one of our minor national traits. An English observer of our
scene has acutely described it:
"At the first sound of a new argument over the United States Constitution and its
interpretation, the hearts of Americans leap with a fearful joy. The blood stirs powerfully
in their veins, and a new lustre brightens their eyes. Like King Harry's men before
Harfleur, they stand like greyhounds in the slips, straining upon the start."
The Economist, May 10, 1952, p. 370.
Page 343 U. S. 595
The path of duty for this Court, it bears repetition, lies in the opposite direction. Due
regard for the implications of the distribution of powers in our Constitution and for the
nature of the judicial process as the ultimate authority in interpreting the Constitution,
has not only confined the Court within the narrow domain of appropriate adjudication. It
has also led to "a series of rules under which it has avoided passing upon a large part of
all the constitutional questions pressed upon it for decision." Brandeis, J., in Ashwander v.
Tennessee Valley Authority, 297 U. S. 288, 297 U. S. 341, 346. A basic rule is the duty of
the Court not to pass on a constitutional issue at all, however narrowly it may be
confined, if the case may, as a matter of intellectual honesty, be decided without even
considering delicate problems of power under the Constitution. It ought to be, but
apparently is not, a matter of common understanding that clashes between different
branches of the government should be avoided if a legal ground of less explosive
potentialities is properly available. Constitutional adjudications are apt, by exposing
differences, to exacerbate them.
So here, our first inquiry must be not into the powers of the President, but into the
powers of a District Judge to issue a temporary injunction in the circumstances of this
case. Familiar as that remedy is, it remains an extraordinary remedy. To start with a
consideration of the relation between the President's powers and those of Congress -- a
most delicate matter that has occupied the thoughts of statesmen and judges since the
Nation was founded and will continue to occupy their thoughts as long as our democracy
lasts -- is to start at the wrong end. A plaintiff is not entitled to an injunction if money
damages would fairly compensate him for any wrong he may have suffered. The same
considerations by which the Steelworkers, in their brief amicus,demonstrate, from the
seizure here in controversy, consequences
Page 343 U. S. 596
that cannot be translated into dollars and cents, preclude a holding that only
compensable damage for the plaintiffs is involved. Again, a court of equity ought not to
issue an injunction, even though a plaintiff otherwise makes out a case for it, if the
plaintiff's right to an injunction is overborne by a commanding public interest against it.

One need not resort to a large epigrammatic generalization that the evils of industrial
dislocation are to be preferred to allowing illegality to go unchecked. To deny inquiry into
the President's power in a case like this, because of the damage to the public interest to
be feared from upsetting its exercise by him, would, in effect, always preclude inquiry
into challenged power, which presumably only avowed great public interest brings into
action. And so, with the utmost unwillingness, with every desire to avoid judicial inquiry
into the powers and duties of the other two branches of the government, I cannot escape
consideration of the legality of Executive Order No. 10340.
The pole-star for constitutional adjudications is John Marshall's greatest judicial
utterance, that "it is aconstitution we are expounding." McCulloch v. Maryland, 4 Wheat.
316, 17 U. S. 407. That requires both a spacious view in applying an instrument of
government "made for an undefined and expanding future,"Hurtado v. California, 110 U.
S. 516, 110 U. S. 530, and as narrow a delimitation of the constitutional issues as the
circumstances permit. Not the least characteristic of great statesmanship which the
Framers manifested was the extent to which they did not attempt to bind the future. It is
no less incumbent upon this Court to avoid putting fetters upon the future by needless
pronouncements today.
Marshall's admonition that "it is a constitution we are expounding" is especially relevant
when the Court is required to give legal sanctions to an underlying principle of the
Constitution -- that of separation of powers.
Page 343 U. S. 597
"The great ordinances of the Constitution do not establish and divide fields of black and
white." Holmes, J., dissenting in Springer v. Philippine Islands, 277 U. S. 189, 277 U. S.
209.
The issue before us can be met, and therefore should be, without attempting to define
the President's powers comprehensively. I shall not attempt to delineate what belongs to
him by virtue of his office beyond the power even of Congress to contract; what authority
belongs to him until Congress acts; what kind of problems may be dealt with either by
the Congress or by the President, or by both, cf. La Abra Silver Mng. Co. v. United States,
175 U. S. 423; what power must be exercised by the Congress and cannot be delegated
to the President. It is as unprofitable to lump together in an undiscriminating hotch-potch
past presidential actions claimed to be derived from occupancy of the office as it is to
conjure up hypothetical future cases. The judiciary may, as this case proves, have to
intervene in determining where authority lies as between the democratic forces in our
scheme of government. But, in doing so, we should be wary and humble. Such is the
teaching of this Court's role in the history of the country.
It is in this mood and with this perspective that the issue before the Court must be
approached. We must therefore put to one side consideration of what powers the

President would have had if there had been no legislation whatever bearing on the
authority asserted by the seizure, or if the seizure had been only for a short, explicitly
temporary period, to be terminated automatically unless Congressional approval were
given. These and other questions, like or unlike, are not now here. I would exceed my
authority were I to say anything about them.
The question before the Court comes in this setting. Congress has frequently -- at least
16 times since 1916 -Page 343 U. S. 598
specifically provided for executive seizure of production, transportation, communications,
or storage facilities. In every case, it has qualified this grant of power with limitations
and safeguards. This body of enactments -- summarized in tabular form in Appendix I,
post, p. 343 U. S. 615 -- demonstrates that Congress deemed seizure so drastic a power
as to require that it be carefully circumscribed whenever the President was vested with
this extraordinary authority. The power to seize has uniformly been given only for a
limited period or for a defined emergency, or has been repealed after a short period. Its
exercise has been restricted to particular circumstances such as "time of war or when
war is imminent," the needs of "public safety" or of "national security or defense," or
"urgent and impending need." The period of governmental operation has been limited,
as, for instance, to "sixty days after the restoration of productive efficiency." Seizure
statutes usually make executive action dependent on detailed conditions: for example,
(a) failure or refusal of the owner of a plant to meet governmental supply needs or (b)
failure of voluntary negotiations with the owner for the use of a plant necessary for great
public ends. Congress often has specified the particular executive agency which should
seize or operate the plants or whose judgment would appropriately test the need for
seizure. Congress also has not left to implication that just compensation be paid; it has
usually legislated in detail regarding enforcement of this litigation-breeding general
requirement. (See Appendix I, post, p. 343 U. S. 615.)
Congress, in 1947, was again called upon to consider whether governmental seizure
should be used to avoid serious industrial shutdowns. Congress decided against
conferring such power generally and in advance, without special Congressional
enactment to meet each particular need. Under the urgency of telephone and coal
strikes in
Page 343 U. S. 599
the winter of 1946, Congress addressed itself to the problems raised by "national
emergency" strikes and lockouts. [Footnote 2/1] The termination of wartime seizure
powers on December 31, 1946, brought these matters to the attention of Congress with
vivid impact. A proposal that the President be given powers to seize plants to avert a
shutdown where the "health or safety" of the Nation was endangered was thoroughly

canvassed by Congress, and rejected. No room for doubt remains that the proponents as
well as the opponents of the bill which became the Labor Management Relations Act of
1947 clearly understood that, as a result of that legislation, the only recourse for
preventing a shutdown in any basic industry, after failure of mediation, was Congress.
[Footnote 2/2] Authorization for seizure as
Page 343 U. S. 600
an available remedy for potential dangers was unequivocally put aside. The Senate
Labor Committee, through its Chairman, explicitly reported to the Senate that a general
grant of seizure powers had been considered and rejected in favor of reliance on ad hoc
legislation, as a particular emergency might call for it. [Footnote 2/3] An amendment
presented in the House providing that, where necessary "to preserve and protect the
public health and security," the President might seize any industry in which there is
Page 343 U. S. 601
an impending curtailment of production, was voted down after debate, by a vote of more
than three to one. [Footnote 2/4]
In adopting the provisions which it did, by the Labor Management Relations Act of 1947,
for dealing with a "national emergency" arising out of a breakdown in peaceful industrial
relations, Congress was very familiar with Governmental seizure as a protective
measure. On a balance of considerations, Congress chose not to lodge this power in the
President. It chose not to make available in advance a remedy to which both industry
and labor were fiercely hostile. [Footnote 2/5] In deciding that authority to seize should
be given to the President only after full consideration of the particular situation should
show such legislation to be necessary, Congress presumably acted on experience with
similar industrial conflicts in the past. It evidently assumed that industrial shutdowns in
basic industries are not instances of spontaneous generation,
Page 343 U. S. 602
and that danger warnings are sufficiently plain before the event to give ample
opportunity to start the legislative process into action.
In any event, nothing can be plainer than that Congress made a conscious choice of
policy in a field full of perplexity and peculiarly within legislative responsibility for choice.
In formulating legislation for dealing with industrial conflicts, Congress could not more
clearly and emphatically have withheld authority than it did in 1947. Perhaps as much so
as is true of any piece of modern legislation, Congress acted with full consciousness of
what it was doing, and in the light of much recent history. Previous seizure legislation had
subjected the powers granted to the President to restrictions of varying degrees of
stringency. Instead of giving him even limited powers, Congress, in 1947, deemed it wise
to require the President, upon failure of attempts to reach a voluntary settlement, to

report to Congress if he deemed the power of seizure a needed shot for his locker. The
President could not ignore the specific limitations of prior seizure statutes. No more could
he act in disregard of the limitation put upon seizure by the 1947 Act.
It cannot be contended that the President would have had power to issue this order had
Congress explicitly negated such authority in formal legislation. Congress has expressed
its will to withhold this power from the President as though it had said so in so many
words. The authoritatively expressed purpose of Congress to disallow such power to the
President and to require him, when in his mind the occasion arose for such a seizure, to
put the matter to Congress and ask for specific authority from it, could not be more
decisive if it had been written into 206-210 of the Labor Management Relations Act of
1947. Only the other day, we treated the Congressional gloss upon those sections as part
of the Act. Bus Employees v. Wisconsin Board,340 U. S. 383, 340 U. S. 395-396.
Page 343 U. S. 603
Grafting upon the words a purpose of Congress thus unequivocally expressed is the
regular legislative mode for defining the scope of an Act of Congress. It would be not
merely infelicitous draftsmanship, but almost offensive gaucherie, to write such a
restriction upon the President's power, in terms, into a statute, rather than to have it
authoritatively expounded, as it was, by controlling legislative history.
By the Labor Management Relations Act of 1947, Congress said to the President, "You
may not seize. Please report to us and ask for seizure power if you think it is needed in a
specific situation." This, of course, calls for a report on the unsuccessful efforts to reach a
voluntary settlement, as a basis for discharge by Congress of its responsibility -- which it
has unequivocally reserved -- to fashion further remedies than it provided. [Footnote 2/6]
But it is now claimed that the President has seizure power by virtue of the Defense
Production Act of 1950 and its Amendments. [Footnote 2/7] And the claim is based on
the occurrence of new events -- Korea and the need for stabilization, etc. -- although it
was well known that seizure power was withheld by the Act of 1947, and although the
President, whose specific requests for other authority were, in the main, granted by
Congress, never suggested that, in view of the new events, he needed the power of
seizure which Congress in its judgment had decided to withhold from him. The utmost
that the Korean conflict may imply is that it may have been desirable to have given the
President further authority, a freer hand in these matters. Absence of authority in the
President to deal with a crisis does not
Page 343 U. S. 604
imply want of power in the Government. Conversely, the fact that power exists in the
Government does not vest it in the President. The need for new legislation does not
enact it. Nor does it repeal or amend existing law.

No authority that has since been given to the President can, by any fair process of
statutory construction, be deemed to withdraw the restriction or change the will of
Congress as expressed by a body of enactments, culminating in the Labor Management
Relations Act of 1947. Title V of the Defense Production Act, entitled "Settlement of Labor
Disputes," pronounced the will of Congress "that there be effective procedures for the
settlement of labor disputes affecting national defense," and that "primary reliance" be
placed
"upon the parties to any labor dispute to make every effort, through negotiation and
collective bargaining and the full use of mediation and conciliation facilities, to effect a
settlement in the national interest. [Footnote 2/8]"
Section 502 authorized the President to hold voluntary conferences of labor, industry,
and public and government representatives and to "take such action as may be agreed
upon in any such conference and appropriate to carry out the provisions of this title,"
provided that no action was taken inconsistent with the Labor Management Relations Act
of 1947. [Footnote 2/9] This provision [Footnote 2/10] was said by the Senate Committee
Page 343 U. S. 605
on Banking and Currency to contemplate a board similar to the War Labor Board of World
War II and "a national labor-management conference such as was held during World War
II, when a "no strike, no lock-out" pledge was obtained." [Footnote 2/11] Section 502 was
believed necessary
Page 343 U. S. 606
in addition to existing means for settling disputes voluntarily because the Federal
Mediation and Conciliation Service could not enter a labor dispute unless requested by
one party. [Footnote 2/12] Similar explanations of Title V were given in the Conference
Report and by Senator Ives, a member of the Senate Committee to whom Chairman
Maybank during the debates on the Senate floor referred questions relating to Title V.
[Footnote 2/13] Senator Ives said:
"It should be remembered in this connection that, during the period of the present
emergency, it is expected that the Congress will not adjourn, but, at most, will recess
only for very limited periods of time. If, therefore, any serious work stoppage should
arise or even be threatened, in spite of the terms of the Labor-Management Relations Act
of 1947, the Congress would be readily available to pass such legislation as might be
needed to meet the difficulty. [Footnote 2/14] "
Page 343 U. S. 607
The Defense Production Act affords no ground for the suggestion that the 1947 denial to
the President of seizure powers has been impliedly repealed, and its legislative history
contradicts such a suggestion. Although the proponents of that Act recognized that the

President would have a choice of alternative methods of seeking a mediated settlement,

they also recognized that Congress alone retained the ultimate coercive power to meet
the threat of "any serious work stoppage."
That conclusion is not changed by what occurred after the passage of the 1950 Act.
Seven and a half months later, on April 21, 1951, the President, by Executive Order
10233, gave the reconstituted Wage Stabilization Board authority to investigate labor
disputes either (1) submitted voluntarily by the parties, or (2) referred to it by the
President. [Footnote 2/15] The Board can only make "recommendations to the parties as
to fair and equitable terms of settlement," unless the parties agree to be bound by the
Board's recommendations. About a month thereafter, Subcommittees of both the House
and Senate Labor Committees began hearings on the newly assigned disputes functions
of the Board. [Footnote 2/16] Amendments to deny the
Page 343 U. S. 608
Board these functions were voted down in the House, [Footnote 2/17] and Congress
extended the Defense Production Act without changing Title V in relevant part. [Footnote
2/18] The legislative history of the Defense Production Act and its Amendments in 1951
cannot possibly be vouched for more than Congressional awareness and tacit approval
that the President had charged the Wage Stabilization Board with authority to seek
voluntary settlement of labor disputes. The most favorable interpretation of the
statements in the committee reports can make them mean no more than "[w]e are glad
to have all the machinery possible for the voluntary settlement of labor disputes." In
considering the Defense Production Act Amendments, Congress was never asked to
approve -- and there is not the slightest indication that the responsible committees ever
had in mind -- seizure of plants to coerce settlement of disputes.
Page 343 U. S. 609
We are not even confronted by an inconsistency between the authority conferred on the
Wage Board, as formulated by the Executive Order, and the denial of Presidential seizure
powers under the 1947 legislation. The Board has been given merely mediatory powers
similar to those of agencies created by the Taft-Hartley Act and elsewhere, with no other
sanctions for acceptance of its recommendations than are offered by its own moral
authority and the pressure of public opinion. The Defense Production Act and the
disputes-mediating agencies created subsequent to it still leave for solution elsewhere
the question what action can be taken when attempts at voluntary settlement fail. To
draw implied approval of seizure power from this history is to make something out of
nothing.
It is one thing to draw an intention of Congress from general language and to say that
Congress would have explicitly written what is inferred, where Congress has not
addressed itself to a specific situation. It is quite impossible, however, when Congress

did specifically address itself to a problem, as Congress did to that of seizure, to find
secreted in the interstices of legislation the very grant of power which Congress
consciously withheld. To find authority so explicitly withheld is not merely to disregard in
a particular instance the clear will of Congress. It is to disrespect the whole legislative
process and the constitutional division of authority between President and Congress.
The legislative history here canvassed is relevant to yet another of the issues before us,
namely, the Government's argument that overriding public interest prevents the
issuance of the injunction despite the illegality of the seizure. I cannot accept that
contention. "Balancing the equities" when considering whether an injunction should
issue, is lawyers' jargon for choosing between conflicting public interests. When
Congress itself has struck
Page 343 U. S. 610
the balance, has defined the weight to be given the competing interests, a court of
equity is not justified in ignoring that pronouncement under the guise of exercising
equitable discretion.
Apart from his vast share of responsibility for the conduct of our foreign relations, the
embracing function of the President is that "he shall take Care that the Laws be faithfully
executed. . . ." Art. II, 3. The nature of that authority has, for me, been comprehensively
indicated by Mr. Justice Holmes.
"The duty of the President to see that the laws be executed is a duty that does not go
beyond the laws or require him to achieve more than Congress sees fit to leave within
his power."
Myers v. United States, 272 U. S. 52, 272 U. S. 177. The powers of the President are not
as particularized as are those of Congress. But unenumerated powers do not mean
undefined powers. The separation of powers built into our Constitution gives essential
content to undefined provisions in the frame of our government.
To be sure, the content of the three authorities of government is not to be derived from
an abstract analysis. The areas are partly interacting, not wholly disjointed. The
Constitution is a framework for government. Therefore, the way the framework has
consistently operated fairly establishes that it has operated according to its true nature.
Deeply embedded traditional ways of conducting government cannot supplant the
Constitution or legislation, but they give meaning to the words of a text or supply them.
It is an inadmissibly narrow conception of American constitutional law to confine it to the
words of the Constitution and to disregard the gloss which life has written upon them. In
short, a systematic, unbroken, executive practice, long pursued to the knowledge of the
Congress and never before questioned, engaged in by Presidents who have also sworn to
uphold the Constitution, making as it were such exercise of power part

Page 343 U. S. 611

of the structure of our government, may be treated as a gloss on "executive Power"
vested in the President by 1 of Art. II.
Such was the case of United States v. Midwest Oil Co., 236 U. S. 459. The contrast
between the circumstances of that case and this one helps to draw a clear line between
authority not explicitly conferred yet authorized to be exercised by the President and the
denial of such authority. In both instances, it was the concern of Congress under express
constitutional grant to make rules and regulations for the problems with which the
President dealt. In the one case, he was dealing with the protection of property belonging
to the United States; in the other, with the enforcement of the Commerce Clause and
with raising and supporting armies and maintaining the Navy. In the Midwest Oil case,
lands which Congress had opened for entry were, over a period of 80 years and in 252
instances, and by Presidents learned and unlearned in the law, temporarily withdrawn
from entry so as to enable Congress to deal with such withdrawals. No remotely
comparable practice can be vouched for executive seizure of property at a time when
this country was not at war, in the only constitutional way in which it can be at war. It
would pursue the irrelevant to reopen the controversy over the constitutionality of some
acts of Lincoln during the Civil War. See J. G. Randall, Constitutional Problems under
Lincoln (Revised ed.1951). Suffice it to say that he seized railroads in territory where
armed hostilities had already interrupted the movement of troops to the beleaguered
Capital, and his order was ratified by the Congress.
The only other instances of seizures are those during the periods of the first and second
World Wars. [Footnote 2/19] In his eleven seizures of industrial facilities, President Wilson
Page 343 U. S. 612
acted, or at least purported to act, [Footnote 2/20] under authority granted by Congress.
Thus, his seizures cannot be adduced as interpretations by a President of his own powers
in the absence of statute.
Down to the World War II period, then, the record is barren of instances comparable to
the one before us. Of twelve seizures by President Roosevelt prior to the enactment of
the War Labor Disputes Act in June, 1943, three were sanctioned by existing law, and six
others
Page 343 U. S. 613
were effected after Congress, on December 8, 1941, had declared the existence of a
state of war. In this case, reliance on the powers that flow from declared war has been
commendably disclaimed by the Solicitor General. Thus, the list of executive assertions
of the power of seizure in circumstances comparable to the present reduces to three in
the six-month period from June to December of 1941. We need not split hairs in

comparing those actions to the one before us, though much might be said by way of
differentiation. Without passing on their validity, as we are not called upon to do, it
suffices to say that these three isolated instances do not add up, either in number,
scope, duration or contemporaneous legal justification, to the kind of executive
construction of the Constitution revealed in the Midwest Oil case. Nor do they come to us
sanctioned by long-continued acquiescence of Congress giving decisive weight to a
construction by the Executive of its powers.
A scheme of government like ours no doubt at times feels the lack of power to act with
complete, all-embracing, swiftly moving authority. No doubt a government with
distributed authority, subject to be challenged in the courts of law, at least long enough
to consider and adjudicate the challenge, labors under restrictions from which other
governments are free. It has not been our tradition to envy such governments. In any
event, our government was designed to have such restrictions. The price was deemed
not too high in view of the safeguards which these restrictions afford. I know no more
impressive words on this subject than those of Mr. Justice Brandeis:
"The doctrine of the separation of powers was adopted by the Convention of 1787 not to
promote efficiency, but to preclude the exercise of arbitrary power. The purpose was not
to avoid friction, but,
Page 343 U. S. 614
by means of the inevitable friction incident to the distribution of the governmental
powers among three departments, to save the people from autocracy."
Myers v. United States, 272 U. S. 52, 272 U. S. 240, 272 U. S. 293.
It is not a pleasant judicial duty to find that the President has exceeded his powers, and
still less so when his purposes were dictated by concern for the Nation's wellbeing, in the
assured conviction that he acted to avert danger. But it would stultify one's faith in our
people to entertain even a momentary fear that the patriotism and the wisdom of the
President and the Congress, as well as the long view of the immediate parties in interest,
will not find ready accommodation for differences on matters which, however close to
their concern and however intrinsically important, are overshadowed by the awesome
issues which confront the world. When, at a moment of utmost anxiety, President
Washington turned to this Court for advice, and he had to be denied it as beyond the
Court's competence to give, Chief Justice Jay, on behalf of the Court, wrote thus to the
Father of his Country:
"We exceedingly regret every event that may cause embarrassment to your
administration, but we derive consolation from the reflection that your judgment will
discern what is right, and that your usual prudence, decision, and firmness will surmount
every obstacle to the preservation of the rights, peace, and dignity of the United States."

Letter of August 8, 1793, 3 Johnston, Correspondence and Public Papers of John Jay
(1891), 489.
In reaching the conclusion that conscience compels, I too derive consolation from the
reflection that the President and the Congress, between them, will continue to safeguard
the heritage which comes to them straight from George Washington.
Page 343 U. S. 620
[pp. 343 U. S. 615 et seq. - Appendix I (table)]
[Footnote 2/1]
The power to seize plants under the War Labor Disputes Act ended with the termination
of hostilities, proclaimed on Dec. 31, 1946, prior to the incoming of the Eightieth
Congress, and the power to operate previously seized plants ended on June 30, 1947,
only a week after the enactment of the Labor Management Relations Act over the
President's veto. 57 Stat. 163, 165, 50 U.S.C.App. (1946 ed.) 1503. See 2 Legislative
History of the Labor Management Relations Act, 1947 (published by National Labor
Relations Board, 1948), 1145, 1519, 1626.
[Footnote 2/2]
Some of the more directly relevant statements are the following:
"In most instances, the force of public opinion should make itself sufficiently felt in this
80-day period to bring about a peaceful termination of the controversy. Should this
expectation fail, the bill provides for the President's laying the matter before Congress
for whatever legislation seems necessary to preserve the health and safety of the Nation
in the crisis."
Senate Report No. 105, 80th Cong., 1st Sess. 15.
"We believe it would be most unwise for the Congress to attempt to adopt laws relating
to any single dispute between private parties." Senate Minority Report, id. Part 2, at 17.
In the debates, Senator H. Alexander Smith, a member of the Senate Committee on
Labor and Public Welfare, said,
"In the event of a deadlock and a strike is not ended, the matter is referred to the
President, who can use his discretion as to whether he will present the matter to the
Congress, whether or not the situation is such that emergency legislation is required."
"Nothing has been done with respect to the Smith-Connally Act. There is no provision for
taking over property or running plants by the Government. We simply provide a
procedure which we hope will be effective in 99 out of 100 cases where the health or
safety of the people may be affected, and still leave a loophole for congressional action."

93 Cong.Rec. 4281.
The President in his veto message said,
". . . it would be mandatory for the President to transfer the whole problem to the
Congress, even if it were not in session. Thus, major economic disputes between
employers and their workers over contract terms might ultimately be thrown into the
political arena for disposition. One could scarcely devise a less effective method for
discouraging critical strikes."
93 Cong.Rec. 7487.
[Footnote 2/3]
Senator Taft said:
"If there finally develops a complete national emergency threatening the safety and
health of the people of the United States, Congress can pass an emergency law to cover
the particular emergency. . . ."
"We have felt that, perhaps in the case of a general strike, or in the case of other serious
strikes, after the termination of every possible effort to resolve the dispute, the remedy
might be an emergency act by Congress for that particular purpose."
". . . But while such a bill [for seizure of plants and union funds] might be prepared, I
should be unwilling to place such a law on the books until we actually face such an
emergency, and Congress applies the remedy for the particular emergency only. Eighty
days will provide plenty of time within which to consider the possibility of what should be
done, and we believe very strongly that there should not be anything in this law which
prohibits finally the right to strike."
93 Cong.Rec. 3835-3836.
[Footnote 2/4]
93 Cong.Rec. 3637-3645.
[Footnote 2/5]
See, for instance, the statements of James B. Carey, Secretary of the CIO, in opposition
to S. 2054, 77th Cong., 1st Sess., which eventually became the War Labor Disputes Act.
Central to that Act, of course, was the temporary grant of the seizure power to the
President. Mr. Carey then said:
"Senator BURTON. If this would continue forever, it might mean the nationalization of
industry?"

"Mr. CAREY. Let us consider it on a temporary basis. How is the law borne by labor? Here
is the Government-sponsored strike-breaking agency, and nothing more."
"* * * *"
"Our suggestion of a voluntary agreement of the representatives of industry and labor
and Government, participating in calling a conference, is a democratic way. The other
one is the imposition of force, the other is the imposition of seizure of certain things for a
temporary period; the destruction of collective bargaining, and it would break down labor
relations that may have been built up over a long period."
Hearing before a Subcommittee of the Senate Committee on the Judiciary on S. 2054,
77th Cong., 1st Sess. 132.
[Footnote 2/6]
Clearly, the President's message of April 9 and his further letter to the President of the
Senate on April 21 do not satisfy this requirement. Cong.Rec. April 9, 1952, pp. 39623963; id., April 21, 1952, p. 4192.
[Footnote 2/7]
64 Stat. 798 et seq., 65 Stat. 131 et seq., 50 U.S.C. App. 2061 et seq.
[Footnote 2/8]
501, 502, 64 Stat. 798, 812, 50 U.S.C.App. 2121, 2122.
[Footnote 2/9]
502, 503, 64 Stat. 798, 812, 50 U.S.C.App. 2122, 2123.
[Footnote 2/10]
The provision of 502 in S. 3936, as reported by the Senate Committee on Banking and
Currency, read as follows:
"The President is authorized, after consultation with labor and management, to establish
such principles and procedures and to take such action as he deems appropriate for the
settlement of labor disputes affecting national defense, including the designation of such
persons, boards or commissions as he may deem appropriate to carry out the provisions
of this title."
That language was superseded in the Conference Report by the language that was finally
enacted. H.R.Rep. No. 3042, 81st Cong., 2d Sess. 16, 35. The change made by the
Conference Committee was for the purpose of emphasizing the voluntary nature of the
cooperation sought from he public, labor, and management; as Senator Ives explained
under repeated questioning, "If any group were to hold out, there would be no

agreement [on action to carry out the provisions of this title]." 96 Cong.Rec. 14071.
Chairman Maybank of the Senate Committee on Banking and Currency said,
"The labor disputes title of the Senate was accepted by the House with amendment
which merely indicates more specific avenues through which the President may bring
labor and management together."
Id. at 14073.
[Footnote 2/11]
S.Rep. No. 2250, 81st Cong., 2d Sess. 41; H.R.Rep. No. 3042, 81st Cong., 2d Sess. 35. It
is hardly necessary to note that Congressional authorization of an agency similar to the
War Labor Board does not imply a Congressional grant of seizure power similar to that
given the President specifically by 3 of the War Labor Disputes Act of 1943. The War
Labor Board, created by 7 of the 1943 Act, had only administrative sanctions. See 57
Stat. 163, 166167; see Report of Senate Committee on Labor and Public Welfare, The
Disputes Functions of the Wage Stabilization Board, 1951, S.Rep. No. 1037, 82d Cong.,
1st Sess. 6. The seizure power given by Congress in 3 of the 1943 Act was given to the
President, not to the War Labor Board, and was needed only when the War Labor Board
reported it had failed; the seizure power was separate and apart from the War Labor
Board machinery for settling disputes. At most, the Defense Production Act does what 7
of the War Labor Disputes Act did; the omission of any grant of seizure power similar to
3 is too obvious not to have been conscious. At any rate, the Wage Stabilization Board
differs substantially from the earlier War Labor Board. In 1951 the Senate Committee
studying the disputes functions of the Wage Stabilization Board pointed out the
substantial differences between that Board and its predecessor, and concluded that "The
new Wage Stabilization Board . . . does not rely on title V of the Defense Production Act
for its authority." S.Rep. No. 1037, 82d Cong., 1st Sess., supra, at 4-6.
[Footnote 2/12]
S.Rep. No. 2250, 81st Cong., 2d Sess. 41.
[Footnote 2/13]
See 96 Cong.Rec. 14071.
[Footnote 2/14]
Id. at 12275. Just before the paragraph quoted in the text, Senator Ives had said:
"In fact, the courts have upheld the constitutionality of the national emergency
provisions of the Labor-Management Relations Act of 1947, which can require that
workers stay on the job for at least 80 days when a strike would seriously threaten the
national health and safety in peacetime."

"By the terms of the pending bill, the Labor-Management Relations Act of 1947 would be
controlling in matters affecting the relationship between labor and management,
including collective bargaining. It seems to me, however, that this is as far as we should
go in legislation of this type."
[Footnote 2/15]
16 Fed.Reg. 3503. The disputes functions were not given to the Wage Stabilization Board
under Title V, seenote 11, supra, but apparently under the more general Title IV, entitled
"Price and Wage Stabilization."
[Footnote 2/16]
See Hearings before a Subcommittee of the House Committee on Education and Labor,
Disputes Functions of Wage Stabilization Board, 82d Cong., 1st Sess. (May 28-June 15,
1951); Hearings before the Subcommittee on Labor and Labor-Management Relations of
Senate Committee on Labor and Public Welfare, Wage Stabilization and Disputes
Program, 82d Cong., 1st Sess. (May 17-June 7, 1951). The resulting Report of the Senate
Committee, S.Rep. No. 1037, 82d Cong., 1st Sess. 9, recommended that "Title V of the
Defense Production Act be retained," and that
"[n]o statutory limitations be imposed on the President's authority to deal with disputes
through voluntarymachinery; such limitations, we believe, would infringe on the
President's constitutional power."
(Emphasis added.) The Committee found, id. at 10, that the
"Wage Stabilization Board relies completely on voluntary means for settling disputes and
is, therefore, an extension of free collective bargaining. The Board has no powers of legal
compulsion."
"Executive Order No. 10233," the Committee found further, "does not in any way run
counter to the . . . Taft-Hartley Act. It is simply an additional tool, not a substitute for
these laws." Of particular relevance to the present case, the Committee declared:
"The recommendations of the Wage Stabilization Board in disputes certified by the
President have no compulsive force. The parties are free to disregard recommendations
of the Wage Stabilization Board. . . ."
"There is, of course, the President's authority to seize plants under the Selective Service
Act [a power not here used], but this is an authority which exists independently of the
Wage Stabilization Board and its disputes-handling functions. In any case, seizure is an
extraordinary remedy, and the authority to seize, operates whether or not there is a
disputes-handling machinery."
Id. at 5.

[Footnote 2/17]
97 Cong.Rec. 8390-8415.
[Footnote 2/18]
65 Stat. 131.
[Footnote 2/19]
Instances of seizure by the President are summarized in Appendix II, post, p. 343 U. S.
620.
[Footnote 2/20]
One of President Wilson's seizures has given rise to controversy. In his testimony in
justification of the Montgomery Ward seizure during World War II, Attorney General
Biddle argued that the World War I seizure of Smith & Wesson could not be supported
under any of the World War I statutes authorizing seizure. He thus adduced it in support
of the claim of so-called inherent Presidential power of seizure. See Hearings before
House Select Committee to Investigate the Seizure of Montgomery Ward, 78th Cong., 2d
Sess. 167-168. In so doing, he followed the ardor of advocates in claiming everything. In
his own opinion to the President, he rested the power to seize Montgomery Ward on the
statutory authority of the War Labor Disputes Act, see 40 Op.Atty.Gen. 312 (1944), and
the Court of Appeals decision upholding the Montgomery Ward seizure confined itself to
that ground. United States v. Montgomery Ward & Co., 150 F.2d 369. What Attorney
General Biddle said about Smith & Wesson was, of course, post litem motam. Whether or
not the World War I statutes were broad enough to justify that seizure, it is clear that the
taking officers conceived themselves as moving within the scope of statute law. See
Letter from Administrative Div., Advisory Sec. to War Dep't. Bd. of Appraisers, National
Archives, Records of the War Department, Office of the Chief of Ordnance, O.O.
004.002/194 Smith & Wesson, Apr. 2, 1919; n. 3, Appendix II, post, p. 343 U. S. 620.
Thus, whether or not that seizure was within the statute, it cannot properly be cited as a
precedent for the one before us. On this general subject, compare Attorney General
Knox's opinion advising President Theodore Roosevelt against the so-called
"stewardship" theory of the Presidency. National Archives, Opinions of the Attorney
General, Book 31, Oct. 10, 1902 (R.G. 60); Theodore Roosevelt, Autobiography, 388-389;
3 Morison, The Letters of Theodore Roosevelt, 323-366.
Page 343 U. S. 615
bwm:
APPENDIX I
SYNOPTIC ANALYSIS OF LEGISLATION

AUTHORIZING SEIZURE OF INDUSTRIAL PROPERTY

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------TERMS AND CONDITIONS OF
LIMITATIONS ON ITS EMPLOYMENT DURING
STATUTE DURATION SCOPE OF AUTHORITY EXERCISE SEIZURE COMPENSATION
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------As extended or
As enacted repealed
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1. Railroad and Telegraph Not "in force any President may "take possession a. "When in
his [the President's] None. President shall appoint three
Act of 1862, 12 Stat. 334. longer than is of" telegraph lines and rail- judgment the public
safety commissioners to assess comnecessary for the roads; prescribe rules for their may require it." pensation to which the
comEnacted 1/31/62; suppression of operation; and place all officers b. President may not
"engage pany is entitled and to report
amended, 12 Stat. 625, this rebellion." and employees under military in any work of
railroad con- to Congress for its action.
7/14/62. control. struction."
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------2. 120 of National No time limit. President, through the head of a. Exercisable "in time
of war None. Compensation "shall be fair and
Defense Act of 1916, 39 any department, may seize or when war is imminent." just."
Stat. 166, 213, 50 U.S.C. any plant and may operate b. Plant is equipped for making
80, as amended. plants through the Army Ord- "necessary supplies or equip-

nance Department. ment for the Army" or "in

Enacted 6/3/16. the opinion of the Secretary
of War" can be transformed
readily to such use.
c. Owner refuses to give government order precedence or to
perform.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------3. Army Appropriations No time limit. President, through Secretary of Exercisable "in time
of war."* None. Compensation "shall be fair
Act of 1916, 39 Stat. 619, War, may take possession of and just."
645, 10 U.S.C. 1361. and utilize any system or part
of any system of transportaEnacted 8/29/16. tion.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------4. Naval Emergency Fund No time limit. President may Exercisable "in time of war" (or
None.
Act of 1917, 39 Stat. 1. "take over for use or opera- of national emergency deter1168, 1192-1195, 50 tion" any factory "whether mined by the President before
U.S.C. 82. [or not] the United States 3/1/18).
has . . . agreement with President shall determine "just
Enacted 3/4/17. Cf. the owner or occupier." compensation"; if the claimant
Emergency Shipping is dissatisfied, he shall be paid
Fund Act of 1917, infra.) 2. "take immediate possession a. Owner fails or refuses to give
None. 50 percent of the amount deof any factory" producing precedence to an order for termined by the President and

ships or war material for "ships or war material as the may sue, subject to existing
the Navy. necessities of the Govern- law, in the district courts and
ment"; refuses to deliver or to the Court of Claims for the
comply with a contract as rest of "just compensation."
modified by President.
b. Exercisable within "the limits
of the amounts appropriated
therefor."
Page 343 U. S. 616
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------5. Emergency Shipping To 6 months after Repealed after 3 President may Exercisable
"within the limits None.
Fund Act of 1917, 40 peace with the years, 2(a) 1. "take over for use or opera- of the
amounts herein author- Same as next above, except that
Stat. 182. German Empire, (1), 41 Stat. tion" any plant, "whether ized." the prepaid
percentage when
40 Stat. 182, 183. 988, 6/5/20. [or not] United States has the owner is dissatisfied is
Enacted 6/15/17. . . . agreement with the 75 percent.
owner or occupier."
2. "take immediate possession Failure or refusal of owner of None.
of any . . . plant" "equipped ship-building plant to give
for the building or produc- Government orders precedtion of ships or material." ence or to comply with order.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------6. 1918 Amendments to To 6 months after Repealed after 2 President may a. The street
railroad is neces- None.

Emergency Shipping peace with the years, 41 Stat. 1. "take possession of . . . sary for
transporting emFund Act of 1917. German Empire. 988, 6/5/20. any street railroad." ployees of plants
which are
or may be hereafter engaged
A. 40 Stat. 535. in "construction of ships or
equipment therefor for the
Enacted 4/22/18. United States.
b. Exercisable "within the limits Same as next above.
of the amounts herein authorized."
B. 40 Stat. 1020, 1022 To 6 months after Repealed after 2. extend seized plants conExercisable "within the limits of None
peace with the 1 1/2 years, 41 structing ships or materials the amounts herein authorGerman Empire. Stat. 988, 6/5/ therefor and requisition land ized."
20. for use in extensions.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------7. Food and Fuel Act of To end of World President may The requisitioning is "necessary
None. President "shall ascertain and
1917, 40 Stat. 276. War I with Ger- 1. requisition foods, fuels, to the support of the Army
or pay a just compensation"; if
many. feeds, etc., and storage the . . . Navy, or any other the owner is dissatisfied, he
Enacted 8/10/17. facilities for them. public use connected with the shall be paid 75
percent of the
common defense." amount determined by the
10, 40 Stat. 276, 279. President and may sue in the
district courts, which are hereby given jurisdiction, for the

rest of "just compensation."

12, 40 Stat. 276, 279. 2. take over any factory, a. President finds "it necessary
President may make regulations
packing house, oil pipe line, to secure an adequate supply for "the employment, control,
mine, or other plant where of necessaries for . . . the and compensation of emany necessaries are or may Army or . . . the Navy, or ployees."
be "produced, prepared, or for any other public use conmined, and to operate the nected with the common Same as in the Emergency Shipsame." defense." ping Fund Act of 1917, supra.
b. President must turn facility
back as soon as further Government operation "is not
essential for the national
security or defense."
Page 343 U. S. 617
25, 40 Stat. 276. 284 To end of World 3. "requisition and take over Producer or dealer
President may "prescribe . . . Same as next above.
War I with Ger- the plant, business, and all a. Fails to conform to prices regulations . . . for
the emmany. appurtenances thereof be- or regulations set by the ployment, control, and comlonging to such producer Federal Trade Commission pensation of the employees."
or dealer" of coal and coke, under the direction of the
and may operate it through President, who deems it
an agency of his choice. "necessary for the efficient
prosecution of the war,"
or
b. Fails to operate efficiently,

or conducts business in a
way "prejudicial to the
public interest."
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------8. Joint Resolution of July "during the con- Terminated on President may "take possession
President deems "it necessary None. Same as next above.
16, 1918, 40 Stat. 904 tinuance of the 7/31/10 by re- . . . of [and operate] any for the
national security or
present war." peal, 7/11/19, telegraph, telephone, marine defense."
41 Stat. 157. cable or radio system."
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------9. 16 of Federal Water No time limit. President may take possession a. President
believes, as "evi- None. Owner shall be paid "just and
Power Act of 1920, 41 of any project, dams, power denced by a written order fair
compensation for the use
Stat. 1063, 1072, 16 houses, transmission lines, addressed to the holder of any of said
property as may be fixed
U.S.C. 809. etc., constructed or operated license hereunder [that] the by the [Federal
Power] commisunder a license from the Fed- safety of the United States sion upon the basis of a reasonEnacted 6/10/20. eral Power Commission and demands it." able profit in time of peace,
and
may operate them. b. Seizure is "for the purpose the cost of restoring said
of manufacturing nitrates, property to as good condition
explosives, or munitions of as existed at the time of the
war, or for any other purpose taking over thereof, less the
involving the safety of the reasonable value of any imUnited States." provements . . . made thereto

c. Control is limited to the "length by the United States and

of time as may appear to the which are valuable and servicePresident to be necessary to able to the [owner]."
accomplish said purposes."
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------10. 606 of Communica- No time limit. President may "use or control a. President
proclaims that there None. President shall ascertain just
tions Act of 1934, 48 Stat. . . . any such station and/or exists compensation and certify it
to
1064, 1104, 47 U.S.C. its apparatus and equipment (1) war or threat of war or Congress
for appropriation; if
606(c). by any department of the (2) a state of public peril, or the owner is dissatisfied,
he shall
Government under such regu- disaster or other national be paid 75 percent of the
Enacted 6/19/34. lations as he may prescribe." emergency, amount determined by the
or President and may sue, subb. It is necessary to preserve ject to existing law, in the
the neutrality of the United district courts and the Court of
States. Claims for the rest of "just
compensation."
Page 343 U. S. 618
11. Amendments to Com- No time limit. Same power as in 606(c), Com- a. President
proclaims a state or None. Same as next above.
munications Act, 56 Stat. munications Act of 1934, next threat of war.
18, 47 U.S.C. 606(d). above. b. President "deems it necessary in the interest of the naEnacted 1/26/42. tional security and defense."
c. Power to seize and use prop-

erty continues to "not later

than six months after the
termination of such state or
threat of war" or than a date
set by concurrent resolution
of Congress.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------12. 8(b) of National De- No time limit. Repealed in less Secretary of Navy, under Presia. Secretary of Navy deems any Secretary of Navy may operate Secretary of Navy may
"fix the
fense Act of 1940, 54 than 3 months, dent's direction, may "take existing plant
necessary for the plant "either by Govern- compensation."
Stat. 676, 680. 9/16/40, 54 over and operate such plant the national defense. ment
personnel or by contract
Stat. 885, 893 or facility." b. He is unable to reach agree- with private firms."
ment with its owner for its
use or operation.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------13. 9 of Selective Training To 5/15/45, 54 Extended to President may "take immedi- a.
Plant is equipped for or None. "The compensation . . . shall be
and Service Act of 1940, Stat. 885, 897. 3/31/47, 60 ate possession of any such capable
of being readily trans- fair and just."
54 Stat. 885, 892, 50 Stat. 341, 342. plant." (Extended by formed for the manufacture of
U.S.C.App. (1946 ed.) amendment to "any plant, necessary supplies.
309. mine, or facility" capable of b. Owner refuses to give Governproducing "any articles or ment order precedence or to
Enacted 9/16/40; amend- materials which may be re- fill it.

ed by War Labor Dis- quired . . . or which may be

putes Act, 57 Stat. 163, useful" for the war effort.
164, q.v., infra. 57 Stat. 163, 164.)
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------14. 3 of War Labor Dis- To termination of President may "take immedi- a. Finding and
proclamation Same "terms and conditions of Same as next above.
putes Act of 1943, 57 this Act by con- ate possession" of "any plant, by the President that
employment which were in
Stat. 163, 164, 50 U.S.C. current resolu- mine, or facility equipped for (1) there is an
interruption effect at the time [of taking]
App. (1946 ed.) 1503. tion by Congress the manufacture, production, on account of a
labor dis- possession," except that terms
or of hostilities. or mining of any articles or turbance, and conditions might be
Enacted 6/25/43. Plants seized pre- materials which may be re- (2) the war effort will be
un- changed by order of the War
viously may be quired . . . or which may be duly impeded, Labor Board, on application.
operated until 6 useful" for the war effort. (3) seizure is necessary to in- 4, 5, 57 Stat.
163, 165.
months after sure operation.
termination of b. Plant must be returned to
hostilities. owner within 60 days "after
the restoration of the productive efficiency."
Page 343 U. S. 619
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------15. Title VIII, Repricing To termination of President may "take immediate a. The Secretary
of a Depart- None. Same as next above.
of War Contracts," of hostilities. possession of the plant of ment deems the price of an

Revenue Act of 1943, 58 plants . . . and . . . operate article or service required diStat. 21, 92, 50 U.S.C. them in accordance with sec- rectly or indirectly by the
App. (1946 ed.) 1192. tion 9 of the Selective Train- Department is unreasonable.
ing and Service Act of 1940, b. The Secretary, after the reEnacted 2/25/44, as amended. fusal of the person furnishing
the article or service to agree
to a price, sets a price.
c. The person "wilfully refuses,
or wilfully fails" to furnish
the articles or services at the
price fixed by the Secretary.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------16. Selective Service Act of No time limit. President may "take immediate a. President
with advice of the None. "Fair and just compensation
1948, 62 Stat. 604, 625 possession of any plant, mine, National Security Resources shall
be paid."
626, 50 U.S.C.App. or other facility . . . and to Board determines prompt de 468. operate it . . . and to livery of articles or materials
tion of such articles or mate- is "in the interest of the naEnacted 6/24/48. rials." tional security."
b. Procurement "has been authorized by the Congress exclusively for the use of the armed
forces. or the A.E.C.
c. Owner refuses or fails to give
precedence to Government

order placed with notice that

it is made pursuant to this
section, or to fill the order
properly.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------17. 201(a) of Defense To 6/30/51. But Extended to President may "requisition" President
determines that None. President shall determine just
Production Act, 64 Stat. see 716(a), 64 7/31/51, 65 "equipment, supplies or com- a. its
use is "needed for na- compensation as of the time
798, 799, 50 U.S.C.App. Stat. 798, 822. Stat. 110, ponent parts thereof, or mate- tional
defense," the property is taken; if owner
2081(a). Extended to rials or facilities necessary for b. the need is "immediate and is
dissatisfied, he shall be
6/30/52, 111, the manufacture, servicing, impending," "will not ad- promptly paid 75
percent of
Enacted 9/8/50; 65 Stat. 131, or operation of such equip- mit of delay or resort to the
amount determined by the
amendment, 65 Stat. 131, 144. ment, supplies, or component any other source of
supply," President and may sue within
132, q.v., infra. parts." 64 Stat. 798, 799. c. other reasonable means of three years in the
district
Restricted in the main to obtaining use of the prop- courts or the Court of Claims,
personal property by 102(b), erty have been exhausted regardless of the amount in65 Stat. 132 volved, for the rest of "just
compensation."
18. 102(b)(2) of Defense To 6/30/52, 65 Court condemnation of real President deems
the real prop- None. Under existing statutes for conProduction Act Amend- Stat. 131, 144. property in accordance with erty "necessary in the
interest demnation. Immediate pos-

ments of 1951, 65 Stat. existing statutes. of national defense." session given only upon
deposit
131, 132, 50 U.S.C.App. of amount "estimated to be just
2081(b). compensation," 75 percent of
which is immediately paid
Enacted 7/31/51. without prejudice to the owner.
Page 343 U. S. 620
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------APPENDIX II
SUMMARY OF SEIZURES OF INDUSTRIAL PLANTS
AND FACILITIES BY THE PRESIDENT
Civil War Period
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------DURATION OF
PLANT OR FACILITY SEIZED SEIZURE ORDER EFFECTING SEIZURE AUTHORITY CITED
REASON FOR SEIZURE OPERATIONS DURING SEIZURE
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------From To
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Railroads and telegraph lines 4/27/61 (?) Order of Secretary of War dated 4/27/61 None.
Communications between Washington and Northern troops guarded railway and telebetween Washington and appointing Thomas A. Scott officer in the North were
interrupted by bands of graph facilities; they were repaired and
Annapolis, Md.{1} charge. War of the Rebellion, Official southern sympathizers who
destroyed restored to operation under orders of the
Records of the Union and Confederate railway and telegraph facilities. Secretary of War.

Armies, Ser. I, Vol. II, 603.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Telegraph lines. 2/26/62 (?) Order of Secretary of War dated 2/25/62 "by virtue of the act
of Congress" (presum- To insure effective transmission and secur- Lines operated under
military supervision;
appointing Anson Stager officer in charge. ably Railroad and Telegraph Act of 1862, ity of
military communications. censorship of messages; lines extended and
Richardson, Messages and Papers of the 12 Stat. 334). completed subject to limitations
of Joint
Resolution of July 14, 1862, 12 Stat. 625.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Railroads. 5/25/62 8/8/65 Order of Secretary of War dated 5/25/62. "by virtue of the
authority vested by act of To insure effective priority to movement of Railways operated
under military superviRichardson, Messages and Papers of the Congress" (presumably Railroad and troops and
supplies. sion; lines extended and completed subject
Presidents, Lincoln, Order of May 25, Telegraph Act of 1862, 12 Stat. 334). to limitations
of Joint Resolution of
1862. July 14, 1862, 12 Stat. 625; interruption of
regular passenger and freight traffic.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------World War I Period{2}
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Bigelow-Hartford Carpet Co., 12/27/17 12/31/19 Order of Secretary of War, Req. 20A/C,
Constitution and laws.{3} Requisitioned for use of United States CarLowell, Mass. Ord. No. 62, dated 12/27/17. tridge Co. for cartridge manufacture.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Railroads. 12/28/17 3/1/20 Presidential proclamation, 40 Stat. 1733 Joint Resolution of

April 6, 1917. Labor difficulties; congestion; ineffective Wage increase; changes in
operating pracJoint Resolution of Dec. 7, 1917. operation in terms of war effort. tices and procedures.
Act of Aug. 29, 1916.
"all other powers thereto me enabling."
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Liberty Ordnance Co., Bridge- 1/7/18 5/20/19 Order of Secretary of War, Req. 26 A/C,
Constitution and laws.{3} Inadequate financing and other difficulties Turned over to
American Can Co. for operport, Conn. Ord. No. 27, dated 1/5/18. leading to failure to perform contract for ation.
manufacture of 75 mm. guns.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Hoboken Land & Improvement 2/28/18 4/1/19 Order of Secretary of War, Req. 37 A/C,
Constitution and laws.{3} Requisitioned for use of Remington ArmsCo., Hoboken, N.J. Ord. No. 516, dated 2/28/18. U.M.C. Co. for cartridge manufacture.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Bijur Motor Appliance Co., 4/1/18 5/1/19 Order of Secretary of War, Req. 37 A/C,
Constitution and laws.{3} Requisitioned for use of Remington ArmsHoboken, N.J. 8/15/18 Ord. No. 516, dated 2/28/18. U.M.C. Co. for cartridge manufacture.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Jewel Tea Co., Hoboken, N.J. 4/1/18 9/2/19 Order of Secretary of War, Req. 37 A/C,
Constitution and laws.{3} Requisitioned for use of Remington ArmsU.M.C. Co. for cartridge manufacture.
[343 U.S. 621]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Telegraph lines. 7/25/18 7/31/19 Presidential proclamation, 40 Stat. 1807. Joint

Resolution of July 16, 1918. Labor difficulties. Anti- union discrimination terminated.
"all other powers thereto me enabling."
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Smith & Wesson, Springfield, 9/13/18 1/31/19 Order of Secretary of War, Req. 709 B/C,
Constitution and laws.{3} Labor difficulties. Anti-union discrimination terminated;
Mass. Ord. No. 604, dated 8/31/18. operation by the National Operating
Co., a Government corporation.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Federal Enameling & Stamp- 9/23/18 12/13/18 Order of Secretary of War, Req. 738 B/C,
Constitution and laws.{3} Failure to fill compulsory order.
ing Co., McKees Rocks, Pa. Ord. No. 609, dated 9/11/18.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Mosler Safe Co., Hamilton, 9/23/19 2/25/19 Order of Secretary of War, Req. 781 B/C,
Constitution and laws.{3} Failure to fill compulsory order.
Ohio. Ord. No. 612, dated 9/23/18.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Bush Terminal Co., Brooklyn, (?) (?) (?) Act of Aug. 29, 1916. (?) (?)
N.Y. Food and Fuel Act of 1917.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------World War {4} -- Seizures Connected With Labor Disputes
1. Before Pearl Harbor.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------CHANGES IN CONDITIONS OF

DURATION OF EXECUTIVE DURATION OF EMPLOYMENT DURING REPORTED LEGAL

PLANT OR FACILITY SEIZED SEIZURE ORDER STATUTORY
STOPPAGE SEIZURE{7} BASIS FOR CHANGES ACTION{8}

AUTHORITY

CITED{5}

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------From To From To{6}

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------North American Aviation, Inc., 6/9/41 7/2/71 8773. None. (Order cites contracts of com6/5/41 6/10/41 Property returned on agreement Agreement of parties on NaInglewood, Calif. 6 Fed.Reg. 2777 pany with Government and ownership of parties to
wage increase and tional Defense Mediation
by Government
recommendation.

of

machinery,

mate-

maintenance

of

membership.

Board

rials and work in progress in plant.)

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Federal Shipbuilding & Drydock 8/23/41 1/6/42 8868. None. (Order cites contracts of
com- 8/6/41 8/23/41 Maintenance off membership National Defense Mediation
Co., Kearny, N.J. 6 Fed.Reg. 4349. pany with Government and ownership during period of
seizure. Board recommendation.
by Government of vessels under construction, materials and equipment in
yard.)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Air Associates, Inc., Bendix, N.J. 10/30/41 12/29/41 8928. None. (Order cites contracts of
com- 7/11/41 7/27/41 Strikers reinstated over replace- Agreement of parties on Na6 Fed.Reg. 5559. pany with Government and ownership ments hired by company prior
tional Defense Mediation

by Government
recommendation.

of

facilities

in

plant.)

9/30/41

10/24/41

to

seizure.

Board

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[343 U.S. 621]

2. Between Pearl Harbor and the Passage of the
War Labor Disputes Act, June 25, 1943.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Toledo, P. & W. R. Co. 3/21/42 10/1/45 9108 None. 12/28/41 3/21/42 Wage increase
during period of War Labor Board recommenda- Toledo P. & W. R. Co. v. Stover,
7 Fed.Reg. 2201 seizure. tion. 60 F.Supp. 587 (S.D.Ill.1945).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------General Cable Co., Bayonne, N.J., 8/13/42 8/20/42 9220 None. 8/10/42 8/13/42 None. War
Labor Board recommendaplant. 7 Fed.Reg. 6413 tion.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------S. A. Woods Machine Co., South 8/19/42 8/25/45 9225. None. None. None. Maintenance
of membership. War Labor Board recommendaBoston, Mass. 7 Fed.Reg. 6627 tion.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Coal Mines. 5/2/43 10/12/43 9340. None. 4/22/43 5/2/43 Six-day week; eight-hour day.
Order of the Secretary of In- GO>United States v. Pewee Coal Co.,
8 Fed.Reg. 5695. (To increase take-home pay.) terior. 341 U. S. 114; NLRB v. West Ky.
6/1/43 6/7/43* Coal Co., 152 F.2d 198 (6th Cir.
1945); Glen Alden Coal Co. v.
6/20/43 (?)* NLRB, 141 F.2d 47 (3d Cir. 1944).

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------American R. Co. of Porto Rico. 5/13/43 7/1/44 9341 None. 5/12/43 5/13/43 Wage
increase. War Labor Board recommenda8 Fed.Reg. 6323. tion.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------3. Between June 25, 1943, and VJ Day.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Atlantic Basin Iron Works, Brook- 9/3/43 9/22/43 9375. War Labor Disputes Act. None.
None. Maintenance of membership. War Labor Board recommendalyn, N.Y. 8 Fed.Reg. 12253. tion.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Coal Mines. 11/1/43 6/21/44 9393. War Labor Disputes Act. 10/12/43 11/4/43* Changes in
wages and hours. Agreement with Secretary of
8 Fed.Reg. 14877. 11/1/43 Interior.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Leather Manufacturers in Salem, 11/20/43 12/13/43 9395B. None. 9/25/43 11/24/43*
None. (Jurisdictional strike.) None.
Peabody, and Danvers, Mass. 8 Fed.Reg. 16957. (sporadic) (sporadic)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Western Electric Co., Point Breeze 12/19/43 3/23/44 9408. War Labor Disputes Act.
12/14/43 12/19/43 None. (Strike in protest of War None.
plant, Baltimore, Md. 8 Fed.Reg. 16958. Labor Board nonsegregation
ruling.)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Railroads. 12/30/45 1/18/44 9412. Act of Aug. 29, 1916. None. None. Control relinquished
when par- Presidential arbitration based Thorne v. Washington Terminal Co.,
8 Fed.Reg. 16958 ties accepted Presidential com- on Railway Labor Act Emer- 55 F.Supp.
139 (D.D.C.1944)
promise of wage demands. gency Board recommendations.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Fall River, Mass., Textile Plants. 2/7/44 2/28/44 9420. War Labor Disputes Act. 12/13/43
2/14/44* Property returned upon agree- War Labor Board recommenda9 Fed.Reg. 1563. ment by parties on seniority tion.
provisions.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[343 U.S. 623]
Department of Water and Power, 2/23/44 2/29/44 9426. War Labor Disputes Act. 2/14/44
2/24/44 None. None.
Los Angeles, Calif. 9 Fed.Reg. 2113.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Jenkins Bros., Inc., Bridgeport, 4/13/44 6/15/44 9435. 9, Selective Service Act of 1940
as None. None. Wage increase. War Labor Board recommenda- In re Jenkins Bros., Inc.,
15
Conn. 9 Fed.Reg. 2113. amended. tion. W.L.R. 719 (D.D.C.1944).**
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Ken-Rad Tube & Lamp Co., 4/13/44 6/15/44 9436. 9, Selective Service Act of 1940 as
None. None. Changes in wage scales; main- War Labor Board recommenda- Ken-Rad
Tube & Lamp Corp. v.
Owensboro, Ky. 9 Fed.Reg. 4063. amended. tenance of membership. tion. Badeau, 55
F.Supp. 193
(W.D.Ky. 1944).**

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Montgomery Ward & Co., Chi- 4/25/44 5/9/44 9438. None. None. None. None.
(Government extended War Labor Board recommenda- United States v. Montgomery
Ward &
cago, Ill., facilities. 9 Fed.Reg. 4459. expired contract pending tion. Co., 150 F.2d 369
NLRB election to determine (7th Cir.1945).**
bargaining representative.)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Montgomery Ward & Co., Hum- 5/21/44 7/2/45 9443. 9, Selective Service Act of 1940
as 5/5/44 5/21/44 Maintenance of membership; War Labor Board recommendamer Mfg. division, Springfield, 9 Fed.Reg. 5395 amended. voluntary check-off. tion.
Ill.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Philadelphia Transportation Co., 8/3/44 8/17/44 9459. Act of Aug. 29, 1916. 8/1/44
8/7/44* None. (Strike is protest of None United States v. McMenamin, 58 F.
Philadelphia, Pa. 9 Fed.Reg. 9878. First War Powers Act of 1941. WLB nonsegregation
ruling.) Supp. 478 (E.D.Pa.1944).**
9 of Selective Service Act of 1940,
as amended.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Midwest Trucking Operators. 8/11/44 1/1/45 9462. Act of Aug. 29, 1916. 8/4/44 8/11/44
Wage increase. War Labor Board recommen11/1/45 9 Fed.Reg. 10071. First War Powers Act of 1941. dation.
9, Selective Service Act of 1940, as
amended by the War Labor Disputes Act.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------San Francisco, Calif., Machine 8/14/44 9/14/45 9463. 9, Selective Service Act of 1940 as
Sporadic. Sporadic. Union agreed not to discipline War Labor Board recommend- San
Francisco Lodge No. 68 IAM v.
Shops. 8/19/44 9 Fed.Reg. 9879. amended. employees who worked over- dation.
Forrestal, 58 F.Supp. 466
9466. time. Cancellation of em- (N.D.Calif. 1944).
9 Fed.Reg. 10139. ployee draft deferments, gas
rations, and job referral rights.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Anthracite Coal Mines. 8/23/44 2/24/45 9469.{9} 9, Selective Service Act of 1940 as
6/29/44 8/23/44 None. None.
9/19/44 9 Fed.Reg. 10343. amended by the War Labor Disputes
Act. 8/?/44 9/?/44{10}
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------International Nickel Co., Hunt- 8/29/44 10/14/44 9473. 9, Selective Service Act of 1940
as 8/18/44 8/29/44 None. None.
ington, W.Va., plant. 9 Fed.Reg. 10613. amended.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[343 U.S. 624]
Hughes Tool Co., Houston Tex., 9/2/44 8/29/45 9475A. 9, Selective Service Act of 1940
as None. None. Maintenance of membership War Labor Board recommendafacilities. 9 Fed.Reg. 10943. amended. during period of seizure. dation.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cleveland Graphite Bronze Co., 9/5/44 11/8/44 9477. 9, Selective Service Act of 1940
as 8/31/44 9/5/44 Union agreed to arbitrate griev- War Labor Board recommenda-

Cleveland, Ohio. 9 Fed.Reg. 10941. amended by the War Labor Disputes ance which had
precipitated dation.
Act. the strike.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Twentieth Century Brass Works, 9/9/44 2/17/45 9480. 9, Selective Service Act of 1940
as 8/21/44 9/9/44 Wage increase. War Labor Board recommendaInc., Minneapolis, Minn. 9 Fed.Reg. 11143. amended. tion.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Farrell Cheeck Steel Co., Sandus- 9/23/44 8/28/45 9484. 9, Selective Service Act of
1940 as 9/11/44 9/23/44 Wage increase; maintenance of War Labor Board recommendaky, Ohio. 9 Fed.Reg. 11731 amended by the War Labor Disputes membership during
period of tion.
Act. seizure.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Toledo, Ohio, Machine Shops. 11/4/44 11/6/44 9496. 9, Selective Service Act of 1940 as
10/27/44 11/5/44 None. (Jurisdictional strike.) None.
9 Fed.Reg. 13187. amended by the War Labor Disputes
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cudahy Bros. Co., Cudahy, Wis. 12/6/44 8/31/45 9505. 9, Selective Service Act of 1940
as None. None. Maintenance of membership; War Labor Board recommenda9 Fed.Reg. 14473. amended by the War Labor Disputes voluntary check-off. tion.
Act.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Montgomery Ward & Co., Detroit, 12,27/44 10/18/45 9508. War Labor Disputes Act.
12/9/44 12/27/44 Maintenance of membership and War Labor Board recommendaNational War Labor Board v. MontMich., and other facilities. 9 Fed.Reg. 15079. 9, Selective Service Act of 1940 as
voluntary check-off during tion. gomery Ward & Co., 144 F.2d 528
amended. period of seizure. (D.C.Cir.1944).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cleveland Electric Illuminating 1/13/45 1/15/45 9511. 9, Selective Service Act of 1940
as 1/12/45 1/13/45 None. None.
Co., Cleveland, Ohio. 10 Fed.Reg. 549. amended.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Bingham & Garfield R.R., Utah. 1/24/45 8/29/45 9516. Act of Aug. 29, 1916. 1/23/45
1/24/45 Property returned upon agree- Railway Labor Act Emergency
10 Fed.Reg. 1313. First War Powers Act of 1941. ment by parties on wage scale Board
recommendation.
War Labor Disputes Act. for certain positions.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------American Enka Corp., Enka, N.C. 2/18/45 6/6/45 9523. War Labor Disputes Act. 2/7/45
2/18/45 None. (Strike over question of War Labor Board recommenda10 Fed.Reg. 2133. Selective Service Act as amended. contract interpretation sub- tion.
mitted to arbitration.)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Coal Mines:
Bituminous. 4/10/45 5/12/45 9536. 4/1/45 4/11/45 Wage increase. Agreement of parties.
10/25/45 10 Fed.Reg. 3939. 9, Selective Service Act as amended by
the War Labor Disputes Act.

Anthracite. 5/3/45 6/23/45 9548. 5/1/45 6/24/45* Wage increase. Agreement of parties.
10 Fed.Reg. 5025.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cities Service Refining Corp., 4/17/45 12/23/45 9540. 9, Selective Service Act of 1940
as (?) 4/17/45 None. (Strike over housing None.
Lake Charles, La., plant. 10 Fed.Reg. 4193. amended by the War Labor Disputes
conditions.)
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------United Engineering Co., Ltd., 4/25/45 8/31/45 9542. 9, Selective Service Act of 1940 as
4/12/45 (?)* Union's privileges under con- War Labor Board recommendaSan Francisco, Calif. 10 Fed.Reg. 4591. amended by the War Labor Disputes tract
revoked. tion.
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Cocker Machine & Foundry Co., 5/20/45 8/31/45 9552. 9, Selective Service Act of 1940
as (?) 5/20/45 Wage increase; maintenance of War Labor Board recommendaGastonia, N.C. 10 Fed.Reg. 5757. amended by the War Labor Disputes membership
during period of tion.
Act. seizure.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Chicago, Ill., Motor Carriers. 5/23/45 8/16/45 9554. 9, Selective Service Act of 1940 as
5/19/45 5/24/45 Wage increase. War Labor Board recommenda10 Fed.Reg. 5981. amended by the War Labor Disputes tion.
Act. 6/16/45 6/27/45*
Act of Aug. 29, 1916.

First War Powers Act of 1941.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Gaffney Mfg. Co., Gaffney, S.C. 5/28/45 9/9/45 9559. 9, Selective Service Act of 1940 as
(?) 5/28/45 Wage increase and maintenance War Labor Board recommenda10 Fed.Reg. 6287. amended by the War Labor Disputes of membership during period
tion.
Act. of seizure.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Mary-Leila Cotton Mills, Greens- 6/1/45 8/31/45 9560. 9, Selective Service Act of 1940
as 4/1/45 6/1/45 Contract extension; mainte- War Labor Board recommendaboro, Ga. 10 Fed.Reg. 6547. amended by the War Labor Disputes nance of membership
and vol- tion.
Act. untary check-off during period
of seizure.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Humble Oil & Refining Co., Ingle- 6/5/45 8/3/45 9564. 9, Selective Service Act of 1940
as None. None. Maintenance of membership War Labor Board recommenda- Eighth
Regional War Labor Bd. v.
side, Tex., plant. 10 Fed.Reg. 6791. amended by the War Labor Disputes during period of
seizure. tion.Humble Oil & Refining Co., 145
Act. F.2d 462 (5th Cir.1945).**
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Pure Oil Co., Cabin Creek oil 6/6/45 9/10/45 9565. 9, Selective Service Act of 1940 as
5/14/45 6/6/45 Maintenance of membership War Labor Board recommendafield, Dawes, W.Va., facilities. 10 Fed.Reg. 6792. amended by the War Labor Disputes
during period of seizure. tion.
Act.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Scranton Transit Co., Scranton, 6/14/45 7/8/45 9570. 9, Selective Service Act of 1940 as
5/20/45 6/14/45 None. None.
Pa. 10 Fed.Reg. 6792. amended by 3 of the War Labor Disputes Act.
Act of Aug. 20, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Diamond Alkali Co., Painesville, 6/19/45 7/19/45 9574. 9, Selective Service Act of 1940
as 6/15/45 6/19/45 Property returned upon agree- None.
Ohio. 10 Fed.Reg. 7435. amended by the War Labor Disputes ment by parties to wage inAct. crease.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Texas Co., Port Arthur, Tex., 7/1/45 9/10/45 9577A. 9, Selective Service Act of 1940 as
6/29/45 7/1/45 None. (Strike over racial displant. 10 Fed.Reg. 8090. amended by the War Labor Disputes crimination.)
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Goodyear Tire & Rubber Co., 7/4/45 8/30/45 9585. 9, Selective Service Act of 1940 as
6/20/45 7/4/45 Agreement by union to submit (?).
Akron, Ohio. 10 Fed.Reg. 8335. amended by the War Labor Disputes future disputes to
federal
Act. agency.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sinclair Rubber Co., Houston, 7/19/45 11/19/45 9589A. 9, Selective Service Act of 1940
as None. None. Change in union security ar- War Labor Board recommendaTex., butadiene plant. 10 Fed.Reg. 8949. amended by the War Labor Disputes
rangements. tions.
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Springfield Plywood Co., Spring- 7/25/45 8/30/45 9593. 9, Selective Service Act of 1940
as (?) 7/25/45 None. None.
field, Oreg. 10 Fed.Reg. 9379. amended by the War Labor Disputes
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------U.S. Rubber Co., Detroit, Mich., 7/31/45 10/10/45 9595. 9, Selective Service Act of 1940
as 7/14/45 7/31/45 None. None.
facilities. 10 Fed.Reg. 9571. amended by the War Labor Disputes
Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------4. Between VJ Day and the Expiration of the
War Labor Disputes Act Seizure Powers, Dec. 31, 1946.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Illinois Central R. Co. 8/23/45 5/27/46 9602. 9, Selective Service Act of 1940 as None.
None. None. (Jurisdictional strike) Railway Labor Act Emergency
10 Fed.Reg. 10957. amended by 3 of the War Labor Board recommended against
Disputes Act. change.
Act of Aug. 29, 1916.
First War Powers Act of 1941.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Petroleum Refineries and Pipe- 10/4/45 12/12/45 9639. 9, Selective Service Act of 1940
as 9/16/45 10/5/45 Plants returned on agreement of Ad hoc factfinding board recomlines. (One-half national re- 2/?/46 10 Fed.Reg. 12592. amended by the War Labor
Disputes owners to 18 percent wage mendation.
fining capacity.) Act. increase.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Capital Transit Co., Washington, 11/21/45 1/7/46 9658. 9, Selective Service Act of 1940
as 11/6/45 11/7/45 Facilities returned when parties Ad hoc arbitration board award.
D.C. 10 Fed.Reg. 14351. amended by 3 of the War Labor agreed to arbitration award.
Disputes Act. 11/20/45 11/21/45 on wages.
Act of Aug. 29, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Great Lakes Towing Co., Cleve- 11/29/45 12/18/46 9661. 9. Selective Service Act of
1940 as 9/4/45 11/29/45 Wage increase. National Wage Stabilization
land, Ohio. 10 Fed.Reg. 14591. amended by 3 of the War Labor 11/1/45 Board
recommendation.
Disputes Act.
Act. of Aug. 29, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Meatpacking Industry. 1/24/46 3/12/46 9685. 9, Selective Service Act of 1940 as
1/16/46 1/28/46* Plants returned as companies Ad hoc factfinding board recom5/22/46 11 Fed.Reg. 989. amended by the War Labor Disputes agreed to wage increase
rec- mendation approved by Na-

9690. Act. ommended by factfinding tional Wage Stabilization

11 Fed.Reg. 1337. board. Board.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[343 U.S. 627]
New York Harbor Tugboat Com- 2/5/46 3/3/46 9693. 9, Selective Service Act of 1940 as
2/4/46 2/13/46* Properties returned after agree- None.
panies. 11 Fed.Reg. 1421. amended by 3 of the War Labor dis- ment of parties to
arbitrate
putes Act. dispute.
Act of Aug. 29, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Railroads. 5/17/46 5/26/46 9727. 9, Selective Service Act of 1940 as 5/23/46 5/25/46*
Properties returned after unions Railway Labor Act Emergency
11 Fed.Reg. 5461. amended by 3 of the War Labor Dis- agreed to Presidential comBoard recommendation as
putes Act. promise of wage demands. modified by President.
Act of Aug. 29, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Bituminous Coal Mines. 5/21/46 6/30/47 9728. 9, Selective Service Act of 1940 as
4/1/46 5/11/46 Wage increase, welfare and re- Contract between union and United States
v. United Mine
11 Fed.Reg. 5593. amended by the War Labor Disputes tirement fund, mine safety
Secretary of Interior.Workers, 330 U. S. 258, Jones &
Act. 5/23/46 5/25/46* provisions, and recognition of Laughlin Steel Co. v. UMW, 159
UMW as representative of F.2d 18 (D.C.Cir.1946); Krug v.

supervisory employees during Fox, 161 F.2d 1013 (4th Cir.

period of seizure. 1947).**
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Monongahela Connecting R. Co., 6/14/46 8/12/46 9736. 8, Selective Service Act of 1940
as 6/10/46 6/14/46 None. (Property returned on None.
Pittsburgh, Pa. 11 Fed.Reg. 6661. amended by 3 of the War Labor Dis- recession of
union from wage
putes Act. demands.)
Act of Aug. 29, 1916.
First War Powers Act of 1941.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------5. Since the expiration of the
War Labor Disputes Act Seizure Powers, Dec. 31, 1946.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Railroads. 5/10/48 7/9/48 9957. Act of Aug. 29, 1916. None. None. Property returned on
agreement Railway Labor Act Emergency United States v. Brotherhood of
13 Fed.Reg. 2502. of parties to wage increase. Board recommendation as Locomotive
Engineers, 79 F.Supp.
modified. 485 (D.D.C.1948).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Chicago, Rock Island & Pacific 7/8/50 5/23/52 10141. Act of Aug. 29, 1916. 6/25/50
7/8/50 Property returned on agreement Railway Labor Act Emergency
R.Co. 15 Fed.Reg. 4363. of parties to wage increase. Board recommendation as
modified.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Railroads. 8/27/50 5/23/52 10155. Act of Aug. 29, 1916. 12/10/50 12/15/50 Agreement
reached by carriers Railway Labor Act Emergency
15 Fed.Reg. 5785. and some of the Brotherhoods Board recommendation as
1/29/51 2/19/51 put into effect. Property re- modified.
turned on agreement of parties
3/9/52 3/12/52 to wage increase.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[343 U.S. 628]
World War II Period{4} -- Seizures
Unconnected with Labor Disputes
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------DURATION OF EXECUTIVE
PLANT OR FACILITY SEIZED SEIZURE ORDER STATUTORY AUTHORITY CITED{5} REASONS
FOR SEIZURE CHANGES INSTITUTED DURING SEIZURE
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------From To
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Grand River Dam Authority, Okla- 11/19/41 7/41/46 8944. 16, Federal Power Act. This
was a State power project, financed by federal Federal Works Administrator replaced
management
homa. 6 Fed.Reg. 5947. loan and grant. Seizure was based on (1) State de- and
completed the project. Transferred to Departfault on loan interest; (2) refusal of State legislature ment of Interior, Executive Order No.
9373, 8 Fed.
to issue bonds to complete financing; (3) failure to Reg. 12001, 8/30/43. Returned
pursuant to Act of

meet scheduled completion date in power-short de- July 31, 1946, 60 Stat. 743.
fense ares.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Brewster Aeronautical Corp., Long 4/18/42 5/20/42 9141. None. (1) Inefficient
management; (2) failure to operate at New board of directors and officers installed;
majority
Island City, N.U., Newark, 7 Fed.Reg. 2961. full capacity; (3) failure to maintain delivery
sched- shareholders established 2 1/2-year voting trust in favor
N.J., Johnsville, Pa. ules on Army and Navy aircraft. (Congressional of new president.
investigation suggested labor difficulties as well, due
to employment of enemy aliens.)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Triumph Explosives, Inc., Mary- 10/12/42 2/28/43 9254. None. Overpayments
(presumably bribes) of $1,400,000 to New board of directors and officers; indictments
against
land and Delaware plants. 6/5/43 7 Fed.Reg. 8333. procurement officers. former officials.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Howarth Pivoted Bearings Co., 6/14/43 8/25/45 9351. None. Inefficient management.
Designees of Secretary of Navy operated plant for
Philadelphia, Pa. 8 Fed.Reg. 8097. duration of war.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Remington Rand, Inc., Southport, 11/23/43 9/30/44 9399. 9, Selective Service Act of
1940 as (1) Norden bombsight parts production of unaccept- Designees of Secretary of
Navy supervised operations
N.Y., plant. 8 Fed.Reg. 16269. amended. able quality; (2) deliveries behind schedule. for
duration of seizure.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Los Angeles Shipbuilding & Dry- 12/8/43 8/25/45 9400. 9, Selective Service Act of 1940
as (1) Excessive costs; (2) production behind schedule. Operated by contractor (Todd
Shipyard Co.) for duradock Corp., Los Angeles, Calif. 8 Fed.Reg. 16641. amended. tion of war.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------York Safe & Lock Co., York, Pa. 1/23/44 3/15/45 9416. 9, Selective Service Act of 1940
as (1) Inefficient management; (2) deliveries behind Designees of Secretary of Navy
operated company for
9 Fed.Reg.936. amended. schedule. duration of war, except for a portion which was condemned and transferred to Blaw-Knox Co.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Lord Mfg. Co., Erie, Pa.{11} 10/24/45 8/25/45 9493. Tit. VIII, Revenue Act of 1943.
Refusal to deliver items at "fair and reasonable Designees of Secretary of Navy operated
company for
9 Fed.Reg. 12860. 9, Selective Service Act of 1940 as prices" fixed by the Secretary of
the Navy in con- duration of war.
amended.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ewm:
APPENDIX FOOTNOTES
* Governmental possession of the Nation's railroads taken on December 28, 1917, was
specifically terminated by statute on March 1, 1920, prior to the end of the "war." See
200 of the Transportation Act of 1920, 41 Stat. 456, 457.
1. Clyde B. Aitchison states that, on March 31, 1861, the Federal authorities took "under
military control the Philadelphia, Wilmington & Baltimore Railway to insure uninterrupted
communication between the North Atlantic States and Washington." Aitchison, War Time
Control of American Railways, 26 Va.L.Rev. 847, 856 (1940). He adds that the return of
the road to its private owners followed "shortly thereafter." Ibid. Original documents on
this seizure are unavailable, and it has, therefore, not been included in this table.

2. The material in this table is taken from original documents in the National Archives
and Hearings before the Senate Special Committee Investigating the Munitions Industry,
73d Cong., Part 17, 4270-4271 (1934).
3. Although no specific statutory authority was cited in the seizing order, it is clear from
correspondence and reports in connection with the administration of the program that
the seizure was effected under wartime legislation. See, e.g., Davisson, History of the
Advisory Section, Administrative Division, Ordnance Office in connection with the
Commandeering of Private Property, National Archives, Records of the War Department,
Office of the Chief of Ordnance, O.O. 023/1362, Nov. 1920; Letter from Ordnance Office,
Administrative Division to The Adjutant General, National Archives, Records of the War
Department, Office of The Adjutant General, AG 386.2, Jan. 7, 1919.
4. The material in this table is summarized from a number of sources, chief of which are
the War Labor Reports, contemporary accounts in the New York Times, United States
National Wage Stabilization Board, Research and statics report No. 2 (1946), and
Johnson, Government Seizures and Labor Disputes (Philadelphia, Pa., 1948) (unpublished
doctoral dissertation at the University of Pennsylvania). Question marks appear in the
tables in instances where no satisfactory information on the particular point was
available.
5. Each of the Executive Orders uses the stock phrase "the Constitution and laws" as
authority for the President's action, as well as his position as Commander in Chief. Only
specific statutory authority relied upon is given in this table. The form of reference of the
particular Executive Order is used. Statutes referred to in the table are analyzed in
Appendix I, supra, p. 343 U. S. 615. For convenience, their citations are repeated here:
(1) Army Appropriations Act of Aug. 29, 1916, 39 Stat. 619, 645, 10 U.S.C. 1361.
(2) Federal Water Power Act of 1920, 16, 41 Stat. 1063, 1072, 16 U.S.C. 809.
(3) Selective Training and Service Act of 1940, 9, 54 Stat. 885, 892.
(4) War Labor Disputes Act, 3, 57 Stat. 163, 164.
(5) Revenue Act of 1943, Tit. VIII, "Repricing of War Contracts," 58 Stat. 21, 92.
When seizures of transportation facilities were effected through agencies other than the
War Department, the First War Powers Act of 1941, 55 Stat. 838, was cited. Title I of that
Act permitted the President to shift certain functions among executive agencies in aid of
the war effort. The Act of Aug. 29, 1916, authorizing seizure of transportation facilities,
specified that it should be accomplished through the Secretary of War.
6. Stoppages continuing during seizure are indicated by an asterisk (*).

7. Unless otherwise indicated, changes in conditions of employment instituted during

seizure were continued by management upon the return of the facilities to its control.
8. Validity of seizure was challenged in comparatively few cases. Most litigation
concerned the consequences of seizure. Cases in which the validity of the seizure was
attacked are indicated by double asterisks (**).
9. This order was followed by a series drawn in the same terms extending the seizure to
additional mines. The Executive Orders were: No. 9474; 9 Fed.Reg. 10815; No. 9476, 9
Fed.Reg. 10817; No. 9478, 9 Fed.Reg. 11045; No. 9481, 9 Fed.Reg. 11387; No. 9482, 9
Fed.Reg. 11459; No. 9483, 9 Fed.Reg. 11601.
10. A series of strikes for recognition by supervisory employees at the various mines
were usually, though not always, terminated on seizure of the affected property.
11. See Lord Mfg. Co. v. Collisson, 62 F.Supp. 79 (W.D.Pa. 1945).
Page 343 U. S. 629
MR. JUSTICE DOUGLAS, concurring.
There can be no doubt that the emergency which caused the President to seize these
steel plants was one that bore heavily on the country. But the emergency did not create
power; it merely marked an occasion when power should be exercised. And the fact that
it was necessary that measures be taken to keep steel in production does not mean that
the President, rather than the Congress, had the constitutional authority to act. The
Congress, as well as the President, is trustee of the national welfare. The President can
act more quickly than the Congress. The President, with the armed services at his
disposal, can move with force, as well as with speed. All executive power -- from the
reign of ancient kings to the rule of modern dictators -- has the outward appearance of
efficiency.
Legislative power, by contrast, is slower to exercise. There must be delay while the
ponderous machinery of committees, hearings, and debates is put into motion. That
takes time, and, while the Congress slowly moves into action, the emergency may take
its toll in wages, consumer goods, war production, the standard of living of the people,
and perhaps even lives. Legislative action may indeed often be cumbersome, timeconsuming, and apparently inefficient. But, as Mr. Justice Brandeis stated in his dissent in
Myers v. United States, 272 U. S. 52, 272 U. S. 293:
"The doctrine of the separation of powers was adopted by the Convention of 1787 not to
promote efficiency, but to preclude the exercise of arbitrary power. The purpose was not
to avoid friction, but, by means of the inevitable friction incident to the distribution of the
governmental powers among three departments, to save the people from autocracy. "
Page 343 U. S. 630

We therefore cannot decide this case by determining which branch of government can
deal most expeditiously with the present crisis. The answer must depend on the
allocation of powers under the Constitution. That, in turn, requires an analysis of the
conditions giving rise to the seizure, and of the seizure itself.
The relations between labor and industry are one of the crucial problems of the era. Their
solution will doubtless entail many methods -- education of labor leaders and business
executives; the encouragement of mediation and conciliation by the President and the
use of his great office in the cause of industrial peace, and the passage of laws. Laws
entail sanctions -- penalties for their violation. One type of sanction is fine and
imprisonment. Another is seizure of property. An industry may become so lawless, so
irresponsible, as to endanger the whole economy. Seizure of the industry may be the
only wise and practical solution.
The method by which industrial peace is achieved is of vital importance not only to the
parties, but to society as well. A determination that sanctions should be applied, that the
hand of the law should be placed upon the parties, and that the force of the courts
should be directed against them is an exercise of legislative power. In some nations, that
power is entrusted to the executive branch as a matter of course or in case of
emergencies. We chose another course. We chose to place the legislative power of the
Federal Government in the Congress. The language of the Constitution is not ambiguous
or qualified. It places not some legislative power in the Congress; Article I, Section 1 says
"All legislative Powers herein granted shall be vested in a Congress of the United States,
which shall consist of a Senate and House of Representatives."
The legislative nature of the action taken by the President seems to me to be clear. When
the United States
Page 343 U. S. 631
takes over an industrial plant to settle a labor controversy, it is condemning property.
The seizure of the plant is a taking in the constitutional sense. United States v Pewee
Coal Co., 341 U. S. 114. A permanent taking would amount to the nationalization of the
industry. A temporary taking falls short of that goal. But though the seizure is only for a
week or a month, the condemnation is complete, and the United States must pay
compensation for the temporary possession. United States v. General Motors Corp., 323
U. S. 373; United States v. Pewee Coal Co., supra.
The power of the Federal Government to condemn property is well established. Kohl v.
United States, 91 U. S. 367. It can condemn for any public purpose, and I have no doubt
but that condemnation of a plant, factory, or industry in order to promote industrial
peace would be constitutional. But there is a duty to pay for all property taken by the
Government. The command of the Fifth Amendment is that no "private property be taken

for public use, without just compensation." That constitutional requirement has an
important bearing on the present case.
The President has no power to raise revenues. That power is in the Congress by Article I,
Section 8 of the Constitution. The President might seize, and the Congress, by
subsequent action, might ratify the seizure. [Footnote 3/1] But, until and unless Congress
acted, no condemnation would be lawful. The branch of government that has the power
to pay compensation for a seizure is the only one able to authorize a seizure or make
lawful one that
Page 343 U. S. 632
the President has effected. [Footnote 3/2] That seems to me to be the necessary result of
the condemnation provision in the Fifth Amendment. It squares with the theory of checks
and balances expounded by MR. JUSTICE BLACK in the opinion of the Court, in which I
join.
If we sanctioned the present exercise of power by the President, we would be expanding
Article II of the Constitution and rewriting it to suit the political conveniences of the
present emergency. Article II, which vests the "executive Power" in the President, defines
that power with particularity. Article II, Section 2, makes the Chief Executive the
Commander in Chief of the Army and Navy. But our history and tradition rebel at the
thought that the grant of military power carries with it authority over civilian affairs.
Article II, Section 3 provides that the President shall,
"from time to time give to the Congress Information of the State of the Union, and
recommend to their Consideration such Measures as he shall judge necessary and
expedient."
The power to recommend legislation, granted to the President, serves only to emphasize
that it is his function to recommend, and that it is the function of the Congress to
legislate. Article II,
Page 343 U. S. 633
Section 3, also provides that the President "shall take Care that the Laws be faithfully
executed." But, as MR. JUSTICE BLACK and MR. JUSTICE FRANKFURTER point out, the
power to execute the laws starts and ends with the laws Congress has enacted.
The great office of President is not a weak and powerless one. The President represents
the people, and is their spokesman in domestic and foreign affairs. The office is
respected more than any other in the land. It gives a position of leadership that is
unique. The power to formulate policies and mould opinion inheres in the Presidency and
conditions our national life. The impact of the man and the philosophy he represents may
at times be thwarted by the Congress. Stalemates may occur when emergencies mount
and the Nation suffers for lack of harmonious, reciprocal action between the White House

and Capitol Hill. That is a risk inherent in our system of separation of powers. The
tragedy of such stalemates might be avoided by allowing the President the use of some
legislative authority. The Framers with memories of the tyrannies produced by a blending
of executive and legislative power rejected that political arrangement. Some future
generation may, however, deem it so urgent that the President have legislative authority
that the Constitution will be amended. We could not sanction the seizures and
condemnations of the steel plants in this case without reading Article II as giving the
President not only the power to execute the laws, but to make some. Such a step would
most assuredly alter the pattern of the Constitution.
We pay a price for our system of checks and balances, for the distribution of power
among the three branches of government. It is a price that today may seem exorbitant
to many. Today, a kindly President uses the seizure power to effect a wage increase and
to keep the steel furnaces in production. Yet tomorrow, another
Page 343 U. S. 634
President might use the same power to prevent a wage increase, to curb trade unionists,
to regiment labor as oppressively as industry thinks it has been regimented by this
seizure.
[Footnote 3/1]
What a President may do as a matter of expediency or extremity may never reach a
definitive constitutional decision. For example, President Lincoln suspended the writ of
habeas corpus, claiming the constitutional right to do so. See Ex parte Merryman, 17
Fed.Cas. No. 9,487. Congress ratified his action by the Act of March 3, 1863. 12 Stat.
755.
[Footnote 3/2]
Mr. Justice Brandeis, speaking for the Court in United States v. North American Co., 253
U. S. 330, 253 U. S. 333, stated that the basis of the Government's liability for a taking of
property was legislative authority:
"In order that the Government shall be liable, it must appear that the officer who has
physically taken possession of the property was duly authorized so to do, either directly
by Congress or by the official upon whom Congress conferred the power."
That theory explains cases like United States v. Causby, 328 U. S. 256, where the acts of
the officials resulting in a taking were acts authorized by the Congress, though the
Congress had not treated the acts as one of appropriation of private property.
Wartime seizures by the military in connection with military operations (cf. 80 U. S.
Russell, 13 Wall. 623) are also in a different category.

MR. JUSTICE JACKSON, concurring in the judgment and opinion of the Court.
That comprehensive and undefined presidential powers hold both practical advantages
and grave dangers for the country will impress anyone who has served as legal adviser
to a President in time of transition and public anxiety. While an interval of detached
reflection may temper teachings of that experience, they probably are a more realistic
influence on my views than the conventional materials of judicial decision which seem
unduly to accentuate doctrine and legal fiction. But, as we approach the question of
presidential power, we half overcome mental hazards by recognizing them. The opinions
of judges, no less than executives and publicists, often suffer the infirmity of confusing
the issue of a power's validity with the cause it is invoked to promote, of confounding the
permanent executive office with its temporary occupant. The tendency is strong to
emphasize transient results upon policies -- such as wages or stabilization -- and lose
sight of enduring consequences upon the balanced power structure of our Republic.
A judge, like an executive adviser, may be surprised at the poverty of really useful and
unambiguous authority applicable to concrete problems of executive power as they
actually present themselves. Just what our forefathers did envision, or would have
envisioned had they foreseen modern conditions, must be divined from materials almost
as enigmatic as the dreams Joseph was called upon to interpret for Pharaoh. A century
and a half of partisan debate and scholarly speculation yields no net result, but only
supplies more or less apt quotations from
Page 343 U. S. 635
respected sources on each side of any question. They largely cancel each other.
[Footnote 4/1] And court decisions are indecisive because of the judicial practice of
dealing with the largest questions in the most narrow way.
The actual art of governing under our Constitution does not, and cannot, conform to
judicial definitions of the power of any of its branches based on isolated clauses, or even
single Articles torn from context. While the Constitution diffuses power the better to
secure liberty, it also contemplates that practice will integrate the dispersed powers into
a workable government. It enjoins upon its branches separateness but interdependence,
autonomy but reciprocity. Presidential powers are not fixed but fluctuate depending upon
their disjunction or conjunction with those of Congress. We may well begin by a
somewhat over-simplified grouping of practical situations in which a President may
doubt, or others may challenge, his powers, and by distinguishing roughly the legal
consequences of this factor of relativity.
1. When the President acts pursuant to an express or implied authorization of Congress,
his authority is at its maximum, for it includes all that he possesses in his own right plus
all that Congress can delegate. [Footnote 4/2] In these circumstances,
Page 343 U. S. 636

and in these only, may he be said (for what it may be worth) to personify the federal
sovereignty. If his act is held unconstitutional under these circumstances, it usually
means that the Federal Government,
Page 343 U. S. 637
as an undivided whole, lacks power. A seizure executed by the President pursuant to an
Act of Congress would be supported by the strongest of presumptions and the widest
latitude of judicial interpretation, and the burden of persuasion would rest heavily upon
any who might attack it.
2. When the President acts in absence of either a congressional grant or denial of
authority, he can only rely upon his own independent powers, but there is a zone of
twilight in which he and Congress may have concurrent authority, or in which its
distribution is uncertain. Therefore, congressional inertia, indifference or quiescence may
sometimes, at least, as a practical matter, enable, if not invite, measures on
independent presidential responsibility. In this area, any actual test of power is likely to
depend on the imperatives of events and contemporary imponderables, rather than on
abstract theories of law. [Footnote 4/3]
3. When the President takes measures incompatible with the expressed or implied will of
Congress, his power is at its lowest ebb, for then he can rely only upon his own
constitutional powers minus any constitutional powers of Congress over the matter.
Courts can sustain exclusive presidential control in such a case only by disabling
Page 343 U. S. 638
the Congress from acting upon the subject. [Footnote 4/4] Presidential claim to a power
at once so conclusive and preclusive must be scrutinized with caution, for what is at
stake is the equilibrium established by our constitutional system.
Into which of these classifications does this executive seizure of the steel industry fit? It
is eliminated from the first by admission, for it is conceded that no congressional
authorization exists for this seizure. That takes away also the support of the many
precedents and declarations which were made in relation, and must be confined, to this
category. [Footnote 4/5]
Page 343 U. S. 639
Can it then be defended under flexible tests available to the second category? It seems
clearly eliminated from that class, because Congress has not left seizure of private
property an open field, but has covered it by three statutory policies inconsistent with
this seizure. In cases where the purpose is to supply needs of the Government itself, two
courses are provided: one, seizure of a plant which fails to comply with obligatory orders
placed by the Government; [Footnote 4/6] another, condemnation of facilities, including
temporary use under the power of eminent domain. [Footnote 4/7] The third is applicable

where it is the general economy of the country that is to be protected, rather than
exclusive governmental interests. [Footnote 4/8] None of these were invoked. In
choosing a different and inconsistent way of his own, the President cannot claim that it is
necessitated or invited by failure of Congress to legislate upon the occasions, grounds
and methods for seizure of industrial properties.
Page 343 U. S. 640
This leaves the current seizure to be justified only by the severe tests under the third
grouping, where it can be supported only by any remainder of executive power after
subtraction of such powers as Congress may have over the subject. In short, we can
sustain the President only by holding that seizure of such strike-bound industries is
within his domain and beyond control by Congress. Thus, this Court's first review of such
seizures occurs under circumstances which leave presidential power most vulnerable to
attack and in the least favorable of possible constitutional postures.
I did not suppose, and I am not persuaded, that history leaves it open to question, at
least in the courts, that the executive branch, like the Federal Government as a whole,
possesses only delegated powers. The purpose of the Constitution was not only to grant
power, but to keep it from getting out of hand. However, because the President does not
enjoy unmentioned powers does not mean that the mentioned ones should be narrowed
by a niggardly construction. Some clauses could be made almost unworkable, as well as
immutable, by refusal to indulge some latitude of interpretation for changing times. I
have heretofore, and do now, give to the enumerated powers the scope and elasticity
afforded by what seem to be reasonable, practical implications, instead of the rigidity
dictated by a doctrinaire textualism.
The Solicitor General seeks the power of seizure in three clauses of the Executive Article,
the first reading, "The executive Power shall be vested in a President of the United States
of America." Lest I be thought to exaggerate, I quote the interpretation which his brief
puts upon it: "In our view, this clause constitutes a grant of all the executive powers of
which the Government is capable." If that be true, it is difficult to see why the
Page 343 U. S. 641
forefathers bothered to add several specific items, including some trifling ones. [Footnote
4/9]
The example of such unlimited executive power that must have most impressed the
forefathers was the prerogative exercised by George III, and the description of its evils in
the Declaration of Independence leads me to doubt that they were creating their new
Executive in his image. Continental European examples were no more appealing. And, if
we seek instruction from our own times, we can match it only from the executive powers
in those governments we disparagingly describe as totalitarian. I cannot accept the view

that this clause is a grant in bulk of all conceivable executive power, but regard it as an
allocation to the presidential office of the generic powers thereafter stated.
The clause on which the Government next relies is that "The President shall be
Commander in Chief of the Army and Navy of the United States. . . ." These cryptic words
have given rise to some of the most persistent controversies in our constitutional history.
Of course, they imply something more than an empty title. But just what authority goes
with the name has plagued presidential advisers who would not waive or narrow it by
nonassertion, yet cannot say where it begins or ends. It undoubtedly puts the Nation's
armed forces under presidential command. Hence, this loose appellation is sometimes
advanced as support for any presidential action, internal or external, involving use of
force, the
Page 343 U. S. 642
idea being that it vests power to do anything, anywhere, that can be done with an army
or navy.
That seems to be the logic of an argument tendered at our bar -- that the President
having, on his own responsibility, sent American troops abroad derives from that act
"affirmative power" to seize the means of producing a supply of steel for them. To quote,
"Perhaps the most forceful illustration of the scope of Presidential power in this
connection is the fact that American troops in Korea, whose safety and effectiveness are
so directly involved here, were sent to the field by an exercise of the President's
constitutional powers."
Thus, it is said, he has invested himself with "war powers."
I cannot foresee all that it might entail if the Court should indorse this argument. Nothing
in our Constitution is plainer than that declaration of a war is entrusted only to Congress.
Of course, a state of war may, in fact, exist without a formal declaration. But no doctrine
that the Court could promulgate would seem to me more sinister and alarming than that
a President whose conduct of foreign affairs is so largely uncontrolled, and often even is
unknown, can vastly enlarge his mastery over the internal affairs of the country by his
own commitment of the Nation's armed forces to some foreign venture. [Footnote 4/10]
Page 343 U. S. 643
I do not, however, find it necessary or appropriate to consider the legal status of the
Korean enterprise to discountenance argument based on it.
Assuming that we are in a war de facto, whether it is or is not a war de jure, does that
empower the Commander in Chief to seize industries he thinks necessary to supply our
army? The Constitution expressly places in Congress power "to raise and support Armies"
and "to provide and maintain a Navy." (Emphasis supplied.) This certainly lays upon

Congress primary responsibility for supplying the armed forces. Congress alone controls
the raising of revenues and their appropriation, and may determine in what manner and
by what means they shall be spent for military and naval procurement. I suppose no one
would doubt that Congress can take over war supply as a Government enterprise. On the
other hand, if Congress sees fit to rely on free private enterprise collectively bargaining
with free labor for support and maintenance of our armed forces, can the Executive,
because of lawful disagreements incidental to that process, seize the facility for
operation upon Government-imposed terms?
There are indications that the Constitution did not contemplate that the title Commander
in Chief of the
Page 343 U. S. 644
Army and Navy will constitute him also Commander in Chief of the country, its industries
and its inhabitants. He has no monopoly of "war powers," whatever they are. While
Congress cannot deprive the President of the command of the army and navy, only
Congress can provide him an army or navy to command. It is also empowered to make
rules for the "Government and Regulation of land and naval Forces," by which it may, to
some unknown extent, impinge upon even command functions.
That military powers of the Commander in Chief were not to supersede representative
government of internal affairs seems obvious from the Constitution and from elementary
American history. Time out of mind, and even now, in many parts of the world, a military
commander can seize private housing to shelter his troops. Not so, however, in the
United States, for the Third Amendment says,
"No Soldier shall, in time of peace be quartered in any house, without the consent of the
Owner, nor in time of war, but in a manner to be prescribed by law."
Thus, even in war time, his seizure of needed military housing must be authorized by
Congress. It also was expressly left to Congress to "provide for calling forth the Militia to
execute the Laws of the Union, suppress Insurrections and repel Invasions. . . ." [Footnote
4/11] Such a limitation on the command power, written at a time when the militia, rather
than a standing army, was contemplated as the military weapon of the Republic,
underscores the Constitution's policy that Congress, not the Executive, should control
utilization of the war power as an instrument of domestic policy. Congress, fulfilling that
function, has authorized the President to use the army to enforce certain civil rights.
[Footnote 4/12] On the other hand, Congress has forbidden him to use the army for the
purpose
Page 343 U. S. 645
of executing general laws except when expressly authorized by the Constitution or by Act
of Congress. [Footnote 4/13]

While broad claims under this rubric often have been made, advice to the President in
specific matters usually has carried overtones that powers, even under this head, are
measured by the command functions usual to the topmost officer of the army and navy.
Even then, heed has been taken of any efforts of Congress to negative his authority.
[Footnote 4/14]
We should not use this occasion to circumscribe, much less to contract, the lawful role of
the President as Commander in Chief. I should indulge the widest latitude of
interpretation to sustain his exclusive function to command the instruments of national
force, at least when turned against the outside world for the security of our society. But,
when it is turned inward not because of rebellion, but because of a lawful economic
struggle between industry and labor, it should have no such indulgence. His command
power is not such an absolute as might be implied from that office in a militaristic
system, but is subject to limitations consistent with a constitutional Republic whose law
and policymaking branch
Page 343 U. S. 646
is a representative Congress. The purpose of lodging dual titles in one man was to insure
that the civilian would control the military, not to enable the military to subordinate the
presidential office. No penance would ever expiate the sin against free government of
holding that a President can escape control of executive powers by law through
assuming his military role. What the power of command may include I do not try to
envision, but I think it is not a military prerogative, without support of law, to seize
persons or property because they are important or even essential for the military and
naval establishment.
The third clause in which the Solicitor General finds seizure powers is that "he shall take
Care that the Laws be faithfully executed. . . . [Footnote 4/15] That authority must be
matched against words of the Fifth Amendment that "No person shall be . . . deprived of
life, liberty or property, without due process of law. . . ." One gives a governmental
authority that reaches so far as there is law, the other gives a private right that authority
shall go no farther. These signify about all there is of the principle that ours is a
government of laws, not of men, and that we submit ourselves to rulers only if under
rules.
The Solicitor General lastly grounds support of the seizure upon nebulous, inherent
powers never expressly granted, but said to have accrued to the office from the customs
and claims of preceding administrations. The plea is for a resulting power to deal with a
crisis or an emergency according to the necessities of the case, the unarticulated
assumption being that necessity knows no law.
Loose and irresponsible use of adjectives colors all nonlegal and much legal discussion of
presidential powers.

Page 343 U. S. 647

"Inherent" powers, "implied" powers, "incidental" powers, "plenary" powers, "war"
powers and "emergency" powers are used, often interchangeably and without fixed or
ascertainable meanings.
The vagueness and generality of the clauses that set forth presidential powers afford a
plausible basis for pressures within and without an administration for presidential action
beyond that supported by those whose responsibility it is to defend his actions in court.
The claim of inherent and unrestricted presidential powers has long been a persuasive
dialectical weapon in political controversy. While it is not surprising that counsel should
grasp support from such unadjudicated claims of power, a judge cannot accept selfserving press statements of the attorney for one of the interested parties as authority in
answering a constitutional question, even if the advocate was himself. But prudence has
counseled that actual reliance on such nebulous claims stop short of provoking a judicial
test. [Footnote 4/16]
Page 343 U. S. 648
The Solicitor General, acknowledging that Congress has never authorized the seizure
here, says practice of prior Presidents has authorized it. He seeks color of legality from
claimed executive precedents, chief of which is President Roosevelt's seizure, on June 9,
1941, of the California plant of the North American Aviation Company. Its superficial
similarities with the present case, upon analysis, yield to distinctions so decisive that it
Page 343 U. S. 649
cannot be regarded as even a precedent, much less an authority for the present seizure.
[Footnote 4/17]
The appeal, however, that we declare the existence of inherent powers ex necessitate to
meet an emergency asks us to do what many think would be wise, although
Page 343 U. S. 650
it is something the forefathers omitted. They knew what emergencies were, knew the
pressures they engender for authoritative action, knew, too, how they afford a ready
pretext for usurpation. We may also suspect that they suspected that emergency powers
would tend to kindle emergencies. Aside from suspension of the privilege of the writ of
habeas corpus in time of rebellion or invasion, when the public safety may require it,
[Footnote 4/18] they made no express provision for exercise of extraordinary authority
because of a crisis. [Footnote 4/19] I do not think we rightfully may so amend their work,
and, if we could, I am not convinced it would be wise to do so, although many modern
nations have forthrightly recognized that war and economic crises may upset the normal
balance between liberty and authority.

Page 343 U. S. 651

Their experience with emergency powers may not be irrelevant to the argument here
that we should say that the Executive, of his own volition, can invest himself with
undefined emergency powers.
Germany, after the First World War, framed the Weimar Constitution, designed to secure
her liberties in the Western tradition. However, the President of the Republic, without
concurrence of the Reichstag, was empowered temporarily to suspend any or all
individual rights if public safety and order were seriously disturbed or endangered. This
proved a temptation to every government, whatever its shade of opinion, and, in 13
years, suspension of rights was invoked on more than 250 occasions. Finally, Hitler
persuaded President Von Hindenberg to suspend all such rights, and they were never
restored. [Footnote 4/20]
The French Republic provided for a very different kind of emergency government known
as the "state of siege." It differed from the German emergency dictatorship, particularly
in that emergency powers could not be assumed at will by the Executive, but could only
be granted as a parliamentary measure. And it did not, as in Germany, result in a
suspension or abrogation of law, but was a legal institution governed by special legal
rules and terminable by parliamentary authority. [Footnote 4/21]
Great Britain also has fought both World Wars under a sort of temporary dictatorship
created by legislation. [Footnote 4/22] As Parliament is not bound by written
constitutional limitations, it established a crisis government simply by
Page 343 U. S. 652
delegation to its Ministers of a larger measure than usual of its own unlimited power,
which is exercised under its supervision by Ministers whom it may dismiss. This has been
called the "high-water mark in the voluntary surrender of liberty," but, as Churchill put it,
"Parliament stands custodian of these surrendered liberties, and its most sacred duty will
be to restore them in their fullness when victory has crowned our exertions and our
perseverance. [Footnote 4/23]"
Thus, parliamentary control made emergency powers compatible with freedom.
This contemporary foreign experience may be inconclusive as to the wisdom of lodging
emergency powers somewhere in a modern government. But it suggests that emergency
powers are consistent with free government only when their control is lodged elsewhere
than in the Executive who exercises them. That is the safeguard that would be nullified
by our adoption of the "inherent powers" formula. Nothing in my experience convinces
me that such risks are warranted by any real necessity, although such powers would, of
course, be an executive convenience.

In the practical working of our Government, we already have evolved a technique within
the framework of the Constitution by which normal executive powers may be
considerably expanded to meet an emergency. Congress may and has granted
extraordinary authorities which lie dormant in normal times but may be called into play
by the Executive in war or upon proclamation of a national emergency. In 1939, upon
congressional request, the Attorney General listed ninety-nine such separate statutory
grants by Congress of emergency or wartime executive powers. [Footnote 4/24] They
were invoked from time to time as need appeared. Under this procedure, we retain
Government
Page 343 U. S. 653
by law -- special, temporary law, perhaps, but law nonetheless. The public may know the
extent and limitations of the powers that can be asserted, and persons affected may be
informed from the statute of their rights and duties.
In view of the ease, expedition and safety with which Congress can grant and has
granted large emergency powers, certainly ample to embrace this crisis, I am quite
unimpressed with the argument that we should affirm possession of them without
statute. Such power either has no beginning or it has no end. If it exists, it need submit
to no legal restraint. I am not alarmed that it would plunge us straightway into
dictatorship, but it is at least a step in that wrong direction.
As to whether there is imperative necessity for such powers, it is relevant to note the
gap that exists between the President's paper powers and his real powers. The
Constitution does not disclose the measure of the actual controls wielded by the modern
presidential office. That instrument must be understood as an Eighteenth-Century sketch
of a government hoped for, not as a blueprint of the Government that is. Vast accretions
of federal power, eroded from that reserved by the States, have magnified the scope of
presidential activity. Subtle shifts take place in the centers of real power that do not show
on the face of the Constitution.
Executive power has the advantage of concentration in a single head in whose choice
the whole Nation has a part, making him the focus of public hopes and expectations. In
drama, magnitude and finality, his decisions so far overshadow any others that, almost
alone, he fills the public eye and ear. No other personality in public life can begin to
compete with him in access to the public mind through modern methods of
communications. By his prestige as head of state and his influence upon public opinion,
he exerts a leverage upon those who are supposed
Page 343 U. S. 654
to check and balance his power which often cancels their effectiveness.

Moreover, rise of the party system has made a significant extraconstitutional supplement
to real executive power. No appraisal of his necessities is realistic which overlooks that
he heads a political system, as well as a legal system. Party loyalties and interests,
sometimes more binding than law, extend his effective control into branches of
government other than his own, and he often may win, as a political leader, what he
cannot command under the Constitution. Indeed, Woodrow Wilson, commenting on the
President as leader both of his party and of the Nation, observed,
"If he rightly interpret the national thought and boldly insist upon it, he is irresistible. . . .
His office is anything he has the sagacity and force to make it. [Footnote 4/25]"
I cannot be brought to believe that this country will suffer if the Court refuses further to
aggrandize the presidential office, already so potent and so relatively immune from
judicial review, [Footnote 4/26] at the expense of Congress.
But I have no illusion that any decision by this Court can keep power in the hands of
Congress if it is not wise and timely in meeting its problems. A crisis that challenges the
President equally, or perhaps primarily, challenges Congress. If not good law, there was
worldly wisdom in the maxim attributed to Napoleon that "The tools belong to the man
who can use them." We may say that power to legislate for emergencies belongs in the
hands of Congress, but only Congress itself can prevent power from slipping through its
fingers.
The essence of our free Government is "leave to live by no man's leave, underneath the
law" -- to be governed by those impersonal forces which we call law. Our Government
Page 343 U. S. 655
is fashioned to fulfill this concept so far as humanly possible. The Executive, except for
recommendation and veto, has no legislative power. The executive action we have here
originates in the individual will of the President, and represents an exercise of authority
without law. No one, perhaps not even the President, knows the limits of the power he
may seek to exert in this instance, and the parties affected cannot learn the limit of their
rights. We do not know today what powers over labor or property would be claimed to
flow from Government possession if we should legalize it, what rights to compensation
would be claimed or recognized, or on what contingency it would end. With all its
defects, delays and inconveniences, men have discovered no technique for long
preserving free government except that the Executive be under the law, and that the law
be made by parliamentary deliberations.
Such institutions may be destined to pass away. But it is the duty of the Court to be last,
not first, to give them up. [Footnote 4/27]
[Footnote 4/1]

A Hamilton may be matched against a Madison. 7 The Works of Alexander Hamilton, 76117; 1 Madison, Letters and Other Writings, 611-654. Professor Taft is counterbalanced
by Theodore Roosevelt. Taft, Our Chief Magistrate and His Powers, 139-140; Theodore
Roosevelt, Autobiography, 388-389. It even seems that President Taft cancels out
Professor Taft. Compare his "Temporary Petroleum Withdrawal No. 5" of September 27,
1909, United States v. Midwest Oil Co., 236 U. S. 459, 236 U. S. 467, 468, with his
appraisal of executive power in "Our Chief Magistrate and His Powers" 139-140.
[Footnote 4/2]
It is in this class of cases that we find the broadest recent statements of presidential
power, including those relied on here. United States v. Curtiss-Wright Corp., 299 U. S.
304, involved not the question of the President's power to act without congressional
authority, but the question of his right to act under and in accord with an Act of
Congress. The constitutionality of the Act under which the President had proceeded was
assailed on the ground that it delegated legislative powers to the President. Much of the
Court's opinion isdictum, but the ratio decidendi is contained in the following language:
"When the President is to be authorized by legislation to act in respect of a matter
intended to affect a situation in foreign territory, the legislator properly bears in mind the
important consideration that the form of the President's action -- or, indeed, whether he
shall act at all -- may well depend, among other things, upon the nature of the
confidential information which he has or may thereafter receive, or upon the effect which
his action may have upon our foreign relations. This consideration, in connection with
what we have already said on the subject, discloses the unwisdom of requiring Congress
in this field of governmental power to lay down narrowly definite standards by which the
President is to be governed. As this court said in Mackenzie v. Hare,239 U. S. 299, 239 U.
S. 311,"
"As a government, the United States is invested with all the attributes of sovereignty. As
it has the character of nationality, it has the powers of nationality, especially those which
concern its relations and intercourse with other countries. We should hesitate long before
limiting or embarrassing such powers."
"(Italics supplied.)"
Id. at 239 U. S. 321-322.
That case does not solve the present controversy. It recognized internal and external
affairs as being in separate categories, and held that the strict limitation upon
congressional delegations of power to the President over internal affairs does not apply
with respect to delegations of power in external affairs. It was intimated that the
President might act in external affairs without congressional authority, but not that he
might act contrary to an Act of Congress.

Other examples of wide definition of presidential powers under statutory authorization

are Chicago & Southern Air Lines, Inc. v. Waterman Steamship Corp., 333 U. S. 103, and
Hirabayashi v. United States, 320 U. S. 81. But see, 54 U. S. Montgomery, 13 How. 498,
54 U. S. 515; United States v. Western Union Telegraph Co., 272 F. 311; aff'd, 272 F. 893;
rev'd on consent of the parties, 260 U.S. 754; United States Harness Co. v. Graham, 288
F. 929.
[Footnote 4/3]
Since the Constitution implies that the writ of habeas corpus may be suspended in
certain circumstances, but does not say by whom, President Lincoln asserted and
maintained it as an executive function in the face of judicial challenge and doubt. Ex
parte Merryman, 17 Fed.Cas. 144; Ex parte Milligan, 4 Wall. 2, 71 U. S. 125;See Ex parte
Bollman, 4 Cranch 75, 8 U. S. 101. Congress eventually ratified his action. Habeas
Corpus Act of March 3, 1863, 12 Stat. 755. See Hall, Free Speech in War Time, 21
Col.L.Rev. 526. Compare Myers v. United States, 272 U. S. 52, with Humphrey's Executor
v. United States, 295 U. S. 602, and Hirabayashi v. United States, 320 U. S. 81, with the
case at bar. Also compare 68 U. S. 1 Wall. 243, with Ex parte Milligan, supra.
[Footnote 4/4]
President Roosevelt's effort to remove a Federal Trade Commissioner was found to be
contrary to the policy of Congress and impinging upon an area of congressional control,
and so his removal power was cut down accordingly. Humphrey's Executor v. United
States, 295 U. S. 602. However, his exclusive power of removal in executive agencies,
affirmed in Myers v. United States, 272 U. S. 52, continued to be asserted and
maintained. Morgan v. Tennessee Valley Authority, 115 F.2d 990, cert. denied, 312 U.S.
701; In re Power to Remove Members of the Tennessee Valley Authority, 39 Op.Atty.Gen.
145; President Roosevelt's Message to Congress of March 23, 1938, The Public Papers
and Addresses of Franklin D. Roosevelt, 1938 (Rosenman), 151.
[Footnote 4/5]
The oft-cited Louisiana Purchase had nothing to do with the separation of powers as
between the President and Congress, but only with state and federal power. The
Louisiana Purchase was subject to rather academic criticism not upon the ground that Mr.
Jefferson acted without authority from Congress, but that neither had express authority
to expand the boundaries of the United States by purchase or annexation. Mr. Jefferson
himself had strongly opposed the doctrine that the States' delegation of powers to the
Federal Government could be enlarged by resort to implied powers. Afterwards, in a
letter to John Breckenridge dated August 12, 1803, he declared:
"The Constitution has made no provision for our holding foreign territory, still less for
incorporating foreign nations into our Union. The executive, in seizing the fugitive
occurrence which so much advances the good of their country, have done an act beyond

the Constitution. The Legislature, in casting behind them metaphysical subtleties and
risking themselves like faithful servants, must ratify and pay for it, and throw themselves
on their country for doing for them, unauthorized, what we know they would have done
for themselves had they been in a situation to do it."
10 The Writings of Thomas Jefferson 407, 411.
[Footnote 4/6]
Selective Service Act of 1948, 18, 62 Stat. 625, 50 U.S.C.App. (Supp. IV) 468(c).
[Footnote 4/7]
Defense Production Act of 1950, 201, 64 Stat. 799, amended, 65 Stat. 132, 50
U.S.C.App. (Supp. IV) 2081. For the latitude of the condemnation power which underlies
this Act, see United States v. Westinghouse Co., 339 U. S. 261, and cases therein cited.
[Footnote 4/8]
Labor Management Relations Act, 1947, 206-210, 61 Stat. 136, 155, 156, 29 U.S.C.
(Supp. IV) 141, 176-180. The analysis, history and application of this Act are fully
covered by the opinion of the Court, supplemented by that of MR. JUSTICE FRANKFURTER
and of MR. JUSTICE BURTON, in which I concur.
[Footnote 4/9]
". . . he may require the Opinion, in writing, of the principal Officer in each of the
executive Departments, upon any Subject relating to the Duties of their respective
Offices. . . ."
U.S.Const., Art. II, 2. He ". . . shall Commission all the Officers of the United States."
U.S.Const., Art. II, 3. Matters such as those would seem to be inherent in the Executive,
if anything is.
[Footnote 4/10]
How widely this doctrine espoused by the President's counsel departs from the early
view of presidential power is shown by a comparison. President Jefferson, without
authority from Congress, sent the American fleet into the Mediterranean, where it
engaged in a naval battle with the Tripolitan fleet. He sent a message to Congress on
December 8, 1801, in which he said:
"Tripoli, the least considerable of the Barbary States, had come forward with demands
unfounded either in right or in compact, and had permitted itself to denounce war on our
failure to comply before a given day. The style of the demand admitted but one answer. I
sent a small squadron of frigates into the Mediterranean . . . with orders to protect our
commerce against the threatened attack. . . . Our commerce in the Mediterranean was

blockaded, and that of the Atlantic in peril. . . . One of the Tripolitan cruisers having fallen
in with and engaged the small schooner Enterprise, . . . was captured, after a heavy
slaughter of her men. . . . Unauthorized by the Constitution, without the sanction of
Congress, to go beyond the line of defense, the vessel, being disabled from committing
further hostilities, was liberated with its crew. The Legislature will doubtless consider
whether, by authorizing measures of offense also, they will place our force on an equal
footing with that of its adversaries. I communicate all material information on this
subject, that, in the exercise of this important function confided by the Constitution to
the Legislature exclusively, their judgment may form itself on a knowledge and
consideration of every circumstance of weight."
I Richardson, Messages and Papers of the Presidents, 314.
[Footnote 4/11]
U.S.Const., Art. I, 8, cl. 15.
[Footnote 4/12]
14 Stat. 29, 16 Stat. 143, 8 U.S.C. 55.
[Footnote 4/13]
20 Stat. 152, 10 U.S. C 15
[Footnote 4/14]
In 1940, President Roosevelt proposed to transfer to Great Britain certain overage
destroyers and small patrol boats then under construction. He did not presume to rely
upon any claim of constitutional power as Commander in Chief. On the contrary, he was
advised that such destroyers -- if certified not to be essential to the defense of the
United States -- could be "transferred, exchanged, sold, or otherwise disposed of,"
because Congress had so authorized him. Accordingly, the destroyers were exchanged
for air bases. In the same opinion, he was advised that Congress had prohibited the
release or transfer of the so-called "mosquito boats" then under construction, so those
boats were not transferred. Acquisition of Naval and Air Bases in Exchange for Over-age
Destroyers, 39 Op.Atty.Gen. 484. See also Training of British Flying Students in the United
States, 40 Op.Atty.Gen. 58.
[Footnote 4/15]
U.S.Const., Art. II, 3.
[Footnote 4/16]

President Wilson, just before our entrance into World War I, went before the Congress
and asked its approval of his decision to authorize merchant ships to carry defensive
weapons. He said:
"No doubt I already possess that authority without special warrant of law, by the plain
implication of my constitutional duties and powers; but I prefer, in the present
circumstances, not to act upon general implication. I wish to feel that the authority and
the power of the Congress are behind me in whatever it may become necessary for me
to do. We are jointly the servants of the people, and must act together and in their spirit,
so far as we can divine and interpret it."
XVII Richardson, op. cit., 8211.
When our Government was itself in need of shipping whilst ships flying the flags of
nations overrun by Hitler, as well as belligerent merchantmen, were immobilized in
American harbors where they had taken refuge, President Roosevelt did not assume that
it was in his power to seize such foreign vessels to make up our own deficit. He informed
Congress:
"I am satisfied, after consultation with the heads of the interested departments and
agencies of the Government, that we should have statutory authority to take over any
such vessels as our needs may require. . . ."
87 Cong.Rec. 3072 (77th Cong., 1st Sess.); The Public Papers and Addresses of Franklin
D. Roosevelt, 1941 (Rosenman), 94. The necessary statutory authority was shortly
forthcoming. 55 Stat. 242.
In his first inaugural address, President Roosevelt pointed out two courses to obtain
legislative remedies, one being to enact measures he was prepared to recommend, the
other to enact measures "the Congress may build out of its experience and wisdom." He
continued,
"But in the event that the Congress shall fail to take one of these two courses, and in the
event that the national emergency is still critical, I shall not evade the clear course of
duty that will then confront me. I shall ask the Congress for the one remaining
instrument to meet the crisis -- broad Executive power to wage a war against the
emergency, as great as the power that would be given to me if we were, in fact, invaded
by a foreign foe."
(Emphasis supplied.) The Public Papers and Addresses of Franklin D. Roosevelt, 1933
(Rosenman), 15.
On March 6, 1933, President Roosevelt proclaimed the Bank Holiday. The Proclamation
did not invoke constitutional powers of the Executive, but expressly and solely relied
upon the Act of Congress of October 6, 1917, 40 Stat. 411, 5(b), as amended. He relied

steadily on legislation to empower him to deal with economic emergency. The Public
Papers and Addresses of Franklin D. Roosevelt, 1933 (Rosenman), 24.
It is interesting to note Holdsworth's comment on the powers of legislation by
proclamation when in the hands of the Tudors.
"The extent to which they could be legally used was never finally settled in this century,
because the Tudors made so tactful a use of their powers that no demand for the
settlement of this question was raised."
4 Holdsworth, History of English Law, 104.
[Footnote 4/17]
The North American Aviation Company was under direct and binding contracts to supply
defense items to the Government. No such contracts are claimed to exist here. Seizure of
plants which refused to comply with Government orders had been expressly authorized
by Congress in 9 of the Selective Service Act of 1940, 54 Stat. 885, 892, so that the
seizure of the North American plant was entirely consistent with congressional policy. The
company might have objected on technical grounds to the seizure, but it was taken over
with acquiescence, amounting to all but consent, of the owners, who had admitted that
the situation was beyond their control. The strike involved in the North American case
was in violation of the union's collective agreement, and the national labor leaders
approved the seizure to end the strike. It was described as in the nature of an
insurrection, a Communist-led political strike against the Government's lend lease policy.
Here we have only a loyal, lawful, but regrettable economic disagreement between
management and labor. The North American plant contained government-owned
machinery, material and goods in the process of production to which workmen were
forcibly denied access by picketing strikers. Here, no Government property is protected
by the seizure. See New York Times of June 10, 1941, pp. 1, 14 and 16, for substantially
accurate account of the proceedings and the conditions of violence at the North
American plant.
The North American seizure was regarded as an execution of congressional policy. I do
not regard it as a precedent for this, but, even if I did, I should not bind present judicial
judgment by earlier partisan advocacy.
Statements from a letter by the Attorney General to the Chairman of the Senate
Committee on Labor and Public Welfare, dated February 2, 1949, with reference to
pending labor legislation, while not cited by any of the parties here, are sometimes
quoted as being in support of the "inherent" powers of the President. The proposed bill
contained a mandatory provision that, during certain investigations, the disputants in a
labor dispute should continue operations under the terms and conditions of employment
existing prior to the beginning of the dispute. It made no provision as to how continuance
should be enforced, and specified no penalty for disobedience. The Attorney General

advised that, in appropriate circumstances, the United States would have access to the
courts to protect the national health, safety and welfare. This was the rule laid down by
this Court in Texas & N.O. R. Co. v. Brotherhood of Railway Clerks, 281 U. S. 548. The
Attorney General observed:
"However, with regard to the question of the power of the Government under Title III, I
might point out that the inherent power of the President to deal with emergencies that
affect the health, safety and welfare of the entire Nation is exceedingly great. See
Opinion of Attorney General Murphy of October 4, 1939 (39 Op.A.G. 344, 347); United
States v. United Mine Workers of America, 330 U. S. 258 (1947)."
See Hearings before the Senate Committee on Labor and Public Welfare on S. 249, 81st
Cong., 1st Sess. 263. Regardless of the general reference to "inherent powers," the
citations were instances of congressional authorization. I do not suppose it is open to
doubt that power to see that the laws are faithfully executed was ample basis for the
specific advice given by the Attorney General in this letter.
[Footnote 4/18]
U.S. Const., Art. I, 9, cl. 2.
[Footnote 4/19]
I exclude, as in a very limited category by itself, the establishment of martial law. Cf. 71
U. S. 4 Wall. 2;Duncan v. Kahanamoku, 327 U. S. 304.
[Footnote 4/20]
1 Nazi Conspiracy and Aggression 126-127; Rossiter, Constitutional Dictatorship, 33-61;
Brecht, Prelude to Silence, 138.
[Footnote 4/21]
Rossiter, Constitutional Dictatorship, 117-129.
[Footnote 4/22]
Defence of the Realm Act, 1914, 4 & 5 Geo. V, c. 29, as amended, c. 63; Emergency
Powers (Defence) Act, 1939, 2 & 3 Geo. VI, c. 62; Rossiter, Constitutional Dictatorship,
135-184.
[Footnote 4/23]
Churchill, The Unrelenting Struggle, 13. See also id. at 279-281.
[Footnote 4/24]
39 Op.Atty.Gen. 348.

[Footnote 4/25]
Wilson, Constitutional Government in the United States, 669.
[Footnote 4/26]
Rossiter, The Supreme Court and the Commander in Chief, 126-132.
[Footnote 4/27]
We follow the judicial tradition instituted on a memorable Sunday in 1612 when King
James took offense at the independence of his judges and, in rage, declared: "Then I am
to be under the law -- which it is treason to affirm." Chief Justice Coke replied to his King:
"Thus, wrote Bracton, The King ought not to be under any man, but he is under God and
the Law.'" 12 Coke 65 (as to its verity, 18 Eng.Hist.Rev. 664-675); 1 Campbell, Lives of
the Chief Justices (1849), 272.
MR. JUSTICE BURTON, concurring in both the opinion and judgment of the Court.
My position may be summarized as follows:
The validity of the President's order of seizure is at issue and ripe for decision. Its validity
turns upon its relation to the constitutional division of governmental power between
Congress and the President.
Page 343 U. S. 656
The Constitution has delegated to Congress power to authorize action to meet a national
emergency of the kind we face. [Footnote 5/1] Aware of this responsibility, Congress has
responded to it. It has provided at least two procedures for the use of the President.
It has outlined one in the Labor Management Relations Act, 1947, better known as the
Taft-Hartley Act. The accuracy with which Congress there describes the present
emergency demonstrates its applicability. It says:
"Whenever in the opinion of the President of the United States, a threatened or actual
strike or lockout affecting an entire industry or a substantial part thereof engaged in
trade, commerce, transportation, transmission, or communication among the several
States or with foreign nations, or engaged in the production of goods for commerce, will,
if permitted to occur or to continue, imperil the national health or safety, he may appoint
a board of inquiry to inquire into the issues involved in the dispute and to make a written
report to him within such time as he shall prescribe. . . . [Footnote 5/2] "
Page 343 U. S. 657
In that situation, Congress has authorized not only negotiation, conciliation and impartial
inquiry, but also a 60-day cooling-off period under injunction, followed by 20 days for a

secret ballot upon the final offer of settlement and then by recommendations from the
President to Congress. [Footnote 5/3]
For the purposes of this case, the most significant feature of that Act is its omission of
authority to seize an affected industry. The debate preceding its passage demonstrated
the significance of that omission. Collective bargaining, rather than governmental
seizure, was to be relied upon. Seizure was not to be resorted to without specific
congressional authority. Congress reserved to itself the opportunity to authorize seizure
to meet particular emergencies. [Footnote 5/4]
Page 343 U. S. 658
The President, however, chose not to use the Taft-Hartley procedure. He chose another
course, also authorized by Congress. He referred he controversy to the Wage
Stabilization Board. [Footnote 5/5] If that course had led to a settlement of the labor
dispute, it would have avoided the need for other action. It, however, did not do so.
Now it is contended that, although the President did not follow the procedure authorized
by the Taft-Hartley Act, his substituted procedure served the same purpose, and must be
accepted as its equivalent. Without appraising that equivalence, it is enough to point out
that neither procedure carried statutory authority for the seizure of private industries in
the manner now at issue. [Footnote 5/6] The exhaustion of both procedures fails to cloud
the
Page 343 U. S. 659
clarity of the congressional reservation of seizure for its own consideration.
The foregoing circumstances distinguish this emergency from one in which Congress
takes no action and outlines no governmental policy. In the case before us, Congress
authorized a procedure which the President declined to follow. Instead, he followed
another procedure which he hoped might eliminate the need for the first. Upon its
failure, he issued an executive order to seize the steel properties in the face of the
reserved right of Congress to adopt or reject that course as a matter of legislative policy.
This brings us to a further crucial question. Does the President, in such a situation, have
inherent constitutional power to seize private property which makes congressional action
in relation thereto unnecessary? We find no such power available to him under the
present circumstances. The present situation is not comparable to that of an imminent
invasion or threatened attack. We do not face the issue of what might be the President's
constitutional power to meet such catastrophic situations. Nor is it claimed that the
current seizure is in the nature of a military command addressed by the President, as
Commander-in-Chief, to a mobilized nation waging, or imminently threatened with, total
war. [Footnote 5/7]
Page 343 U. S. 660

The controlling fact here is that Congress, within its constitutionally delegated power,
has prescribed for the President specific procedures, exclusive of seizure, for his use in
meeting the present type of emergency. Congress has reserved to itself the right to
determine where and when to authorize the seizure of property in meeting such an
emergency. Under these circumstances, the President's order of April 8 invaded the
jurisdiction of Congress. It violated the essence of the principle of the separation of
governmental powers. Accordingly, the injunction against its effectiveness should be
sustained.
[Footnote 5/1]
"Article I"
"Section. 1. All legislative Powers herein granted shall be vested in a Congress of the
United States. . . ."
"* * * *"
"Section. 8. The Congress shall have Power . . . ;"
"* * * *"
"To regulate Commerce with foreign Nations, and among the several States . . . ;"
"* * * *"
"To make all Laws which shall be necessary and proper for carrying into Execution the
foregoing Powers, and all other Powers vested by this Constitution in the Government of
the United States, or in any Department or Officer thereof."
[Footnote 5/2]
61 Stat. 155, 29 U.S.C. (Supp. IV) 176.
[Footnote 5/3]
361 Stat. 155-156, 29 U.S.C. (Supp. IV) 176-180.
[Footnote 5/4]
The Chairman of the Senate Committee sponsoring the bill said in the Senate:
"We did not feel that we should put into the law, as a part of the collective bargaining
machinery, an ultimate resort to compulsory arbitration, or to seizure, or to any other
action. We feel that it would interfere with the whole process of collective bargaining. If
such a remedy is available as a routine remedy, there will always be pressure to resort to
it by whichever party thinks it will receive better treatment through such a process than
it would receive in collective bargaining, and it will back out of collective bargaining. It

will not make a bona-fide attempt to settle if it thinks it will receive a better deal under
the final arbitration which may be provided."
"We have felt that perhaps in the case of a general strike, or in the case of other serious
strikes, after the termination of every possible effort to resolve the dispute, the remedy
might be an emergency act by Congress for that particular purpose."
"I have had in mind drafting such a bill, giving power to seize the plants and other
necessary facilities, to seize the unions, their money, and their treasury, and requisition
trucks and other equipment; in fact, to do everything that the British did in their general
strike of 1926. But while such a bill might be prepared, I should be unwilling to place
such a law on the books until we actually face such an emergency, and Congress applies
the remedy for the particular emergency only. Eighty days will provide plenty of time
within which to consider the possibility of what should be done, and we believe very
strongly that there should not be anything in this law which prohibits finally the right to
strike."
93 Cong.Rec. 3835-3836.
Part of this quotation was relied upon by this Court in Bus Employees v. Wisconsin Board,
340 U. S. 383, 340 U. S. 396, note 21.
[Footnote 5/5]
Under Titles IV and V of the Defense Production Act of 1950, 64 Stat. 803-812, 50 U.S.C.
App. (Supp. IV) 2101-2123, and see Exec.Order No. 10233, 16 Fed.Reg. 3503.
[Footnote 5/6]
Congress has authorized other types of seizure under conditions not present here.
Section 201 of the Defense Production Act authorizes the President to acquire specific
"real property, including facilities, temporary use thereof, or other interest therein . . . "
by condemnation. 64 Stat. 799, as amended, 65 Stat. 132, see 50 U.S.C.App. (Supp. IV)
2081. There have been no declarations of taking or condemnation proceedings in
relation to any of the properties involved here. Section 18 of the Selective Service Act of
1948 authorizes the President to take possession of a plant or other facility failing to fill
certain defense orders placed with it in the manner there prescribed. 62 Stat. 625, 50
U.S.C.App. (Supp. IV) 468. No orders have been so placed with the steel plants seized.
[Footnote 5/7]
The President and Congress have recognized the termination of the major hostilities in
the total wars in which the Nation has been engaged. Many wartime procedures have
expired or been terminated.

The War Labor Disputes Act, 57 Stat. 163 et seq., 50 U.S.C.App. 1501-1511, expired
June 30, 1947, six months after the President's declaration of the end of hostilities, 3
CFR, 1946 Supp., p. 77. The Japanese Peace Treaty was approved by the Senate March
20, 1952, Cong.Rec. Mar. 20, 1952, p. 2635, and proclaimed by the President April 28,
1952, 17 Fed.Reg. 3813.
MR. JUSTICE CLARK, concurring in the judgment of the Court.
One of this Court's first pronouncements upon the powers of the President under the
Constitution was made by Mr. Chief Justice John Marshall some one hundred and fifty
years ago. In Little v. Barreme, [Footnote 6/1] he used this characteristically clear
language in discussing the power of the President to instruct the seizure of the Flying
Fish, a vessel bound from a French port:
"It is by no means clear that the president of the United States whose high duty it is to
'take care that the laws be faithfully executed' and who is commander in chief of the
armies and navies of the United States, might not, without any special authority for that
purpose, in the then-existing state of things, have empowered the officers commanding
the armed vessels of the United States to seize, and send into port for adjudication,
American vessels which were forfeited by being engaged in this illicit commerce. But
when it is observed that [an act of Congress] gives a special authority to seize on the
high seas, and limits that authority to the seizure of vessels bound or sailing to a French
port, the legislature seem to have prescribed that
Page 343 U. S. 661
the manner in which this law shall be carried into execution, was to exclude a seizure of
any vessel not bound to a French port. [Footnote 6/2]"
Accordingly, a unanimous Court held that the President's instructions had been issued
without authority, and that they could not "legalize an act which, without those
instructions, would have been a plain trespass." I know of no subsequent holding of this
Court to the contrary. [Footnote 6/3]
The limits of presidential power are obscure. However, Article II, no less than Article I, is
part of "a constitution intended to endure for ages to come, and, consequently, to be
adapted to the various crises of human affairs." [Footnote 6/4] Some of our Presidents,
such as Lincoln,
"felt that measures otherwise unconstitutional might become lawful by becoming
indispensable to the preservation of the Constitution through the preservation of the
nation. [Footnote 6/5] "
Page 343 U. S. 662

Others, such as Theodore Roosevelt, thought the President to be capable, as a "steward"

of the people, of exerting all power save that which is specifically prohibited by the
Constitution or the Congress. [Footnote 6/6] In my view -- taught me not only by the
decision of Mr. Chief Justice Marshall in Little v. Barreme, but also by a score of other
pronouncements of distinguished members of this bench -- the Constitution does grant
to the President extensive authority in times of grave and imperative national
emergency. In fact, to my thinking, such a grant may well be necessary to the very
existence of the Constitution itself. As Lincoln aptly said, "[is] it possible to lose the
nation and yet preserve the Constitution? [Footnote 6/7] In describing this authority, I
care not whether one calls it "residual," "inherent," "moral," "implied," "aggregate,"
"emergency," or otherwise. I am of the conviction that those who have had the gratifying
experience of being the President's lawyer have used one or more of these adjectives
only with the utmost of sincerity and the highest of purpose.
I conclude that, where Congress has laid down specific procedures to deal with the type
of crisis confronting the President, he must follow those procedures in meeting the crisis;
but that, in the absence of such action by Congress, the President's independent power
to act depends upon the gravity of the situation confronting the nation. I cannot sustain
the seizure in question because here, as in Little v. Barreme, Congress had prescribed
methods to be followed by the President in meeting the emergency at hand.
Page 343 U. S. 663
Three statutory procedures were available: those provided in the Defense Production Act
of 1950, the Labor Management Relations Act, and the Selective Service Act of 1948. In
this case, the President invoked the first of these procedures; he did not invoke the other
two.
The Defense Production Act of 1950 provides for mediation of labor disputes affecting
national defense. Under this statutory authorization, the President has established the
Wage Stabilization Board. The Defense Production Act, however, grants the President no
power to seize real property except through ordinary condemnation proceedings, which
were not used here, and creates no sanctions for the settlement of labor disputes.
The Labor Management Relations Act, commonly known as the Taft-Hartley Act, includes
provisions adopted for the purpose of dealing with nationwide strikes. They establish a
procedure whereby the President may appoint a board of inquiry and thereafter, in
proper cases, seek injunctive relief for an 80-day period against a threatened work
stoppage. The President can invoke that procedure whenever, in his opinion,
"a threatened or actual strike . . . affecting an entire industry . . . will, if permitted to
occur or to continue, imperil the national health or safety. [Footnote 6/8]"
At the time that Act was passed, Congress specifically rejected a proposal to empower
the President to seize any "plant, mine, or facility" in which a threatened work stoppage

would, in his judgment, "imperil the public health or security." [Footnote 6/9] Instead, the
Taft-Hartley Act directed the President, in the event a strike had not been settled during
the 80-day injunction period, to submit to Congress "a full and comprehensive report . . .
together with such recommendations as he may see fit to make for consideration and
Page 343 U. S. 664
appropriate action." [Footnote 6/10] The legislative history of the Act demonstrates
Congress' belief that the 80-day period would afford it adequate opportunity to
determine whether special legislation should be enacted to meet the emergency at
hand. [Footnote 6/11]
The Selective Service Act of 1948 gives the President specific authority to seize plants
which fail to produce goods required by the armed forces or the Atomic Energy
Commission for national defense purposes. The Act provides that, when a producer from
whom the President has ordered such goods "refuses or fails" to fill the order within a
period of time prescribed by the President, the President may take immediate possession
of the producer's plant. [Footnote 6/12] This language is significantly broader than
Page 343 U. S. 665
that used in the National Defense Act of 1916 and the Selective Training and Service Act
of 1940, which provided for seizure when a producer "refused" to supply essential
defense materials, but not when he "failed" to do so. [Footnote 6/13]
These three statutes furnish the guideposts for decision in this case. Prior to seizing the
steel mills on April 8, the President had exhausted the mediation procedures of the
Defense Production Act through the Wage Stabilization Board. Use of those procedures
had failed to avert the impending crisis; however, it had resulted in a 99-day
postponement of the strike. The Government argues that this accomplished more than
the maximum 80-day waiting period possible under the sanctions of the Taft-Hartley Act,
and therefore amounted to compliance with the substance of that Act. Even if one were
to accept this somewhat hyperbolic conclusion, the hard fact remains that neither the
Defense Production Act nor Taft-Hartley authorized the seizure challenged here, and the
Government made no effort to comply with the procedures
Page 343 U. S. 666
established by the Selective Service Act of 1948, a statute which expressly authorizes
seizures when producers fail to supply necessary defense materiel. [Footnote 6/14]
For these reasons, I concur in the judgment of the Court. As Mr. Justice Story once said:
"For the executive department of the government, this court entertain the most entire
respect, and, amidst the multiplicity of cares in that department, it may, without any
violation of decorum, be presumed, that sometimes there may be an inaccurate

construction of a law. It is our duty to expound the laws as we find them in the records of
state;
Page 343 U. S. 667
and we cannot, when called upon by the citizens of the country, refuse our opinion,
however it may differ from that of very great authorities.' [Footnote 6/15]"
[Footnote 6/1]
6 U. S. 2 Cranch 170 (1804).
[Footnote 6/2]
Id. at 6 U. S. 177-178 (emphasis changed).
[Footnote 6/3]
Decisions of this Court which have upheld the exercise of presidential power include the
following: Prize Cases, 2 Black 635 (1863) (subsequent ratification of President's acts by
Congress); In re Neagle, 135 U. S. 1 (1890) (protection of federal officials from personal
violence while performing official duties); In re Debs,158 U. S. 564 (1895) (injunction to
prevent forcible obstruction of interstate commerce and the mails); United States v.
Midwest Oil Co., 236 U. S. 459 (1915) (acquiescence by Congress in more than 250
instances of exercise of same power by various Presidents over period of 80 years);
Myers v. United States, 272 U. S. 52(1926) (control over subordinate officials in executive
department) [but see Humphrey's Executor v. United States, 295 U. S. 602, 295 U. S.
626-628 (1935)]; Hirabayashi v. United States, 320 U. S. 81 (1943), andKorematsu v.
United States, 323 U. S. 214 (1944) (express congressional authorization); cf. 80 U. S.
Russell,13 Wall. 623 (1871) (imperative military necessity in area of combat during war);
United States v. Curtiss-Wright Export Corp., 299 U. S. 304 (1936) (power to negotiate
with foreign governments); United States v. United Mine Workers, 330 U. S. 258 (1947)
(seizure under specific statutory authorization).
[Footnote 6/4]
Mr. Chief Justice Marshall, in McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 415 (1819).
[Footnote 6/5]
Letter of April 4, 1864, to A.G. Hodges, in 10 Complete Works of Abraham Lincoln
(Nicolay and Hay ed. 1894), 66.
[Footnote 6/6]
Roosevelt, Autobiography (1914 ed.), 371-372.
[Footnote 6/7]

Letter of April 4, 1864, to A.G. Hodges, in 10 Complete Works of Abraham Lincoln

(Nicolay and Hay ed. 1894), 66.
[Footnote 6/8]
61 Stat. 155, 29 U.S.C. (Supp. IV) 176.
[Footnote 6/9]
93 Cong.Rec. 3637-3645; cf. id. at 3835-3836.
[Footnote 6/10]
61 Stat. 156, 29 U.S.C. (Supp. IV) 180.
[Footnote 6/11]
E.g., S.Rep. No. 105, 80th Cong., 1st Sess. 15; 93 Cong.Rec. 3835-3836; id. at 4281.
[Footnote 6/12]
The producer must have been notified that the order was placed pursuant to the Act. The
Act provides in pertinent part as follows:
"(a) Whenever the President after consultation with and receiving advice from the
National Security Resources Board determines that it is in the interest of the national
security for the Government to obtain prompt delivery of any articles or materials the
procurement of which has been authorized by the Congress exclusively for the use of the
armed forces of the United States, or for the use of the Atomic Energy Commission, he is
authorized, through the head of any Government agency, to place with any person
operating a plant, mine, or other facility capable of producing such articles or materials
an order for such quantity of such articles or materials as the President deems
appropriate. Any person with whom an order is placed pursuant to the provisions of this
section shall be advised that such order is placed pursuant to the provisions of this
section."
"* * * *"
"(c) In case any person with whom an order is placed pursuant to the provisions of
subsection (a) refuses or fails -- "
"* * * *"
"(2) to fill such order within the period of time prescribed by the President or as soon
thereafter as possible as determined by the President;"
"(3) to produce the kind or quality of articles or materials ordered; or"

"(4) to furnish the quantity, kind, and quality of articles or materials ordered at such
price as shall be negotiated between such person and the Government agency
concerned; or in the event of failure to negotiate a price, to furnish the quantity, kind,
and quality of articles or materials ordered at such price as he may subsequently be
determined to be entitled to receive under subsection (d);"
"the President is authorized to take immediate possession of any plant, mine, or other
facility of such person and to operate it, through any Government agency, for the
production of such articles or materials as may be required by the Government."
62 Stat. 625, 50 U.S.C.App. (Supp. IV) 468. The Act was amended in 1951 and
redesignated the Universal Military Training and Service Act, but no change was made in
this section. 65 Stat. 75.
[Footnote 6/13]
39 Stat. 213; 54 Stat. 892.
[Footnote 6/14]
The Government has offered no explanation, in the record, the briefs, or the oral
argument, as to why it could not have made both a literal and timely compliance with
the provisions of that Act. Apparently the Government could have placed orders with the
steel companies for the various types of steel needed for defense purposes, and
instructed the steel companies to ship the materiel directly to producers of planes, tanks,
and munitions. The Act does not require that government orders cover the entire
capacity of a producer's plant before the President has power to seize.
Our experience during World War I demonstrates the speed with which the Government
can invoke the remedy of seizing plants which fail to fill compulsory orders. The Federal
Enameling & Stamping Co., of McKees Rocks, Pa. was served with a compulsory order on
September 13, 1918, and seized on the same day. The Smith & Wesson plant at
Springfield, Mass. was seized on September 13, 1918, after the company had failed to
make deliveries under a compulsory order issued the preceding week. Communication
from Ordnance Office to War Department Board of Appraisers, entitled "Report on Plants
Commandeered by the Ordnance Office," Dec.19, 1918, pp. 3, 4, in National Archives,
Records of the War Department, Office of the Chief of Ordnance, O.O. 004.002/260.
Apparently the Mosler Safe Co., of Hamilton, Ohio, was seized on the same day on which
a compulsory order was issued. Id. at 2; Letter from counsel for Mosler Safe Co. to Major
General George W. Goethals, Director of Purchase, Storage and Traffic, War Department,
Dec. 9, 1918, p. 1, in National Archives, Records of the War Department, Office of the
General Staff, PST Division 400.1202.
[Footnote 6/15]
The Orono, 18 Fed.Cas. No. 10,585 (Cir. Ct. D. Mass. 1812).

MR CHIEF JUSTICE VINSON, with whom MR. JUSTICE REED and MR. JUSTICE MINTON join,
dissenting.
The President of the United States directed the Secretary of Commerce to take
temporary possession of the Nation's steel mills during the existing emergency because
"a work stoppage would immediately jeopardize and imperil our national defense and the
defense of those joined with us in resisting aggression, and would add to the continuing
danger of our soldiers, sailors, and airmen engaged in combat in the field."
The District Court ordered the mills returned to their private owners on the ground that
the President's action was beyond his powers under the Constitution.
This Court affirms. Some members of the Court are of the view that the President is
without power to act in time of crisis in the absence of express statutory authorization.
Other members of the Court affirm on the basis of their reading of certain statutes.
Because we cannot agree that affirmance is proper on any ground, and because of the
transcending importance of the questions presented not only in this critical litigation, but
also to the powers of the President and of future Presidents to act in time of crisis, we are
compelled to register this dissent.
I
In passing upon the question of Presidential powers in this case, we must first consider
the context in which those powers were exercised.
Page 343 U. S. 668
Those who suggest that this is a case involving extraordinary powers should be mindful
that these are extraordinary times. A world not yet recovered from the devastation of
World War II has been forced to face the threat of another and more terrifying global
conflict.
Accepting in full measure its responsibility in the world community, the United States
was instrumental in securing adoption of the United Nations Charter, approved by the
Senate by a vote of 89 to 2. The first purpose of the United Nations is to
"maintain international peace and security, and, to that end, to take effective collective
measures for the prevention and removal of threats to the peace, and for the
suppression of acts of aggression or other breaches of the peace. . . . [Footnote 7/1]"
In 1950, when the United Nations called upon member nations "to render every
assistance" to repel aggression in Korea, the United States furnished its vigorous support.
[Footnote 7/2] For almost two full years, our armed forces have been fighting in Korea,
suffering casualties of over 108,000 men. Hostilities have not abated. The
"determination of the United Nations to continue its action in Korea to meet the

aggression" has been reaffirmed. [Footnote 7/3] Congressional support of the action in
Korea has been manifested by provisions for increased military manpower and
equipment and for economic stabilization, as hereinafter described.
Further efforts to protect the free world from aggression are found in the congressional
enactments of the Truman Plan for assistance to Greece and Turkey [Footnote 7/4] and
Page 343 U. S. 669
the Marshall Plan for economic aid needed to build up the strength of our friends in
Western Europe. [Footnote 7/5] In 1949, the Senate approved the North Atlantic Treaty
under which each member nation agrees that an armed attack against one is an armed
attack against all. [Footnote 7/6] Congress immediately implemented the North Atlantic
Treaty by authorizing military assistance to nations dedicated to the principles of mutual
security under the United Nations Charter. [Footnote 7/7] The concept of mutual security
recently has been extended by treaty to friends in the Pacific. [Footnote 7/8]
Our treaties represent not merely legal obligations, but show congressional recognition
that mutual security for the free world is the best security against the threat of
aggression on a global scale. The need for mutual security is shown by the very size of
the armed forces outside the free world. Defendant's brief informs us that the Soviet
Union maintains the largest air force in the world, and maintains ground forces much
larger than those presently available to the United States and the countries joined with
us in mutual security arrangements. Constant international tensions are cited to
demonstrate how precarious is the peace.
Even this brief review of our responsibilities in the world community discloses the
enormity of our undertaking. Success of these measures may, as has often been
Page 343 U. S. 670
observed, dramatically influence the lives of many generations of the world's peoples yet
unborn. Alert to our responsibilities, which coincide with our own self-preservation
through mutual security, Congress has enacted a large body of implementing legislation.
As an illustration of the magnitude of the over-all program, Congress has appropriated
$130 billion for our own defense and for military assistance to our allies since the June,
1950, attack in Korea.
In the Mutual Security Act of 1951, Congress authorized
"military, economic, and technical assistance to friendly countries to strengthen the
mutual security and individual and collective defenses of the free world. . . . [Footnote
7/9]"
Over $5 1/2 billion were appropriated for military assistance for fiscal year 1952, the bulk
of that amount to be devoted to purchase of military equipment. [Footnote 7/10] A

request for over $7 billion for the same purpose for fiscal year 1953 is currently pending
in Congress. [Footnote 7/11] In addition to direct shipment of military equipment to
nations of the free world, defense production in those countries relies upon shipment of
machine tools and allocation of steel tonnage from the United States. [Footnote 7/12]
Congress also directed the President to build up our own defenses. Congress, recognizing
the "grim fact . . . that the United States is now engaged in a struggle for survival" and
that "it is imperative that we now take those necessary steps to make our strength equal
to the peril of the hour," granted authority to draft men into
Page 343 U. S. 671
the armed forces. [Footnote 7/13] As a result, we now have over 3,500,000 men in our
armed forces. [Footnote 7/14]
Appropriations for the Department of Defense; which had averaged less than $13 billion
per year for the three years before attack in Korea, were increased by Congress to $48
billion for fiscal year 1951 and to $60 billion for fiscal year 1952. [Footnote 7/15] A
request for $51 billion for the Department of Defense for fiscal year 1953 is currently
pending in Congress. [Footnote 7/16] The bulk of the increase is for military equipment
and supplies -- guns, tanks, ships, planes and ammunition -- all of which require steel.
Other defense programs requiring great quantities of steel include the large scale
expansion of facilities for the Atomic Energy Commission [Footnote 7/17] and the
expansion of the Nation's productive capacity affirmatively encouraged by Congress.
[Footnote 7/18]
Congress recognized the impact of these defense programs upon the economy. Following
the attack in Korea, the President asked for authority to requisition property and to
allocate and fix priorities for scarce goods. In the Defense Production Act of 1950,
Congress granted the powers requested and, in addition, granted power to stabilize
prices and wages and to provide for settlement
Page 343 U. S. 672
of labor disputes arising in the defense program. [Footnote 7/19] The Defense Production
Act was extended in 1951, a Senate Committee noting that, in the dislocation caused by
the programs for purchase of military equipment "lies the seed of an economic disaster
that might well destroy the military might we are straining to build." [Footnote 7/20]
Significantly, the Committee examined the problem "in terms of just one commodity,
steel," and found "a graphic picture of the over-all inflationary danger growing out of
reduced civilian supplies and rising incomes." Even before Korea, steel production at
levels above theoretical 100% capacity was not capable of supplying civilian needs
alone. Since Korea, the tremendous military demand for steel has far exceeded the
increases in productive capacity. This Committee emphasized that the shortage of steel,

even with the mills operating at full capacity, coupled with increased civilian purchasing
power, presented grave danger of disastrous inflation. [Footnote 7/21]
The President has the duty to execute the foregoing legislative programs. Their
successful execution depends upon continued production of steel and stabilized prices
for steel. Accordingly, when the collective bargaining agreements between the Nation's
steel producers and their employees, represented by the United Steel Workers, were due
to expire on December 31, 1951, and a strike shutting down the entire basic steel
industry was threatened, the President acted to avert a complete shutdown of steel
production. On December 22, 1951, he certified the dispute to the Wage Stabilization
Board, requesting that the Board investigate the dispute and promptly report its
recommendation as to fair and equitable terms of settlement. The Union complied with
the President's
Page 343 U. S. 673
request and delayed its threatened strike while the dispute was before the Board. After a
special Board panel had conducted hearings and submitted a report, the full Wage
Stabilization Board submitted its report and recommendations to the President on March
20, 1952.
The Board's report was acceptable to the Union, but was rejected by plaintiffs. The Union
gave notice of its intention to strike as of 12:01 a.m., April 9, 1952, but bargaining
between the parties continued with hope of settlement until the evening of April 8, 1952.
After bargaining had failed to avert the threatened shutdown of steel production, the
President issued the following Executive Order:
"WHEREAS on December 16, 1950, I proclaimed the existence of a national emergency
which requires that the military, naval, air, and civilian defenses of this country be
strengthened as speedily as possible to the end that we may be able to repel any and all
threats against our national security and to fulfill our responsibilities in the efforts being
made throughout the United Nations and otherwise to bring about a lasting peace; and"
"WHEREAS American fighting men and fighting men of other nations of the United
Nations are now engaged in deadly combat with the forces of aggression in Korea, and
forces of the United States are stationed elsewhere overseas for the purpose of
participating in the defense of the Atlantic Community against aggression; and"
"WHEREAS the weapons and other materials needed by our armed forces and by those
joined with us in the defense of the free world are produced to a great extent in this
country, and steel is an indispensable component of substantially all of such weapons
and materials; and "
Page 343 U. S. 674

"WHEREAS steel is likewise indispensable to the carrying out of programs of the Atomic
Energy Commission of vital importance to our defense efforts; and"
"WHEREAS a continuing and uninterrupted supply of steel is also indispensable to the
maintenance of the economy of the United States, upon which our military strength
depends; and"
"WHEREAS a controversy has arisen between certain companies in the United States
producing and fabricating steel and the elements thereof and certain of their workers
represented by the United Steel Workers of America, CIO, regarding terms and conditions
of employment; and"
"WHEREAS the controversy has not been settled through the processes of collective
bargaining or through the efforts of the Government, including those of the Wage
Stabilization Board, to which the controversy was referred on December 22, 1951,
pursuant to Executive Order No. 10233, and a strike has been called for 12:01 A. M., April
9, 1952; and"
"WHEREAS a work stoppage would immediately jeopardize and imperil our national
defense and the defense of those joined with us in resisting aggression, and would add
to the continuing danger of our soldiers, sailors, and airmen engaged in combat in the
field; and"
"WHEREAS in order to assure the continued availability of steel and steel products during
the existing emergency, it is necessary that the United States take possession of and
operate the plants, facilities, and other property of the said companies as hereinafter
provided: "
"NOW, THEREFORE, by virtue of the authority vested in me by the Constitution and laws
of the
Page 343 U. S. 675
United States, and as President of the United States and Commander in Chief of the
armed forces of the United States, it is hereby ordered as follows: "
"1. The Secretary of Commerce is hereby authorized and directed to take possession of
all or such of the plants, facilities, and other property of the companies named in the list
attached hereto, or any part thereof, as he may deem necessary in the interests of
national defense, and to operate or to arrange for the operation thereof and to do all
things necessary for, or incidental to, such operation. . . . [Footnote 7/22]"
The next morning, April 9, 1952, the President addressed the following Message to
Congress:
To the Congress of the United States:

"The Congress is undoubtedly aware of the recent events which have taken place in
connection with the management-labor dispute in the steel industry. These events
culminated in the action which was taken last night to provide for temporary operation of
the steel mills by the Government."
"I took this action with the utmost reluctance. The idea of Government operation of the
steel mills is thoroughly distasteful to me, and I want to see it ended as soon as possible.
However, in the situation which confronted me yesterday, I felt that I could make no
other choice. The other alternatives appeared to be even worse -- so much worse that I
could not accept them."
"One alternative would have been to permit a shutdown in the steel industry. The effects
of such a shut-down would have been so immediate and damaging with respect to our
efforts to support our Armed Forces and to protect our national security that it made this
alternative unthinkable. "
Page 343 U. S. 676
"The only way that I know of, other than Government operation, by which a steel shutdown could have been avoided was to grant the demands of the steel industry for a large
price increase. I believed and the officials in charge of our stabilization agencies believed
that this would have wrecked our stabilization program. I was unwilling to accept the
incalculable damage which might be done to our country by following such a course."
"Accordingly, it was my judgment that Government operation of the steel mills for a
temporary period was the least undesirable of the courses of action which lay open. In
the circumstances, I believed it to be, and now believe it to be, my duty and within my
powers as President to follow that course of action."
"It may be that the Congress will deem some other course to be wiser. It may be that the
Congress will feel we should give in to the demands of the steel industry for an
exorbitant price increase and take the consequences so far as resulting inflation is
concerned."
"It may be that the Congress will feel the Government should try to force the steel
workers to continue to work for the steel companies for another long period, without a
contract, even though the steel workers have already voluntarily remained at work
without a contract for 100 days in an effort to reach an orderly settlement of their
differences with management."
"It may even be that the Congress will feel that we should permit a shut-down of the
steel industry, although that would immediately endanger the safety of our fighting
forces abroad and weaken the whole structure of our national security. "
Page 343 U. S. 677

"I do not believe the Congress will favor any of these courses of action, but that is a
matter for the Congress to determine."
"It may be, on the other hand, that the Congress will wish to pass legislation establishing
specific terms and conditions with reference to the operation of the steel mills by the
Government. Sound legislation of this character might be very desirable."
"On the basis of the facts that are known to me at this time, I do not believe that
immediate congressional action is essential; but I would, of course, be glad to cooperate
in developing any legislative proposals which the Congress may wish to consider."
"If the Congress does not deem it necessary to act at this time, I shall continue to do all
that is within my power to keep the steel industry operating and at the same time make
every effort to bring about a settlement of the dispute so the mills can be returned to
their private owners as soon as possible. [Footnote 7/23]"
Twelve days passed without action by Congress. On April 21, 1952, the President sent a
letter to the President of the Senate in which he again described the purpose and need
for his action and again stated his position that "The Congress can, if it wishes, reject the
course of action I have followed in this matter." [Footnote 7/24] Congress has not so
acted to this date.
Meanwhile, plaintiffs instituted this action in the District Court to compel defendant to
return possession of the steel mills seized under Executive Order 10340. In this litigation
for return of plaintiffs' properties, we assume that defendant Charles Sawyer is not
immune from judicial restraint, and that plaintiffs are entitled to equitable relief if we find
that the Executive Order
Page 343 U. S. 678
under which defendant acts is unconstitutional. We also assume without deciding that
the courts may go behind a President's finding of fact that an emergency exists. But
there is not the slightest basis for suggesting that the President's finding in this case can
be undermined. Plaintiffs moved for a preliminary injunction before answer or hearing.
Defendant opposed the motion, filing uncontroverted affidavits of Government officials
describing the facts underlying the President's order.
Secretary of Defense Lovett swore that
"a work stoppage in the steel industry will result immediately in serious curtailment of
production of essential weapons and munitions of all kinds."
He illustrated by showing that 84% of the national production of certain alloy steel is
currently used for production of military-end items and that 35% of total production of
another form of steel goes into ammunition, 80% of such ammunition now going to

Korea. The Secretary of Defense stated that: "We are holding the line [in Korea] with
ammunition, and not with the lives of our troops."
Affidavits of the Chairman of the Atomic Energy Commission, the Secretary of the
Interior, defendant as Secretary of Commerce, and the Administrators of the Defense
Production Administration, the National Production Authority, the General Services
Administration and the Defense Transport Administration were also filed in the District
Court. These affidavits disclose an enormous demand for steel in such vital defense
programs as the expansion of facilities in atomic energy, petroleum, power,
transportation and industrial production, including steel production. Those charged with
administering allocations and priorities swore to the vital part steel production plays in
our economy. The affidavits emphasize the critical need for steel in our defense program,
Page 343 U. S. 679
the absence of appreciable inventories of steel, and the drastic results of any
interruption in steel production.
One is not here called upon even to consider the possibility of executive seizure of a
farm, a corner grocery store or even a single industrial plant. Such considerations arise
only when one ignores the central fact of this case -- that the Nation's entire basic steel
production would have shut down completely if there had been no Government seizure.
Even ignoring for the moment whatever confidential information the President may
possess as "the Nation's organ for foreign affairs," [Footnote 7/25] the uncontroverted
affidavits in this record amply support the finding that "a work stoppage would
immediately jeopardize and imperil our national defense."
Plaintiffs do not remotely suggest any basis for rejecting the President's finding that any
stoppage of steel production would immediately place the Nation in peril. Moreover, even
self-generated doubts that any stoppage of steel production constitutes an emergency
are of little comfort here. The Union and the plaintiffs bargained for 6 months with over
100 issues in dispute -- issues not limited to wage demands, but including the union shop
and other matters of principle between the parties. At the time of seizure, there was not,
and there is not now, the slightest evidence to justify the belief that any strike will be of
short duration. The Union and the steel companies may well engage in a lengthy
struggle. Plaintiffs' counsel tells us that "sooner or later" the mills will operate again.
That may satisfy the steel companies and, perhaps, the Union. But our soldiers and our
allies will hardly be cheered with the assurance that the ammunition upon which their
lives depend will be forthcoming -- "sooner or later," or, in other words, "too little and too
late."
Page 343 U. S. 680

Accordingly, if the President has any power under the Constitution to meet a critical
situation in the absence of express statutory authorization, there is no basis whatever for
criticizing the exercise of such power in this case.
II
The steel mills were seized for a public use. The power of eminent domain, invoked in
this case, is an essential attribute of sovereignty, and has long been recognized as a
power of the Federal Government. Kohl v. United States, 91 U. S. 367 (1876). Plaintiffs
cannot complain that any provision in the Constitution prohibits the exercise of the
power of eminent domain in this case. The Fifth Amendment provides: "nor shall private
property be taken for public use, without just compensation." It is no bar to this seizure
for, if the taking is not otherwise unlawful, plaintiffs are assured of receiving the required
just compensation. United States v. Pewee Coal Co., 341 U. S. 114 (1951).
Admitting that the Government could seize the mills, plaintiffs claim that the implied
power of eminent domain can be exercised only under an Act of Congress; under no
circumstances, they say, can that power be exercised by the President unless he can
point to an express provision in enabling legislation. This was the view adopted by the
District Judge when he granted the preliminary injunction. Without an answer, without
hearing evidence, he determined the issue on the basis of his "fixed conclusion . . . that
defendant's acts are illegal" because the President's only course in the face of an
emergency is to present the matter to Congress and await the final passage of legislation
which will enable the Government to cope with threatened disaster.
Under this view, the President is left powerless at the very moment when the need for
action may be most pressing and when no one, other than he, is immediately
Page 343 U. S. 681
capable of action. Under this view, he is left powerless because a power not expressly
given to Congress is nevertheless found to rest exclusively with Congress'.
Consideration of this view of executive impotence calls for further examination of the
nature of the separation of powers under our tripartite system of Government.
The Constitution provides:
Art. I,
Section 1. "All legislative Powers herein granted shall be vested in a Congress of the
United States. . . ."
Art. II,
Section 1. "The executive Power shall be vested in a President of the United States of
America. . . ."

Section 2. "The President shall be Commander in Chief of the Army and Navy of the
United States. . . ."
"He shall have Power, by and with the Advice and Consent of the Senate, to make
Treaties, provided two thirds of the Senators present concur; . . ."
Section 3. "He shall from time to time give to the Congress Information of the State of
the Union, and recommend to their Consideration such Measures as he shall judge
necessary and expedient; . . . The shall take Care that the Laws be faithfully executed. . .
."
Art. III,
Section 1. "The judicial Power of the United States, shall be vested in one supreme Court,
and in such inferior Courts as the Congress may from time to time ordain and establish."
The whole of the "executive Power" is vested in the President. Before entering office, the
President swears that he "will faithfully execute the Office of President of the
Page 343 U. S. 682
United States, and will to the best of [his] Ability, preserve, protect and defend the
Constitution of the United States." Art. II, 1.
This comprehensive grant of the executive power to a single person was bestowed soon
after the country had thrown the yoke of monarchy. Only by instilling initiative and vigor
in all of the three departments of Government, declared Madison, could tyranny in any
form be avoided. [Footnote 7/26] Hamilton added:
"Energy in the Executive is a leading character in the definition of good government. It is
essential to the protection of the community against foreign attacks; it is not less
essential to the steady administration of the laws; to the protection of property against
those irregular and high-handed combinations which sometimes interrupt the ordinary
course of justice; to the security of liberty against the enterprises and assaults of
ambition, of faction, and of anarchy. [Footnote 7/27]"
It is thus apparent that the Presidency was deliberately fashioned as an office of power
and independence. Of course, the Framers created no autocrat capable of arrogating any
power unto himself at any time. But neither did they create an automaton impotent to
exercise the powers of Government at a time when the survival of the Republic itself may
be at stake.
In passing upon the grave constitutional question presented in this case, we must never
forget, as Chief Justice Marshall admonished, that the Constitution is "intended to endure
for ages to come, and, consequently, to be adapted to the various crises of human
affairs," and that "[i]ts means are adequate to its ends." [Footnote 7/28] Cases do arise

presenting questions which could not have been foreseen by the Framers. In such cases,
the Constitution has been treated as a living document adaptable to new situations.
[Footnote 7/29]
Page 343 U. S. 683
But we are not called upon today to expand the Constitution to meet a new situation.
For, in this case, we need only look to history and time-honored principles of
constitutional law -- principles that have been applied consistently by all branches of the
Government throughout our history. It is those who assert the invalidity of the Executive
Order who seek to amend the Constitution in this case.
III
A review of executive action demonstrates that our Presidents have on many occasions
exhibited the leadership contemplated by the Framers when they made the President
Commander in Chief, and imposed upon him the trust to "take Care that the Laws be
faithfully executed." With or without explicit statutory authorization, Presidents have at
such times dealt with national emergencies by acting promptly and resolutely to enforce
legislative programs, at least to save those programs until Congress could act. Congress
and the courts have responded to such executive initiative with consistent approval.
Our first President displayed at once the leadership contemplated by the Framers. When
the national revenue laws were openly flouted in some sections of Pennsylvania,
President Washington, without waiting for a call from the state government, summoned
the militia and took decisive steps to secure the faithful execution of the laws. [Footnote
7/30] When international disputes engendered by the French revolution threatened to
involve this country in war, and while congressional policy remained uncertain,
Washington issued his Proclamation of Neutrality. Hamilton, whose defense of the
Proclamation
Page 343 U. S. 684
has endured the test of time, invoked the argument that the Executive has the duty to
do that which will preserve peace until Congress acts and, in addition, pointed to the
need for keeping the Nation informed of the requirements of existing laws and treaties as
part of the faithful execution of the laws. [Footnote 7/31]
President John Adams issued a warrant for the arrest of Jonathan Robbins in order to
execute the extradition provisions of a treaty. This action was challenged in Congress on
the ground that no specific statute prescribed the method to be used in executing the
treaty. John Marshall, then a member of the House of Representatives, made the
following argument in support of the President's action:
"The treaty, which is a law, enjoins the performance of a particular object. The person
who is to perform this object is marked out by the Constitution, since the person is

named who conducts the foreign intercourse, and is to take care that the laws be
faithfully executed. The means by which it is to be performed, the force of the nation, are
in the hands of this person. Ought not this person to perform the object, although the
particular mode of using the means has not been prescribed? Congress, unquestionably,
may prescribe the mode, and Congress may devolve on others the whole execution of
the contract; but, till this be done, it seems the duty of the Executive department to
execute the contract by any means it possesses. [Footnote 7/32]"
Efforts in Congress to discredit the President for his action failed. [Footnote 7/33] Almost
a century later, this Court had
Page 343 U. S. 685
occasion to give its express approval to "the masterly and conclusive argument of John
Marshall." [Footnote 7/34]
Jefferson's initiative in the Louisiana Purchase, the Monroe Doctrine, and Jackson's
removal of Government deposits from the Bank of the United States further serve to
demonstrate by deed what the Framers described by word when they vested the whole
of the executive power in the President.
Without declaration of war, President Lincoln took energetic action with the outbreak of
the War Between the States. He summoned troops and paid them out of the Treasury
without appropriation therefor. He proclaimed a naval blockade of the Confederacy and
seized ships violating that blockade. Congress, far from denying the validity of these
acts, gave them express approval. The most striking action of President Lincoln was the
Emancipation Proclamation, issued in aid of the successful prosecution of the War
Between the States, but wholly without statutory authority. [Footnote 7/35]
In an action furnishing a most apt precedent for this case, President Lincoln, without
statutory authority, directed the seizure of rail and telegraph lines leading to
Washington. [Footnote 7/36] Many months later, Congress recognized and confirmed the
power of the President to seize railroads and telegraph lines and provided criminal
penalties for interference with Government operation. [Footnote 7/37] This Act did not
confer on the President any additional powers of seizure. Congress plainly rejected the
view that the President's acts had been without legal sanction until
Page 343 U. S. 686
ratified by the legislature. Sponsors of the bill declared that its purpose was only to
confirm the power which the President already possessed. [Footnote 7/38] Opponents
insisted a statute authorizing seizure was unnecessary, and might even be construed as
limiting existing Presidential powers. [Footnote 7/39]
Other seizures of private property occurred during the War Between the States, just as
they had occurred during previous wars. [Footnote 7/40] In United States v. Russell, 13

Wall. 623 (1872), three river steamers were seized by Army Quartermasters on the
ground of "imperative military necessity." This Court affirmed an award of compensation,
stating:
"Extraordinary and unforeseen occasions arise, however, beyond all doubt, in cases of
extreme necessity in time of war or of immediate and impending public danger, in which
private property may be impressed into the public service, or may be seized and
appropriated to the public use, or may even be destroyed without the consent of the
owner."
"* * * *"
"Exigencies of the kind do arise in time of war or impending public danger, but it is the
emergency, as was said by a great magistrate, that gives the right,
Page 343 U. S. 687
and it is clear that the emergency must be shown to exist before the taking can be
justified. Such a justification may be shown, and, when shown, the rule is well settled
that the officer taking private property for such a purpose, if the emergency is fully
proved, is not a trespasser, and that the government is bound to make full compensation
to the owner. [Footnote 7/41]"
In In re Neagle, 135 U. S. 1 (1890), this Court held that a federal officer had acted in line
of duty when he was guarding a Justice of this Court riding circuit. It was conceded that
there was no specific statute authorizing the President to assign such a guard. In holding
that such a statute was not necessary, the Court broadly stated the question as follows:
"[The President] is enabled to fulfil the duty of his great department, expressed in the
phrase that 'he shall take care that the laws be faithfully executed.'"
"Is this duty limited to the enforcement of acts of Congress or of treaties of the United
States according to their express terms, or does it include the rights, duties and
obligations growing out of the Constitution itself, our international relations, and all the
protection implied by the nature of the government under the Constitution? [Footnote
7/42]"
The latter approach was emphatically adopted by the Court.
President Hayes authorized the widespread use of federal troops during the Railroad
Strike of 1877. [Footnote 7/43] President Cleveland also used the troops in the Pullman
Strike,
Page 343 U. S. 688
of 1895 and his action is of special significance. No statute authorized this action. No call
for help had issued from the Governor of Illinois; indeed Governor Altgeld disclaimed the

need for supplemental forces. But the President's concern was that federal laws relating
to the free flow of interstate commerce and the mails be continuously and faithfully
executed without interruption. [Footnote 7/44] To further this aim, his agents sought and
obtained the injunction upheld by this Court in In re Debs, 158 U. S. 564 (1895). The
Court scrutinized each of the steps taken by the President to insure execution of the
"mass of legislation" dealing with commerce and the mails and gave his conduct full
approval. Congress likewise took note of this use of Presidential power to forestall
apparent obstacles to the faithful execution of the laws. By separate resolutions, both
the Senate and the House commended the Executive's action. [Footnote 7/45]
President Theodore Roosevelt seriously contemplated seizure of Pennsylvania coal mines
if a coal shortage necessitated such action. [Footnote 7/46] In his autobiography,
President Roosevelt expounded the "Stewardship Theory" of Presidential power, stating
that
"the executive as subject only to the people, and, under the Constitution, bound to serve
the people affirmatively in cases where the Constitution does not explicitly forbid him to
render the service. [Footnote 7/47]"
Because the contemplated seizure of the coal mines was based on this theory, then exPresident Taft criticized President Roosevelt in a passage in his book relied upon by the
District Court in this case. Taft, Our Chief Magistrate and His Powers (1916), 139-147. In
the same book, however, President Taft agreed that
Page 343 U. S. 689
such powers of the President as the duty to "take Care that the Laws be faithfully
executed" could not be confined to "express Congressional statutes." Id. at 88. In re
Neagle, supra, and In re Debs, supra, were cited as conforming with Taft's concept of the
office, id. at pp. 88-94, as they were later to be cited with approval in his opinion as Chief
Justice in Myers v. United States, 272 U. S. 52, 272 U. S. 133 (1926). [Footnote 7/48]
In 1909, President Taft was informed that government-owned oil lands were being
patented by private parties at such a rate that public oil lands would be depleted in a
matter of months. Although Congress had explicitly provided that these lands were open
to purchase by United States citizens, 29 Stat. 526 (1897), the President nevertheless
ordered the lands withdrawn from sale "[i]n aid of proposed legislation." In United States
v. Midwest Oil Co., 236 U. S. 459 (1915), the President's action was sustained as
consistent with executive practice throughout our history. An excellent brief was filed in
the case by the Solicitor General, Mr. John W. Davis, together with Assistant Attorney
General Knaebel, later Reporter for this Court. In this brief, the situation confronting
President Taft was described as "an emergency; there was no time to wait for the action
of Congress." The brief then discusses the powers of the President under the Constitution
in such a case:

"Ours is a self-sufficient Government within its sphere. (Ex parte Siebold, 100 U. S. 371,
100 U. S. 395; In re Debs, 158 U. S. 564, 158 U. S. 578.) 'Its means are adequate to its
ends' (McCulloch v. Maryland, 4
Page 343 U. S. 690
Wheat. 316, 17 U. S. 424), and it is rational to assume that its active forces will be found
equal in most things to the emergencies that confront it. While perfect flexibility is not to
be expected in a Government of divided powers, and while division of power is one of the
principal features of the Constitution, it is the plain duty of those who are called upon to
draw the dividing lines to ascertain the essential, recognize the practical, and avoid a
slavish formalism which can only serve to ossify the Government and reduce its
efficiency without any compensating good. The function of making laws is peculiar to
Congress, and the Executive cannot exercise that function to any degree. But this is not
to say that all of the subjects concerning which laws might be made are perforce
removed from the possibility of Executive influence. The Executive may act upon things
and upon men in many relations which have not, though they might have, been actually
regulated by Congress. In other words, just as there are fields which are peculiar to
Congress and fields which are peculiar to the Executive, so there are fields which are
common to both, in the sense that the Executive may move within them until they shall
have been occupied by legislative action. These are not the fields of legislative
prerogative, but fields within which the lawmaking power may enter and dominate
whenever it chooses. This situation results from the fact that the President is the active
agent not of Congress, but of the Nation. As such, he performs the duties which the
Constitution lays upon him immediately, and as such, also, he executes the laws and
regulations adopted by Congress. He is the agent of the people of the United States,
deriving all his powers from them and responsible directly to them. In no
Page 343 U. S. 691
sense is he the agent of Congress. He obeys and executes the laws of Congress not
because Congress is enthroned in authority over him, but because the Constitution
directs him to do so."
"Therefore it follows that, in ways short of making laws or disobeying them, the
Executive may be under a grave constitutional duty to act for the national protection in
situations not covered by the acts of Congress, and in which, even, it may not be said
that his action is the direct expression of any particular one of the independent powers
which are granted to him specifically by the Constitution. Instances wherein the
President has felt and fulfilled such a duty have not been rare in our history, though,
being for the public benefit and approved by all, his acts have seldom been challenged in
the courts. We are able, however, to present a number of apposite cases which were
subjected to judicial inquiry."

The brief then quotes from such cases as In re Debs, supra, and In re Neagle, supra, and
continues:
"As we understand the doctrine of the Neagle case, and the cases therein cited, it is
clearly this: the Executive is authorized to exert the power of the United States when he
finds this necessary for the protection of the agencies, the instrumentalities, or the
property of the Government. This does not mean an authority to disregard the wishes of
Congress on the subject when that subject lies within its control and when those wishes
have been expressed, and it certainly does not involve the slightest semblance of a
power to legislate, much less to 'suspend' legislation already passed by Congress. It
involves the performance of specific acts not of a
Page 343 U. S. 692
legislative but purely of an executive character -- acts which are not in themselves laws,
but which presuppose a 'law' authorizing him to perform them. This law is not expressed
either in the Constitution or in the enactments of Congress, but reason and necessity
compel that it be implied from the exigencies of the situation."
"In none of the cases which we have mentioned, nor in the cases cited in the extracts
taken from the Neaglecase, was it possible to say that the action of the President was
directed, expressly or impliedly, by Congress. The situations dealt with had never been
covered by any act of Congress, and there was no ground whatever for a contention that
the possibility of their occurrence had ever been specifically considered by the legislative
mind. In none of those cases did the action of the President amount merely to the
execution of some specific law."
"Neither does any of them stand apart in principle from the case at bar, as involving the
exercise of specific constitutional powers of the President in a degree in which this case
does not involve them. Taken collectively, the provisions of the Constitution which
designate the President as the official who must represent us in foreign relations, in
commanding the Army and Navy, in keeping Congress informed of the state of the Union,
in insuring the faithful execution of the laws and in recommending new ones, considered
in connection with the sweeping declaration that the executive power shall be vested in
him, completely demonstrate that his is the watchful eye, the active hand, the
overseeing dynamic force of the United States. [Footnote 7/49] "
Page 343 U. S. 693
This brief is valuable not alone because of the caliber of its authors, but because it lays
bare in succinct reasoning the basis of the executive practice which this Court approved
in the Midwest Oil case.
During World War I, President Wilson established a War Labor Board without awaiting
specific direction by Congress. [Footnote 7/50] With William Howard Taft and Frank P.

Walsh as co-chairmen, the Board had as its purpose the prevention of strikes and
lockouts interfering with the production of goods needed to meet the emergency.
Effectiveness of War Labor Board decision was accomplished by Presidential action,
including seizure of industrial plants. [Footnote 7/51] Seizure of the Nation's railroads
was also ordered by President Wilson. [Footnote 7/52]
Beginning with the Bank Holiday Proclamation [Footnote 7/53] and continuing through
World War II, executive leadership and initiative were characteristic of President Franklin
D. Roosevelt's administration. In 1939, upon the outbreak
Page 343 U. S. 694
of war in Europe, the President proclaimed a limited national emergency for the purpose
of strengthening our national defense. [Footnote 7/54] In May of 1941, the danger from
the Axis belligerents having become clear, the President proclaimed "an unlimited
national emergency" calling for mobilization of the Nation's defenses to repel aggression.
[Footnote 7/55] The President took the initiative in strengthening our defenses by
acquiring rights from the British Government to establish air bases in exchange for overage destroyers. [Footnote 7/56]
In 1941, President Roosevelt acted to protect Iceland from attack by Axis powers, when
British forces were withdrawn, by sending our forces to occupy Iceland. Congress was
informed of this action on the same day that our forces reached Iceland. [Footnote 7/57]
The occupation of Iceland was but one of "at least 125 incidents" in our history in which
Presidents,
"without congressional authorization, and in the absence of a declaration of war, [have]
ordered the Armed Forces to take action or maintain positions abroad. [Footnote 7/58]"
Some six months before Pearl Harbor, a dispute at a single aviation plant at Inglewood,
California, interrupted a segment of the production of military aircraft. In spite of the
comparative insignificance of this work stoppage to total defense production, as
contrasted with the complete paralysis now threatened by a shutdown of the entire basic
steel industry, and even though
Page 343 U. S. 695
our armed forces were not then engaged in combat, President Roosevelt ordered the
seizure of the plant
"pursuant to the powers vested in [him] by the Constitution and laws of the United
States, as President of the United States of America and Commander in Chief of the Army
and Navy of the United States. [Footnote 7/59]"

The Attorney General (Jackson) vigorously proclaimed that the President had the moral
duty to keep this Nation's defense effort a "going concern." His ringing moral justification
was coupled with a legal justification equally well stated:
"The Presidential proclamation rests upon the aggregate of the Presidential powers
derived from the Constitution itself and from statutes enacted by the Congress."
"The Constitution lays upon the President the duty 'to take care that the laws be
faithfully executed.' Among the laws which he is required to find means to execute are
those which direct him to equip an enlarged army, to provide for a strengthened navy, to
protect Government property, to protect those who are engaged in carrying out the
business of the Government, and to carry out the provisions of the Lend-Lease Act. For
the faithful execution of such laws, the President has back of him not only each general
law enforcement power conferred by the various acts of Congress, but the aggregate of
all such laws plus that wide discretion as to method vested in him by the Constitution for
the purpose of executing the laws."
"The Constitution also places on the President the responsibility and vests in him the
powers of Commander in Chief of the Army and of the Navy. These weapons for the
protection of the continued existence of the Nation are placed in his sole command
Page 343 U. S. 696
and the implication is clear that he should not allow them to become paralyzed by failure
to obtain supplies for which Congress has appropriated the money and which it has
directed the President to obtain. [Footnote 7/60]"
At this time, Senator Connally proposed amending the Selective Training and Service Act
to authorize the President to seize any plant where an interruption of production would
unduly impede the defense effort. [Footnote 7/61] Proponents of the measure in no way
implied that the legislation would add to the powers already possessed by the President,
[Footnote 7/62] and the amendment was opposed as unnecessary, since the President
already had the power. [Footnote 7/63] The amendment relating to plant seizures was
not approved at that session of Congress. [Footnote 7/64]
Meanwhile, and also prior to Pearl Harbor, the President ordered the seizure of a
shipbuilding company and an aircraft parts plant. [Footnote 7/65] Following the
declaration of war, but prior to the Smith-Connally Act of 1943, five additional industrial
concerns were seized to avert interruption
Page 343 U. S. 697
of needed production. [Footnote 7/66] During the same period, the President directed
seizure of the Nation's coal mines to remove an obstruction to the effective prosecution
of the war. [Footnote 7/67]

The procedures adopted by President Roosevelt closely resembled the methods

employed by President Wilson. A National War Labor Board, like its predecessor of World
War I, was created by Executive Order to deal effectively and fairly with disputes
affecting defense production. [Footnote 7/68] Seizures were considered necessary, upon
disobedience of War Labor Board orders, to assure that the mobilization effort remained
a "going concern," and to enforce the economic stabilization program.
At the time of the seizure of the coal mines, Senator Connally's bill to provide a statutory
basis for seizures and for the War Labor Board was again before Congress. As stated by
its sponsor, the purpose of the bill was not to augment Presidential power, but to "let the
country know that the Congress is squarely behind the President." [Footnote 7/69] As in
the case of the legislative recognition of President Lincoln's power to seize, Congress
again recognized that the President already had the necessary power, for there was no
intention to "ratify" past actions of doubtful validity. Indeed, when Senator Tydings
offered an amendment to the Connally bill expressly to confirm and validate the seizure
of the coal mines, sponsors of the bill
Page 343 U. S. 698
opposed the amendment as casting doubt on the legality of the seizure, and the
amendment was defeated. [Footnote 7/70] When the Connally bill, S. 796, came before
the House, all parts after the enacting clause were stricken, and a bill introduced by
Representative Smith of Virginia was substituted and passed. This action in the House is
significant because the Smith bill did not contain the provisions authorizing seizure by
the President, but did contain provisions controlling and regulating activities in respect to
properties seized by the Government under statute "or otherwise." [Footnote 7/71] After
a conference, the seizure provisions of the Connally bill, enacted as the Smith-Connally
or War Labor Disputes Act of 1943, 57 Stat. 163, were agreed to by the House.
Following passage of the Smith-Connally Act, seizures to assure continued production on
the basis of terms recommended by the War Labor Board were based upon that Act as
well as upon the President's power under the Constitution and the laws generally. A
question did arise as to whether the statutory language relating to "any plant, mine, or
facility equipped for the manufacture, production, or mining of any articles or materials"
[Footnote 7/72] authorized the seizure of properties of Montgomery Ward & Co., a retail
department store and mail-order concern. The Attorney General (Biddle) issued an
opinion that the President possessed the power to seize Montgomery Ward properties to
prevent a work stoppage whether or not the terms of the Smith-Connally Act authorized
such a seizure. [Footnote 7/73] This opinion was in line with
Page 343 U. S. 699
the views on Presidential powers maintained by the Attorney General's predecessors
(Murphy [Footnote 7/74] and Jackson [Footnote 7/75]) and his successor (Clark [Footnote

7/76]). Accordingly, the President ordered seizure of the Chicago properties of

Montgomery Ward in April, 1944, when that company refused to obey a War Labor Board
order concerning the bargaining representative of its employees in Chicago. [Footnote
7/77] In Congress, a Select Committee to Investigate Seizure of the Property of
Montgomery Ward & Co., assuming that the terms of the Smith-Connally Act did not
cover this seizure, concluded that the seizure "was not only within the constitutional
power, but was the plain duty of the President." [Footnote 7/78] Thereafter, an election
determined the bargaining representative for the Chicago employees and the properties
were returned to Montgomery Ward & Co. In December, 1944, after continued defiance
of a series of War Labor Board orders, President Roosevelt ordered the seizure of
Montgomery Ward properties throughout the country. [Footnote 7/79] The Court of
Appeals for the Seventh Circuit upheld this seizure on statutory grounds, and also
indicated its disapproval of a lower court's denial of seizure power apart from express
statute. [Footnote 7/80]
Page 343 U. S. 700
More recently, President Truman acted to repel aggression by employing our armed
forces in Korea. [Footnote 7/81] Upon the intervention of the Chinese Communists, the
President proclaimed the existence of an unlimited national emergency requiring the
speedy build-up of our defense establishment. [Footnote 7/82] Congress responded by
providing for increased manpower and weapons for our own armed forces, by increasing
military aid under the Mutual Security Program, and by enacting economic stabilization
measures, as previously described.
This is but a cursory summary of executive leadership. But it amply demonstrates that
Presidents have taken prompt action to enforce the laws and protect the country whether
or not Congress happened to provide in advance for the particular method of execution.
At the minimum, the executive actions reviewed herein sustain the action of the
President in this case. And many of the cited examples of Presidential practice go far
beyond the extent of power necessary to sustain the President's order to seize the steel
mills. The fact that temporary executive seizures of industrial plants to meet an
emergency have not been directly tested in this Court furnishes not the slightest
suggestion that such actions have been illegal. Rather, the fact that Congress and the
courts have consistently recognized and given their support to such executive action
indicates that such a power of seizure has been accepted throughout our history.
History bears out the genius of the Founding Fathers, who created a Government subject
to law but not left subject to inertia when vigor and initiative are required.
Page 343 U. S. 701
IV

Focusing now on the situation confronting the President on the night of April 8, 1952, we
cannot but conclude that the President was performing his duty under the Constitution to
"take Care that the Laws be faithfully executed" -- a duty described by President
Benjamin Harrison as "the central idea of the office." [Footnote 7/83]
The President reported to Congress the morning after the seizure that he acted because
a work stoppage in steel production would immediately imperil the safety of the Nation
by preventing execution of the legislative programs for procurement of military
equipment. And, while a shutdown could be averted by granting the price concessions
requested by plaintiffs, granting such concessions would disrupt the price stabilization
program also enacted by Congress. Rather than fail to execute either legislative
program, the President acted to execute both.
Much of the argument in this case has been directed at straw men. We do not now have
before us the case of a President acting solely on the basis of his own notions of the
public welfare. Nor is there any question of unlimited executive power in this case. The
President himself closed the door to any such claim when he sent his Message to
Congress stating his purpose to abide by any action of Congress, whether approving or
disapproving his seizure action. Here, the President immediately made sure that
Congress was fully informed of the temporary action he had taken only to preserve the
legislative programs from destruction until Congress could act.
The absence of a specific statute authorizing seizure of the steel mills as a mode of
executing the laws -- both the military procurement program and the anti-inflation
program -- has not until today been thought to prevent
Page 343 U. S. 702
the President from executing the laws. Unlike an administrative commission confined to
the enforcement of the statute under which it was created, or the head of a department
when administering a particular statute, the President is a constitutional officer charged
with taking care that a "mass of legislation" be executed. Flexibility as to mode of
execution to meet critical situations is a matter of practical necessity. This practical
construction of the "Take Care" clause, advocated by John Marshall, was adopted by this
Court in In re Neagle, In re Debs and other cases cited supra. See also Ex parte Quirin,
317 U. S. 1, 317 U. S. 26 (1942). Although more restrictive views of executive power,
advocated in dissenting opinions of Justices Holmes, McReynolds and Brandeis, were
emphatically rejected by this Court in Myers v. United States, supra,members of today's
majority treat these dissenting views as authoritative.
There is no statute prohibiting seizure as a method of enforcing legislative programs.
Congress has in no wise indicated that its legislation is not to be executed by the taking
of private property (subject, of course, to the payment of just compensation) if its
legislation cannot otherwise be executed. Indeed, the Universal Military Training and

Service Act authorizes the seizure of any plant that fails to fill a Government contract
[Footnote 7/84] or the properties of any steel producer that fails to allocate steel as
directed for defense production. [Footnote 7/85] And the Defense Production Act
authorizes the President to requisition equipment and condemn real property needed
without delay in the defense effort. [Footnote 7/86] Where Congress authorizes seizure in
instances not necessarily crucial to the defense
Page 343 U. S. 703
program, it can hardly be said to have disclosed an intention to prohibit seizures where
essential to the execution of that legislative program.
Whatever the extent of Presidential power on more tranquil occasions, and whatever the
right of the President to execute legislative programs as he sees fit without reporting the
mode of execution to Congress, the single Presidential purpose disclosed on this record is
to faithfully execute the laws by acting in an emergency to maintain the status quo,
thereby preventing collapse of the legislative programs until Congress could act. The
President's action served the same purposes as a judicial stay entered to maintain the
status quo in order to preserve the jurisdiction of a court. In his Message to Congress
immediately following the seizure, the President explained the necessity of his action in
executing the military procurement and anti-inflation legislative programs and expressed
his desire to cooperate with any legislative proposals approving, regulating or rejecting
the seizure of the steel mills. Consequently, there is no evidence whatever of any
Presidential purpose to defy Congress or act in any way inconsistent with the legislative
will.
In United States v. Midwest Oil Co., supra, this Court approved executive action where, as
here, the President acted to preserve an important matter until Congress could act -even though his action in that case was contrary to an express statute. In this case,
there is no statute prohibiting the action taken by the President in a matter not merely
important, but threatening the very safety of the Nation. Executive inaction in such a
situation, courting national disaster, is foreign to the concept of energy and initiative in
the Executive as created by the Founding Fathers. The Constitution was itself
"adopted in a period of grave emergency. . . . While emergency does not create power,
emergency may furnish
Page 343 U. S. 704
the occasion for the exercise of power. [Footnote 7/87]"
The Framers knew, as we should know in these times of peril, that there is real danger in
Executive weakness. There is no cause to fear Executive tyranny so long as the laws of
Congress are being faithfully executed. Certainly there is no basis for fear of dictatorship

when the Executive acts, as he did in this case, only to save the situation until Congress
could act.
V
Plaintiffs place their primary emphasis on the Labor Management Relations Act of 1947,
hereinafter referred to as the Taft-Hartley Act, but do not contend that that Act contains
any provision prohibiting seizure.
Under the Taft-Hartley Act, as under the Wagner Act, collective bargaining and the right
to strike are at the heart of our national labor policy. Taft-Hartley preserves the right to
strike in any emergency, however serious, subject only to an 80-day delay in cases of
strikes imperiling the national health and safety. [Footnote 7/88] In such a case, the
President may appoint a board of inquiry to report the facts of the labor dispute. Upon
receiving that report, the President may direct the Attorney General to petition a District
Court to enjoin the strike. If the injunction is granted, it may continue in effect for no
more than 80 days, during which time the board of inquiry makes further report and
efforts are made to settle the dispute. When the injunction is dissolved, the President is
directed to submit a report to Congress together with his recommendations. [Footnote
7/89]
Enacted after World War II, Taft-Hartley restricts the right to strike against private
employers only to a limited
Page 343 U. S. 705
extent and for the sole purpose of affording an additional period of time within which to
settle the dispute. Taft-Hartley in no way curbs strikes before an injunction can be
obtained and after an 80-day injunction is dissolved.
Plaintiffs admit that the emergency procedures of Taft-Hartley are not mandatory.
Nevertheless, plaintiffs apparently argue that, since Congress did provide the 80-day
injunction method for dealing with emergency strikes, the President cannot claim that an
emergency exists until the procedures of Taft-Hartley have been exhausted. This
argument was not the basis of the District Court's opinion, and, whatever merit the
argument might have had following the enactment of Taft-Hartley, it loses all force when
viewed in light of the statutory pattern confronting the President in this case.
In Title V of the Defense Production Act of 1950, [Footnote 7/90] Congress stated:
"It is the intent of Congress, in order to provide for effective price and wage stabilization
pursuant to title IV of this Act and to maintain uninterrupted production, that there be
effective procedures for the settlement of labor disputes affecting national defense."
( 501.) Title V authorized the President to initiate labor-management conferences and to
take action appropriate to carrying out the recommendations of such conferences and

the provisions of Title V. ( 502.) Due regard is to be given to collective bargaining

practice and stabilization policies, and no action taken is to be inconsistent with TaftHartley and other laws. ( 503.) The purpose of these provisions was to authorize the
President "to establish a board, commission or other agency, similar
Page 343 U. S. 706
to the War Labor Board of World War II, to carry out the title." [Footnote 7/91]
The President authorized the Wage Stabilization Board (WSB), which administers the
wage stabilization functions of Title IV of the Defense Production Act, also to deal with
labor disputes affecting the defense program. [Footnote 7/92] When extension of the
Defense Production Act was before Congress in 1951, the Chairman of the Wage
Stabilization Board described in detail the relationship between the Taft-Hartley
procedures applicable to labor disputes imperiling the national health and safety and the
new WSB disputes procedures especially devised for settlement of labor disputes
growing out of the needs of the defense program. [Footnote 7/93] Aware that a
technique separate from Taft-Hartley had been devised, members of Congress attempted
to divest the WSB of its disputes powers. These attempts were defeated in the House,
were not brought to a vote in the Senate, and the Defense Production Act was extended
through June 30, 1952, without change in the disputes powers of the WSB. [Footnote
7/94]
Page 343 U. S. 707
Certainly this legislative creation of a new procedure for dealing with defense disputes
negatives any notion that Congress intended the earlier and discretionary Taft-Hartley
procedure to be an exclusive procedure.
Accordingly, as of December 22, 1951, the President had a choice between alternate
procedures for settling the threatened strike in the steel mills: one route created to deal
with peacetime disputes; the other route specially created to deal with disputes growing
out of the defense and stabilization program. There is no question of bypassing a
statutory procedure, because both of the routes available to the President in December
were based upon statutory authorization. Both routes were available in the steel dispute.
The Union, by refusing to abide by the defense and stabilization program, could have
forced the President to invoke Taft-Hartley at that time to delay the strike a maximum of
80 days. Instead, the Union agreed to cooperate with the defense program and submit
the dispute to the Wage Stabilization Board.
Plaintiffs had no objection whatever at that time to the President's choice of the WSB
route. As a result, the strike was postponed, a WSB panel held hearings and reported the
position of the parties and the WSB recommended the terms of a settlement which it
found were fair and equitable. Moreover, the WSB performed a function which the board
of inquiry contemplated by Taft-Hartley could not have accomplished when it checked

the recommended wage settlement against its own wage stabilization regulations issued
pursuant to its stabilization functions under Title IV of the Defense Production Act.
Thereafter, the parties bargained on the basis of the WSB recommendation.
When the President acted on April 8, he had exhausted the procedures for settlement
available to him. Taft-Hartley was a route parallel to, not connected with, the WSB
procedure. The strike had been delayed 99
Page 343 U. S. 708
days, as contrasted with the maximum delay of 80 days under Taft-Hartley. There had
been a hearing on the issues in dispute and bargaining which promised settlement up to
the very hour before seizure had broken down. Faced with immediate national peril
through stoppage in steel production, on the one hand, and faced with destruction of the
wage and price legislative programs, on the other, the President took temporary
possession of the steel mills as the only course open to him consistent with his duty to
take care that the laws be faithfully executed.
Plaintiffs' property was taken and placed in the possession of the Secretary of Commerce
to prevent any interruption in steel production. It made no difference whether the
stoppage was caused by a union-management dispute over terms and conditions of
employment, a union-Government dispute over wage stabilization, or a managementGovernment dispute over price stabilization. The President's action has thus far been
effective not in settling the dispute, but in saving the various legislative programs at
stake from destruction until Congress could act in the matter.
VI
The diversity of views expressed in the six opinions of the majority, the lack of reference
to authoritative precedent, the repeated reliance upon prior dissenting opinions, the
complete disregard of the uncontroverted facts showing the gravity of the emergency,
and the temporary nature of the taking all serve to demonstrate how far afield one must
go to affirm the order of the District Court.
The broad executive power granted by Article II to an officer on duty 365 days a year
cannot, it is said, be invoked to avert disaster. Instead, the President must confine
himself to sending a message to Congress recommending action. Under this messengerboy concept of
Page 343 U. S. 709
the Office, the President cannot even act to preserve legislative programs from
destruction so that Congress will have something left to act upon. There is no judicial
finding that the executive action was unwarranted because there was, in fact, no basis
for the President's finding of the existence of an emergency [Footnote 7/95] for, under

this view, the gravity of the emergency and the immediacy of the threatened disaster
are considered irrelevant as a matter of law.
Seizure of plaintiffs' property is not a pleasant undertaking. Similarly unpleasant to a free
country are the draft which disrupts the home and military procurement which causes
economic dislocation and compels adoption of price controls, wage stabilization and
allocation of materials. The President informed Congress that even a temporary
Government operation of plaintiffs' properties was "thoroughly distasteful" to him, but
was necessary to prevent immediate paralysis of the mobilization program. Presidents
have been in the past, and any man worthy of the Office should be in the future, free to
take at least interim action necessary to execute legislative programs essential to
survival of the Nation. A sturdy judiciary should not be swayed by the unpleasantness or
unpopularity of necessary executive action, but must independently determine for itself
whether the President was acting, as required by the Constitution, to "take Care that the
Laws be faithfully executed."
As the District Judge stated, this is no time for "timorous" judicial action. But neither is
this a time for timorous executive action. Faced with the duty of executing the defense
programs which Congress had enacted and the disastrous effects that any stoppage in
steel production would have on those programs, the President acted to preserve those
programs by seizing the steel mills.
Page 343 U. S. 710
There is no question that the possession was other than temporary in character, and
subject to congressional direction -- either approving, disapproving, or regulating the
manner in which the mills were to be administered and returned to the owners. The
President immediately informed Congress of his action, and clearly stated his intention to
abide by the legislative will. No basis for claims of arbitrary action, unlimited powers, or
dictatorial usurpation of congressional power appears from the facts of this case. On the
contrary, judicial, legislative and executive precedents throughout our history
demonstrate that, in this case, the President acted in full conformity with his duties
under the Constitution. Accordingly, we would reverse the order of the District Court.
[Footnote 7/1]
59 Stat. 1031, 1037 (1945); 91 Cong.Rec. 8190 (1945).
[Footnote 7/2]
U.N. Security Council, U.N. Doc. S/1501 (1950); Statement by the President, June 26,
1950, United States Policy in the Korean Crisis, Dept. of State Pub. (1950), 16.
[Footnote 7/3]
U.N. General Assembly, U.N. Doc. A/1771 (1951).

[Footnote 7/4]
61 Stat. 103 (1947)
[Footnote 7/5]
62 Stat. 137 (1948), as amended, 63 Stat. 50 (1949), 64 Stat. 98 (1950).
[Footnote 7/6]
63 stat. 2241, 2252 (1949), extended to Greece and Turkey, S.Exec. E, 82d cong., 2d
Sess. (1952), advice and consent of the Senate granted. 98 Cong.Rec. 930.
[Footnote 7/7]
63 Stat. 714 (1949).
[Footnote 7/8]
S.Execs. A, B, C and D, 82d cong., 2d Sess. (1952), advice and consent of the senate
granted. 98 Cong.Rec. 2594, 2595, 2605.
[Footnote 7/9]
65 Stat. 373 (1951).
[Footnote 7/10]
65 Stat. 730 (1951); see H.R.Doc. No. 147, 82d Cong., 1st Sess. 3 (1951).
[Footnote 7/11]
See H.R.Doc. No. 382, 82d Cong., 2d Sess. (1952).
[Footnote 7/12]
Hearings before Senate Committee on Foreign Relations on the Mutual Security Act of
1952, 82d Cong., 2d Sess. 565-566 (1952); Hearings before House Committee on Foreign
Affairs on the Mutual Security Act of 1952, 82d Cong., 2d Sess. 370 (1952).
[Footnote 7/13]
65 Stat. 75 (1951); S.Rep. No. 117, 82d Cong., 1st Sess. 3 (1951).
[Footnote 7/14]
Address by Secretary of Defense Lovett before the American Society of Newspaper
Editors, Washington, April 18, 1952.
[Footnote 7/15]

Fiscal Year 1952, 65 Stat. 423, 760 (1951); F.Y. 1951, 64 Stat. 595, 1044, 1223, 65 Stat.
48 (1950-1951); F.Y. 1950, 63 Stat. 869, 973, 987 (1949); F.Y. 1949, 62 Stat. 647 (1948);
F.Y. 1948, 61 Stat. 551 (1947).
[Footnote 7/16]
See H.R.Rep. No. 1685, 82d Cong., 2d Sess. 2 (1952), on H.R. 7391.
[Footnote 7/17]
See H.R.Rep. No. 384, 82d Cong., 1st Sess. 5 (1951); 97 Cong.Rec. 13647-13649.
[Footnote 7/18]
Defense Production Act, Tit. III. 64 Stat. 798, 800 (1950), 65 Stat. 138 (1951).
[Footnote 7/19]
Note 18, supra, Tits. IV and V.
[Footnote 7/20]
S.Rep. No. 470, 82d Cong., 1st Sess. 8 (1951).
[Footnote 7/21]
Id. at 8-9.
[Footnote 7/22]
Exec.Order 10340, 17 Fed.Reg. 3139 (1952).
[Footnote 7/23]
Cong.Rec. April 9, 1952, pp. 3962-3963.
[Footnote 7/24]
Cong.Rec. April 21, 1952, p. 4192.
[Footnote 7/25]
Chicago & Southern Air Lines v. Waterman S.S. Corp., 333 U. S. 103, 333 U. S. 111
(1948), and cases cited.
[Footnote 7/26]
The Federalist, No. XLVIII.
[Footnote 7/27]

The Federalist, No. LXX.

[Footnote 7/28]
McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 415, 17 U. S. 424 (1819).
[Footnote 7/29]
United States v. Classic, 313 U. S. 299, 313 U. S. 315-316 (1941); Home Building & Loan
Assn. v. Blaisdell,290 U. S. 398, 290 U. S. 442 443 (1934).
[Footnote 7/30]
4 Annals of Congress 1411, 1413 (1794).
[Footnote 7/31]
IV Works of Hamilton (Lodge ed.1904) 432-444.
[Footnote 7/32]
10 Annals of Congress 596, 613-614 (1800); also printed in 5 Wheat. App. pp. 3, 27
(1820).
[Footnote 7/33]
10 Annals of Congress 619 (1800).
[Footnote 7/34]
Fong Yue Ting v. United States, 149 U. S. 698, 149 U. S. 714 (1893).
[Footnote 7/35]
See Prize Cases, 2 Black 635 (1863); Randall, Constitutional Problems Under Lincoln
(1926); Corwin, The President: Office and Powers (1948 ed.), 277-281.
[Footnote 7/36]
War of the Rebellion, Official Records of the Union and Confederate Armies, Series I, Vol.
II (1880), pp.603-604.
[Footnote 7/37]
12 Stat. 334 (1862)
[Footnote 7/38]
Senator Wade, Cong.Globe, 37th Cong., 2d Sess. 509 (1862); Rep. Blair, id. at 548.
[Footnote 7/39]

Senators Browning, Fessenden, Cowan, Grimes, id. at 510, 512, 516, 520.
[Footnote 7/40]
In 1818, the House Committee on Military Affairs recommended payment of
compensation for vessels seized by the Army during the War of 1812. American State
Papers, Claims (1834), 649. Mitchell v. Harmony, 13 How. 115, 54 U. S. 134 (1852),
involving seizure of a wagon train by an Army officer during the Mexican War, noted that
such executive seizure was proper in case of emergency, but affirmed a personal
judgment against the officer on the ground that no emergency had been found to exist.
The judgment was paid by the United States pursuant to Act of Congress. 10 Stat. 727
(1852).
[Footnote 7/41]
13 Wall. at 80 U. S. 627-628. Such a compensable taking was soon distinguished from
the noncompensable taking and destruction of property during the extreme exigencies of
a military campaign. United States v. Pacific R. Co., 120 U. S. 227 (1887).
[Footnote 7/42]
135 U.S. at 135 U. S. 64.
[Footnote 7/43]
Rich, The Presidents and Civil Disorder (1941), 72-86.
[Footnote 7/44]
Cleveland, The Government in the Chicago Strike of 1894 (1913).
[Footnote 7/45]
26 Cong.Rec. 7281-7284, 7544-7546 (1894).
[Footnote 7/46]
Theodore Roosevelt, Autobiography (1916 ed.), 479-491.
[Footnote 7/47]
Id. at 378.
[Footnote 7/48]
Humphrey's Executor v. United States, 295 U. S. 602, 295 U. S. 626 (1935), disapproved
expressions in theMyers opinion only to the extent that they related to the President's
power to remove members of quasi-legislative and quasi-judicial commissions as
contrasted with executive employees.

[Footnote 7/49]
Brief for the United States, No. 278, October Term, 1914, pp. 11, 75-77, 88-90.
[Footnote 7/50]
National War Labor Board. Bureau of Labor Statistics, Bull. 287 (1921).
[Footnote 7/51]
Id. at 24 25, 32-34. See also 2 Official U.S.Bull. (1918), No. 412; 8 Baker, Woodrow
Wilson, Life & Letters (1939), 400-402; Berman, Labor Disputes and the President (1924),
125-153; Pringle, The Life and Times of William Howard Taft (1939), 915-925.
[Footnote 7/52]
39 Stat. 619, 645 (1916), provides that the President may take possession of any system
of transportation in time of war. Following seizure of the railroads by President Wilson,
Congress enacted detailed legislation regulating the mode of federal control. 40 Stat.
451 (1918).
When Congress was considering the statute authorizing the President to seize
communications systems whenever he deemed such action necessary during the war, 40
Stat. 904 (1918), Senator (later President) Harding opposed on the ground that there was
no need for such stand-by powers because, in event of a present necessity, the Chief
Executive "ought to" seize communications lines, "else he would be unfaithful to his
duties as such Chief Executive." 56 Cong.Rec. 9064 (1918).
[Footnote 7/53]
48 Stat. 1689 (1933).
[Footnote 7/54]
54 Stat. 2643 (1939).
[Footnote 7/55]
55 Stat. 1647 (1941).
[Footnote 7/56]
86 Cong.Rec. 11354 (1940) (Message of the President). See 39 Op.Atty.Gen. 484 (1940).
Attorney General Jackson's opinion did not extend to the transfer of "mosquito boats,"
solely because an express statutory prohibition on transfer was applicable.
[Footnote 7/57]
87 Cong.Rec. 5868 (1941) (Message of the President).

[Footnote 7/58]
Powers of the President to Send the Armed Forces Outside the United States, Report
prepared by executive department for use of joint committee of Senate Committees on
Foreign Relations and Armed Services, 82d Cong., 1st Sess., Committee Print, 2 (1951).
[Footnote 7/59]
Exec.Order 8773, 6 Fed.Reg. 2777 (1941).
[Footnote 7/60]
See 89 Cong.Rec. 3992 (1943). The Attorney General also noted that the dispute at
North American Aviation was Communist-inspired, and more nearly resembled an
insurrection than a labor strike. The relative size of North American Aviation and the
impact of an interruption in production upon our defense effort were not described.
[Footnote 7/61]
87 Cong.Rec. 4932 (1941). See also S. 1600 and S. 2054, 77th Cong., 1st Sess. (1941).
[Footnote 7/62]
Reps. May, Whittington; 87 Cong.Rec. 5895, 5972 (1941).
[Footnote 7/63]
Reps. Dworshak, Feddis, Harter, Dirksen, Hook; 87 Cong.Rec. 5901, 5910, 5974, 5975
(1941).
[Footnote 7/64]
The plant seizure amendment passed the Senate, but was rejected in the House after a
Conference Committee adopted the amendment. 87 Cong.Rec. 6424 (1941).
[Footnote 7/65]
Exec.Order 8868, 6 Fed.Reg. 4349 (1941); Exec.Order 8928, 6 Fed.Reg. 5559 (1941).
[Footnote 7/66]
Exec.Order 9141, 7 Fed.Reg. 2961 (1942); Exec.Order 9220 7 Fed.Reg. 6413 (1942);
Exec.Order 9225, 7 Fed.Reg. 6627 (1942), Exec.Order 9254, 7 Fed.Reg. 8333 (1942);
Exec.Order 9351, 8 Fed.Reg. 8097 (1943).
[Footnote 7/67]
Exec.Order 9340, 8 Fed.Reg. 5695 (1943).
[Footnote 7/68]

Exec.Order 9017, 7 Fed.Reg. 237 (1942); 1 Termination Report of the National War Labor
Board 5-11.
[Footnote 7/69]
89 Cong.Rec. 3807 (1943). Similar views of the President's existing power were
expressed by Senators Lucas, Wheeler, Austin and Barkley. Id. at 3885-3887, 3896, 3992.
[Footnote 7/70]
89 cong. Rec. 3989-3992 (1943).
[Footnote 7/71]
S. 796, 78th cong., 1st Sess., 12, 13 (1943), as passed by the House.
[Footnote 7/72]
57 stat. 163, 164 (1943).
[Footnote 7/73]
40 Op.Atty.Gen. 312 (1944). See also Hearings before House Select committee to
Investigate Seizure of Montgomery Ward & Co., 78th Cong., 2d Sess. 117-132 (1944).
[Footnote 7/74]
39 Op.Atty.Gen. 343, 347 (1939)
[Footnote 7/75]
Note 60, supra.
[Footnote 7/76]
Letter introduced in Hearings before Senate Committee on Labor and Public Welfare on
S. 249, 81st Cong., 1st Sess. 232 (1949) pointing to the "exceedingly great" powers of
the President to deal with emergencies even before the Korean crisis.
[Footnote 7/77]
Exec.Order 9438, 9 Fed.Reg. 4459 (1944).
[Footnote 7/78]
H.R.Rep. No.1904, 78th Cong., 2d Sess. 25 (1944) (the Committee divided along party
lines).
[Footnote 7/79]
Exec.Order 9508, 9 Fed.Reg. 15079 (1944).

[Footnote 7/80]
United States v. Montgomery Ward & Co., 150 F.2d 369 (c A. 7th Cir.1945), reversing 58
F.Supp. 408 (N.D.Ill.1945). See also Ken-Rad Tube & Lamp Corp. v. Badeau, 55 F.Supp.
193, 197-199 (W. D. Ky.1944), where the court held that a seizure was proper with or
without express statutory authorization.
[Footnote 7/81]
United States Policy in the Korean Crisis (1950), Dept. of State Pub. 3922.
[Footnote 7/82]
15 Fed.Reg. 9029 (1950).
[Footnote 7/83]
Harrison, This Country of Ours (1897), 98.
[Footnote 7/84]
62 Stat. 604, 626 (1948), 50 U.S.C. App. (Supp. IV) 468(c).
[Footnote 7/85]
62 Stat. 604, 627 (1948), 50 U.S.C. App. (Supp. IV) 468(h)(1).
[Footnote 7/86]
Tit. II, 64 Stat. 798, 799 (1950), as amended, 65 Stat. 138 (1951).
[Footnote 7/87]
Home Building Loan Assn. v. Blaisdell, 290 U. S. 398, 290 U. S. 425 426 (1934).
[Footnote 7/88]
See Bus Employees v. Wisconsin Board, 340 U. S. 383 (1951).
[Footnote 7/89]
206-210, Labor Management Relations Act of 1947. 29 U.S.C. (Supp.IV) 176-180.
[Footnote 7/90]
64 Stat. 812, 65 Stat. 132 (1950).
[Footnote 7/91]
H.R.Rep. No. 3042, 81st Cong., 2d Sess. 35 (1950) (Conference Report). See also S.Rep.
No. 2250, 81st Cong., 2d Sess. 41 (1950).

[Footnote 7/92]
Exec.Order 10161, 15 Fed.Reg. 6105 (1950), as amended, Exec.Order 10233, 16
Fed.Reg. 3503 (1951).
[Footnote 7/93]
Hearings before the House Committee on Banking and Currency on Defense Production
Act Amendments of 1951, 82d Cong., 1st Sess. 305-306, 312-313 (1951).
[Footnote 7/94]
The Lucas Amendment to abolish the disputes function of the WSB was debated at
length in the House, the sponsor of the amendment pointing out the similarity of the
WSB functions to those of the War Labor Board and noting the seizures that occurred
when War Labor Board orders were not obeyed. 97 Cong.Rec. 8390-8415. The
amendment was rejected by a vote of 217 to 113. Id. at 8415. A similar amendment
introduced in the Senate was withdrawn. 97 Cong.Rec. 7373-7374. The Defense
Production Act was extended without amending Tit. V or otherwise affecting the disputes
functions of the WSB. 65 Stat. 132 (1951).
[Footnote 7/95]
Compare Sterling v. Constantin, 287 U. S. 378, 287 U. S. 399-401 (1932).
Disclaimer: Official Supreme Court case law is only found in the print version of the
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only, and may not reflect current legal developments, verdicts or settlements. We make
no warranties or guarantees about the accuracy, completeness, or adequacy of the
information contained on this site or information linked to from this site. Please check
official sources.
6.

BOWSHER V SYNAR

BOWSHER v. SYNAR
478 U.S. 714 (1986)
Decided July 7, 1986

CHIEF JUSTICE BURGER delivered the opinion of the Court.

The question presented by these appeals is whether the assignment by Congress to the
Comptroller General of the United States of certain functions under the Balanced Budget
and Emergency Deficit Control Act of 1985 violates the doctrine of separation of powers.
I
A
On December 12, 1985, the President signed into law the Balanced Budget and
Emergency Deficit Control Act of 1985, popularly known as the "Gramm-Rudman-Hollings
Act." The purpose of the Act is to eliminate the federal budget deficit. To that end, the
Act sets a "maximum deficit amount" for federal spending for each of fiscal years 1986
through 1991. The size of that maximum deficit amount progressively reduces to zero in
fiscal year 1991. If in any fiscal year the federal budget deficit exceeds the maximum
deficit amount by more than a specified sum, the Act requires across-the-board cuts in
federal spending to reach the targeted deficit level, with half of the cuts made to defense
programs and the other half made to nondefense programs. The Act exempts certain
priority programs from these cuts.
These "automatic" reductions are accomplished through a rather complicated procedure.
Each year, the Directors of the Office of Management and Budget (OMB) and the
Congressional Budget Office (CBO) independently estimate the amount of the federal
budget deficit for the upcoming fiscal year. If that deficit exceeds the maximum targeted
deficit amount for that fiscal year by more than a specified amount, the Directors of OMB
and CBO independently calculate, on a program-by-program basis, the budget reductions
necessary to ensure that the deficit does not exceed the maximum deficit amount. The
Act then requires the Directors to report jointly their deficit estimates and budget
reduction calculations to the Comptroller General.
The Comptroller General, after reviewing the Directors' reports, then reports his
conclusions to the President. The President in turn must issue a "sequestration" order
mandating the spending reductions specified by the Comptroller General. There follows a
period during which Congress may by legislation reduce spending to obviate, in whole or
in part, the need for the sequestration order. If such reductions are not enacted, the
sequestration order becomes effective and the spending reductions included in that
order are made....

B
Within hours of the President's signing of the Act, Congressman Synar, who had voted
against the Act, filed a complaint seeking declaratory relief that the Act was
unconstitutional. Eleven other Members later joined Congressman Synar's suit. A
virtually identical lawsuit was also filed by the National Treasury Employees Union....

A three-judge District Court invalidated the reporting provisions....Although the District

Court concluded that the Act survived a delegation doctrine challenge, it held that the
role of the Comptroller General in the deficit reduction process violated the
constitutionally imposed separation of powers...We noted probable jurisdiction and
expedited consideration of the appeals. We affirm....

III
....The Constitution does not contemplate an active role for Congress in the supervision
of officers charged with the execution of the laws it enacts....
In light of these precedents, we conclude that Congress cannot reserve for itself the
power of removal of an officer charged with the execution of the laws except by
impeachment. To permit the execution of the laws to be vested in an officer answerable
only to Congress would, in practical terms, reserve in Congress control over the
execution of the laws. As the District Court observed: "Once an officer is appointed, it is
only the authority that can remove him, and not the authority that appointed him, that
he must fear and, in the performance of his functions, obey." The structure of the
Constitution does not permit Congress to execute the laws; it follows that Congress
cannot grant to an officer under its control what it does not possess.
Our decision in INS v. Chadha (1983), supports this conclusion.... To permit an officer
controlled by Congress to execute the laws would be, in essence, to permit a
congressional veto. Congress could simply remove, or threaten to remove, an officer for
executing the laws in any fashion found to be unsatisfactory to Congress. This kind of
congressional control over the execution of the laws, Chadha makes clear, is
constitutionally impermissible....

IV
Appellants urge that the Comptroller General performs his duties independently and is
not subservient to Congress. We agree with the District Court that this contention does
not bear close scrutiny.
The critical factor lies in the provisions of the statute defining the Comptroller General's
office relating to removability. Although the Comptroller General is nominated by the
President from a list of three individuals recommended by the Speaker of the House of
Representatives and the President pro tempore of the Senate, and confirmed by the
Senate, he is removable only at the initiative of Congress. He may be removed not only
by impeachment but also by joint resolution of Congress "at any time" resting on any one

of the following bases: "(i) permanent disability; (ii) inefficiency; (iii) neglect of duty; (iv)
malfeasance; or (v) a felony or conduct involving moral turpitude."
This provision was included, as one Congressman explained in urging passage of the Act,
because Congress "felt that [the Comptroller General] should be brought under the sole
control of Congress, so that Congress at any moment when it found he was inefficient
and was not carrying on the duties of his office as he should and as the Congress
expected, could remove him without the long, tedious process of a trial by
impeachment."
The removal provision was an important part of the legislative scheme, as a number of
Congressmen recognized....
We need not decide whether "inefficiency" or "malfeasance" are terms as broad as
"maladministration" in order to reject the dissent's position that removing the
Comptroller General requires "a feat of bipartisanship more difficult than that required to
impeach and convict." Surely no one would seriously suggest that judicial independence
would be strengthened by allowing removal of federal judges only by a joint resolution
finding "inefficiency," "neglect of duty," or "malfeasance."
It is clear that Congress has consistently viewed the Comptroller General as an officer of
the Legislative Branch.... Over the years, the Comptrollers General have also viewed
themselves as part of the Legislative Branch....
Against this background, we see no escape from the conclusion that, because Congress
has retained removal authority over the Comptroller General, he may not be entrusted
with executive powers. The remaining question is whether the Comptroller General has
been assigned such powers in the Balanced Budget and Emergency Deficit Control Act of
1985.
V
....Appellants suggest that the duties assigned to the Comptroller General in the Act are
essentially ministerial and mechanical so that their performance does not constitute
"execution of the law" in a meaningful sense. On the contrary, we view these functions
as plainly entailing execution of the law in constitutional terms. Interpreting a law
enacted by Congress to implement the legislative mandate is the very essence of
"execution" of the law. Under 251, the Comptroller General must exercise judgment
concerning facts that affect the application of the Act. He must also interpret the
provisions of the Act to determine precisely what budgetary calculations are required.
Decisions of that kind are typically made by officers charged with executing a statute.
The executive nature of the Comptroller General's functions under the Act is revealed in
252(a)(3) which gives the Comptroller General the ultimate authority to determine the
budget cuts to be made. Indeed, the Comptroller General commands the President

himself to carry out, without the slightest variation (with exceptions not relevant to the
constitutional issues presented), the directive of the Comptroller General as to the
budget reductions....
See also 251(d)(3)(A).
...By placing the responsibility for execution of the Balanced Budget and Emergency
Deficit Control Act in the hands of an officer who is subject to removal only by itself,
Congress in effect has retained control over the execution of the Act and has intruded
into the executive function. The Constitution does not permit such intrusion....
JUSTICE WHITE, dissenting.
The Court, acting in the name of separation of powers, takes upon itself to strike down
the Gramm-Rudman-Hollings Act, one of the most novel and far-reaching legislative
responses to a national crisis since the New Deal. The basis of the Court's action is a
solitary provision of another statute that was passed over 60 years ago and has lain
dormant since that time. I cannot concur in the Court's action. Like the Court, I will not
purport to speak to the wisdom of the policies incorporated in the legislation the Court
invalidates; that is a matter for the Congress and the Executive, both of which expressed
their assent to the statute barely half a year ago. I will, however, address the wisdom of
the Court's willingness to interpose its distressingly formalistic view of separation of
powers as a bar to the attainment of governmental objectives through the means chosen
by the Congress and the President in the legislative process established by the
Constitution. Twice in the past four years I have expressed my view that the Court's
recent efforts to police the separation of powers have rested on untenable constitutional
propositions leading to regrettable results. Today's result is even more misguided. As I
will explain, the Court's decision rests on a feature of the legislative scheme that is of
minimal practical significance and that presents no substantial threat to the basic
scheme of separation of powers. In attaching dispositive significance to what should be
regarded as a triviality, the Court neglects what has in the past been recognized as a
fundamental principle governing consideration of disputes over separation of powers:
"The actual art of governing under our Constitution does not and cannot conform to
judicial definitions of the power of any of its branches based on isolated clauses or even
single Articles torn from context. While the Constitution diffuses power the better to
secure liberty, it also contemplates that practice will integrate the dispersed powers into
a workable government"....
The majority's conclusion rests on the rigid dogma that, outside of the impeachment
process, any "direct congressional role in the removal of officers charged with the
execution of the laws . . . is inconsistent with separation of powers." Reliance on such an
unyielding principle to strike down a statute posing no real danger of aggrandizement of
congressional power is extremely misguided and insensitive to our constitutional role.

The wisdom of vesting "executive" powers in an officer removable by joint resolution

may indeed be debatable - as may be the wisdom of the entire scheme of permitting an
unelected official to revise the budget enacted by Congress - but such matters are for
the most part to be worked out between the Congress and the President through the
legislative process, which affords each branch ample opportunity to defend its interests.
The Act vesting budget-cutting authority in the Comptroller General represents Congress'
judgment that the delegation of such authority to counteract ever-mounting deficits is
"necessary and proper" to the exercise of the powers granted the Federal Government
by the Constitution; and the President's approval of the statute signifies his unwillingness
to reject the choice made by Congress. Under such circumstances, the role of this Court
should be limited to determining whether the Act so alters the balance of authority
among the branches of government as to pose a genuine threat to the basic division
between the lawmaking power and the power to execute the law. Because I see no such
threat, I cannot join the Court in striking down the Act.
I dissent.
7.

SENATE V ERMITA

G.R. No. 169777*

April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as

Senate President, 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" EJERCITO ESTRADA, JUAN PONCE
ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM, M. A. MADRIGAL,
SERGIO OSMENA III, RALPH G. RECTO, and MAR ROXAS, Petitioners,
vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President
Gloria Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of
the Philippines,Respondents.
x-------------------------x
G.R. No. 169659

April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep.
CRISPIN BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep.
JOEL VIRADOR, COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE
DEFENSE OF LIBERTIES (CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners,

vs.
EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President
Gloria Macapagal-Arroyo, Respondent.
x-------------------------x
G.R. No. 169660

April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner,

vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his
capacity as Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief
of Staff, Respondents.
x-------------------------x
G.R. No. 169667

April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,

vs.
HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent.
x-------------------------x
G.R. No. 169834

April 20, 2006

PDP- LABAN, Petitioner,

vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
x-------------------------x
G.R. No. 171246

April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR

AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B.
JOVY C. BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED BAR
FOR THE PHILIPPINES,Petitioners,
vs.
HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION

CARPIO MORALES, J.:

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 information confidential in pursuit of the public interest.
Explaining the reason for vesting executive power in only one magistrate, a distinguished
delegate to the U.S. Constitutional Convention said: "Decision, activity, secrecy, and
dispatch will generally characterize the proceedings of one man, in a much more
eminent degree than the proceedings of any greater number; and in proportion as the
number is increased, these qualities will be diminished."1
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.
The present consolidated petitions for certiorari and prohibition proffer that the President
has abused 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.
In resolving the controversy, this Court shall proceed with the recognition that the
issuance under review has come from a co-equal branch of government, which thus
entitles it to a strong presumption of 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.
In the exercise of its legislative power, the Senate of the Philippines, through its various
Senate 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 Arroyos 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
Senates 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 Courts 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 Munas 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-infact."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 Courts 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
In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino
(Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano
(Anakpawis), and Liza Maza (Gabriela) are allowed to sue to question the
constitutionality of E.O. 464, the absence of any claim that an investigation called by the
House of Representatives or any of its committees was aborted due to the

implementation of E.O. 464 notwithstanding, it being sufficient that a claim is made that
E.O. 464 infringes on their constitutional rights and duties as members of Congress to
conduct investigation in aid of legislation and conduct oversight functions in the
implementation of laws.
The national political party, Bayan Muna, likewise meets the standing requirement as it
obtained three seats in the House of Representatives in the 2004 elections and is,
therefore, entitled to participate in the legislative process consonant with the declared
policy underlying the party list system of affording 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
As Bayan Muna and Representatives Ocampo et al. have the standing to file their
petitions, passing on the standing of their co-petitioners Courage and Codal is rendered
unnecessary.49
In filing their respective petitions, Chavez, the ALG which claims to be an organization of
citizens, and the incumbent members of the IBP Board of Governors and the IBP in behalf
of its lawyer members,50 invoke their constitutional right to information on matters of
public concern, asserting that the right to information, curtailed and violated by E.O. 464,
is essential to the effective exercise of other 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
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-Labans 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.
Respondents counter that there is no case or controversy, there being no showing that
President Arroyo has actually withheld her consent or prohibited the appearance of the
invited officials.56 These officials, they claim, merely communicated to the Senate that
they have not yet secured the consent of the President, not that the President prohibited
their attendance.57 Specifically with regard to the AFP officers who did not attend the
hearing on September 28, 2005, respondents claim that the instruction not to attend
without the Presidents consent was based on its role as Commander-in-Chief of the
Armed Forces, not on E.O. 464.
Respondents thus conclude that the petitions merely rest on an unfounded apprehension
that the President will abuse its power of preventing the appearance of officials before
Congress, and that such apprehension is not sufficient for challenging the validity of E.O.
464.
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 withholding of consent or an express prohibition
issuing from the President in order to bar officials from appearing before Congress.
As the implementation of the challenged order has already resulted in the absence of
officials invited to the hearings of petitioner Senate of the Philippines, it would make no
sense to wait for any further event before considering the present case ripe for
adjudication. Indeed, it would be sheer abandonment of duty if this Court would now
refrain from passing on the constitutionality of E.O. 464.
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 Senates 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 coextensive 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 Courts 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 Houses 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 informers 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
Tribes 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)
The entry in Blacks Law Dictionary on "executive privilege" is similarly instructive
regarding the scope of the doctrine.
This privilege, based on the constitutional doctrine of separation of powers, exempts the
executive from disclosure requirements applicable to the ordinary citizen or organization
where such exemption is 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 integral to an appropriate
exercise of the executive domestic decisional and policy making functions, that is, those
documents reflecting the frank expression necessary in intra-governmental advisory and
deliberative communications.70 (Emphasis and underscoring supplied)
That a type of information is recognized as privileged does not, however, necessarily
mean that it would be considered privileged in all instances. For in determining the
validity of a claim of privilege, the question that must be asked is not only whether the
requested information falls within one of the traditional privileges, but also whether that
privilege should be honored in a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided
in 1974. In issue in that case was the validity of President Nixons claim of executive
privilege against a subpoena issued by a district court requiring the production of certain
tapes and documents relating to the Watergate investigations. The claim of privilege was
based on the Presidents general interest in the confidentiality of his conversations and
correspondence. The U.S. Court held that while there is no explicit reference to a
privilege of confidentiality in the U.S. Constitution, it is constitutionally based to the
extent that it relates to the effective discharge of a Presidents powers. The Court,
nonetheless, rejected the Presidents 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 Washingtons 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 Presidents 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.77Almonte 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)
Almonte involved a subpoena duces tecum issued by the Ombudsman against the
therein petitioners. It 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 from the public, thus acknowledging,
in substance if not in name, that executive privilege may be claimed against citizens
demands for information.
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law
holding that there is a "governmental privilege against public disclosure with respect to
state secrets regarding military, diplomatic and other national security matters."80 The
same case held that closed-door Cabinet meetings are also a recognized limitation on
the right to information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to
information does not extend to matters recognized as "privileged information under the
separation of powers,"82 by which the Court meant Presidential conversations,
correspondences, and discussions in closed-door Cabinet 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
prosecution of the accused were exempted from the right to information.

From the above discussion on the meaning and scope of executive privilege, both in the
United States and in this jurisdiction, 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.
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--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--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 Davides 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 Maambongs 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 officials 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 Ermitas 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 decisionmaking 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 claimants 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 claimants 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 claimants 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 Courts 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 Presidents 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
peoples 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 legislatures
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, Taada 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 accomplishwas 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.
CONCHITA CARPIO MORALES
Associate Justice

8.

BIRAOGO V PHIL TRUTH COMM

LOUIS BAROK C. BIRAOGO,

Petitioner,

- versus -

THE PHILIPPINE TRUTH COMMISSION OF 2010,

Respondent.
x-----------------------x
REP. EDCEL C. LAGMAN,
REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP. ORLANDO B.
FUA, SR.,
Petitioners,

- versus -

EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND

MANAGEMENT SECRETARY FLORENCIO B. ABAD,
Respondents.

G.R. No. 192935

G.R. No. 193036

Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,

BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.

Promulgated:

December 7, 2010

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

DECISION

MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of
the legislature, but only asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights which that instrument
secures and guarantees to them.

--- Justice Jose P. Laurel[1]

The role of the Constitution cannot be overlooked. It is through the Constitution that the
fundamental powers of government are established, limited and defined, and by which
these powers are distributed among the several departments.[2] The Constitution is the
basic and paramount law to which all other laws must conform and to which all persons,
including the highest officials of the land, must defer.[3] Constitutional doctrines must
remain steadfast no matter what may be the tides of time. It cannot be simply made to
sway and accommodate the call of situations and much more tailor itself to the whims
and caprices of government and the people who run it.[4]

For consideration before the Court are two consolidated cases[5] both of which
essentially assail the validity and constitutionality of Executive Order No. 1, dated July
30, 2010, entitled Creating the Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted by
petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo
assails Executive Order No. 1 for being violative of the legislative power of Congress
under Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority
of the legislature to create a public office and to appropriate funds therefor.[7]

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition
filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and
Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of
Representatives.

The genesis of the foregoing cases can be traced to the events prior to the historic May
2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch
condemnation of graft and corruption with his slogan, Kung walang corrupt, walang
mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this
noble objective, catapulted the good senator to the presidency.

To transform his campaign slogan into reality, President Aquino found a need for a
special body to investigate reported cases of graft and corruption allegedly committed
during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive
Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission).
Pertinent provisions of said executive order read:
EXECUTIVE ORDER NO. 1

CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly
enshrines the principle that a public office is a public trust and mandates that public
officers and employees, who are servants of the people, must at all times be accountable
to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act
with patriotism and justice, and lead modest lives;

WHEREAS, corruption is among the most despicable acts of defiance of this principle and
notorious violation of this mandate;

WHEREAS, corruption is an evil and scourge which seriously affects the political,
economic, and social life of a nation; in a very special way it inflicts untold misfortune
and misery on the poor, the marginalized and underprivileged sector of society;

WHEREAS, corruption in the Philippines has reached very alarming levels, and
undermined the peoples trust and confidence in the Government and its institutions;

WHEREAS, there is an urgent call for the determination of the truth regarding certain
reports of large scale graft and corruption in the government and to put a closure to
them by the filing of the appropriate cases against those involved, if warranted, and to
deter others from committing the evil, restore the peoples faith and confidence in the
Government and in their public servants;

WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last
elections kung walang corrupt, walang mahirap expresses a solemn pledge that if
elected, he would end corruption and the evil it breeds;

WHEREAS, there is a need for a separate body dedicated solely to investigating and
finding out the truth concerning the reported cases of graft and corruption during the
previous administration, and which will recommend the prosecution of the offenders and
secure justice for all;
WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known
as the Revised Administrative Code of the Philippines, gives the President the continuing
authority to reorganize the Office of the President.

NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby order:

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH

COMMISSION, hereinafter referred to as the COMMISSION,which shall primarily seek and
find the truth on, and toward this end, investigate reports of graft and corruption of such
scale and magnitude that shock and offend the moral and ethical sensibilities of the
people, committed by public officers and employees, their co-principals, accomplices and
accessories from the private sector, if any, during the previous administration; and
thereafter recommend the appropriate action or measure to be taken thereon to ensure
that the full measure of justice shall be served without fear or favor.
The Commission shall be composed of a Chairman and four (4) members who will act as
an independent collegial body.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an
investigative body under Section 37, Chapter 9, Book I of the Administrative Code of
1987, is primarily tasked to conduct a thorough fact-finding investigation of reported
cases of graft and corruption referred to in Section 1, involving third level public officers
and higher, their co-principals, accomplices and accessories from the private sector, if
any, during the previous administration and thereafter submit its finding and
recommendations to the President, Congress and the Ombudsman.
In particular, it shall:

a)
Identify and determine the reported cases of such graft and corruption which it will
investigate;

b)
Collect, receive, review and evaluate evidence related to or regarding the cases of
large scale corruption which it has chosen to investigate, and to this end require any
agency, official or employee of the Executive Branch, including government-owned or
controlled corporations, to produce documents, books, records and other papers;

c)
Upon proper request or representation, obtain information and documents from the
Senate and the House of Representatives records of investigations conducted by
committees thereof relating to matters or subjects being investigated by the
Commission;

d)
Upon proper request and representation, obtain information from the courts,
including the Sandiganbayan and the Office of the Court Administrator, information or
documents in respect to corruption cases filed with the Sandiganbayan or the regular
courts, as the case may be;

e)
Invite or subpoena witnesses and take their testimonies and for that purpose,
administer oaths or affirmations as the case may be;

f)
Recommend, in cases where there is a need to utilize any person as a state
witness to ensure that the ends of justice be fully served, that such person who qualifies
as a state witness under the Revised Rules of Court of the Philippines be admitted for
that purpose;

g)
Turn over from time to time, for expeditious prosecution, to the appropriate
prosecutorial authorities, by means of a special or interim report and recommendation,
all evidence on corruption of public officers and employees and their private sector coprincipals, accomplices or accessories, if any, when in the course of its investigation the
Commission finds that there is reasonable ground to believe that they are liable for graft
and corruption under pertinent applicable laws;

h)
Call upon any government investigative or prosecutorial agency such as the
Department of Justice or any of the agencies under it, and the Presidential Anti-Graft
Commission, for such assistance and cooperation as it may require in the discharge of its
functions and duties;

i)
Engage or contract the services of resource persons, professionals and other
personnel determined by it as necessary to carry out its mandate;

j)
Promulgate its rules and regulations or rules of procedure it deems necessary to
effectively and efficiently carry out the objectives of this Executive Order and to ensure
the orderly conduct of its investigations, proceedings and hearings, including the
presentation of evidence;

k)
Exercise such other acts incident to or are appropriate and necessary in connection
with the objectives and purposes of this Order.
SECTION 3. Staffing Requirements. x x x.

SECTION 4. Detail of Employees. x x x.

SECTION 5. Engagement of Experts. x x x

SECTION 6. Conduct of Proceedings. x x x.

SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.
SECTION 8. Protection of Witnesses/Resource Persons. x x x.
SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government
official or personnel who, without lawful excuse, fails to appear upon subpoena issued by
the Commission or who, appearing before the Commission refuses to take oath or
affirmation, give testimony or produce documents for inspection, when required, shall be
subject to administrative disciplinary action. Any private person who does the same may
be dealt with in accordance with law.
SECTION 10. Duty to Extend Assistance to the Commission. x x x.
SECTION 11. Budget for the Commission. The Office of the President shall provide the
necessary funds for the Commission to ensure that it can exercise its powers, execute its
functions, and perform its duties and responsibilities as effectively, efficiently, and
expeditiously as possible.
SECTION 12. Office. x x x.

SECTION 13. Furniture/Equipment. x x x.

SECTION 14. Term of the Commission. The Commission shall accomplish its mission on or
before December 31, 2012.

SECTION 15. Publication of Final Report. x x x.

SECTION 16. Transfer of Records and Facilities of the Commission. x x x.

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the
President there is a need to expand the mandate of the Commission as defined in
Section 1 hereof to include the investigation of cases and instances of graft and
corruption during the prior administrations, such mandate may be so extended
accordingly by way of a supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is declared

unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.

SECTION 19. Effectivity. This Executive Order shall take effect immediately.

DONE in the City of Manila, Philippines, this 30th day of July 2010.

(SGD.) BENIGNO S. AQUINO III

By the President:

(SGD.) PAQUITO N. OCHOA, JR.

Executive Secretary

Nature of the Truth Commission

As can be gleaned from the above-quoted provisions, the Philippine Truth Commission
(PTC) is a mere ad hoc body formed under the Office of the President with the primary
task to investigate reports of graft and corruption committed by third-level public officers
and employees, their co-principals, accomplices and accessories during the previous
administration, and thereafter to submit its finding and recommendations to the
President, Congress and the Ombudsman. Though it has been described as an
independent collegial body, it is essentially an entity within the Office of the President
Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc
body is one.[8]

To accomplish its task, the PTC shall have all the powers of an investigative body under
Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a
quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards
indisputes between contending parties. All it can do is gather, collect and assess
evidence of graft and corruption and make recommendations. It may have subpoena
powers but it has no power to cite people in contempt, much less order their arrest.
Although it is a fact-finding body, it cannot determine from such facts if probable cause
exists as to warrant the filing of an information in our courts of law. Needless to state, it
cannot impose criminal, civil or administrative penalties or sanctions.
The PTC is different from the truth commissions in other countries which have been
created as official, transitory and non-judicial fact-finding bodies to establish the facts
and context of serious violations of human rights or of international humanitarian law in
a countrys past.[9]They are usually established by states emerging from periods of
internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional
justice.

Truth commissions have been described as bodies that share the following
characteristics: (1) they examine only past events; (2) they investigate patterns of abuse
committed over a period of time, as opposed to a particular event; (3) they are
temporary bodies that finish their work with the submission of a report containing
conclusions and recommendations; and (4) they are officially sanctioned, authorized or
empowered by the State.[10] Commissions members are usually empowered to conduct
research, support victims, and propose policy recommendations to prevent recurrence of
crimes. Through their investigations, the commissions may aim to discover and learn

more about past abuses, or formally acknowledge them. They may aim to prepare the
way for prosecutions and recommend institutional reforms.[11]

Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo
war crime tribunals are examples of a retributory or vindicatory body set up to try and
punish those responsible for crimes against humanity. A form of a reconciliatory tribunal
is the Truth and Reconciliation Commission of South Africa, the principal function of
which was to heal the wounds of past violence and to prevent future conflict by providing
a cathartic experience for victims.

The PTC is a far cry from South Africas model. The latter placed more emphasis on
reconciliation than on judicial retribution, while themarching order of the PTC is the
identification and punishment of perpetrators. As one writer[12] puts it:

The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino
in his inaugural speech: To those who talk about reconciliation, if they mean that they
would like us to simply forget about the wrongs that they have committed in the past, we
have this to say: There can be no reconciliation without justice. When we allow crimes to
go unpunished, we give consent to their occurring over and over again.

The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked the
Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A
perusal of the arguments of the petitioners in both cases shows that they are essentially
the same. The petitioners-legislators summarized them in the following manner:

(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress
to create a public office and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987
cannot legitimize E.O. No. 1 because the delegated authority of the President to
structurally reorganize the Office of the President to achieve economy, simplicity and
efficiency does not include the power to create an entirely new public office which was
hitherto inexistent like the Truth Commission.

(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested
the Truth Commission with quasi-judicial powers duplicating, if not superseding, those of
the Office of the Ombudsman created under the 1987 Constitution and the Department
of Justice created under the Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for
investigation and prosecution officials and personnel of the previous administration as if
corruption is their peculiar species even as it excludes those of the other administrations,
past and present, who may be indictable.

(e) The creation of the Philippine Truth Commission of 2010 violates the consistent and
general international practice of four decades wherein States constitute truth
commissions to exclusively investigate human rights violations, which customary
practice forms part of the generally accepted principles of international law which the
Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined
in the Constitution.

(f) The creation of the Truth Commission is an exercise in futility, an adventure in

partisan hostility, a launching pad for trial/conviction by publicity and a mere populist
propaganda to mistakenly impress the people that widespread poverty will altogether
vanish if corruption is eliminated without even addressing the other major causes of
poverty.

(g) The mere fact that previous commissions were not constitutionally challenged is of no
moment because neither laches nor estoppel can bar an eventual question on the
constitutionality and validity of an executive issuance or even a statute.[13]

In their Consolidated Comment,[14] the respondents, through the Office of the Solicitor
General (OSG), essentially questioned the legal standing of petitioners and defended the
assailed executive order with the following arguments:

1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because
the Presidents executive power and power of control necessarily include the inherent

power to conduct investigations to ensure that laws are faithfully executed and that, in
any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), [15]
Presidential Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No. 9970,
[17] and settled jurisprudence that authorize the President to create or form such bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is
no appropriation but a mere allocation of funds already appropriated by Congress.

3] The Truth Commission does not duplicate or supersede the functions of the Office of
the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a factfinding body and not a quasi-judicial body and its functions do not duplicate, supplant or
erode the latters jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it was
validly created for laudable purposes.

The OSG then points to the continued existence and validity of other executive orders
and presidential issuances creating similar bodies to justify the creation of the PTC such
as Presidential Complaint and Action Commission (PCAC) by President Ramon B.
Magsaysay, Presidential Committee on Administrative Performance Efficiency (PCAPE) by
President Carlos P. Garcia and Presidential Agency on Reform and Government
Operations (PARGO) by President Ferdinand E. Marcos.[18]
From the petitions, pleadings, transcripts, and memoranda, the following are the
principal issues to be resolved:

1.
Whether or not the petitioners have the legal standing to file their
respective petitions and question Executive Order No. 1;

2.
Whether or not Executive Order No. 1 violates the principle of
separation of powers by usurping the powers of Congress to create and to appropriate
funds for public offices, agencies and commissions;
3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and
the DOJ;

4. Whether or not Executive Order No. 1 violates the equal protection clause; and

5. Whether or not petitioners are entitled to injunctive relief.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1,
the Court needs to ascertain whether the requisites for a valid exercise of its power of
judicial review are present.

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 the standing
to question 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.[19]

Among all these limitations, only the legal standing of the petitioners has been put at
issue.

Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition
for failure to demonstrate their personal stake in the outcome of the case. It argues that
the petitioners have not shown that they have sustained or are in danger of sustaining
any personal injury attributable to the creation of the PTC. Not claiming to be the subject
of the commissions investigations, petitioners will not sustain injury in its creation or as a
result of its proceedings.[20]

The Court disagrees with the OSG in questioning the legal standing of the petitionerslegislators to assail Executive Order No. 1. Evidently, their petition primarily invokes
usurpation of the power of the Congress as a body to which they belong as members.
This certainly justifies their resolve to take the cudgels for Congress as an institution and
present the complaints on the usurpation of their power and rights as members of the
legislature before the Court. As held in Philippine Constitution Association v. Enriquez,
[21]

To the extent the powers of Congress are impaired, so is the power of each member
thereof, since his office confers a right to participate in the exercise of the powers of that
institution.
An act of the Executive which injures the institution of Congress causes a derivative but
nonetheless substantial injury, which can be questioned by a member of Congress. In
such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and
privileges vested by the Constitution in their office remain inviolate. Thus, they are
allowed to question the validity of any official action which, to their mind, infringes on
their prerogatives as legislators.[22]

With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to
question the creation of the PTC and the budget for its operations.[23] It emphasizes that
the funds to be used for the creation and operation of the commission are to be taken
from those funds already appropriated by Congress. Thus, the allocation and
disbursement of funds for the commission will not entail congressional action but will
simply be an exercise of the Presidents power over contingent funds.

As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in
danger of sustaining, any personal and direct injury attributable to the implementation of
Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may
justify his clamor for the Court to exercise judicial power and to wield the axe over
presidential issuances in defense of the Constitution. The case of David v. Arroyo[24]
explained the deep-seated rules on locus standi. Thus:

Locus standi is defined as a right of appearance in a court of justice on a given question.

In private suits, standing is governed by the real-parties-in interest rule as contained in

Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that every
action must be prosecuted or defended in the name of the real party in interest.
Accordingly, the real-party-in interest is 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. Succinctly put,
the plaintiffs standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff who
asserts a public right in assailing an allegedly illegal official action, does so as a
representative of the general public. He may be a person who is affected no differently
from any other person. He could be suing as a stranger, or in the category of a citizen, or
taxpayer. In either case, he has to adequately show that he is entitled to seek judicial
protection. In other words, he has to make out a sufficient interest in the vindication of
the public order and the securing of relief as a citizen or taxpayer.

Case law in most jurisdictions now allows both citizen and taxpayer standing in public
actions. The distinction was first laid down inBeauchamp v. Silk, where it was held that
the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens
suit. In the former, the plaintiff is affected by the expenditure of public funds, while in the
latter, he is but the mere instrument of the public concern.As held by the New York
Supreme Court in People ex rel Case v. Collins: In matter of mere public right,
howeverthe people are the real partiesIt is at least the right, if not the duty, of every
citizen to interfere and see that a public offence be properly pursued and punished, and
that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held
that the right of a citizen and a taxpayer to maintain an action in courts to restrain the
unlawful use of public funds to his injury cannot be denied.

However, to prevent just about any person from seeking judicial interference in any
official policy or act with which he disagreed with, and thus hinders the activities of
governmental agencies engaged in public service, the United State Supreme Court laid
down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v.
Ullman. The same Court ruled that for a private individual to invoke the judicial power to
determine the validity of an executive or legislative action, he must show that he has
sustained a direct injury as a result of that action, and it is not sufficient that he has a
general interest common to all members of the public.

This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it held that
the 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 Veradoctrine was upheld in a litany of cases, such as, Custodio v. President of the
Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v. Secretary of
Public Works and Anti-Chinese League of the Philippines v. Felix. [Emphases included.
Citations omitted]

Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of
procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens,
taxpayers, and legislators when the public interest so requires, such as when the matter
is oftranscendental importance, of overreaching significance to society, or of paramount
public interest.[25]

Thus, in Coconut Oil Refiners Association, Inc. v. Torres,[26] the Court held that in cases
of paramount importance where serious constitutional questions are involved, the
standing requirements may be relaxed and a suit may be allowed to prosper even where
there is no direct injury to the party claiming the right of judicial review. In the first
Emergency Powers Cases,[27] ordinary citizens and taxpayers were allowed to question
the constitutionality of several executive orders although they had only an indirect and
general interest shared in common with the public.

The OSG claims that the determinants of transcendental importance[28] laid down in
CREBA v. ERC and Meralco[29] are non-existent in this case. The Court, however, finds
reason in Biraogos assertion that the petition covers matters of transcendental
importance to justify the exercise of jurisdiction by the Court. There are constitutional
issues in the petition which deserve the attention of this Court in view of their
seriousness, novelty and weight as precedents. Where the issues are of transcendental
and paramount importance not only to the public but also to the Bench and the Bar, they
should be resolved for the guidance of all.[30] Undoubtedly, the Filipino people are more
than interested to know the status of the Presidents first effort to bring about a promised
change to the country. The Court takes cognizance of the petition not due to
overwhelming political undertones that clothe the issue in the eyes of the public, but
because the Court stands firm in its oath to perform its constitutional duty to settle legal
controversies with overreaching significance to society.

Power of the President to Create the Truth Commission

In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a
public office and not merely an adjunct body of the Office of the President.[31] Thus, in
order that the President may create a public office he must be empowered by the
Constitution, a statute or an authorization vested in him by law. According to petitioner,
such power cannot be presumed[32] since there is no provision in the Constitution or any
specific law that authorizes the President to create a truth commission.[33] He adds that
Section 31 of the Administrative Code of 1987, granting the President the continuing
authority to reorganize his office, cannot serve as basis for the creation of a truth
commission considering the aforesaid provision merely uses verbs such as reorganize,
transfer, consolidate, merge, and abolish.[34] Insofar as it vests in the President the
plenary power to reorganize the Office of the President to the extent of creating a public
office, Section 31 is inconsistent with the principle of separation of powers enshrined in
the Constitution and must be deemed repealed upon the effectivity thereof.[35]

Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public
office lies within the province of Congress and not with the executive branch of
government. They maintain that the delegated authority of the President to reorganize
under Section 31 of the Revised Administrative Code: 1) does not permit the President to
create a public office, much less a truth commission; 2) is limited to the reorganization of
the administrative structure of the Office of the President; 3) is limited to the
restructuring of the internal organs of the Office of the President Proper, transfer of
functions and transfer of agencies; and 4) only to achieve simplicity, economy and
efficiency.[36] Such continuing authority of the President to reorganize his office is
limited, and by issuing Executive Order No. 1, the President overstepped the limits of this
delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the
President of a fact-finding body such as a truth commission. Pointing to numerous offices
created by past presidents, it argues that the authority of the President to create public
offices within the Office of the President Proper has long been recognized.[37] According
to the OSG, the Executive, just like the other two branches of government, possesses the
inherent authority to create fact-finding committees to assist it in the performance of its
constitutionally mandated functions and in the exercise of its administrative functions.
[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded
by the President under Section 1 and his power of control under Section 17, both of
Article VII of the Constitution.[39]

It contends that the President is necessarily vested with the power to conduct factfinding investigations, pursuant to his duty to ensure that all laws are enforced by public

officials and employees of his department and in the exercise of his authority to assume
directly the functions of the executive department, bureau and office, or interfere with
the discretion of his officials.[40] The power of the President to investigate is not limited
to the exercise of his power of control over his subordinates in the executive branch, but
extends further in the exercise of his other powers, such as his power to discipline
subordinates,[41] his power for rule making, adjudication and licensing purposes[42] and
in order to be informed on matters which he is entitled to know.[43]

The OSG also cites the recent case of Banda v. Ermita,[44] where it was held that the
President has the power to reorganize the offices and agencies in the executive
department in line with his constitutionally granted power of control and by virtue of a
valid delegation of the legislative power to reorganize executive offices under existing
statutes.

Thus, the OSG concludes that the power of control necessarily includes the power to
create offices. For the OSG, the President may create the PTC in order to, among others,
put a closure to the reported large scale graft and corruption in the government.[45]

The question, therefore, before the Court is this: Does the creation of the PTC fall within
the ambit of the power to reorganize as expressed in Section 31 of the Revised
Administrative Code? Section 31 contemplates reorganization as limited by the following
functional and structural lines: (1) restructuring the internal organization of the Office of
the President Proper by abolishing, consolidating or merging units thereof or transferring
functions from one unit to another; (2) transferring any function under the Office of the
President to any other Department/Agency or vice versa; or (3) transferring any agency
under the Office of the President to any other Department/Agency or vice versa. Clearly,
the provision refers to reduction of personnel, consolidation of offices, or abolition
thereof by reason of economy or redundancy of functions. These point to situations
where a body or an office is already existent but a modification or alteration thereof has
to be effected.The creation of an office is nowhere mentioned, much less envisioned in
said provision. Accordingly, the answer to the question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under
Section 31 is a misplaced supposition, even in the plainest meaning attributable to the
term restructure an alteration of an existing structure. Evidently, the PTC was not part of
the structure of the Office of the President prior to the enactment of Executive Order No.
1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,[46]

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 in 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. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that
reorganization "involves the reduction of personnel, consolidation of offices, or abolition
thereof by reason of economy or redundancy of functions." It 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. The EIIB is a bureau
attached to the Department of Finance. It falls under the Office of the President. Hence, it
is subject to the Presidents continuing authority to reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power of
control. Control is essentially the power to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the
judgment of the former with that of the latter.[47] Clearly, the power of control is entirely
different from the power to create public offices. The former is inherent in the Executive,
while the latter finds basis from either a valid delegation from Congress, or his inherent
duty to faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the
President to create a public office?

According to the OSG, the power to create a truth commission pursuant to the above
provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.[48] The
said law granted the President the continuing authority to reorganize the national
government, including the power to group, consolidate bureaus and agencies, to abolish
offices, to transfer functions, to create and classify functions, services and activities,
transfer appropriations, and to standardize salaries and materials. This decree, in
relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such
as Larin v. Executive Secretary.[49]

The Court, however, declines to recognize P.D. No. 1416 as a justification for the
President to create a public office. Said decree is already stale, anachronistic and
inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to
reorganize the administrative structure of the national government including the power
to create offices and transfer appropriations pursuant to one of the purposes of the
decree, embodied in its last Whereas clause:

WHEREAS, the transition towards the parliamentary form of government will necessitate
flexibility in the organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during
the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the
convening of the First Congress, as expressly provided in Section 6, Article XVIII of the
1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause
of P.D. 1416 says it was enacted to prepare the transition from presidential to
parliamentary. Now, in a parliamentary form of government, the legislative and executive
powers are fused, correct?

SOLICITOR GENERAL CADIZ: Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you
agree with me that P.D. 1416 should not be considered effective anymore upon the
promulgation, adoption, ratification of the 1987 Constitution.

SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.

ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National
Government is deemed repealed, at least, upon the adoption of the 1987 Constitution,
correct.

SOLICITOR GENERAL CADIZ: Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D.
No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under
Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure
that the laws are faithfully executed. Section 17 reads:

Section 17. The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

As correctly pointed out by the respondents, the allocation of power in the three principal
branches of government is a grant of all powers inherent in them. The Presidents power
to conduct investigations to aid him in ensuring the faithful execution of laws in this
case, fundamental laws on public accountability and transparency is inherent in the
Presidents powers as the Chief Executive. That the authority of the President to conduct
investigations and to create bodies to execute this power is not explicitly mentioned in
the Constitution or in statutes does not mean that he is bereft of such authority.[51] As
explained in the landmark case of Marcos v. Manglapus:[52]

x x x. The 1987 Constitution, however, brought back the presidential system of

government and restored the separation of legislative, executive and judicial powers by
their actual distribution among three distinct branches of government with provision for
checks and balances.

It would not be accurate, however, to state that "executive power" is the power to
enforce the laws, for the President is head of state as well as head of government and
whatever powers inhere in such positions pertain to the office unless the Constitution
itself withholds it.Furthermore, the Constitution itself provides that the execution of the
laws is only one of the powers of the President. It also grants the President other powers

that do not involve the execution of any provision of law, e.g., his power over the
country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution imposes
limitations on the exercise of specific powers of the President, it maintains intact what is
traditionally considered as within the scope of "executive power." Corollarily, the powers
of the President cannot be said to be limited only to the specific powers enumerated in
the Constitution. In other words, executive power is more than the sum of specific
powers so enumerated.

It has been advanced that whatever power inherent in the government that is neither
legislative nor judicial has to be executive. x x x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully
executed. As stated above, the powers of the President are not limited to those specific
powers under the Constitution.[53] One of the recognized powers of the President
granted pursuant to this constitutionally-mandated duty is the power to create ad hoc
committees. This flows from the obvious need to ascertain facts and determine if laws
have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the
authority of the President to issue Administrative Order No. 298, creating an
investigative committee to look into the administrative charges filed against the
employees of the Department of Health for the anomalous purchase of medicines was
upheld. In said case, it was ruled:

The Chief Executives power to create the Ad hoc Investigating Committee cannot be
doubted. Having been constitutionally granted full control of the Executive Department,
to which respondents belong, the President has the obligation to ensure that all
executive officials and employees faithfully comply with the law. With AO 298 as
mandate, the legality of the investigation is sustained. Such validity is not affected by
the fact that the investigating team and the PCAGC had the same composition, or that
the former used the offices and facilities of the latter in conducting the inquiry.
[Emphasis supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is
to allow an inquiry into matters which the President is entitled to know so that he can be
properly advised and guided in the performance of his duties relative to the execution
and enforcement of the laws of the land. And if history is to be revisited, this was also
the objective of the investigative bodies created in the past like the PCAC, PCAPE,
PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission.
There being no changes in the government structure, the Court is not inclined to declare
such executive power as non-existent just because the direction of the political winds
have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to
appropriate funds for the operation of a public office, suffice it to say that there will be no
appropriation but only an allotment or allocations of existing funds already appropriated.
Accordingly, there is no usurpation on the part of the Executive of the power of Congress
to appropriate funds. Further, there is no need to specify the amount to be earmarked for
the operation of the commission because, in the words of the Solicitor General, whatever
funds the Congress has provided for the Office of the President will be the very source of
the funds for the commission.[55] Moreover, since the amount that would be allocated to
the PTC shall be subject to existing auditing rules and regulations, there is no impropriety
in the funding.

Power of the Truth Commission to Investigate

The Presidents power to conduct investigations to ensure that laws are faithfully
executed is well recognized. It flows from the faithful-execution clause of the Constitution
under Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents
the government as a whole and sees to it that all laws are enforced by the officials and
employees of his department. He has the authority to directly assume the functions of
the executive department.[57]

Invoking this authority, the President constituted the PTC to primarily investigate reports
of graft and corruption and to recommend the appropriate action. As previously stated,
no quasi-judicial powers have been vested in the said body as it cannot adjudicate rights
of persons who come before it. It has been said that Quasi-judicial powers involve the
power to hear and determine questions of fact to which the legislative policy is to apply
and to decide in accordance with the standards laid down by law itself in enforcing and
administering the same law.[58] In simpler terms, judicial discretion is involved in the

exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary
and must be clearly authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was
delineated by the Court in Cario v. Commission on Human Rights.[59] Thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or

probe into, research on, study. The dictionary definition of "investigate" is "to observe or
study closely: inquire into systematically: "to search or inquire into: x x to subject to an
official probe x x: to conduct an official inquiry." The purpose of investigation, of course,
is to discover, to find out, to learn, obtain information. Nowhere included or intimated is
the notion of settling, deciding or resolving a controversy involved in the facts inquired
into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by
patient inquiry or observation. To trace or track; to search into; to examine and inquire
into with care and accuracy; to find out by careful inquisition; examination; the taking of
evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in
turn described as "(a)n administrative function, the exercise of which ordinarily does not
require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the
discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge,

decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle
finally (the rights and duties of the parties to a court case) on the merits of issues raised:
x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to
decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or
grant judicially in a case of controversy x x."
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To
determine finally. Synonymous with adjudgein its strictest sense;" and "adjudge" means:
"To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies
a judicial determination of a fact, and the entry of a judgment." [Italics included.
Citations Omitted]

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 resolved authoritatively,
finally and definitively, subject to appeals or modes of review as may be provided by law.
[60] Even respondents themselves admit that the commission is bereft of any quasijudicial power.[61]

Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the
DOJ or erode their respective powers. If at all, the investigative function of the
commission will complement those of the two offices. As pointed out by the Solicitor
General, the recommendation to prosecute is but a consequence of the overall task of
the commission to conduct a fact-finding investigation.[62] The actual prosecution of
suspected offenders, much less adjudication on the merits of the charges against them,
[63] is certainly not a function given to the commission.The phrase, when in the course
of its investigation, under Section 2(g), highlights this fact and gives credence to a
contrary interpretation from that of the petitioners. The function of determining probable
cause for the filing of the appropriate complaints before the courts remains to be with
the DOJ and the Ombudsman.[64]

At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive
but is shared with other similarly authorized government agencies. Thus, in the case of
Ombudsman v. Galicia,[65] it was written:

This power of investigation granted to the Ombudsman by the 1987 Constitution and The
Ombudsman Act is not exclusive but is shared with other similarly authorized
government agencies such as the PCGG and judges of municipal trial courts and
municipal circuit trial courts. The power to conduct preliminary investigation on charges
against public employees and officials is likewise concurrently shared with the
Department of Justice. Despite the passage of the Local Government Code in 1991, the
Ombudsman retains concurrent jurisdiction with the Office of the President and the local
Sanggunians to investigate complaints against local elective officials. [Emphasis
supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to
investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states:

(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. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the

conduct of a preliminary investigation or the determination of the existence of probable
cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is
limited to obtaining facts so that it can advise and guide the President in the
performance of his duties relative to the execution and enforcement of the laws of the
land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial
duties.

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1,
Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus,
can be shared with a body likewise tasked to investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC
are to be accorded conclusiveness. Much like its predecessors, the Davide Commission,
the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be
recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider
degree of latitude to decide whether or not to reject the recommendation. These offices,
therefore, are not deprived of their mandated duties but will instead be aided by the
reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power of the
President, the Court finds difficulty in upholding the constitutionality of Executive Order
No. 1 in view of its apparent transgression of the equal protection clause enshrined in
Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads:

Section 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.

The petitioners assail Executive Order No. 1 because it is violative of this constitutional
safeguard. They contend that it does not apply equally to all members of the same class
such that the intent of singling out the previous administration as its sole object makes
the PTC an adventure in partisan hostility.[66] Thus, in order to be accorded with validity,
the commission must also cover reports of graft and corruption in virtually all
administrations previous to that of former President Arroyo.[67]

The petitioners argue that the search for truth behind the reported cases of graft and
corruption must encompass acts committed not only during the administration of former
President Arroyo but also during prior administrations where the same magnitude of
controversies and anomalies[68] were reported to have been committed against the
Filipino people. They assail the classification formulated by the respondents as it does
not fall under the recognized exceptions because first, there is no substantial distinction
between the group of officials targeted for investigation by Executive Order No. 1 and
other groups or persons who abused their public office for personal gain; and second, the
selective classification is not germane to the purpose of Executive Order No. 1 to end
corruption.[69] In order to attain constitutional permission, the petitioners advocate that
the commission should deal with graft and grafters prior and subsequent to the Arroyo
administration with the strong arm of the law with equal force.[70]

Position of respondents

According to respondents, while Executive Order No. 1 identifies the previous

administration as the initial subject of the investigation, following Section 17 thereof, the
PTC will not confine itself to cases of large scale graft and corruption solely during the
said administration.[71] Assuming arguendo that the commission would confine its
proceedings to officials of the previous administration, the petitioners argue that no
offense is committed against the equal protection clause for the segregation of the
transactions of public officers during the previous administration as possible subjects of
investigation is a valid classification based on substantial distinctions and is germane to
the evils which the Executive Order seeks to correct.[72] To distinguish the Arroyo
administration from past administrations, it recited the following:

First. E.O. No. 1 was issued in view of widespread reports of large scale graft and
corruption in the previous administration which have eroded public confidence in public
institutions. There is, therefore, an urgent call for the determination of the truth
regarding certain reports of large scale graft and corruption in the government and to
put a closure to them by the filing of the appropriate cases against those involved, if
warranted, and to deter others from committing the evil, restore the peoples faith and
confidence in the Government and in their public servants.

Second. The segregation of the preceding administration as the object of fact-finding is

warranted by the reality that unlike with administrations long gone, the current
administration will most likely bear the immediate consequence of the policies of the
previous administration.

Third. The classification of the previous administration as a separate class for

investigation lies in the reality that the evidenceof possible criminal activity, the
evidence that could lead to recovery of public monies illegally dissipated, the policy
lessons to be learned to ensure that anti-corruption laws are faithfully executed, are
more easily established in the regime that immediately precede the current
administration.

Fourth. Many administrations subject the transactions of their predecessors to

investigations to provide closure to issues that are pivotal to national life or even as a
routine measure of due diligence and good housekeeping by a nascent administration
like the Presidential Commission on Good Government (PCGG), created by the late
President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of illgotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and
theSaguisag Commission created by former President Joseph Estrada under
Administrative Order No, 53, to form an ad-hoc and independent citizens committee to
investigate all the facts and circumstances surrounding Philippine Centennial projects of
his predecessor, former President Fidel V. Ramos.[73] [Emphases supplied]

Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality
of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal
protection of the laws is embraced in the concept of due process, as every unfair
discrimination offends the requirements of justice and fair play. It has been embodied in

a separate clause, however, to provide for a more specific guaranty against any form of
undue favoritism or hostility from the government. Arbitrariness in general may be
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 protectionclause.[74]

According to a long line of decisions, equal protection simply requires that all persons or
things similarly situated should be treated alike,both as to rights conferred and
responsibilities imposed.[75] It requires public bodies and institutions to treat similarly
situated individuals in a similar manner.[76] The purpose of the equal protection clause
is to secure every person within a states jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the express terms of a statue or by its improper
execution through the states duly constituted authorities.[77] In other words, the
concept of equal justice under the law requires the state to govern impartially, and it
may not draw distinctions between individuals solely on differences that are irrelevant to
a legitimate governmental objective.[78]

The equal protection clause is aimed at all official state actions, not just those of the
legislature.[79] Its inhibitions cover all the departments of the government including the
political and executive departments, and extend to all actions of a state denying equal
protection of the laws, through whatever agency or whatever guise is taken. [80]

It, however, does not require the universal application of the laws to all persons or things
without distinction. What it simply requires is equality among equals as determined
according to a valid classification. Indeed, the equal protection clause permits
classification. Such classification, however, to be valid must pass the test of
reasonableness. The test has four requisites: (1) The classification rests on substantial
distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing
conditions only; and
(4) It applies equally to all members of the same class.[81] Superficial differences do not
make for a valid classification.[82]

For a classification to meet the requirements of constitutionality, it must include or

embrace all persons who naturally belong to the class.[83] The classification will be
regarded as invalid if all the members of the class are not similarly treated, both as to
rights conferred and obligations imposed. It is not necessary that the classification be
made with absolute symmetry, in the sense that the members of the class should

possess the same characteristics in equal degree. Substantial similarity will suffice; and
as long as this is achieved, all those covered by the classification are to be treated
equally. The mere fact that an individual belonging to a class differs from the other
members, as long as that class is substantially distinguishable from all others, does not
justify the non-application of the law to him.[84]

The classification must not be based on existing circumstances only, or so constituted as

to preclude addition to the number included in the class. It must be of such a nature as
to embrace all those who may thereafter be in similar circumstances and conditions. It
must not leave out or underinclude those that should otherwise fall into a certain
classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85] and
reiterated in a long line of cases,[86]
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against inequality, that every man, woman
and child should be affected alike by a statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as such, but on persons according to
the circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination
as to things that are different. It does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is required of
a valid classification is that it be reasonable, which means that the classification should
be based on substantial distinctions which make for real differences, that it must be
germane to the purpose of the law; that it must not be limited to existing conditions
only; and that it must apply equally to each member of the class. This Court has held
that the standard is satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. [Citations omitted]

Applying these precepts to this case, Executive Order No. 1 should be struck down as
violative of the equal protection clause. The clear mandate of the envisioned truth

commission is to investigate and find out the truth concerning the reported cases of graft
and corruption during the previous administration[87] only. The intent to single out the
previous administration is plain, patent and manifest. Mention of it has been made in at
least three portions of the questioned executive order. Specifically, these are:

WHEREAS, there is a need for a separate body dedicated solely to investigating and
finding out the truth concerning the reported cases of graft and corruption during the
previous administration, and which will recommend the prosecution of the offenders and
secure justice for all;

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH

COMMISSION, hereinafter referred to as theCOMMISSION, which shall primarily seek and
find the truth on, and toward this end, investigate reports of graft and corruption of such
scale and magnitude that shock and offend the moral and ethical sensibilities of the
people, committed by public officers and employees, their co-principals, accomplices and
accessories from the private sector, if any, during the previous administration; and
thereafter recommend the appropriate action or measure to be taken thereon to ensure
that the full measure of justice shall be served without fear or favor.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an
investigative body under Section 37, Chapter 9, Book I of the Administrative Code of
1987, is primarily tasked to conduct a thorough fact-finding investigation of reported
cases of graft and corruption referred to in Section 1, involving third level public officers
and higher, their co-principals, accomplices and accessories from the private sector, if
any, during the previous administration and thereafter submit its finding and
recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a
member of a class, that is, a class of past administrations. It is not a class of its own. Not
to include past administrations similarly situated constitutes arbitrariness which the
equal protection clause cannot sanction. Such discriminating differentiation clearly
reverberates to label the commission as a vehicle for vindictiveness and selective
retribution.

Though the OSG enumerates several differences between the Arroyo administration and
other past administrations, these distinctions are not substantial enough to merit the
restriction of the investigation to the previous administration only. The reports of

widespread corruption in the Arroyo administration cannot be taken as basis for

distinguishing said administration from earlier administrations which were also
blemished by similar widespread reports of impropriety. They are not inherent in, and do
not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial
differences do not make for a valid classification.[88]

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope
of the intended investigation to the previous administration only. The OSG ventures to
opine that to include other past administrations, at this point, may unnecessarily
overburden the commission and lead it to lose its effectiveness.[89] The reason given is
specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to
stamp out or end corruption and the evil it breeds.[90]

The probability that there would be difficulty in unearthing evidence or that the earlier
reports involving the earlier administrations were already inquired into is beside the
point. Obviously, deceased presidents and cases which have already prescribed can no
longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct
simultaneous investigations of previous administrations, given the bodys limited time
and resources. The law does not require the impossible (Lex non cogit ad impossibilia).
[91]

Given the foregoing physical and legal impossibility, the Court logically recognizes the
unfeasibility of investigating almost a centurys worth of graft cases. However, the fact
remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, to be
true to its mandate of searching for the truth, must not exclude the other past
administrations. The PTC must, at least, have the authority to investigate all past
administrations. While reasonable prioritization is permitted, it should not be arbitrary
lest it be struck down for being unconstitutional. In the often quoted language of Yick Wo
v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and
administered by public authority with an evil eye and an unequal hand, so as practically
to make unjust and illegal discriminations between persons in similar circumstances,

material to their rights, the denial of equal justice is still within the prohibition of the
constitution. [Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited.
The Court, however, is of the considered view that although its focus is restricted, the
constitutional guarantee of equal protection under the laws should not in any way be
circumvented. 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
determined and all public authority administered.[93] Laws that do not conform to the
Constitution should be stricken down for being unconstitutional.[94] While the thrust of
the PTC is specific, that is, for investigation of acts of graft and corruption, Executive
Order No. 1, to survive, must be read together with the provisions of the Constitution. To
exclude the earlier administrations in the guise of substantial distinctions would only
confirm the petitioners lament that the subject executive order is only an adventure in
partisan hostility. In the case of US v. Cyprian,[95] it was written: A rather limited number
of such classifications have routinely been held or assumed to be arbitrary; those
include: race, national origin, gender, political activity or membership in a political party,
union activity or membership in a labor union, or more generally the exercise of first
amendment rights.

To reiterate, in order for a classification to meet the requirements of constitutionality, it

must include or embrace all persons who naturally belong to the class.[96] Such a
classification must not be based on existing circumstances only, or so constituted as to
preclude additions to the number included within a class, but must be of such a nature
as to embrace all those who may thereafter be in similar circumstances and conditions.
Furthermore, all who are in situations and circumstances which are relative to the
discriminatory legislation and which are indistinguishable from those of the members of
the class must be brought under the influence of the law and treated by it in the same
way as are the members of the class.[97]

The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law
under the equal protection clause.[98]Legislation is not unconstitutional merely because
it is not all-embracing and does not include all the evils within its reach.[99] It has been
written that a regulation challenged under the equal protection clause is not devoid of a
rational predicate simply because it happens to be incomplete.[100] In several instances,
the underinclusiveness was not considered a valid reason to strike down a law or
regulation where the purpose can be attained in future legislations or regulations. These
cases refer to the step by step process.[101] With regard to equal protection claims, a
legislature does not run the risk of losing the entire remedial scheme simply because it

fails, through inadvertence or otherwise, to cover every evil that might conceivably have
been attacked.[102]

In Executive Order No. 1, however, there is no inadvertence. That the previous

administration was picked out was deliberate and intentional as can be gleaned from the
fact that it was underscored at least three times in the assailed executive order. It must
be noted that Executive Order No. 1 does not even mention any particular act, event or
report to be focused on unlike the investigative commissions created in the past. The
equal protection clause is violated by purposeful and intentional discrimination.[103]

To disprove petitioners contention that there is deliberate discrimination, the OSG

clarifies that the commission does not only confine itself to cases of large scale graft and
corruption committed during the previous administration.[104] The OSG points to
Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the
President there is a need to expand the mandate of the Commission as defined in
Section 1 hereof to include the investigation of cases and instances of graft and
corruption during the prior administrations, such mandate may be so extended
accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to
expand the scope of investigations of the PTC so as to include the acts of graft and
corruption committed in other past administrations, it does not guarantee that they
would be covered in the future. Such expanded mandate of the commission will still
depend on the whim and caprice of the President. If he would decide not to include them,
the section would then be meaningless. This will only fortify the fears of the petitioners
that the Executive Order No. 1 was crafted to tailor-fit the prosecution of officials and
personalities of the Arroyo administration.[105]

The Court tried to seek guidance from the pronouncement in the case of Virata v.
Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2
and 14) does not violate the equal protection clause. The decision, however, was devoid
of any discussion on how such conclusory statement was arrived at, the principal issue in
said case being only the sufficiency of a cause of action.

A final word

The issue that seems to take center stage at present is - whether or not the Supreme
Court, in the exercise of its constitutionally mandated power of Judicial Review with
respect to recent initiatives of the legislature and the executive department, is exercising
undue interference. Is the Highest Tribunal, which is expected to be the protector of the
Constitution, itself guilty of violating fundamental tenets like the doctrine of separation
of powers? Time and again, this issue has been addressed by the Court, but it seems that
the present political situation calls for it to once again explain the legal basis of its action
lest it continually be accused of being a hindrance to the nations thrust to progress.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987
Constitution, is vested with Judicial Power that includes the duty of the courts of justice
to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave of abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government.

Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which
is the power to declare a treaty, international or executive agreement, law, presidential
decree, proclamation, order, instruction, ordinance, or regulation unconstitutional. This
power also includes the duty to rule on the constitutionality of the application, or
operation of presidential decrees, proclamations, orders, instructions, ordinances, and
other regulations. These provisions, however, have been fertile grounds of conflict
between the Supreme Court, on one hand, and the two co-equal bodies of government,
on the other. Many times the Court has been accused of asserting superiority over the
other departments.

To answer this accusation, the words of Justice Laurel would be a good source of
enlightenment, to wit: And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; it does not in

reality nullify or invalidate an act of the legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual controversy
the rights which that instrument secures and guarantees to them.[107]

Thus, the Court, in exercising its power of judicial review, is not imposing its own will
upon a co-equal body but rather simply making sure that any act of government is done
in consonance with the authorities and rights allocated to it by the Constitution. And, if
after said review, the Court finds no constitutional violations of any sort, then, it has no
more authority of proscribing the actions under review. Otherwise, the Court will not be
deterred to pronounce said act as void and unconstitutional.

It cannot be denied that most government actions are inspired with noble intentions, all
geared towards the betterment of the nation and its people. But then again, it is
important to remember this ethical principle: The end does not justify the means. No
matter how noble and worthy of admiration the purpose of an act, but if the means to be
employed in accomplishing it is simply irreconcilable with constitutional parameters,
then it cannot still be allowed.[108] The Court cannot just turn a blind eye and simply let
it pass. It will continue to uphold the Constitution and its enshrined principles.

The Constitution must ever remain supreme. All must bow to the mandate of this law.
Expediency must not be allowed to sap its strength nor greed for power debase its
rectitude.[109]

Lest it be misunderstood, this is not the death knell for a truth commission as nobly
envisioned by the present administration. Perhaps a revision of the executive issuance so
as to include the earlier past administrations would allow it to pass the test of
reasonableness and not be an affront to the Constitution. Of all the branches of the
government, it is the judiciary which is the most interested in knowing the truth and so it
will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be
emphasized that the search for the truth must be within constitutional bounds for ours is
still a government of laws and not of men.[110]

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared
UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the
Constitution.

As also prayed for, the respondents are hereby ordered to cease and desist from carrying
out the provisions of Executive Order No. 1.
SO ORDERED
DIGEST
BIRAOGO V. PHILIPPINE TRUTH COMMISSION 2010, G. R. No. 192935. December 7, 2010
(CASE DIGEST)

9.

PANGASINAN TRANSPO V PSC

.R. No. 47065

June 26, 1940

PANGASINAN TRANSPORTATION CO., INC., petitioner,

vs.
THE PUBLIC SERVICE COMMISSION, respondent.
C. de G. Alvear for petitioner.
Evaristo R. Sandoval for respondent.
LAUREL, J.:
The petitioner has been engaged for the past twenty years in the business of
transporting passengers in the Province of Pangasinan and Tarlac and, to a certain
extent, in the Province of Nueva Ecija and Zambales, by means of motor vehicles
commonly known as TPU buses, in accordance with the terms and conditions of the

certificates of public convenience issued in its favor by the former Public Utility
Commission in cases Nos. 24948, 30973, 36830, 32014 and 53090. On August 26, 1939,
the petitioner filed with the Public Service Commission an application for authorization to
operate ten additional new Brockway trucks (case No. 56641), on the ground that they
were needed to comply with the terms and conditions of its existing certificates and as a
result of the application of the Eight Hour Labor Law. In the decision of September 26,
1939, granting the petitioner's application for increase of equipment, the Public Service
Commission ordered:
Y de acuerdo con que se provee por el articulo 15 de la ley No. 146 del Commonwealth,
tal como ha sido enmendada por el articulo 1 de la Ley No. 454, por la presente se
enmienda las condiciones de los certificados de convenciencia publica expedidos en los
expedientes Nos. 24948, 30973, 36831, 32014 y la authorizacion el el expediente No.
53090, asi que se consideran incorporadas en los mismos las dos siguientes condiciones:
Que los certificados de conveniencia publica y authorizacion arriba mencionados seran
validos y subsistentes solamente durante de veinticinco (25) anos, contados desde la
fecha de la promulgacion de esta decision.
Que la empresa de la solicitante porda ser adquirida por el Commonwealth de Filipinas o
por alguna dependencia del mismo en cualquier tiempo que lo deseare previo pago del
precio d costo de su equipo util, menos una depreciacion razonable que se ha fijar por la
Comision al tiempo de su adquisicion.
Not being agreeable to the two new conditions thus incorporated in its existing
certificates, the petitioner filed on October 9, 1939 a motion for reconsideration which
was denied by the Public Service Commission on November 14, 1939. Whereupon, on
November 20, 1939, the present petition for a writ of certiorari was instituted in this
court praying that an order be issued directing the secretary of the Public Service
Commission to certify forthwith to this court the records of all proceedings in case No.
56641; that this court, after hearing, render a decision declaring section 1 of
Commonwealth Act No. 454 unconstitutional and void; that, if this court should be of the
opinion that section 1 of Commonwealth Act No. 454 is constitutional, a decision be
rendered declaring that the provisions thereof are not applicable to valid and subsisting
certificates issued prior to June 8, 1939. Stated in the language of the petitioner, it is
contended:
1. That the legislative powers granted to the Public Service Commission by section 1 of
Commonwealth Act No. 454, without limitation, guide or rule except the unfettered
discretion and judgment of the Commission, constitute a complete and total abdication
by the Legislature of its functions in the premises, and for that reason, the Act, in so far
as those powers are concerned, is unconstitutional and void.

2. That even if it be assumed that section 1 of Commonwealth Act No. 454, is valid
delegation of legislative powers, the Public Service Commission has exceeded its
authority because: (a) The Act applies only to future certificates and not to valid and
subsisting certificates issued prior to June 8, 1939, when said Act took effect, and (b) the
Act, as applied by the Commission, violates constitutional guarantees.
Section 15 of Commonwealth Act No. 146, as amended by section 1 of Commonwealth
Act No. 454, invoked by the respondent Public Service Commission in the decision
complained of in the present proceedings, reads as follows:
With the exception to those enumerated in the preceding section, no public service shall
operate in the Philippines without possessing a valid and subsisting certificate from the
Public Service Commission, known as "certificate of public convenience," or "certificate
of convenience and public necessity," as the case may be, to the effect that the
operation of said service and the authorization to do business will promote the public
interests in a proper and suitable manner.
The Commission may prescribed as a condition for the issuance of the certificate
provided in the preceding paragraph that the service can be acquired by the
Commonwealth of the Philippines or by any instrumentality thereof upon payment of the
cost price of its useful equipment, less reasonable depreciation; and likewise, that the
certificate shall valid only for a definite period of time; and that the violation of any of
these conditions shall produce the immediate cancellation of the certificate without the
necessity of any express action on the part of the Commission.
In estimating the depreciation, the effect of the use of the equipment, its actual
condition, the age of the model, or other circumstances affecting its value in the market
shall be taken into consideration.
The foregoing is likewise applicable to any extension or amendment of certificates
actually force and to those which may hereafter be issued, to permits to modify
itineraries and time schedules of public services and to authorization to renew and
increase equipment and properties.
Under the first paragraph of the aforequoted section 15 of Act No. 146, as amended, no
public service can operate without a certificate of public convenience or certificate of
convenience and public necessity to the effect that the operation of said service and the
authorization to do business will "public interests in a proper and suitable manner."
Under the second paragraph, one of the conditions which the Public Service Commission
may prescribed the issuance of the certificate provided for in the first paragraph is that
"the service can be acquired by the Commonwealth of the Philippines or by any
instrumental thereof upon payment of the cost price of its useful equipment, less
reasonable depreciation," a condition which is virtually a restatement of the principle
already embodied in the Constitution, section 6 of Article XII, which provides that "the

State may, in the interest of national welfare and defense, establish and operate
industries and means of transportation and communication, and, upon payment of just
compensation, transfer to public ownership utilities and other private enterprises to be
operated by the Government. "Another condition which the Commission may prescribed,
and which is assailed by the petitioner, is that the certificate "shall be valid only for a
definite period of time." As there is a relation between the first and second paragraphs of
said section 15, the two provisions must be read and interpreted together. That is to say,
in issuing a certificate, the Commission must necessarily be satisfied that the operation
of the service under said certificate during a definite period fixed therein "will promote
the public interests in a proper and suitable manner." Under section 16 (a) of
Commonwealth Act. No. 146 which is a complement of section 15, the Commission is
empowered to issue certificates of public convenience whenever it "finds that the
operation of the public service proposed and the authorization to do business will
promote the public interests in a proper and suitable manner." Inasmuch as the period to
be fixed by the Commission under section 15 is inseparable from the certificate itself,
said period cannot be disregarded by the Commission in determining the question
whether the issuance of the certificate will promote the public interests in a proper and
suitable manner. Conversely, in determining "a definite period of time," the Commission
will be guided by "public interests," the only limitation to its power being that said period
shall not exceed fifty years (sec. 16 (a), Commonwealth Act No. 146; Constitution, Art.
XIII, sec. 8.) We have already ruled that "public interest" furnishes a sufficient standard.
(People vs.Fernandez and Trinidad, G. R. No. 45655, promulgated June 15, 1938; People
vs. Rosenthal and Osmea, G. R. Nos. 46076 and 46077, promulgated June 12, 1939,
citing New York Central Securities Corporation vs. U.S.A., 287 U.S. 12, 24, 25, 77 Law. ed.
138, 145, 146; Schenchter Poultry Corporation vs. I.S., 295, 540, 79 Law. ed. 1570, 1585;
Ferrazzini vs. Gsell, 34 Phil., 697, 711-712.)
Section 8 of Article XIII of the Constitution provides, among other things, that no
franchise, certificate, or any other form of authorization for the operation of a public
utility shall be "for a longer period than fifty years," and when it was ordained, in section
15 of Commonwealth Act No. 146, as amended by Commonwealth Act No. 454, that the
Public Service Commission may prescribed as a condition for the issuance of a certificate
that it "shall be valid only for a definite period of time" and, in section 16 (a) that "no
such certificates shall be issued for a period of more than fifty years," the National
Assembly meant to give effect to the aforesaid constitutional mandate. More than this, it
has thereby also declared its will that the period to be fixed by the Public Service
Commission shall not be longer than fifty years. All that has been delegated to the
Commission, therefore, is the administrative function, involving the use discretion, to
carry out the will of the National Assembly having in view, in addition, the promotion of
"public interests in a proper and suitable manner." The fact that the National Assembly
may itself exercise the function and authority thus conferred upon the Public Service
Commission does not make the provision in question constitutionally objectionable.

The theory of the separation of powers is designed by its originators to secure action and
at the same time to forestall overaction which necessarily results from undue
concentration of powers, and thereby obtain efficiency and prevent deposition. Thereby,
the "rule of law" was established which narrows the range of governmental action and
makes it subject to control by certain devices. As a corollary, we find the rule prohibiting
delegation of legislative authority, and from the earliest time American legal authorities
have proceeded on the theory that legislative power must be exercised by the legislature
alone. It is frankness, however, to confess that as one delves into the mass of judicial
pronouncement, he finds a great deal of confusion. One thing, however, is apparent in
the development of the principle of separation of powers and that is that the maxim of
delegatus non potest delegari or delegata potestas non potest delegari, attributed to
Bracton (De Legius et Consuetedinious Angliae, edited by G. E. Woodbine, Yale University
Press, 1922, vol. 2, p. 167) but which is also recognized in principle in the Roman Law (D.
17.18.3), has been made to adapt itself to the complexities of modern governments,
giving rise to the adoption, within certain limits, of the principle of "subordinate
legislation," not only in the United States and England but in practically all modern
governments. (People vs. Rosenthal and Osmea, G. R. Nos. 46076 and 46077,
promulgated June 12, 1939.) Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the increased difficulty of
administering the laws, there is a constantly growing tendency toward the delegation of
greater powers by the legislature, and toward the approval of the practice by the court.
(Dillon Catfish Drainage Dist, v. Bank of Dillon, 141 S. E. 274, 275, 143 S. Ct. 178; State
vs. Knox County, 54 S. W. 2d. 973, 976, 165 Tenn. 319.) In harmony with such growing
tendency, this Court, since the decision in the case of Compaia General de Tabacos de
Filipinas vs. Board of Public Utility Commissioner (34 Phil., 136), relied upon by the
petitioner, has, in instances, extended its seal of approval to the "delegation of greater
powers by the legislature." (Inchausti Steamship Co. vs. Public Utility Commissioner, 44
Phil., Autobus Co. vs. De Jesus, 56 Phil., 446; People vs. Fernandez & Trinidad, G. R. No.
45655, promulgated June 15, 1938; People vs. Rosenthal & Osmea, G. R. Nos. 46076,
46077, promulgated June 12, 1939; and Robb and Hilscher vs. People, G. R. No. 45866,
promulgated June 12, 1939.).
Under the fourth paragraph of section 15 of Commonwealth Act No. 146, as amended by
Commonwealth Act No. 454, the power of the Public Service Commission to prescribed
the conditions "that the service can be acquired by the Commonwealth of the Philippines
or by any instrumentality thereof upon payment of the cost price of its useful equipment,
less reasonable," and "that the certificate shall be valid only for a definite period of time"
is expressly made applicable "to any extension or amendment of certificates actually in
force" and "to authorizations to renew and increase equipment and properties." We have
examined the legislative proceedings on the subject and have found that these
conditions were purposely made applicable to existing certificates of public convenience.
The history of Commonwealth Act No. 454 reveals that there was an attempt to

suppress, by way of amendment, the sentence "and likewise, that the certificate shall be
valid only for a definite period of time," but the attempt failed:
xxx

xxx

xxx

Sr. CUENCO. Seor Presidente, para otra enmienda. En la misma pagina, lineas 23 y 24,
pido que se supriman las palabras 'and likewise, that the certificate shall be valid only for
a definite period time.' Esta disposicion del proyecto autoriza a la Comision de Servicios
Publicos a fijar un plazo de vigencia certificado de conveniencia publica. Todo el mundo
sabe que bo se puede determinar cuando los intereses del servicio publico requiren la
explotacion de un servicio publico y ha de saber la Comision de Servisios, si en un
tiempo determinado, la explotacion de algunos buses en cierta ruta ya no tiene de ser,
sobre todo, si tiene en cuenta; que la explotacion de los servicios publicos depende de
condiciones flutuantes, asi como del volumen como trafico y de otras condiciones.
Ademas, el servicio publico se concede por la Comision de Servicios Publicos el interes
publico asi lo exige. El interes publico no tiene duracion fija, no es permanente; es un
proceso mas o menos indefinido en cuanto al tiempo. Se ha acordado eso en el caucus
de anoche.
EL PRESIDENTE PRO TEMPORE. Que dice el Comite?
Sr. ALANO. El Comite siente tener que rechazar esa enmienda, en vista de que esto
certificados de conveniencia publica es igual que la franquicia: sepuede extender. Si los
servicios presentados por la compaia durante el tiempo de su certificado lo require,
puede pedir la extension y se le extendera; pero no creo conveniente el que nosotros
demos un certificado de conveniencia publica de una manera que podria pasar de
cincuenta anos, porque seria anticonstitucional.
xxx

xxx

xxx

By a majority vote the proposed amendment was defeated. (Sesion de 17 de mayo de

1939, Asamblea Nacional.)
The petitioner is mistaken in the suggestion that, simply because its existing certificates
had been granted before June 8, 1939, the date when Commonwealth Act No. 454,
amendatory of section 15 of Commonwealth Act No. 146, was approved, it must be
deemed to have the right of holding them in perpetuity. Section 74 of the Philippine Bill
provided that "no franchise, privilege, or concession shall be granted to any corporation
except under the conditions that it shall be subject to amendment, alteration, or repeal
by the Congress of the United States." The Jones Law, incorporating a similar mandate,
provided, in section 28, that "no franchise or right shall be granted to any individual,
firm, or corporation except under the conditions that it shall be subject to amendment,
alteration, or repeal by the Congress of the United States." Lastly, the Constitution of the
Philippines provided, in section 8 of Article XIII, that "no franchise or right shall be
granted to any individual, firm, or corporation, except under the condition that it shall be

subject to amendment, alteration, or repeal by the National Assembly when the public
interest so requires." The National Assembly, by virtue of the Constitution, logically
succeeded to the Congress of the United States in the power to amend, alter or repeal
any franchise or right granted prior to or after the approval of the Constitution; and when
Commonwealth Acts Nos. 146 and 454 were enacted, the National Assembly, to the
extent therein provided, has declared its will and purpose to amend or alter existing
certificates of public convenience.
Upon the other hand, statutes enacted for the regulation of public utilities, being a
proper exercise by the state of its police power, are applicable not only to those public
utilities coming into existence after its passage, but likewise to those already established
and in operation.
Nor is there any merit in petitioner's contention, that, because of the establishment of
petitioner's operations prior to May 1, 1917, they are not subject to the regulations of the
Commission. Statutes for the regulation of public utilities are a proper exercise by the
state of its police power. As soon as the power is exercised, all phases of operation of
established utilities, become at once subject to the police power thus called into
operation. Procedures' Transportation Co. v. Railroad Commission, 251 U. S. 228, 40 Sup.
Ct. 131, 64 Law. ed. 239, Law v. Railroad Commission, 184 Cal. 737, 195 Pac. 423, 14 A.
L. R. 249. The statute is applicable not only to those public utilities coming into existence
after its passage, but likewise to those already established and in operation. The 'Auto
Stage and Truck Transportation Act' (Stats. 1917, c. 213) is a statute passed in pursuance
of the police power. The only distinction recognized in the statute between those
established before and those established after the passage of the act is in the method of
the creation of their operative rights. A certificate of public convenience and necessity it
required for any new operation, but no such certificate is required of any transportation
company for the operation which was actually carried on in good faith on May 1, 1917,
This distinction in the creation of their operative rights in no way affects the power of the
Commission to supervise and regulate them. Obviously the power of the Commission to
hear and dispose of complaints is as effective against companies securing their
operative rights prior to May 1, 1917, as against those subsequently securing such right
under a certificate of public convenience and necessity. (Motor Transit Co. et al. v.
Railroad Commission of California et al., 209 Pac. 586.)
Moreover, Commonwealth Acts Nos. 146 and 454 are not only the organic acts of the
Public Service Commission but are "a part of the charter of every utility company
operating or seeking to operate a franchise" in the Philippines. (Streator Aqueduct Co. v.
et al., 295 Fed. 385.) The business of a common carrier holds such a peculiar relation to
the public interest that there is superinduced upon it the right of public regulation. When
private property is "affected with a public interest it ceased to be juris privati only."
When, therefore, one devotes his property to a use in which the public has an interest,
he, in effect, grants to the public an interest in that use, and must submit to be

controlled by the public for the common good, to the extent of the interest he has thus
created. He may withdraw his grant by discounting the use, but so long as he maintains
the use he must submit to control. Indeed, this right of regulation is so far beyond
question that it is well settled that the power of the state to exercise legislative control
over public utilities may be exercised through boards of commissioners. (Fisher
vs.Yangco Steamship Company, 31 Phil., 1, citing Munn vs. Illinois, 94 U.S. 113; Georgia
R. & Bkg. Co. vs. Smith, 128 U.S. 174; Budd vs. New York, 143 U.S. 517; New York etc. R.
Co. vs. Bristol 151 U.S. 556, 571; Connecticut etc. R. Co. vs. Woodruff, 153 U.S. 689;
Louisville etc. Ry Co. vs. Kentucky, 161 U.S. 677, 695.) This right of the state to regulate
public utilities is founded upon the police power, and statutes for the control and
regulation of utilities are a legitimate exercise thereof, for the protection of the public as
well as of the utilities themselves. Such statutes are, therefore, not unconstitutional,
either impairing the obligation of contracts, taking property without due process, or
denying the equal protection of the laws, especially inasmuch as the question whether or
not private property shall be devoted to a public and the consequent burdens assumed is
ordinarily for the owner to decide; and if he voluntarily places his property in public
service he cannot complain that it becomes subject to the regulatory powers of the
state. (51 C. J., sec. 21, pp. 9-10.) in the light of authorities which hold that a certificate
of public convenience constitutes neither a franchise nor contract, confers no property
right, and is mere license or privilege. (Burgess vs. Mayor & Alderman of Brockton, 235
Mass. 95, 100, 126 N. E. 456; Roberto vs.Commisioners of Department of Public Utilities,
262 Mass. 583, 160 N. E. 321; Scheible vs. Hogan, 113 Ohio St. 83, 148 N. E. 581; Martz
vs. Curtis [J. L.] Cartage Co. [1937], 132 Ohio St. 271, 7 N. E. [d] 220; Manila Yellow
Taxicab Co. vs. Sabellano, 59 Phil., 773.)
Whilst the challenged provisions of Commonwealth Act No. 454 are valid and
constitutional, we are, however, of the opinion that the decision of the Public Service
Commission should be reversed and the case remanded thereto for further proceedings
for the reason now to be stated. The Public Service Commission has power, upon proper
notice and hearing, "to amend, modify or revoke at any time any certificate issued under
the provisions of this Act, whenever the facts and circumstances on the strength of which
said certificate was issued have been misrepresented or materially changed." (Section
16, par. [m], Commonwealth Act No. 146.) The petitioner's application here was for an
increase of its equipment to enable it to comply with the conditions of its certificates of
public convenience. On the matter of limitation to twenty five (25) years of the life of its
certificates of public convenience, there had been neither notice nor opportunity given
the petitioner to be heard or present evidence. The Commission appears to have taken
advantage of the petitioner to augment petitioner's equipment in imposing the limitation
of twenty-five (25) years which might as well be twenty or fifteen or any number of
years. This is, to say the least, irregular and should not be sanctioned. There are cardinal
primary rights which must be respected even in proceedings of this character. The first of
these rights is the right to a hearing, which includes the right of the party interested or
affected to present his own case and submit evidence in support thereof. In the language

of Chief Justice Hughes, in Morgan v. U.S., (304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed.
1129), "the liberty and property of the citizen shall be protected by the rudimentary
requirements of fair play." Not only must the party be given an opportunity to present his
case and to adduce evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. (Chief Justice Hughes in Morgan vs. U.S.,
298 U.S. 468, 56 S. Ct. 906, 80 :Law. ed. 1288.) In the language of this Court in Edwards
vs. McCoy (22 Phil., 598), "the right to adduce evidence, without the corresponding duty
on the part of the board to consider it, is vain. Such right is conspicuously futile if the
person or persons to whom the evidence is presented can thrust it aside without or
consideration." While the duty to deliberate does not impose the obligation to decide
right, it does imply a necessity which cannot be disregarded, namely, that of having
something to support its decision. A decision with absolutely nothing to support it is a
nullity, at least when directly attacked. (Edwards vs. McCoy, supra.) This principle
emanates from the more fundamental principle that the genius of constitutional
government is contrary to the vesting of unlimited power anywhere. Law is both a grant
and a limitation upon power.
The decision appealed from is hereby reversed and the case remanded to the Public
Service Commission for further proceedings in accordance with law and this decision,
without any pronouncement regarding costs. So ordered.Avancea, C.J., Imperial, Diaz,
Concepcion and Moran, JJ., concur.

10.

ABAKADA v. ERMITA

G.R. No. 168056 September 1, 2005

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA and ED
VINCENT S. ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE SECRETARY OF
THE DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE COMMISSIONER OF
INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondent.
x-------------------------x
G.R. No. 168207
AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO
M. LACSON, ALFREDO S. LIM, JAMBY A.S. MADRIGAL, AND SERGIO R. OSMEA III,
Petitioners,
vs.

EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA, SECRETARY OF

FINANCE, GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE, Respondent.
x-------------------------x
G.R. No. 168461
ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its President, ROSARIO
ANTONIO; PETRON DEALERS ASSOCIATION represented by its President, RUTH E.
BARBIBI; ASSOCIATION OF CALTEX DEALERS OF THE PHILIPPINES represented by its
President, MERCEDITAS A. GARCIA; ROSARIO ANTONIO doing business under the name
and style of "ANB NORTH SHELL SERVICE STATION"; LOURDES MARTINEZ doing business
under the name and style of "SHELL GATE N. DOMINGO"; BETHZAIDA TAN doing
business under the name and style of "ADVANCE SHELL STATION"; REYNALDO P.
MONTOYA doing business under the name and style of "NEW LAMUAN SHELL SERVICE
STATION"; EFREN SOTTO doing business under the name and style of "RED FIELD SHELL
SERVICE STATION"; DONICA CORPORATION represented by its President, DESI
TOMACRUZ; RUTH E. MARBIBI doing business under the name and style of "R&R PETRON
STATION"; PETER M. UNGSON doing business under the name and style of "CLASSIC STAR
GASOLINE SERVICE STATION"; MARIAN SHEILA A. LEE doing business under the name and
style of "NTE GASOLINE & SERVICE STATION"; JULIAN CESAR P. POSADAS doing business
under the name and style of "STARCARGA ENTERPRISES"; ADORACION MAEBO doing
business under the name and style of "CMA MOTORISTS CENTER"; SUSAN M. ENTRATA
doing business under the name and style of "LEONAS GASOLINE STATION and SERVICE
CENTER"; CARMELITA BALDONADO doing business under the name and style of "FIRST
CHOICE SERVICE CENTER"; MERCEDITAS A. GARCIA doing business under the name and
style of "LORPED SERVICE CENTER"; RHEAMAR A. RAMOS doing business under the name
and style of "RJRAM PTT GAS STATION"; MA. ISABEL VIOLAGO doing business under the
name and style of "VIOLAGO-PTT SERVICE CENTER"; MOTORISTS HEART CORPORATION
represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA; MOTORISTS
HARVARD CORPORATION represented by its Vice-President for Operations, JOSELITO F.
FLORDELIZA; MOTORISTS HERITAGE CORPORATION represented by its Vice-President for
Operations, JOSELITO F. FLORDELIZA; PHILIPPINE STANDARD OIL CORPORATION
represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA; ROMEO
MANUEL doing business under the name and style of "ROMMAN GASOLINE STATION";
ANTHONY ALBERT CRUZ III doing business under the name and style of "TRUE SERVICE
STATION", Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of the Department of Finance and
GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of Internal Revenue,
Respondent.

x-------------------------x
G.R. No. 168463
FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA,
RODOLFO G. PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN
C. AGARAO, JR. JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO G.
NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A. SANTIAGO, TEOFISTO DL.
GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI and TEODORO A. CASIO,
Petitioners,
vs.
CESAR V. PURISIMA, in his capacity as Secretary of Finance, GUILLERMO L. PARAYNO, JR.,
in his capacity as Commissioner of Internal Revenue, and EDUARDO R. ERMITA, in his
capacity as Executive Secretary, Respondent.
x-------------------------x
G.R. No. 168730
BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. Petitioner,
vs.
HON. EDUARDO R. ERMITA, in his capacity as the Executive Secretary; HON. MARGARITO
TEVES, in his capacity as Secretary of Finance; HON. JOSE MARIO BUNAG, in his capacity
as the OIC Commissioner of the Bureau of Internal Revenue; and HON. ALEXANDER
AREVALO, in his capacity as the OIC Commissioner of the Bureau of Customs,
Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The expenses of government, having for their object the interest of all, should be borne
by everyone, and the more man enjoys the advantages of society, the more he ought to
hold himself honored in contributing to those expenses.
-Anne Robert Jacques Turgot (1727-1781)
French statesman and economist
Mounting budget deficit, revenue generation, inadequate fiscal allocation for education,
increased emoluments for health workers, and wider coverage for full value-added tax
benefits these are the reasons why Republic Act No. 9337 (R.A. No. 9337)1 was
enacted. Reasons, the wisdom of which, the Court even with its extensive constitutional

power of review, cannot probe. The petitioners in these cases, however, question not
only the wisdom of the law, but also perceived constitutional infirmities in its passage.
Every law enjoys in its favor the presumption of constitutionality. Their arguments
notwithstanding, petitioners failed to justify their call for the invalidity of the law. Hence,
R.A. No. 9337 is not unconstitutional.
LEGISLATIVE HISTORY
R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill Nos. 3555 and
3705, and Senate Bill No. 1950.
House Bill No. 35552 was introduced on first reading on January 7, 2005. The House
Committee on Ways and Means approved the bill, in substitution of House Bill No. 1468,
which Representative (Rep.) Eric D. Singson introduced on August 8, 2004. The President
certified the bill on January 7, 2005 for immediate enactment. On January 27, 2005, the
House of Representatives approved the bill on second and third reading.
House Bill No. 37053 on the other hand, substituted House Bill No. 3105 introduced by
Rep. Salacnib F. Baterina, and House Bill No. 3381 introduced by Rep. Jacinto V. Paras. Its
"mother bill" is House Bill No. 3555. The House Committee on Ways and Means approved
the bill on February 2, 2005. The President also certified it as urgent on February 8, 2005.
The House of Representatives approved the bill on second and third reading on February
28, 2005.
Meanwhile, the Senate Committee on Ways and Means approved Senate Bill No. 19504
on March 7, 2005, "in substitution of Senate Bill Nos. 1337, 1838 and 1873, taking into
consideration House Bill Nos. 3555 and 3705." Senator Ralph G. Recto sponsored Senate
Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were both sponsored by Sens.
Franklin M. Drilon, Juan M. Flavier and Francis N. Pangilinan. The President certified the
bill on March 11, 2005, and was approved by the Senate on second and third reading on
April 13, 2005.
On the same date, April 13, 2005, the Senate agreed to the request of the House of
Representatives for a committee conference on the disagreeing provisions of the
proposed bills.
Before long, the Conference Committee on the Disagreeing Provisions of House Bill No.
3555, House Bill No. 3705, and Senate Bill No. 1950, "after having met and discussed in
full free and conference," recommended the approval of its report, which the Senate did
on May 10, 2005, and with the House of Representatives agreeing thereto the next day,
May 11, 2005.
On May 23, 2005, the enrolled copy of the consolidated House and Senate version was
transmitted to the President, who signed the same into law on May 24, 2005. Thus, came
R.A. No. 9337.

July 1, 2005 is the effectivity date of R.A. No. 9337.5 When said date came, the Court
issued a temporary restraining order, effective immediately and continuing until further
orders, enjoining respondents from enforcing and implementing the law.
Oral arguments were held on July 14, 2005. Significantly, during the hearing, the Court
speaking through Mr. Justice Artemio V. Panganiban, voiced the rationale for its issuance
of the temporary restraining order on July 1, 2005, to wit:
J. PANGANIBAN : . . . But before I go into the details of your presentation, let me just tell
you a little background. You know when the law took effect on July 1, 2005, the Court
issued a TRO at about 5 oclock in the afternoon. But before that, there was a lot of
complaints aired on television and on radio. Some people in a gas station were
complaining that the gas prices went up by 10%. Some people were complaining that
their electric bill will go up by 10%. Other times people riding in domestic air carrier were
complaining that the prices that theyll have to pay would have to go up by 10%. While
all that was being aired, per your presentation and per our own understanding of the law,
thats not true. Its not true that the e-vat law necessarily increased prices by 10%
uniformly isnt it?
ATTY. BANIQUED : No, Your Honor.
J. PANGANIBAN : It is not?
ATTY. BANIQUED : Its not, because, Your Honor, there is an Executive Order that granted
the Petroleum companies some subsidy . . . interrupted
J. PANGANIBAN : Thats correct . . .
ATTY. BANIQUED : . . . and therefore that was meant to temper the impact . . . interrupted
J. PANGANIBAN : . . . mitigating measures . . .
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : As a matter of fact a part of the mitigating measures would be the
elimination of the Excise Tax and the import duties. That is why, it is not correct to say
that the VAT as to petroleum dealers increased prices by 10%.
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : And therefore, there is no justification for increasing the retail price by
10% to cover the E-Vat tax. If you consider the excise tax and the import duties, the Net
Tax would probably be in the neighborhood of 7%? We are not going into exact figures I
am just trying to deliver a point that different industries, different products, different
services are hit differently. So its not correct to say that all prices must go up by 10%.
ATTY. BANIQUED : Youre right, Your Honor.

J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr. Counsel, are at
present imposed a Sales Tax of 3%. When this E-Vat law took effect the Sales Tax was
also removed as a mitigating measure. So, therefore, there is no justification to increase
the fares by 10% at best 7%, correct?
ATTY. BANIQUED : I guess so, Your Honor, yes.
J. PANGANIBAN : There are other products that the people were complaining on that first
day, were being increased arbitrarily by 10%. And thats one reason among many others
this Court had to issue TRO because of the confusion in the implementation. Thats why
we added as an issue in this case, even if its tangentially taken up by the pleadings of
the parties, the confusion in the implementation of the E-vat. Our people were subjected
to the mercy of that confusion of an across the board increase of 10%, which you
yourself now admit and I think even the Government will admit is incorrect. In some
cases, it should be 3% only, in some cases it should be 6% depending on these
mitigating measures and the location and situation of each product, of each service, of
each company, isnt it?
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : Alright. So thats one reason why we had to issue a TRO pending the
clarification of all these and we wish the government will take time to clarify all these by
means of a more detailed implementing rules, in case the law is upheld by this Court. . . .
6
The Court also directed the parties to file their respective Memoranda.
G.R. No. 168056
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a
petition for prohibition on May 27, 2005. They question the constitutionality of Sections
4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the
National Internal Revenue Code (NIRC). Section 4 imposes a 10% VAT on sale of goods
and properties, Section 5 imposes a 10% VAT on importation of goods, and Section 6
imposes a 10% VAT on sale of services and use or lease of properties. These questioned
provisions contain a uniformproviso authorizing the President, upon recommendation of
the Secretary of Finance, to raise the VAT rate to 12%, effective January 1, 2006, after
any of the following conditions have been satisfied, to wit:
. . . That the President, upon the recommendation of the Secretary of Finance, shall,
effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%),
after any of the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
Petitioners argue that the law is unconstitutional, as it constitutes abandonment by
Congress of its exclusive authority to fix the rate of taxes under Article VI, Section 28(2)
of the 1987 Philippine Constitution.
G.R. No. 168207
On June 9, 2005, Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition for certiorari likewise
assailing the constitutionality of Sections 4, 5 and 6 of R.A. No. 9337.
Aside from questioning the so-called stand-by authority of the President to increase the
VAT rate to 12%, on the ground that it amounts to an undue delegation of legislative
power, petitioners also contend that the increase in the VAT rate to 12% contingent on
any of the two conditions being satisfied violates the due process clause embodied in
Article III, Section 1 of the Constitution, as it imposes an unfair and additional tax burden
on the people, in that: (1) the 12% increase is ambiguous because it does not state if the
rate would be returned to the original 10% if the conditions are no longer satisfied; (2)
the rate is unfair and unreasonable, as the people are unsure of the applicable VAT rate
from year to year; and (3) the increase in the VAT rate, which is supposed to be an
incentive to the President to raise the VAT collection to at least 2 4/5 of the GDP of the
previous year, should only be based on fiscal adequacy.
Petitioners further claim that the inclusion of a stand-by authority granted to the
President by the Bicameral Conference Committee is a violation of the "no-amendment
rule" upon last reading of a bill laid down in Article VI, Section 26(2) of the Constitution.
G.R. No. 168461
Thereafter, a petition for prohibition was filed on June 29, 2005, by the Association of
Pilipinas Shell Dealers, Inc.,et al., assailing the following provisions of R.A. No. 9337:
1) Section 8, amending Section 110 (A)(2) of the NIRC, requiring that the input tax on
depreciable goods shall be amortized over a 60-month period, if the acquisition,
excluding the VAT components, exceeds One Million Pesos (P1, 000,000.00);
2) Section 8, amending Section 110 (B) of the NIRC, imposing a 70% limit on the amount
of input tax to be credited against the output tax; and
3) Section 12, amending Section 114 (c) of the NIRC, authorizing the Government or any
of its political subdivisions, instrumentalities or agencies, including GOCCs, to deduct a
5% final withholding tax on gross payments of goods and services, which are subject to
10% VAT under Sections 106 (sale of goods and properties) and 108 (sale of services and
use or lease of properties) of the NIRC.

Petitioners contend that these provisions are unconstitutional for being arbitrary,
oppressive, excessive, and confiscatory.
Petitioners argument is premised on the constitutional right of non-deprivation of life,
liberty or property without due process of law under Article III, Section 1 of the
Constitution. According to petitioners, the contested sections impose limitations on the
amount of input tax that may be claimed. Petitioners also argue that the input tax
partakes the nature of a property that may not be confiscated, appropriated, or limited
without due process of law. Petitioners further contend that like any other property or
property right, the input tax credit may be transferred or disposed of, and that by
limiting the same, the government gets to tax a profit or value-added even if there is no
profit or value-added.
Petitioners also believe that these provisions violate the constitutional guarantee of
equal protection of the law under Article III, Section 1 of the Constitution, as the
limitation on the creditable input tax if: (1) the entity has a high ratio of input tax; or (2)
invests in capital equipment; or (3) has several transactions with the government, is not
based on real and substantial differences to meet a valid classification.
Lastly, petitioners contend that the 70% limit is anything but progressive, violative of
Article VI, Section 28(1) of the Constitution, and that it is the smaller businesses with
higher input tax to output tax ratio that will suffer the consequences thereof for it wipes
out whatever meager margins the petitioners make.
G.R. No. 168463
Several members of the House of Representatives led by Rep. Francis Joseph G. Escudero
filed this petition forcertiorari on June 30, 2005. They question the constitutionality of
R.A. No. 9337 on the following grounds:
1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an undue delegation of legislative
power, in violation of Article VI, Section 28(2) of the Constitution;
2) The Bicameral Conference Committee acted without jurisdiction in deleting the no
pass on provisions present in Senate Bill No. 1950 and House Bill No. 3705; and
3) Insertion by the Bicameral Conference Committee of Sections 27, 28, 34, 116, 117,
119, 121, 125,7 148, 151, 236, 237 and 288, which were present in Senate Bill No. 1950,
violates Article VI, Section 24(1) of the Constitution, which provides that all
appropriation, revenue or tariff bills shall originate exclusively in the House of
Representatives
G.R. No. 168730
On the eleventh hour, Governor Enrique T. Garcia filed a petition for certiorari and
prohibition on July 20, 2005, alleging unconstitutionality of the law on the ground that

the limitation on the creditable input tax in effect allows VAT-registered establishments to
retain a portion of the taxes they collect, thus violating the principle that tax collection
and revenue should be solely allocated for public purposes and expenditures. Petitioner
Garcia further claims that allowing these establishments to pass on the tax to the
consumers is inequitable, in violation of Article VI, Section 28(1) of the Constitution.
RESPONDENTS COMMENT
The Office of the Solicitor General (OSG) filed a Comment in behalf of respondents.
Preliminarily, respondents contend that R.A. No. 9337 enjoys the presumption of
constitutionality and petitioners failed to cast doubt on its validity.
Relying on the case of Tolentino vs. Secretary of Finance, 235 SCRA
630 (1994), respondents argue that the procedural issues raised by petitioners, i.e.,
legality of the bicameral proceedings, exclusive origination of revenue measures and the
power of the Senate concomitant thereto, have already been settled. With regard to the
issue of undue delegation of legislative power to the President, respondents contend that
the law is complete and leaves no discretion to the President but to increase the rate to
12% once any of the two conditions provided therein arise.
Respondents also refute petitioners argument that the increase to 12%, as well as the
70% limitation on the creditable input tax, the 60-month amortization on the purchase or
importation of capital goods exceedingP1,000,000.00, and the 5% final withholding tax
by government agencies, is arbitrary, oppressive, and confiscatory, and that it violates
the constitutional principle on progressive taxation, among others.
Finally, respondents manifest that R.A. No. 9337 is the anchor of the governments fiscal
reform agenda. A reform in the value-added system of taxation is the core revenue
measure that will tilt the balance towards a sustainable macroeconomic environment
necessary for economic growth.
ISSUES
The Court defined the issues, as follows:
PROCEDURAL ISSUE
Whether R.A. No. 9337 violates the following provisions of the Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
SUBSTANTIVE ISSUES
1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of
the NIRC, violate the following provisions of the Constitution:

a. Article VI, Section 28(1), and

b. Article VI, Section 28(2)
2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the
NIRC; and Section 12 of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the
following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
RULING OF THE COURT
As a prelude, the Court deems it apt to restate the general principles and concepts of
value-added tax (VAT), as the confusion and inevitably, litigation, breeds from a
fallacious notion of its nature.
The VAT is a tax on spending or consumption. It is levied on the sale, barter, exchange or
lease of goods or properties and services.8 Being an indirect tax on expenditure, the
seller of goods or services may pass on the amount of tax paid to the buyer,9 with the
seller acting merely as a tax collector.10 The burden of VAT is intended to fall on the
immediate buyers and ultimately, the end-consumers.
In contrast, a direct tax is a tax for which a taxpayer is directly liable on the transaction
or business it engages in, without transferring the burden to someone else.11 Examples
are individual and corporate income taxes, transfer taxes, and residence taxes.12
In the Philippines, the value-added system of sales taxation has long been in existence,
albeit in a different mode. Prior to 1978, the system was a single-stage tax computed
under the "cost deduction method" and was payable only by the original sellers. The
single-stage system was subsequently modified, and a mixture of the "cost deduction
method" and "tax credit method" was used to determine the value-added tax payable.13
Under the "tax credit method," an entity can credit against or subtract from the VAT
charged on its sales or outputs the VAT paid on its purchases, inputs and imports.14
It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273,
that the VAT system was rationalized by imposing a multi-stage tax rate of 0% or 10% on
all sales using the "tax credit method."15
E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT Law,16 R.A. No. 8241 or
the Improved VAT Law,17 R.A. No. 8424 or the Tax Reform Act of 1997,18 and finally, the
presently beleaguered R.A. No. 9337, also referred to by respondents as the VAT Reform
Act.
The Court will now discuss the issues in logical sequence.

PROCEDURAL ISSUE
I.
Whether R.A. No. 9337 violates the following provisions of the Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
A. The Bicameral Conference Committee
Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral Conference
Committee exceeded its authority by:
1) Inserting the stand-by authority in favor of the President in Sections 4, 5, and 6 of R.A.
No. 9337;
2) Deleting entirely the no pass-on provisions found in both the House and Senate bills;
3) Inserting the provision imposing a 70% limit on the amount of input tax to be credited
against the output tax; and
4) Including the amendments introduced only by Senate Bill No. 1950 regarding other
kinds of taxes in addition to the value-added tax.
Petitioners now beseech the Court to define the powers of the Bicameral Conference
Committee.
It should be borne in mind that the power of internal regulation and discipline are
intrinsic in any legislative body for, as unerringly elucidated by Justice Story, "[i]f the
power did not exist, it would be utterly impracticable to transact the business of the
nation, either at all, or at least with decency, deliberation, and order."19Thus, Article VI,
Section 16 (3) of the Constitution provides that "each House may determine the rules of
its proceedings." Pursuant to this inherent constitutional power to promulgate and
implement its own rules of procedure, the respective rules of each house of Congress
provided for the creation of a Bicameral Conference Committee.
Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives provides as
follows:
Sec. 88. Conference Committee. In the event that the House does not agree with the
Senate on the amendment to any bill or joint resolution, the differences may be settled
by the conference committees of both chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible,
adhere to and support the House Bill. If the differences with the Senate are so substantial

that they materially impair the House Bill, the panel shall report such fact to the House
for the latters appropriate action.
Sec. 89. Conference Committee Reports. . . . Each report shall contain a detailed,
sufficiently explicit statement of the changes in or amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on the Conference Committee
Report prior to the voting thereon. The House shall vote on the Conference Committee
Report in the same manner and procedure as it votes on a bill on third and final reading.
Rule XII, Section 35 of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House of Representatives
on the provision of any bill or joint resolution, the differences shall be settled by a
conference committee of both Houses which shall meet within ten (10) days after their
composition. The President shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed and sufficiently explicit
statement of the changes in, or amendments to the subject measure, and shall be signed
by a majority of the members of each House panel, voting separately.
A comparative presentation of the conflicting House and Senate provisions and a
reconciled version thereof with the explanatory statement of the conference committee
shall be attached to the report.
...
The creation of such conference committee was apparently in response to a problem, not
addressed by any constitutional provision, where the two houses of Congress find
themselves in disagreement over changes or amendments introduced by the other
house in a legislative bill. Given that one of the most basic powers of the legislative
branch is to formulate and implement its own rules of proceedings and to discipline its
members, may the Court then delve into the details of how Congress complies with its
internal rules or how it conducts its business of passing legislation? Note that in the
present petitions, the issue is not whether provisions of the rules of both houses creating
the bicameral conference committee are unconstitutional, but whether the bicameral
conference committee has strictly complied with the rules of both houses, thereby
remaining within the jurisdiction conferred upon it by Congress.
In the recent case of Farias vs. The Executive Secretary,20 the Court En Banc,
unanimously reiterated and emphasized its adherence to the "enrolled bill doctrine,"
thus, declining therein petitioners plea for the Court to go behind the enrolled copy of
the bill. Assailed in said case was Congresss creation of two sets of bicameral

conference committees, the lack of records of said committees proceedings, the alleged
violation of said committees of the rules of both houses, and the disappearance or
deletion of one of the provisions in the compromise bill submitted by the bicameral
conference committee. It was argued that such irregularities in the passage of the law
nullified R.A. No. 9006, or the Fair Election Act.
Striking down such argument, the Court held thus:
Under the "enrolled bill doctrine," the signing of a bill by the Speaker of the House and
the Senate President and the certification of the Secretaries of both Houses of Congress
that it was passed are conclusive of its due enactment. A review of cases reveals the
Courts consistent adherence to the rule. The Court finds no reason to deviate from the
salutary rule in this case where the irregularities alleged by the petitioners mostly
involved the internal rules of Congress, e.g., creation of the 2nd or 3rd Bicameral
Conference Committee by the House. This Court is not the proper forum for the
enforcement of these internal rules of Congress, whether House or Senate. Parliamentary
rules are merely procedural and with their observance the courts have no concern.
Whatever doubts there may be as to the formal validity of Rep. Act No. 9006 must be
resolved in its favor. The Court reiterates its ruling in Arroyo vs. De Venecia, viz.:
But the 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. In Osmea v. Pendatun, it
was held: "At any rate, courts have declared that the rules adopted by deliberative
bodies are subject to revocation, modification or waiver at the pleasure of the body
adopting them.And it has been said that "Parliamentary rules are merely procedural,
and with their observance, the courts have no concern. They may be waived or
disregarded by the legislative body." Consequently, "mere failure to conform to
parliamentary usage will not invalidate the action (taken by a deliberative body) when
the requisite number of members have agreed to a particular measure."21 (Emphasis
supplied)
The foregoing declaration is exactly in point with the present cases, where petitioners
allege irregularities committed by the conference committee in introducing changes or
deleting provisions in the House and Senate bills. Akin to the Farias case,22 the present
petitions also raise an issue regarding the actions taken by the conference committee on
matters regarding Congress compliance with its own internal rules. As stated earlier,
one of the most basic and inherent power of the legislature is the power to formulate
rules for its proceedings and the discipline of its members. Congress is the best judge of
how it should conduct its own business expeditiously and in the most orderly manner. It
is also the sole

concern of Congress to instill discipline among the members of its conference committee
if it believes that said members violated any of its rules of proceedings. Even the
expanded jurisdiction of this Court cannot apply to questions regarding only the internal
operation of Congress, thus, the Court is wont to deny a review of the internal
proceedings of a co-equal branch of government.
Moreover, as far back as 1994 or more than ten years ago, in the case of Tolentino vs.
Secretary of Finance,23the Court already made the pronouncement that "[i]f a change is
desired in the practice [of the Bicameral Conference Committee] it must be sought in
Congress since this question is not covered by any constitutional provision but is only an
internal rule of each house." 24 To date, Congress has not seen it fit to make such
changes adverted to by the Court. It seems, therefore, that Congress finds the practices
of the bicameral conference committee to be very useful for purposes of prompt and
efficient legislative action.
Nevertheless, just to put minds at ease that no blatant irregularities tainted the
proceedings of the bicameral conference committees, the Court deems it necessary to
dwell on the issue. The Court observes that there was a necessity for a conference
committee because a comparison of the provisions of House Bill Nos. 3555 and 3705 on
one hand, and Senate Bill No. 1950 on the other, reveals that there were indeed
disagreements. As pointed out in the petitions, said disagreements were as follows:
House Bill No. 3555

House Bill No.3705

Senate Bill No. 1950

With regard to "Stand-By Authority" in favor of President

Provides for 12% VAT on every sale of goods or properties (amending Sec. 106 of NIRC);
12% VAT on importation of goods (amending Sec. 107 of NIRC); and 12% VAT on sale of
services and use or lease of properties (amending Sec. 108 of NIRC)
Provides for
12% VAT in general on sales of goods or properties and reduced rates for sale of certain
locally manufactured goods and petroleum products and raw materials to be used in the
manufacture thereof (amending Sec. 106 of NIRC); 12% VAT on importation of goods and
reduced rates for certain imported products including petroleum products (amending
Sec. 107 of NIRC); and 12% VAT on sale of services and use or lease of properties and a
reduced rate for certain services including power generation (amending Sec. 108 of
NIRC)
Provides for a single rate of 10% VAT on sale of goods or properties
(amending Sec. 106 of NIRC), 10% VAT on sale of services including sale of electricity by
generation companies, transmission and distribution companies, and use or lease of
properties (amending Sec. 108 of NIRC)
With regard to the "no pass-on" provision
No similar provision
Provides that the VAT imposed on power generation and on
the sale of petroleum products shall be absorbed by generation companies or sellers,
respectively, and shall not be passed on to consumers
Provides that the VAT

imposed on sales of electricity by generation companies and services of transmission

companies and distribution companies, as well as those of franchise grantees of electric
utilities shall not apply to residential
end-users. VAT shall be absorbed by generation, transmission, and distribution
companies.
With regard to 70% limit on input tax credit
Provides that the input tax credit for capital goods on which a VAT has been paid shall be
equally distributed over 5 years or the depreciable life of such capital goods; the input
tax credit for goods and services other than capital goods shall not exceed 5% of the
total amount of such goods and services; and for persons engaged in retail trading of
goods, the allowable input tax credit shall not exceed 11% of the total amount of goods
purchased.
No similar provision
Provides that the input tax credit for
capital goods on which a VAT has been paid shall be equally distributed over 5 years or
the depreciable life of such capital goods; the input tax credit for goods and services
other than capital goods shall not exceed 90% of the output VAT.
With regard to amendments to be made to NIRC provisions regarding income and excise
taxes
No similar provision
No similar provision
Provided for amendments to
several NIRC provisions regarding corporate income, percentage, franchise and excise
taxes
The disagreements between the provisions in the House bills and the Senate bill were
with regard to (1) what rate of VAT is to be imposed; (2) whether only the VAT imposed
on electricity generation, transmission and distribution companies should not be passed
on to consumers, as proposed in the Senate bill, or both the VAT imposed on electricity
generation, transmission and distribution companies and the VAT imposed on sale of
petroleum products should not be passed on to consumers, as proposed in the House
bill; (3) in what manner input tax credits should be limited; (4) and whether the NIRC
provisions on corporate income taxes, percentage, franchise and excise taxes should be
amended.
There being differences and/or disagreements on the foregoing provisions of the House
and Senate bills, the Bicameral Conference Committee was mandated by the rules of
both houses of Congress to act on the same by settling said differences and/or
disagreements. The Bicameral Conference Committee acted on the disagreeing
provisions by making the following changes:
1. With regard to the disagreement on the rate of VAT to be imposed, it would appear
from the Conference Committee Report that the Bicameral Conference Committee tried
to bridge the gap in the difference between the 10% VAT rate proposed by the Senate,

and the various rates with 12% as the highest VAT rate proposed by the House, by
striking a compromise whereby the present 10% VAT rate would be retained until certain
conditions arise, i.e., the value-added tax collection as a percentage of gross domestic
product (GDP) of the previous year exceeds 2 4/5%, or National Government deficit as a
percentage of GDP of the previous year exceeds 1%, when the President, upon
recommendation of the Secretary of Finance shall raise the rate of VAT to 12% effective
January 1, 2006.
2. With regard to the disagreement on whether only the VAT imposed on electricity
generation, transmission and distribution companies should not be passed on to
consumers or whether both the VAT imposed on electricity generation, transmission and
distribution companies and the VAT imposed on sale of petroleum products may be
passed on to consumers, the Bicameral Conference Committee chose to settle such
disagreement by altogether deleting from its Report any no pass-on provision.
3. With regard to the disagreement on whether input tax credits should be limited or not,
the Bicameral Conference Committee decided to adopt the position of the House by
putting a limitation on the amount of input tax that may be credited against the output
tax, although it crafted its own language as to the amount of the limitation on input tax
credits and the manner of computing the same by providing thus:
(A) Creditable Input Tax. . . .
...
Provided, The input tax on goods purchased or imported in a calendar month for use in
trade or business for which deduction for depreciation is allowed under this Code, shall
be spread evenly over the month of acquisition and the fifty-nine (59) succeeding
months if the aggregate acquisition cost for such goods, excluding the VAT component
thereof, exceeds one million Pesos (P1,000,000.00): PROVIDED, however, that if the
estimated useful life of the capital good is less than five (5) years, as used for
depreciation purposes, then the input VAT shall be spread over such shorter period: . . .
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax
exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input
tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or
quarters: PROVIDED that the input tax inclusive of input VAT carried over from the
previous quarter that may be credited in every quarter shall not exceed seventy percent
(70%) of the output VAT: PROVIDED, HOWEVER, THAT any input tax attributable to zerorated sales by a VAT-registered person may at his option be refunded or credited against
other internal revenue taxes, . . .
4. With regard to the amendments to other provisions of the NIRC on corporate income
tax, franchise, percentage and excise taxes, the conference committee decided to

include such amendments and basically adopted the provisions found in Senate Bill No.
1950, with some changes as to the rate of the tax to be imposed.
Under the provisions of both the Rules of the House of Representatives and Senate Rules,
the Bicameral Conference Committee is mandated to settle the differences between the
disagreeing provisions in the House bill and the Senate bill. The term "settle" is
synonymous to "reconcile" and "harmonize."25 To reconcile or harmonize disagreeing
provisions, the Bicameral Conference Committee may then (a) adopt the specific
provisions of either the House bill or Senate bill, (b) decide that neither provisions in the
House bill or the provisions in the Senate bill would
be carried into the final form of the bill, and/or (c) try to arrive at a compromise between
the disagreeing provisions.
In the present case, the changes introduced by the Bicameral Conference Committee on
disagreeing provisions were meant only to reconcile and harmonize the disagreeing
provisions for it did not inject any idea or intent that is wholly foreign to the subject
embraced by the original provisions.
The so-called stand-by authority in favor of the President, whereby the rate of 10% VAT
wanted by the Senate is retained until such time that certain conditions arise when the
12% VAT wanted by the House shall be imposed, appears to be a compromise to try to
bridge the difference in the rate of VAT proposed by the two houses of Congress.
Nevertheless, such compromise is still totally within the subject of what rate of VAT
should be imposed on taxpayers.
The no pass-on provision was deleted altogether. In the transcripts of the proceedings of
the Bicameral Conference Committee held on May 10, 2005, Sen. Ralph Recto, Chairman
of the Senate Panel, explained the reason for deleting the no pass-on provision in this
wise:
. . . the thinking was just to keep the VAT law or the VAT bill simple. And we were thinking
that no sector should be a beneficiary of legislative grace, neither should any sector be
discriminated on. The VAT is an indirect tax. It is a pass on-tax. And lets keep it plain and
simple. Lets not confuse the bill and put a no pass-on provision. Two-thirds of the world
have a VAT system and in this two-thirds of the globe, I have yet to see a VAT with a no
pass-though provision. So, the thinking of the Senate is basically simple, lets keep the
VAT simple.26 (Emphasis supplied)
Rep. Teodoro Locsin further made the manifestation that the no pass-on provision "never
really enjoyed the support of either House."27
With regard to the amount of input tax to be credited against output tax, the Bicameral
Conference Committee came to a compromise on the percentage rate of the limitation or
cap on such input tax credit, but again, the change introduced by the Bicameral

Conference Committee was totally within the intent of both houses to put a cap on input
tax that may be
credited against the output tax. From the inception of the subject revenue bill in the
House of Representatives, one of the major objectives was to "plug a glaring loophole in
the tax policy and administration by creating vital restrictions on the claiming of input
VAT tax credits . . ." and "[b]y introducing limitations on the claiming of tax credit, we are
capping a major leakage that has placed our collection efforts at an apparent
disadvantage."28
As to the amendments to NIRC provisions on taxes other than the value-added tax
proposed in Senate Bill No. 1950, since said provisions were among those referred to it,
the conference committee had to act on the same and it basically adopted the version of
the Senate.
Thus, all the changes or modifications made by the Bicameral Conference Committee
were germane to subjects of the provisions referred
to it for reconciliation. Such being the case, the Court does not see any grave abuse of
discretion amounting to lack or excess of jurisdiction committed by the Bicameral
Conference Committee. In the earlier cases of Philippine Judges Association vs. Prado29
and Tolentino vs. Secretary of Finance,30 the Court recognized the long-standing
legislative practice of giving said conference committee ample latitude for compromising
differences between the Senate and the House. Thus, in the Tolentino case, it was held
that:
. . . it is within the power of a conference committee to include in its report an entirely
new provision that is not found either in the House bill or in the Senate bill. If the
committee can propose an amendment consisting of one or two provisions, there is no
reason why it cannot propose several provisions, collectively considered as an
"amendment in the nature of a substitute," so long as such amendment is germane to
the subject of the bills before the committee. After all, its report was not final but needed
the approval of both houses of Congress to become valid as an act of the legislative
department. The charge that in this case the Conference Committee acted as a third
legislative chamber is thus without any basis.31 (Emphasis supplied)
B. R.A. No. 9337 Does Not Violate Article VI, Section 26(2) of the Constitution on the "NoAmendment Rule"
Article VI, Sec. 26 (2) of the Constitution, states:
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.
Petitioners argument that the practice where a bicameral conference committee is
allowed to add or delete provisions in the House bill and the Senate bill after these had
passed three readings is in effect a circumvention of the "no amendment rule" (Sec. 26
(2), Art. VI of the 1987 Constitution), fails to convince the Court to deviate from its ruling
in the Tolentino case that:
Nor is there any reason for requiring that the Committees Report in these cases must
have undergone three readings in each of the two houses. If that be the case, there
would be no end to negotiation since each house may seek modification of the
compromise bill. . . .
Art. VI. 26 (2) must, therefore, be construed as referring only to bills introduced for the
first time in either house of Congress, not to the conference committee report.32
(Emphasis supplied)
The Court reiterates here that the "no-amendment rule" refers only to the procedure to
be followed by each house of Congress with regard to bills initiated in each of said
respective houses, before said bill is transmitted to the other house for its concurrence or
amendment. Verily, to construe said provision in a way as to proscribe any further
changes to a bill after one house has voted on it would lead to absurdity as this would
mean that the other house of Congress would be deprived of its constitutional power to
amend or introduce changes to said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution
cannot be taken to mean that the introduction by the Bicameral Conference Committee
of amendments and modifications to disagreeing provisions in bills that have been acted
upon by both houses of Congress is prohibited.
C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the Constitution on Exclusive
Origination of Revenue Bills
Coming to the issue of the validity of the amendments made regarding the NIRC
provisions on corporate income taxes and percentage, excise taxes. Petitioners refer to
the following provisions, to wit:
Section 27 Rates of Income Tax on Domestic Corporation
28(A)(1)

Tax on Resident Foreign Corporation

28(B)(1)

Inter-corporate Dividends

34(B)(1)

Inter-corporate Dividends

116

Tax on Persons Exempt from VAT

117

Percentage Tax on domestic carriers and keepers of Garage

119

Tax on franchises

121

Tax on banks and Non-Bank Financial Intermediaries

148

Excise Tax on manufactured oils and other fuels

151

Excise Tax on mineral products

236

Registration requirements

237

Issuance of receipts or sales or commercial invoices

288

Disposition of Incremental Revenue

Petitioners claim that the amendments to these provisions of the NIRC did not at all
originate from the House. They aver that House Bill No. 3555 proposed amendments only
regarding Sections 106, 107, 108, 110 and 114 of the NIRC, while House Bill No. 3705
proposed amendments only to Sections 106, 107,108, 109, 110 and 111 of the NIRC;
thus, the other sections of the NIRC which the Senate amended but which amendments
were not found in the House bills are not intended to be amended by the House of
Representatives. Hence, they argue that since the proposed amendments did not
originate from the House, such amendments are a violation of Article VI, Section 24 of
the Constitution.
The argument does not hold water.
Article VI, Section 24 of the Constitution reads:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the House of
Representatives but the Senate may propose or concur with amendments.
In the present cases, petitioners admit that it was indeed House Bill Nos. 3555 and 3705
that initiated the move for amending provisions of the NIRC dealing mainly with the
value-added tax. Upon transmittal of said House bills to the Senate, the Senate came out
with Senate Bill No. 1950 proposing amendments not only to NIRC provisions on the
value-added tax but also amendments to NIRC provisions on other kinds of taxes. Is the
introduction by the Senate of provisions not dealing directly with the value- added tax,
which is the only kind of tax being amended in the House bills, still within the purview of
the constitutional provision authorizing the Senate to propose or concur with
amendments to a revenue bill that originated from the House?
The foregoing question had been squarely answered in the Tolentino case, wherein the
Court held, thus:
. . . To begin with, it is not the law but the revenue bill which is required by the
Constitution to "originate exclusively" in the House of Representatives. It is important to

emphasize this, because a bill originating in the House may undergo such extensive
changes in the Senate that the result may be a rewriting of the whole. . . . At this point,
what is important to note is that, as a result of the Senate action, a distinct bill may be
produced. To insist that a revenue statute and not only the bill which initiated the
legislative process culminating in the enactment of the law must substantially be the
same as the House bill would be to deny the Senates power not only to "concur with
amendments" but also to "propose amendments." It would be to violate the coequality of
legislative power of the two houses of Congress and in fact make the House superior to
the Senate.

Given, then, the power of the Senate to propose amendments, the Senate can propose
its own version even with respect to bills which are required by the Constitution to
originate in the House.
...
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff
or tax bills, bills authorizing an increase of the public debt, private bills and bills of local
application must come from the House of Representatives on the theory that, elected as
they are from the districts, the members of the House can be expected to be more
sensitive to the local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the national
perspective. Both views are thereby made to bear on the enactment of such laws.33
(Emphasis supplied)
Since there is no question that the revenue bill exclusively originated in the House of
Representatives, the Senate was acting within its
constitutional power to introduce amendments to the House bill when it included
provisions in Senate Bill No. 1950 amending corporate income taxes, percentage, excise
and franchise taxes. Verily, Article VI, Section 24 of the Constitution does not contain any
prohibition or limitation on the extent of the amendments that may be introduced by the
Senate to the House revenue bill.
Furthermore, the amendments introduced by the Senate to the NIRC provisions that had
not been touched in the House bills are still in furtherance of the intent of the House in
initiating the subject revenue bills. The Explanatory Note of House Bill No. 1468, the very
first House bill introduced on the floor, which was later substituted by House Bill No.
3555, stated:
One of the challenges faced by the present administration is the urgent and daunting
task of solving the countrys serious financial problems. To do this, government
expenditures must be strictly monitored and controlled and revenues must be

significantly increased. This may be easier said than done, but our fiscal authorities are
still optimistic the government will be operating on a balanced budget by the year 2009.
In fact, several measures that will result to significant expenditure savings have been
identified by the administration. It is supported with a credible package of revenue
measures that include measures to improve tax administration and control the leakages
in revenues from income taxes and the value-added tax (VAT). (Emphasis supplied)
Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555, declared that:
In the budget message of our President in the year 2005, she reiterated that we all
acknowledged that on top of our agenda must be the restoration of the health of our
fiscal system.
In order to considerably lower the consolidated public sector deficit and eventually
achieve a balanced budget by the year 2009, we need to seize windows of opportunities
which might seem poignant in the beginning, but in the long run prove effective and
beneficial to the overall status of our economy. One such opportunity is a review of
existing tax rates, evaluating the relevance given our present conditions.34(Emphasis
supplied)
Notably therefore, the main purpose of the bills emanating from the House of
Representatives is to bring in sizeable revenues for the government
to supplement our countrys serious financial problems, and improve tax administration
and control of the leakages in revenues from income taxes and value-added taxes. As
these house bills were transmitted to the Senate, the latter, approaching the measures
from the point of national perspective, can introduce amendments within the purposes of
those bills. It can provide for ways that would soften the impact of the VAT measure on
the consumer, i.e., by distributing the burden across all sectors instead of putting it
entirely on the shoulders of the consumers. The sponsorship speech of Sen. Ralph Recto
on why the provisions on income tax on corporation were included is worth quoting:
All in all, the proposal of the Senate Committee on Ways and Means will raise P64.3
billion in additional revenues annually even while by mitigating prices of power, services
and petroleum products.
However, not all of this will be wrung out of VAT. In fact, only P48.7 billion amount is from
the VAT on twelve goods and services. The rest of the tab P10.5 billion- will be picked
by corporations.
What we therefore prescribe is a burden sharing between corporate Philippines and the
consumer. Why should the latter bear all the pain? Why should the fiscal salvation be
only on the burden of the consumer?
The corporate worlds equity is in form of the increase in the corporate income tax from
32 to 35 percent, but up to 2008 only. This will raise P10.5 billion a year. After that, the

rate will slide back, not to its old rate of 32 percent, but two notches lower, to 30
percent.
Clearly, we are telling those with the capacity to pay, corporations, to bear with this
emergency provision that will be in effect for 1,200 days, while we put our fiscal house in
order. This fiscal medicine will have an expiry date.
For their assistance, a reward of tax reduction awaits them. We intend to keep the length
of their sacrifice brief. We would like to assure them that not because there is a light at
the end of the tunnel, this government will keep on making the tunnel long.
The responsibility will not rest solely on the weary shoulders of the small man. Big
business will be there to share the burden.35
As the Court has said, the Senate can propose amendments and in fact, the
amendments made on provisions in the tax on income of corporations are germane to
the purpose of the house bills which is to raise revenues for the government.
Likewise, the Court finds the sections referring to other percentage and excise taxes
germane to the reforms to the VAT system, as these sections would cushion the effects
of VAT on consumers. Considering that certain goods and services which were subject to
percentage tax and excise tax would no longer be VAT-exempt, the consumer would be
burdened more as they would be paying the VAT in addition to these taxes. Thus, there is
a need to amend these sections to soften the impact of VAT. Again, in his sponsorship
speech, Sen. Recto said:
However, for power plants that run on oil, we will reduce to zero the present excise tax
on bunker fuel, to lessen the effect of a VAT on this product.
For electric utilities like Meralco, we will wipe out the franchise tax in exchange for a VAT.
And in the case of petroleum, while we will levy the VAT on oil products, so as not to
destroy the VAT chain, we will however bring down the excise tax on socially sensitive
products such as diesel, bunker, fuel and kerosene.
...
What do all these exercises point to? These are not contortions of giving to the left hand
what was taken from the right. Rather, these sprang from our concern of softening the
impact of VAT, so that the people can cushion the blow of higher prices they will have to
pay as a result of VAT.36
The other sections amended by the Senate pertained to matters of tax administration
which are necessary for the implementation of the changes in the VAT system.

To reiterate, the sections introduced by the Senate are germane to the subject matter
and purposes of the house bills, which is to supplement our countrys fiscal deficit,
among others. Thus, the Senate acted within its power to propose those amendments.
SUBSTANTIVE ISSUES
I.
Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107 and 108 of
the NIRC, violate the following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article VI, Section 28(2)
A. No Undue Delegation of Legislative Power
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escudero, et al.
contend in common that Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106,
107 and 108, respectively, of the NIRC giving the President the stand-by authority to
raise the VAT rate from 10% to 12% when a certain condition is met, constitutes undue
delegation of the legislative power to tax.
The assailed provisions read as follows:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as
follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties.
(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale,
barter or exchange of goods or properties, a value-added tax equivalent to ten percent
(10%) of the gross selling price or gross value in money of the goods or properties sold,
bartered or exchanged, such tax to be paid by the seller or transferor:provided, that the
President, upon the recommendation of the Secretary of Finance, shall, effective January
1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the
following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
SEC. 5. Section 107 of the same Code, as amended, is hereby further amended to read
as follows:
SEC. 107. Value-Added Tax on Importation of Goods.

(A) In General. There shall be levied, assessed and collected on every importation of
goods a value-added tax equivalent to ten percent (10%) based on the total value used
by the Bureau of Customs in determining tariff and customs duties, plus customs duties,
excise taxes, if any, and other charges, such tax to be paid by the importer prior to the
release of such goods from customs custody: Provided, That where the customs duties
are determined on the basis of the quantity or volume of the goods, the value-added tax
shall be based on the landed cost plus excise taxes, if any: provided, further, that the
President, upon the recommendation of the Secretary of Finance, shall, effective January
1, 2006, raise the rate of value-added tax to twelve percent (12%) after any of the
following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read
as follows:
SEC. 108. 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, a value-added
tax equivalent to ten percent (10%) of gross receipts derived from the sale or exchange
of services: provided, that the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve
percent (12%), after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %). (Emphasis supplied)
Petitioners allege that the grant of the stand-by authority to the President to increase the
VAT rate is a virtual abdication by Congress of its exclusive power to tax because such
delegation is not within the purview of Section 28 (2), Article VI of the Constitution, which
provides:
The Congress may, by law, authorize the President to fix within specified limits, and may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of the
government.
They argue that the VAT is a tax levied on the sale, barter or exchange of goods and
properties as well as on the sale or exchange of services, which cannot be included

within the purview of tariffs under the exempted delegation as the latter refers to
customs duties, tolls or tribute payable upon merchandise to the government and usually
imposed on goods or merchandise imported or exported.
Petitioners ABAKADA GURO Party List, et al., further contend that delegating to the
President the legislative power to tax is contrary to republicanism. They insist that
accountability, responsibility and transparency should dictate the actions of Congress
and they should not pass to the President the decision to impose taxes. They also argue
that the law also effectively nullified the Presidents power of control, which includes the
authority to set aside and nullify the acts of her subordinates like the Secretary of
Finance, by mandating the fixing of the tax rate by the President upon the
recommendation of the Secretary of Finance.
Petitioners Pimentel, et al. aver that the President has ample powers to cause, influence
or create the conditions provided by the law to bring about either or both the conditions
precedent.
On the other hand, petitioners Escudero, et al. find bizarre and revolting the situation
that the imposition of the 12% rate would be subject to the whim of the Secretary of
Finance, an unelected bureaucrat, contrary to the principle of no taxation without
representation. They submit that the Secretary of Finance is not mandated to give a
favorable recommendation and he may not even give his recommendation. Moreover,
they allege that no guiding standards are provided in the law on what basis and as to
how he will make his recommendation. They claim, nonetheless, that any
recommendation of the Secretary of Finance can easily be brushed aside by the
President since the former is a mere alter ego of the latter, such that, ultimately, it is the
President who decides whether to impose the increased tax rate or not.
A brief discourse on the principle of non-delegation of powers is instructive.
The principle of separation of powers ordains that each of the three great branches of
government has exclusive cognizance of and is supreme in matters falling within its own
constitutionally allocated sphere.37 A logical
corollary to the doctrine of separation of powers is the principle of non-delegation of
powers, as expressed in the Latin maxim: potestas delegata non delegari potest which
means "what has been delegated, cannot be delegated."38 This doctrine is based on the
ethical principle that such as delegated power constitutes not only a right but a duty to
be performed by the delegate through the instrumentality of his own judgment and not
through the intervening mind of another.39
With respect to the Legislature, Section 1 of Article VI of the Constitution provides that
"the Legislative power shall be vested in the Congress of the Philippines which shall
consist of a Senate and a House of Representatives." The powers which Congress is
prohibited from delegating are those which are strictly, or inherently and exclusively,

legislative. Purely legislative power, which can never be delegated, has been described
as theauthority to make a complete law complete as to the time when it shall take
effect and as to whom it shall be applicable and to determine the expediency of its
enactment.40 Thus, the rule is that in order that a court may be justified in holding a
statute unconstitutional as a delegation of legislative power, it must appear that the
power involved is purely legislative in nature that is, one appertaining exclusively to
the legislative department. It is the nature of the power, and not the liability of its use or
the manner of its exercise, which determines the validity of its delegation.
Nonetheless, the general rule barring delegation of legislative powers is subject to the
following recognized limitations or exceptions:
(1) Delegation of tariff powers to the President under Section 28 (2) of Article VI of the
Constitution;
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of
the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
In every case of permissible delegation, there must be a showing that the delegation
itself is valid. It is valid only if the law (a) is complete in itself, setting forth therein the
policy to be executed, carried out, or implemented by the delegate;41 and (b) fixes a
standard the limits of which are sufficiently determinate and determinable to which
the delegate must conform in the performance of his functions.42 A sufficient standard is
one which defines legislative policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the circumstances under which the
legislative command is to be effected.43 Both tests are intended to prevent a total
transference of legislative authority to the delegate, who is not allowed to step into the
shoes of the legislature and exercise a power essentially legislative.44
In People vs. Vera,45 the Court, through eminent Justice Jose P. Laurel, expounded on the
concept and extent of delegation of power in this wise:
In testing whether a statute constitutes an undue delegation of legislative power or not,
it is usual to inquire whether the statute was complete in all its terms and provisions
when it left the hands of the legislature so that nothing was left to the judgment of any
other appointee or delegate of the legislature.
...

The true distinction, says Judge Ranney, is between the delegation of power to make
the law, which necessarily involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised under and in pursuance of the
law. The first cannot be done; to the latter no valid objection can be made.
...
It is contended, however, that a legislative act may be made to the effect as law after it
leaves the hands of the legislature. It is true that laws may be made effective on certain
contingencies, as by proclamation of the executive or the adoption by the people of a
particular community. In Wayman vs. Southard, the Supreme Court of the United States
ruled that the legislature may delegate a power not legislative which it may itself
rightfully exercise. The power to ascertain facts is such a power which may be delegated.
There is nothing essentially legislative in ascertaining the existence of facts or conditions
as the basis of the taking into effect of a law. That is a mental process common to all
branches of the government. Notwithstanding the apparent tendency, however, to relax
the rule prohibiting delegation of legislative authority on account of the complexity
arising from social and economic forces at work in this modern industrial age, the
orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations finds
restatement in Prof. Willoughby's treatise on the Constitution of the United States in the
following language speaking of declaration of legislative power to administrative
agencies: The principle which permits the legislature to provide that the administrative
agent may determine when the circumstances are such as require the application of a
law is defended upon the ground that at the time this authority is granted, the rule of
public policy, which is the essence of the legislative act, is determined by the legislature.
In other words, the legislature, as it is its duty to do, determines that, under given
circumstances, certain executive or administrative action is to be taken, and that, under
other circumstances, different or no action at all is to be taken. What is thus left to the
administrative official is not the legislative determination of what public policy demands,
but simply the ascertainment of what the facts of the case require to be done according
to the terms of the law by which he is governed. The efficiency of an Act as a declaration
of legislative will must, of course, come from Congress, but the ascertainment of the
contingency upon which the Act shall take effect may be left to such agencies as it may
designate. The legislature, then, may provide that a law shall take effect upon the
happening of future specified contingencies leaving to some other person or body the
power to determine when the specified contingency has arisen. (Emphasis supplied).46
In Edu vs. Ericta,47 the Court reiterated:
What cannot be delegated is the authority under the Constitution to make laws and to
alter and repeal them; the test is the completeness of the statute in all its terms and
provisions when it leaves the hands of the legislature. To determine whether or not there
is an undue delegation of legislative power, the inquiry must be directed to the scope
and definiteness of the measure enacted. The legislative does not abdicate its functions

when it describes what job must be done, who is to do it, and what is the scope of his
authority. For a complex economy, that may be the only way in which the legislative
process can go forward. A distinction has rightfully been made between delegation of
power to make the laws which necessarily involves a discretion as to what it shall be,
which constitutionally may not be done, and delegation of authority or discretion as to its
execution to be exercised under and in pursuance of the law, to which no valid objection
can be made. The Constitution is thus not to be regarded as denying the legislature the
necessary resources of flexibility and practicability. (Emphasis supplied).48
Clearly, the legislature may delegate to executive officers or bodies the power to
determine certain facts or conditions, or the happening of contingencies, on which the
operation of a statute is, by its terms, made to depend, but the legislature must
prescribe sufficient standards, policies or limitations on their authority.49 While the
power to tax cannot be delegated to executive agencies, details as to the enforcement
and administration of an exercise of such power may be left to them, including the power
to determine the existence of facts on which its operation depends.50
The rationale for this is that the preliminary ascertainment of facts as basis for the
enactment of legislation is not of itself a legislative function, but is simply ancillary to
legislation. Thus, the duty of correlating information and making recommendations is the
kind of subsidiary activity which the legislature may perform through its members, or
which it may delegate to others to perform. Intelligent legislation on the complicated
problems of modern society is impossible in the absence of accurate information on the
part of the legislators, and any reasonable method of securing such information is
proper.51 The Constitution as a continuously operative charter of government does not
require that Congress find for itself
every fact upon which it desires to base legislative action or that it make for itself
detailed determinations which it has declared to be prerequisite to application of
legislative policy to particular facts and circumstances impossible for Congress itself
properly to investigate.52
In the present case, the challenged section of R.A. No. 9337 is the common proviso in
Sections 4, 5 and 6 which reads as follows:
That the President, upon the recommendation of the Secretary of Finance, shall, effective
January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of
the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).

The case before the Court is not a delegation of legislative power. It is simply a
delegation of ascertainment of facts upon which enforcement and administration of the
increase rate under the law is contingent. The legislature has made the operation of the
12% rate effective January 1, 2006, contingent upon a specified fact or condition. It
leaves the entire operation or non-operation of the 12% rate upon factual matters
outside of the control of the executive.
No discretion would be exercised by the President. Highlighting the absence of discretion
is the fact that the wordshall is used in the common proviso. The use of the word shall
connotes a mandatory order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion.53 Where the law is clear and unambiguous, it
must be taken to mean exactly what it says, and courts have no choice but to see to it
that the mandate is obeyed.54
Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon
the existence of any of the conditions specified by Congress. This is a duty which cannot
be evaded by the President. Inasmuch as the law specifically uses the word shall, the
exercise of discretion by the President does not come into play. It is a clear directive to
impose the 12% VAT rate when the specified conditions are present. The time of taking
into effect of the 12% VAT rate is based on the happening of a certain specified
contingency, or upon the ascertainment of certain facts or conditions by a person or
body other than the legislature itself.
The Court finds no merit to the contention of petitioners ABAKADA
that the law effectively nullified the Presidents power of control
Finance by mandating the fixing of the tax rate by the
recommendation of the Secretary of Finance. The Court cannot
position of petitioners

GURO Party List, et al.

over the Secretary of
President upon the
also subscribe to the

Pimentel, et al. that the word shall should be interpreted to mean may in view of the
phrase "upon the recommendation of the Secretary of Finance." Neither does the Court
find persuasive the submission of petitioners Escudero, et al. that any recommendation
by the Secretary of Finance can easily be brushed aside by the President since the
former is a mere alter ego of the latter.
When one speaks of the Secretary of Finance as the alter ego of the President, it simply
means that as head of the Department of Finance he is the assistant and agent of the
Chief Executive. The multifarious executive and administrative functions of the Chief
Executive are performed by and through the executive departments, and the acts of the
secretaries of such departments, such as the Department of Finance, performed and
promulgated in the regular course of business, are, unless disapproved or reprobated by
the Chief Executive, presumptively the acts of the Chief Executive. The Secretary of
Finance, as such, occupies a political position and holds office in an advisory capacity,
and, in the language of Thomas Jefferson, "should be of the President's bosom

confidence" and, in the language of Attorney-General Cushing, is "subject to the

direction of the President."55
In the present case, in making his recommendation to the President on the existence of
either of the two conditions, the Secretary of Finance is not acting as the alter ego of the
President or even her subordinate. In such instance, he is not subject to the power of
control and direction of the President. He is acting as the agent of the legislative
department, to determine and declare the event upon which its expressed will is to take
effect.56The Secretary of Finance becomes the means or tool by which legislative policy
is determined and implemented, considering that he possesses all the facilities to gather
data and information and has a much broader perspective to properly evaluate them. His
function is to gather and collate statistical data and other pertinent information and
verify if any of the two conditions laid out by Congress is present. His personality in such
instance is in reality but a projection of that of Congress. Thus, being the agent of
Congress and not of the President, the President cannot alter or modify or nullify, or set
aside the findings of the Secretary of Finance and to substitute the judgment of the
former for that of the latter.
Congress simply granted the Secretary of Finance the authority to ascertain the
existence of a fact, namely, whether by December 31, 2005, the value-added tax
collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds
two and four-fifth percent (24/5%) or the national government deficit as a percentage of
GDP of the previous year exceeds one and one-half percent (1%). If either of these two
instances has occurred, the Secretary of Finance, by legislative mandate, must submit
such information to the President. Then the 12% VAT rate must be imposed by the
President effective January 1, 2006. There is no undue delegation of legislative power but
only of the discretion as to the execution of a law. This is constitutionally permissible.57
Congress does not abdicate its functions or unduly delegate power when it describes
what job must be done, who must do it, and what is the scope of his authority; in our
complex economy that is frequently the only way in which the legislative process can go
forward.58
As to the argument of petitioners ABAKADA GURO Party List, et al. that delegating to the
President the legislative power to tax is contrary to the principle of republicanism, the
same deserves scant consideration. Congress did not delegate the power to tax but the
mere implementation of the law. The intent and will to increase the VAT rate to 12%
came from Congress and the task of the President is to simply execute the legislative
policy. That Congress chose to do so in such a manner is not within the province of the
Court to inquire into, its task being to interpret the law.59
The insinuation by petitioners Pimentel, et al. that the President has ample powers to
cause, influence or create the conditions to bring about either or both the conditions
precedent does not deserve any merit as this argument is highly speculative. The Court
does not rule on allegations which are manifestly conjectural, as these may not exist at

all. The Court deals with facts, not fancies; on realities, not appearances. When the Court
acts on appearances instead of realities, justice and law will be short-lived.
B. The 12% Increase VAT Rate Does Not Impose an Unfair and Unnecessary Additional
Tax Burden
Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate imposes an unfair
and additional tax burden on the people. Petitioners also argue that the 12% increase,
dependent on any of the 2 conditions set forth in the contested provisions, is ambiguous
because it does not state if the VAT rate would be returned to the original 10% if the
rates are no longer satisfied. Petitioners also argue that such rate is unfair and
unreasonable, as the people are unsure of the applicable VAT rate from year to year.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any of the two
conditions set forth therein are satisfied, the President shall increase the VAT rate to
12%. The provisions of the law are clear. It does not provide for a return to the 10% rate
nor does it empower the President to so revert if, after the rate is increased to 12%, the
VAT collection goes below the 24/5 of the GDP of the previous year or that the national
government deficit as a percentage of GDP of the previous year does not exceed 1%.
Therefore, no statutory construction or interpretation is needed. Neither can conditions
or limitations be introduced where none is provided for. Rewriting the law is a forbidden
ground that only Congress may tread upon.60
Thus, in the absence of any provision providing for a return to the 10% rate, which in this
case the Court finds none, petitioners argument is, at best, purely speculative. There is
no basis for petitioners fear of a fluctuating VAT rate because the law itself does not
provide that the rate should go back to 10% if the conditions provided in Sections 4, 5
and 6 are no longer present. The rule is that where the provision of the law is clear and
unambiguous, so that there is no occasion for the court's seeking the legislative intent,
the law must be taken as it is, devoid of judicial addition or subtraction.61
Petitioners also contend that the increase in the VAT rate, which was allegedly an
incentive to the President to raise the VAT collection to at least 2 4/5 of the GDP of the
previous year, should be based on fiscal adequacy.
Petitioners obviously overlooked that increase in VAT collection is not the only condition.
There is another condition, i.e., the national government deficit as a percentage of GDP
of the previous year exceeds one and one-half percent (1 %).
Respondents explained the philosophy behind these alternative conditions:
1. VAT/GDP Ratio > 2.8%
The condition set for increasing VAT rate to 12% have economic or fiscal meaning. If
VAT/GDP is less than 2.8%, it means that government has weak or no capability of

implementing the VAT or that VAT is not effective in the function of the tax collection.
Therefore, there is no value to increase it to 12% because such action will also be
ineffectual.
2. Natl Govt Deficit/GDP >1.5%
The condition set for increasing VAT when deficit/GDP is 1.5% or less means the fiscal
condition of government has reached a relatively sound position or is towards the
direction of a balanced budget position. Therefore, there is no need to increase the VAT
rate since the fiscal house is in a relatively healthy position. Otherwise stated, if the ratio
is more than 1.5%, there is indeed a need to increase the VAT rate.62
That the first condition amounts to an incentive to the President to increase the VAT
collection does not render it unconstitutional so long as there is a public purpose for
which the law was passed, which in this case, is mainly to raise revenue. In fact, fiscal
adequacy dictated the need for a raise in revenue.
The principle of fiscal adequacy as a characteristic of a sound tax system was originally
stated by Adam Smith in his Canons of Taxation (1776), as:
IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets
of the people as little as possible over and above what it brings into the public treasury
of the state.63
It simply means that sources of revenues must be adequate to meet government
expenditures and their variations.64
The dire need for revenue cannot be ignored. Our country is in a quagmire of financial
woe. During the Bicameral Conference Committee hearing, then Finance Secretary
Purisima bluntly depicted the countrys gloomy state of economic affairs, thus:
First, let me explain the position that the Philippines finds itself in right now. We are in a
position where 90 percent of our revenue is used for debt service. So, for every peso of
revenue that we currently raise, 90 goes to debt service. Thats interest plus
amortization of our debt. So clearly, this is not a sustainable situation. Thats the first
fact.
The second fact is that our debt to GDP level is way out of line compared to other peer
countries that borrow money from that international financial markets. Our debt to GDP
is approximately equal to our GDP. Again, that shows you that this is not a sustainable
situation.
The third thing that Id like to point out is the environment that we are presently
operating in is not as benign as what it used to be the past five years.
What do I mean by that?

In the past five years, weve been lucky because we were operating in a period of
basically global growth and low interest rates. The past few months, we have seen an
inching up, in fact, a rapid increase in the interest rates in the leading economies of the
world. And, therefore, our ability to borrow at reasonable prices is going to be
challenged. In fact, ultimately, the question is our ability to access the financial markets.
When the President made her speech in July last year, the environment was not as bad
as it is now, at least based on the forecast of most financial institutions. So, we were
assuming that raising 80 billion would put us in a position where we can then convince
them to improve our ability to borrow at lower rates. But conditions have changed on us
because the interest rates have gone up. In fact, just within this room, we tried to access
the market for a billion dollars because for this year alone, the Philippines will have to
borrow 4 billion dollars. Of that amount, we have borrowed 1.5 billion. We issued last
January a 25-year bond at 9.7 percent cost. We were trying to access last week and the
market was not as favorable and up to now we have not accessed and we might pull
back because the conditions are not very good.
So given this situation, we at the Department of Finance believe that we really need to
front-end our deficit reduction. Because it is deficit that is causing the increase of the
debt and we are in what we call a debt spiral. The more debt you have, the more deficit
you have because interest and debt service eats and eats more of your revenue. We
need to get out of this debt spiral. And the only way, I think, we can get out of this debt
spiral is really have a front-end adjustment in our revenue base.65
The image portrayed is chilling. Congress passed the law hoping for rescue from an
inevitable catastrophe. Whether the law is indeed sufficient to answer the states
economic dilemma is not for the Court to judge. In theFarias case, the Court refused to
consider the various arguments raised therein that dwelt on the wisdom of Section 14 of
R.A. No. 9006 (The Fair Election Act), pronouncing that:
. . . policy matters are not the concern of the Court. Government policy is within the
exclusive dominion of the political branches of the government. It is not for this Court to
look into the wisdom or propriety of legislative determination. Indeed, whether an
enactment is wise or unwise, whether it is based on sound economic theory, whether it is
the best means to achieve the desired results, whether, in short, the legislative
discretion within its prescribed limits should be exercised in a particular manner are
matters for the judgment of the legislature, and the serious conflict of opinions does not
suffice to bring them within the range of judicial cognizance.66
In the same vein, the Court in this case will not dawdle on the purpose of Congress or the
executive policy, given that it is not for the judiciary to "pass upon questions of wisdom,
justice or expediency of legislation."67
II.

Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 110(B) of the
NIRC; and Section 12 of R.A. No. 9337, amending Section 114(C) of the NIRC, violate the
following provisions of the Constitution:
a. Article VI, Section 28(1), and
b. Article III, Section 1
A. Due Process and Equal Protection Clauses
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that Section 8 of R.A.
No. 9337, amending Sections 110 (A)(2), 110 (B), and Section 12 of R.A. No. 9337,
amending Section 114 (C) of the NIRC are arbitrary, oppressive, excessive and
confiscatory. Their argument is premised on the constitutional right against deprivation
of life, liberty of property without due process of law, as embodied in Article III, Section 1
of the Constitution.
Petitioners also contend that these provisions violate the constitutional guarantee of
equal protection of the law.
The doctrine is that where the due process and equal protection clauses are invoked,
considering that they are not fixed rules but rather broad standards, there is a need for
proof of such persuasive character as would lead to such a conclusion. Absent such a
showing, the presumption of validity must prevail.68
Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes a limitation on
the amount of input tax that may be credited against the output tax. It states, in part:
"[P]rovided, that the input tax inclusive of the input VAT carried over from the previous
quarter that may be credited in every quarter shall not exceed seventy percent (70%) of
the output VAT: "
Input Tax is defined under Section 110(A) of the NIRC, as amended, as the value-added
tax due from or paid by a VAT-registered person on the importation of goods or local
purchase of good and services, including lease or use of property, in the course of trade
or business, from a VAT-registered person, and Output Tax is the value-added tax due on
the sale or lease of taxable goods or properties or services by any person registered or
required to register under the law.
Petitioners claim that the contested sections impose limitations on the amount of input
tax that may be claimed. In effect, a portion of the input tax that has already been paid
cannot now be credited against the output tax.
Petitioners argument is not absolute. It assumes that the input tax exceeds 70% of the
output tax, and therefore, the input tax in excess of 70% remains uncredited. However,
to the extent that the input tax is less than 70% of the output tax, then 100% of such
input tax is still creditable.

More importantly, the excess input tax, if any, is retained in a businesss books of
accounts and remains creditable in the succeeding quarter/s. This is explicitly allowed by
Section 110(B), which provides that "if the input tax exceeds the output tax, the excess
shall be carried over to the succeeding quarter or quarters." In addition, Section 112(B)
allows a VAT-registered person to apply for the issuance of a tax credit certificate or
refund for any unused input taxes, to the extent that such input taxes have not been
applied against the output taxes. Such unused input tax may be used in payment of his
other internal revenue taxes.
The non-application of the unutilized input tax in a given quarter is not ad infinitum, as
petitioners exaggeratedly contend. Their analysis of the effect of the 70% limitation is
incomplete and one-sided. It ends at the net effect that there will be unapplied/unutilized
inputs VAT for a given quarter. It does not proceed further to the fact that such
unapplied/unutilized input tax may be credited in the subsequent periods as allowed by
the carry-over provision of Section 110(B) or that it may later on be refunded through a
tax credit certificate under Section 112(B).
Therefore, petitioners argument must be rejected.
On the other hand, it appears that petitioner Garcia failed to comprehend the operation
of the 70% limitation on the input tax. According to petitioner, the limitation on the
creditable input tax in effect allows VAT-registered establishments to retain a portion of
the taxes they collect, which violates the principle that tax collection and revenue should
be for public purposes and expenditures
As earlier stated, the input tax is the tax paid by a person, passed on to him by the
seller, when he buys goods. Output tax meanwhile is the tax due to the person when he
sells goods. In computing the VAT payable, three possible scenarios may arise:
First, if at the end of a taxable quarter the output taxes charged by the seller are equal
to the input taxes that he paid and passed on by the suppliers, then no payment is
required;
Second, when the output taxes exceed the input taxes, the person shall be liable for the
excess, which has to be paid to the Bureau of Internal Revenue (BIR);69 and
Third, if the input taxes exceed the output taxes, the excess shall be carried over to the
succeeding quarter or quarters. Should the input taxes result from zero-rated or
effectively zero-rated transactions, any excess over the output taxes shall instead be
refunded to the taxpayer or credited against other internal revenue taxes, at the
taxpayers option.70
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input tax. Thus, a
person can credit his input tax only up to the extent of 70% of the output tax. In
laymans term, the value-added taxes that a person/taxpayer paid and passed on to him

by a seller can only be credited up to 70% of the value-added taxes that is due to him on
a taxable transaction. There is no retention of any tax collection because the
person/taxpayer has already previously paid the input tax to a seller, and the seller will
subsequently remit such input tax to the BIR. The party directly liable for the payment of
the tax is the seller.71 What only needs to be done is for the person/taxpayer to apply or
credit these input taxes, as evidenced by receipts, against his output taxes.
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that the input tax
partakes the nature of a property that may not be confiscated, appropriated, or limited
without due process of law.
The input tax is not a property or a property right within the constitutional purview of the
due process clause. A VAT-registered persons entitlement to the creditable input tax is a
mere statutory privilege.
The distinction between statutory privileges and vested rights must be borne in mind for
persons have no vested rights in statutory privileges. The state may change or take
away rights, which were created by the law of the state, although it may not take away
property, which was vested by virtue of such rights.72
Under the previous system of single-stage taxation, taxes paid at every level of
distribution are not recoverable from the taxes payable, although it becomes part of the
cost, which is deductible from the gross revenue. When Pres. Aquino issued E.O. No. 273
imposing a 10% multi-stage tax on all sales, it was then that the crediting of the input
tax paid on purchase or importation of goods and services by VAT-registered persons
against the output tax was introduced.73 This was adopted by the Expanded VAT Law
(R.A. No. 7716),74 and The Tax Reform Act of 1997 (R.A. No. 8424).75 The right to credit
input tax as against the output tax is clearly a privilege created by law, a privilege that
also the law can remove, or in this case, limit.
Petitioners also contest as arbitrary, oppressive, excessive and confiscatory, Section 8 of
R.A. No. 9337, amending Section 110(A) of the NIRC, which provides:
SEC. 110. Tax Credits.
(A) Creditable Input Tax.
Provided, That the input tax on goods purchased or imported in a calendar month for use
in trade or business for which deduction for depreciation is allowed under this Code, shall
be spread evenly over the month of acquisition and the fifty-nine (59) succeeding
months if the aggregate acquisition cost for such goods, excluding the VAT component
thereof, exceeds One million pesos (P1,000,000.00): Provided, however, That if the
estimated useful life of the capital goods is less than five (5) years, as used for
depreciation purposes, then the input VAT shall be spread over such a shorter period:
Provided, finally, That in the case of purchase of services, lease or use of properties, the

input tax shall be creditable to the purchaser, lessee or license upon payment of the
compensation, rental, royalty or fee.
The foregoing section imposes a 60-month period within which to amortize the creditable
input tax on purchase or importation of capital goods with acquisition cost of P1 Million
pesos, exclusive of the VAT component. Such spread out only poses a delay in the
crediting of the input tax. Petitioners argument is without basis because the taxpayer is
not permanently deprived of his privilege to credit the input tax.
It is worth mentioning that Congress admitted that the spread-out of the creditable input
tax in this case amounts to a 4-year interest-free loan to the government.76 In the same
breath, Congress also justified its move by saying that the provision was designed to
raise an annual revenue of 22.6 billion.77 The legislature also dispelled the fear that the
provision will fend off foreign investments, saying that foreign investors have other tax
incentives provided by law, and citing the case of China, where despite a 17.5% noncreditable VAT, foreign investments were not deterred.78 Again, for whatever is the
purpose of the 60-month amortization, this involves executive economic policy and
legislative wisdom in which the Court cannot intervene.
With regard to the 5% creditable withholding tax imposed on payments made by the
government for taxable transactions, Section 12 of R.A. No. 9337, which amended
Section 114 of the NIRC, reads:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Value-added Tax. The Government or any of its political subdivisions,
instrumentalities or agencies, including government-owned or controlled corporations
(GOCCs) shall, before making payment on account of each purchase of goods and
services which are subject to the value-added tax imposed in Sections 106 and 108 of
this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of
the gross payment thereof: Provided, That the payment for lease or use of properties or
property rights to nonresident owners shall be subject to ten percent (10%) withholding
tax at the time of payment. For purposes of this Section, the payor or person in control of
the payment shall be considered as the withholding agent.
The value-added tax withheld under this Section shall be remitted within ten (10) days
following the end of the month the withholding was made.
Section 114(C) merely provides a method of collection, or as stated by respondents, a
more simplified VAT withholding system. The government in this case is constituted as a
withholding agent with respect to their payments for goods and services.
Prior to its amendment, Section 114(C) provided for different rates of value-added taxes
to be withheld -- 3% on gross payments for purchases of goods; 6% on gross payments
for services supplied by contractors other than by public works contractors; 8.5% on

gross payments for services supplied by public work contractors; or 10% on payment for
the lease or use of properties or property rights to nonresident owners. Under the
present Section 114(C), these different rates, except for the 10% on lease or property
rights payment to nonresidents, were deleted, and a uniform rate of 5% is applied.
The Court observes, however, that the law the used the word final. In tax usage, final, as
opposed to creditable, means full. Thus, it is provided in Section 114(C): "final valueadded tax at the rate of five percent (5%)."
In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The Tax Reform Act of
1997), the concept of final withholding tax on income was explained, to wit:
SECTION 2.57. Withholding of Tax at Source
(A) Final Withholding Tax. Under the final withholding tax system the amount of income
tax withheld by the withholding agent is constituted as full and final payment of the
income tax due from the payee on the said income. The liability for payment of the tax
rests primarily on the payor as a withholding agent. Thus, in case of his failure to
withhold the tax or in case of underwithholding, the deficiency tax shall be collected
from the payor/withholding agent.
(B) Creditable Withholding Tax. Under the creditable withholding tax system, taxes
withheld on certain income payments are intended to equal or at least approximate the
tax due of the payee on said income. Taxes withheld on income payments covered by
the expanded withholding tax (referred to in Sec. 2.57.2 of these regulations) and
compensation income (referred to in Sec. 2.78 also of these regulations) are creditable in
nature.
As applied to value-added tax, this means that taxable transactions with the government
are subject to a 5% rate, which constitutes as full payment of the tax payable on the
transaction. This represents the net VAT payable of the seller. The other 5% effectively
accounts for the standard input VAT (deemed input VAT), in lieu of the actual input VAT
directly or attributable to the taxable transaction.79
The Court need not explore the rationale behind the provision. It is clear that Congress
intended to treat differently taxable transactions with the government.80 This is
supported by the fact that under the old provision, the 5% tax withheld by the
government remains creditable against the tax liability of the seller or contractor, to wit:
SEC. 114. Return and Payment of Value-added Tax.
(C) Withholding of Creditable Value-added Tax. The Government or any of its political
subdivisions, instrumentalities or agencies, including government-owned or controlled
corporations (GOCCs) shall, before making payment on account of each purchase of
goods from sellers and services rendered by contractors which are subject to the valueadded tax imposed in Sections 106 and 108 of this Code, deduct and withhold the value-

added tax due at the rate of three percent (3%) of the gross payment for the purchase of
goods and six percent (6%) on gross receipts for services rendered by contractors on
every sale or installment payment which shall becreditable against the value-added tax
liability of the seller or contractor: Provided, however, That in the case of government
public works contractors, the withholding rate shall be eight and one-half percent (8.5%):
Provided, further, That the payment for lease or use of properties or property rights to
nonresident owners shall be subject to ten percent (10%) withholding tax at the time of
payment. For this purpose, the payor or person in control of the payment shall be
considered as the withholding agent.
The valued-added tax withheld under this Section shall be remitted within ten (10) days
following the end of the month the withholding was made. (Emphasis supplied)
As amended, the use of the word final and the deletion of the word creditable exhibits
Congresss intention to treat transactions with the government differently. Since it has
not been shown that the class subject to the 5% final withholding tax has been
unreasonably narrowed, there is no reason to invalidate the provision. Petitioners, as
petroleum dealers, are not the only ones subjected to the 5% final withholding tax. It
applies to all those who deal with the government.
Moreover, the actual input tax is not totally lost or uncreditable, as petitioners believe.
Revenue Regulations No. 14-2005 or the Consolidated Value-Added Tax Regulations 2005
issued by the BIR, provides that should the actual input tax exceed 5% of gross
payments, the excess may form part of the cost. Equally, should the actual input tax be
less than 5%, the difference is treated as income.81
Petitioners also argue that by imposing a limitation on the creditable input tax, the
government gets to tax a profit or value-added even if there is no profit or value-added.
Petitioners stance is purely hypothetical, argumentative, and again, one-sided. The
Court will not engage in a legal joust where premises are what ifs, arguments, theoretical
and facts, uncertain. Any disquisition by the Court on this point will only be, as
Shakespeare describes life in Macbeth,82 "full of sound and fury, signifying nothing."
Whats more, petitioners contention assumes the proposition that there is no profit or
value-added. It need not take an astute businessman to know that it is a matter of
exception that a business will sell goods or services without profit or value-added. It
cannot be overstressed that a business is created precisely for profit.
The equal protection clause under the Constitution means that "no person or class of
persons shall be deprived of the same protection of laws which is enjoyed by other
persons or other classes in the same place and in like circumstances."83
The power of the State to make reasonable and natural classifications for the purposes of
taxation has long been established. Whether it relates to the subject of taxation, the kind

of property, the rates to be levied, or the amounts to be raised, the methods of

assessment, valuation and collection, the States power is entitled to presumption of
validity. As a rule, the judiciary will not interfere with such power absent a clear showing
of unreasonableness, discrimination, or arbitrariness.84
Petitioners point out that the limitation on the creditable input tax if the entity has a high
ratio of input tax, or invests in capital equipment, or has several transactions with the
government, is not based on real and substantial differences to meet a valid
classification.
The argument is pedantic, if not outright baseless. The law does not make any
classification in the subject of taxation, the kind of property, the rates to be levied or the
amounts to be raised, the methods of assessment, valuation and collection. Petitioners
alleged distinctions are based on variables that bear different consequences. While the
implementation of the law may yield varying end results depending on ones profit
margin and value-added, the Court cannot go beyond what the legislature has laid down
and interfere with the affairs of business.
The equal protection clause does not require the universal application of the laws on all
persons or things without distinction. This might in fact sometimes result in unequal
protection. 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.85
Petitioners brought to the Courts attention the introduction of Senate Bill No. 2038 by
Sens. S.R. Osmea III and Ma. Ana Consuelo A.S. Madrigal on June 6, 2005, and House
Bill No. 4493 by Rep. Eric D. Singson. The proposed legislation seeks to amend the 70%
limitation by increasing the same to 90%. This, according to petitioners, supports their
stance that the 70% limitation is arbitrary and confiscatory. On this score, suffice it to say
that these are still proposed legislations. Until Congress amends the law, and absent any
unequivocal basis for its unconstitutionality, the 70% limitation stays.
B. Uniformity and Equitability of Taxation
Article VI, Section 28(1) of the Constitution reads:
The rule of taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation.
Uniformity in taxation means that all taxable articles or kinds of property of the same
class shall be taxed at the same rate. Different articles may be taxed at different
amounts provided that the rate is uniform on the same class everywhere with all people
at all times.86

In this case, the tax law is uniform as it provides a standard rate of 0% or 10% (or 12%)
on all goods and services. Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106,
107 and 108, respectively, of the NIRC, provide for a rate of 10% (or 12%) on sale of
goods and properties, importation of goods, and sale of services and use or lease of
properties. These same sections also provide for a 0% rate on certain sales and
transaction.
Neither does the law make any distinction as to the type of industry or trade that will
bear the 70% limitation on the creditable input tax, 5-year amortization of input tax paid
on purchase of capital goods or the 5% final withholding tax by the government. It must
be stressed that the rule of uniform taxation does not deprive Congress of the power to
classify subjects of taxation, and only demands uniformity within the particular class.87
R.A. No. 9337 is also equitable. The law is equipped with a threshold margin. The VAT
rate of 0% or 10% (or 12%) does not apply to sales of goods or services with gross
annual sales or receipts not exceedingP1,500,000.00.88 Also, basic marine and
agricultural food products in their original state are still not subject to the tax,89 thus
ensuring that prices at the grassroots level will remain accessible. As was stated in
Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan:90
The disputed sales tax is also equitable. It is imposed only on sales of goods or services
by persons engaged in business with an aggregate gross annual sales exceeding
P200,000.00. Small corner sari-sari stores are consequently exempt from its application.
Likewise exempt from the tax are sales of farm and marine products, so that the costs of
basic food and other necessities, spared as they are from the incidence of the VAT, are
expected to be relatively lower and within the reach of the general public.
It is admitted that R.A. No. 9337 puts a premium on businesses with low profit margins,
and unduly favors those with high profit margins. Congress was not oblivious to this.
Thus, to equalize the weighty burden the law entails, the law, under Section 116,
imposed a 3% percentage tax on VAT-exempt persons under Section 109(v), i.e.,
transactions with gross annual sales and/or receipts not exceeding P1.5 Million. This acts
as a equalizer because in effect, bigger businesses that qualify for VAT coverage and
VAT-exempt taxpayers stand on equal-footing.
Moreover, Congress provided mitigating measures to cushion the impact of the
imposition of the tax on those previously exempt. Excise taxes on petroleum products91
and natural gas92 were reduced. Percentage tax on domestic carriers was removed.93
Power producers are now exempt from paying franchise tax.94
Aside from these, Congress also increased the income tax rates of corporations, in order
to distribute the burden of taxation. Domestic, foreign, and non-resident corporations are
now subject to a 35% income tax rate, from a previous 32%.95 Intercorporate dividends
of non-resident foreign corporations are still subject to 15% final withholding tax but the

tax credit allowed on the corporations domicile was increased to 20%.96 The Philippine
Amusement and Gaming Corporation (PAGCOR) is not exempt from income taxes
anymore.97 Even the sale by an artist of his works or services performed for the
production of such works was not spared.
All these were designed to ease, as well as spread out, the burden of taxation, which
would otherwise rest largely on the consumers. It cannot therefore be gainsaid that R.A.
No. 9337 is equitable.
C. Progressivity of Taxation
Lastly, petitioners contend that the limitation on the creditable input tax is anything but
regressive. It is the smaller business with higher input tax-output tax ratio that will suffer
the consequences.
Progressive taxation is built on the principle of the taxpayers ability to pay. This principle
was also lifted from Adam Smiths Canons of Taxation, and it states:
I. The subjects of every state ought to contribute towards the support of the government,
as nearly as possible, in proportion to their respective abilities; that is, in proportion to
the revenue which they respectively enjoy under the protection of the state.
Taxation is progressive when its rate goes up depending on the resources of the person
affected.98
The VAT is an antithesis of progressive taxation. By its very nature, it is regressive. The
principle of progressive taxation has no relation with the VAT system inasmuch as the
VAT paid by the consumer or business for every goods bought or services enjoyed is the
same regardless of income. In
other words, the VAT paid eats the same portion of an income, whether big or small. The
disparity lies in the income earned by a person or profit margin marked by a business,
such that the higher the income or profit margin, the smaller the portion of the income or
profit that is eaten by VAT. A converso, the lower the income or profit margin, the bigger
the part that the VAT eats away. At the end of the day, it is really the lower income group
or businesses with low-profit margins that is always hardest hit.
Nevertheless, the Constitution does not really prohibit the imposition of indirect taxes,
like the VAT. What it simply provides is that Congress shall "evolve a progressive system
of taxation." The Court stated in the Tolentino case, thus:
The Constitution does not really prohibit the imposition of indirect taxes which, like the
VAT, are regressive. What it simply provides is that Congress shall evolve a progressive
system of taxation. The constitutional provision has been interpreted to mean simply
that direct taxes are . . . to be preferred [and] as much as possible, indirect taxes should
be minimized. (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed.

1977)) Indeed, the mandate to Congress is not to prescribe, but to evolve, a progressive
tax system. Otherwise, sales taxes, which perhaps are the oldest form of indirect taxes,
would have been prohibited with the proclamation of Art. VIII, 17 (1) of the 1973
Constitution from which the present Art. VI, 28 (1) was taken. Sales taxes are also
regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is
difficult, if not impossible, to avoid them by imposing such taxes according to the
taxpayers' ability to pay. In the case of the VAT, the law minimizes the regressive effects
of this imposition by providing for zero rating of certain transactions (R.A. No. 7716, 3,
amending 102 (b) of the NIRC), while granting exemptions to other transactions. (R.A.
No. 7716, 4 amending 103 of the NIRC)99
CONCLUSION
It has been said that taxes are the lifeblood of the government. In this case, it is just an
enema, a first-aid measure to resuscitate an economy in distress. The Court is neither
blind nor is it turning a deaf ear on the plight of the masses. But it does not have the
panacea for the malady that the law seeks to remedy. As in other cases, the Court
cannot strike down a law as unconstitutional simply because of its yokes.
Let us not be overly influenced by the plea that for every wrong there is a remedy, and
that the judiciary should stand ready to afford relief. There are undoubtedly many wrongs
the judicature may not correct, for instance, those involving political questions. . . .
Let us likewise disabuse our minds from the notion that the judiciary is the repository of
remedies for all political or social ills; We should not forget that the Constitution has
judiciously allocated the powers of government to three distinct and separate
compartments; and that judicial interpretation has tended to the preservation of the
independence of the three, and a zealous regard of the prerogatives of each, knowing
full well that one is not the guardian of the others and that, for official wrong-doing, each
may be brought to account, either by impeachment, trial or by the ballot box.100
The words of the Court in Vera vs. Avelino101 holds true then, as it still holds true now.
All things considered, there is no raison d'tre for the unconstitutionality of R.A. No.
9337.
WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions in G.R. Nos.
168056, 168207, 168461, 168463, and 168730, are hereby DISMISSED.
There being no constitutional impediment to the full enforcement and implementation of
R.A. No. 9337, the temporary restraining order issued by the Court on July 1, 2005 is
LIFTED upon finality of herein decision.
SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
WE CONCUR:
HILARIO G. DAVIDE, JR.
Chief Justice
REYNATO S. PUNO
Associate Justice ARTEMIO V. PANGANIBAN
Associate Justice
LEONARDO A. QUISUMBING
Associate Justice CONSUELO YNARES-SANTIAGO
Associate Justice
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice ANTONIO T. CARPIO
Associate Justice
RENATO C. CORONA
Associate Justice CONCHITA CARPIO-MORALES
Associate Justice
ROMEO J. CALLEJO, SR.
Associate Justice ADOLFO S. AZCUNA
Associate Justice
DANTE O. TINGA
Associate Justice MINITA V. CHICO-NAZARIO
Associate Justice
CANCIO C. GARCIA
Associate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.
HILARIO G. DAVIDE, JR.
Chief Justice

Footnotes
1 Entitled "An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113,
114, 116, 117, 119, 121, 148, 151, 236, 237, and 288 of the National Internal Revenue
Code of 1997, As Amended and For Other Purposes."
2 Entitled, "An Act Restructuring the Value-Added Tax, Amending for the Purpose
Sections 106, 107, 108, 110 and 114 of the National Internal Revenue Code of 1997, As
Amended, and For Other Purposes."
3 Entitled, "An Act Amending Sections 106, 107, 108, 109, 110 and 111 of the National
Internal Revenue Code of 1997, As Amended, and For Other Purposes."
4 Entitled, "An Act Amending Sections 27, 28, 34, 106, 108, 109, 110, 112, 113, 114,
116, 117, 119, 121, 125, 148, 151, 236, 237 and 288 of the National Internal Revenue
Code of 1997, As Amended, and For Other Purposes."
5 Section 26, R.A. No. 9337.
6 TSN, July 14, 2005.
7 Section 125 of the National Internal Revenue Code, as amended, was not amended by
R.A. No. 9337, as can be gleaned from the title and body of the law.
8 Section 105, National Internal Revenue of the Philippines, as amended.
9 Ibid.
10 Deoferio, Jr., V.A. and Mamalateo, V.C., The Value Added Tax in the Philippines (First
Edition 2000).
11 Maceda vs. Macaraig, Jr., G.R. No. 88291, May 31, 1991, 197 SCRA 771.
12 Maceda vs. Macaraig, Jr., G.R. No. 88291, June 8, 1993, 223 SCRA, 217.
13 Id., Deoferio, Jr., V.A. and Mamalateo, V.C., The Value Added Tax in the Philippines
(First Edition 2000).

14 Commissioner of Internal Revenue vs. Seagate, G.R. No. 153866, February 11, 2005.
15 Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs. Tan, G.R. Nos. L81311, L-81820, L-81921, L-82152, June 30, 1988, 163 SCRA 371.
16 Entitled, "An Act Restructuring the Value-Added Tax (VAT) System, Widening its Tax
Base and Enhancing its Administration, And for these Purposes Amending and Repealing
the Relevant Provisions of the National Internal Revenue Code, as amended, and for
other Purposes."
17 Entitled, "An Act Amending Republic Act No. 7716, otherwise known as the ValueAdded Tax Law and Other Pertinent Provisions of the National Internal Revenue Code, as
Amended."
18 Entitled, "An Act Amending the National Internal Revenue Code, as Amended, and for
other Purposes."
19 Story, Commentaries 835 (1833).
20 G.R. No. 147387, December 10, 2003, 417 SCRA 503.
21 Id., pp. 529-530.
22 Supra., Note 20.
23 G.R. No. 115455, August 25, 1994, 235 SCRA 630.
24 Id., p. 670.
25 Westers Third New International Dictionary, p. 1897.
26 TSN, Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill
No. 1950 and House Bill Nos. 3705 and 3555, May 10, 2005, p. 4.
27 Id., p. 3.
28 Sponsorship Speech of Representative Teves, in behalf of Representative Jesli Lapus,
TSN, January 7, 2005, pp. 34-35.
29 G.R. No. 105371, November 11, 1993, 227 SCRA 703.
30 Supra, Note 23.
31 Id., p. 668.
32 Id., p. 671.
33 Id., pp. 661-663.
34 Transcript of Session Proceedings, January 7, 2005, pp. 19-20.

35 Journal of the Senate, Session No. 67, March 7, 2005, pp. 727-728.
36 Id., p. 726.
37 See Angara vs. Electoral Commission, No. 45081, July 15, 1936, 63 Phil. 139, 156.
38 Defensor-Santiago vs. Commission on Elections, G.R. No. 127325, March 19, 1997,
270 SCRA 106, 153; People vs. Rosenthal, Nos. 46076 & 46077, June 12, 1939, 68 Phil.
328; ISAGANI A. CRUZ, Philippine Political Law 86 (1996). Judge Cooley enunciates the
doctrine in the following oft-quoted language: "One of the settled maxims in
constitutional law is, that the power conferred upon the legislature to make laws cannot
be delegated by that department to any other body or authority. Where the sovereign
power of the state has located the authority, there it must remain; and by the
constitutional agency alone the laws must be made until the Constitution itself is
changed. The power to whose judgment, wisdom, and patriotism this high prerogative
has been intrusted cannot relieve itself of the responsibility by choosing other agencies
upon which the power shall be devolved, nor can it substitute the judgment, wisdom,
and patriotism of any other body for those to which alone the people have seen fit to
confide this sovereign trust." (Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224)
39 United States vs. Barrias, No. 4349, September 24, 1908, 11 Phil. 327, 330.
40 16 Am Jur 2d, Constitutional Law, 337.
41 Pelaez vs. Auditor General, No. L-23825, December 24, 1965, 122 Phil. 965, 974 citing
Calalang vs. Williams, No. 47800, December 2, 1940, 70 Phil. 726; Pangasinan Transp.
Co. vs. Public Service Commission, No. 47065, June 26, 1940, 70 Phil. 221; Cruz vs.
Youngberg, No. 34674, October 26, 1931, 56 Phil. 234; Alegre vs. Collector of Customs,
No. 30783, August 27, 1929, 53 Phil. 394 et seq.
42 Pelaez vs. Auditor General, supra, citing People vs. Lim Ho, No. L-12091-2, January 28,
1960, 106 Phil. 887; People vs. Jolliffee, No. L-9553, May 13, 1959, 105 Phil 677; People
vs. Vera, No. 45685, November 16, 1937, 65 Phil. 56; U.S. vs. Nag Tang Ho, No. L-17122,
February 27, 1922, 43 Phil. 1; Compaia General de Tabacos vs. Board of Public Utility,
No. 11216, March 6, 1916, 34 Phil. 136 et seq.
43 Edu vs. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481, 497.
44 Eastern Shipping Lines, Inc. vs. POEA, No. L-76633, October 18, 1988, 166 SCRA 533,
543-544.
45 No. 45685, November 16, 1937, 65 Phil. 56.
46 Id., pp. 115-120.
47 Supra, note 43.

48 Id., pp. 496-497.

49 16 C.J.S., Constitutional Law, 138.
50 Ibid.
51 16 Am Jur 2d, Constitutional Law 340.
52 Yajus vs. United States, 321 US 414, 88 L Ed 834, 64 S Ct. 660, 28 Ohio Ops 220.
53 Province of Batangas vs. Romulo, G.R. No. 152774, May 27, 2004; Enriquez vs. Court
of Appeals, G.R. No. 140473, January 28, 2003, 396 SCRA 377; Codoy vs. Calugay, G.R.
No. 123486, August 12, 1999, 312 SCRA 333.
54 Province of Batangas vs. Romulo, supra; Quisumbing vs. Meralco, G.R. No. 142943,
April 3, 2002, 380 SCRA 195; Agpalo, Statutory Construction, 1990 ed., p. 45.
55 Villena vs. Secretary of Interior, No. 46570, April 21, 1939, 67 Phil 451, 463-464.
56 Alunan vs. Mirasol, G.R. No. 108399, July 31, 1997, 276 SCRA 501, 513-514, citing
Panama Refining Co. vs. Ryan, 293 U.S. 388, 79 L.Ed. 469 (1935).
57 Compaia General de Tabacos de Filipinas vs. The Board of Public Utility
Commissioners, No. 11216, 34 Phil. 136; Cruz vs. Youngberg, No. 34674, October 26,
1931, 56 Phil. 234; People vs. Vera, No. 45685, November 16, 1937, 65 Phil. 56, 113; Edu
vs. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481; Tatad vs. Secretary of the
Department of Energy, G.R. No. 124360, November 5, 1997, 281 SCRA 330; Alunan vs.
Mirasol, supra.
58 Bowles vs. Willinghan, 321 US 503, 88 l Ed 892, 64 S Ct 641, 28 Ohio Ops 180.
59 United Residents of Dominican Hill, Inc. vs. Commission on the Settlement of Land
Problems, G.R. No. 135945, March 7, 2001, 353 SCRA 782; Commissioner of Internal
Revenue vs. Santos, G.R. No. 119252, August 18, 1997, 277 SCRA 617, 630.
60 Commission on Internal Revenue vs. American Express International, Inc. (Philippine
Branch), G.R. No. 152609, June 29, 2005.
61 Acting Commissioner of Customs vs. MERALCO, No. L-23623, June 30, 1977, 77 SCRA
469, 473.
62 Respondents Memorandum, pp. 168-169.
63 The Wealth of Nations, Book V, Chapter II.
64 Chavez vs. Ongpin, G.R. No. 76778, June 6, 1990, 186 SCRA 331, 338.
65 TSN, Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill
No. 1950 and House Bill Nos. 3705 and 3555, April 25, 2005, pp. 5-6.

66 G.R. No. 147387, December 10, 2003, 417 SCRA 503, 524.
67 National Housing Authority vs. Reyes, G.R. No. L-49439, June 29, 1983, 123 SCRA 245,
249.
68 Sison vs. Ancheta, G.R. No. L-59431, July 25, 1984, 130 SCRA 654, 661.
69 Section 8, R.A. No. 9337, amending Section 110(A)(B),NIRC.
70 Ibid.
71 Commissioner of Internal Revenue vs. Benguet Corp., G.R. Nos. 134587 & 134588,
July 8, 2005.
72 United Paracale Mining Co. vs. Dela Rosa, G.R. Nos. 63786-87, April 7, 1993, 221
SCRA 108, 115.
73 E.O. No. 273, Section 1.
74 Section 5.
75 Section 110(B).
76 Journal of the Senate, Session No. 71, March 15, 2005, p. 803.
77 Id., Session No. 67, March 7, 2005, p. 726.
78 Id., Session No. 71, March 15, 2005, p. 803.
79 Revenue Regulations No. 14-2005, 4.114-2(a).
80 Commissioner of Internal Revenue vs. Philam, G.R. No. 141658, March 18, 2005.
81 Revenue Regulations No. 14-2005, Sec. 4. 114-2.
82 Act V, Scene V.
83 Philippine Rural Electric Cooperatives Association, Inc. vs. DILG, G.R. No. 143076, June
10, 2003, 403 SCRA 558, 565.
84 Aban, Benjamin, Law of Basic Taxation in the Philippines (First Edition 1994).
85 Philippine Judges Association case, supra., note 29.
86 Commissioner of Internal Revenue vs. Court of Appeals, G.R. No. 119761, August 29,
1996, 261 SCRA 236, 249.
87 Kee vs. Court of Tax Appeals, No. L-18080, April 22, 1963, 117 Phil 682, 688.
88 Section 7, R.A. No. 9337.

89 Ibid.
90 No. L-81311, June 30, 1988, 163 SCRA 371, 383.
91 Section 17, R.A. No. 9337, amending Section 148, NIRC.
92 Section 18, amending Section 151, NIRC.
93 Section 14, amending Section 117, NIRC.
94 Section 15, amending Section 119, NIRC.
95 Sections 1 and 2, amending Sections 27 and 28, NIRC.
96 Section 2, amending Section 28, NIRC.
97 Section 1, amending Section 27(C), NIRC.
98 Reyes vs. Almanzor, G.R. Nos. 49839-46, April 26, 1991, 196 SCRA 322, 327.
99 Tolentino vs. Secretary of Finance, G.R. No. 115455, October 30, 1995, 249 SCRA 628,
659.
100 Vera vs. Avelino, G.R. No. L-543, August 31, 1946, 77 Phil. 365.
101 Ibid.

The Lawphil Project - Arellano Law Foundation

________________________________________

EN BANC
G.R. No. 168056 - ABAKADA GURO PARTY LIST, ET AL. V. EXECUTIVE SECRETARY
EDUARDO R. ERMITA, ET AL.
G.R. No. 168207 - AQUILINO PIMENTEL, JR., ET AL. V. EXECUTIVE SECRETARY EDUARDO
ERMITA, ET AL.
G.R. No. 168461 - ASSOCIATION OF PILIPINAS SHELL DEALERS, INC, ET AL. V. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 - FRANCIS JOSEPH G. ESCUDERO, ET AL. V. CESAR V. PURISIMA, ET AL.
X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X

SEPARATE CONCURRING
AND DISSENTING OPINION
DAVIDE, JR., C.J.:
While I still hold on to my position expressed in my dissenting opinion in the first VAT
cases,1 I partly yield to the application to the cases at bar of the rule on "germaneness"
therein enunciated. Thus, I concur with the ponenciaof my highly-esteemed colleague
Mme. Justice Ma. Alicia Austria-Martinez except as regards its ruling on the issue of
whether Republic Act No. 9337 violates Section 24, Article VI of the Constitution.
R.A. No. 9337 primarily aims to restructure the value-added tax (VAT) system by
broadening its base and raising the rate so as to generate more revenues for the
government that can assuage the economic predicament that our country is now facing.
This recently enacted law stemmed from three legislative bills: House Bill (HB) No. 3555,
HB No. 3705, and Senate Bill (SB) 1950. The first (HB No. 3555) called for the
amendment of Sections 106, 107, 108, 109, 110, and 111 of the National Internal
Revenue Code (NIRC) as amended; while the second (HB No. 3705) proposed
amendments to Sections 106, 107, 108, 110, and 114 of the NIRC, as amended. It is
significant to note that all these Sections specifically deal with VAT. And indubitably,
these bills are revenue bills in that they are intended to levy taxes and raise funds for the
government.2
On the other hand, SB No. 1950 introduced amendments to "Sections 27, 28, 34, 106,
108, 109, 110, 111, 112, 113, 114, 116, 117, 118, 119, 125, 148, 236, 237, and 288" of
the NIRC, as amended. Among the provisions sought to be amended, only Sections 106,
108, 109, 110, 111, 112, 113, 114, and 116 pertain to VAT. And while Sections 236, 237,
and 288 are administrative provisions pertaining to registration requirements and
issuance of receipts commercial invoices, the proposed amendments thereto are related
to VAT. Hence, the proposed amendments to these Sections were validly taken
cognizance of and properly considered by the Bicameral Conference Committee (BCC).
However, I am of the opinion that the inclusion into the law of the amendments proposed
in SB No. 1950 to the following provisions (with modifications on the rates of taxes) is
invalid.
Provision Subject matter
Section 27 Rate of income tax on domestic corporations
Section 28(A)(1) Rate of income tax on resident foreign corporation
Section 28(B)(1) Rate of income tax on non-resident foreign corporation

Section 28(B)(5-b) Rate of income tax on intra-corporate dividends received by nonresident foreign corporation
Section 34(B)(1) Deductions from gross income
Section 117 Percentage tax on domestic carriers and keepers of garages
Section 119 Tax on franchises
Section 148 Excise tax on manufactured oils and other fuels
Obviously, these provisions do not deal with VAT. It must be noted that the House Bills
initiated amendments to provisions pertaining to VAT only. Doubtless, the Senate has the
constitutional power to concur with the amendments to the VAT provisions introduced in
the House Bills or even to propose its own version of VAT measure. But that power does
not extend to initiation of other tax measures, such as introducing amendments to
provisions on corporate income taxes, percentage taxes, franchise taxes, and excise
taxes like what the Senate did in these cases. It was beyond the ambit of the authority of
the Senate to propose amendments to provisions not covered by the House Bills or not
related to the subject matter of the House Bills, which is VAT. To allow the Senate to do so
would be tantamount to vesting in it the power to initiate revenue bills -- a power that
exclusively pertains to the House of Representatives under Section 24, Article VI of the
Constitution, which provides:
Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the House of
Representatives but the Senate may propose or concur with amendments.
Moreover, Sections 121 (Percentage Tax on Banks and Non-Bank Financial
Intermediaries) and 151 (Excise Tax on Mineral Products) of the NIRC, as amended, have
been included by the BCC in R.A. N0. 9337 even though they were not found in the
Senate and House Bills.
In Philippine Judges Association v. Prado,3 the Court described the function of a
conference committee in this wise: "A conference committee may deal generally with the
subject matter or it may be limited to resolving the precise differences between the two
houses. Even where the conference committee is not by rule limited in its jurisdiction,
legislative custom severely limits the freedom with which new subject matter can be
inserted into the conference bill."
The limitation on the power of a conference committee to insert new provisions was laid
down in Tolentino v. Secretary of Finance.4 There, the Court, while recognizing the power
of a conference committee to include in its report an entirely new provision that is not
found either in the House bill or in the Senate bill, held that the exercise of that power is
subject to the condition that the said provision is "germane to the subject of the House
andSenate bills."

As pointed out by the petitioners, Tolentino differs from the present cases in the sense
that in that case the amendments introduced in the Senate bill were on the same subject
matter treated in the House bill, which was VAT, and the new provision inserted by the
conference committee had relation to that subject matter. Specifically, HB No. 11197
called for the (1) amendment of Sections 99,100,102,103,104,105,106,107, 108, 110,
112,115, 116, 236,237, and 238 of the NIRC, as amended; and (2) repeal of Sections 113
and 114 of the NIRC, as amended. SB No. 1630, on the other hand, proposed the (1)
amendment of Sections 99,100,102,103,104,105,107, 108, 110, 112, 236, 237, and 238
of the NIRC, as amended; and (2) repeal of Sections 113, 114, and 116 of the NIRC, as
amended. In short, all the provisions sought to be changed in the Senate bill were
covered in the House bill. Although the new provisions inserted by the conference
committee were not found in either the House or Senate bills, they were germane to the
general subject of the bills.
In the present cases, the provisions inserted by the BCC, namely, Sections 121
(Percentage Tax on Banks and Non-Bank Financial Intermediaries) and 151 (Excise Tax on
Mineral Products) of the NIRC, as amended, are undoubtedly germane to SB No. 1950,
which introduced amendments to the provisions on percentage and excise taxes -- but
foreign to HB Nos. 3555 and 3705, which dealt with VAT only. Since the proposed
amendments in the Senate bill relating to percentage and excise taxes cannot
themselves be sustained because they did not take their root from, or are not related to
the subject of, HB Nos. 3705 and 3555, in violation of Section 24, Article VI of the
Constitution, the new provisions inserted by the BCC on percentage and excise taxes
would have no leg to stand on.
I understand very well that the amendments of the Senate and the BCC relating to
corporate income, percentage, franchise, and excise taxes were designed to "soften the
impact of VAT measure on the consumer, i.e., by distributing the burden across all
sectors instead of putting it entirely on the shoulders of the consumers" and to alleviate
the countrys financial problems by bringing more revenues for the government.
However, these commendable intentions do not justify a deviation from the Constitution,
which mandates that the initiative for filing revenue bills should come from the House of
Representatives, not from the Senate. After all, these aims may still be realized by
means of another bill that may later be initiated by the House of Representatives.
Therefore, I vote to declare R.A. No. 9337 as constitutional insofar as it amends
provisions pertaining to VAT. However, I vote to declare as unconstitutional Sections 1, 2,
3, 14, 15, 16, 17, and 18 thereof which, respectively, amend Sections 27, 28, 34, 117,
119, 121, 148, and 151 of the NIRC, as amended because these amendments deal with
subject matters which were not touched or covered by the bills emanating from the
House of Representatives, thereby violating Section 24 of Article VI of the Constitution.
HILARIO G. DAVIDE, JR.

Footnotes
1 Tolentino v. Secretary of Finance, G.R. No. 115455, 25 August 1994, 235 SCRA 630, and
companion cases.
2 ISAGANI A. CRUZ, POLITICAL LAW 154 (2002 ed.) citing U.S. v. Nortorn, 91 U.S. 566.
3 G.R. No. 105371, 11 November 1993, 27 SCRA 703, 708, citing Davies, Legislative Law
and Process: In a Nutshell 81 (1986 ed.)
4 Supra note 1.

The Lawphil Project - Arellano Law Foundation

________________________________________

G.R. No. 168056 ABAKADA GURO PARTY LIST, ET AL. VS. EXECUTIVE SECRETARY
EDUARDO ERMITA,ET AL.
G.R. No. 168207 AQUILINO PIMENTEL, JR., ET AL. VS. EXECUTIVE SECRETARY EDUARDO
ERMITA, ET AL.
G.R. No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL. VS. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL. VS. CESAR V. PURISIMA, ET AL.
Promulgated: September 1, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CONCURRING AND
DISSENTING OPINION
PUNO, J.:
The main opinion of Madam Justice Martinez exhaustively discusses the numerous
constitutional and legal issues raised by the petitioners. Be that as it may, I wish to raise
the following points, viz:

First. Petitioners assail sections 4 to 6 of Republic Act No. 9337 as violative of the
principle of non-delegation of legislative power. These sections authorize the President,
upon recommendation of the Secretary of Finance, to raise the value-added tax (VAT)
rate to 12% effective January 1, 2006, upon satisfaction of the following conditions: viz:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
The power of judicial review under Article VIII, section 5(2) of the 1987 Constitution is
limited to the review of "actual cases and controversies."1 As rightly stressed by retired
Justice Vicente V. Mendoza, this requirement gives the judiciary "the opportunity, denied
to the legislature, of seeing the actual operation of the statute as it is applied to actual
facts and thus enables it to reach sounder judgment" and "enhances public acceptance
of its role in our system of government."2 It also assures that the judiciary does not
intrude on areas committed to the other branches of government and is confined to its
role as defined by the Constitution.3 Apposite thereto is the doctrine of ripeness whose
basic rationale is "to prevent the courts, through premature adjudication, from
entangling themselves in abstract disagreements."4 Central to the doctrine is the
determination of "whether the case involves uncertain or contingent future events that
may not occur as anticipated, or indeed may not occur at all."5 The ripeness requirement
must be satisfied for each challenged legal provision and parts of a statute so that those
which are "not immediately involved are not thereby thrown open for a judicial
determination of constitutionality."6
It is manifest that the constitutional challenge to sections 4 to 6 of R.A. No. 9337 cannot
hurdle the requirement of ripeness. These sections give the President the power to raise
the VAT rate to 12% on January 1, 2006 upon satisfaction of certain fact-based
conditions. We are not endowed with the infallible gift of prophesy to know whether
these conditions are certain to happen. The power to adjust the tax rate given to the
President is futuristic and may or may not be exercised. The Court is therefore
beseeched to render a conjectural judgment based on hypothetical facts. Such a
supplication has to be rejected.
Second. With due respect, I submit that the most important constitutional issue posed by
the petitions at bar relates to the parameters of power of a Bicameral Conference
Committee. Most of the issues in the petitions at bar arose because the Bicameral
Conference Committee concerned exercised powers that went beyond reconciling the
differences between Senate Bill No. 1950 and House Bill Nos. 3705 and 3555. In Tolentino
v. Secretary of Finance,7 I ventured the view that a Bicameral Conference Committee has
limited powers and cannot be allowed to act as if it were a "third house" of Congress. I
further warned that unless its roving powersare reigned in, a Bicameral Conference

Committee can wreck the lawmaking process which is a cornerstone of the democratic,
republican regime established in our Constitution. The passage of time fortifies my faith
that there ought to be no legal u-turn on this preeminent principle. I wish, therefore, to
reiterate my reasons for this unbending view, viz:8
Section 209, Rule XII of the Rules of the Senate provides:
In the event that the Senate does not agree with the House of Representatives on the
provision of any bill or joint resolution, the differences shall be settled by a conference
committee of both Houses which shall meet within ten days after their composition.
Each Conference Committee Report shall contain a detailed and sufficiently explicit
statement of the changes in or amendments to the subject measure, and shall be signed
by the conferees. (Emphasis supplied)
The counterpart rule of the House of Representatives is cast in near identical language.
Section 85 of the Rules of the House of Representatives pertinently provides:
In the event that the House does not agree with the Senate on the amendments to any
bill or joint resolution, the differences may be settled by a conference committee of both
chambers.
x x x. Each report shall contain a detailed, sufficiently explicit statement of the changes
in or amendments to the subject measure. (Emphasis supplied)
The Jeffersons Manual has been adopted as a supplement to our parliamentary rules
and practice. Section 456 of Jeffersons Manual similarly confines the powers of a
conference committee, viz:
The managers of a conference must confine themselves to the differences committed to
them and may not include subjects not within the disagreements, even though
germane to a question in issue.
This rule of antiquity has been honed and honored in practice by the Congress of the
United States. Thus, it is chronicled by Floyd Biddick, Parliamentarian Emeritus of the
United States Senate, viz:
Committees of conference are appointed for the sole purpose of compromising and
adjusting the differing and conflicting opinions of the two Houses and the committees of
conference alone can grant compromises and modify propositions of either Houses within
the limits of the disagreement. Conferees are limited to the consideration of differences
between the two Houses.
Congress shall not insert in their report matters not committed to them by either House,
nor shall they strike from the bill matters agreed to by both Houses. No matter on which
there is nothing in either the Senate or House passed versions of a bill may be included

in the conference report and actions to the contrary would subject the report to a point
of order. (Emphasis ours)
In fine, there is neither a sound nor a syllable in the Rules of the Senate and the House of
Representatives to support the thesis of the respondents that a bicameral conference
committee is clothed with an ex post veto power.
But the thesis that a Bicameral Conference Committee can wield ex post veto power
does not only contravene the rules of both the Senate and the House. It wages war
against our settled ideals of representative democracy. For the inevitable, catastrophic
effect of the thesis is to install a Bicameral Conference Committee as the Third Chamber
of our Congress, similarly vested with the power to make laws but with the dissimilarity
that its laws are not the subject of a free and full discussion of both Houses of Congress.
With such a vagrant power, a Bicameral Conference Committee acting as a Third
Chamber will be a constitutional monstrosity.
It needs no omniscience to perceive that our Constitution did not provide for a Congress
composed of three chambers. On the contrary, section 1, Article VI of the Constitution
provides in clear and certain language: "The legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate and a House of
Representatives " Note that in vesting legislative power exclusively to the Senate and
the House, the Constitution used the word "shall." Its command for a Congress of two
houses is mandatory. It is not mandatory sometimes.
In vesting legislative power to the Senate, the Constitution means the Senate "
composed of twenty-four Senators xxx elected at large by the qualified voters of the
Philippines " Similarly, when the Constitution vested the legislative power to the
House, it means the House " composed of not more than two hundred and fifty
members xxx who shall be elected from legislative districts xxx and those who xxx shall
be elected through a party-list system of registered national, regional, and sectoral
parties or organizations." The Constitution thus, did not vest on a Bicameral Conference
Committee with an ad hoc membership the power to legislate for it exclusively vested
legislative power to the Senate and the House as co-equal bodies. To be sure, the
Constitution does not mention the Bicameral Conference Committees of Congress. No
constitutional status is accorded to them. They are not even statutory creations. They
owe their existence from the internal rules of the two Houses of Congress. Yet,
respondents peddle the disconcerting idea that they should be recognized as a Third
Chamber of Congress and with ex post veto power at that.
The thesis that a Bicameral Conference Committee can exercise law making power with
ex post veto power is freighted with mischief. Law making is a power that can be used
for good or for ill, hence, our Constitution carefully laid out a plan and a procedure for its
exercise. Firstly, it vouchsafed that the power to make laws should be exercised by no
other body except the Senate and the House. It ought to be indubitable that what is

contemplated is the Senate acting as a full Senate and the House acting as a full House.
It is only when the Senate and the House act as whole bodies that they truly represent
the people. And it is only when they represent the people that they can legitimately pass
laws. Laws that are not enacted by the peoples rightful representatives subvert the
peoples sovereignty. Bicameral Conference Committees, with their ad hoc character and
limited membership, cannot pass laws for they do not represent the people. The
Constitution does not allow the tyranny of the majority. Yet, the respondents will impose
the worst kind of tyranny the tyranny of the minority over the majority. Secondly, the
Constitution delineated in deft strokes the steps to be followed in making laws. The
overriding purpose of these procedural rules is to assure that only bills that successfully
survive the searching scrutiny of the proper committees of Congress and the full and
unfettered deliberations of both Houses can become laws. For this reason, a bill has to
undergo three (3) mandatory separate readings in each House. In the case at bench, the
additions and deletions made by the Bicameral Conference Committee did not enjoy the
enlightened studies of appropriate committees. It is meet to note that the complexities
of modern day legislations have made our committee system a significant part of the
legislative process. Thomas Reed called the committee system as "the eye, the ear, the
hand, and very often the brain of the house." President Woodrow Wilson of the United
States once referred to the government of the United States as "a government by the
Chairmen of the Standing Committees of Congress " Neither did these additions and
deletions of the Bicameral Conference Committee pass through the coils of collective
deliberation of the members of the two Houses acting separately. Due to this
shortcircuiting of the constitutional procedure of making laws, confusion shrouds the
enactment of R.A. No. 7716. Who inserted the additions and deletions remains a mystery.
Why they were inserted is a riddle. To use a Churchillian phrase, lawmaking should not
be a riddle wrapped in an enigma. It cannot be, for Article II, section 28 of the
Constitution mandates the State to adopt and implement a "policy of full public
disclosure of all its transactions involving public interest." The Constitution could not
have contemplated a Congress of invisible and unaccountable John and Mary Does. A law
whose rationale is a riddle and whose authorship is obscure cannot bind the people.
All these notwithstanding, respondents resort to the legal cosmetology that these
additions and deletions should govern the people as laws because the Bicameral
Conference Committee Report was anyway submitted to and approved by the Senate
and the House of Representatives. The submission may have some merit with respect to
provisions agreed upon by the Committee in the process of reconciling conflicts between
S.B. No. 1630 and H.B. No. 11197. In these instances, the conflicting provisions had been
previously screened by the proper committees, deliberated upon by both Houses and
approved by them. It is, however, a different matter with respect to additions and
deletions which were entirely new and which were made not to reconcile inconsistencies
between S.B. No. 1630 and H.B. No. 11197. The members of the Bicameral Conference
Committee did not have any authority to add new provisions or delete provisions already
approved by both Houses as it was not necessary to discharge their limited task of

reconciling differences in bills. At that late stage of law making, the Conference
Committee cannot add/delete provisions which can become laws without undergoing the
study and deliberation of both chambers given to bills on 1st, 2nd, and 3rd readings.
Even the Senate and the House cannot enact a law which will not undergo these
mandatory three (3) readings required by the Constitution. If the Senate and the House
cannot enact such a law, neither can the lesser Bicameral Conference Committee.
Moreover, the so-called choice given to the members of both Houses to either approve or
disapprove the said additions and deletions is more of an optical illusion. These additions
and deletions are not submitted separately for approval. They are tucked to the entire
bill. The vote is on the bill as a package, i.e., together with the insertions and deletions.
And the vote is either "aye" or "nay," without any further debate and deliberation. Quite
often, legislators vote "yes" because they approve of the bill as a whole although they
may object to its amendments by the Conference Committee. This lack of real choice is
well observed by Robert Luce:
Their power lies chiefly in the fact that reports of conference committees must be
accepted without amendment or else rejected in toto. The impulse is to get done with
the matter and so the motion to accept has undue advantage, for some members are
sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is
the more likely if the report comes in the rush of business toward the end of a session,
when to seek further conference might result in the loss of the measure altogether. At
any time in the session there is some risk of such a result following the rejection of a
conference report, for it may not be possible to secure a second conference, or delay
may give opposition to the main proposal chance to develop more strength.
In a similar vein, Prof. Jack Davies commented that "conference reports are returned to
assembly and Senate on a take-it or leave-it-basis, and the bodies are generally placed in
the position that to leave-it is a practical impossibility." Thus, he concludes that
"conference committee action is the most undemocratic procedure in the legislative
process."
The respondents also contend that the additions and deletions made by the Bicameral
Conference Committee were in accord with legislative customs and usages. The
argument does not persuade for it misappreciates the value of customs and usages in
the hierarchy of sources of legislative rules of procedure. To be sure, every legislative
assembly has the inherent right to promulgate its own internal rules. In our jurisdiction,
Article VI, section 16(3) of the Constitution provides that "Each House may determine the
rules of its proceedings x x x." But it is hornbook law that the sources of Rules of
Procedure are many and hierarchical in character. Mason laid them down as follows:
xxx

1. Rules of Procedure are derived from several sources. The principal sources are as
follows:
a. Constitutional rules.
b. Statutory rules or charter provisions.
c. Adopted rules.
d. Judicial decisions.
e. Adopted parliamentary authority.
f. Parliamentary law.
g. Customs and usages.
2. The rules from the different sources take precedence in the order listed above except
that judicial decisions, since they are interpretations of rules from one of the other
sources, take the same precedence as the source interpreted. Thus, for example, an
interpretation of a constitutional provision takes precedence over a statute.
3. Whenever there is conflict between rules from these sources the rule from the source
listed earlier prevails over the rule from the source listed later. Thus, where the
Constitution requires three readings of bills, this provision controls over any provision of
statute, adopted rules, adopted manual, or of parliamentary law, and a rule of
parliamentary law controls over a local usage but must give way to any rule from a
higher source of authority. (Emphasis ours)
As discussed above, the unauthorized additions and deletions made by the Bicameral
Conference Committee violated the procedure fixed by the Constitution in the making of
laws. It is reasonless for respondents therefore to justify these insertions as sanctioned
by customs and usages.
Finally, respondents seek sanctuary in the conclusiveness of an enrolled bill to bar any
judicial inquiry on whether Congress observed our constitutional procedure in the
passage of R.A. No. 7716. The enrolled bill theory is a historical relic that should not
continuously rule us from the fossilized past. It should be immediately emphasized that
the enrolled bill theory originated in England where there is no written constitution and
where Parliament is supreme. In this jurisdiction, we have a written constitution and the
legislature is a body of limited powers. Likewise, it must be pointed out that starting from
the decade of the 40s, even American courts have veered away from the rigidity and
unrealism of the conclusiveness of an enrolled bill. Prof. Sutherland observed:
xxx

Where the failure of constitutional compliance in the enactment of statutes is not

discoverable from the face of the act itself but may be demonstrated by recourse to the
legislative journals, debates, committee reports or papers of the governor, courts have
used several conflicting theories with which to dispose of the issue. They have held: (1)
that the enrolled bill is conclusive and like the sheriffs return cannot be attacked; (2)
that the enrolled bill isprima facie correct and only in case the legislative journal shows
affirmative contradiction of the constitutional requirement will the bill be held invalid; (3)
that although the enrolled bill is prima facie correct, evidence from the journals, or other
extrinsic sources is admissible to strike the bill down; (4) that the legislative journal is
conclusive and the enrolled bills is valid only if it accords with the recital in the journal
and the constitutional procedure.
Various jurisdictions have adopted these alternative approaches in view of strong dissent
and dissatisfaction against the philosophical underpinnings of the conclusiveness of an
enrolled bill. Prof. Sutherland further observed:
x x x. Numerous reasons have been given for this rule. Traditionally, an enrolled bill was
"a record" and as such was not subject to attack at common law. Likewise, the rule of
conclusiveness was similar to the common law rule of the inviolability of the sheriffs
return. Indeed, they had the same origin, that is, the sheriff was an officer of the king
and likewise the parliamentary act was a regal act and no official might dispute the
kings word. Transposed to our democratic system of government, courts held that as the
legislature was an official branch of government the court must indulge every
presumption that the legislative act was valid. The doctrine of separation of powers was
advanced as a strong reason why the court should treat the acts of a co-ordinate branch
of government with the same respect as it treats the action of its own officers; indeed, it
was thought that it was entitled to even greater respect, else the court might be in the
position of reviewing the work of a supposedly equal branch of government. When these
arguments failed, as they frequently did, the doctrine of convenience was advanced, that
is, that it was not only an undue burden upon the legislature to preserve its records to
meet the attack of persons not affected by the procedure of enactment, but also that it
unnecessarily complicated litigation and confused the trial of substantive issues.
Although many of these arguments are persuasive and are indeed the basis for the rule
in many states today, they are not invulnerable to attack. The rule most relied on the
sheriffs return or sworn official rule did not in civil litigation deprive the injured party of
an action, for always he could sue the sheriff upon his official bond. Likewise, although
collateral attack was not permitted, direct attack permitted raising the issue of fraud,
and at a later date attack in equity was also available; and that the evidence of the
sheriff was not of unusual weight was demonstrated by the fact that in an action against
the sheriff no presumption of its authenticity prevailed.
The argument that the enrolled bill is a "record" and therefore unimpeachable is likewise
misleading, for the correction of records is a matter of established judicial procedure.

Apparently, the justification is either the historical one that the kings word could not be
questioned or the separation of powers principle that one branch of the government
must treat as valid the acts of another.
Persuasive as these arguments are, the tendency today is to avoid reaching results by
artificial presumptions and thus it would seem desirable to insist that the enrolled bill
stand or fall on the basis of the relevant evidence which may be submitted for or against
it. (Emphasis ours)
Thus, as far back as the 1940s, Prof. Sutherland confirmed that "x x x the tendency
seems to be toward the abandonment of the conclusive presumption rule and the
adoption of the third rule leaving only a prima faciepresumption of validity which may be
attacked by any authoritative source of information.
Third. I respectfully submit that it is only by strictly following the contours of powers of a
Bicameral Conference Committee, as delineated by the rules of the House and the
Senate, that we can prevent said Committee from acting as a "third" chamber of
Congress. Under the clear rules of both the Senate and House, its power can go no
further than settling differences in their bills or joint resolutions. Sections 88 and 89, Rule
XIV of the Rules of the House of Representatives provide as follows:
Sec. 88. Conference Committee. In the event that the House does not agree with the
Senate on the amendment to any bill or joint resolution, the differences may be settled
by the conference committees of both chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible,
adhere to and support the House Bill. If the differences with the Senate are so substantial
that they materially impair the House Bill, the panel shall report such fact to the House
for the latters appropriate action.
Sec. 89. Conference Committee Reports. - . . . Each report shall contain a detailed,
sufficiently explicit statement of the changes in or amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on the Conference Committee
Report prior to the voting thereon. The House shall vote on the Conference Committee
Report in the same manner and procedure as it votes a bill on third and final reading.
Section 35, Rule XII of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with the House of Representatives
on the provision of any bill or joint resolution, the differences shall be settled by a
conference committee of both Houses which shall meet within ten (10) days after their
composition. The President shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.

Each Conference Committee Report shall contain a detailed and sufficiently explicit
statement of the changes in, or amendments to the subject measure, and shall be signed
by a majority of the members of each House panel, voting separately.
The House rule brightlines the following: (1) the power of the Conference Committee is
limited . . . it is only to settle differences with the Senate; (2) if the differences are
substantial, the Committee must report to the House for the latters appropriate action;
and (3) the Committee report has to be voted upon in the same manner and procedure
as a bill on third and final reading. Similarly, the Senate rule underscores in crimson that
(1) the power of the Committee is limited - - - to settle differences with the House; (2) it
can make changes or amendments only in the discharge of this limited power to settle
differences with the House; and (3) the changes or amendments are merely
recommendatory for they still have to be approved by the Senate.
Under both rules, it is obvious that a Bicameral Conference Committee is a mere agent of
the House or the Senate with limited powers. The House contingent in the Committee
cannot, on its own, settle differences which are substantial in character. If it is confronted
with substantial differences, it has to go back to the chamber that created it "for the
latters appropriate action." In other words, it must take the proper instructions from the
chambers that created it. It cannot exercise its unbridled discretion. Where there is no
differencebetween the bills, it cannot make any change. Where the difference is
substantial, it has to return to the chamber of its origin and ask for appropriate
instructions. It ought to be indubitable that it cannot create a new law, i.e., that which
has never been discussed in either chamber of Congress. Its parameters of power are
not porous, for they are hedged by the clear limitation that its only power is to settle
differences in bills and joint resolutions of the two chambers of Congress.
Fourth. Prescinding from these premises, I respectfully submit that the following acts of
the Bicameral Conference Committee constitute grave abuse of discretion amounting to
lack or excess of jurisdiction and should be struck down as unconstitutional nullities, viz:
a. Its deletion of the pro poor "no pass on provision" which is common in both Senate Bill
No. 1950 and House Bill No. 3705.
Sec. 1 of House Bill No. 37059 provides:
Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby
further amended to read as follows:
SEC. 106. Value-added Tax on Sale of Goods or Properties.
xxx
Provided, further, that notwithstanding the provision of the second paragraph of Section
105 of this Code, the Value-added Tax herein levied on the sale of petroleum products
under Subparagraph (1) hereof shall be paid and absorbed by the sellers of petroleum

products who shall be prohibited from passing on the cost of such tax payments, either
directly or indirectly[,] to any consumer in whatever form or manner, it being the express
intent of this act that the Value-added Tax shall be borne and absorbed exclusively by
the sellers of petroleum products x x x.
Sec. 3 of the same House bill provides:
Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby
further amended to read as follows:
Sec. 108. Value-added Tax on Sale of Goods or Properties.
Provided, further, that notwithstanding the provision of the second paragraph of Section
105 of this Code, the Value-added Tax imposed under this paragraph shall be paid and
absorbed by the subject generation companies who shall be prohibited from passing on
the cost of such tax payments, either directly or indirectly[,] to any consumer in
whatever form or manner, it being the express intent of this act that the Value-added Tax
shall be borne and absorbed exclusively [by] the power-generating companies.
In contrast and comparison, Sec. 5 of Senate Bill No. 1950 provides:
Value-added Tax on sale of Services and Use or Lease of Properties.
x x x Provided, that the VAT on sales of electricity by generation companies, and services
of transmission companies and distribution companies, as well as those of franchise
grantees of electrical utilities shall not apply to residential end-users: Provided, that the
Value-added Tax herein levied shall be absorbed and paid by the generation,
transmission and distribution companies concerned. The said companies shall not pass
on such tax payments to NAPOCOR or ultimately to the consumers, including but not
limited to residential end users, either as costs or in any other form whatsoever, directly
or indirectly. x x x.
Even the faintest eye contact with the above provisions will reveal that: (a) both the
House bill and the Senate bill prohibited the passing on to consumers of the VAT on sales
of electricity and (b) the House bill prohibited the passing on to consumers of the VAT on
sales of petroleum products while the Senate bill is silent on the prohibition.
In the guise of reconciling disagreeing provisions of the House and the Senate bills on the
matter, the Bicameral Conference Committee deleted the "no pass on provision" on both
the sales of electricity and petroleum products. This action by the Committee is not
warranted by the rules of either the Senate or the House. As aforediscussed, the only
power of a Bicameral Conference Committee is to reconcile disagreeing provisions in the
bills or joint resolutions of the two houses of Congress. The House and the Senate bills
both prohibited the passing on to consumers of the VAT on sales of electricity. The
Bicameral Conference Committee cannot override this unequivocal decision of the
Senate and the House. Nor is it clear that there is a conflict between the House and

Senate versions on the "no pass on provisions" of the VAT on sales of petroleum
products. The House version contained a "no pass on provision" but the Senate had
none. Elementary logic will tell us that while there may be a difference in the two
versions, it does not necessarily mean that there is a disagreement or conflict between
the Senate and the House. The silence of the Senate on the issue cannot be interpreted
as an outright opposition to the House decision prohibiting the passing on of the VAT to
the consumers on sales of petroleum products. Silence can even be conformity, albeit
implicit in nature. But granting for the nonce that there is conflict between the two
versions, the conflict cannot escape the characterization as a substantial difference. The
seismic consequence of the deletion of the "no pass on provision" of the VAT on sales of
petroleum products on the ability of our consumers, especially on the roofless and the
shirtless of our society, to survive the onslaught of spiraling prices ought to be beyond
quibble. The rules require that the Bicameral Conference Committee should not, on its
own, act on this substantial conflict. It has to seek guidance from the chamber that
created it. It must receive proper instructions from its principal, for it is the law of nature
that no spring can rise higher than its source. The records of both the Senate and the
House do not reveal that this step was taken by the members of the Bicameral
Conference Committee. They bypassed their principal and ran riot with the exercise of
powers that the rules never bestowed on them.
b. Even more constitutionally obnoxious are the added restrictions on local governments
use of incremental revenue from the VAT in Section 21 of R.A. No. 9337 which were not
present in the Senate or House Bills. Section 21 of R.A. No. 9337 provides:
Fifty percent of the local government units share from VAT shall be allocated and used
exclusively for the following purposes:
1. Fifteen percent (15%) for public elementary and secondary education to finance the
construction of buildings, purchases of school furniture and in-service teacher trainings;
2. Ten percent (10%) for health insurance premiums of enrolled indigents as a
counterpart contribution of the local government to sustain the universal coverage of the
national health insurance program;
3. Fifteen percent (15%) for environmental conservation to fully implement a
comprehensive national reforestation program; and
4. Ten percent (10%) for agricultural modernization to finance the construction of farmto-market roads and irrigation facilities.
Such allocations shall be segregated as separate trust funds by the national treasury and
shall be over and above the annual appropriation for similar purposes.
These amendments did not harmonize conflicting provisions between the constituent
bills of R.A. No. 9337 but are entirely new and extraneous concepts which fall beyond the

median thereof. They transgress the limits of the Bicameral Conference Committees
authority and must be struck down.
I cannot therefore subscribe to the thesis of the majority that "the changes introduced by
the Bicameral Conference Committee on disagreeing provisions were meant only to
reconcile and harmonize the disagreeing provisions for it did not inject any idea or intent
that is wholly foreign to the subject embraced by the original provisions."
Fifth. The majority further defends the constitutionality of the above provisions by
holding that "all the changes or modifications were germane to subjects of the provisions
referred to it for reconciliation."
With due respect, it is high time to re-examine the test of germaneness proffered in
Tolentino.
The test of germaneness is overly broad and is the fountainhead of mischief for it allows
the Bicameral Conference Committee to change provisions in the bills of the House and
the Senate when they are not even in disagreement. Worse still, it enables the
Committee to introduce amendments which are entirely new and have not previously
passed through the coils of scrutiny of the members of both houses. The Constitution did
not establish a Bicameral Conference Committee that can act as a "third house" of
Congress with super veto power over bills passed by the Senate and the House. We
cannot concede that super veto power without wrecking the delicate architecture of
legislative power so carefully laid down in our Constitution. The clear intent of our
fundamental law is to install a lawmaking structure composed only of two houses whose
members wouldthoroughly debate proposed legislations in representation of the will of
their respective constituents. The institution of this lawmaking structure is unmistakable
from the following provisions: (1) requiring that legislative power shall be vested in a
bicameral legislature;10 (2) providing for quorum requirements;11 (3) requiring that
appropriation, revenue or tariff bills, bills authorizing increase of public debt, bills of local
application, and private bills originate exclusively in the House of Representatives;12 (4)
requiring
that bills embrace one subject expressed in the title thereof;13 and (5) mandating that
bills undergo three readings on separate days in each House prior to passage into law
and prohibiting amendments on the last reading thereof.14 A Bicameral Conference
Committee with untrammeled powers will destroy this lawmaking structure. At the very
least, it will diminish the free and open debate of proposed legislations and facilitate the
smuggling of what purports to be laws.
On this point, Mr. Robert Luces disconcerting observations are apropos:
"Their power lies chiefly in the fact that reports of conference committees must be
accepted without amendment or else rejected in toto. The impulse is to get done with
the matters and so the motion to accept has undue advantage, for some members are

sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is
more likely if the report comes in the rush of business toward the end of the session,
when to seek further conference might result in the loss of the measure altogether. At
any time in the session there is some risk of such a result following the rejection of a
conference report, for it may not be possible to secure a second conference, or delay
may give opposition to the main proposal chance to develop more strength.
xxx xxx xxx
Entangled in a network of rule and custom, the Representative who resents and would
resist this theft of his rights, finds himself helpless. Rarely can be vote, rarely can he
voice his mind, in the matter of any fraction of the bill. Usually he cannot even record
himself as protesting against some one feature while accepting the measure as whole.
Worst of all, he cannot by argument or suggested change, try to improve what the other
branch has done.
This means more than the subversion of individual rights. It means to a degree the
abandonment of whatever advantage the bicameral system may have. By so much it in
effect transfers the lawmaking power to small group of members who work out in private
a decision that almost always prevails. What is worse, these men are not chosen in a
way to ensure the wisest choice. It has become the practice to name as conferees the
ranking members of the committee, so that the accident of seniority determines.
Exceptions are made, but in general it is not a question of who are most competent to
serve. Chance governs, sometimes giving way to favor, rarely to merit.
xxx xxx xxx
Speaking broadly, the system of legislating by conference committee is unscientific and
therefore defective.Usually it forfeits the benefit of scrutiny and judgment by all the
wisdom available. Uncontrolled, it is inferior to that process by which every amendment
is secured independent discussion and vote. . . ."15
It cannot be overemphasized that in a republican form of government, laws can only be
enacted by all the duly elected representatives of the people. It cuts against
conventional wisdom in democracy to lodge this power in the hands of a few or in the
claws of a committee. It is for these reasons that the argument that we should overlook
the excesses of the Bicameral Conference Committee because its report is anyway
approved by both houses is a futile attempt to square the circle for an unconstitutional
act is void and cannot be redeemed by any subsequent ratification.
Neither can we shut our eyes to the unconstitutional acts of the Bicameral Conference
Committee by holding that the Court cannot interpose its checking powers over mere
violations of the internal rules of Congress. In Arroyo, et al. v. de Venecia, et al.,16 we
ruled that when the violations affect private rights or impair the Constitution,the Court
has all the power, nay, the duty to strike them down.

In conclusion, I wish to stress that this is not the first time nor will it be last that
arguments will be foisted for the Court to merely wink at assaults
on the Constitution on the ground of some national interest, sometimes clear and at
other times inchoate. To be sure, it cannot be gainsaid that the country is in the vortex of
a financial crisis. The broadsheets scream the disconcerting news that our debt
payments for the year 2006 will exceed Pph1 billion daily for interest alone. Experts
underscore some factors that will further drive up the debt service expenses such as the
devaluation of the peso, credit downgrades and a spike in interest rates.17 But no
doomsday scenario will ever justify the thrashing of the Constitution. The Constitution is
meant to be our rule both in good times as in bad times. It is the Courts
uncompromising obligation to defend the Constitution at all times lest it be condemned
as an irrelevant relic.
WHEREFORE, I concur with the majority but dissent on the following points:
a) I vote to withhold judgment on the constitutionality of the "standby authority" in
Sections 4 to 6 of Republic Act No. 9337 as this issue is not ripe for adjudication.;
b) I vote to declare unconstitutional the deletion by the Bicameral Conference Committee
of the pro poor "no pass on provision" on electricity to residential consumers as it
contravened the unequivocal intent of both Houses of Congress; and
c) I vote to declare Section 21 of Republic Act No. 9337 as unconstitutional as it contains
extraneous provisions not found in its constituent bills.
REYNATO S. PUNO
Associate Justice

Footnotes
1 Angara v. Electoral Commission, 63 Phil. 139 (1936); See also Tribe, American
Constitutional Law, pp. 311-314 (3rd ed.).
2 Mendoza, Judicial Review of Constitutional Questions: Cases and Materials, p. 86
(2004).
3 Id. at 87.
4 Abbott Laboratories v. Gardner, 387 U.S. 136 (1967); I Tribe, American Constitutional
Law, p. 334 (3rd ed.).

5 Texas v. United States, 523 U.S. 296 (1998); Thomas v. Union Carbide Agricultural
Products Co., 473 U.S. 568 (1985); I Tribe, American Constitutional Law, pp. 335-336 (3rd
ed.).
6 Communist Party of the United States v. Subversive Activities Control Bd., 367 U.S. 1,
71 (1961); I Tribe, American Constitutional Law, p. 336 (3rd ed.); See also concurring
opinion of Justice Brandeis in Ashwander v. Tennessee Valley Authority, 297 U.S. 288
(1936).
7 235 SCRA 630 (1994).
8 See Opinion in 235 SCRA 630, 805-825.
9 H.B. No. 3555 has no "no pass on provision." House Bill No. 3705 expresses the latest
intent of the House on the matter.
10 1 Sutherland Statutory Construction 6:2 (6th ed.): The provision requiring that
legislative power shall be vested in a bicameral legislature seeks to "assure sound
judgment that comes from separate deliberations and actions in the respective bodies
that check and balance each other."
11 Const., Article VI, Section 16(2) (1987): "(2) A majority of each House shall constitute
a quorum to do business, but a smaller number may adjourn from day to day and may
compel the attendance of absent Members in such manner, and under such penalties, as
such House may provide."
12 Const., Article VI, Section 24 (1987); 1 Sutherland Statutory Construction 9:6 (6th
ed.): The provision helps guarantee that the exercise of the taxing power is well studied
as the lower house is "presumably more representative in character."
13 Const., Article VI, Section 26(1) (1987); I Cooley, A Treatise on Constitutional
Limitations, p. 143; Central Capiz v. Ramirez, 40 Phil. 883 (1920): "In the construction
and application of this constitutional restriction the courts have kept steadily in view the
correction of the mischief against which it was aimed. The object is to prevent the
practice, which was common in all legislative bodies where no such restrictions existed
of embracing in the same bill incongruous matters having no relation to each other or to
the subject specified in the title, by which measures were often adopted without
attracting attention. Such distinct subjects represented diverse interests, and were
combined in order to unite the members of the legislature who favor either in support of
all. These combinations were corruptive of the legislature and dangerous to the State.
Such omnibus bills sometimes included more than a hundred sections on as many
different subjects, with a title appropriate to the first section, and for other purposes."
"The failure to indicate in the title of the bill the object intended to be accomplished by
the legislation often resulted in members voting ignorantly for measures which they
would not knowingly have approved; and not only were legislators thus misled, but the

public also; so that legislative provisions were steadily pushed through in the closing
hours of a session, which, having no merit to commend them, would have been made
odious by popular discussion and remonstrance if their pendency had been seasonably
announced. The constitutional clause under discussion is intended to correct these evils;
to prevent such corrupting aggregations of incongruous measures, by confining each act
to one subject or object; to prevent surprise and inadvertence by requiring that subject
or object to be expressed in the title."
14 Const., Article VI, Section 26(2) (1987); 1 Sutherland Statutory Construction 10:4
(6th ed.); See also IV Laurel, Journal of the (1935) Constitutional Convention, pp. 436437, 440-441 where the 1934 Constitutional Convention noted the anomalous legislative
practice of railroading bills on the last day of the legislative year when members of
Congress were eager to go home. By this irregular procedure, legislators were able to
successfully insert matters into bills which would not otherwise stand scrutiny in leisurely
debate; I Cooley, A Treatise on the Constitutional Limitations, pp. 286-287(8th ed.); Smith
v. Mitchell, 69 W.Va 481, 72 S.E. 755 (1911): "The purpose of this provision of the
Constitution is to inform legislators and people of legislation proposed by a bill, and to
prevent hasty legislation."
15 235 SCRA 630, 783-784 citing Luce, Legislative Procedure, pp. 404-405, 407 (1922);
See also Davies, Legislative Law and Process, p. 81 (2nd ed.): "conference reports are
returned to assembly and Senate on a take-it or leave-it-basis, and the bodies are
generally placed in the position that to leave-it is a practical impossibility." Thus, he
concludes that "conference committee action is the most undemocratic procedure in the
legislative process."
16 268 SCRA 269, 289 (1997).
17 The Manila Standard Today, August 26, 2005, p. 1.

The Lawphil Project - Arellano Law Foundation

________________________________________

EN BANC
GR No. 168056 -- ABAKADA GURO PARTY LIST, etc. et al. v. HON. EXECUTIVE SECRETARY
EDUARDO R. ERMITA et al.
GR No. 168207 -- AQUILINO Q. PIMENTEL JR. et al. v. EXECUTIVE SECRETARY EDUARDO R.
ERMITA et al.

GR No. 168461 -- ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., etc. et al. v. CESAR V.
PURISIMA, etc. et al.
GR No. 168463 -- FRANCIS JOSEPH G. ESCUDERO et al. v. CESAR V. PURISIMA etc., et al.
GR No. 168730 -- BATAAN GOVERNOR ENRIQUE T. GARCIA JR. v. HON. EDUARDO R.
ERMITA, etc. et al.
Promulgated: September 1, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
SEPARATE OPINION
PANGANIBAN, J.:
The ponencia written by the esteemed Madame Justice Ma. Alicia Austria-Martinez
declares that the enrolled bill doctrine has been historically and uniformly upheld in our
country. Cited as recent reiterations of this doctrine are the two Tolentino v. Secretary of
Finance judgments1 and Farias v. Executive Secretary.2
Precedence of Mandatory
Constitutional Provisions
Over the Enrolled Bill Doctrine
I believe, however, that the enrolled bill doctrine3 is not absolute. It may be allencompassing in some countries like Great Britain,4 but as applied to our jurisdiction, it
must yield to mandatory provisions of our 1987 Constitution. The Court can take judicial
notice of the form of government5 in Great Britain.6 It is unlike that in our country and,
therefore, the doctrine from which it originated7 could be modified accordingly by our
Constitution.
In fine, the enrolled bill doctrine applies mainly to the internal rules and processes
followed by Congress in its principal duty of lawmaking. However, when the Constitution
imposes certain conditions, restrictions or limitations on the exercise of congressional
prerogatives, the judiciary has both the power and the duty to strike down congressional
actions that are done in plain contravention of such conditions, restrictions or
limitations.8 Insofar as the present case is concerned, the three most important
restrictions or limitations to the enrolled bill doctrine are the "origination," "noamendment" and "three-reading" rules which I will discuss later.
Verily, these restrictions or limitations to the enrolled bill doctrine are safeguarded by the
expanded9 constitutional mandate of the judiciary "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."10 Even the ponenteof

Tolentino,11 the learned Mr. Justice Vicente V. Mendoza, concedes in another decision
that each house "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."12
The Bicameral Conference Committee (BCC) created by Congress to iron out differences
between the Senate and the House of Representatives versions of the E-VAT bills13 is
one such "branch or instrumentality of the government," over which this Court may
exercise certiorari review to determine whether or not grave abuse of discretion has
been committed; and, specifically, to find out whether the constitutional conditions,
restrictions and limitations on law-making have been violated.
In general, the BCC has at least five options in performing its functions: (1) adopt the
House version in part or in toto, (2) adopt the Senate version in part or in toto, (3)
consolidate the two versions, (4) reject non-conflictingprovisions, and (5) adopt
completely new provisions not found in either version. This, therefore, is the simple
question: In the performance of its function of reconciling conflicting provisions, has the
Committee blatantly violated the Constitution?
My short answer is: No, except those relating to income taxes referred to in Sections 1, 2
and 3 of Republic Act (RA) No. 9337. Let me explain.
Adopting the House
Version in Part or in Toto
First, the BCC had the option of adopting the House bills either in part or in toto,
endorsing them without changes. Since these bills had passed the three-reading
requirement14 under the Constitution,15 it readily becomes apparent that no procedural
impediment would arise. There would also be no question as to their
origination,16because the bills originated exclusively from the House of Representatives
itself.
In the present case, the BCC did not ignore the Senate and adopt any of the House bills
in part or in toto. Therefore, this option was not taken by the BCC.
Adopting the Senate
Version in Part or in Toto
Second, the BCC may choose to adopt the Senate version either
in part or in toto, endorsing it also without changes. In so doing, the question of
origination arises. Under the 1987 Constitution, all "revenue x x x bills x x x shall

originate exclusively in the House of Representatives, but the Senate may propose or
concur with amendments."17
If the revenue bill originates exclusively from the Senate, then obviously the origination
provision18 of the Constitution would be violated. If, however, it originates exclusively
from the House and presumably passes the three-reading requirement there, then the
question to contend with is whether the Senate amendments complied with the
"germane" principle.
While in the Senate, the House version may, per Tolentino, undergo extensive changes,
such that the Senate may rewrite not only portions of it but even all of it.19 I believe that
such rewriting is limited by the "germane" principle: although "relevant"20 or "related"21
to the general subject of taxation, the Senate version is not necessarily "germane" all
the time. The "germane" principle requires a legal -- not necessarily an economic22 or
political -- interpretation. There must be an "inherent logical connection."23 What may
be germane in an economic or political sense is not necessarily germane in the legal
sense. Otherwise, any provision in the Senate version that is entirely new and
extraneous, or that is remotely or even slightly connected, to the vast and perplexing
subject of taxation, would always be germane. Under this interpretation, the origination
principle would surely be rendered inutile.
To repeat, in Tolentino, the Court said that the Senate may even write its own version,
which in effect would be an amendment by substitution.24 The Court went further by
saying that "the Constitution does not prohibit the filing in the Senate of a substitute bill
in anticipation of its receipt of the bill from the House, so long as action by the Senate as
a body is withheld pending receipt of the House bill."25 After all, the initiative for filing a
revenue bill must come from the House26 on the theory that, elected as its members are
from their respective districts, the House is more sensitive to local needs and problems.
By contrast, the Senate whose members are elected at large approaches the matter from
a national perspective,27 with a broader and more circumspect outlook.28
Even if I have some reservations on the foregoing sweeping pronouncements in
Tolentino, I shall not comment any further, because the BCC, in reconciling conflicting
provisions, also did not take the second option of ignoring the House bills completely and
of adopting only the Senate version in part or in toto. Instead, the BCC used or applied
the third option as will be discussed below.
Compromising
by Consolidating
As a third option, the BCC may reach a compromise by
consolidating both the Senate and the House versions. It can adopt some parts and
reject other parts of both bills, and craft new provisions or even a substitute bill. I believe

this option is viable, provided that there is no violation of the origination and germane
principles, as well as the three-reading rule. After all, the report generated by the BCC
will not become a final valid act of the Legislative Department until the BCC obtains the
approval of both houses of Congress.29
Standby Authority. I believe that the BCC did not exceed its authority when it crafted the
so-called "standby authority" of the President. The originating bills from the House
imposed a 12 percent VAT rate,30 while the bill from the Senate retained the
original 10 percent.31 The BCC opted to initially use the 10 percent Senate provision and
to increase this rate to the 12 percent House provision, effective January 1, 2006, upon
the occurrence of a predetermined factual scenario as follows:
"(i) [VAT] collection as a percentage of Gross Domestic Product (GDP) of the previous
year exceeds two and four-fifth percent (2 4/5%) or
(ii) National Government Deficit as a percentage of GDP of the previous year exceeds
one and one-half percent (1 1/2%)."32
In the computation of the percentage requirements in the alternative conditions under
the law, the amounts of the VAT collection, National Deficit,33 and GDP34 -- as well as
the interrelationship among them -- can easily be derived by the finance secretary from
the proper government bodies charged with their determination. The law is complete and
standards have been fixed.35 Only the fact-finding mathematical computation for its
implementation on January 1, 2006, is necessary.
Once either of the factual and mathematical events provided in the law takes place, the
President has no choice but to implement the increase of the VAT rate to 12 percent.36
This eventuality has been predetermined by Congress.37
The taxing power has not been delegated by Congress to either or both the President
and the finance secretary. What was delegated
was only the power to ascertain the facts in order to bring the law into operation. In fact,
there was really no "delegation to speak of;
__________________
Culled from the same record, the following excerpts show the position of public
respondents:
"Justice Panganiban: It will be based on actual figures?
"Usec. Bonoan: It will be based on actual figures.
"Justice Panganiban: That creates a problem[,] because where do you get the actual
figures[?]

"Usec. Bonoan: I understand that[,] traditionally[,] we can come in March, but there is no
impediment to speeding up the gathering.
"Justice Panganiban: Speed it up. February 15?
"Usec. Bonoan: Even within January, Your Honor, I think this can be.
"Justice Panganiban: Alright at the end of January, its just estimate to get the figures in
January.
"Usec. Bonoan: Yes, Your Honor (pp. 661-662); and
xxx
"Justice Panganiban: My only point is, I raised this earlier and I promised counsel for the
petitioner whom I was questionin[g] that I will raise it with you, whether the date January
1, 2006 would present an impossibility of a condition happening.
"Usec. Bonoan: It will not, Your Honor.
"Justice Panganiban: So, your position [is] it will not present an impossibility. Elaborate on
it in your memorandum.
"Usec. Bonoan: Yes, Your Honor.
"Justice Panganiban: Because it is important. The administrative regulations are
important[,] because they clarify the law and it will guide taxpayers. So[,] by January 1[,]
[taxpayers] would not be wondering. Do we charge the end consumers 10 [percent] or
12 [percent]? The regulations should be able to spell that out [i]n the same manner that
even now the various consumers of various products and services must be able to get
from your
there was merely a declaration of an administrative, not a legislative, function.38
I concur with the ponencia in that there was no undue delegation of legislative power in
the increase from 10 percent to 12 percent of the VAT rate. I respectfully disagree,
however, with the statements therein that, first, the secretary of finance is "acting as the
agent of the legislative department" or an "agent of Congress" in determining and
declaring the event upon which its expressed will is to take effect; and, second, that the
secretarys personality "is in reality but a projection of that of Congress."

The secretary of finance is not an alter ego of Congress, but of the President. The
mandate given by RA 9337 to the secretary is not equipollent to an authority to make
laws. In passing this law, Congress did not restrict or curtail the constitutional power of
the President to retain control and supervision over the entire Executive Department.
The law should be construed to be merely asking the President, with a recommendation

from the Presidents alter ego in finance matters, to determine the factual bases for
making the increase in VAT rate operative.39 Indeed, as I have mentioned earlier, the
fact-finding condition is a mere administrative, notlegislative, function.
The ponencia states that Congress merely delegates the implementation of the law to
the secretary of finance. How then can the latter be its agent? Making a law is different
from implementing it. While the first (the making of laws) may be delegated under
certain conditions and only in specific instances provided under the Constitution, the
second (the implementation of laws) may not be done by Congress. After all, the
legislature does not have the power to implement laws. Therefore, congressional agency
arises only in the first, not in the second. The first is a legislative function; the second, an
executive one.
Petitioners argument is that because the GDP does not account for the economic effects
of so-called underground businesses, it is an inaccurate indicator of either economic
growth or slowdown in transitional economies.40 Clearly, this matter is within the
confines of lawmaking. This Court is neither a substitute for the wisdom, or lack of it, in
Congress,41 nor an arbiter of flaws within the latters internal rules.42 Policy matters lie
within the domain of the political branches of government,43 outside the range of
judicial cognizance.44 "[T]he right to select the measure and objects of taxation
devolves upon the Congress, and not upon the courts, and such selections are valid
unless constitutional limitations are overstepped."45 Moreover, each house of Congress
has the power and authority to determine the rules of its proceedings.46 The contention
that this case is not ripe for determination because there is no violation yet of the
Constitution regarding the exercise of the Presidents standby authority has no basis. The
question raised is whether the BCC, in passing the law, committed grave abuse of
discretion, not whether the provision in question had been violated. Hence, this case is
not premature and is, in fact, subject to judicial determination.
Amendments on Income Taxes. I respectfully submit that the amendments made by the
BCC (that were culled from the Senate version) regarding income taxes47 are not legally
germane to the subject matter of the House bills. Revising the income tax rates on
domestic, resident foreign and nonresident foreign corporations; increasing the tax credit
against taxes due from nonresident foreign corporations on intercorporate dividends; and
reducing the allowable deduction for interest expense are legally unrelated and not
germane to the subject matter contained in the House bills; they violate the origination
principle.48 The reasons are as follows:
One, an income tax is a direct tax imposed on actual or presumed income -- gross or net
-- realized by a taxpayer during a given taxable year,49 while a VAT is an indirect tax not
in the context of who is directly and legally liable for its payment, but in terms of its
nature as "a tax on consumption."50 The former cannot be passed on to the consumer,
but the latter can.51 It is too wide a stretch of the imagination to even relate one
concept with the other. In like manner, it is inconceivable how the provisions that

increase corporate income taxes can be considered as mitigating measures for

increasing the VAT and, as I will explain later, for effectively imposing a maximum of 3
percent tax on gross sales or revenues because of the 70 percent cap. Even the
argument that the corporate income tax rates will be reduced to 30 percent does not
hold water. This reduction will take effect only in 2009, not 2006 when the 12 percent
VAT rate will have been implemented.
Two, taxes on intercorporate dividends are final, but the input VAT is generally creditable.
Under a finalwithholding tax system, the amount of income tax that is withheld by a
withholding agent is constituted as a full and final payment of the income tax due from
the payee on said income.52 The liability for the tax primarily rests upon the payor as a
withholding agent.53 Under a creditable withholding tax system, taxes withheld on
certain payments are meant to approximate the tax that is due of the payee on said
payments.54 The liability for the tax rests upon the payee who is mandated by law to
still file a tax return, report the tax base, and pay the difference between the tax
withheld and the tax due.55
From this observation alone, it can already be seen that not only are dividends alien to
the tax base upon which the VAT is imposed, but their respective methods of withholding
are totally different. VAT-registered persons may not always be nonresident foreign
corporations that declare and pay dividends, while intercorporate dividends are certainly
not goods or properties for sale, barter, exchange, lease or importation. Certainly, input
VAT credits are different from tax credits on dividends received by nonresident foreign
corporations.
Three, itemized deductions from gross income partake of the nature of a tax
exemption.56 Interest -- which is among such deductions -- refers to the amount paid by
a debtor to a creditor for the use or forbearance of money.57 It is an expense item that is
paid or incurred within a given taxable year on indebtedness in connection with a
taxpayers trade, business or exercise of profession.58 In order to reduce revenue losses,
Congress enacted RA 842459 which reduces the amount of interest expense deductible
by a taxpayer from gross income, equal to the applicable percentage of interest income
subject to final tax.60 To assert that reducing the allowable deduction in interest expense
is a matter that is legally related to the proposed VAT amendments is too far-fetched.
Interest expenses are not allowed as credits against output VAT. Neither are VATregistered persons always liable for interest.
Having argued on the unconstitutionality (non-germaneness) of the BCC insertions on
income taxes, let me now proceed to the other provisions that were attacked by
petitioners.
No Pass-on Provisions. I agree with the ponencia that the BCC did not exceed its
authority when it deleted the no pass-on provisions found in the congressional bills. Its

authority to make amendments not only implies the power to make insertions, but also
deletions, in order to resolve conflicting provisions.
The no pass-on provision in House Bill (HB) No. 3705 referred to the petroleum products
subject to excise tax (and the raw materials used in the manufacture of such products),
the sellers of petroleum products, and the generation companies.61 The analogous
provision in Senate Bill (SB) No. 1950 dealt with electricity, businesses other than
generation companies, and services of franchise grantees of electric utilities.62 In
contrast, there was a marked absence of the no pass-on provision in HB 3555. Faced with
such variances, the BCC had the option of retaining or modifying the no pass-on
provisions and determining their extent, or of deleting them altogether. In opting for
deletion to resolve the variances, it was merely acting within its discretion. No grave
abuse may be imputed to the BCC.
The 70 Percent Cap on Input Tax and the 5 Percent Final Withholding VAT. Deciding on the
70 percent cap and the 5 percent final withholding VAT in the consolidated bill is also
within the power of the BCC. While HB 3555 included limits of 5 percent and 11 percent
on input tax,63 SB 1950 proposed an even spread over 60 months.64The decision to put
a cap and fix its rate, so as to harmonize or to find a compromise in settling the apparent
differences in these versions,65 was within the sound discretion of the BCC.
In like manner, HB 3555 contained provisions on the withholding of creditable VAT at the
rates of 5 percent, 8 percent, 10.5 percent, and 12 percent.66 HB 3705 had no such
equivalent amendment, and SB 1950 pegged the rates at only 5 percent and 10
percent.67 I believe that the decision to impose a final (not creditable) VAT and to fix the
rates at 5 percent and 10 percent, so as to harmonize the apparent differences in all
three versions, was also within the sound discretion of the BCC.
Indeed, the tax credit method under our VAT system is not only practical, but also
principally used in almost all taxing jurisdictions. This does not mean, however, that in
the eyes of Congress through the BCC, our country can neither deviate from this method
nor modify its application to suit our fiscal requirements. The VAT is usuallycollected
through the tax credit method (and in the past, even through the cost deduction method
or a mixture of these two methods),68 but there is no hard and fast rule that 100 percent
of the input taxes will always be allowed as a tax credit.
In fact, it was Maurice Laur, a French engineer,69 who invented the VAT. In 1954, he had
the idea of imposing an indirect tax on consumption, called taxe sur la valeur ajoute,70
which was quickly adopted by the Direction Gnrale des Impost, the new French tax
authority of which he became joint director. Consequently, taxpayers at all levels in the
production process, rather than retailers or tax authorities, were forced to administer and
account for the tax themselves.71

Since the unutilized input VAT can be carried over to succeeding quarters, there is no
undue deprivation of property. Alternatively, it can be passed on to the consumers;72
there is no law prohibiting that. Merely speculative and unproven, therefore, is the
contention that the law is arbitrary and oppressive.73 Laws that impose taxes are
necessarily burdensome, compulsory, and involuntary.
The deferred input tax account -- which accumulates the unutilized input VAT -- remains
an asset in the accounting records of a business. It is not at all confiscated by the
government. By deleting Section 112(B) of the Tax Code,74 Congress no longer made
available tax credit certificates for such asset account until retirement from or cessation
of business, or changes in or cessation of VAT-registered status.75 This is a matter of
policy, not legality. The Court cannot step beyond the confines of its constitutional
power, if there is absolutely no clear showing of grave abuse of discretion in the
enactment of the law.
That the unutilized input VAT would be rendered useless is merely speculative.76
Although it is recorded as a deferred asset in the books of a company, it remains to be a
mere privilege. It may be written off or expensed outright; it may also be denied as a tax
credit.
There is no vested right in a deferred input tax account; it is a mere statutory
privilege.77 The State may modify or withdraw such privilege, which is merely an asset
granted by operation of law.78 Moreover, there is no vested right in generally accepted
accounting principles.79 These refer to accounting concepts, measurement techniques,
and standards of presentation in a companys financial statements, and are not rooted in
laws of nature, as are the laws of physical science, for these are merely developed and
continually modified by local and international regulatory accounting bodies.80 To state
otherwise and recognize such asset account as a vested right is to limit the taxing power
of the State. Unlimited, plenary, comprehensive and supreme, this power cannot be
unduly restricted by mere creations of the State.
That the unutilized input VAT would also have an unequal effect on businesses -- some
with low, others with high, input-output ratio -- is not a legal ground for invalidating the
law. Profit margins are a variable of sound business judgment, not of legal doctrine. The
law applies equally to all businesses; it is up to each of them to determine the best
formula for selling their goods or services in the face of stiffer competition. There is,
thus, no violation of the equal protection clause. If the implementation of the 70 percent
cap would cause an ad infinitum deferment of input taxes or an unequal effect upon
different types of businesses with varying profit margins and capital requirements, then
the remedy would be an amendment of the law -- not an unwarranted and outright
declaration of unconstitutionality.
The matter of business establishments shouldering 30 percent of output tax and
remitting the amount, as computed, to the government is in effect imposing a tax that is

equivalent to a maximum of 3 percent of gross sales or revenues.81 This imposition is

arguably another tax on gross -- not net -- income and thus a deviation from the concept
of VAT as a tax on consumption; it also assumes that sales or revenues are on cash basis
or, if on credit, given credit terms shorter than a quarter of a year. However, such
additional imposition and assumption are also arguably within the power of Congress to
make. The State may in fact choose to impose an additional 3 percent tax on gross
income, in lieu of the 70 percent cap, and thus subject the income of businesses to two
types of taxes -- one on gross, the other on net. These impositions may constitute double
taxation,82 which is not constitutionally proscribed.83
Besides, prior to the amendments introduced by the BCC, already extant in the Tax Code
was a 3 percentpercentage tax on the gross quarterly sales or receipts of persons who
were not VAT-registered, and whose sales or receipts were exempt from VAT.84 This is
another type of tax imposed by the Tax Code, in addition to the tax on their respective
incomes. No question as to its validity was raised before; none is being brought now.
More important, there is a presumption in favor of constitutionality,85 "rooted in the
doctrine of separation of powers which enjoins upon the three coordinate departments of
the Government a becoming courtesy for each others acts."86
As to the argument that Section 8 of RA 9337 contravenes Section 1 of Article III and
Section 20 of Article II of the 1987 Constitution, I respectfully disagree.
One, petitioners have not been denied due process or, as I have illustrated earlier, equal
protection. In the exercise of its inherent power to tax, the State validly interferes with
the right to property of persons, natural or artificial. Those similarly situated are affected
in the same way and treated alike, "both as to privileges conferred and liabilities
enforced."87
RA 9337 was enacted precisely to achieve the objective of raising revenues to defray the
necessary expenses of government.88 The means that this law employs are reasonably
related to the accomplishment of such objective, and not unduly oppressive. The
reduction of tax credits is a question of economic policy, not of legal perlustration. Its
determination is vested in Congress, not in this Court. Since the purpose of the law is to
raise revenues, it cannot be denied that the means employed is reasonably related to
the achievement of that purpose. Moreover, the proper congressional procedure for its
enactment was followed;89 neither public notice nor public hearings were denied.
Two, private enterprises are not discouraged. Tax burdens are never delightful, but with
the imposition of the 70 percent cap, there will be an assurance of a steady cash flow to
the government, which can be translated to the production of improved goods, rendition
of better services, and construction of better facilities for the people, including all private
enterprises. Perhaps, Congress deems it best to make our economy depend more on
businesses that are easier to monitor, so there will be a more efficient collection of taxes.

Whatever is expected of the outcome of the law, or its wisdom, should be the sole
responsibility of the representatives chosen by the electorate.
The profit margin rates of various industries generally do not change. However, the profit
margin figures do, because these are obviously monetary variables that affect business,
along with the level of competition, the quality of goods and services offered, and the
cost of their production. And there will inevitably be a conscious desire on the part of
those who engage in business and those who consume their output to adapt or adjust
accordingly to any congressional modification of the VAT system.
In addition, it is contended that the VAT should be proportional in nature. I submit that
this proportionality pertains to the rate imposable, not the credit allowable. Private
enterprises are subjected to a proportional VAT rate, but VAT credits need not be. The
VAT is, after all, a human concept that is neither immutable nor invariable. In fact, it has
changed after it was adopted as a system of indirect taxation by other countries. Again
unlike the laws of physical science, the VAT system can always be modified to suit
modern fiscal demands. The State, through the Legislative Department, may even
choose to do away with it and revert to our previous system of turnover taxes, sales
taxes and compensating taxes, in which credits may be disallowed altogether.
Not expensed, but amortized over its useful life, is capital equipment, which is purchased
or treated as capital leases by private enterprises. Aimed at achieving the twin
objectives of profitability and solvency, such purchase or lease is a matter of prudence in
business decision-making.
Hence, business judgments, sales volume, and their effect on competition are for
businesses to determine and for Congress to regulate -- not for this Court to interfere
with, absent a clear showing that constitutional provisions have been violated. Tax
collection and administrative feasibility are for the executive branch to focus on, again
not for this Court to dwell upon.
The Transcript of the Oral Arguments on July 14, 2005 clearly point out in a long line of
relevant questioning that, absent a violation of constitutional provisions, the Court
cannot interfere with the 70 percent cap, the 5 percent final withholding tax, and the 60month amortization, there being other extra-judicial remedies available to petitioners,
thus:
"Atty. Baniqued: But if your profit margin is low as i[n] the case of the petroleum dealers,
x x x then we would have a serious problem, Your Honor.
"Justice Panganiban: Isnt the solution to increase the price then?
"Atty. Baniqued: If you increase the price which you can very well do, Your Honor, then
that [will] be deflationary and it [will] have a cascading effect on all other basic
commodities[, especially] because what is involved here is petroleum, Your Honor.

"Justice Panganiban: That may be true[,] but its not unconstitutional?

"Atty. Baniqued: That may be true, Your Honor, but the very limitation of the [seventy
percent] input [VAT], when applied to the case of the petroleum dealers[,] is
oppressive[.] [I]ts unjust and its unreasonable, Your Honor.
"Justice Panganiban: But it can be passed as a part of sales, sales costs rather.
"Atty. Baniqued: But the petroleum dealers here themselves interrupted
"Justice Panganiban: In your [b]alance [s]heet, it could be reflected as Cost of Sales and
therefore the price will go up?
"Atty. Baniqued: Even if it were to be reflected as part of the Cost of Sales, Your Honor,
the [input VAT] that you cannot claim, the benefit to you is only to the extent of the
corporate tax rate which is 32 now 35 [percent].
"Justice Panganiban: Yes.
"Atty. Baniqued: Its not 100 [percent] credi[ta]bility[,] unlike if it were applied against
your [output VAT], you get to claim 100 [percent] of it, Your Honor.
"Justice Panganiban: That might be true, but we are talking about whether that particular
provision would be unconstitutional. You say its oppressive, but you have a remedy, you
just pass it on to the customer. I am not sayin[g] its good[.] [N]either am I saying its
wise[.] [A]ll Im talking about is, whether its constitutional or not.
"Atty. Baniqued: Yes, in fact we acknowledge, Your Honor, that that is a remedy available
to the petroleum dealers, but considering the impact of that limitation[,] and were just
talking of the 70 [percent cap] on [input VAT] in the level of the petroleum dealers. Were
not even talking yet of the limitation on the [input VAT] available to the manufacturers,
so, what if they pass that on as well?
"Justice Panganiban: Yes.
"Atty. Baniqued: Then, it would complicate interrupted
"Justice Panganiban: What I am saying is, there is a remedy, which is business in
character. The mere fact that the government is imposing that [seventy percent] cap
does not make the law unconstitutional, isnt it?
"Atty. Baniqued: It does, Your Honor, if it can be shown. And as we have shown, it is
oppressive and unreasonable, it is excessive, Your Honor interrupted
"Justice Panganiban: If you have no way of recouping it. If you have no way of recouping
that amount, then it will be oppressive, but you have a business way of recouping it[.] I
am saying that, not advising that its good. All I am saying is, is it constitutional or not[?]
Were not here to determine the wisdom of the law, thats up for Congress. As pointed

out earlier, if the law is not wise, the law makers will be changed by the people[.] [T]hat
is their solution t[o] the lack of wisdom of a law. If the law is unconstitutional[,] then the
Supreme Court will declare it unconstitutional and void it, but[,] in this case[,] there
seems to be a business remedy in the same manner that Congress may just impose that
tax straight without saying its [VAT]. If Congress will just say all petroleum will pay 3
[percent] of their Gross Sales, but you dont bear that, you pass that on, isnt it?
"Atty. Baniqued: We acknowledge your concern, Your Honor, but we should not forget
that when the petroleum dealers pass these financial burden or this tax differential to
the consumers, they themselves are consumers in their own right. As a matter of fact,
they filed this case both as petroleum dealer[s] and as taxpayers. If they pass if on, they
themselves would ultimately bear the burden[, especially] in increase[d] cost of
electricity, land transport, food, everything, Your Honor.
"Justice Panganiban: Yes, but the issue here in this Court, is whether that act of Congress
is unconstitutional.
"Atty. Baniqued: Yes, we believe it is unconstitutional, Your Honor.
"Justice Panganiban: You have a right to complain that it is oppressive, it is excessive, it
burdens the people too much, but is it unconstitutional?
"Atty. Baniqued: Besides, passing it on, Your Honor, may not be as simple as it may
seem. As a matter of fact, at the strike of midnight on June 30, when petroleum prices
were being changed upward, the [s]ecretary of [the] Department of Energy was going
around[.] [H]e was seen on TV going around just to check that prices dont go up. And as
a matter of fact, he had pronouncements that, the increase in petroleum price should
only be limited to the effect of 10 [percent] E-VAT.
"Justice Panganiban: Its becaus[e] the implementing rules were not clear and were not
extensive enough to cover how much really should be the increase for various oil
products, refined oil products. Its up for the dealers to guess, and the dealers were
guessing to their advantage by saying plus 10 [percent] anyway, right?
"Atty. Baniqued: In fact, the petroleum dealers, Your Honors, are not only faced with
constitutional issues before this Court. They are also faced with a possibility of the
Department of Energy not allowing them to pass it on[,] because this would be an
unreasonable price increase. And so, they are being hit from both sidesinterrupted
"Justice Panganiban: Thats why I say, that there is need to refine the implementing rules
so that everyone will know, the customers will know how much to pay for gasoline, not
only gasoline, gasoline, and so on, diesel and all kinds of products, so therell be no
confusion and therell be no undue taking advantage. There will be a smooth
implementation[,] if the law were to be upheld by the Court. In your case, as I said, it
may be unwise to pass that on to the customers, but definitely, the dealers will not bear

that [--] to suffer the loss that you mentioned in your consolidated balance sheets.
Certainly, the dealers will not bear that [cost], isnt it?
"Atty. Baniqued: It will be a very hard decision to make, Your Honor.
"Justice Panganiban: Why, you will not pass it on?
"Atty. Baniqued: I cannot speak for the dealers. interrupted.
"Justice Panganiban: As a consumer, I will thank you if you dont pass it on[;] but you or
your clients as businessm[e]n, I know, will pass it on.
"Atty. Baniqued: As I have said, Your Honor, there are many constraints on their ability to
do that[,] and that is why the first step that we are seeking is to seek redress from this
Honorable Court[,] because we feel that the imposition is excessive and oppressive..
interrupted
"Justice Panganiban: You can find redress here, only if you can show that the law is
unconstitutional.
"Atty. Baniqued: We realized that, Your Honor.
"Justice Panganiban: Alright. Lets talk about the 5 [percent] [d]epreciation rate, but that
applies only to the capital equipment worth over a million?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: And that doesnt apply at all times, isnt it?
"Atty. Baniqued: Well
"Justice Panganiban: That doesnt at all times?
"Atty. Baniqued: For capital goods costing less than 1 million, Your Honor, then.
"Justice Panganiban: That will not apply?
"Atty. Baniqued: That will not apply, but you will have the 70 [percent] cap on input
[VAT], Your Honor.
"Justice Panganiban: Yes, but we talked already about the 70 [percent].
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: When you made your presentation on the balance sheet, it is as if
every capital expenditure you made is subject to the 5 [percent,] rather the [five year]
depreciation schedule[.] [T]hats not so. So, the presentation you made is a little
inaccurate and misleading.

"Atty. Baniqued: At the start of our presentation, Your Honor[,] we stated clearly that this
applies only to capital goods costing more than one [million].
"Justice Panganiban: Yes, but you combined it later on with the 70 [percent] cap to show
that the dealers are so disadvantaged. But you didnt tell us that that will apply only
when capital equipment or goods is one million or more. And in your case, what kind of
capital goods will be worth one million or more in your existing gas stations?
"Atty. Baniqued: Well, you would have petroleum dealers, Your Honor, who would have[,]
aside from sale of petroleum[,] they would have their service centers[,] like[] to service
cars and they would have those equipments, they are, Your Honor.
"Justice Panganiban: But thats a different profit center, thats not from the sale of
"Atty. Baniqued: No, they would form part of their [VATable] sale, Your Honor.
Justice Panganiban: Its a different profit center[;] its not in the sale of petroleum
products. In fact the mode now is to put up super stores in huge gas stations. I do not
begrudge the gas station[.] [A]ll I am saying is it should be presented to us in
perspective. Neither am I siding with the government. All I am saying is, when I saw your
complicated balance sheet and mathematics, I saw that you were to put in all the time
the depreciation that should be spread over [five] years. But we have agreed that that
applies only to capital equipment [-- ]not to any kind of goods [--] but to capital
equipment costing over 1 million pesos.
"Atty. Baniqued: Yes, Your Honor, we apologize if it has caused a little confusion.
"Justice Panganiban: Again the solution could b[e] to pass that on, because thats an
added cost, isnt it?
"Atty. Baniqued: Well, yes, you can pass it on.
"Justice Panganiban: I am not teaching you, I am just saying that you have a remedy I
am not saying either that the remedy is wise or should be done, because[,] as a
consumer[,] I wouldnt want that to be done to me.
"Atty. Baniqued: We realiz[e] that, Your Honor, but the fact remain[s] that whether it is in
the hands of the petroleum dealers or in the hands of the consumers[,] if this imposition
is unreasonable and oppressive, it will remain so, even after it is passed on, Your Honor.
"Justice Panganiban: Alright. Lets go to the third. The 5 [percent] withholding tax, [f]inal
[w]ithholding [t]ax, but this applies to sales to government?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: So, you can pass on this 5 [percent] to the [g]overnment. After all,
that 5 [percent] will still go back to the government.

"Atty. Baniqued: Then it will come back to haunt us, Your Honor..
"Justice Panganiban: Why?
"Atty. Baniqued: By way of, for example sales to NAPOCOR or NTC. interrupted
"Justice Panganiban: Sales of petroleum products.
"Atty. Baniqued: in the case of NTC, Your Honor, it would come back to us by way
of increase[d] cost, Your Honor.
"Justice Panganiban: Okay, lets see. You sell, lets say[,] your petroleum products to the
Supreme Court, as a gas station that sells gasoline to us here. Under this law, the 5
[percent] withholding tax will have to be charged, right?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: You will charge that[.] [T]herefore[,] the sales to the Supreme Court
by that gas station will effectively be higher?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: So, the Supreme Court will pay more, you will not [be] going to
[absorb] that 5 [percent], will you?
"Atty. Baniqued; If it is passed on, Your Honor, thats of course we agree. Interrupted.
"Justice Panganiban: Not if, you can pass it on.
"Atty. Baniqued: Yes, we can. interrupted
"Justice Panganiban: There is no prohibition to passing it on[.] [P]robably the gas station
will simply pass it on to the Supreme Court and say[,] well[,] there is this 5 [percent] final
VAT on you so[,] therefore, for every tank full you buy[,] well just have to [charge] you 5
[percent] more. Well, the Supreme Court will probably say, well, anyway, that 5 [percent]
that we will pay the gas dealer, will be paid back to the government, isnt it[?] So, how
[will] you be affected?
"Atty. Baniqued: I hope the passing on of the burden, Your Honor, doesnt come back to
party litigants by way of increase in docket fees, Your Honor.
"Justice Panganiban: But thats quite another m[a]tter, though(laughs) [W]hat I am
saying, Mr. [C]ounsel is, you still have to show to us that your remedy is to declare the
law unconstitutional[,] and its not business in character.
"Atty. Baniqued: Yes, Your Honor, it is our submission that this limitation in the input [VAT]
credit as well as the amortization.

"Justice Panganiban: All you talk about is equal protection clause, about due process,
depreciation of property without observance of due process[,] could really be a remedy
than a business way.
"Atty. Baniqued: Business in the level of the petroleum dealers, Your Honor, or in the
level of Congress, Your Honor.
"Justice Panganiban: Yes, you can pass them on to customers[,] in other words. Its the
customers who should [complain].
"Atty. Baniqued: Yes, Your Honor interrupted
"Justice Panganiban: And perhaps will not elect their representatives anymore[.]
"Atty. Baniqued: Yes, Your Honor..
"Justice Panganiban: For agreeing to it, because the wisdom of a law is not for the
Supreme Court to pass upon.
"Atty. Baniqued: It just so happens, Your Honor, that what is [involved] here is a
commodity that when it goes up, it affects everybody.
"Justice Panganiban: Yes, inflationary and inflammatory.
"Atty. Baniqued: just like what Justice Puno says it shakes the entire economic
foundation, Your Honor.
"Justice Panganiban: Yes, its inflationary[,] brings up the prices of everything
"Atty. Baniqued: And it is our submission that[,] if the petroleum dealers cannot absorb it
and they pass it on to the customers, a lot of consumers would neither be in a position to
absorb it too and that[s] why we patronize, Your Honor.
"Justice Panganiban: There might be wisdom in what youre saying, but is that
unconstitutional?
"Atty. Baniqued: Yes, because as I said, Your Honor, there are even constraints in the
petroleum dealers to pass it on, and we[]re not even sure whether.interrupted
"Justice Panganiban: Are these constraints [--] legal constraints?
"Atty. Baniqued: Well, it would be a different story, Your Honor[.] [T]hats something we
probably have to take up with the Department of Energy, lest [we may] be accused of
..
"Justice Panganiban: In other words, thats your remedy
[--] to take it up with the Department of Energy

"Atty. Baniqued: ..unreasonable price increases, Your Honor.

"Justice Panganiban: Not for us to declare those provisions unconstitutional.
"Atty. Baniqued: We, again, wish to stress that the petroleum dealers went to this
Court[,] both as businessmen and as consumers. And as consumers, [were] also going
to bear the burden of whatever they themselves pass on.
"Justice Panganiban: You know[,] as a consumer, I wish you can really show that the laws
are unconstitutional, so I dont have to pay it. But as a magistrate of this Court, I will
have to pass upon judgment on the basis of [--] whether the law is unconstitutional or
not. And I hope you can in your memorandum show that.
"Atty. Baniqued: We recognized that, Your Honor." (boldface supplied, pp. 386-410).
Amendments on Other Taxes and Administrative Matters. Finally, the BCCs amendments
regarding other taxes90 are both germane in a legal sense and reasonably necessary in
an economic sense. This fact is evident, considering that the proposed changes in the
VAT law will have inevitable implications and repercussions on such taxes, as well as on
the procedural requirements and the disposition of incremental revenues, in the Tax
Code. Either mitigating measures91 have to be put in place or increased rates imposed,
in order to achieve the purpose of the law, cushion the impact of increased taxation, and
still maintain the equitability desired of any other revenue law.92 Directly related to the
proposed VAT changes, these amendments are expected also to have a salutary effect
on the national economy.
The no-amendment rule93 in the Constitution was not violated by the BCC, because no
completely new provision was inserted in the approved bill. The amendments may be
unpopular or even work hardship upon everyone (this writer included). If so, the remedy
cannot be prescribed by this Court, but by Congress.
Rejecting Non-Conflicting
Provisions
Fourth, the BCC may choose neither to adopt nor to consolidate the versions presented
to it by both houses of Congress, but instead to reject non-conflicting provisions in those
versions. In other words, despite the lack of conflict in them, such provisions are still
eliminated entirely from the consolidated bill. There may be a constitutional problem
here.
The no pass-on provisions in the congressional bills are the only item raised by
petitioners concerning deletion.94As I have already mentioned earlier, these provisions
were in conflict. Thus, the BCC exercised its prerogative to remove them. In fact,
congressional rules give the BCC the power to reconcile disagreeing provisions, and in

the process of reconciliation, to delete them. No other non-conflicting provision was

deleted.
At this point, and after the extensive discussion above, it can readily be seen no nonconflicting provisions of the E-VAT bills were rejected indiscriminately by the BCC.
Approving and Inserting
Completely New Provisions
Fifth, the BCC had the option of inserting completely new provisions not found in any of
the provisions of the bills of either house of Congress, or make and endorse an entirely
new bill as a substitute. Taking this option may be a blatant violation of the Constitution,
for not only will the surreptitious insertion or unwarranted creation contravene the
"origination" principle; it may likewise desecrate the three-reading requirement and the
no-amendment rule.95
Fortunately, however, the BCC did not approve or insert completely new provisions.
Thus, no violation of the Constitution was committed in this regard.
Summary
The enrolled bill doctrine is said to be conclusive not only as to the provisions of a law,
but also to its due enactment. It is not absolute, however, and must yield to mandatory
provisions of the 1987 Constitution. Specifically, this Court has the duty of striking down
provisions of a law that in their enactment violate conditions, restrictions or limitations
imposed by the Constitution.96 The Bicameral Conference Committee (BCC) is a mere
creation of Congress. Hence, the BCC may resolve differences only in conflicting
provisions of congressional bills that are referred to it; and it may do so only on the
condition that such resolution does not violate the origination, the three-reading, and the
no-amendment rules of the Constitution.
In crafting RA 9337, the BCC opted to reconcile the conflicting provisions of the Senate
and House bills, particularly those on the 70 percent cap on input tax; the 5 percent final
withholding tax; percentage taxes on domestic carriers, keepers of garages and
international carriers; franchise taxes; amusement taxes; excise taxes on manufactured
oils and other fuels; registration requirements; issuance of receipts or sales or
commercial invoices; and disposition of incremental revenues. To my mind, these
changes do not violate the origination or the germaneness principles.
Neither is there undue delegation of legislative power in the standby authority given by
Congress to the President. The law is complete, and the standards are fixed. While I
concur with the ponencias view that the President was given merely the power to
ascertain the facts to bring the law into operation -- clearly an administrative, not a
legislative, function -- I stress that the finance secretary remains the Chief Executives
alter ego, not an agent of Congress.

The BCC exercised its prerogative to delete the no pass-on provisions, because these
were in conflict. I believe, however, that it blatantly violated the origination and the
germaneness principles when it inserted provisions not found in the House versions of
the E-VAT Law: (1) increasing the tax rates on domestic, resident foreign and nonresident
foreign corporations; (2) increasing the tax credit against taxes due from nonresident
foreign corporations on intercorporate dividends; and (3) reducing the allowable
deduction for interest expense. Hence, I find these insertions unconstitutional.
Some have criticized the E-VAT Law as oppressive to our already suffering people. On the
other hand, respondents have justified it by comparing it to bitter medicine that patients
must endure to be healed eventually of their maladies. The advantages and
disadvantages of the E-VAT Law, as well as its long-term effects on the economy, are
beyond the reach of judicial review. The economic repercussions of the statute are policy
in nature and are beyond the power of the courts to pass upon.
I have combed through the specific points raised in the Petitions. Other than the three
items on income taxes that I respectfully submit are unconstitutional, I cannot otherwise
attribute grave abuse of discretion to the BCC, or Congress for that matter, for passing
the law.
"[T]he Court -- as a rule -- is deferential to the actions taken by the other branches of
government that have primary responsibility for the economic development of our
country."97 Thus, in upholding the Philippine ratification of the treaty establishing the
World Trade Organization (WTO), Taada v. Angara held that "this Court never forgets
that the Senate, whose act is under review, is one of two sovereign houses of Congress
and is thus entitled to great respect in its actions. It is itself a constitutional body,
independent and coordinate, and thus its actions are presumed regular and done in good
faith. Unless convincing proof and persuasive arguments are presented to overthrow
such presumption, this Court will resolve every doubt in its favor."98 As pointed our
inCawaling Jr. v. Comelec, the grounds for nullity of the law "must be beyond reasonable
doubt, for to doubt is to sustain."99 Indeed, "there must be clear and unequivocal
showing that what the Constitutions prohibits, the statute permits."100
WHEREFORE, I vote to GRANT the Petitions in part and to declare Sections 1, 2, and 3 of
Republic Act No. 9337 unconstitutional, insofar as these sections (a) amend the rates of
income tax on domestic, resident foreign, and nonresident foreign corporations; (b)
amend the tax credit against taxes due from nonresident foreign corporations on
intercorporate dividends; and (c) reduce the allowable deduction for interest expense.
The other provisions are constitutional, and as to these I vote to DISMISS the Petitions.
ARTEMIO V. PANGANIBAN
Associate Justice

Footnotes
1 235 SCRA 630, August 25, 1994; and 249 SCRA 628, October 30, 1995. The second
case is an en banc Resolution on the Motions for Reconsideration of the first case.
2 417 SCRA 503, December 10, 2003.
3 "[I]t is well settled that the enrolled bill doctrine is conclusive upon the courts as
regards the tenor of the measure passed by Congress and approved by the President."
Resins Inc. v. Auditor General, 134 Phil. 697, 700, October 29, 1968, per Fernando, J.,
later CJ.; (citing Casco Philippine Chemical Co., Inc. v. Gimenez, 117 Phil. 363, 366,
February 28, 1963, per Concepcin, J., later CJ.). It is a doctrine that flows as a corollary
to the separation of powers, and by which due respect is given by one branch of
government to the actions of the others. See Morales v. Subido, 136 Phil. 405, 412,
February 27, 1969.
Following Field v. Clark (143 US 649, 12 S.Ct. 495, February 29, 1892), such
conclusiveness refers not only to the provisions of the law, but also to its due enactment.
Mabanag v. Lopez Vito, 78 Phil. 1, 13-18, March 5, 1947.
"[T]he signing of a bill by the Speaker of the House and the Senate President and the
certification of the Secretaries of both [h]ouses of Congress that it was passed are
conclusive of its due enactment." Farias v. Executive Secretary, supra, p. 529, per
Callejo Sr., J.
4 Mabanag v. Lopez Vito, supra, p. 12.
5 1 of Rule 129 of the Rules of Court.
6 The United Kingdom has an uncodified Constitution, consisting of both written and
unwritten sources, capable of evolving to be responsive to political and social change,
and found partly in conventions and customs and partly in statute. Its Parliament has the
power to change or abolish any written or unwritten element of the Constitution. There is
neither separation of powers nor formal checks and balances. Every bill drafted has to be
approved by both the House of Commons and the House of Lords, before it receives the
Royal Assent and becomes an Act of Parliament. The House of Lords is the second
chamber that complements the work of the Commons, whose members are elected to
represent their constituents. The first is the House of Commons that alone may start bills
to raise taxes or authorize expenditures. Each bill goes through several stages in each
House. The first stage, called the first reading, is a mere formality. The second -- the
second reading -- is when general principles of the bill are debated upon. At the second
reading, the House may vote to reject the bill. Once the House considers the bill, the
third reading follows. In the House of Commons, no further amendments may be made,
and the passage of the motion amounts to passage of the whole bill. The House of Lords,

however, may not amend a bill so as to insert a provision relating to taxation.

http://en.wikipedia.org/wiki/Constitution_of_the_United_Kingdom;
http://
www.oefre.unibe.ch/law/icl/uk00000_.html;
www.parliament.uk;
and
http://encyclopedia.thefreedictionary.com/British+Parliament (Last visited August 4,
2005, 11:30am PST).
7 See Dissenting Opinion of Puno, J. in Tolentino v. Secretary of Finance, supra, p. 818.
8 Cf. Francisco Jr. v. House of Representatives, 415 SCRA 44, November 10, 2003.
9 Tolentino v. Secretary of Finance, supra.
10 2nd paragraph, 1 of Article VIII of the 1987 Constitution.
11 Tolentino v. Secretary of Finance, supra.
12 Arroyo v. De Venecia, 343 Phil. 42, 61-62, August 14, 1997, per Mendoza, J.
13 These refer to House Bill Nos. 3555 & 3705; and Senate Bill No. 1950.
14 26(2) of Article VI of the 1987 Constitution.
15 "The purpose for which three readings on separate days is required is said to be twofold: (1) to inform the members of Congress of what they must vote on and (2) to give
them notice that a measure is progressing through the enacting process, thus enabling
them and others interested in the measure to prepare their positions with reference to
it." Tolentino v. Secretary of Finance, supra, p. 647, October 30, 1995, per Mendoza, J.
16 24 of Article VI of the 1987 Constitution.
17 24 of Article VI of the 1987 Constitution.
The power of the Senate to propose or concur with amendments is, apparently, without
restriction. By virtue of this power, the Senate can practically rewrite a bill that is
required to come from the House and leave only a trace of the original bill. See Flint v.
Stone Tracy Co., 220 US 107, 31 S.Ct. 342, March 13, 1911.
18 24 of Article VI of the 1987 Constitution.
19 Tolentino v. Secretary of Finance, supra, p. 661, August 25, 1994.
20 Garner (ed. in chief), Blacks Law Dictionary (8th ed., 2004), p. 708.
21 Statsky, Wests Legal Thesaurus/Dictionary (1986), p. 348.
22 To argue that the raising of revenues makes the non-VAT provisions of a VAT bill
automatically germane is to bring legal analysis within the penumbra of economic
scrutiny. The burden or impact of any tax depends on the relative elasticities of supply

and demand and is chiefly a matter of policy confined within the august halls of
Congress. See Pindyck and Rubinfeld, Microeconomics (5th ed., 2003), pp. 314-317.
23 Exxon Mobil Corp. v. Allapattah Services, Inc., 125 S.Ct. 2611, 2622, June 23, 2005,
per Kennedy, J.
24 Tolentino v. Secretary of Finance, supra, p. 663, August 25, 1994. See Cruz, Philippine
Political Law(2002), p. 154.
25 Tolentino v. Secretary of Finance, supra, August 25, 1994, per Mendoza, J.
26 Cruz, Philippine Political Law (2002), p. 155.
27 Tolentino v. Secretary of Finance, supra, August 25, 1994.
28 Cruz, Philippine Political Law (2002), p. 111.
29 Tolentino v. Secretary of Finance, supra, p. 668, August 25, 1994.
There is no allegation in any of the memoranda submitted to this Court that the
consolidated bill was not approved. In fact, both houses of Congress voted separately
and majority of each house approved it.
30 On the one hand, 1-3 of House Bill (HB) No. 3555 seek to amend 106, 107 & 108
the Tax Code by increasing the VAT rate to 12% on every sale, barter or exchange of
goods or properties; importation of goods; and sale or exchange of services, including
the use or lease of properties.
1-3 of HB 3705, on the other, seek to amend 106, 107 & 108 the Tax Code by also
increasing the VAT rate to 12% on every sale, barter or exchange of goods or properties;
importation of goods; and sale or exchange of services, including the use or lease of
properties, but decreasing such rate to 8% on every importation of certain goods; 6% on
the sale, barter or exchange of certain locally manufactured goods; and 4% on the sale,
barter or exchange, as well as importation, of petroleum products subject to excise tax
and raw materials to be used in their manufacture (subject to subsequent increases of
such reduced rates), and on the gross receipts derived from services rendered on the
sale of generated power.
The Tax Code referred to in this case is RA 8424, otherwise known as the "Tax Reform Act
of 1997."
31 4-5 of Senate Bill (SB) No. 1950 seek to amend 106 & 108 of the Tax Code by
retaining the VAT rate of 10% on every sale, barter or exchange of goods or properties;
and on the sale or exchange of services, including the use or lease of properties, and the
sale of electricity by generation, transmission, and distribution companies.

32 4-6 of the consolidated bill amending 106-108 of the Tax Code, respectively.
Conference Committee Report on HBs 3555 & 3705, and SB 1950, pp. 4-7.
The predetermined factual scenario in the above-cited sections of the consolidated bill
also appears in 4-6 of Republic Act (RA) No. 9337, amending the same provisions of the
Tax Code. Mathematically, it is expressed as follows:
VAT Collection > 2.8%
GDP
or
National Government Deficit > 1.5%
GDP
33 A negative budget surplus, or an excess of expenditure over revenues, is a budget
deficit. Dornbusch, Fischer, and Startz, Macroeconomics (9th ed., 2005), p. 231.
34 GDP refers to the value of all goods and services produced domestically; the sum of
gross value added of all resident institutional units engaged in production (plus any
taxes, and minus any subsidies, on products not included in the values of their outputs).
www.nscb.gov.ph/sna/default.asp (Last visited July 14, 2005 10am PST).
35 See Pelaez v. Auditor General, 122 Phil. 965, 974, December 24, 1965.
36 The acts of retroactively implementing the 12 percent VAT rate, should the finance
secretary be able to make recommendation only weeks or months after the end of fiscal
year 2005, or reverting to 10 percent if both conditions are not met, are best addressed
to the political branches of government.
The following excerpts from the Transcript of the Oral Arguments in GR Nos. 168461,
168463, 168056, and 168207, held on July 14, 2005 at the Supreme Court Session Hall,
are instructive on the position of petitioners:
"Atty. Gorospe: [Its] supposed to be 2005, Your Honor, but apparently, it [will] be
impossible to determine GDP the first day of 2006, Your Honor." (p. 57);
xxx
"Justice Panganiban: Now [lets see] when it is possible then to determine this formula. It
cannot be on the first day of January 2006, because the year [2005] ended just the
midnight before, isnt it?
"Atty. Gorospe: Yes, Your Honor.

"Justice Panganiban: x x x if its only determined on March 1[,] then how can the law
become effective January 1[.] In other words, how will the [people be] able to pay the tax
if ever that formula is exceeded x x x?" (pp. 59-60);
xxx
"Atty. Gana: Well, x x x it would take a grace period of 6 to 8 months[,] because
obviously, determination could not be made on January 1, 2006. Yes, they were under
the impression that at the earliest it would take 30 days.
"Justice Panganiban: Historically, when [will] these figures [be] available[:] the GDP,
[VAT] collection?" (p. 192);
xxx
"Justice Panganiban: But certainly not on January 1. Therefore, by January 1, people
would not know whether the rate would be increased or not, even if there is no
discretion?
"Atty. Gana: Thats true, Your Honor, even if there is no discretion.
"Justice Panganiban: It will take weeks, or months to be able to determine that?
"Atty. Gana: Well, they anticipated it, would take at most by March." (p. 193); and
xxx
"Justice Panganiban: March, I will ask the government later on when they argue.
"Atty. Gana: As early as January but not later than 60 to 90 days." (boldface supplied; p.
194).
37
38regulations how much they [would] be charged, how much should gasoline stations
charge in addition to their correct prices, how much carriers should charge[,] so there
[would] be no confusion.
"Usec. Bonoan: Yes, Your Honor." (boldface supplied; pp. 665-666).
37 Using available statistics, it is approximated that the 24/5 percent has been reached.
VAT collection (in million pesos) for the first quarter alone of 2004 is 83,542.83, or 83
percent of revenue collections amounting to 100,654.01. Divided into GDP of 13,053, the
quotient
is
already
6.4
percent.
http://www.nscb.gov.ph/sna/2005/1stQ2005/2005per1.asp; and the 2003 Bureau of
Internal Revenue (BIR) Annual Report found on www.bir.gov.ph (Last visited July 14, 2005,
10:45am PST).

[38] Besides, the use of the word "shall" in 106(A), 107(A) & 108(A) of the Tax Code, as
amended respectively by 4, 5 & 6 of RA 9337, is mandatory, imperative and
compulsory. See Agpalo, Statutory Construction (4th ed., 1998), p. 333.
39 See Separate Opinion (Concurring and Dissenting) of Panganiban, J., in Southern
Cross Cement Corp. v. Philippine Cement Manufacturers Corp., GR No. 158540, August 3,
2005, p. 31.
40 Escudero Memorandum, pp. 38-39.
GDP data are far from perfect measures of either economic output or welfare. There are
three major problems: (1) some outputs are poorly measured because they are not
traded in the market, and government services are not directly priced by such market;
(2) some activities measured as additions to GDP in fact only represent the use of
resources in order to avoid crime or risks to national security; and (3) it is difficult to
account correctly for improvements in the quality of goods. Dornbusch, Fischer, and
Startz,Macroeconomics (9th ed., 2005), pp. 35-36.
41 Farias v. Executive Secretary, 417 SCRA, 503, 530, December 10, 2003.
42 "Any meaningful change in the method and procedures of Congress or its committees
must x x x be sought in that body itself." Tolentino v. Secretary of Finance, supra, p. 650,
October 30, 1995, per Mendoza, J.
43 The necessity, desirability or expediency of a law must be addressed to Congress as
the body that is responsible to the electorate, for "legislators are the ultimate guardians
of the liberties and welfare of the people in quite as great a degree [as the] courts."
Tolentino v. Secretary of Finance, supra, p. 650, October 30, 1995, per Mendoza, J.;
(citing Missouri, K. & T. Ry. Co. v. May, 194 US 267, 270, 24 S.Ct. 638, 639, May 2, 1904,
per Holmes, J.)
44 Farias v. Executive Secretary, 417 SCRA, 503, 524, December 10, 2003.
45 Flint v. Stone Tracy Co., 220 US 107, 167, 31 S.Ct. 342, 355, March 13, 1911, per Day,
J.
46 16(3) of Article VI of the 1987 Constitution.
"Parliamentary rules are merely procedural, and with their observance, the courts have
no concern. They may be waived or disregarded by the legislative body." Arroyo v. De
Venecia, supra, p. 61, August 14, 1997, per Mendoza, J.; (citing Osmea Jr. v. Pendatun,
109 Phil 863, 870-871, October 28, 1960, per Bengzon, J.).
47 HBs 3555 & 3705 do not contain any provision that seeks to revise non-VAT provisions
of the Tax Code, but SB 1950 has 1-3 that seek to amend the rates of income tax on
domestic, resident foreign and nonresident foreign corporations at 35% (30% in 2009),

with a tax credit on intercorporate dividends at 20% (15% in 2009); and to reduce the
allowable deductions for interest expense by 42% (33% in 2009) of the interest income
subject to final tax.
48 The amendments to income taxes also partake of the nature of taxation without
representation. As I will discuss in the succeeding paragraphs of this Opinion, they did
not emanate from the House of Representatives that, under 24 of Article VI of the 1987
Constitution, is the only body from which revenue bills should exclusively originate.
49 Mamalateo, Philippine Income Tax (2004), p. 1.
50 Commissioner of Internal Revenue v. American Express International, Inc. (Philippine
Branch), GR No. 152609, p. 20, June 29, 2005, per Panganiban, J. See Deoferio Jr. &
Mamalateo, The Value Added Tax in the Philippines (2000), p. 36.
51 De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 92 & 132.
52 Mamalateo, Philippine Income Tax (2004), p. 379.
53 Vitug, Tax Law and Jurisprudence (2nd ed., 2000), p. 188.
54 Mamalateo, Philippine Income Tax (2004), p. 380.
55 De Leon, The Law on Transfer and Business Taxation with Illustrations, Problems, and
Solutions (1998), pp. 195-196 & 222-224.
56 Mamalateo, Philippine Income Tax (2004), p. 173.
57 See 78 of Revenue Regulations No. 2-1940, recommended by Bibiano L. Meer, then
Collector of Internal Revenue, and promulgated by Manuel Roxas, then Secretary of
Finance, later President of the Republic of the Philippines, on February 11, 1941, XXXIX
OG 18, 325.
58 Mamalateo, Philippine Income Tax (2004), p. 196.
59 RA 8424 refers to the Tax Reform Act of 1997.
60 The 42 percent reduction rate under 3 of RA 9337, amending 34(B)(1) of the Tax
Code, is derived by first subtracting the 20 percent tax on interest income from the
increased tax rate of 35 percent imposed on domestic, resident foreign, and nonresident
foreign corporations, and then dividing the difference obtained by the increased rate.
Hence, it is computed as follows:
35% - 20% = 15%
15% : 35% = 42%, the amount of reduction.
61 1-3 of HB 3705.

62 5 of SB 1950. There seems to be a discrepancy between the Conference Committee

Report and the various pleadings before this Court. While such report, attaching a copy
of the bill as reconciled and approved by its conferees, as well as the report submitted by
the Senates Committee on Ways & Means to the Senate President on March 7, 2005,
show that SB 1950 does not contain a no-pass on provision, the petitioners and
respondents show that it does (Pimentel Memorandum, Annex A showing a "Matrix on
the Disagreeing Provisions of the [VAT] Bills," pp. 9-11; Escudero Memorandum, p. 42;
and Respondents Memorandum, pp. 109-110). Notably, the qualified dissent of Senator
Joker Arroyo to the Bicameral Conference Report states that the Senate version prohibits
the power companies from passing on the VAT that they will pay.
63 4 of HB 3555 seeks to amend 110(A) of the Tax Code by limiting to 5% and 11% of
their respective total amounts the claim for input tax credit of capital goods, through
equal distribution of the amount of such claim over their depreciable lives; and of goods
and services other than capital goods, and goods purchased by persons engaged in retail
trade.
64 7 of SB 1950 seeks to amend 110 of the Tax Code by also limiting the claim for
input tax credit of goods purchased or imported for use in trade or business, through an
even depreciation or amortization over the month of acquisition and the 59 succeeding
months, if the aggregate acquisition cost of such goods exceeds P 660,000.
The depreciation or amortization in the amendments is referred to as a "spread-out" in
an unnumbered Revenue Memorandum Circular dated July 12, 2005, submitted to this
Court by public respondents in their Compliance dated August 16, 2005. Such spread-out
recognizes industries where capital assets are constructed or assembled.
65 No cap is found in HB 3705.
66 5 of HB 3555 seeks to amend 114 of the Tax Code by requiring that the VAT be
deducted and withheld by the government or by any of its political subdivisions,
instrumentalities or agencies -- including government-owned-and-controlled corporations
(GOCCs) -- before making any payment on account of each purchase of goods from
sellers and services rendered by contractors. The VAT deducted and withheld shall be at
the rates of 5% of the gross payment for the purchase of goods and 8% of the gross
receipts for services rendered by contractors on every sale or installment payment. The
VAT that is deducted and withheld shall be creditable against their respective VAT
liabilities -- 10.5%, in case of government public works contractors; and 12% of the
payments for the lease or use of properties or property rights to nonresident owners.
67 11 of SB 1950 seeks to amend 114 of the Tax Code by requiring that the VAT be
deducted and withheld by the government or by any of its political subdivisions,
instrumentalities or agencies -- including government-owned or -controlled corporations
(GOCCs) -- before making any payment on account of each purchase of goods from

sellers and services rendered by contractors. The VAT deducted and withheld shall be at
the rates of 5% of the gross payment for the purchase of goods and on the gross receipts
for services rendered by contractors, including public works contractors. The VAT that is
deducted and withheld shall be creditable against the VAT liability of the seller; and 10%
of the gross payment for the lease or use of properties or property rights to nonresident
owners.
68 Deoferio Jr. & Mamalateo, The Value Added Tax in the Philippines (2000), pp. 34-35 &
44.
69 http://explanation-guide.info/meaning/Maurice-Laur.html (Last visited August 23,
2005, 3:25pm PST).
70 This refers to a "tax on value added" -- TVA in French and VAT in English.
71 http://en.wikipedia.org/wiki/ Maurice-Laur (Last visited August 23, 2005, 3:20pm
PST).
72 The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and
168207, held on July 14, 2005 at the Supreme Court Session Hall, show that the act of
passing on to consumers is a mere cash flow problem, as agreed to by counsel for
petitioners in GR No. 168461:
"Justice Panganiban: So, the final consumer pays the tax?
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: The trade people in between the middlemen just take it as an input
and then [collect] it as output, isnt it?
Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: Its just a cash flow problem for them, essentially?
"Atty. Baniqued: Yes x x x." (p. 375).
73 The 5 percent final withholding tax may also be charged as part of a suppliers Cost of
Sales.
74 This refers to RA 8424, as amended.
75 In fact, 112(B) of the Tax Code, prior to and after its amendment by 10 of RA 9337,
does not at all prohibit the application of unused input taxes against other internal
revenue taxes. The manner of application is determined though by the BIR through
4.112-1(b) of Revenue Regulations No. 14-2005, otherwise known as the "Consolidated
VAT Regulations of 2005," dated June 22, 2005.

76 That the unutilized input VAT can be considered an ordinary and necessary expense
for which a corresponding deduction will be allowed against gross income under 34(A)
(1) of the Tax Code -- instead of a deferred asset -- is another matter to be adjudicated
upon in proper cases.
77 See United Paracale Mining Co. v. De la Rosa, 221 SCRA 108, 115, April 7, 1993.
78 The law referred to is not only the Tax Code, but also RA 9298, otherwise known as
the "Philippine Accountancy Act of 2004."
79 These are based on pronouncements of recognized bodies involved in setting
accounting principles. Greatest weight shall be given to their pronouncements in the
order listed below:
1. Securities and Exchange Commission (SEC);
2. Accounting Standards Council;
3. Standards issued by the International Accounting Standards Board (now Committee);
and
4. Accounting principles and practices for which there has been a long history of
acceptance and usage.
If there appears to be a conflict between any of the bodies listed above, the
pronouncements of the first listed body shall be applied. SEC Securities Regulation Code
Rule 68(1)(b)(iv) as amended, cited in Appendix C of Morales, The Philippine Securities
Regulation Code (Annotated), [2005], p. 578.
Recommended by the World Bank and the Asian Development Bank, and increasingly
recognized worldwide, international accounting standards (IAS) have been merely
adopted by Philippine regulatory bodies and accredited professional organizations. The
SEC, for instance, complies with the agreement among co-members of the International
Organization of Securities Commissions to adopt IAS in order to ensure high-quality and
transparent financial reporting, with full disclosure as a means to promote credibility and
efficiency in the capital markets. In implementing the General Agreement on Trade in
Services, the Professional Regulatory Board of Accountancy (PRBOA) of the Professional
Regulatory Commission supports the adoption of IAS. The Philippine Institute of Certified
Public Accountants, a member of the International Accounting Standards Committee
(IASC), also has the commitment to support the work of the IASC and uses best
endeavors to foster compliance with IAS. http://www.picpa.com.ph/adb/index.htm (Last
visited August 23, 2005, 3:15pm PST).
80 Meigs & Meigs, Accounting: The Basis for Business Decisions (1981), pp. 28 & 515.

Under 9(b) & (g) of RA 9298, the PRBOA shall supervise the practice of accountancy in
the Philippines and adopt measures -- such as the promulgation of accounting and
auditing standards, rules and regulations, and best practices -- that may be deemed
proper for the enhancement and maintenance of high professional, ethical, accounting,
and auditing standards that include international accounting and auditing standards and
generally accepted best practices.
81 The VAT is collected on each sale of goods or properties or upon the actual or
constructive receipt of consideration for services, starting from the production stage,
followed by the intermediate stages in the distribution process, and culminating with the
sale to the final consumer. This is the essence of a VAT; it is a tax on the value added,
that is, on the excess of sales over purchases. See Deoferio Jr. & Mamalateo, The Value
Added Tax in the Philippines (2000), pp. 33-34. With the 70 percent cap on output tax
that is allowable as an input tax credit, the remaining 30 percent becomes an outright
expense that is, however, immediately payable and remitted by the business
establishment to the government. This amount can never be recovered or passed on to
the consumer, but it can be an allowable deduction from gross income under 34(A)(1) of
the Tax Code. In effect, it is a tax computed by multiplying 30 percent to the 10 percent
VAT that is imposed on gross sales, receipts or revenues. It is not a tax on tax and,
mathematically, it is derived as follows:
30% x 10% = 3% of gross sales, receipts or revenues.
82 "Double taxation means taxing the same property [or subject matter] twice when it
should be taxed only once; that is, taxing the same person twice by the same
jurisdiction for the same thing." Commissioner of Internal Revenue v. Solidbank Corp.,
416 SCRA 436, November 25, 2003, per Panganiban, J.; (citing Afisco Insurance Corp. v.
CA, 361 Phil. 671, 687, January 25, 1999, per Panganiban, J.). See Commissioner of
Internal Revenue v. Bank of Commerce, GR No. 149636, pp. 17-18, June 8, 2005.
83 "The rule x x x is well settled that there is no constitutional prohibition against double
taxation." China Banking Corp. v. CA, 403 SCRA 634, 664, June 10, 2003, per Carpio, J.
Cruz, Constitutional Law (1998), p. 89.
84 116 of the Tax Code as amended.
85 "[C]ourts accord the presumption of constitutionality to legislative enactments, not
only because the legislature is presumed to abide by the Constitution[,] but also because
the judiciary[,] in the determination of actual cases and controversies[,] must reflect the
wisdom and justice of the people as expressed through their representatives in the
executive and legislative departments of the government." Angara v. Electoral
Commission, 63 Phil. 139, 158-159, July 15, 1936, per Laurel, J.; (cited in Francisco Jr. v.
House of Representatives, supra, pp. 121-122.)

86 Cawaling Jr. v. COMELEC, 420 Phil. 524, 530, October 26, 2001, per SandovalGutierrez, J.
87 Ichong v. Hernandez, 101 Phil. 1155, 1164, May 31, 1957, per Labrador, J.
88 De Leon, The Fundamentals of Taxation (12th ed., 1998), p. 1.
89 Except, as earlier discussed, for Sections 1, 2 and 3 of the law.
90 13-20 of SB 1950 seek to amend Tax Code provisions on percentage taxes on
domestic carriers and keepers of garages in 117, and on international carriers in 118;
franchise taxes in 119; amusement taxes in 125; excise taxes on manufactured oils
and other fuels in 148; registration requirements in 236; issuance of receipts or sales
or commercial invoices in 237; and disposition of incremental revenues in 288.
91 "[T]he removal of the excise tax on diesel x x x and other socially sensitive products
such as kerosene and fuel oil substantially lessened the impact of VAT. The reduction in
import duty x x x also eased the impact of VAT." Manila Bulletin, "Impact of VAT on prices
of oil products should be less than 10%, says DoE," by James A. Loyola, Business Bulletin
B-3, Friday, July 1, 2005, attached as Annex A to the Memorandum filed by the
Association of Pilipinas Shell Dealers, Inc.
The Transcript of the Oral Arguments in GR Nos. 168461, 168463, 168056, and 168207
on July 14, 2005 also reveals the effect of mitigating measures upon petitioners in GR No.
168461:
"Justice Panganiban: As a matter of fact[,] a part of the mitigating measures would be
the elimination of the [e]xcise [t]ax and the import duties. That is [why] it is not correct
to say that the [VAT] as to petroleum dealers increase to 10 [percent].
"Atty. Baniqued: Yes, Your Honor.
"Justice Panganiban: And[,] therefore, there is no justification for increasing the retail
price by 10 [percent] to cover the E-[VAT.] [I]f you consider the excise tax and the import
duties, the [n]et [t]ax would probably be in the neighborhood of 7 [percent]? We are not
going into exact figures[.] I am just trying to deliver a point that different industries,
different products, different services are hit differently. So its not correct to say that all
prices must go up by 10 [percent].
"Atty. Baniqued: Youre right, Your Honor.
"Justice Panganiban: Now. For instance, [d]omestic [a]irline companies, Mr. Counsel, are
at present imposed a [s]ales [t]ax of 3 [percent]. When this E-[VAT] law took effect[,] the
[s]ales [t]ax was also removed as a mitigating measure. So, therefore, there is no
justification to increase the fares by 10 [percent;] at best 7 [percent], correct?
"Atty. Baniqued: I guess so, Your Honor, yes." (pp. 367-368).

92 28(1) of Article VI of the 1987 Constitution.

93 26(2) of Article VI of the 1987 Constitution.
94 These bills refer to HB 3705 and SB 1950.
95 26(2), supra.
96 "Each house 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." US v. Ballin, 144 US 1, 5, 12 S.Ct. 507, 509, February 29, 1892, per Brewer, J.
97 Panganiban, Leveling the Playing Field (2004), PRINTTOWN Group of Companies, pp.
46-47.
98 338 Phil. 546, 604-605, May 2, 1997, per Panganiban, J.
99 420 Phil. 525, 531, October 26, 2001, per Sandoval-Gutierrez, J.; (citing The Philippine
Judges Association v. Prado, 227 SCRA 703, 706, November 11, 1993, per Cruz, J.).
100 Veterans Federation Party v. COMELEC, 396 Phil. 419, 452-453, October 6, 2000, per
Panganiban, J.; (citing Garcia v. COMELEC, 227 SCRA 100, 107-108, October 5, 1993).

The Lawphil Project - Arellano Law Foundation

________________________________________

EN BANC
G.R. No. 168056 --- ABAKADA Guro Party List (Formerly AASJAS) Officers Samson S.
Alcantara and Ed Vincent S. Albano, Petitioners, versus The Honorable Executive
Secretary Eduardo Ermita, et al.,Respondents.
G.R. No. 168207 --- Aquilino Q. Pimentel, Jr., et al., Petitioners, versus Executive Secretary
Eduardo R. Ermita, et al., Respondents.
G.R. No. 168461 --- Association of Pilipinas Shell Dealers, Inc., et al., Petitioners, versus
Cesar V. Purisima, et al., Respondents.
G.R. No. 168463 --- Francis Joseph G. Escudero, et al., Petitioners, versus Cesar V.
Purisima, et al.,Respondents.

G.R. No. 168730 --- Bataan Governor Enrique T. Garcia, Jr., et al., Petitioners, versus Hon.
Eduardo R. Ermita, et al., Respondents.
Promulgated:
September 1, 2005
x ---------------------------------------------------------------------------------------- x
CONCURRING AND DISSENTING OPINION
YNARES-SANTIAGO, J.:
The ponencia states that under the provisions of the Rules of the House of
Representatives and the Senate Rules, the Bicameral Conference Committee is
mandated to settle differences between the disagreeing provisions in the House bill and
Senate bill. However, the ponencia construed the term "settle" as synonymous to
"reconcile" and "harmonize," and as such, the Bicameral Conference Committee may
either (a) adopt the specific provisions of either the House bill or Senate bill, (b) decide
that neither provisions in the House bill or the provisions in the Senate bill would be
carried into the final form of the bill, and/or (c) try to arrive at a compromise between the
disagreeing provisions.
I beg to differ on the third proposition.
Indeed, Section 16(3), Article VI of the 1987 Constitution explicitly allows each House to
determine the rules of its proceedings. However, the rules must not contravene
constitutional provisions. The rule-making power of Congress should take its bearings
from the Constitution. If in the exercise of this rule-making power, Congress failed to set
parameters in the functions of the committee and allowed the latter unbridled authority
to perform acts which Congress itself is prohibited, like the passage of a law without
undergoing the requisite three-reading and the so-called no-amendment rule, then the
same amount to grave abuse of discretion which this Court is empowered to correct
under its expanded certiorari jurisdiction. Notwithstanding the doctrine of separation of
powers, therefore, it is the duty of the Court to declare as void a legislative enactment,
either from want of constitutional power to enact or because the constitutional forms or
conditions have not been observed.1 When the Court declares as unconstitutional a law
or a specific provision thereof because procedural requirements for its passage were not
complied, the Court is by no means asserting its ascendancy over the Legislature, but
simply affirming the supremacy of the Constitution as repository of the sovereign will.2
The judicial branch must ensure that constitutional norms for the exercise of powers
vested upon the two other branches are properly observed. This is the very essence of
judicial authority conferred upon the Court under Section 1, Article VII of the 1987
Constitution.

The Rules of the House of Representatives and the Rules of the Senate provide that in
the event there is disagreement between the provisions of the House and Senate bills,
the differences shall be settled by a bicameral conference committee.
By this, I fully subscribe to the theory advanced in the Dissenting Opinion of Chief Justice
Hilario G. Davide, Jr. inTolentino v. Secretary of Finance3 that the authority of the
bicameral conference committee was limited to the reconciliation of disagreeing
provisions or the resolution of differences or inconsistencies. Thus, it could only either (a)
restore, wholly or partly, the specific provisions of the House bill amended by the Senate
bill, (b) sustain, wholly or partly, the Senates amendments, or (c) by way of a
compromise, to agree that neither provisions in the House bill amended by the Senate
nor the latters amendments thereto be carried into the final form of the former.
Otherwise stated, the Bicameral Conference Committee is authorized only to adopt
either the version of the House bill or the Senate bill, or adopt neither. It cannot, as the
ponencia proposed, "try to arrive at a compromise", such as introducing provisions not
included in either the House or Senate bill, as it would allow a mere ad hoc committee to
substitute the will of the entire Congress and without undergoing the requisite threereading, which are both constitutionally proscribed. To allow the committee unbridled
discretion to overturn the collective will of the whole Congress defies logic considering
that the bills are passed presumably after study, deliberation and debate in both houses.
A lesser body like the Bicameral Conference Committee should not be allowed to
substitute its judgment for that of the entire Congress, whose will is expressed
collectively through the passed bills.
When the Bicameral Conference Committee goes beyond its limited function by
substituting its own judgment for that of either of the two houses, it violates the internal
rules of Congress and contravenes material restrictions imposed by the Constitution,
particularly on the passage of law. While concededly, the internal rules of both Houses do
not explicitly limit the Bicameral Conference Committee to a consideration only of
conflicting provisions, it is understood that the provisions of the Constitution should be
read into these rules as imposing limits on what the committee can or cannot do. As
such, it cannot perform its delegated function in violation of the three-reading
requirement and the no-amendment rule.
Section 26(2) of Article VI of the 1987 Constitution provides that:
(2) No bill shall be 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 hereto shall be allowed, and
the vote thereon shall be taken immediately thereafter, and the yeas and nays entered
in the Journal.

Thus, before a bill becomes a law, it must pass three readings. Hence, the ponencias
submission that despite its limited authority, the Bicameral Conference Committee could
"compromise the disagreeing provisions" by substituting it with its own version clearly
violate the three-reading requirement, as the committees version would no longer
undergo the same since it would be immediately put into vote by the respective houses.
In effect, it is not a bill that was passed by the entire Congress but by the members of
the ad hoc committee only, which of course is constitutionally infirm.
I disagree that the no-amendment rule referred only to "the procedure to be followed by
each house of Congress with regard to bills initiated in each of said respective houses"
because it would relegate the no-amendment rule to a mere rule of procedure. To my
mind, the no-amendment rule should be construed as prohibiting the Bicameral
Conference Committee from introducing amendments and modifications to nondisagreeing provisions of the House and Senate bills. In sum, the committee could only
either adopt the version of the House bill or the Senate bill, or adopt neither. As Justice
Reynato S. Puno said in his Dissenting Opinion in Tolentino v. Secretary of Finance,4 there
is absolutely no legal warrant for the bold submission that a Bicameral Conference
Committee possesses the power to add/delete provisions in bills already approved on
third reading by both Houses or an ex post veto power.
In view thereof, it is my submission that the amendments introduced by the Bicameral
Conference Committee which are not found either in the House or Senate versions of the
VAT reform bills, but are inserted merely by the Bicameral Conference Committee and
thereafter included in Republic Act No. 9337, should be declared unconstitutional. The
insertions and deletions made do not merely settle conflicting provisions but materially
altered the bill, thus giving rise to the instant petitions.
I, therefore, join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno.
CONSUELO YNARES-SANTIAGO
Associate Justice

Footnotes
1 Cooley on Constitutional Limitations, 8th Ed., Vol. I, p. 332.
2 Angara v. Electoral Commission, 63 Phil. 139, 158 [1936].
3 G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873,
115931, 25 August 1994, 235 SCRA 630, 750.
4 Supra, p. 811.

The Lawphil Project - Arellano Law Foundation

________________________________________

G.R. NO. 168056 ABAKADA GURO PARTY LIST (FORMERLY AASJAS) OFFICERS SAMSON S.
ALCANTARA AND ED VINCENT S. ALBANO, petitioners versus THE HONORABLE
EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL., respondents.
G.R. NO. 168207 AQUILINO Q. PIMENTEL, JR., ET AL., petitioners versus THE
HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL., respondents.
G.R. NO. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL., petitioners
versus CESAR V. PURISIMA, ET AL., respondents.
G.R. NO. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL., petitioners versus CESAR V.
PURISIMA, ET AL., respondents.
G.R. NO. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., ET AL., petitioners
versus HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA, ET AL., respondents.
Promulgated:
September 1, 2005
x----------------------------------------------------------------------------------------------x
CONCURRING AND DISSENTING OPINION
SANDOVAL GUTIERREZ, J.:
Adam Smith, the great 18th century political economist, enunciated the dictum that
"the subjects of every state ought to contribute to the support of government, as nearly
as possible, in proportion to their respective abilities; that is, in proportion to the revenue
which they respectively enjoy under the protection of the state."1 At no other time this
dictum becomes more urgent and obligatory as in the present time, when the Philippines
is in its most precarious fiscal position.
At this juncture, may I state that I join Mr. Senior Justice Reynato S. Puno in his Opinion,
specifically on the following points:
1. It is "high time to re-examine the test of germaneness proffered in Tolentino;"

2. The Bicameral Conference Committee "cannot exercise its unbridled discretion," "it
cannot create a new law," and its deletion of the "no pass on provision" common in both
Senate Bill No. 1950 and House Bill No. 3705 is "unconstitutional."
In addition to the above points raised by Mr. Senior Justice Puno, may I expound on the
issues specified hereunder:
There is no reason to rush and stamp the imprimatur of validity to a tax law, R.A. 9337,
that contains patently unconstitutional provisions. I refer to Sections 4 to 6 which violate
the principle of non-delegation of legislative power. These Sections authorize the
President, upon recommendation of the Secretary of Finance, to raise the VAT rate from
10% to 12% effective January 1, 2006, if the conditions specified therein are met, thus:
. . . That the President, upon the recommendation of the Secretary of Finance, shall,
effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%) after
any of the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).
This proviso on the authority of the President is uniformly appended to Sections 4, 5 and
6 of R.A. No. 9337, provisions amending Sections 106, 107 and 108 of the NIRC,
respectively. Section 4 imposes a 10% VAT on sales of goods and properties, Section 5
imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT on sale of
services and use or lease of properties.
Petitioners in G.R. Nos. 168056,2 1682073 and 1684634 assail the constitutionality of
the above provisions on the ground that such stand-by authority granted to the President
constitutes: (1) undue delegation of legislative power; (2) violation of due process; and
(3) violation of the principle of "exclusive origination." They cited as their basis Article VI,
Section 28 (2); Article III, Section 1; and Article VI, Section 24 of the Constitution.
I
Undue Delegation of Legislative Power
Taxation is an inherent attribute of sovereignty.5 It is a power that is purely legislative
and which the central legislative body cannot delegate either to the executive or judicial
department of government without infringing upon the theory of separation of powers.6
The rationale of this doctrine may be traced from the democratic principle of "no
taxation without representation." The power of taxation being so pervasive, it is in the
best interest of the people that such power be lodged only in the Legislature. Composed

of the peoples representatives, it is "closer to the pulse of the people and are
therefore in a better position to determine both the extent of the legal burden the people
are capable of bearing and the benefits they need."7 Also, this set-up provides security
against the abuse of power. As Chief Justice Marshall said: "In imposing a tax, the
legislature acts upon its constituents. The power may be abused; but the interest,
wisdom, and justice of the representative body, and its relations with its constituents,
furnish a sufficient security."
Consequently, Section 24, Article VI of our Constitution enshrined the principle of "no
taxation without representation" by providing that "all revenue bills shall originate
exclusively in the House of Representatives, but the Senate may propose or concur with
amendments." This provision generally confines the power of taxation to the Legislature.
R.A. No. 9337, in granting to the President the stand-by authority to increase the VAT
rate from 10% to 12%, the Legislature abdicated its power by delegating it to the
President. This is constitutionally impermissible. The Legislature may not escape its
duties and responsibilities by delegating its power to any other body or authority. Any
attempt to abdicate the power is unconstitutional and void, on the principle that potestas
delegata non delegare potest.8 As Judge Cooley enunciated:
"One of the settled maxims in constitutional law is, that the power conferred upon the
legislature to make laws cannot be delegated by that department to any other body or
authority. Where the sovereign power of the state has located the authority, there it
must remain; and by the constitutional agency alone the laws must be made until the
Constitution itself is changed. The power to whose judgment, wisdom, and patriotism this
high prerogative has been entrusted cannot relieve itself of the responsibility by
choosing other agencies upon which the power shall be devolved, nor can it substitute
the judgment, wisdom, and patriotism of any other body for those to which alone the
people have seen fit to confide this sovereign trust."9
Of course, the rule which forbids the delegation of the power of taxation is not absolute
and inflexible. It admits of exceptions. Retired Justice Jose C. Vitug enumerated such
exceptions, to wit: (1) delegations to local governments (to be exercised by the local
legislative bodies thereof) or political subdivisions; (2) delegations allowed by the
Constitution; and (3) delegations relating merely to administrative implementation that
may call for some degree of discretionary powers under a set of sufficient standards
expressed by law.10
Patently, the act of the Legislature in delegating its power to tax does not fall under any
of the exceptions.
First, it does not involve a delegation of taxing power to the local government. It is a
delegation to the President.

Second, it is not allowed by the Constitution. Section 28 (2), Article VI of the Constitution
enumerates the charges or duties, the rates of which may be fixed by the President
pursuant to a law passed by Congress, thus:
The Congress may, by law, authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and
export quotas, tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the Government.
Noteworthy is the absence of tax rates or VAT rates in the enumeration. If the intention
of the Framers of the Constitution is to permit the delegation of the power to fix tax rates
or VAT rates to the President, such could have been easily achieved by the mere
inclusion of the term "tax rates" or "VAT rates" in the enumeration. It is a dictum in
statutory construction that what is expressed puts an end to what is implied. Expressium
facit cessare tacitum.11 This is a derivative of the more familiar maxim express mention
is implied exclusion orexpressio unius est exclusio alterius. Considering that Section 28
(2), Article VI expressly speaks only of "tariff rates,12 import13 and export
quotas,14 tonnage15 and wharfage dues16 and other duties and imposts,17" by no
stretch of imagination can this enumeration be extended to include the VAT.
And third, it does not relate merely to the administrative implementation of R.A. No.
9337.
In testing whether a statute constitutes an undue delegation of legislative power or not,
it is usual to inquire whether the statute was complete in all its terms and provisions
when it left the hands of the Legislature so that nothing was left to the judgment of any
other appointee or delegate of the legislature.18
In the present case, the President is the delegate of the Legislature, endowed with the
power to raise the VAT rate from 10 % to 12% if any of the following conditions, to
reiterate, has been satisfied: (i) value-added tax collection as a percentage of gross
domestic product (GDP) of the previous year exceeds two and four-fifths percent (2
4/5%) or (ii) National Government deficit as a percentage of GDP of the previous year
exceeds one and one-half percent (1 %).
At first glance, the two conditions may appear to be definite standards sufficient to guide
the President. However, to my mind, they are ineffectual and malleable as they give the
President ample opportunity to exercise herauthority in arbitrary and discretionary
fashion.
The two conditions set forth by law would have been sufficient had it not been for the
fact that the President, being at the helm of the entire officialdom, has more than
enough power of control to bring about the existence of such conditions. Obviously, R.A.
No. 9337 allows the President to determine for herself whether the VAT rate shall be

increased or not at all. The fulfillment of the conditions is entirely placed in her hands. If
she wishes to increase the VAT rate, all she has to do is to strictly enforce the VAT
collection so as to exceed the 2 4/5% ceiling. The same holds true with the national
government deficit. She will just limit government expenses so as not to exceed the 1
% ceiling. On the other hand, if she does not wish to increase the VAT rate, she may
discourage the Secretary of Finance from making the recommendation.
That the Presidents exercise of an authority is practically within her control is
tantamount to giving no conditions at all. I believe this amounts to a virtual surrender of
legislative power to her. It must be stressed that the validity of a law is not tested by
what has been done but by what may be done under its provisions.19
II
Violation of Due Process
The constitutional safeguard of due process is briefly worded in Section 1, Article III of
the Constitution which states that, "no person shall be deprived of life, liberty or property
without due process of law."20
Substantive due process requires the intrinsic validity of the law in interfering with the
rights of the person to his property. The inquiry in this regard is not whether or not the
law is being enforced in accordance with the prescribed manner but whether or not, to
begin with, it is a proper exercise of legislative power.
To be so, the law must have a valid governmental objective, i.e., the interest of the public
as distinguished from those of a particular class, requires the intervention of the State.
This objective must be pursued in a lawful manner, or in other words, the means
employed must be reasonably related to the accomplishment of the purpose and not
unduly oppressive.
There is no doubt that R.A. No. 9337 was enacted pursuant to a valid governmental
objective, i.e. to raise revenues for the government. However, with respect to the means
employed to accomplish such objective, I am convinced that R.A. No. 9337, particularly
Sections 4, 5 and 6 thereof, are arbitrary and unduly oppressive.
A reading of the Senate deliberation reveals that the first condition constitutes a reward
to the President for her effective collection of VAT. Thus, the President may increase the
VAT rate from 10% to 12% if her VAT collection during the previous year exceeds 2 4/5%
of the Gross Domestic Product. I quote the deliberation:
Senator Lacson. Thank you, Mr. President. Now, I will go back to my original question, my
first question. Who are we threatening to punish on the imposed condition No. 1 the
public or the President?
Senator Recto. That is not a punishment, that is supposed to be a reward system.

Senator Lacson. Yes, an incentive. So we are offering an incentive to the Chief Executive.
Senator Recto. That is right.
Senator Lacson. in order for her to be able to raise the VAT to 12 %.
Senator Recto. That is right. That is the intention, yes.
xxxxxx
Senator Osmena. All right. Therefore, with the lifting of exemptions it stands to reason
that Value-added tax collections as a percentage of GDP will be much higher than Now,
if it is higher than 2.5%, in other words, because they collected more, we will allow them
to even tax more. Is that the meaning of this particular phrase?
Senator Recto. Yes, Mr. President, that is why it is as low as 2.8%. It is like if a person has
a son and his son asks him for an allowance, I do not think that he would immediately
give his son an increase in allowance unless he tells his son, You better improve your
grades and I will give you an allowance. That is the analogy of this.
xxxxxx
Senator Osmena. So the gentleman is telling the President, If you collect more than 138
billion, I will give you additional powers to tax the people.
Senator Recto. x x x We are saying, kung mataas and grade mo, dadagdagan ko an
allowance mo. Katulad ng sinabi natin ditto. What we are saying here is you prove to me
that you can collect it, then we will increase your rate, you can raise your rate. It is an
incentive.21
Why authorize the President to increase the VAT rate on the premise alone that she
deserves an "incentive" or "reward"? Indeed, why should she be rewarded for performing
a duty reposed upon her by law?
The rationale stated by Senator Recto is flawed. One of the principles of sound taxation
is fiscal adequacy. The proceeds of tax revenue should coincide with, and approximate
the needs of, government expenditures. Neither an excess nor a deficiency of revenue
vis--vis the needs of government would be in keeping with the principle.22
Equating the grant of authority to the President to increase the VAT rate with the grant of
additional allowance to a studious son is highly inappropriate. Our Senators must have
forgotten that for every increase of taxes, the burden always redounds to the people.
Unlike the additional allowance given to a studious son that comes from the pocket of
the granting parent alone, the increase in the VAT rate would be shouldered by the
masses. Indeed, mandating them to pay the increased rate as an award to the President
is arbitrary and unduly oppressive. Taxation is not a power to be exercised at ones
whim.

III
Exclusive Origination from the
House of Representatives
Section 24, Article VI of the Constitution provides:
SEC. 24. All appropriations, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments.
In Tolentino vs. Secretary of Finance,23 this Court expounded on the foregoing provision
by holding that:
"x x x To begin with, it is not the law but the revenue bill which is required by the
Constitution to originate exclusively in the House of Representatives. It is important to
emphasize this, because a bill originating the in the House may undergo such extensive
changes in the Senate that the result may be a rewriting of the whole x x x. At this point,
what is important to note is that, as a result of the Senate action, a distinct bill may be
produced. To insist that a revenue statute -- and not only the bill which initiated the
legislative process culminating in the enactment of the law must substantially be the
same as the House Bill would be to deny the Senates power not only to concur with
amendments: but also to propose amendments. It would be to violate the co-equality of
the legislative power of the two houses of Congress and in fact, make the House superior
to the Senate."
The case at bar gives us an opportunity to take a second hard look at the efficacy of the
foregoing jurisprudence.
Section 25, Article VI is a verbatim re-enactment of Section 18, Article VI of the 1935
Constitution. The latter provision was modeled from Section 7 (1), Article I of the United
States Constitution, which states:
"All bills for raising revenue shall originate in the House of Representatives, but the
Senate may propose or concur with amendments, as on other bills."
The American people, in entrusting what James Madison termed "the power of the purse"
to their elected representatives, drew inspiration from the British practice and
experience with the House of Commons. As one commentator puts it:
"They knew the inestimable value of the House of Commons, as a component branch of
the British parliament; and they believed that it had at all times furnished the best
security against the oppression of the crown and the aristocracy. While the power of
taxation, of revenue, and of supplies remained in the hands of a popular branch, it was

difficult for usurpation to exist for any length of time without check, and prerogative
must yield of that necessity which controlled at once the sword and the purse."
But while the fundamental principle underlying the vesting of the power to propose
revenue bills solely in the House of Representatives is present in both the Philippines and
US Constitutions, stress must be laid on the differences between the two quoted
provisions. For one, the word "exclusively" appearing in Section 24, Article VI of our
Constitution is nowhere to be found in Section 7 (1), Article I of the US Constitution. For
another, the phrase "as on other bills," present in the same provision of the US
Constitution, is not written in our Constitution.
The adverb "exclusively" means "in an exclusive manner."24 The term "exclusive" is
defined as "excluding or having power to exclude; limiting to or limited to; single, sole,
undivided, whole."25 In one case, this Court define the term "exclusive" as "possessed to
the exclusion of others; appertaining to the subject alone, not including, admitting, or
pertaining to another or others."26
As for the term "originate," its meaning are "to cause the beginning of; to give rise to; to
initiate; to start on a course or journey; to take or have origin; to be deprived; arise;
begin or start."27
With the foregoing definitions in mind, it can be reasonably concluded that when Section
24, Article VI provides that revenue bills shall originate exclusively from the House of
Representatives, what the Constitution mandates is that any revenue statute must begin
or start solely and only in the House. Not the Senate. Not both Chambers of Congress.
But there is more to it than that. It also means that "an act for taxation must pass the
House first." It is no consequence what amendments the Senate adds.28
A perusal of the legislative history of R.A. No. 9337 shows that it did not "exclusively
originate" from the House of Representatives.
The House of Representatives approved House Bill Nos. 355529 and 370530. These Bills
intended to amend Sections 106, 107, 108, 109, 110, 111 and 114 of the NIRC. For its
part, the Senate approved Senate Bill No.1950,31 taking into consideration House Bill
Nos. 3555 and 3705. It intended to amend Sections 27, 28, 34, 106, 108, 109, 110, 112,
113, 114, 116, 117, 119, 121, 125, 148, 151, 236, 237 and 288 of the NIRC.
Thereafter, on April 13, 2005, a Committee Conference was created to thresh out the
disagreeing provisions of the three proposed bills.
In less than a month, the Conference Committee "after having met and discussed in full
free and conference," came up with a report and recommended the approval of the
consolidated version of the bills. The Senate and the House of Representatives approved
it.

On May 23, 2005, the enrolled copy of the consolidated version of the bills was
transmitted to President Arroyo, who signed it into law. Thus, the enactment of R.A. No.
9337, entitled "An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112,
113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal
Revenue Code of 1997, As Amended and For Other Purposes."
Clearly, Senate Bill No. 1950 is not based on any bill passed by the House of
Representatives. It has a legislative identity and existence separate and apart from
House Bills No. 3555 and 3705. Instead of concurring or proposing amendments, Senate
Bill No. 1950 merely "takes into consideration" the two House Bills. To take into
consideration means "to take into account." Consideration, in this sense, means
"deliberation, attention, observation or contemplation.32 Simply put, the Senate in
passing Senate Bill No. 1950, a tax measure, merely took into account House Bills No.
3555 and 3705, but did not concur with or amend either or both bills. As a matter of fact,
it did not even take these two House Bills as a frame of reference.
In Tolentino, the majority subscribed to the view that Senate may amend the House
revenue bill by substitution or by presenting its own version of the bill. In either case, the
result is "two bills on the same subject."33 This is the source of the "germaneness" rule
which states that the Senate bill must be germane to the bill originally passed by the
House of Representatives. In Tolentino, this was not really an issue as both the House
and Senate Bills in question had one subject the VAT.
The facts obtaining here is very much different from Tolentino. It is very apparent that
House Bills No. 3555 and 3705 merely intended to amend Sections 106, 107, 108, 109,
110, 111 and 114 of the NIRC of 1997, pertaining to the VAT provisions. On the other
hand, Senate Bill No. 1950 intended to amend Sections 27, 28, 34, 106, 108, 109, 110,
112, 113, 114, 116, 117, 119, 121, 125, 148, 151, 236, 237 and 288 of the NIRC,
pertaining to matters outside of VAT, such as income tax, percentage tax, franchise tax,
taxes on banks and other financial intermediaries, excise taxes, etc.
Thus, I am of the position that the Senate could not, without violating the germaneness
rule and the principle of "exclusive origination," propose tax matters not included in the
House Bills.
WHEREFORE, I vote to CONCUR with the majority opinion except with respect to the
points above-mentioned.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Footnotes
1 Book V of The Wealth of Nations.
2 ABAKADA GURO Party List (Formerly AASJAS), Officers Samson S. Alcantara and Ed
Vincent S. Albano.
3 Aquilino Q. Pimentel, Jr., Luisa P. Ejercito-Estrada, Jinggoy E. Estrada, Panfilo M. Lacson,
Alfredo S. Lim, Jamby A.S. Madrigal and Sergio R. Osmena III.
4 Francis Joseph G. Escudero, Vincent Crisologo, Emmanuel Joel J. Villanueva, Rodolfo G.
Plaza, Darlene Antonino-Custodio, Oscar G. Malapitan, Benjamin C. Agarao, Jr., Juan
Edgardo M. Angara, Justin Marc SB. Chipeco, Florencio G. Noel, Mujiv S. Hataman, Renato
B. Magtubo, Joseph A. Santiago, Teofisto DL. Guingona III, Ruy Elias C. Lopez, Rodolfo Q.
Agbayani and Teodoro A. Casino.
5 Luzon Stevedoring Co. vs. Court of Tax Appeals, L-302332, July 29, 1998, 163 SCRA 647
cited in Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 7.
6 Pepsi Cola Bottling Company of the Philippines vs. Municipality of Tanauan, Leyte, G.R.
No. L-31156, February 27, 1976, 69 SCRA 460. See also National Power Corporation vs.
Albay, G.R. No. 87479, June 4, 1990, 186 SCRA 198.
7 Bernas, SJ, The 1987 Constitution of the Republic of the Philippines, A Commentary,
1996 Edition, at 687.
8 People vs. Vera, 65 Phil. 56 (1937).
9 Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224.
10 Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 8-9.
11 Espiritu vs. Cipriano, G.R. No. 32743, February 15, 1974, 55 SCRA 533, 538, citing
Sutherlands Statutory Construction, Vol. 2, Section 4945, p. 412.
12 A tariff is a list or schedule of articles on which a duty is imposed upon their
importation, with the rates at which they are severally taxed, it is also the custom or
duty payable on such articles. (Blacks Law Dictionary [6th Edition], 1990, at 1456).
13 An import quota is a quantitative restriction on the importation of an article into a
country, and is a remedy available to the executive department upon its determination
that an imported article threatens serious injury to a domestic industry. (Id. at 755).
14 An export quota is an amount of specific goods which may be exported and are set by
the government for purposes of national defense, economic stability and price support.
(Id. at 579).

15 Tonnage dues are duties laid upon vessels according to their tonnage or cubical
capacity. (Id. at 1488).
16 Wharfage dues are generally understood to be the fees paid for landing goods upon
or loading them from a wharf. It is a charge for the use of the wharf and may be treated
either as rent or compensation. (Marine Lighterage Corp. vs. Luckenbach S.S. Co., 119
Misc. 612, 248 NYS 71).
17 A duty is generally understood to be a tax on the importation or exportation of goods,
merchandise and other commodities, while imposts are duties or impositions levied for
various reasons. (Crew Levick Co. vs. Commonwealth of Pennsylvania, 245 US 292, 62 L.
Ed. 295, 38 S. Ct. 126).
18 People vs. Vera, supra.
19 Walter E. Olsen & Co. vs. Aldanese and Trinidad (1922), 43 Phil., 259; 12 C. J., p. 786.
20 Cruz, Constitutional Law, 1987 Edition, at 101.
21 TSN, May 10, 2005, Annex E" of the Petition in G.R. No. 168056.
22 Vitug, Acosta, Tax Law and Jurisprudence, Second Edition, at 3.
23 G.R. No. 115455, August 25, 1994, 235 SCRA 630.
24 Merriam-Websters Third New International Dictionary (1993 Ed.), at 793.
25 Id.
26 City Mayor vs. The Chief of Philippine Constabulary, G.R. No. 20346, October 31,
1967, 21 SCRA 665, 673.
27 Merriam-Websters Third New International Dictionary (1993 Ed.), at 1592.
28 Davies, Legislative Law and Process, (2d. Ed. 1986), at 89.
29 Entitled "An Act Restructuring the Value-Added Tax, Amending for the Purpose
Sections 106, 107, 108, 110 and 114 of the National Internal Revenue Code of 1997, As
amended, and For Other Purposes." Approved on January 27, 2005.
30 Entitled "An Act Amending Sections 106, 107, 108, 109, 110 and 111 of the National
Internal Revenue Code of 1997, As Amended, and For Other Purposes." Approved on
February 28, 2005.
31 Entitled "An Act Amending Sections 27, 28, 34, 106,108, 109,110, 112, 113, 114, 116,
117, 119, 121, 125, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of
1997, As Amended, and For Other Purposes." Approved on April1 3, 2005.
32 Merriam-Websters Third New International Dictionary (1993 Ed.), at 484.

33 Supra.

The Lawphil Project - Arellano Law Foundation

________________________________________

G.R. No. 168056 (Abakada Guro Party List [Formerly AASJAS] Officers Samson S.
Alcantara and Ed Vincent S. Albano v. The Hon. Executive Secretary Eduardo Ermita, et
al.)
G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. v. Executive Secretary Eduardo R.
Ermita, et al.)
G.R. No. 168461 (Association of Filipinas Shell Dealers, Inc., et al. v. Cesar V. Purisima,
et al.)
G.R. No. 168463 (Francis Joseph G. Escudero, et al. v. Cesar V. Purisima, et al.)
G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. v. Hon. Eduardo R. Ermita, et
al.)
Promulgated:
September 1, 2005
X--------------------------------------------------X
CONCURRING AND DISSENTING OPINION
CALLEJO, SR., J.:
I join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno as I concur
with the majority opinion but vote to declare as unconstitutional the deletion of the "nopass on provision" contained in Senate Bill No. 1950 and House Bill No. 3705 (the
constituent bills of Republic Act No. 9337).
The present petitions provide an opportune
occasion for the Court to re-examine
Tolentino v. Secretary of Finance
In ruling that Congress, in enacting R.A. No. 9337, complied with the formal requirements
of the Constitution, theponencia relies mainly on the Courts rulings in Tolentino v.

Secretary of Finance.1 To recall, Tolentino involved Republic Act No. 7716, which similarly
amended the NIRC by widening the tax base of the VAT system. The procedural attacks
against R.A. No. 9337 are substantially the same as those leveled against R.A. No. 7716,
e.g., violation of the "Origination Clause" (Article VI, Section 24) and the "Three-Reading
Rule" and the "No-Amendment Rule" (Article VI, Section 26[2]) of the Constitution.
The present petitions provide an opportune occasion for the Court to re-examine its
rulings in Tolentinoparticularly with respect to the scope of the powers of the Bicameral
Conference Committee vis--vis Article VI, Section 26(2) of the Constitution.
The crucial issue posed by the present petitions is whether the Bicameral Conference
Committee may validly introduce amendments that were not contained in the respective
bills of the Senate and the House of Representatives. As a corollary, whether it may
validly delete provisions uniformly contained in the respective bills of the Senate and the
House of Representatives.
In Tolentino, the Court declared as valid amendments introduced by the Bicameral
Conference Committee even if these were not contained in the Senate and House bills.
The majority opinion therein held:
As to the possibility of an entirely new bill emerging out of a Conference Committee, it
has been explained:
Under congressional rules of procedures, conference committees are not expected to
make any material change in the measure at issue, either by deleting provisions to which
both houses have already agreed or by inserting new provisions. But this is a difficult
provision to enforce. Note the problem when one house amends a proposal originating in
either house by striking out everything following the enacting clause and substituting
provisions which make it an entirely new bill. The versions are now altogether different,
permitting a conference committee to draft essentially a new bill
The result is a third version, which is considered an "amendment in the nature of a
substitute," the only requirement for which being that the third version be germane to
the subject of the House and Senate bills.
Indeed, this Court recently held that it is within the power of a conference committee to
include in its report an entirely new provision that is not found either in the House bill or
in the Senate Bill. If the committee can propose an amendment consisting of one or two
provisions, collectively considered as an "amendment in the nature of a substitute," so
long as such an amendment is germane to the subject of the bills before the committee.
After all, its report was not final but needed the approval of both houses of Congress to
become valid as an act of the legislative department. The charge that in this case the
Conference Committee acted a third legislative chamber is thus without any basis.2

The majority opinion in Tolentino relied mainly on the practice of the United States
legislature in making the foregoing disquisition. It was held, in effect, that following the
US Congress practice where a conference committee is permitted to draft a bill that is
entirely different from the bills of either the House of Representatives or Senate, the
Bicameral Conference Committee is similarly empowered to make amendments not
found in either the House or Senate bills.
The ponencia upholds the acts of the Bicameral Conference Committee with respect to
R.A. No. 9337, following the said ruling in Tolentino.
To my mind, this unqualified adherence by the majority opinion in Tolentino, and now by
the ponencia, to the practice of the US Congress and its conference committee system
ought to be re-examined. There are significant textual differences between the US
Federal Constitutions and our Constitutions prescribed congressional procedure for
enacting laws. Accordingly, the degree of freedom accorded by the US Federal
Constitution to the US Congress markedly differ from that accorded by our Constitution
to the Philippine Congress.
Section 7, Article I of the US Federal Constitution reads:
[1] All Bills for raising Revenue shall originate in the House of Representatives; but the
Senate may propose or concur with Amendments as on other Bills.
[2] Every Bill which shall have passed the House of Representatives and the Senate,
shall, before it become a Law, be presented to the President of the United States; If he
approve he shall it, but if not he shall return it, with his Objections to the House in which
it shall have originated, who shall enter the Objections at large on their Journal, and
proceed to reconsider it. If after such Reconsideration two thirds of that House shall
agree to pass the Bill, it shall be sent together with the Objections, to the other House,
by which it shall, likewise, be reconsidered, and if approved by two thirds of that House,
it shall become a Law. But in all such Cases the Votes of both Houses shall be determined
by yeas and Nays, and the Names of the Persons voting for and against the Bill shall be
entered on the Journal of each House respectively. If any Bill shall not be returned by the
President within ten Days (Sundays excepted) after it shall have been presented to him,
the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by
their Adjournment prevent its return in which Case it shall not be a Law.
[3] Every Order, Resolution, or Vote to Which the Concurrence of the Senate and House
of Representatives may be necessary (except on a question of Adjournment) shall be
presented to the President of the United States; and before the Same shall take Effect,
shall be approved by him, or being disapproved by him, shall be repassed by two thirds
of the Senate and House of Representatives, according to the Rules and Limitations
prescribed in the Case of a Bill.

On the other hand, Article VI of our Constitution prescribes for the following procedure
for enacting a law:
Sec. 26. (1) Every bill passed by Congress shall embrace only one subject which shall be
expressed in the title thereof.
(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.
Sec. 27. (1) Every bill passed by Congress shall, before it becomes a law, be presented to
the President. If he approves the same, he shall sign it; otherwise, he shall veto it and
return the same with his objections to the House where it originated, which shall enter
the objections at large in its Journal and proceed to reconsider it. If, after such
reconsideration, two-thirds of all the Members of such House shall agree to pass the bill,
it shall be sent, together with the objections, to the other House by which it shall likewise
be reconsidered, and if approved by two-thirds of all the Members of that House, it shall
become a law. In all such cases, the votes of each House shall be determined by yeas
and nays, and the names of the Members voting for or against shall be entered in its
Journal. The President shall communicate his veto of any bill to the House where it
originated within thirty days after the date of receipt thereof; otherwise, it shall become
a law as if he had signed it.
(2) The President shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to
which he does not object.
Two distinctions are readily apparent between the two procedures:
1. Unlike the US Federal Constitution, our Constitution prescribes the "three-reading" rule
or that no bill shall become a law unless it shall have been read on three separate days
in each house except when its urgency is certified by the President; and
2. Unlike the US Federal Constitution, our Constitution prescribes the "no-amendment"
rule or that no amendments shall be allowed upon the last reading of the bill.
American constitutional experts have lamented that certain congressional procedures
have not been entrenched in the US Federal Constitution. According to a noted
constitutional law professor, the absence of the "three-reading" requirement as well as
similar legislative-procedure rules from the US Federal Constitution is a "cause for
regret."3

In this connection, it is interesting to note that the conference committee system in the
US Congress has been described in this wise:
Conference Committees
Another main mechanism of joint House and Senate action is the conference committee.
Inherited from the English Constitution, the conference committee system is an
evolutionary product whose principal threads were woven on the loom of congressional
practice into a unified pattern by the middle of the nineteenth century. "By 1852," writes
Ada McCown, historian of the origin and development of the conference committee, "the
customs of presenting identical reports from the committees of conference in both
houses, of granting high privilege to these conference reports, of voting upon the
conference report as a whole and permitting no amendment of it, of keeping secret the
discussions carried on in the meetings of the conference committee, had become
established in American parliamentary practice."
Conference committees are composed of Senators and Representatives, usually three
each, appointed by the presiding officers of both houses, for the purpose of adjusting
differences between bills they have passed. This device has been extensively used by
every Congress since 1789. Of the 1157 laws enacted by the 78th Congress, for
example, 107 went through conference and, of these, 36 were appropriation bills on
which the House had disagreed to Senate amendments. In practice, most important
legislation goes through the conference closet and is there revised, sometimes beyond
recognition, by the all-powerful conferees or managers, as they are styled. A large body
of law and practice has been built up over the years governing conference procedure and
reports.
Suffice it to say here that serious evils have marked the development of the conference
committee system. In the first place, it is highly prodigal of members time. McConachie
calculated that the average time consumed in conference was 33 days per bill. Bills are
sent to conference without reading the amendments of the other chamber. Despite rules
to the contrary, conferees do not confine themselves to matters in dispute, but often
initiate entirely new legislation and even strike out identical provisions previously
approved by both houses. This happened during the 78th Congress, for instance, when
an important amendment to the surplus property bill, which had been approved by both
houses, was deleted in conference.
Conference committees, moreover, suffer like other committees from the seniority rule.
The senior members of the committees concerned, who are customarily appointed as
managers on the part of the House and Senate, are not always the best informed on the
questions at issue, nor do they always reflect the majority sentiment of their houses.
Furthermore, conference reports must be accepted or rejected in toto without
amendment and they are often so complex and obscure that they are voted upon
without knowledge of their contents. What happens in practice is that Congress

surrenders its legislative function to irresponsible committees of conference. The

standing rules against including new and extraneous matter in conference reports have
been gradually whittled away in recent years by the decisions of presiding officers.
Senate riders attached to appropriation bills enable conference committees to legislate
and the House usually accepts them rather than withhold supply, thus putting it, as
Senator Hoar once declared, under a degrading duress.
It is also alleged that under this secret system lobbyist are able to kill legislation they
dislike and that "jokers" designed to defeat the will of Congress can be inserted without
detection. Senator George W. Norris once characterized the conference committee as a
third house of Congress. "The members of this house, he said, "are not elected by the
people. The people have no voice as to who these members shall be ... This conference
committee is many times, in very important matters of legislation, the most important
branch of our legislature.There is no record kept of the workings of the conference
committee. Its work is performed, in the main, in secret.No constituent has any definite
knowledge as to how members of this conference committee vote, and there is no record
to prove the attitude of any member of the conference committee ... As a practical
proposition we have legislation, then, not by the voice of the members of the Senate, not
by the members of the House of Representatives, but we have legislation by the voice of
five or six men. And for practical purposes, in most cases, it is impossible to defeat the
legislation proposed by this conference committee. Every experienced legislator knows
that it is the hardest thing in the world to defeat a conference report."
Despite these admitted evils, impartial students of the conference committee system
defend it on net balance as an essential part of the legislative process. Some mechanism
for reconciling differences under bicameral system is obviously indispensable. The
remedy for the defects of the device is not to abolish it, but to keep it under
congressional control. This can be done by enforcing the rules which prohibit the
inclusion in conference reports of matter not committed to them by either house and
forbid the deletion of items approved by both bodies; by permitting conference
managers to report necessary new matter separately and the houses to consider it apart
from the conference report; by fixing a deadline toward the close of a session after which
no bills could be sent to conference, so as to eliminate congestion at the end of the
session a suggestion made by the elder Senator La Follete in 1919; by holding
conferences in sessions open to the public, letting conference reports lie over longer, and
printing them in bill form (with conference changes in italics) so as to allow members
more time to examine them and discover "jokers."4
The "three-reading" and "no-amendment" rules, absent in the US Federal Constitution,
but expressly mandated by Article VI, Section 26(2) of our Constitution are mechanisms
instituted to remedy the "evils" inherent in a bicameral system of legislature, including
the conference committee system.

Sadly, the ponencias refusal to apply Article VI, Section 26(2) of the Constitution on the
Bicameral Conference Committee and the amendments it introduced to R.A. No. 9337
has "effectively dismantled" the "three-reading rule" and "no-amendment rule." As
posited by Fr. Joaquin Bernas, a member of the Constitutional Commission:
In a bicameral system, bills are independently processed by both House of Congress. It is
not unusual that the final version approved by one House differs from what has been
approved by the other. The "conference committee," consisting of members nominated
from both Houses, is an extra-constitutional creation of Congress whose function is to
propose to Congress ways of reconciling conflicting provisions found in the Senate
version and in the House version of a bill. It performs a necessary function in a bicameral
system. However, since conference committees have merely delegated authority from
Congress, they should not perform functions that Congress itself may not do. Moreover,
their proposals need confirmation by both Houses of Congress.
In Tolentino v. Secretary of Finance, the Court had the opportunity to delve into the limits
of what conference committees may do. The petitioners contended that the
consolidation of the House and Senate bills made by the conference committee
contained provisions which neither the Senate bill nor the House bill had. In her
dissenting opinion, Justice Romero laid out in great detail the provisions that had been
inserted by the conference committee. These provisions, according to the petitioners had
been introduced "surreptitiously" during a closed door meeting of the committee.
The Courts answer to this was that in United States practice conference committees
could be held in executive sessions and amendments germane to the purpose of the bill
could be introduced even if these were not in either original bill. But the Court did not
bother to check whether perhaps the American practice was based on a constitutional
text different from that of the Philippine Constitution.
There are as a matter of fact significant differences in the degree of freedom American
and Philippine legislators have. The only rule that binds the Federal Congress is that it
may formulate its own rules of procedure. For this reason, the Federal Congress is master
of its own procedures. It is different with the Philippine Congress. Our Congress indeed is
also authorized to formulate its own rules of procedure but within limits not found in
American law. For instance, there is the "three readings on separate days" rule. Another
important rule is that no amendments may be introduced by either house during third
reading. These limitations were introduced by the 1935 and 1973 Constitutions and
confirmed by the 1987 Constitution as a defense against the inventiveness of the
stealthy and surreptitious. These, however, were disregarded by the Court in Tolentino in
favor of contrary American practice.
This is not to say that conference committees should not be allowed. But an effort should
be made to lay out the scope of what conference committees may do according to the
requirements and the reasons of the Philippine Constitution and not according to the

practice of the American Congress. For instance, if the two Houses are not allowed to
introduce and debate amendments on third reading, can they circumvent this rule by
coursing new provisions through the instrumentality of a conference committee created
by Congress and meeting in secret? The effect of the Courts uncritical embrace of the
practice of the American Congress and its conference committees is to dismantle the noamendment rule.5
The task at hand for the Court, but which the ponencia eschews, is to circumscribe the
powers of the Bicameral Conference Committee in light of the "three-reading" and "noamendment" rules in Article VI, Section 26(2) of the Constitution.
The Bicameral Conference Committee, in
deleting the "no pass on provision" contained in
Senate Bill No. 1950 and House Bill No. 3705,
violated Article VI , Section 26(2) of the Constitution
Pertinently, in his dissenting opinion in Tolentino, Justice Davide (now Chief Justice)
opined that the duty of the Bicameral Conference Committee was limited to the
reconciliation of disagreeing provisions or the resolution of differences or inconsistencies.
This proposition still applies as can be gleaned from the following text of Sections 88 and
89, Rule XIV of the Rules of the House of Representatives:
Sec. 88. Conference Committee. In the event that the House does not agree with the
Senate on the amendments to any bill or joint resolution, the differences may be settled
by the conference committees of both chambers.
In resolving the differences with the Senate, the House panel shall, as much as possible,
adhere to and support the House Bill. If the differences with the Senate are so substantial
that they materially impair the House Bill, the panel shall report such fact to the House
for the latters appropriate action.
Sec. 89. Conference Committee Reports. - Each report shall contain a detailed,
sufficiently explicit statement of the changes in or amendments to the subject measure.

The Chairman of the House panel may be interpellated on the Conference Committee
Report prior to the voting thereon. The House shall vote on the Conference Committee
report in the same manner and procedure as it votes on a bill on third and final reading.
and Rule XII, Section 35 of the Rules of the Senate:
Sec. 35. In the event that the Senate does not agree with the House of Representatives
on the provision of any bill or joint resolution, the differences shall be settled by a

conference committee of both Houses which shall meet within ten (10) days after their
composition. The President shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed and sufficiently explicit
statement of the changes in, or amendments to the subject measure, and shall be signed
by a majority of the members of each House panel, voting separately.
Justice Davide further explained that under its limited authority, the Bicameral
Conference Committee could only (a) restore, wholly or partly, the specific provisions of
the House Bill amended by the Senate Bill; (b) sustain, wholly or partly, the Senates
amendments, or (c) by way of compromise, to agree that neither provisions in the House
Bill amended by the Senate nor the latters amendments thereto be carried into the final
form of the former. Justice Romero, who also dissented in Tolentino, added that the
conference committee is not authorized to initiate or propose completely new matters
although under certain legislative rules like the Jeffersons Manual, a conference
committee may introduce germane matters in a particular bill. However, such matters
should be circumscribed by the committees sole authority and function to reconcile
differences.
In the case of R.A. No. 9337, the Bicameral Conference Committee made an
"amendment by deletion" with respect to the "no pass on provision" contained in both
House Bill (HB) No. 3705 and Senate Bill (SB) No. 1950. HB 3705 proposed to amend
Sections 106 and 108 of the NIRC by expressly stating therein that sellers of petroleum
products and power generation companies selling electricity are prohibited from passing
on the VAT to the consumers. SB 1950 proposed to amend Section 108 by likewise
prohibiting power generation companies from passing on the VAT to the consumers.
However, these "no pass on provisions" were altogether deleted by the Bicameral
Conference Committee. At the least, since there was no disagreement between HB 3705
and SB 1950 with respect to the "no pass on provision" on the sale of electricity, the
Bicameral Conference Committee acted beyond the scope of its authority in deleting the
pertinent proviso.
At this point, it is well to recall the rationale for the "no-amendment rule" and the "threereading rule" in Article VI, Section 26(2) of the Constitution. The proscription on
amendments upon the last reading is intended to subject all bills and their amendments
to intensive deliberation by the legislators and the ample ventilation of issues to afford
the public an opportunity to express their opinions or objections thereon.6 Analogously,
it is said that the "three-reading rule" operates "as a self-binding mechanism that allows
the legislature to guard against the consequences of its own future passions, myopia, or
herd behavior. By requiring that bills be read and debated on successive days, legislature
may anticipate and forestall future occasions on which it will be seized by deliberative
pathologies."7 As Jeremy Bentham, a noted political analyst, put it: "[t]he more
susceptible a people are of excitement and being led astray, so much the more ought

they to place themselves under the protection of forms which impose the necessity of
reflection, and prevent surprises."8
Reports of the Bicameral Conference Committee, especially in cases where substantial
amendments, or in this case deletions, have been made to the respective bills of either
house of Congress, ought to undergo the "three-reading" requirement in order to give
effect to the letter and spirit of Article VI, Section 26(2) of the Constitution.
The Bicameral Conference Committee Report that eventually became R.A. No. 9337, in
fact, bolsters the argument for the strict compliance by Congress of the legislative
procedure prescribed by the Constitution. As can be gleaned from the said Report, of the
9 Senators-Conferees,9 only 5 Senators10 unqualifiedly approved it. Senator Joker P.
Arroyo expressed his qualified dissent while Senators Sergio R. Osmea III and Juan
Ponce Enrile approved it with reservations. On the other hand, of the twenty-eight (28)
Members of the House of Representatives-Conferees,11 fourteen (14)12 approved the
same with reservations while three13 voted no. All the reservations expressed by the
conferees relate to the deletion of the "no pass on provision." Only eleven (11)
unqualifiedly approved it. In other words, even among themselves, the conferees were
not unanimous on their Report. Nonetheless, Congress approved it without even
thoroughly discussing the reservations or qualifications expressed by the conferees
therein.
This "take it or leave it" stance vis--vis conference committee reports opens the
possibility of amendments, which are substantial and not even germane to the original
bills of either house, being introduced by the conference committees and voted upon by
the legislators without knowledge of their contents. This practice cannot be
countenanced as it patently runs afoul of the essence of Article VI, Section 26(2) of the
Constitution. Worse, it is tantamount to Congress surrendering its legislative functions to
the conference committees.
Ratification by Congress did not cure the
unconstitutional act of the Bicameral Conference
Committee of deleting the "no pass on provision"
That both the Senate and the House of Representatives approved the Bicameral
Conference Committee Report which deleted the "no pass on provision" did not cure the
unconstitutional act of the said committee. As succinctly put by Chief Justice Davide in
his dissent in Tolentino, "[t]his doctrine of ratification may apply to minor procedural
flaws or tolerable breaches of the parameters of the bicameral conference committees
limited powers but never to violations of the Constitution. Congress is not above the
Constitution."14
Enrolled Bill Doctrine is not applicable where, as in

this case, there is grave violation of the Constitution

As expected, the ponencia invokes the enrolled bill doctrine to buttress its refusal to pass
upon the validity of the assailed acts of the Bicameral Conference Committee. Under the
"enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate
President and the certification of the Secretaries of both houses of Congress that it was
passed are conclusive of its due enactment. In addition to Tolentino, the ponencia
citesFarias v. Executive Secretary15 where the Court declined to go behind the enrolled
bill vis--vis the allegations of the petitioners therein that irregularities attended the
passage of Republic Act No. 9006, otherwise known as the Fair Election Act.
Reliance by the ponencia on Farias is quite misplaced. The Courts adherence to the
enrolled bill doctrine in the said case was justified for the following reasons:
The Court finds no reason to deviate from the salutary in this case where the
irregularities alleged by the petitioners mostly involved the internal rules of Congress,
whether House or Senate. Parliamentary rules are merely procedural and with their
observance the courts have no concern. Whatever doubts there may be as to the formal
validity of Rep. Act No. 9006 must be resolved in its favor. The Court reiterates its ruling
in Arroyo v. De Venecia, viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the
courts the power to inquire into the 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. In Osmea v.
Pendatun, it was held: "At any rate, courts have declared that the rules adopted by
deliberative bodies are subject to revocation, modification or waiver at the pleasure of
the body adopting them. And it has been said that Parliamentary rules are merely
procedural, and with their observance, the courts have no concern. They may be waived
or disregarded by the legislative body. Consequently, mere failure to conform to
parliamentary usage will not invalidate the action (taken by a deliberative body) when
the requisite number of members have agreed to a particular measure.16
Thus, in Farias, the Courts refusal to go behind the enrolled bill was based on the fact
that the alleged irregularities that attended the passage of R.A. No. 9006 merely involved
the internal rules of both houses of Congress. The procedural irregularities allegedly
committed by the conference committee therein did not amount to a violation of a
provision of the Constitution.17
In contrast, the act of the Bicameral Conference Committee of deleting the "no pass on
provision" of SB 1950 and HB 3705 infringe Article VI, Section 26(2) of the Constitution.
The violation of this constitutional provision warrants the exercise by the Court of its
constitutionally-ordained power to strike down any act of a branch or instrumentality of

government or any of its officials done with grave abuse of discretion amounting to lack
or excess of jurisdiction.18
ACCORDINGLY, I join the concurring and dissenting opinion of Mr. Justice Reynato S. Puno
and vote to dismiss the petitions with respect to Sections 4, 5 and 6 of Republic Act No.
9337 for being premature. Further, I vote to declare as unconstitutional Section 21
thereof and the deletion of the "no pass on provision" contained in the constituent bills of
Republic Act No. 9337.
ROMEO J. CALLEJO, SR.
Associate Justice

Footnotes
1 G.R. No. 115455, 25 August 1994, 235 SCRA 630.
2 Tolentino v. Secretary of Finance, supra, at 667-668.
3 See, for example, Vermuele, A., The Constitutional Law of Congressional Procedure, 71
U. Chi. L. Rev. 361 (Spring 2004).
4 Galloway, G., Congress at the Crossroads, pp. 98-100.
5 Bernas SJ, J., The 1987 Constitution of the Republic of the Philippines, A Commentary,
pp. 702-703 (1996 Ed.).
6 Dissenting Opinion of Justice Romero in Tolentino, supra.
7 Vermuele, supra.
8 Id. citing Bentham, J., Political Tactics.
9 Senators Ralph G. Recto, Joker P. Arroyo, Manuel B. Villar, Richard J. Gordon, Rodolfo G.
Biazon, Edgardo G. Angara, M.A. Madrigal, Sergio R. Osmena III, Juan Ponce Enrile.
10 Senators Recto, Villar, Gordon, Biazon.
11 Representatives Jesli A. Lapus, Danilo E. Suarez, Arnulfo P. Fuentebella, Eric D.
Singson, Junie E. Cua, Teodoro L. Locsin, Jr., Salacnib Baterina, Edcel C. Lagman, Luis R.
Villafuerte, Herminio G. Teves, Eduardo G. Gullas, Joey Sarte Salceda, Prospero C.
Nograles, Exequiel B. Javier, Rolando G. Andaya, Jr., Guillermo P. Cua, Arthur D. Defensor,
Raul V. Del Mar, Ronaldo B. Zamora, Rolex P. Suplico, Jacinto V. Paras, Vincent P.
Crisologo, Alan Peter S. Cayetano, Joseph Santiago, Oscar G. Malapitan, Catalino
Figueroa, Antonino P. Roman and Imee R. Marcos.

12 Representatives Suarez, Fuentebella, Cua, Locsin, Jr., Teves, Gullas, Javier, Cua,
Defensor, Crisologo, Cayetano, Santiago, Malapitan and Marcos.
13 Representatives Del Mar, Suplico and Paras.
14 Dissenting Opinion in Tolentino, supra.
15 G.R. No. 147387, 10 December 2003, 417 SCRA 503.
16 Id., pp. 529-530. (Emphases mine.)
17 By way of explanation, the constitutional issues raised in Farias were (1) whether
Section 14 of R.A. No. 9006 was a rider or that it violated Article VI, Section 26(1) of the
Constitution requiring that "[e]very bill passed by Congress shall embrace only one
subject which shall be expressed in the title thereof;" and (2) whether Section 14 of R.A.
No. 9006 violated the equal protection clause of the Constitution. On both issues the
Court ruled in the negative. To reiterate, unlike in the present cases, the acts of the
conference committee with respect to R.A. No. 9006 in Farias allegedly violated the
internal rules of either house of Congress, but it was not alleged therein that they
amounted to a violation of any constitutional provision on legislative procedure.
18 Article VIII, Section 1, CONSTITUTION.

The Lawphil Project - Arellano Law Foundation

________________________________________

EN BANC
G.R. No. 168056 (ABAKADA Guro Party List [formerly ASSJS] Officers Samson S.
Alcantara, et al. v. Hon. Executive Secretary Eduardo Ermita, et al.);
G.R. No. 168207 (Aquilino Q. Pimentel, Jr., et al. v. Executive Secretary Eduardo R. Ermita,
et al.);
G.R. No. 168461 (Association of Pilipinas Shell Dealers, Inc., etc., et al. v. Cesar V.
Purisima, etc., et al.);
G.R. No. 168463 (Francis Joseph G. Escudero, et al. v. Cesar V. Purisima, etc., et al.); and
G.R. No. 168730 (Bataan Governor Enrique T. Garcia, Jr. v. Hon. Eduardo R. Ermita, etc.,
et al.)

Promulgated:
September 1, 2005
X----------------------------------------------------------------------------------------X
CONCURRING AND DISSENTING OPINION
AZCUNA, J.:
Republic Act No. 9337, the E-VAT law, is assailed as an unconstitutional abdication of
Congress of its power to tax through its delegation to the President of the decision to
increase the rate of the tax from 10% to 12%, effective January 1, 2006, after any of two
conditions has been satisfied.1
The two conditions are:
(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 %).2
A scrutiny of these "conditions" shows that one of them is certain to happen on January
1, 2006.
The first condition is that the collection from the E-VAT exceeds 2 4/5% of the Gross
Domestic Product (GDP) of the previous year, a ratio that is known as the tax effort.
The second condition is that the national government deficit exceeds 1 % of the GDP of
the previous year.
Note that the law says that the rate shall be increased if any of the two conditions
happens, i.e., if condition (i) orcondition (ii) occurs.
Now, in realistic terms, considering the short time-frame given, the only practicable way
that the present deficit of the national government can be reduced to 1 % or lower,
thus preventing condition (ii) from happening, is to increase the tax effort, which mainly
has to come from the E-VAT. But increasing the tax effort through the E-VAT, to the extent
needed to reduce the national deficit to 1 % or less, will trigger the happening of
condition (i) under the law. Thus, the happening of condition (i) or condition (ii) is in
reality certain and unavoidable, as of January 1, 2006.
This becomes all the more clear when we consider the figures provided during the oral
arguments.
The Gross Domestic Product for 2005 is estimated at P5.3 Trillion pesos.

The tax effort of the present VAT is now at 1.5%.

The national budgetary deficit against the GDP is now at 3%.
So to reduce the deficit to 1.5% from 3%, one has to increase the tax effort from VAT,
now at 1.5%, to at least 3%, thereby exceeding the 2 4/5 percent ceiling in condition (i),
making condition (i) happen.

If, on the other hand, this is not done, then condition (ii) happens the budget deficit
remains over 1.5%.
What is the result of this? The result is that in reality, the law does not impose any
condition, or the rate increase thereunder, from 10% to 12%, effective January 1, 2006,
is unconditional. For a condition is an event that may or may not happen, or one whose
occurrence is uncertain.3 Now while condition (i) is indeed uncertain and condition (ii) is
likewise uncertain, the combination of both makes the occurrence of one of them certain.
Accordingly, there is here no abdication by Congress of its power to fix the rate of the tax
since the rate increase provided under the law, from 10% to 12%, is definite and certain
to occur, effective January 1, 2006. All that the President will do is state which of the two
conditions occurred and thereupon implement the rate increase.
At first glance, therefore, it would appear that the decision to increase the rate is to be
made by the President, or that the increase is still uncertain, as it is subject to the
happening of any of two conditions.
Nevertheless, the contrary is true and thus it would be best in these difficult and critical
times to let our people know precisely what burdens they are being asked to bear as the
necessary means to recover from a crisis that calls for a heroic sacrifice by all.
It is for this reason that the Court required respondents to submit a copy of the rules to
implement the E-VAT, particularly as to the impact of the tax on prices of affected
commodities, specially oil and electricity. For the onset of the law last July 1, 2005 was
confusing, resulting in across-the-board increases of 10% in the prices of commodities.
This is not supposed to be the effect of the law, as was made clear during the oral
arguments, because the law also contains provisions that mitigate the impact of the EVAT through reduction of other kinds of taxes and duties, and other similar measures,
specially as to goods that go into the supply chain of the affected products. A proper
implementation of the E-VAT, therefore, should cause only the appropriate incremental
increase in prices, reflecting the net incremental effect of the tax, which is not
necessarily 10%, but possibly less, depending on the products involved.
The introduction of the mitigating or cushioning measures through the Senate or through
the Bicameral Conference Committee, is also being questioned by petitioners as

unconstitutional for violating the rule against amendments after third reading and the
rule that tax measures must originate exclusively in the House of Representatives (Art.
VI, Secs. 24 and 26 [2], Constitution). For my part, I would rather give the necessary
leeway to Congress, as long as the changes are germane to the bill being changed, the
bill which

originated from the House of Representatives, and these are so, since these were
precisely the mitigating measures that go hand-on-hand with the E-VAT, and are,
therefore, essential -- and hopefully sufficient -- means to enable our people to bear the
sacrifices they are being asked to make. Such an approach is in accordance with the
Enrolled Bill Doctrine that is the prevailing rule in this jurisdiction. (Tolentino v. Secretary
of Finance, 249 SCRA 628 [1994]). The exceptions I find are the provisions on corporate
income taxes, which are not germane to the E-VAT law, and are not found in the Senate
and House bills.
I thus agree with Chief Justice Hilario G. Davide, Jr. in his separate opinion that the
following are not germane to the E-VAT legislation:
Amended TAX
CODE Provision Subject Matter
Section 27 Rate of income tax on domestic corporations
Section 28(A)(1) Rate of income tax on resident foreign corporations
Section 28(B)(1) Rate of income tax on non-resident foreign corporations
Section 28(B)(5-b) Rate of income tax on intercorporate dividends received by nonresident foreign corporations
Section 34(B)(1) Deduction from gross income
Similarly, I agree with Justice Artemio V. Panganiban in his separate opinion that the
following are not germane to the E-VAT law:
"Sections 1, 2, and 3 of the Republic Act No. 9337, in so far as these sections (a)
amend the rates of income tax on domestic, resident foreign, and nonresident foreign
corporations; (b) amend the tax credit against taxes due from nonresident foreign
corporations on the intercorporate dividends; and (c) reduce the allowable deduction
from interest expense."
Respondents should, in any case, now be able to implement the E-VAT law without
confusion and thereby achieve its purpose.4

I vote to GRANT the petitions to the extent of declaring unconstitutional the provisions in
Republic Act. No. 9337 that are not germane to the subject matter and DENY said
petitions as to the rest of the law, which are constitutional.
ADOLFO S. AZCUNA
Associate Justice

Footnotes
1 The Constitution states that "Congress may, by law, allow the President to fix within
specified limits, and subject to such limitations and restrictions as it may impose, tariff
rates, import and export quotas, tonnage and wharfage dues, and other duties as
imposts within the framework of the national development program of the Government."
(Art. VI, Sec. 28 [2], emphasis supplied.)
Petitioners claim that the power does not extend to fixing the rates of taxes, since taxes
are not tariffs, import and export quotas, tonnage and wharfage dues, or other duties or
imposts.
2 Section 4, Republic Act No. 9337. The pertinent portion of the provision states:
SEC. 4. Section 106 of the same Code, as amended, is hereby further amended to read
as follows:
"SEC. 106. Value-added Tax on Sale of Goods or Properties.
"(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale,
barter or exchange of goods or properties, a value-added tax equivalent to ten percent
(10%) of the gross selling price or gross value in money of the goods or properties sold,
bartered or exchanged, such tax to be paid by the seller or transferor: Provided, That the
President, upon the recommendation of the Secretary of Finance, shall, effective January
1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the
following conditions has been satisfied:
"(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or
"(ii) National government deficit as a percentage of GDP of the previous year exceeds
one and one-half percent (1 %)."
3 Condition has been defined by Escriche as "every future and uncertain event upon
which an obligation or provision is made to depend." It is a future and uncertain event
upon which the acquisition or resolution of rights is made to depend by those who

execute the juridical act. Futurity and uncertainty must concur as characteristics of the
event.
...
An event which is not uncertain but must necessarily happen cannot be a condition; the
obligation will be considered as one with a term. (IV TOLENTINO, COMMENTARIES AND
JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES, 144).
4 I voted for the issuance of the temporary restraining order to prevent the disorderly
implementation of the law that would have defeated its very purpose and disrupted the
entire VAT system, resulting in less revenues. The rationale, therefore, of the rule against
enjoining the collection of taxes, that taxes are the lifeblood of Government, leaned in
favor of the temporary restraining order.

The Lawphil Project - Arellano Law Foundation

________________________________________

GR No. 168056 - (ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S.
ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE EXECUTIVE SECRETARY
EDUARDO ERMITA; HONORABLE SECRETARY OF THE DEPARTMENT OF FINANCE CESAR
PURISIMA; and HONORABLE COMMISSIONER OF INTERNAL REVENUE GUILLERMO
PARAYNO, JR.)
GR No. 168207 (AQUILINO Q. PIMENTEL, JR., LUISA P. EJERCITO-ESTRADA, JINGGOY E.
ESTRADA, PANFILO M. LACSON, ALFREDO S. LIM, JAMBY A.S. MADRIGAL, and SERGIO R.
OSMEA III v. EXECUTIVE SECRETARY EDUARDO R. ERMITA, CESAR V. PURISIMA,
SECRETARY OF FINANCE, GUILLERMO L. PARAYNO, JR., COMMISSIONER OF THE BUREAU
OF INTERNAL REVENUE)
GR No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC. represented by its
President, ROSARIO ANTONIO; PETRON DEALERS ASSOCIATION represented by its
President, RUTH E. BARBIBI; ASSOCIATION OF CALTEX DEALERS OF THE PHILIPPINES
represented by its President, MERCEDITAS A. GARCIA; ROSARIO ANTONIO doing business
under the name and style of "ANB NORTH SHELL SERVICE STATION"; LOURDES MARTINEZ
doing business under the name and style of "SHELL GATE N. DOMINGO"; BETHZAIDA
TAN doing business under the name and style of "ADVANCED SHELL STATION";
REYNALDO P. MONTOYA doing business under the name and style of "NEW LAMUAN
SHELL SERVICE STATION"; EFREN SOTTO doing business under the name and style of

"REDFIELD SHELL SERVICE STATION"; DONICA CORPORATION represented by its

President, DESI TOMACRUZ; RUTH E. MARBIBI doing business under the name and style
of "R&R PETRO STATION"; PETER M. UNGSON doing business under the name and style of
"CLASSIC STAR GASOLINE SERVICE STATION"; MARIAN SHEILA A. LEE doing business
under the name and style "NTE GASOLINE & SERVICE STATION"; JULIAN CESAR P.
POSADAS doing business under the name and style of "STARCARGA ENTERPRISES";
ADORACION MAEBO doing business under the name and style of "CMA MOTORISTS
CENTER"; SUSAN M. ENTRATA doing business under the name and style of "LEONAS
GASOLINE STATION and SERVICE CENTER"; CARMELITA BALDONADO doing business
under the name and style of "FIRST CHOICE SERVICE CENTER: RHEAMAR A. RAMOS
doing business under the name and style of "RJAM PTT GAS STATION"; MA. ISABEL
VIOLAGO doing business under the name and style of "VIOLAGO-PTT SERVICE CENTER";
MOTORISTS HEART CORPORATON represented by its Vice-President for Operations,
JOSELITO F. FLORDELIZA; MOTORISTS HARVARD CORPORATION represented by its VicePresident for Operations, JOSELITO F. FLORDELIZA; MOTORISTS HERITAGE CORPORATION
represented by its Vice-President for Operations, JOSELITO F. FLORDELIZA; PHILIPPINE
STANDARD OIL CORPORATION represented by its Vice-President for Operations, JOSELITO
F. FLORDELIZA; ROMEO MANUEL doing business under the name and style of "ROMMAN
GASOLINE STATION"; ANTHONY ALBERT CRUZ III doing business under the name and
style of "TRUE SERVICE STATION" v. CESAR V. PURISIMA, in his capacity as Secretary of
the Department of Finance and GUILLERMO L. PARAYNO, JR., in his capacity as
Commissioner of Internal Revenue.
GR No. 168463 FRANCIS JOSEPH G. ESCUDERO, VINCENT CRISOLOGO, EMMANUEL
JOSEL J. VILLANUEVA, RODOLFO G. PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G.
MALAPITAN, BENJAMIN C. AGARAO, JR., JUAN EDGARDO M. ANGARA, JUSTIN MARC SB.
CHIPECO, FLORENCIOI G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A.
SANTIAGO, TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI
and TEODORO A. CASIO, v. CESAR V. PURISIMA, in his capacity as Secretary of Finance,
GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of Internal Revenue, and
EDUARDO R. ERMITA, in his capacity as Executive Secretary.
GR. No. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR. v. HON. EDUARDO R.
ERMITA, in his capacity as the Executive Secretary; HON. MARGARITO TEVES, in his
capacity as Secretary of Finance; HON. JOSE MARIO BUNAG, in his capacity as the OIC
Commissioner of the Bureau of Customs.
x-------------------------------------------------------------------x
DISSENTING OPINION
Tinga, J.:

The E-VAT Law,1 as it stands, will exterminate our countrys small to medium enterprises.
This will be the net effect of affirming Section 8 of the law, which amends Sections 110 of
the National Internal Revenue Code (NIRC) by imposing a seventy percent (70%) cap on
the creditable input tax a VAT-registered person may apply every quarter and a
mandatory sixty (60) -month amortization period on the input tax on goods purchased or
imported in a calendar month if the acquisition cost of such goods exceeds One Million
Pesos (P1,000,000.00).
Taxes may be inherently punitive, but when the fine line between damage and
destruction is crossed, the courts must step forth and cut the hangmans noose. Justice
Holmes once confidently asserted that "the power to tax is not the power to destroy
while this Court sits", and we should very well live up to this expectation not only of the
revered Holmes, but of the Filipino people who rely on this Court as the guardian of their
rights. At stake is the right to exist and subsist despite taxes, which is encompassed in
the due process clause.
I respectfully submit these views while maintaining the deepest respect for the
prerogative of the legislature to impose taxes, and of the national government to chart
economic policy. Such respect impels me to vote to deny the petitions in G.R. Nos.
168056, 168207, 168463,2 and 168730, even as I acknowledge certain merit in the
challenges against the E-VAT law that are asserted in those petitions. In the final
analysis, petitioners therein are unable to convincingly demonstrate the constitutional
infirmity of the provisions they seek to assail. The only exception is Section 21 of the law,
which I consider unconstitutional, for reasons I shall later elaborate.
However, I see the petition in G.R. No. 168461 as meritorious and would vote to grant it.
Accordingly, I dissent and hold as unconstitutional Section 8 of Republic Act No. 9337,
insofar as it amends Section 110(A) and (B) of the National Internal Revenue Code (NIRC)
as well as Section 12 of the same law, with respect to its amendment of Section 114(C)
of the NIRC.
The first part of my discussion pertains to the petitions in G.R. Nos. 168056, 168207,
168463, and 168730, while the second part is devoted to what I deem the most crucial
issue before the Court, the petition in G.R. No. 168461.
I.
Undue Delegation and the Increase
Of the VAT Rate
My first point pertains to whether or not Sections 4, 5 and 6 of the E-VAT Law constitutes
an undue delegation of legislative power. In appreciating the aspect of undue delegation
as regards taxation statutes, the fundamental point remains that the power of taxation is
inherently legislative,3 and may be imposed or revoked only by the legislature.4 In

tandem with Section 1, Article VI of the Constitution which institutionalizes the lawmaking power of Congress, Section 24 under the same Article crystallizes this principle,
as it provides that "[a]ll appropriation, revenue or tariff bills shall originate exclusively
in the House of Representatives."5
Consequently, neither the executive nor judicial branches of government may originate
tax measures. Even if the President desires to levy new taxes, the imposition cannot be
done by mere executive fiat. In such an instance, the President would have to rely on
Congress to enact tax laws.
Moreover, this plenary power of taxation cannot be delegated by Congress to any other
branch of government or private persons, unless its delegation is authorized by the
Constitution itself.6 In this regard, the situation stands different from that in the recent
case Southern Cross v. PHILCEMCOR,7 wherein I noted in my ponencia that the Tariff
Commission and the DTI Secretary may be regarded as agents of Congress for the
purpose of imposing safeguard measures. That pronouncement was made in light of
Section 28(2) Article VI, which allows Congress to delegate to the President through law
the power to impose tariffs and imposts, subject to limitations and restrictions as may be
ordained by Congress. In the case of taxes, no such constitutional authorization exists,
and the discretion to ascertain the rates, subjects, and conditions of taxation may not be
delegated away by Congress.
However, as the majority correctly points out, the power to ascertain the facts or
conditions as the basis of the taking into effect of a law may be delegated by Congress,8
and that the details as to the enforcement and administration of an exercise of taxing
power may be delegated to executive agencies, including the power to determine the
existence of facts on which its operation depends.9
Proceeding from these principles, Sections 4, 5, and 6 of the E-VAT Law warrant
examination. The provisions read:
SEC. 4. Sec. 106 of the same Code, as amended, is hereby further amended to read as
follows:
SEC. 106. Value-Added Tax on Sale of Goods or Properties.
(A) Rate and Base of Tax. There shall be levied, assessed and collected on every sale,
barter or exchange of goods or properties, a value-added tax equivalent to ten percent
(10%) of the gross selling price or gross value in money of the goods or properties sold,
bartered or exchanged, such tax to be paid by the seller or transferor;provided, that the
President, upon the recommendation of the Secretary of Finance, shall, effective January
1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the
following conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent 1 %).
Sec. 5. Section 107 of the same Code, as amended, is hereby further amended to read
as follows:
SEC. 107. Value-Added Tax on Importation of Goods.
(a) In General. There shall be levied, assessed and collected on every importation of
goods a value-added tax equivalent to ten percent (10%) based on the total value used
by the Bureau of Customs in determining tariff and customs duties, plus customs duties,
excise taxes, if any, and other charges, such tax to be paid by the importer prior to the
release of such goods from customs custody: Provided, That where the customs duties
are determined on the basis of the quantity or volume of the goods, the value-added tax
shall be based on the landed cost plus excise taxes, if any: provided, further, that the
President, upon the recommendation of the Secretary of Finance, shall, effective January
1, 2006, raise the rate of value-added tax to twelve percent (12%) after any of the
following conditions has been satisfied.
(i) national value-added tax collection as a percentage of Gross Domestic Product (GDP)
of the previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) government deficit as a percentage of GDP of the previous year exceeds one and
one-half percent (1 %).
SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read
as follows:
SEC. 108. Value-added Tax on Sale of Services and Use of Lease of Properties(A) Rate and Base of Tax. There shall be levied, assessed and collected, a value-added
tax equivalent to ten percent (10%) of gross receipts derived from the sale or exchange
of services; provided, that the President, upon the recommendation of the Secretary of
Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve
percent (12%), after any of the following conditions has been satisfied.
(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%) or
(ii) national government deficit as a percentage of GDP of the previous year exceed
same and on-half percent (1 %).
The petitioners deem as noxious the proviso common to these provisions that "the
President, upon the recommendation of the Secretary of Finance, shall, effective January

1, 2006, raise the rate of value-added tax to twelve percent (12%)," after the satisfaction
of the twin conditions that value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or that
the national government deficit as a percentage of GDP of the previous year exceed
same and on-half percent (1 %).
At first blush, it does seem that the assailed provisions are constitutionally deficient. It is
Congress, and not the President, which is authorized to raise the rate of VAT from 10% to
12%, no matter the circumstance. Yet a closer analysis of the proviso reveals that this is
not exactly the operative effect of the law. The qualifier "shall" denotes a mandatory,
rather than discretionary function on the part of the President to raise the rate of VAT to
12% upon the existence of any of the two listed conditions.
Since the President is not given any discretion in refusing to raise the VAT rate to 12%,
there is clearly no delegation of the legislative power to tax by Congress to the executive
branch. The use of the word "shall" obviates any logical construction that would allow the
President leeway in not raising the tax rate. More so, it is accepted that the principle of
constitutional construction that every presumption should be indulged in favor of
constitutionality and the court in considering the validity of the 'statute in question
should give it such reasonable construction as can be reached to bring it within the
fundamental law.10 While all reasonable doubts should be resolved in favor, of the
constitutionality of a statute,11 it should necessarily follow that the construction upheld
should be one that is not itself noxious to the Constitution.
Congress should be taken to task for imperfect draftsmanship at least. Much trouble
would have been avoided had the provisos instead read: "that effective January 1, 2006,
the rate of value-added tax shall be raised to twelve percent (12%), after any of the
following conditions has been satisfied xxx." This, after all is the operative effect of the
provision as it stands. In relation to the operation of the tax increase, the denominated
role of the President and the Secretary of Finance may be regarded as a superfluity, as
their imprimatur as a precondition to the increase of the VAT rate must have no bearing.
Nonetheless, I cannot ignore the fact that both the President and the Secretary of
Finance have designated roles in the implementation of the tax increase. Considering
that it is Congress, and not these officials, which properly have imposed the increase in
the VAT rate, how should these roles be construed?
The enactment of a law should be distinguished from its implementation. Even if it is
Congress which exercises the plenary power of taxation, it is not the body that
administers the implementation of the tax. Under Section 2 of the National Internal
Revenue Code (NIRC), the assessment and collection of all national internal revenue
taxes, and the enforcement of all forefeitures, penalties and fines connected therewith
had been previously delegated to the Bureau of Internal Revenue, under the supervision
and control of the Department of Finance.12

Moreover, as intimated earlier, Congress may delegate to other components of the

government the power to ascertain the facts or conditions as the basis of the taking into
effect of a law. It follows that ascertainment of the existence of the two conditions
precedent for the increase as stated in the law could very well be delegated to the
President or the Secretary of Finance.13
Nonetheless, the apprehensions arise that the process of ascertainment of the listed
conditions delegated to the Secretary of Finance and the President effectively vest
discretionary authority to raise the VAT rate on the President, through the subterfuges
that may be employed to delay the determination, or even to manipulate the factual
premises. Assuming arguendo that these feared abuses may arise, I think it possible to
seek judicial enforcement of the increased VAT rate, even without the participation or
consent of the President or Secretary of Finance, upon indubitable showing that any of
the two listed conditions do exist. After all, the Court is ruling that the increase in the VAT
rate is mandatory and beyond the discretion of the President to impose or delay.
The majority states that in making the recommendation to the President on the
existence of either of the two conditions, the Secretary of Finance is acting as the agent
of the legislative branch, to determine and declare the event upon which its expressed
will is to take effect.14 This recognition of agency must be qualified. I do not doubt the
ability of Congress to delegate to the Secretary of Finance administrative functions in the
implementation of tax laws, as it does under Section 2 of the NIRC. Yet it would be
impermissible for Congress to delegate to the Secretary of Finance the plenary function
of enacting a tax law. As stated earlier, the situation stands different from that in
Southern Cross wherein the Constitution itself authorizes the delegation by Congress
through a law to the President of the discretion to impose tariff measures, subject to
restrictions and limitations provided in the law.15 Herein, Congress cannot delegate to
either the President or the Secretary of Finance the discretion to raise the tax, as such
power belongs exclusively to the legislative branch.
Perhaps the term "agency" is not most suitable in describing the delegation exercised by
Congress in this case, for agency implies that the agent takes on attributes of the
principal by reason of representative capacity. In this case, whatever "agency" that can
be appreciated would be of severely limited capacity, encompassing as it only could the
administration, not enactment, of the tax measure.
I do not doubt the impression left by the provisions that it is the President, and not
Congress, which is authorized to raise the VAT rate. On paper at least, these imperfect
provisions could be multiple sources of mischief. On the political front, whatever blame or
scorn that may be attended with the increase of the VAT rate would fall on the President,
and not on Congress which actually increased the tax rate. On the legal front, a President
averse to increasing the VAT rate despite the existence of the two listed conditions may
take refuge in the infelicities of the provision, and refuse to do so on the ground that the
law, as written, implies some form of discretion on the part of the President who was,

after all, "authorized" to increase the tax rate. It is critical for the Court to disabuse this
notion right now.
The Continued Viability of
Tolentino v. Secretary of Finance
One of the more crucial issues now before us, one that has seriously divided the Court,
pertains to the ability of the Bicameral Conference Committee to introduce amendments
to the final bill which were not contained in the House bill from which the E-VAT Law
originated. Most of the points addressed by the petitioners have been settled in our
ruling in Tolentino v. Secretary of Finance,16 yet a revisit of that precedent is urged upon
this Court. On this score, I offer my qualified concurrence with the ponencia.
Two key provisions of the Constitution come into play: Sections 24 and 26(2), Article VI of
the Constitution. They read:
Section 24: All appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills shall originate exclusively in the
House of Representatives, but the Senate may propose or concur with amendments.
Section 26(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.
Section 24 is also known as the origination clause, which derives origin from British
practice. From the assertion that the power to tax the public at large must reside in the
representatives of the people, the principle evolved that money bills must originate in
the House of Commons and may not be amended by the House of Lords.17 The principle
was adopted across the shores in the United States, and was famously described by
James Madison inThe Federalist Papers as follows:
This power over the purse, may in fact be regarded as the most compleat and effectual
weapon with which any constitution can arm the immediate representatives of the
people, for obtaining a redress of every grievance, and for carrying into effect every just
and salutary measure.18
There is an eminent difference from the British system from which the principle emerged,
and from our own polity. To this day, only members of the British House of Commons are
directly elected by the people, with the members of the House of Lords deriving their
seats from hereditary peerage. Even in the United States, members of the Senate were
not directly elected by the people, but chosen by state legislatures, until the adoption of

the Seventeenth Amendment in 1913. Hence, the rule assured the British and American
people that tax legislation arises with the consent of the sovereign people, through their
directly elected representatives. In our country though, both members of the House and
Senate are directly elected by the people, hence the vitality of the original conception of
the rule has somewhat lost luster.
Still, the origination clause deserves obeisance in this jurisdiction, simply because it is
provided in the Constitution. At the same time, its proper interpretation is settled
precedent, as enunciated in Tolentino:
To begin with, it is not the law but the revenue bill which is required by the
Constitution to "originate exclusively" in the House of Representatives. It is important to
emphasize this, because a bill originating in the House may undergo such extensive
changes in the Senate that the result may be a rewriting of the whole. The possibility of a
third version by the conference committee will be discussed later. At this point, what is
important to note is that, as a result of the Senate action, a distinct bill may be
produced. To insist that a revenue statute and not only the bill which initiated the
legislative process culminating in the enactment of the law must substantially be the
same as the House bill would be to deny the Senate's power not only to "concur with
amendments" but also to " propose amendments." It would be to violate the coequality
of legislative power of the two houses of Congress and in fact make the House superior
to the Senate.19
The vested power of the Senate to " propose or concur with amendments" necessarily
implies the ability to adduce transformations from the original House bill into the final
law. Since the House and Senate sit separately in sessions, the only opportunity for the
Senate to introduce its amendments would be in the Bicameral Conference Committee,
which emerges only after both the House and the Senate have approved their respective
bills.
In the present petitions, Tolentino comes under fire on two fronts. The first controversy
arises from the adoption inTolentino of American legislative practices relating to
bicameral committees despite the difference in constitutional frameworks, particularly
the limitation under Section 26(2), Article VI which does not exist in the American
Constitution.
The majority points out that the "no amendment rule" refers only to the procedure to be
followed by each house of Congress with regard to bills initiated in the house concerned,
before said bills are transmitted to the other house for its concurrence or amendment. I
agree with this statement. Clearly, the procedure under Section 26(2), Article VI only
relates to the passage of a bill before the House and Senate, and not the process
undertaken afterwards in the Bicameral Conference Committee.

Indeed, Sections 26 and 27 of Article VI, which detail the procedure how a bill becomes a
law, are silent as to what occurs between the passage by both houses of their respective
bills, and the presentation to the President of
"every bill passed by the Congress".20 Evidently, "Congress" means both Houses, such
that a bill approved by the Senate but not by the House is not presented to the President
for approval. There is obviously a need for joint concurrence by the House and Senate of
a bill before it is transmitted to the President, but the Constitution does not provide how
such concurrence is acquired. This lacuna has to be filled, otherwise no bill may be
transmitted to the President.
Even if the Bicameral Conference Committee is not a constitutionally organized body, it
has existed as the necessary conclave for both chambers of Congress to reconcile their
respective versions of a prospective law. The members of the Bicameral Conference
Committee may possess in them the capacity to represent their particular chamber, yet
the collective is neither the House nor the Senate. Hence, the procedure contained in
Section 26(2), Article VI cannot apply to the Bicameral Conference Committee.
Tellingly, the version approved by the Bicameral Conference Committee still undergoes
deliberation and approval by both Houses. Only one vote is taken to approve the
reconciled bill, just as only one vote is taken in order to approve the original bill.
Certainly, it could not be contended that this final version surreptitiously evades
approval of either the House or Senate.
The second front concerns the scope and limitations of the Bicameral Conference
Committee to amend, delete, or otherwise modify the bills as approved by the House and
the Senate.
Tolentino adduced the principle, adopted from American practice, that the version as
approved by the Bicameral Conference Committee need only be germane to the subject
of the House and Senate bills in order to be valid.21The majority, in applying the test of
germaneness, upholds the contested provisions of the E-VAT Law. Even the members of
the Court who prepared to strike down provisions of the law applying germaneness
nonetheless accept the basic premise that such test is controlling.
I agree that any amendment made by the Bicameral Conference Committee that is not
germane to the subject matter of the House or Senate Bills is not valid. It is the only valid
ground by which an amendment introduced by the Bicameral Conference Committee
may be judicially stricken.
The germaneness standard which should guide Congress or the Bicameral Conference
Committee should be appreciated in its normal but total sense. In that regard, my views
contrast with that of Justice Panganiban, who asserts that provisions that are not "legally
germane" should be stricken down. The legal notion of germaneness is just but one
component, along with other factors such as economics and politics, which guides the

Bicameral Conference Committee, or the legislature for that matter, in the enactment of
laws. After all, factors such as economics or politics are expected to cast a pervasive
influence on the legislative process in the first place, and it is essential as well to allow
such "non-legal" elements to be considered in ascertaining whether Congress has
complied with the criteria of germaneness.
Congress is a political body, and its rationale for legislating may be guided by factors
other than established legal standards. I deem it unduly restrictive on the plenary
powers of Congress to legislate, to coerce the body to adhere to judge-made standards,
such as a standard of "legal germaneness". The Constitution is the only legal standard
that Congress is required to abide by in its enactment of laws.
Following these views, I cannot agree with the position maintained by the Chief Justice,
Justices Panganiban and Azcuna that the provisions of the law that do not pertain to VAT
should be stricken as unconstitutional. These would include, for example, the provisions
raising corporate income taxes. The Bicameral Conference Committee, in evaluating the
proposed amendments, necessarily takes into account not just the provisions relating to
the VAT, but the entire revenue generating mechanism in place. If, for example,
amendments to non-VAT related provisions of the NIRC were intended to offset the
expanded coverage for the VAT, then such amendments are germane to the purpose of
the House and Senate Bills.
Moreover, it would be myopic to consider that the subject matter of the House Bill is
solely the VAT system, rather than the generation of revenue. The majority has
sufficiently demonstrated that the legislative intent behind the bills that led to the E-VAT
Law was the generation of revenue to counter the countrys dire fiscal situation.
The mere fact that the law is popularly known as the E-VAT Law, or that most of its
provisions pertain to the VAT, or indirect taxes, does not mean that any and all
amendments which are introduced by the Bicameral Conference Committee must pertain
to the VAT system. As the Court noted in Tatad v. Secretary of Energy:22
[I]t is contended that section 5(b) of R.A. No. 8180 on tariff differential violates the
provision 17 of the Constitution requiring every law to have only one subject which
should be expressed in its title. We do not concur with this contention. As a policy, this
Court has adopted a liberal construction of the one title - one subject rule. We have
consistently ruled that the title need not mirror, fully index or catalogue all contents and
minute details of a law. A law 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. We hold that section 5(b) providing for tariff differential is germane to
the subject of R.A. No. 8180 which is the deregulation of the downstream oil industry. The

section is supposed to sway prospective investors to put up refineries in our country and
make them rely less on imported petroleum.23
I submit that if the amendments are attuned to the goal of revenue generation, the
stated purpose of the original House Bills, then the test of germaneness is satisfied. It
might seem that the goal of revenue generation, which is stated in virtually all tax or
tariff bills, is so encompassing in scope as to justify the inclusion by the Bicameral
Conference Committee of just about any revenue generation measure. This may be so,
but it does not mean that the test of germaneness would be rendered inutile when it
comes to revenue laws.
I do believe that the test of germaneness was violated by the E-VAT Law in one regard.
Section 21 of the law, which was not contained in either the House or Senate Bills,
imposes restrictions on the use by local government units of their incremental revenue
from the VAT. These restrictions are alien to the principal purposes of revenue
generation, or the purposes of restructuring the VAT system. I could not see how the
provision, which relates to budgetary allocations, is germane to the E-VAT Law. Since it
was introduced only in the Bicameral Conference Committee, the test of germaneness is
essential, and the provision does not pass muster. I join Justice Puno and the Chief Justice
in voting to declare Section 21 as unconstitutional.
I also offer this brief comment regarding the deletion of the so-called "no pass on"
provisions, which several of my colleagues deem unconstitutional. Both the House and
Senate Bills contained these provisions that would prohibit the seller/producer from
passing on the cost of the VAT payments to the consumers. However, an examination of
the said bills reveal that the "no pass on" provisions in the House Bill affects a different
subject of taxation from that of the Senate Bill. In the House Bill No. 3705, the taxpayers
who are prohibited from passing on the VAT payments are the sellers of petroleum
products and electricity/power generation companies. In Senate Bill No. 1950, no
prohibition was adopted as to sellers of petroleum products, but enjoined therein are
electricity/power generation companies but also transmission and distribution
companies.
I consider such deletions as valid, for the same reason that I deem the amendments
valid. The deletion of the two disparate "no pass on" provisions which were approved by
the House in one instance, and only by the Senate in the other, remains in the sphere of
compromise that ultimately guides the approval of the final version. Again, I point out
that even while the two provisions may have been originally approved by the House and
Senate respectively, their subsequent deletion by the Bicameral Conference Committee
is still subject to approval by both chambers of Congress when the final version is
submitted for deliberation and voting.
Moreover, the fact that the nature of the "no pass on" provisions adopted by the House
essentially differs from that of the Senate necessarily required the corrective relief from

the Bicameral Conference Committee. The Committee could have either insisted on the
House version, the Senate version, or both versions, and it is not difficult to divine that
any of these steps would have obtained easy approval. Hence, the deletion altogether of
the "no pass on" provisions existed as a tangible solution to the possible impasse, and
the Committee should be accorded leeway to implement such a compromise, especially
considering that the deletion would have remained germane to the law, and would not
be constitutionally prohibited since the prohibition on amendments under Section 26(2),
Article VI does not apply to the Committee.
An outright declaration that the deletion of the two elementally different "no-pass on"
provisions is unconstitutional, is of dubious efficacy in this case. Had such
pronouncement gained endorsement of a majority of the Court, it could not result in the
ipso facto restoration of the provision, the omission of which was ultimately approved in
both the House and Senate. Moreover, since the House version of the "no pass on" is
quite different from that of the Senate, there would be a question as to whether the
House version, the Senate version, or both versions would be reinstated. And of course,
if it were the Court which would be called upon to choose, such would be way beyond the
bounds of judicial power.
Indeed, to intimate that the Court may require Congress to reinstate a provision that
failed to meet legislative approval would result in a blatant violation of the principle of
separation of powers, with the Court effectively dictating to Congress the content of its
legislation. The Court cannot simply decree to Congress what laws or provisions to enact,
but is limited to reviewing those enactments which are actually ratified by the
legislature.
II.
My earlier views, as are the submissions I am about to offer, are rooted in nothing more
than constitutional interpretation. Perhaps my preceding discussion may lead to an
impression that I whole-heartedly welcome the passage of the E-VAT Law. Yet whatever
relief I may have over the enactment of a law designed to relieve our countrys financial
woes are sadly obviated with the realization that a key amendment introduced in the law
is not only unconstitutional, but of fatal consequences. The clarion call of judicial review
is most critical when it stands as the sole barrier against the deprivation of life, liberty
and property without due process of law. It becomes even more impelling now as we are
faced with provisions of the E-VAT Law which, though in bland disguise, would operate as
the most destructive of tax measures enacted in generations.
Tax Statutes and the Due Process Clause
It is the duty of the courts to nullify laws that contravene the due process clause of the
Bill of Rights. This task is at the heart not only of judicial review, but of the democratic
system, for the fundamental guarantees in the Bill of Rights become merely hortatory if

their judicial enforcement is unavailing. Even if the void law in question is a tax statute,
or one that encompasses national economic policy, the courts should not shirk from
striking it down notwithstanding any notion of deference to the executive or legislative
branch on questions of policy. Neither Congress nor the President has the right to enact
or enforce unconstitutional laws.
The Bill of Rights is by no means the only constitutional yardstick by which the validity of
a tax law can be measured. Nonetheless, it stands as the most unyielding of
constitutional standards, given its position of primacy in the fundamental law way above
the articles on governmental power.24 If the question lodged, for example, hinges on the
proper exercise of legislative powers in the enactment of the tax law, leeway can be
appreciated in favor of affirming the legislatures inherent power to levy taxes. On the
other hand, no quarter can be ceded, no concession yielded, on the peoples
fundamental rights as enshrined in the Bill of Rights, even if the sacrifice is ostensibly
made "in the national interest." It is my understanding that "the national interests,"
however comported, always subsumes in the first place recognition and enforcement of
the Bill of Rights, which manifests where we stand as a democratic society.
The constitutional safeguard of due process is embodied in the fiat "No person shall be
deprived of life, liberty or property without due process of law".25 The purpose of the
guaranty is to prevent governmental encroachment against the life, liberty and property
of individuals; to secure the individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private rights and distributive
justice; to protect property from confiscation by legislative enactments, from seizure,
forfeiture, and destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the benefit of the
general law.26
In Magnano Co. v. Hamilton,27 the U.S. Supreme Court recognized that the due process
clause may be utilized to strike down a taxation statute, "if the act be so arbitrary as to
compel the conclusion that it does not involve an exertion of the taxing power, but
constitutes, in substance and effect, the direct exertion of a different and forbidden
power, as, for example, the confiscation of property."28 Locally, Sison v. Ancheta29 has
long provided sanctuary for persons assailing the constitutionality of taxing statutes. The
oft-quoted pronouncement of Justice Fernando follows:
2. The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of
sovereignty. It is the strongest of all the powers of government." It is, of course, to be
admitted that for all its plenitude, the power to tax is not unconfined. There are
restrictions. The Constitution sets forth such limits. Adversely affecting as it does
property rights, both the due process and equal protection clauses may properly be
invoked, as petitioner does, to invalidate in appropriate cases a revenue measure. If it
were otherwise, there would be truth to the 1803 dictum of Chief Justice Marshall that
"the power to tax involves the power to destroy." In a separate opinion in Graves v. New

York, Justice Frankfurter, after referring to it as an "unfortunate remark," characterized it

as "a flourish of rhetoric [attributable to] the intellectual fashion of the times [allowing] a
free use of absolutes." This is merely to emphasize that it is not and there cannot be
such a constitutional mandate. Justice Frankfurter could rightfully conclude: "The web of
unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr.
Justice Holmes's pen: 'The power to tax is not the power to destroy while this Court sits.'"
So it is in the Philippines.
3. This Court then is left with no choice. The Constitution as the fundamental law
overrides any legislative or executive act that runs counter to it. In any case therefore
where it can be demonstrated that the challenged statutory provision as petitioner
here alleges fails to abide by its command, then this Court must so declared and
adjudge it null. The inquiry thus is centered on the question of whether the imposition of
a higher tax rate on taxable net income derived from business or profession than on
compensation is constitutionally infirm.
4. The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere
allegation, as here, does not suffice. There must be a factual foundation of such
unconstitutional taint. Considering that petitioner here would condemn such a provision
as void on its face, he has not made out a case. This is merely to adhere to the
authoritative doctrine that where the due process and equal protection clauses are
invoked, considering that they are not fixed rules but rather broad standards, there is a
need for proof of such persuasive character as would lead to such a conclusion. Absent
such a showing, the presumption of validity must prevail.
5. It is undoubted that the due process clause may be invoked where a taxing statute is
so arbitrary that it finds no support in the Constitution. An obvious example is where it
can be shown to amount to the confiscation of property. That would be a clear abuse of
power. It then becomes the duty of this Court to say that such an arbitrary act amounted
to the exercise of an authority not conferred. That properly calls for the application of the
Holmes dictum. It has also been held that where the assailed tax measure is beyond the
jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute
is so harsh and unreasonable, it is subject to attack on due process grounds.30
Sison pronounces more concretely how a tax statute may contravene the due process
clause. Arbitrariness, confiscation, overstepping the states jurisdiction, and lack of a
public purpose are all grounds for nullity encompassed under the due process invocation.
Yet even these more particular standards as enunciated in Sison are quite exacting, and
difficult to reach. Even the constitutional challenge posed in Sison failed to pass muster.
The majority cites Sison in asserting that due process and equal protection are broad
standards which need proof of such persuasive character to lead to such a conclusion.

It is difficult though to put into quantifiable terms how onerous a taxation statute must
be before it contravenes the due process clause.31 After all, the inherent nature of
taxation is to cause pain and injury to the taxpayer, albeit for the greater good of society.
Perhaps whatever collective notion there may be of what constitutes an arbitrary,
confiscatory, and unreasonable tax might draw more from the fairy tale/legend traditions
of absolute monarchs and the oppressed peasants they tax. Indeed, it is easier to jump
to the conclusion that a tax is oppressive and unfair if it is imposed by a tyrant or an
authoritarian state.
But could an arbitrary, confiscatory or unreasonable tax actually be enacted by a
democratic state such as ours? Of course it could, but these would exist in more
palatable guises. In a democratic society wherein statutes are enacted by a
representative legislature only after debate and deliberation, tax statutes will most likely,
on their face, seem fair and even-handed. After all, if Congress passes a tax law that on
facial examination is obviously harsh and unfair, it faces the wrath of the voting public,
to say nothing of the media.
In testing the validity of a tax statute as against the due process clause, I think that the
Court should go beyond a facial examination of the statute, and seek to understand how
exactly it would operate. The express terms of a statute, especially tax laws, are usually
inadequate in spelling out the practical effects of its implementation. The devil is usually
in the details.
Admittedly, the degree of difficulty involved of judicial review of tax laws has increased
with the growing complexities of business, economic and accounting practices. These are
sciences which laymen are not normally equipped by their general education to fully
grasp, hence the possible insecurity on their part when confronted with such questions
on these fields.
However, we should not cede ground to those transgressions of the peoples
fundamental rights simply because the mechanism employed to violate constitutional
guarantees is steeped in disciplines not normally associated with the legal profession.
Venality cannot be allowed to triumph simply due to its sophistication. This petition
imputes in the E-VAT Law unconstitutional oppression of the fatal variety, but in order to
comprehend exactly how and why that is so, one has to delve into the complex milieu of
the VAT system. The party alleging the laws unconstitutionality of course has the burden
to demonstrate the violations in understandable terms, but if such proof is presented,
the Courts duty is to engage accordingly.
The Viability of the Clear and Present
Danger Doctrine as Counterweight
To the Shibboleths of Speculation

and Wisdom
I do not see as an impediment to the annulment of a tax law the fact that it has yet to be
implemented, or the fear that doing so constitutes an undue attack on the wisdom,
rather than the legality of a statute. However, my position in this petition has been
challenged on those grounds, and I see it fit to refute these preemptive allegations
before delving into the operative aspect of the E-VAT Law.
If there is cause to characterize my arguments as speculative, it is only because the EVAT Law has yet to be implemented. No person as of yet can claim to have sustained
actual injury by reason of the implementation of the assailed provisions in G.R. No.
168461. Yet this should not mean that the Court is impotent from declaring a provision of
law as violative of the due process clause if it is clear that its implementation will cause
the illegal deprivation of life, liberty or property without due process of
law. This is especially so if, as in this case, the injury is of mathematical certainty, and
the extent of the loss quantifiable through easy reference to the most basic of business
practices.
These arguments are conjectural for the same reason that the bare statement "firing a
gunshot into the head will cause a fatal wound" would be conjectural. Some people are
lucky enough to survive gunshot wounds to the head, while many others are not. Yet just
because the fear of mortality would be merely speculative, it does not mean that there
should be less compulsion to avoid a situation of getting shot in the head.
Indeed, the Court has long responded to strike down prospective actions, even if the
injury has not yet even occurred. One of the most significant legal principles of the last
century, the "clear and present danger" doctrine in free speech cases, in fact emanates
from the prospectivity, and not the actuality of danger. The Court has not been hesitant
to nullify acts which might cause injury, owing to the presence of a clear and present
danger of a substantive evil which the State has the right to prevent. It has even
extended the "clear and present danger rule" beyond the confines of freedom of
expression to the
realm of freedom of religion, as noted by Justice Puno in his ponencia in Estrada v.
Escritor.32
Justice Teodoro Padilla goes further in his concurring opinion in Basco v. PAGCOR, and
asserts that the clear and present danger test squarely applies to the due process
clause: "The courts, as the decision states, cannot inquire into the wisdom, morality or
expediency of policies adopted by the political departments of government in areas
which fall within their authority, except only when such policies pose a clear and present
danger to the life, liberty or property of the individual."

I see no reason why the clear and present danger test cannot apply in this case, or any
case wherein a taxing statute poses a clear and present danger to the life, liberty or
property of the individual. The application of this standard frees the Court from inutility in
the face of patently unconstitutional tax laws that have been enacted but are yet to be
fully operational.
If for example, Congress deems it wise to impose the most draconian of tax measures
such as trebling the income taxes of all persons over 40, raising the gross sales tax rate
to 50%, or penalizing delinquent taxpayers with 50 lashes of the whip there certainly
would be a massive public outcry, and an expectation that the Court would immediately
nullify the offensive measures even before they are actually imposed. Applying the clear
and present danger test, the Court is empowered to strike down the noxious measures
even before they are implemented. Yet with this "bar on speculativeness" as argued by
the majority, the Court could easily refuse to pay heed to the prayers for injunctive relief,
and instead demand that the taxing subjects must first suffer before the Court can act.
In the same vein, the claim that my arguments strike at the wisdom, rather than the
constitutionality of the law are misplaced. Concededly, the assailed provisions of the EVAT law are basically unwise. But any provision of law that directly contradicts the
Constitution, especially the Bill of Rights, are similarly unwise, as they run inconsistent
with the fundamental law of the land, the enunciated state policies and the elemental
guarantees assured by the State to its people. Not every unwise law is unconstitutional,
but every unconstitutional law is unwise, for an unconstitutional law contravenes a
primordial principle or guarantee on which our polity is founded.
If it can be shown that the E-VAT Law violates these provisions of the Constitution,
especially the due process clause, then the Court should accordingly act and nullify. Such
is the essence of judicial review, which stands as the sole barrier to the implementation
of an unconstitutional law.
The Separate Opinion of Justice Panganiban notes that "[t]he Court cannot step beyond
the confines of its constitutional power, if there is absolutely no clear showing of grave
abuse of discretion in the enactment of the law"33. This, I feel, is an unduly narrow view
of judicial review, implying that such merely encompasses the procedural aspect by
which a law is enacted. If the policy of the law, and/or the means by which such policy is
implemented run counter to the Constitution, then the Court is empowered to strike
down the law, even if the legislative and executive branches act within their discretion in
legislating and signing the law.
It is also asserted that if the implementation of the 70% cap imposes an unequal effect
on different types of businesses with varying profit margins and capital requirements,
then the remedy would be an amendment of the law.34 Of course, the remedy of
legislative amendment applies to even the most unconstitutional of laws. But if our
society can take cold comfort in the ability of the legislature to amend its enactments as

the defense against unconstitutional laws, what remains then as the function of judicial
review? This legislative capacity to amend unconstitutional laws runs concurrently with
the judicial capacity to strike down unconstitutional laws. In fact, the long-standing
tradition has been reliance on the judicial branch, and not the legislative branch, for
salvation from unconstitutional laws.
I do recognize that the Separate Opinion of Justice Panganiban ultimately proceeds from
the premise that the assailed provisions of the E-VAT Law may be merely unwise, but not
unconstitutional. Hence, its preference to rely on Congress to amend the offending
provisions rather than judicial nullification. But I maintain that the assailed provisions of
the E-VAT Law violate the due process clause of the Constitution and must be stricken
down.
The Nature of VAT
To understand why Sections 8 and 12 of the E-VAT law contravenes the due process
clause, it is essential to understand the nature of the value-added tax itself. Filipino
consumers may comprehend VAT at its elemental form, having been accustomed for
several years now in paying an extra 10% of the listed selling price for a wide class of
consumer goods. From the perspective of the end consumer, such as the patron who
purchases a meal from a fastfood restaurant, VAT is simply a tax on transactions
involving the sale of goods. The tax is shouldered by the buyer, and is based on a
percentage of the purchase price. Since an excise or percentage tax shares the same
characteristics, there could be some confusion as between such taxes and the VAT.
However, VAT is distinguishable from the standard excise or percentage taxes in that it is
imposable not only on the final transaction involving the end user, but on previous
stages as well so long as there was a sale involved. Thus, VAT does not simply pertain to
the extra percentage paid by the buyer of a fast-food meal, but also that paid by
restaurant itself to its suppliers of raw food products. This multi-stage system is more
acclimated to the vagaries of the modern industrial climate, which has long surpassed
the stage when there was only one level of transfer between the farmer who harvests
the crop and the person who eats the crop. Indeed, from the extraction or production of
the raw material to its final consumption by a user, several transactions or sales
materialize. The VAT system assures that the government shall reap income for every
transaction that is had, and not just on the final sale or transfer.
The European Union, which has long required its member states to apply the VAT system,
provided the following definition of the tax which I deem clear and comprehensive:
The principle of the common system of value added tax involves the application to goods
and services of a general tax on consumption exactly proportional to the price of the
goods and services, whatever the number of transactions that take place in the
production and distribution process before the stage at which tax is charged.

On each transaction, value added tax, calculated on the price of the goods or services at
the rate applicable to such goods or services, shall be chargeable after deduction of the
amount of value added tax borne directly by the various cost components.35
The above definition alludes to a key characteristic of the VAT system, that the
imposable tax remains proportional to the price of goods and services no matter the
number of transactions that takes place.
There is another key characteristic of the VAT that no matter how many the taxable
transactions that precede the final purchase or sale, it is the end-user, or the consumer,
that ultimately shoulders the tax. Despite its name, VAT is generally not intended to be a
tax on value added, but rather as a tax on consumption. Hence, there is a mechanism in
the VAT system that enables firms to offset the tax they have paid on their own
purchases of goods and services against the tax they charge on their sales of goods and
services.36 Section 105 of the NIRC assures that "the amount of tax may be shifted or
passed on to the buyer, transferee or lessee of the goods, properties or services." The
assailed provisions of the E-VAT law strike at the heart of this accepted principle.
And there is one final basic element of the VAT system integral to this disquisition: the
mode by which the tax is remitted to the government. In simple theory, the VAT payable
can be remitted to the government immediately upon the occurrence of the transaction,
but such a demand proves excessively unwieldy. The number of VAT covered
transactions a modern enterprise may contract in a single day, plus the recognized
principle that it is the final end user who ultimately shoulders the tax; render the
remittance of the tax on a per transaction basis impossible.
Thus, the VAT is delivered by the purchaser not directly to the government but to the
seller, who then collates the VAT received and remits it to the government every quarter.
The process may seem simple if cast in this manner, but there is a wrinkle, due to the
offsetting mechanism designed to ultimately make the end consumer bear the cost of
the VAT.
The Concepts of Input and
Output VAT
This mechanism is employed through the introduction of two concepts, the input tax and
the output tax. Section 110(A) of the National Internal Revenue Code defines the input
tax as the VAT due from or paid by a VAT-registered person on the importation of goods
or local purchase of goods and services in the course of trade or business, from a VAT
registered person.
Let us put this in operational terms. A VAT registered person, engaged in an enterprise,
necessarily purchases goods such as raw materials and machinery in order to produce
consumer goods. The purchase of such raw materials and machineries is subject to VAT,

hence the enterprise pays an additional 10% of the purchase price to the supplier as VAT.
This extra amount paid by the enterprise constitutes its input VAT. The enterprise
likewise pays input VAT when it purchases services covered by the tax, or rentals of
property.
Since VAT is a final tax that is supposed to be ultimately shouldered by the end
consumer, the VAT system allows for a mechanism by which the business is able to
recover the input VAT that it paid. This comes into play when the business, having
transformed the raw materials into consumer goods, sells these goods to the public. As
widely known, the consumer pays to the business an additional amount of 10% of the
purchase price as VAT. As to the business, this VAT payments it collects from the
consumer represents output VAT, which is formally described under Section 110(A) of the
NIRC as "the value-added tax due on the sale or lease of taxable goods or properties or
services by" by any VAT-registered person.
The output VAT collected by the business from the consumers accumulates, until the end
of every quarter, when the enterprise is obliged to remit the collected output VAT to the
government. This is where the crediting mechanism comes into play. Since the business
is entitled to recover the prepaid input VAT, it does so in every quarter by applying the
amount of prepaid input VAT against the collected output VAT which is to be remitted. If
the output VAT collected exceeds the prepaid input VAT, then the amount of input VAT is
deducted from the output VAT, and it is entitled to remit only the remainder as output
VAT to the government. To illustrate, if Business X collects P1,000,000.00 as output VAT
and incurs P500,000.00 as input VAT, the P500,000.00 is deducted from
theP1,000,000.00 output VAT, and X is required to remit only P500,000.00 of the output
VAT it collected from customers.
On the other hand, if the input VAT prepaid exceeds the output VAT collected, then the
business need not remit any amount as output VAT for the quarter. Moreover, the
difference between the input VAT and the output VAT may be credited as input VAT by
the business in the succeeding quarter. Thus, if in the First Quarter of a year, Business X
prepays P1,000,000.00 as input VAT, and collects only P500,000.00 as output VAT, it
need not remit any amount of output VAT to the government. Moreover, in the Second
Quarter, Business X can credit the remaining P500,000.00 as part of its input VAT for that
quarter. Hence, if in the Second Quarter, X actually prepays P400,000.00 as input VAT,
and collects P500,000.00 as output VAT, it may add the P500,000.00 input VAT from the
previous quarter to the P400,000.00 prepaid in the current quarter, bringing the total
input VAT it could claim to P900,000.00. Since the input VAT of P900,000.00 now exceeds
the output VAT collected ofP500,000, then X need not remit any output VAT as well to the
government for the Second Quarter.
However, reality is far bleaker than that befaced by Business X. The VAT collected and
remitted is not the most relevant statistic evaluated by the business. The figure of
primary concern of the enterprise would be the profit margin, which is simply the excess

of revenue less expenditures. Revenue is derived from the gross sales of the business.
Expenditures encompass all expenses incurred by the business including overhead
expenses, wages and purchases of capital goods. Crucially, expenditures would include
the input VAT prepaid by the business on its capital expenditures.
Since a significant amount of the capital outlay incurred by a business is subjected to the
prepayment of input taxes, the necessity of recovering these losses through the output
VAT collected becomes more impelling. These output taxes are obviously proportional to
the volume of gross sales the higher the gross sales, the higher the output VAT
collected. The output taxes collected on sales answer for not only those input taxes paid
on the purchase of the raw materials, but also for the input taxes paid on the
multifarious overhead expenses covered by VAT. The burden carried by the sales volume
on the stability, if not survival of the business thus just became more crucial. The
maintenance of the proper equilibrium is not an easy matter. Increasing the selling price
of the goods sold does not necessarily increase the gross sales, as it could have the
counter-effect of repelling the consumer and diminishing the number of goods sold. At
the same time, keeping the selling price low may increase the volume of goods sold, but
not necessarily the amount of gross sales.
Profit is a chancy matter, and in cases of small to medium enterprises, usually small if
any. It is quite common for retail and distribution enterprises to incur profits of less than
1% of their gross revenues. Low profitability is not an automatic badge of poor business
skills, but a reality dictated by the laws of the marketplace. The probability of profit is
lower than that of capital expenditures, and ultimately, many business establishments
end up with a higher input tax than output tax in a given quarter. This would be
especially true for small to medium enterprises who do not reap sufficient profits from its
business in the first place, and for those firms that opt to also invest in capital expenses
in addition to the overhead. Whatever miniscule profit margins that can be obtained
usually spell the difference between life and death of the business.
The possibility of profit is further diminished by the fact that businesses have to shoulder
the input VAT in the purchase of their capital expenses. Yet the erstwhile VAT system was
not tainted by the label of oppressiveness and neither did it bear the confiscatory mode.
This was because of the immediate relief afforded from the input taxes paid by the
crediting system. In theory, VAT is not supposed to affect the profit margin. If such
margin is affected, it is only because of the prepayment of the input taxes, and this
should be remedied by the immediate recovery through the crediting system of the
settled input taxes.
The new E-VAT law changes all that, and puts in jeopardy the survival of small to medium
enterprises.
The Effects of the 70% Cap on Creditable Input VAT

The first radical shift introduced by the E-VAT law to the creditable input system the
70% cap on the creditable input tax that may be carried over into the next quarter is
provided in Section 8 of the law, which amends Section 110(A) of the NIRC, among
others. Section 110(A) as amended would now read:
Sec. 110. Tax Credits.
(B) Excess Output or Input Tax. If at the end of any taxable quarter the output tax
exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input
tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or
quarters. Provided, That the input tax inclusive of input VAT carried over from the
previous quarter that may be credited in every quarter shall not exceed seventy percent
(70%) of the output VAT: Provided, however, That any input tax attributable to zero rated
sales by a VAT-registered person may at his option be refunded or credited against other
internal revenue taxes, subject to the provisions of Section 112. (emphasis supplied)
All hope for entrepreneurial stability is dashed with the imposition of the 70% cap. Under
the E-VAT Law, the business, regardless of stability or financial capability, is obliged to
remit to the government every quarter at least 30% of the output VAT collected from
customers, or roughly 3% of the amount of gross sales. Thus, if a quarterly gross sales of
Y Business totaled P1,000,000, and Y is prudent enough to keep its capital expenses
down toP980,000, it would then appear on paper that Y incurred a profit of P20,000.
However, with the 70% cap, Y would be obliged to remit to the government P30,000,
thus wiping out the profit margin for the quarter. Y would be entitled to credit the excess
input VAT it prepaid for the next quarter, but the continuous operation of the 70% cap
obviates whatever benefits this may give, and cause the accumulation of the unutilized
creditable input VAT which should be returned to the business.
The difference is even more dramatic if seen how the unutilized creditable input VAT
accumulates over a one year period. To illustrate, Business Y prepays the following
amounts of input VAT over a one-year period: P100,000.00 - First Quarter; P100,000.00
2nd Quarter; P34,000.00 3rd Quarter; and P50,000.00 4th Quarter. On the other hand,
Y collects the following amounts of output VAT from consumers: P60,000.00 - First
Quarter;P60,000.00 2nd Quarter; P100,000.00 3rd Quarter; and P50,000.00 4th
Quarter. Applying the 70% cap, which would limit the amount of the declarable input VAT
to 70% in a quarter, the following results obtain, as presented in tabular form:
Particulars 1st Quarter 2nd Quarter
Output VAT 60,000

60,000

Input VAT (Actual) + Carry Over

[excess creditable]
158,000

34,000

3rd Quarter 4th Quarter

100,000

50,000

100,000

100,000 [input] +58,000

[input]
+116,000
[excess creditable]
150,000

50,000

[input]
+80,000
[excess creditable]
130,000
DeclarableInput VAT (70% of output VAT) (60,000x70%)
42,000

(60,000x70%)

42,000

(100,000x70%)

70,000

(50,000x70%)

35,000
Lower of actual and 70% cap allowable
VAT
Payable

(60,000 -42,000)

18,000

(60,000 -42,000)

18,000

(100,000-70,000)

30,000

(50,000- 35,000)

15,000
CreditableInput VAT

(100,000 42,000)

58,000

(158,000 42,000)

116,000

(150,000-

70,000)
80,000
95,000

(130,000- 35,000)

This stands in contrast to same business VAT accountability under the present system,
using the same variables of output VAT and input VAT. The need to distinguish a
declarable input VAT is obviated with the elimination of the 70% cap.
Particulars 1st Quarter 2nd Quarter
Output VAT 60,000

60,000

Input VAT (Actual) + Carry Over

3rd Quarter 4th Quarter

100,000

50,000

100,000

100,000 [input]

+40,000
[excess creditable]
140,000

34,000

[input]
+80,000
[excess creditable]
114,000

50,000

[input]
+ 14,000
(excess
creditable)
50,000
VAT Payable

Creditable
Input VAT

40,000

80,000

14,000

14,000

The difference is dramatic, as is the impact on the businesss profit margin and available
cash on hand. Under normal conditions, small to medium enterprises are already
encumbered with the likelihood of obtaining only a minimal profit margin. Without the
70% cap, those businesses would nonetheless be able to expect an immediate return on
its input taxes earlier advanced, taxes which under the VAT system it is not supposed to
shoulder in the first place. However, with the 70% cap in place, the unutilized input taxes
would continue to accumulate, and the enterprise precluded from immediate recovery
thereof. The inability to utilize these input taxes, which could spell the difference

between profit and loss, solvency and insolvency, will eventually impair, if not kill off the
enterprise.
The majority fails to consider one of the most important concepts in finance, time value
for money.37 Simply put, the value of one peso is worth more today than in 2006. Money
that you hold today is worth more because you can invest it and earn interest.38 By
reason of the 70% cap, the amount of input VAT credit that remains unutilized would
continue accumulate for months and years. The longer the amount remains unutilized,
the higher the degree of its depreciation in value, in accordance with the concept of time
value of money. Even assuming that the business eventually recovers the input VAT
credit, the sum recovered would have decreased in practical value.
It would be sad, but fair, if a business ceases because of its inability to compete with
other businesses. It would be utter malevolence to condemn an enterprise to death
solely through the employment of a deceptive accounting wizardry. For the raison detre
of this 70% cap is to make it appear on paper that the government is more solvent than
it actually is. Conceding for the nonce, there is a temporary advantage gained by the
government by this 70% cap, as the steady remittance by businesses of the 30% output
VAT would assure a cash flow. Such collection may only momentarily resolve an endemic
problem in our local tax system, the problem of collection itself.
If the 70% cap was designed in order to enhance revenue collection, then I submit that
the means employed stand beyond reason. If sheer will proves insufficient in assuring
that the State all taxes due it, there should be allowable discretion for the government to
formulate creative means to enhance collection. But to do so by depriving low profit
enterprises of whatever meager income earned and consequently assuring the death of
these industries goes beyond any valid State purpose.
Only stable businesses with substantial cash flows, or extraordinarily successful
enterprises will be able to remain in operation should the 70% cap be retained. The
effect of the 70% cap is to effectively impose a tax amounting to 3% of gross revenue.
The amount may seem insignificant to those without working knowledge of the ways of
business, but anybody who is actually familiar with business would be well aware the
profit margins of the retailing and distribution sectors typically amount to less than 1% of
the gross revenues. A taxpayer has to earn a margin of at least 3% on gross revenue in
order to recoup the losses sustained due to the 70% cap. But as stated earlier, profits are
chancy, and the entrepreneur does not have full control of the conditions that lead to
profit.
Even more galling is the fact that the 70% cap, oppressive as it already is to the business
establishment, even limits the options of the business to recover the unutilized input VAT
credit. During the deliberations, the argument was raised that the problem presented by
the 70% cap was a business problem, which can only be solved by business. Yet there is
only one viable option for the enterprise to resolve the problem, and that is to increase

the selling price of goods.39 It would be incorrect to assume that increase the volume of
the goods sold could solve the problem, since for items with the same purchasing cost,
the effect of the 70% cap remains constant regardless of an increase in volume.
But the additional burden is not limited to the increase of prices by the retailer to the end
consumer. Since VAT is a transaction tax, every level of distribution becomes subject not
only to the VAT, but also to the 70% cap. The problem increases due to a cascading
effect as the number of distribution levels increases since it will result in the collection of
an effective 3% percentage tax at every distribution level.
In analyzing the effects of the 70% cap, and appreciating how it violates the due process
clause, we should not focus solely on the end consumers. Undoubtedly, consumers will
face hardships due to the increased prices, but their threshold of physical survival, as
individual people, is significantly less than that of enterprises. Somehow, I do not think
the new E-VAT would generally deprive consumers of the bare necessities such as food,
water, shelter and clothing. There may be significant deprivation of comfort as a result,
but not of life.
The same does not hold true for businesses. The standard of "deprivation of life" of
juridical persons employs different variables than that of natural persons. What food and
water may be for persons, profit is for an enterprise the bare necessity for survival.
For businesses, the implementation of the same law, with the 70% cap and 60-month
amortization period, would mean the deprivation of profit, which is the determinative
necessity for the survival of a business.
It is easy to admonish both the consumer and the enterprise to cut back on expenditures
to survive the new E-VAT Law. However, this can be realistically expected only of the
consumer. The small/medium enterprise cannot just cut back easily on expenditures in
order to survive the implementation of the E-VAT Law. For such businesses, expenditures
do not normally contemplate unnecessary expenses such as executive perks which can
be dispensed with without injury to the enterprises. These expenditures pertain to
expenses necessary for the survival of the enterprise, such as wages, overhead and
purchase of raw materials. Those three basic items of expenditure cannot simply be
reduced, as to do so with impair the ability of the business to operate on a daily basis.
And reduction of expenditures is not the exclusive antidote to these impositions under
the E-VAT Law, as there must also be a corresponding increase in the amount of gross
sales. To do so though, would require an increase in the selling price, dampening
consumer enthusiasm, and further impairing the ability of the enterprise to recover from
the E-VAT Law. This is your basic Catch-2240 situation no matter which means the
enterprise employs to recover from the E-VAT Law, it will still go down in flames.
Section 8 of the E-VAT law, while ostensibly even-handed in application, fails to
appreciate valid substantial distinctions between large scale enterprises and small and

medium enterprises. The latter group, owing to the limited capability for capital
investment, subsists on modest profit margins, whereas the former expects, by reason of
its substantial capital investments, a high margin. In essentially prohibiting the recovery
of small profit margins, the E-VAT law effectively sends the message that only high
margin businesses are welcome to do business in the Philippines. It stifles any
entrepreneurial ambitions of Filipinos unfortunate enough to have been born poor yet
seek a better life by sacrificing all to start a small business.
Among the enunciated State policies in the Constitution, as stated in Section 20, Article
II, is that "the State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments."41 The provision, as
with other declared State policies in the Constitution, have sufficient import and
consequence such that in assessing the constitutionality of the governmental action,
these provisions should be considered and weighed as against the rationale for the
assailed State action.42 The incompatibility of the 70% cap with this provision is patent.
Pilipinas Shell Dealers, on whom the burden to establish the violation of due process and
equal protection lies, offers the following chart of the income statement of a typical
petroleum dealer:
QUARTERLY PROFIT AND LOSS STATEMENT
DEALER "A"
Price VAT (without 70% cap) VAT (with 70% cap)
Sales/Output

32,748,534 3,274,853.40

Cost of Sales

31,834,717 3,183,471.70

Gross Margin

913,817

3,274,853.40

Operating Expenses Non-vatable items

Vatable Items

536,249

317,584

31,758.40

Total Cost

853,833

Net Profit

59,984

Total Input Tax

3,215,230.10

2,292,397.38

VAT Payable

59,623.30 982,456.02

Unutilized Input VAT 922,832.72

*computed by multiplying output VAT by 70% [3,274,853.40 x 70% = 2,292.397.38]

The presentation of the Pilipinas Shell Dealers more or less jibes with my own
observations on the impact of the 70% cap. The dealer whose income is illustrated above
has to outlay a cash amount of P922,832.72 more than what would have been shelled
out if the 70% cap were not in place. Considering that the net profit of the dealer is only
P59,984.00, the consequences could very well be fatal, especially if these state of events
persist in succeeding quarters.
The burden of proof was on the Pilipinas Shell Dealers to prove their allegations, and
accordingly, these figures have been duly presented to the Court for appreciation and
evaluation. Instead, the majority has shunted aside these presentations as being merely
theoretical, despite the fact that they present a clear and present danger to the very life
of our nations enterprises. The majoritys position would have been more credible had it
faced the issue squarely, and endeavored to demonstrate in like numerical fashion why
the 70% cap is not oppressive, confiscatory, or otherwise violative of the due process
clause.
Sadly, the majority refuses to confront the figures or engage in a meaningful
demonstration of how these assailed provisions truly operate. Instead, it counters with
platitudes and bromides that do not intellectually satisfy. Considering that the very
vitality, if not life of our domestic economy is at stake, I think it derelict to our duty to
block out these urgent concerns presented to the Court with blind faith tinged with
irrational Panglossian43optimism.
The obligation of the majority to refute on the merits the arguments of the Petroleum
Dealers becomes even more grave considering that the respondents have abjectly failed
to convincingly dispute the claims. During oral arguments, respondents attempted to
counter the arguments that the 70% cap was oppressive and confiscatory by presenting
the following illustration, which I fear is severely misleading:
Slide 1

Item Cost VAT

Sales 1,000,000.00 100,000.00

Purchases 800,000.00 80,000.00
Due BIR without cap Due BIR with 70% cap
Output VAT 100,000.00 Output VAT 100,000.00

Actual Input VAT 80,000.00 Allowable Input VAT 70,000.00

Net VAT Payable 20,000.00 Net VAT Payable 30,000.00
Excess Input VAT 10,000.00
Carry-over to next quarter
Slide 2
___________________________________________
Item Cost VAT

Sales 1,000,000.00 100,000.00

Purchases 600,000.00 60,000.00
Due BIR without cap Due BIR with 70% cap

Output VAT 100,000.00 Output VAT 100,000.00

Actual Input VAT (60% of output VAT) 60,000.00 Allowable Input VAT 60,000.00
Net VAT Payable 40,000.00 Net VAT Payable 40,000.00
Excess Input VAT 0
Carry-over to next quarter
This presentation of the respondents is grossly deceptive, as it fails to account for the
excess creditable input VAT that remains unutilized due to the 70% cap. This excess or
creditable input VAT is supposed to be carried over for the computation of the input VAT
of the next quarter. Instead, this excess or creditable input VAT magically disappears
from the table of the respondents. In their memorandum, the Pilipinas Shell Dealers
counter with their own presentation using the same variables as respondents, but taking
into account the excess creditable input VAT and extending the situation over a one-year
period. I cite with approval the following chart44 of the Pilipinas Shell Dealers:

Slide 1
Quarter 1
Item No. Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00
Allowable Input VAT 70,000.00
Net VAT Payable 30,000.00
Excess Input Vat
Carry-over to next quarter 10,000.00
Quarter 2
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 7-% cap
Output VAT 100,000.00
Less: Input VAT
Excess Input VAT fr. 1st Quarter 10,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 90,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
=========
Total Available Input VAT 90,000.00
Allowable Input VAT 70,000.00

Excess Input VAT to be carried over to next

Quarter 20,000.00
=========
Quarter 3
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00
Less: Input VAT
Excess Input VAT fr. 2nd Qtr. 20,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 100,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
=========
Total Available Input VAT 100,000.00
Allowable Input VAT 70,000.00
Excess Input VAT to be carried over to next quarter 30,000.00
==========
Quarter 4
Cost VAT
Sales 1,000,000.00 100,000.00
Purchases 800,000.00 80,000.00
Due BIR with 70% cap
Output VAT 100,000.00

Less: Input VAT

Excess Input VAT fr. 3rd Qtr. 30,000.00
Input VAT-Current Qtr. 80,000.00
Total Available Input VAT 110,000.00
Allowable Input VAT (100,000 x 70%) 70,000.00 70,000.00
Net VAT Payable 30,000.00
========
Total Available Input VAT 110,000.00
Allowable Input VAT 70,000.00
Excess Input VAT to be carried over to next quarter 40,000.00
==========
The 70% cap is not merely an unwise imposition. It is a burden designed, either through
sheer heedlessness or cruel calculation, to kill off the small and medium enterprises that
are the soul, if not the heart, of our economy. It is not merely an undue taking of
property, but constitutes an unjustified taking of life as well.
And what legitimate, germane purposes does this lethal 70% cap serve? It certainly does
not increase the governments revenue since the unutilized creditable input VAT should
be entered in the government books as a debt payable as it is supposed to be eventually
repaid to the taxpayer, and so on the contrary it increases the governments debts. I do
see that the 70% cap temporarily allows the government to brag to the world of an
increased cash flow. But this situation would be akin to the provincial man who borrows
from everybody in the barrio in order to show off money and maintain the pretense of
prosperity to visiting city relatives. The illusion of wealth is hardly a legitimate state
purpose, especially if projected at the expense of the very business life of the country.
The majority, in an effort to belittle these concerns, points out that that the excess input
tax remains creditable in succeeding quarters. However, as seen in the above
illustration, the actual application of the excess input tax will always be limited by the
amount of output taxes collected in a quarter, as a result of the 70% cap. Thus, it is
entirely possible that a VAT-registered person, through the accumulation of unutilized
input taxes, would have in a quarter an express creditable input tax of P50,000,000, but
would be allowed to actually credit only P70,000 if the output tax collected for that
quarter were only P100,000.
The burden of the VAT may fall at first to the immediate buyers, but it is supposed to be
eventually shifted to the end-consumer. The 70% cap effectively prevents this from

happening, as it limits the ability of the business to recover the prepaid input taxes. This
is unconscionable, since in the first place, these intervening
players the manufacturers, producers, traders, retailers are not even supposed to
sustain the losses incurred by reason of the prepayment of the input taxes. Worse, they
would be obliged every quarter to pay to the government from out of their own pockets
the equivalent of 30% of the output taxes, no matter their own particular financial
condition. Worst, this twin yoke on the taxpayer of having to sustain a debit equivalent to
30% of output taxes, and having to await forever in order to recover the prepaid taxes
would impair the cash flow and prove fatal for a shocking number of businesses which,
as they now stand, have to make do with a minimum profit that stands to be wiped out
with the introduction of the 70% cap.
Nonetheless, the majority notes that the excess creditable input tax may be the subject
of a tax credit certificate, which then could be used in payment of internal revenue
taxes, or a refund to the extent that such input taxes have not been applied against
output taxes.45 What the majority fails to mention is that under Section 10 of the E-VAT
Law, which amends Section 112 of the NIRC, such credit or refund may not be done while
the enterprise remains operational:
SEC. 10. Section 112 of the same Code, as amended, is hereby further amended to read
as follows:
SEC. 112. Refunds or Tax Credits of Input Tax.
xxx
"(B) Cancellation of VAT Registration. A person whose registration has been cancelled
due to retirement from or cessation of business or due to changes or cessation of status
under Section 106(C) of this Code may, within two (2) years from the date of
cancellation, apply for the issuance of a tax credit certificate for any unused input tax
which may be used in payment of his other internal revenue taxes.
xxx
This stands in marked contrast to Section 112(B) of the NIRC as it read prior to this
amendment. Under the previous rule, a VAT-registered person was entitled to apply for
the tax credit certificate or refund paid on capital goods even while it remained in
operation:
SEC. 112. Refunds or Tax Credits of Input Tax.
xxx
"(B) Capital Goods . A VAT-registered person may apply for the issuance of a tax credit
certificate or refund of input taxes paid on capital goods imported or locally purchased,

to the extent that such input taxes have not been applied against output taxes. The
application may be made only within two (2) years after the close of the taxable quarter
when the importation or purchase was made.
This provision, which could have provided foreseeable and useful relief to the VATregistered person, was deleted under the new E-VAT Law. At present, the refund or tax
credit certificate may only be issued upon two instances: on zero-rated or effectively
zero-rated sales, and upon cancellation of VAT registration due to retirement from or
cessation of business.46 This is the cruelest cut of all. Only after the business ceases to
be may the State be compelled to repay the entire amount of the unutilized input tax. It
is like a macabre form of sweepstakes wherein the winner is to be paid his fortune only
when he is already dead. Aanhin pa ang damo kung patay na ang kabayo.
Moreover, the inability to immediately credit or otherwise recover the unutilized input
VAT could cause such prepaid amount to actually be recognized in the accounting books
as a loss. Under international accounting practices, the unutilized input VAT due to the
70% cap would not even be recognized as a deferred asset. The same would not hold
true if the 70% cap were eliminated. Under the International Accounting Standards47,
the unutilized input VAT credit is recognized as an asset "to the extent that it is probable
that future taxable profit will be available against which the unused tax losses and
unused tax credits can be utili[z]ed"48 Thus, if the immediate accreditation of the input
VAT credit can be obtained, as it would without the 70% cap, the asset could be
recognized.
However, the same Standards hold that "[t]o the extent that it is not probable that
taxable profit will be available against which the unused tax losses or unused tax credits
can be utilised, the deferred tax asset is not recognised".49 As demonstrated, the
continuous operation of the 70% cap precludes the recovery of input VAT prepaid months
or years prior. Moreover, the inability to claim a refund or tax credit certificate until after
the business has already ceased virtually renders it improbable for the input VAT to be
recovered. As such, under the International Accounting Standards, it is with all likelihood
that the prepaid input VAT, ostensibly creditable, would actually be reflected as a loss.50
What heretofore was recognized as an asset would now, with the imposition of the 70%
cap, be now considered as a loss, enhancing the view that the 70% cap is ultimately
confiscatory in nature.
This leads to my next point. The majority asserts that the input tax is not a property or
property right within the purview of the due process clause.51 I respectfully but strongly
disagree.
Tellingly, the BIR itself has recognized that unutilized input VAT is one of those assets,
corporate attributes or property rights that, in the event of a merger, are transferred to
the surviving corporation by operation of law.52Assets would fall under the purview of
property under the due process clause, and if the taxing arm of the State recognizes that

such property belongs to the taxpayer and not to the State, then due respect should be
given to such expert opinion.
Even under the International Accounting Standards I adverted to above, the unutilized
input VAT credit may be recognized as an asset "to the extent that it is probable that
future taxable profit will be available against which the unused tax losses and unused
tax credits can be utilised"53 If not probable, it would be recognized as a loss.54Since
these international standards, duly recognized by the Securities and Exchange
Commission as controlling in this jurisdiction, attribute tangible gain or loss to the VAT
credit, it necessarily follows that there is proprietary value attached to such gain or loss.
Moreover, the prepaid input tax represents unutilized profit, which can only be utilized if
it is refunded or credited to output taxes. To assert that the input VAT is merely a
privilege is to correspondingly claim that the business profit is similarly a mere privilege.
The Constitution itself recognizes the right to profit by private enterprises. As I stated
earlier, one of the enunciated State policies under the Constitution is the recognition of
the indispensable role of the private sector, the encouragement of private enterprise,
and the provision of incentives to needed investments.55 Moreover, the Constitution also
requires the State to recognize the right of enterprises to reasonable returns on
investments, and to expansion and growth.56 This, I believe, encompasses profit.
60-Month Amortization Period
Another portion of Section 8 of the E-VAT Law is unconstitutional, essentially for the same
reasons as above. The relevant portion reads:
SEC. 8. Section 110 of the same Code, as amended, is hereby further amended to read
as follows:
"SEC. 110. Tax Credits.
(A) Creditable Input Tax.
....
Provided, That the input tax on goods purchased or imported in a calendar month for use
in trade or business for which deduction for depreciation is allowed under this Code, shall
be spread evenly over the month of acquisition and the fifty-nine (59) succeeding
months if the aggregate acquisition cost for such goods, excluding the VAT component
thereof, exceeds One million pesos (P1,000,000): Provided,however, That if the
estimated useful life of the capital good is less than five (5) years, as used for
depreciation purposes, then the input VAT shall be spread over such a shorter period:
Provided, finally, that in the case of purchase of services, lease or use of properties, the
input tax shall be creditable to the purchaser, lessee or licensee upon payment of the
compensation, rental, royalty or fee.

Again, this provision unreasonably severely limits the ability of an enterprise to recover
its prepaid input VAT. On its face, it might appear injurious primarily to high margin
enterprises, whose purchase of capital goods in a given quarter would routinely exceed
P1,000,000.00. The amortization over a five-year period of the input VAT on these capital
goods would definitely eat up into their profit margin. But it is still possible for such big
businesses to survive despite this new restriction, and their financial pain alone may not
be sufficient to cause the invalidity of a taxing statute.
However, this amortization plan will prove especially fatal to start-ups and other new
businesses, which need to purchase capital goods in order to start up their new
businesses. It is a known fact in the financial community that a majority of businesses
start earning profit only after the second or third year, and many enterprises do not even
get to survive that long. The first few years of a business are the most crucial to its
survival, and any financial benefits it can obtain in those years, no matter how miniscule,
may spell the difference between life and death. For such emerging businesses, it is
already difficult under the present system to recover the prepaid input VAT from the
output VAT collected from customers because initial sales volumes are usually low. With
this further limitation, diminishing as it does any opportunity to have a sustainable cash
flow, the ability of new businesses to survive the first three years becomes even more
endangered.
Even existing small to medium enterprises are imperiled by this 60 month amortization
restriction, especially considering the application of the 70% cap. The additional
purchase of capital goods bears as a means of adding value to the consumer good, as a
means to justify the increased selling price. However, the purchase of capital goods in
excess of P1,000,000.00 would impose another burden on the small to medium
enterprise by further restricting their ability to immediately recover the entire prepaid
input VAT (which would exceed at leastP100,000.00), as they would be compelled to wait
for at least five years before they can do so. Another hurdle is imposed for such small to
medium enterprise to obtain the profit margin critical to survival. For some lucky
enterprises who may be able to survive the injury brought about by the 70% cap, this 60
month amortization period might instead provide the mortal head wound.
Moreover, the increased administrative burden on the taxpayer should not be
discounted, considering this Courts previous recognition of the aims of the VAT system
to "rationalize the system of taxes on goods and services, [and] simplify tax
administration".57 With the amortization requirement, the taxpayer would be forced to
segregate assets into several classes and strictly monitor the useful life of assets so that
proper classification can be made. The administrative requirements of the taxpayer in
order to monitor the input VAT from the purchase of capital assets thus has exponentially
increased.
5% Withholding VAT on Sales

Pilipinas Shell Dealers argue that Section 12 of the E-VAT law, which amends Section
114(C) of the NIRC, is also unconstitutional. The provision is supremely unwise,
oppressive and confiscatory in nature, and ruinous to private enterprise and even State
development. The provision reads:
SEC. 12. Section 114 of the same Code, as amended, is hereby further amended to read
as follows:
"SEC. 114. Return and Payment of Value-Added Tax.
xxx
"(C) Withholding of Value-added Tax. The Government or any of its political
subdivisions, instrumentalities or agencies, including government-owned or controlled
corporations (GOCCs) shall, before making payment on account of each purchase of
goods and services which are subject to the value-added tax imposed in Sections 106
and 108 of this Code, deduct and withhold a final value-added tax at the rate of five
percent (5%) of the gross payment thereof: Provided, That the payment for lease or use
of properties or property rights to nonresident owners shall be subject to ten percent
(10%) withholding tax at the time of payment. For purposes of this Section, the payor or
person in control of the payment shall be considered as the withholding payment. xxx
The principle that the Government and its subsidiaries may deduct and withhold a final
value-added tax on its purchase of goods and services is not new, as the NIRC had
allowed such deduction and withholding at the rate of 3% of the gross payment for the
purchase of goods, and 6% of the gross receipts for services. However, the NIRC had also
provided that this tax withheld would also be creditable against the VAT liability of the
seller or contractor, a mechanism that was deleted by the E-VAT law. The deletion of this
credit apparatus effectively compels the private enterprise transacting with the
government to shoulder the output VAT that should have been paid by the government
in excess of 5% of the gross selling price, and at the same time unduly burdens the
private enterprise by precluding it from applying any creditable input VAT on the same
transaction.
Notably, the removal of the credit mechanism runs contrary to the essence of the VAT
system, which characteristically allows the crediting of input taxes against output taxes.
Without such crediting mechanism, which allows the shifting of the VAT to only the final
end user, the tax becomes a straightforward tax on business or income. The effect on
the enterprise doing business with the government would be that two taxes would be
imposed on the income by the business derived on such transaction: the regular
personal or corporate income tax on such income, and this final withholding tax of 5%.
Granted that Congress is not bound to adopt with strict conformity the VAT system, and
that it has to power to impose new taxes on business income, this amendment to Section
114(C) of the NIRC still remains unconstitutional. It unfairly discriminates against entities

which contract with the government by imposing an additional tax on the income derived
from such transactions. The end result of such discrimination is double taxation on
income that is both oppressive and confiscatory.
It is a legitimate purpose of a tax law to devise a manner by which the government could
save money on its own transactions, but it is another matter if a private enterprise is
punished for doing business with the government. The erstwhile NIRC worked towards
such advantage, by allowing the government to reduce its cash outlay on purchases of
goods and services by withholding the payment of a percentage thereof. While the new
E-VAT law retains this benefit to the government, at the same time it burdens the private
enterprise with an additional tax by refusing to allow the crediting of this tax withheld to
the businesss input VAT.
This imposition would be grossly unfair for private entities that transact with the
government, especially on a regular basis. It might be argued that the provision, even if
concededly unwise, nonetheless fails to meet the standard of unconstitutionality, as it
affects only those persons or establishments that choose to do business with the
government. However, it is an acknowledged fact that the government and its
subsidiaries rely on contracts with private enterprises in order to be able to carry out
innumerable functions of the State. This provision effectively discourages private
enterprises to do business with the State, as it would impose on the business a higher
rate of tax if it were to transact with the State, as compared to transactions with other
private entities.
Established industries with track records of quality performance could very well be
dissuaded from doing further business with government entities as the higher tax rate
would make no economic sense. Only those enterprises which really need the money,
such as those with substandard track records that have affected their viability in the
marketplace, would bother seeking out government contracts. The corresponding
sacrifice in quality would eventually prove detrimental to the State. Our society can ill
afford shoddy infrastructures such as roads, bridges and buildings that would
unnecessarily pose danger to the public at large simply because the government wanted
to skimp on expenses.
The provision squarely contradicts Section 20, Article II of the Constitution as it
vacuously discourages private enterprise, and provides disincentives to needed
investments such as those expected by the State from private businesses. Whatever
advantages may be gained by the temporary increase in the government coffers would
be overturned by the disadvantages of having a reduced pool of private enterprises
willing to do business with the government. Moreover, since government contracts with
private enterprises will still remain a necessary fact of life, the amendment to Section
114(C) of the NIRC introduced by the E-VAT Law.

Double taxation means taxing for the same tax period the same thing or activity twice,
when it should be taxed but once, for the same purpose and with the same kind of
character of tax.58 Double taxation is not expressly forbidden in our constitution, but the
Court has recognized it as obnoxious "where the taxpayer is taxed twice for the benefit
of the same governmental entity or by the same jurisdiction for the same purpose."59
Certainly, both the 5% final tax withheld and the general corporate income tax are both
paid for the benefit of the national government, and for the same incidence of taxation,
the sale/lease of goods and services to the government.
The Court, in Re: Request of Atty. Bernardo Zialcita60 had cause to make the following
observation I submitapropos to the case at bar, on double taxation in a case involving
the attempt of the BIR to tax the commuted accumulated leave credits of a government
lawyer upon his retirement:
Section 284 of the Revised Administrative Code grants to a government employee 15
days vacation leave and 15 days sick leave for every year of service. Hence, even if the
government employee absents himself and exhausts his leave credits, he is still deemed
to have worked and to have rendered services. His leave benefits are already imputed in,
and form part of, his salary which in turn is subject to withholding tax on income. He is
taxed on the entirety of his salaries without any deductions for any leaves not utilized. It
follows then that the money values corresponding to these leave benefits both the used
and unused have already been taxed during the year that they were earned. To tax them
again when the retiring employee receives their money value as a form of government
concern and appreciation plainly constitutes an attempt to tax the employee a second
time. This is tantamount to double taxation.61
Conclusions
The VAT system, in itself, is intelligently designed, and stands as a fair means to raise
revenue. It has been adopted worldwide by countries hoping to employ an efficient
means of taxation. The concerns I have raised do not detract from my general approval
of the VAT system.
I do lament though that our governments wholehearted adoption of the VAT system is
endemic of what I deem a flaw in our national tax policy in the last few decades. The
power of taxation, inherent in the State and ever so powerful, has been generally
employed by our financial planners for a solitary purpose: the raising of revenue.
Revenue generation is a legitimate purpose of taxation, but standing alone, it is a
woefully unsophisticated design. Intelligent tax policy should extend beyond the singularminded goal of raising State funds the old-time philosophy behind the taxing schemes
of war-mongering monarchs and totalitarian states and should sincerely explore the
concept of taxation as a means of providing genuine incentives to private enterprise to
spur economic growth; of promoting egalitarian social justice that would allow everyone
to their fair share of the nations wealth.

Instead, we are condemned by a national policy driven by the monomania for State
revenue. It may be beyond my oath as a Justice to compel the government to adopt an
economic policy in consonance with my personal views, but I offer these observations
since they lie at the very heart of the noxiousness of the assailed provisions of the E-VAT
law. The 70% cap, the 60-month amortization period and the 5% withholding tax on
government transactions were selfishly designed to increase government revenue at the
expense of the survival of local industries.
I am not insensitive to the concerns raised by the respondents as to the dire
consequences to the economy should the E-VAT law be struck down. I am aware that the
granting of the petition in G.R. No. 168461 will negatively affect the cash flow of the
government. If that were the only relevant concern at stake, I would have no problems
denying the petition. Unfortunately, under the device employed in the E-VAT law, the
price to be paid for a more sustainable liquidity of the governments finances will be the
death of local business, and correspondingly, the demise of our society. It is a measure
just as draconian as the standard issue taxes of medieval tyrants.
I am not normally inclined towards the language of the overwrought, yet if the sky were
indeed truly falling, how else could that fact be communicated. The E-VAT Law is of
multiple fatal consequences. How are we to survive as a nation without the bulwark of
private industries? Perhaps the larger scale, established businesses may ultimately
remain standing, but they will be unable to sustain the void left by the demise of small to
medium enterprises. Or worse, domestic industry would be left in the absolute control of
monopolies, combines or cartels, whether dominated by foreigners or local oligarchs. The
destruction of subsisting industries would be bad enough, the destruction of opportunity
and the entrepreneurial spirit would be even more grievous and tragic, as it would mark
as well the end of hope. Taxes may be the lifeblood of the state, but never at the
expense of the life of its subjects.
Accordingly, I VOTE to:
1) DENY the Petitions in G.R. Nos. 168056, 168207, and 168730 for lack of merit;
2) PARTIALLY GRANT the Petition in G.R. Nos. 168463 and declare Section 21 of the E-VAT
Law as unconstitutional;
3) GRANT the Petition in G.R. No. 168461 and declare as unconstitutional Section 8 of
Republic Act No. 9337, insofar as it amends Section 110(A) and (B) of the National
Internal Revenue Code (NIRC) as well as Section 12 of the same law, with respect to its
amendment of Section 114(C) of the NIRC.
DANTE O. TINGA
Associate Justice

Footnotes
1Republic Act No. 9337. Referred to intext as "E-VAT Law."
2Except insofar as it prays that Section 21 of the E-VAT Law be declared unconstitutional.
Infra.
3J. Vitug and E. Acosta, Tax Law and Jurisprudence (2nd ed., 2000), at 7-8.
4See National Power Corporation v. Province of Albay, G.R. No. 87479, 4 June 1990, 186
SCRA 198, 203.
5See Section 24, Article VI, Constitution.
6The recognized exceptions, both expressly provided by the Constitution, being the tariff
clause under Section 28(2), Article VI, and the powers of taxation of local government
units under Section 5, Article X.
7G.R. No. 158540, 8 July 2005, 434 SCRA 65.
8See People v. Vera, 65 Phil. 56, 117 (1937).
9Decision, infra.
10Carpio v. Executive Secretary, GR No. 96409 February 14,1992, 206 SCRA 290, 298;
citing In re Guarina, 24 Phil. 37.
11People v. Vera, supra note 8.
12See Section 2, National Internal Revenue Code.
13There are two eminent tests for valid delegation, the "completeness test" and the
"sufficient standard test". The law must be complete in its essential terms and conditions
when it leaves the legislature so that there will be nothing left for the delegate to do
when it reaches him except enforce it. U.S. v. Ang Tang Ho, 43 Phil. 1, 6-7 (1922). On the
other hand, a sufficient standard is intended to map out the boundaries of the delegates
authority by defining legislative policy and indicating the circumstances under which it is
to be pursued and effected; intended to prevent a total transference of legislative power
from the legislature to the delegate.
14Decision, infra, citing Alunan v. Mirasol, G.R. No. 108399, 31 July 1997, 276 SCRA 501,
513-514.
15Notwithstanding, the Court in Southern Cross did rule that Section 5 of the Safeguard
Measures Act, which required a positive final determination by the Tariff Commission
before the DTI or Agriculture Secretaries could impose general safeguard measures,

operated as a valid restriction and limitation on the exercise by the executive branch of
government of its tariff powers.
16G.R. No. 115455, 25 August 1994, 235 SCRA 630.
17M. Evans, A Source of Frequent and Obstinate Altercations: The History and
Application of the Origination Clause.
18The Federalist No. 58, at 394 (J. Madison) (J.Cooke ed. 1961), cited in J. M. Medina, The
Orignation Clause in the American Constitution: A Comparative Survey, 23 Tulsa Law
Journal 2, at 165.
19Tolentino v. Secretary of Finance, supra note 16 at 661.
20See Section 27(1), Article VI, Constitution.
21Tolentino v. Secretary of Finance, supra note 16 at 668.
22G.R. No. 124360, 5 November 1997, 281 SCRA 330.
23Id. at 349-350.
24People v. Tudtud, G.R. No. 144037, 26 September 2003, 412 SCRA 142, 168.
25See Section 1, Article III, Constitution. Private corporations and partnerships are
persons within the scope of the guaranty insofar as their property is concerned. Smith
Bell & Co. v. Natividad, 40 Phil. 136, 145 (1919).
2616 C.J.S., at 1150-1151.
27292 U.S. 40 (1934).
28Id. at 44.
29G.R. No. L-59431, 25 July 1984, 130 SCRA 654.
30Id. at 660-662.
31Justice Isagani Cruz offers the following examples of taxes that contravene the due
process clause: "A tax, for example, that would claim 80 percent of a persons net
income would clearly be oppressive and could unquestionably struck down as a
deprivation of his property without due process of law. A property tax retroacting to as
long as fifty years back would by tyrannical and unrealistic, as the property might not yet
have been then in the possession of the taxpayer nor, presumably, would he have
acquired it had he known of the tax to be imposed on it." I. Cruz, Constitutional Law, p.
85.
32 "After defining religion, the Court, citing Tanada and Fernando, made this statement,
viz:

The constitutional guaranty of the free exercise and enjoyment of religious profession
and worship carries with it the right to disseminate religious information. Any restraint of
such right can only be justified like other restraints of freedom of expression on the
grounds that there is a clear and present danger of any substantive evil which the State
has the right to prevent. (Tanada and Fernando on the Constitution of the Philippines, vol.
1, 4th ed., p. 297) (emphasis supplied)
This was the Court's maiden unequivocal affirmation of the "clear and present danger"
rule in the religious freedom area, and in Philippine jurisprudence, for that matter."
Estrada v. Escritor, A.M. No. P-02-1651, 4 August 2003, 408 SCRA 1.
33Separate Opinion, infra.
34Ibid.
35Art. 2, European Commission First Council Directive 67/227 of 11 April 1967 on the
Harmonization of Legislation of Member States Concerning Turnover Taxes, 1971 O.J. (L
71) 1301.
36Liam & Ebrill, The Modern VAT.
37"The most basic law in finance!" Understand the Time Value of Money. http://www.freefinancial-advice.net/time-value-of-money.html. Last visited, 30 August 2005.
38Time
Value
of
Money.
http://www.jetobjects.com/components/finance/
TVM/concepts.html. Last visited, 30 August 2005.
39There is also the option for the business to go underground and avoid VAT registration,
and consequently avoid remitting VAT payments to the government. It would be
facetious though for a Justice of the Supreme Court to characterize this illegal option as
"viable."
40In Joseph Hellers Catch-22, Yossarian, a World War II pilot reasoned that if he feigned
insanity, he would be necessarily exempt from assignment to dangerous bombing runs in
enemy territory. However, his superiors reasoned that if he were truly insane, he then
would be heedless enough to be sent on those dangerous bombing runs he had sought
to avoid in the first place.
41Section 20, Article II, Constitution.
42The due process clause alone is sufficient to invalidate any contravening taxing
statute. On the other hand, Section 20, Article II on its own might not be similarly
sufficient. However, if the taxing statute violates both the due process clause and
Section 20, Article II, then the impetus to strike down the offending law becomes even
more compelling, so as to defeat the generalist invocation of the States inherent powers
of taxation.

43Pangloss was a famed character ridiculed in Voltaires Candide, renowned for his
absolute blind faith in optimism, no matter how dire the circumstances.
44Id. at 29-30.
45Decision, infra.
46This is confirmed by the BIR in its draft Revenue Memorandum Circular dated 12 July
2005, submitted by respondents in its Compliance dated 16 August 2005:
"[Q]: Is there a way by which such unapplied excess input tax credits can be claimed for
refund or issuance of TCC?
[A]: The only time application for refund/issuance of TCC is allowed for input taxes
incurred on the purchase of domestic goods/services is when the same are directly
attributable to zero-rated or effectively zero-rated sales (of goods/services). xxx
For those engaged purely in domestic transactions, the only time that unapplied input
taxes may be applied for the issuance of TCC is when the VAT registration of the
taxpayer is cancelled due to retirement or cessation of business or change in the status
of the taxpayer as a VAT registered taxpayer. As provided for in Section 112(B0, in case
of cancellation of VAT registration due to cessation of business or change in status of
taxpayer, the only recourse given to such taxpayer is to apply for the issuance of TCC on
his excess input tax credits which may be used in payment of his other internal revenue
taxes, application for refund thereof is not an option."
See Annexes "18-N" and "18-O", Compliance dated 12 July 2005.
47See SRC Rule 68(1)(b)(c), Implementing Rules and Regulations to the Securities and
Regulations Code.
48Section 34, International Accounting Standards 12.
49Section 36, id.
50In his Separate Opinion, Justice Panganiban asserts that the deferred input tax credit is
not really confiscated by the government, as it remains an asset in the accounting
records of a business. SeeSeparate Opinion, infra. By the same logic, a law requiring all
businesses to surrender to the government 100% of its gross sales subject to
reimbursement only after a five year period, would pass muster, since the amount is "not
really confiscated by the government as it remains an asset in the accounting records of
a business."
51Justice Panganiban cites United Paracale Mining Co. v. De la Rosa (cited as 221 SCRA
108, 115, April 7, 1993) to bolster his stated position that ""[t]here is no vested right in a
deferred input tax account; it is a mere statutory privilege". Separate Opinion, infra.
United Paracale does not pertain to any deferred input taxes, but instead to "mining

claims which according to [petitioners] is private property would constitute impairment

of vested rights since by shifting the forum of the petitioners case from the courts to the
Bureau of Mines[the] substantive rights to full protection of its property rights shall be
greatly impaired." United Paracale Mining Co. v. Hon. Dela Rosa, G.R. Nos. 63786-87, 7
April 1993, 221 SCRA 108, `115. Clearly,United Paracale is not even a tax case, involving
as it does, questions of the jurisdiction of the Bureau of Mines.
52See Part III, Paragraph 3, Revenue Memorandum Ruling No. 1-2002.
53Section 32, International Accounting Standards 12.
54Supra note 47.
55Supra note 9.
56Section 3, Article XIII, Constitution.
57Kapatiran ng Mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. et al. v. Tan, G.R. No. L81311, 30 June 1988.
58J. Vitug and E. Acosta, supra note 3 at 41.
59Pepsi-Cola Bottling Co. of the Philippines, Inc. v. Municipality of Tanauan, G.R. No. L31156, 27 February 1976, 69 SCRA 460, 466-67; citing CIR v. Lednicky, L-18169, July 31,
1964, 11 SACRA 609 and SMB, Inc. v. City of Cebu, L-20312, February 26, 1972, 43 SCRA
280.
60A.M. No. 90-6-015-SC, 18 October 1990, 190 SCRA 851.
61Id. at 856.

The Lawphil Project - Arellano Law Foundation

________________________________________

EN BANC
G.R. No. 168056 ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S.
ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE EXECUTIVE SECRETARY
EDUARDO ERMITA, ET AL.
G.R. No. 168207 AQUILINO Q. PIMENTEL, JR., ET AL. v. EXECUTIVE SECRETARY
EDUARDO R. ERMITA

G.R. No. 168461 ASSOCIATION OF PILIPINAS SHELL DEALERS, INC., ET AL. v. CESAR V.
PURISIMA, ET AL.
G.R. No. 168463 FRANCIS JOSEPH G. ESCUDERO, ET AL. v. CESAR V. PURISIMA, ET AL.
G.R. No. 168730 BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., ET AL. v. HON. EDUARDO
R. ERMITA, ET AL.
Promulgated:
September 1, 2005
x--------------------------------------------------x
CONCURRING OPINION
CHICO-NAZARIO, J.:
Five petitions were filed before this Court questioning the constitutionality of Republic Act
No. 9337. Rep. Act No. 9337, which amended certain provisions of the National Internal
Revenue Code of 1997,1 by essentially increasing the tax rates and expanding the
coverage of the Value-Added Tax (VAT). Undoubtedly, during these financially difficult
times, more taxes would be additionally burdensome to the citizenry. However, like a
bitter pill, all Filipino citizens must bear the burden of these new taxes so as to raise the
much-needed revenue for the ailing Philippine economy. Taxation is the indispensable
and inevitable price for a civilized society, and without taxes, the government would be
paralyzed.2 Without the tax reforms introduced by Rep. Act No. 9337, the then Secretary
of the Department of Finance, Cesar V. Purisima, assessed that "all economic scenarios
point to the National Governments inability to sustain its precarious fiscal position,
resulting in severe erosion of investor confidence and economic stagnation."3
Finding Rep. Act No. 9337 as not unconstitutional, both in its procedural enactment and
in its substance, I hereby concur in full in the foregoing majority opinion, penned by my
esteemed colleague, Justice Ma. Alicia Austria-Martinez.
According to petitioners, the enactment of Rep. Act No. 9337 by Congress was riddled
with irregularities and violations of the Constitution. In particular, they alleged that: (1)
The Bicameral Conference Committee exceeded its authority to merely settle or
reconcile the differences among House Bills No. 3555 and 3705 and Senate Bill No. 1950,
by including in Rep. Act No. 9337 provisions not found in any of the said bills, or deleting
from Rep. Act No. 9337 or amending provisions therein even though they were not in
conflict with the provisions of the other bills; (2) The amendments introduced by the
Bicameral Conference Committee violated Article VI, Section 26(2), of the Constitution
which forbids the amendment of a bill after it had passed third reading; and (3) Rep. Act
No. 9337 contravened Article VI, Section 24, of the Constitution which prescribes that
revenue bills should originate exclusively from the House of Representatives.

Invoking the expanded power of judicial review granted to it by the Constitution of 1987,
petitioners are calling upon this Court to look into the enactment of Rep. Act No. 9337 by
Congress and, consequently, to review the applicability of the enrolled bill doctrine in this
jurisdiction. Under the said doctrine, the enrolled bill, as signed by the Speaker of the
House of Representatives and the Senate President, and certified by the Secretaries of
both Houses of Congress, shall be conclusive proof of its due enactment.4
Petitioners arguments failed to convince me of the wisdom of abandoning the enrolled
bill doctrine. I believe that it is more prudent for this Court to remain conservative and to
continue its adherence to the enrolled bill doctrine, for to abandon the said doctrine
would be to open a Pandoras Box, giving rise to a situation more fraught with evil and
mischief. Statutes enacted by Congress may not attain finality or conclusiveness unless
declared so by this Court. This would undermine the authority of our statutes because
despite having been signed and certified by the designated officers of Congress, their
validity would still be in doubt and their implementation would be greatly hampered by
allegations of irregularities in their passage by the Legislature. Such an uncertainty in the
statutes would indubitably result in confusion and disorder. In all probability, it is the
contemplation of such a scenario that led an American judge to proclaim, thus
. . . Better, far better, that a provision should occasionally find its way into the statute
through mistake, or even fraud, than, that every Act, state and national, should at any
and all times be liable to put in issue and impeached by the journals, loose papers of the
Legislature, and parol evidence. Such a state of uncertainty in the statute laws of the
land would lead to mischiefs absolutely intolerable. . . .5
Moreover, this Court must attribute good faith and accord utmost respect to the acts of a
co-equal branch of government. While it is true that its jurisdiction has been expanded
by the Constitution, the exercise thereof should not violate the basic principle of
separation of powers. The expanded jurisdiction does not contemplate judicial
supremacy over the other branches of government. Thus, in resolving the procedural
issues raised by the petitioners, this Court should limit itself to a determination of
compliance with, or conversely, the violation of a specified procedure in the Constitution
for the passage of laws by Congress, and not of a mere internal rule of proceedings of its
Houses.
It bears emphasis that most of the irregularities in the enactment of Rep. Act No. 9337
concern the amendments introduced by the Bicameral Conference Committee. The
Constitution is silent on such a committee, it neither prescribes the creation thereof nor
does it prohibit it. The creation of the Bicameral Conference Committee is authorized by
the Rules of both Houses of Congress. That the Rules of both Houses of Congress provide
for the creation of a Bicameral Conference Committee is within the prerogative of each
House under the Constitution to determine its own rules of proceedings.

The Bicameral Conference Committee is a creation of necessity and practicality

considering that our Congress is composed of two Houses, and it is highly improbable
that their respective bills on the same subject matter shall always be in accord and
consistent with each other. Instead of all their members, only the appointed
representatives of both Houses shall meet to reconcile or settle the differences in their
bills. The resulting bill from their meetings, embodied in the Bicameral Conference
Report, shall be subject to approval and ratification by both Houses, voting separately.
It does perplex me that members of both Houses would again ask the Court to define
and limit the powers of the Bicameral Conference Committee when such committee is of
their own creation. In a number of cases,6 this Court already made a determination of
the extent of the powers of the Bicameral Conference Committee after taking into
account the existing Rules of both Houses of Congress. In gist, the power of the
Bicameral Conference Committee to reconcile or settle the differences in the two Houses
respective bills is not limited to the conflicting provisions of the bills; but may include
matters not found in the original bills but germane to the purpose thereof. If both Houses
viewed the pronouncement made by this Court in such cases as extreme or beyond what
they intended, they had the power to amend their respective Rules to clarify or limit
even further the scope of the authority which they grant to the Bicameral Conference
Committee. Petitioners grievance that, unfortunately, they cannot bring about such an
amendment of the Rules on the Bicameral Conference Committee because they are
members of the minority, deserves scant consideration. That the majority of the
members of both Houses refuses to amend the Rules on the Bicameral Conference
Committee is an indication that it is still satisfied therewith. At any rate, this is how
democracy works the will of the majority shall be controlling.
Worth reiterating herein is the concluding paragraph in Arroyo v. De Venecia,7 which
reads
It would be unwarranted invasion of the prerogative of a coequal department for this
Court either to set aside a legislative action as void because the Court thinks the house
has disregarded its own rules of procedure, or to allow those defeated in the political
arena to seek a rematch in the judicial forum when petitioners can find remedy in that
department. The Court has not been invested with a roving commission to inquire into
complaints, real or imagined, of legislative skullduggery. It would be acting in excess of
its power and would itself be guilty of grave abuse of its discretion were it to do so. . . .
Present jurisprudence allows the Bicameral Conference Committee to amend, add, and
delete provisions of the Bill under consideration, even in the absence of conflict thereon
between the Senate and House versions, but only so far as said provisions are germane
to the purpose of the Bill.8 Now, there is a question as to whether the Bicameral
Conference Committee, which produced Rep. Act No. 9337, exceeded its authority when
it included therein amendments of provisions of the National Internal Revenue Code of
1997 not related to VAT.

Although House Bills No. 3555 and 3705 were limited to the amendments of the
provisions on VAT of the National Internal Revenue Code of 1997, Senate Bill No. 1950
had a much wider scope and included amendments of other provisions of the said Code,
such as those on income, percentage, and excise taxes. It should be borne in mind that
the very purpose of these three Bills and, subsequently, of Rep. Act No. 9337, was to
raise additional revenues for the government to address the dire economic situation of
the country. The National Internal Revenue Code of 1997, as its title suggests, is the
single Code that governs all our national internal revenue taxes. While it does cover
different taxes, all of them are imposed and collected by the national government to
raise revenues. If we have one Code for all our national internal revenue taxes, then
there is no reason why we cannot have a single statute amending provisions thereof
even if they involve different taxes under separate titles. I hereby submit that the
amendments introduced by the Bicameral Conference Committee to non-VAT provisions
of the National Internal Revenue Code of 1997 are not unconstitutional for they are
germane to the purpose of House Bills No. 3555 and 3705 and Senate Bill No. 1950,
which is to raise national revenues.
Furthermore, the procedural issues raised by the petitioners were already addressed and
resolved by this Court in Tolentino v. Executive Secretary.9 Since petitioners failed to
proffer novel factual or legal argument in support of their positions that were not
previously considered by this Court in the same case, then I am not compelled to depart
from the conclusions made therein.
The majority opinion has already thoroughly discussed each of the substantial issues
raised by the petitioners. I would just wish to discuss additional matters pertaining to the
petition of the petroleum dealers in G.R. No. 168461.
They claim that the provision of Rep. Act No. 9337 limiting their input VAT credit to only
70% of their output VAT deprives them of their property without due process of law. They
argue further that such 70% cap violates the equal protection and uniformity of taxation
clauses under Article III, Section 1, and Article VI, Section 28(1), respectively, of the
Constitution, because it will unduly prejudice taxpayers who have high input VAT and
who, because of the cap, cannot fully utilize their input VAT as credit.
I cannot sustain the petroleum dealers position for the following reasons
First, I adhere to the view that the input VAT is not a property to which the taxpayer has
vested rights. Input VAT consists of the VAT a VAT-registered person had paid on his
purchases or importation of goods, properties, and services from a VAT-registered
supplier; more simply, it is VAT paid. It is not, as averred by petitioner petroleum dealers,
a property that the taxpayer acquired for valuable consideration.10 A VAT-registered
person incurs input VAT because he complied with the National Internal Revenue Code of
1997, which imposed the VAT and made the payment thereof mandatory; and not
because he paid for it or purchased it for a price.

Generally, when one pays taxes to the government, he cannot expect any direct and
concrete benefit to himself for such payment. The benefit of payment of taxes shall
redound to the society as a whole. However, by virtue of Section 110(A) of the National
Internal Revenue Code of 1997, prior to its amendment by Rep. Act No. 9337, a VATregistered person is allowed, subject to certain substantiation requirements, to credit his
input VAT against his output VAT.
Output VAT is the VAT imposed by the VAT-registered person on his own sales of goods,
properties, and services or the VAT he passes on to his buyers. Hence, the VAT-registered
person selling the goods, properties, and services does not pay for the output VAT; said
output VAT is paid for by his consumers and he only collects and remits the same to the
government.
The crediting of the input VAT against the output VAT is a statutory privilege, granted by
Section 110 of the National Internal Revenue Code of 1997. It gives the VAT-registered
person the opportunity to recover the input VAT he had paid, so that, in effect, the input
VAT does not constitute an additional cost for him. While it is true that input VAT credits
are reported as assets in a VAT-registered persons financial statements and books of
account, this accounting treatment is still based on the statutory provision recognizing
the input VAT as a credit. Without Section 110 of the National Internal Revenue Code of
1997, then the accounting treatment of any input VAT will also change and may no
longer be booked outright as an asset. Since the privilege of an input VAT credit is
granted by law, then an amendment of such law may limit the exercise of or may totally
withdraw the privilege.
The amendment of Section 110 of the National Internal Revenue Code of 1997 by Rep.
Act No. 9337, which imposed the 70% cap on input VAT credits, is a legitimate exercise
by Congress of its law-making power. To say that Congress may not trifle with Section
110 of the National Internal Revenue Code of 1997 would be to violate a basic precept of
constitutional law that no law is irrepealable.11 There can be no vested right to the
continued existence of a statute, which precludes its change or repeal.12
It bears to emphasize that Rep. Act No. 9337 does not totally remove the privilege of
crediting the input VAT against the output VAT. It merely limits the amount of input VAT
one may credit against his output VAT per quarter to an amount equivalent to 70% of the
output VAT. What is more, any input VAT in excess of the 70% cap may be carried-over to
the next quarter.13 It is certainly a departure from the VAT crediting system under
Section 110 of the National Internal Revenue Code of 1997, but it is an innovation that
Congress may very well introduce, because
VAT will continue to evolve from its pioneering original structure. Dynamically, it will be
subjected to reforms that will make it conform to many factors, among which are: the
changing requirements of government revenue; the social, economic and political
vicissitudes of the times; and the conflicting interests in our society. In the course of its

evolution, it will be injected with some oddities and inevitably transformed into a
structure which its revisionists believe will be an improvement overtime.14
Second, assuming for the sake of argument, that the input VAT credit is indeed a
property, the petroleum dealers right thereto has not vested. A right is deemed vested
and subject to constitutional protection when
". . . [T]he right to enjoyment, present or prospective, has become the property of some
particular person or persons as a present interest. The right must be absolute, complete,
and unconditional, independent of a contingency, and a mere expectancy of future
benefit, or a contingent interest in property founded on anticipated continuance of
existing laws, does not constitute a vested right. So, inchoate rights which have not been
acted on are not vested." (16 C. J. S. 214-215)15
Under the National Internal Revenue Code of 1997, before it was amended by Rep. Act
No. 9337, the sale or importation of petroleum products were exempt from VAT, and
instead, were subject to excise tax.16 Petroleum dealers did not impose any output VAT
on their sales to consumers. Since they had no output VAT against which they could
credit their input VAT, they shouldered the costs of the input VAT that they paid on their
purchases of goods, properties, and services. Their sales not being subject to VAT, the
petroleum dealers had no input VAT credits to speak of.
It is only under Rep. Act No. 9337 that the sales by the petroleum dealers have become
subject to VAT and only in its implementation may they use their input VAT as credit
against their output VAT. While eager to use their input VAT credit accorded to it by Rep.
Act No. 9337, the petroleum dealers reject the limitation imposed by the very same law
on such use.
It should be remembered that prior to Rep. Act No. 9337, the petroleum dealers input
VAT credits were inexistent they were unrecognized and disallowed by law. The
petroleum dealers had no such property called input VAT credits. It is only rational,
therefore, that they cannot acquire vested rights to the use of such input VAT credits
when they were never entitled to such credits in the first place, at least, not until Rep.
Act No. 9337.
My view, at this point, when Rep. Act No. 9337 has not yet even been implemented, is
that petroleum dealers right to use their input VAT as credit against their output VAT
unlimitedly has not vested, being a mere expectancy of a future benefit and being
contingent on the continuance of Section 110 of the National Internal Revenue Code of
1997, prior to its amendment by Rep. Act No. 9337.
Third, although the petroleum dealers presented figures and computations to support
their contention that the cap shall lead to the demise of their businesses, I remain
unconvinced.

Rep. Act No. 9337, while imposing the 70% cap on input VAT credits, allows the taxpayer
to carry-over to the succeeding quarters any excess input VAT. The petroleum dealers
presented a situation wherein their input VAT would always exceed 70% of their output
VAT, and thus, their excess input VAT will be perennially carried-over and would remain
unutilized. Even though they consistently questioned the 70% cap on their input VAT
credits, the petroleum dealers failed to establish what is the average ratio of their input
VAT vis--vis their output VAT per quarter. Without such fact, I consider their objection to
the 70% cap arbitrary because there is no basis therefor.
On the other, I find that the 70% cap on input VAT credits was not imposed by Congress
arbitrarily. Members of the Bicameral Conference Committee settled on the said
percentage so as to ensure that the government can collect a minimum of 30% output
VAT per taxpayer. This is to put a VAT-taxpayer, at least, on equal footing with a VATexempt taxpayer under Section 109(V) of the National Internal Revenue Code, as
amended by Rep. Act No. 9337.17 The latter taxpayer is exempt from VAT on the basis
that his sale or lease of goods or properties or services do not exceed P1,500,000;
instead, he is subject to pay a three percent (3%) tax on his gross receipts in lieu of the
VAT.18 If a taxpayer with presumably a smaller business is required to pay three percent
(3%) gross receipts tax, a type of tax which does not even allow for any crediting, a VATtaxpayer with a bigger business should be obligated, likewise, to pay a minimum of 30%
output VAT (which should be equivalent to 3% of the gross selling price per good or
property or service sold). The cap assures the government a collection of at least 30%
output VAT, contributing to an improved cash flow for the government.
Attention is further called to the fact that the output VAT is the VAT imposed on the sales
by a VAT-taxpayer; it is paid by the purchasers of the goods, properties, and services,
and merely collected through the VAT-registered seller. The latter, therefore, serves as a
collecting agent for the government. The VAT-registered seller is merely being required to
remit to the government a minimum of 30% of his output VAT collection.
Fourth, I give no weight to the figures and computations presented before this Court by
the petroleum dealers, particularly the supposed quarterly profit and loss statement of a
"typical dealer." How these data represent the financial status of a typical dealer, I would
not know when there was no effort to explain the manner by which they were surveyed,
collated, and averaged out. Without establishing their source therefor, the figures and
computations presented by the petroleum dealers are merely self-serving and
unsubstantiated, deserving scant consideration by this Court. Even assuming that these
figures truly represent the financial standing of petroleum dealers, the introduction and
application thereto of the VAT factor, which forebode the collapse of said petroleum
dealers businesses, would be nothing more than an anticipated damage an injury that
may or may not happen. To resolve their petition on this basis would be premature and
contrary to the established tenet of ripeness of a cause of action before this Court could
validly exercise its power of judicial review.

Fifth, in response to the contention of the petroleum dealers during oral arguments
before this Court that they cannot pass on to the consumers the VAT burden and
increase the prices of their goods, it is worthy to quote below this Courts ruling in
Churchill v. Concepcion,19 to wit
It will thus be seen that the contention that the rates charged for advertising cannot be
raised is purely hypothetical, based entirely upon the opinion of the plaintiffs,
unsupported by actual test, and that the plaintiffs themselves admit that a number of
other persons have voluntarily and without protest paid the tax herein complained of.
Under these circumstances, can it be held as a matter of fact that the tax is confiscatory
or that, as a matter of law, the tax is unconstitutional? Is the exercise of the taxing power
of the Legislature dependent upon and restricted by the opinion of two interested
witnesses? There can be but one answer to these questions, especially in view of the fact
that others are paying the tax and presumably making reasonable profit from their
business.
As a final observation, I perceive that what truly underlies the opposition to Rep. Act No.
9337 is not the question of its constitutionality, but rather the wisdom of its enactment.
Would it truly raise national revenue and benefit the entire country, or would it only
increase the burden of the Filipino people? Would it contribute to a revival of our
economy or only contribute to the difficulties and eventual closure of businesses? These
are issues that we cannot resolve as the Supreme Court. As this Court explained in
Agustin v. Edu,20 to wit
It does appear clearly that petitioners objection to this Letter of Instruction is not
premised on lack of power, the justification for a finding of unconstitutionality, but on the
pessimistic, not to say negative, view he entertains as to its wisdom. That approach, it
put it at its mildest, is distinguished, if that is the appropriate word, by its unorthodoxy. It
bears repeating "that this Court, in the language of Justice Laurel, does not pass upon
questions of wisdom, justice or expediency of legislation. As expressed by Justice
Tuason: It is not the province of the courts to supervise legislation and keep it within the
bounds of propriety and common sense. That is primarily and exclusively a legislative
concern. There can be no possible objection then to the observation of Justice
Montemayor: As long as laws do not violate any Constitutional provision, the Courts
merely interpret and apply them regardless of whether or not they are wise or salutary.
For they, according to Justice Labrador, are not supposed to override legitimate policy
and * * * never inquire into the wisdom of the law. It is thus settled, to paraphrase Chief
Justice Concepcion in Gonzales v. Commission on Elections, that only congressional
power or competence, not the wisdom of the action taken, may be the basis for declaring
a statute invalid. This is as it ought to be. The principle of separation of powers has in
the main wisely allocated the respective authority of each department and confined its
jurisdiction to such sphere. There would then be intrusion not allowable under the

Constitution if on a matter left to the discretion of a coordinate branch, the judiciary

would substitute its own"21
To reiterate, we cannot substitute our discretion for Congress, and even though there are
provisions in Rep. Act No. 9337 which we may believe as unwise or iniquitous, but not
unconstitutional, we cannot strike them off by invoking our power of judicial review. In
such a situation, the recourse of the people is not judicial, but rather political. If they
severely doubt the wisdom of the present Congress for passing a statute such as Rep.
Act No. 9337, then they have the power to hold the members of said Congress
accountable by using their voting power in the next elections.
In view of the foregoing, I vote for the denial of the present petitions and the upholding
of the constitutionality of Rep. Act No. 9337 in its entirety.
MINITA V. CHICO-NAZARIO
Associate Justice

11. ARANETA V DINGLASAN

G.R. No. L-2044

August 26, 1949

J. ANTONIO ARANETA, petitioner,

vs.
RAFAEL DINGLASAN, Judge of First Instance of Manila, and JOSE P. BENGZON, Fiscal of
City of Manila,respondents.
x---------------------------------------------------------x
G.R. No. L-2756

August 26, 1949

J. ANTONIO ARANETA and GREGORIO VILLAMOR, petitioners,

vs.
EUGENIO ANGELES, Fiscal of City of Manila, respondent.
x---------------------------------------------------------x
G.R. No. L-3054

August 26, 1949

EULOGIO RODRIGUEZ, Sr., por si y como Presidente del Partido Nacionalista, recurrente,
vs.

EL TESORERO DE FILIPINAS, recurrido.

x---------------------------------------------------------x
G.R. No. L-3055

August 26, 1949

LEON MA. GURRERO, petitioner,

vs.
THE COMMISSIONER OF CUSTOMS and THE ADMINISTRATOR, SUGAR QUOTA OFFICE,
DEPARTMENT OF COMMERCE AND INDUSTRY, respondents.
x---------------------------------------------------------x
G.R. No. L-3056

August 26, 1949

ANTONIO BARREDO, in his own behalf and on behalf of all taxpayers similarly situated,
petitioner,
vs.
THE COMMISSION ON ELECTIONS, THE AUDITOR GENERAL and THE INSULAR TREASURER
OF THE PHILIPPINES, respondents.
L-2044
Paredes, Diaz and Poblador, Jesus G. Barrera, Vicente Hilado, and Araneta and Araneta
for petitioner.
Office of the Solicitor General Felix Bautista Angelo, Assistant Solicitor General Ruperto
Kapunan, Jr., Solicitor Martiniano P. Vico and Assistant City Fiscal Julio Villamor for
respondents.
Claro M. Recto and Padilla, Carlos and Fernando as amici curiae.
L-2756
Araneta and Araneta and Jesus G. Barrera for petitioners.
Assistant City Fiscal Luis B. Reyes for respondent.
Claro M. Recto as amici curiae.
L-3054
Claro M. Recto, Ramon Diokno, Jose O. Vera, Alejo Mabanag, Jose B. Laurel, Jr. and
Antonio Barredo for petitioner.
Office of the Solicitor General Felix Bautista Angelo for respondent.

Vicente de Vera, Chairman, Commission on Elections.

Alfonso Ponce Enrile, Alva J. Hill and Honorio Poblador, Jr. and Emiliano R. Navarro as
amici curiae.
Jesus G. Barrera, Enrique M. Fernando, Ramon Sunico, and Francisco A. Rodrigo also as
amici curiae.
L-3055
Claro M. Recto and Leon Ma. Guerrero for petitioner.
Office of the Solicitor General Felix Bautista Angelo for respondents.
V. G. Bunuan, Administrator, Sugar Quota Office.
Jesus G. Barrera, Felixberto M. Serrano, Enrique; Honorio Poblador, Jr. and Emiliano R.
Navarro as amici curiae.
L-3056
Claro M. Recto and Antonio Barredo for petitioner.
Office of the Solicitor General Felix Bautista Angelo for respondents.
Vicente de Vera, Chairman, Commission on Elections.
Alfonso Ponce Enrile, Alva J. Hill, Jesus G. Barrera, Enrique M. Fernando, Ramon Sunico
and Francisco A. Rodrigo; Honorio Poblador, Jr. and Emiliano R. Navarro as amici curiae.
TUASON, J.:
Three of these cases were consolidated for argument and the other two were argued
separately on other dates. Inasmuch as all of them present the same fundamental
question which, in our view, is decisive, they will be disposed of jointly. For the same
reason we will pass up the objection to the personality or sufficiency of interest of the
petitioners in case G. R. No. L-3054 and case G. R. No. L-3056 and the question whether
prohibition lies in cases Nos. L-2044 and L-2756. No practical benefit can be gained from
a discussion of the procedural matters since the decision in the cases wherein the
petitioners' cause of action or the propriety of the procedure followed is not in dispute,
will be controlling authority on the others. Above all, the transcendental importance to
the public of these cases demands that they be settled promptly and definitely, brushing
aside, if we must, technicalities of procedure. (Avelino vs. Cuenco, G. R. No. L-2821.) The
petitions challenge the validity of executive orders of the President avowedly issued in
virtue of Commonwealth Act No. 671. Involved in cases Nos. L-2044 and L-2756 is
Executive Order No. 62, which regulates rentals for houses and lots for residential
buildings. The petitioner, J. Antonio Araneta, is under prosecution in the Court of First
Instance of Manila for violation of the provisions of this Executive Order, and prays for

the issuance of the writ of prohibition to the judge and the city fiscal. Involved in case L3055 is Executive Order No. 192, which aims to control exports from the Philippines. In
this case, Leon Ma. Guerrero seeks a writ of mandamus to compel the Administrator of
the Sugar Quota Office and the Commissioner of Customs to permit the exportation of
shoes by the petitioner. Both official refuse to issue the required export license on the
ground that the exportation of shoes from the Philippines is forbidden by this Executive
Order. Case No. L-3054 relates to Executive Order No. 225, which appropriates funds for
the operation of the Government of the Republic of the Philippines during the period from
July 1, 1949 to June 30, 1950, and for other purposes. The petitioner Eulogio Rodriguez,
Sr., as a tax-payer, an elector, and president of the Nacionalista Party, applies for a writ
of prohibition to restrain the Treasurer of the Philippines from disbursing this Executive
Order. Affected in case No. L-3056 is Executive Order No. 226, which appropriates
P6,000,000 to defray the expenses in connection with, and incidental to, the hold lug of
the national elections to be held in November, 1949. The petitioner, Antonio Barredo, as
a citizen, tax-payer and voter, asks this Court to prevent "the respondents from
disbursing, spending or otherwise disposing of that amount or any part of it."
Notwithstanding allegations in the petitions assailing the constitutionally of Act No. 671,
the petitioners do not press the point in their oral argument and memorandum. They rest
their case chiefly on the proposition that the Emergency Powers Act (Commonwealth Act
No. 671) has ceased to have any force and effect. This is the basic question we have
referred to, and it is to this question that we will presently address ourselves and devote
greater attention. For the purpose of this decision, only, the constitutionality of Act No.
671 will be taken for granted, and any dictum or statement herein which may appear
contrary to that hypothesis should be understood as having been made merely in
furtherance of the main thesis.
Act No. 671 in full is as follows:
AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR INVOLVING
THE PHILIPPINES AND AUTHORIZING THE PRESIDENT TO PROMULGATE RULES AND
REGULATIONS TO MEET SUCH EMERGENCY.
Be it enacted by the National Assembly of the Philippines:
SECTION 1. The existence of war between the United States and other countries of
Europe and Asia, which involves the Philippines, makes it necessary to invest the
President with extraordinary powers in order to meet the resulting emergency.
"SEC. 2. Pursuant to the provisions of Article VI, section 26, of the Constitution, the
President is hereby authorized, during the existence of the emergency, to promulgate
such rules and regulations as he may deem necessary to carry out the national policy
declared in section 1 hereof. Accordingly, he is, among other things, empowered (a) to
transfer the seat of the Government or any of its subdivisions, branches, departments,

offices, agencies or instrumentalities; (b) to reorganize the Government of the

Commonwealth including the determination of the order of precedence of the heads of
the Executive Department; (c) to create new subdivisions, branches, departments,
agencies or instrumentalities of government and to abolish any of those already existing;
(d) to continue in force laws and appropriations which would lapse or otherwise become
inoperative, and to modify or suspend the operation or application of those of an
administrative character; (e) to impose new taxes or to increase, reduce, suspend or
abolish those in existence; (f) to raise funds through the issuance of bonds or otherwise,
and to authorize the expenditure of the proceeds thereof; (g) to authorize the national,
provincial, city or municipal governments to incur in overdrafts for purposes that he may
approve; (h) to declare the suspension of the collection of credits or the payment of
debts; and (i) to exercise such other powers as he may deem to enable the Government
to fulfill its responsibities and to maintain and enforce the authority.
SEC. 3. The President of the Philippines shall as soon as practicable upon the convening
of the Congress of the Philippines report thereto all the rules and regulations
promulgated by him under the powers herein granted.
SEC. 4. This Act shall take effect upon its approval and the rules and regulations
promulgated hereunder shall be in force and effect until the Congress of the Philippines
shall otherwise provide.
Section 26 of Article VI of the Constitution provides:
In time of war or other national emergency, the Congress may by law authorize the
President, for a limited period and subject to such restrictions as it may prescribe, to
promulgate rules and regulations to carry out a declared national policy.
Commonwealth Act No. 671 does not in term fix the duration of its effectiveness. The
intention of the Act has to be sought for in its nature, the object to be accomplish, the
purpose to be subserved, and its relation to the Constitution. The consequences of the
various constructions offered will also be resorted to as additional aid to interpretation.
We test a rule by its results.
Article VI of the Constitution provides that any law passed by virtue thereof should be
"for a limited period." "Limited" has been defined to mean "restricted; bounded;
prescribed; confined within positive bounds; restrictive in duration, extent or scope."
(Encyclopedia Law Dictionary, 3rd ed., 669; Black's Law Dictionary, 3rd ed., 1120.) The
words "limited period" as used in the Constitution are beyond question intended to mean
restrictive in duration. Emergency, in order to justify the delegation of emergency
powers, "must be temporary or it can not be said to be an emergency." (First Trust Joint
Stock Land Bank of Chicago vs. Adolph P. Arp, et al., 120 A. L. R., 937, 938.).
It is to be presumed that Commonwealth Act No. 671 was approved with this limitation in
view. The opposite theory would make the law repugnant to the Constitution, and is

contrary to the principle that the legislature is deemed to have full knowledge of the
constitutional scope of its powers. The assertion that new legislation is needed to repeal
the act would not be in harmony with the Constitution either. If a new and different law
were necessary to terminate the delegation, the period for the delegation, it has been
correctly pointed out, would be unlimited, indefinite, negative and uncertain; "that which
was intended to meet a temporary emergency may become permanent law," (Peck vs.
Fink, 2 Fed. [2d], 912); for Congress might not enact the repeal, and even if it would, the
repeal might not meet the approval of the President, and the Congress might not be able
to override the veto. Furthermore, this would create the anomaly that, while Congress
might delegate its powers by simple majority, it might not be able to recall them except
by a two-third vote. In other words, it would be easier for Congress to delegate its
powers than to take them back. This is not right and is not, and ought not to be, the law.
Corwin, President: Office and Powers, 1948 ed., p. 160, says:
It is generally agreed that the maxim that the legislature may not delegate its powers
signifies at the very least that the legislature may not abdicate its powers: Yet how, in
view of the scope that legislative delegations take nowadays, is the line between
delegation and abdication to be maintained? Only, I urge, by rendering the delegated
powers recoverable without the consent of the delegate; . . . .
Section 4 goes far to settle the legislative intention of this phase of Act No. 671. Section
4 stipulates that "the rules and regulations promulgated thereunder shall be in full force
and effect until the Congress of the Philippines shall otherwise provide." The silence of
the law regarding the repeal of the authority itself, in the face of the express provision
for the repeal of the rules and regulations issued in pursuance of it, a clear manifestation
of the belief held by the National Assembly that there was no necessity to provide for the
former. It would be strange if having no idea about the time the Emergency Powers Act
was to be effective the National Assemble failed to make a provision for this termination
in the same way that it did for the termination of the effects and incidents of the
delegation. There would be no point in repealing or annulling the rules and regulations
promulgated under a law if the law itself was to remain in force, since, in that case, the
President could not only make new rules and regulations but he could restore the ones
already annulled by the legislature.
More anomalous than the exercise of legislative function by the Executive when
Congress is in the unobstructed exercise of its authority is the fact that there would be
two legislative bodies operating over the same field, legislating concurrently and
simultaneously, mutually nullifying each other's actions. Even if the emergency powers
of the President, as suggested, be suspended while Congress was in session and be
revived after each adjournment, the anomaly would not be limited. Congress by a twothird vote could repeal executive orders promulgated by the President during
congressional recess, and the President in turn could treat in the same manner, between
sessions of Congress, laws enacted by the latter. This is not a fantastic apprehension; in

two instances it materialized. In entire good faith, and inspired only by the best interests
of the country as they saw them, a former President promulgated an executive order
regulating house rentals after he had vetoed a bill on the subject enacted by Congress,
and the present Chief Executive issued an executive order on export control after
Congress had refused to approve the measure.
Quiet apart from these anomalies, there is good basis in the language of Act No. 671 for
the inference that the National Assembly restricted the life of the emergency powers of
the President to the time the Legislature was prevented from holding sessions due to
enemy action or other causes brought on by the war. Section 3 provides:
The President of the Philippines shall as soon as practicable upon the convening of the
Congress of the Philippines report thereto all the rules and regulations promulgated by
him under the powers herein granted.
The clear tenor of this provision is that there was to be only one meeting of Congress at
which the President was to give an account of his trusteeship. The section did not say
each meeting, which it could very well have said if that had been the intention. If the
National Assembly did not think that the report in section 3 was to be the first and last
Congress Act No. 671 would lapsed, what reason could there be for its failure to provide
in appropriate and clear terms for the filing of subsequent reports? Such reports, if the
President was expected to continue making laws in the forms of rules, regulations and
executive orders, were as important, of as unimportant, as the initial one.
As a contemporary construction, President Quezon's statement regarding the duration of
Act No. 671 is enlightening and should carry much weight, considering his part in the
passage and in the carrying out of the law. Mr. Quezon, who called the National Assembly
to a special session, who recommended the enactment of the Emergency Powers Act, if
indeed he was not its author, and who was the very President to be entrusted with its
execution, stated in his autobiography, "The Good Fight," that Act No. 671 was only "for a
certain period" and "would become invalid unless reenacted." These phrases connote
automatical extinction of the law upon the conclusion of a certain period. Together they
denote that a new legislation was necessary to keep alive (not to repeal) the law after
the expiration of that period. They signify that the same law, not a different one, had to
be repassed if the grant should be prolonged.
What then was the contemplated period? President Quezon in the same paragraph of his
autobiography furnished part of the answer. He said he issued the call for a special
session of the National Assembly "when it became evident that we were completely
helpless against air attack, and that it was most unlikely the Philippine Legislature would
hold its next regular session which was to open on January 1, 1942." (Emphasis ours.) It
can easily be discerned in this statement that the conferring of enormous powers upon
the President was decided upon with specific view to the inability of the National
Assembly to meet. Indeed no other factor than this inability could have motivated the

delegation of powers so vast as to amount to an abdication by the National Assembly of

its authority. The enactment and continuation of a law so destructive of the foundations
of democratic institutions could not have been conceived under any circumstance short
of a complete disruption and dislocation of the normal processes of government.
Anyway, if we are to uphold the constitutionality of the act on the basis of its duration,
we must start with the premise that it fixed a definite, limited period. As we have
indicated, the period that best comports with constitutional requirements and limitations,
with the general context of the law and with what we believe to be the main if not the
sole raison d'etre for its enactment, was a period coextensive with the inability of
Congress to function, a period ending with the conventing of that body.
It is our considered opinion, and we so hold, that Commonwealth Act No. 671 became
inoperative when Congress met in regular session on May 25, 1946, and that Executive
Orders Nos. 62, 192, 225 and 226 were issued without authority of law. In setting the
session of Congress instead of the first special session preceded it as the point of
expiration of the Act, we think giving effect to the purpose and intention of the National
Assembly. In a special session, the Congress may "consider general legislation or only
such as he (President) may designate." (Section 9, Article VI of the Constitution.) In a
regular session, the power Congress to legislate is not circumscribed except by the
limitations imposed by the organic law.
Having arrived at this conclusion, we are relieved of the necessity of deciding the
question as to which department of government is authorized to inquire whether the
contingency on which the law is predicated still exists. The right of one or another
department to declare the emergency terminated is not in issue. As a matter of fact, we
have endeavored to find the will of the National Assemblycall that will, an exercise of
the police power or the war power and, once ascertained, to apply it. Of course, the
function of interpreting statutes in proper cases, as in this, will not be denied the courts
as their constitutional prerogative and duty. In so far as it is insinuated that the Chief
Executive has the exclusive authority to say that war not ended, and may act on the
strength of his opinion and findings in contravention of the law as the courts have
construed it, no legal principle can be found to support the proposition. There is no
pretense that the President has independent or inherent power to issue such executive
orders as those under review. we take it that the respondents, in sustaining the validity
of these executive orders rely on Act No. 600, Act No. 620, or Act No. 671 of the former
Commonwealth and on no other source. To put it differently, the President's authority in
this connection is purely statutory, in no sense political or directly derived from the
Constitution.
Act No. 671, as we have stressed, ended ex proprio vigore with the opening of the
regular session of Congress on May 25, 1946. Acts Nos. 600 and 620 contain stronger if
not conclusive indication that they were self-liquidating. By express provision the rules
and regulations to be eventually made in pursuance of Acts Nos. 600 and 620,

respectively approved on August 19, 1940 and June 6, 1941, were to be good only up to
the corresponding dates of adjournment of the following sessions of the Legislature,
"unless sooner amended or repealed by the National Assembly." The logical deduction to
be drawn from this provision is that in the mind of the lawmakers the idea was fixed that
the Acts themselves would lapse not latter than the rules and regulations. The design to
provide for the automatic repeal of those rules and regulations necessarily was
predicated on the consciousness of a prior or at best simultaneous repeal of their source.
Were not this the case, there would arise the curious spectacle, already painted, and
easily foreseen, of the Legislature amending or repealing rules and regulations of the
President while the latter was empowered to keep or return them into force and to issue
new ones independently of the National Assembly. For the rest, the reasoning heretofore
adduced against the asserted indefinite continuance of the operation of Act No. 671
equally applies to Acts Nos. 600 and 620.
The other corollary of the opinion we have reached is that the question whether war, in
law or in fact, continues, is irrelevant. If we were to that actual hostilities between the
original belligerents are still raging, the elusion would not be altered. After the convening
of Congress new legislation had to be approved if the continuation of the emergency
powers, or some of them, was desired. In the light of the conditions surrounding the
approval of the Emergency Power Act, we are of the opinion that the "state of total
emergency as a result of war" envisaged in the preamble referred to the impending
invasion and occupation of the Philippines by the enemy and the consequent total
disorganization of the Government, principally the impossibility for the National
Assembly to act. The state of affairs was one which called for immediate action and with
which the National Assembly would would not be able to cope. The war itself and its
attendant chaos and calamities could not have necessitated the delegation had the
National Assembly been in a position to operate.
After all the criticism that have been made against the efficiency of the system of the
separation of powers, the fact remains that the Constitution has set up this form of
government, with all its defects and shortcomings, in preference to the commingling of
powers in one man or group of men. The Filipino people by adopting parliamentary
government have given notice that they share the faith of other democracy-loving
people in this system, with all its faults, as the ideal. The point is, under this framework
of government, legislation is preserved for Congress all the time, not expecting periods
of crisis no matter how serious. Never in the history of the United States, the basic
features of whose Constitution have been copied in ours, have the specific functions of
the legislative branch of enacting laws been surrendered to another department
unless we regard as legislating the carrying out of a legislative policy according to
prescribed standards; no, not even when that Republic was fighting a total war, or when
it was engaged in a life-and-death struggle to preserve the Union. The truth is that under
our concept of constitutional government, in times of extreme perils more than in normal
circumstances "the various branches, executive, legislative, and judicial," given the

ability to act, are called upon "to the duties and discharge the responsibilities committed
to them respectively."
These observations, though beyond the issue as formulated in this decision, may, we
trust, also serve to answer the vehement plea that for the good of the Nation, the
President should retain his extraordinary powers as long asturmoil and other ills directly
or indirectly traceable to the late war harass the Philippines.
Upon the foregoing considerations, the petitions will be granted. In order to avoid any
possible disruption and interruption in the normal operation of the Government, we have
deemed it best to depart in these cases from the ordinary rule to the period for the
effectivity of decisions, and to decree, as it is hereby decreed, that this decision take
effect fifteen days from the date of the entry of final judgment provided in section 8 of
Rule 53 of the Rules of Court in relation to section 2 of Rule 35. No costs will be charged.
Ozaeta, J., concurs.

Separate Opinions
MORAN, C. J., concurring:
I agree with the opinion prepared by Mr. Justice Tuason, except on the points hereunder
discussed.
I believe, on the one hand, that the emergency power of the President had ceased not in
May 1946, when Congress held its regular sessions, as Mr. Justice Tuason and Mr. Justice
Feria maintain, but on June 9, 1945, when Congress convened in a special session to
consider general legislation. The emergency contemplated in Commonwealth Act No.
671, is "total emergency" which means the state of actual war involving the Philippines,
with the impending invasion and occupation of our country by the enemy and the
consequent total disorganization and paralyzation of the Government, principally, the
impossibility for the National Assembly to act. This was the only reason and justification
for the total relinquishment of legislative power by Congress in favor of the Chief
Executive under Commonwealth Act No. 671. Such relinquishment was total because the
emergency was also total. Clearly, therefore, the inability of Congress to act was the soul
of the law, and the moment such inability ceased, the total emergency also ceased and
the law likewise ceased to validly exist. On June 9, 1945, the Congress of the Philippines
convened in a special session "to adopt such measures as may be necessary to meet the
existing emergency" and "for the purpose of considering general legislation." I hold that
from that date, June 9, 1945, Congress was able and ready to act on all matters, and the
emergency powers delegated to the President in Commonwealth Act No. 671, naturally
ceased to exist.

Upon the other hand, while I believe that the emergency powers had ceased in June
1945, I am not prepared to hold that all executive orders issued thereafter under
Commonwealth Act No. 671, are per se null and void. It must be borne in mind that these
executive orders had been issued in good faith and with the best of intentions of three
successive Presidents, and some of them may have already produced extensive effects
in the life of the nation. We have, for instance, Executive Order No. 73, issued on
November 12, 1945, appropriating the sum of P6,750,000 for public works; Executive
Order No. 86, issued on January 7, 1946, amending a previous order regarding the
organization of the Supreme Court; Executive Order No. 89, issued on January 1, 1946,
reorganizing the Courts of First Instance; Executive Order No. 184, issued on November
19, 1948, controlling rice and palay to combat hunger; and other executive orders
appropriating funds for other purposes. The consequences of a blanket nullification of
these executive orders will be unquestionably serious and harmful. And I hold that before
nullifying them, other important circumstances should be inquired into, as for instance,
whether or not they have been ratified by the Congress expressly or impliedly, whether
their purposes have already been accomplished entirely or partially, and in last instance,
to what extent; acquiescence of litigants; de facto officers; acts and contrast of parties
acting in good faith; etc. It is my opinion that each executive order must be viewed in the
lights of its peculiar circumstances, and, if necessary and possible, before nullifying it,
precautionary measures should be taken to avoid harm to public interest and innocent
parties.
To illustrate the foregoing proposition of individual consideration of specific cases, shall
go into a brief discussion of the executive orders involved in the cases now before this
Court. With regard to Executive No. 225 on general appropriation, I hold that the court
should not declare it null and void till Congress may have an opportunity to provide a
substitute measure for the sustenance of government. This view is predicated upon the
principle of absolute necessity. Till Congress may pass a valid appropriation act our
government cannot survive without the executive order in question. It would be absurd
for this court to declare the cessation of an emergency, and by that same declaration
permit, if not abet, the formation of another emergency which would be inevitable if, by
reason of lack of appropriation, government shall cease to function. In such cases, when
apparently the provisions of our laws and Constitution seem inadequate, the courts must
go deeper even than the very Magna Carta itself and find solution in the basic principles
of preservation of government and of national survival, which in the last analysis, are the
very reasons for the existence of a Constitution. In such extreme cases, as can come
from the present situation, it would be the height of judicial imprecision to preserve the
form of the constitution, and at the same time permit the disruption and cessation of the
government which that same constitution so intricately designed and firmly established.
Thus, in the remedy of an evil, we shall cause a far greater one.
It may be argued that the course of action I am taking is founded upon fear, fear that
Congress will again fail to act on the matter of appropriation, and it may be asserted that

the members of the Congress are presumed to be as patriotic as the members of this
Court, if not more, and that, therefore, we may rest assured that they will not fail to fulfill
their duty. I admit this to be true, and accordingly, I ask what is then the hurry and
necessity for nullifying the executive order on appropriation which we are sure will soon
be substituted by a valid appropriation act? Why not defer judgment and wait until the
special session of Congress so that it may fulfill its duty as it clearly sees it? I can find no
reason against this suggestion except, perhaps, a desire to assert judicial supremacy in a
case where judicial statemanship is more necessary.
It is also true that the possibility that Congress will again fail to provide funds for the
operation of the government is a remote possibility. But there is no harm in providing for
all the possibilities, both near and remote. If that remote possibility never comes, well
and good, nothing is lost and the situation is saved. However, if the remote possibility
does come, and it is not impossible, and we had already nullified the executive order on
appropriation, how will the government function and survive? On the other hand, if we
defer judgment upon the nullity of such executive order, and that remote possibility does
come, we still have the saving lifeline of that executive order which may, perhaps, be
tolerated to save the country from chaos, until a more proper and adequate remedy can
be secured.
With regard to the executive order appropriating funds for the conduct of the coming
elections, I uphold the same view as in the foregoing, namely, not in abdicating the
power of this court to pass upon the validity of an executive order, but to defer judgment
upon such an order until the legislature may provide a substitute measure. The reason
for this is, likewise, absolute necessity. Without such Executive Order we may have not
elections in November. Elections are the very essence of popular government for the
establishment and preservation of which, our Constitution has been consecrated. To
permit the unwarranted abolition or even suspension of elections, will surely result either
in the denial of popular representation or in the perpetuation in power of those already in
office. Either result is revolting to our system of government. Briefly stated, I hold that
this court should neither ratify nor nullify this executive order, but should defer judgment
in the same manner and for the same reasons stated above in connection with the
executive order on appropriations. The Court, in these cases, is confronted not only with
bare issues of law, but with actual anomalous situations pregnant with possible dangers
to the nation, and it is the duty of the Court, as a dispenser of justice, to find a solution
that is both legal and realistic.
With reference to Executive Order No. 62, which regulates rentals for houses, and
Executive Order No. 192, which aims to control exports from the Philippines, I agree that
they must be held null and void upon the reason stated by Mr. Justice Tuason and Mr.
Justice Feria and also upon those stated by Mr. Justice Montemayor and Mr. Justice Alex
Reyes.

My vote, therefore, is that the petitions must be granted in Araneta vs. Dinglasan, G.
No. L-2044; Araneta vs. Angeles, G. R. No. L-2756 and Guerrero vs. Commissioner
Customs, G. R. No. L-3055, and that judgment must be deferred in Rodriguez vs.
Tesorero de Filipinas, G. R. No. L-3054 and Barredo vs. The Commission on Election, G.
No. L-3056.

R.
of
El
R.

PARAS, J., concurring:

I concur in the opinion of Mr. Justice Tuason. I wish to add, however the following
observations: Even assuming, for the sake of argument, that the legislative intent is to
make Commonwealth Act No. 671, effective during the existence of the emergency
contemplated therein and that it is within the exclusive province of the political
departments to determine whether said emergency continues or has ceased to exist, I
am of the conviction that, in view of the formal and unmistakable declarations of both
the Congress and the President, said Act No. 671, should be held as having lost its force
and effect.
It is important to remember that the kind of emergency expressly spoken of in the Act is
a total emergency resulting from war and that the Act was passed at a time (December
16, 1941) when there was factually a state of war involving the Philippines.
In section 1 of Republic Act No. 342, approved on July 26, 1948, it was categorically
declared by the Congress that "since liberation conditions have gradually returned to
normal, but not so with regard to those who have suffered the ravages of war and who
have not received any relief for the loss and destruction resulting therefrom," and that
"the emergency created by the last war as regards these was sufferers being still
existent, it is the declared policy of the state that as to them the debt moratorium should
be continued in force in a modified form." The President, in turn, in his speech delivered
on July 4, 1949, plainly proclaimed that "what emergencies it (the Republic) faces today
are incidental passing pains artificially created by seasonal partisanship, very common
among democracies but will disappear with the rains that follow the thunderclaps not
later than November 8 of this year."
We thus have a formal declaration on the part of the Congress that the emergency
created by the last war exists as regards only those debtors whose war damage claims
have not been settled by the United States Philippine War Damage Commission (section
2, Republic Act No. 342), patently meaning that said emergency is, at most, a partial
emergency. It is needless to point out that only a small portion of the Philippine
population are debtors and not all of those who are debtors are war damage claimants.

We also have the solemn declaration on the part of the President that the emergencies
faced by the Republic are incidental emergencies artificially created by seasonal
partisanship, clearly meaning that such emergencies not only are not total but are not
the result of war.
If the emergency is, as admitted by the Congress, not total and, as admitted by the
President, not the result of the war, Commonwealth Act No. 671 has lost its basis and
cannot legally give rise to the executive orders herein involved. Indeed, it is not
pretended that said orders are intended to meet any emergency growing out of the last
war. Lack of a budget, an appropriation for the elections, or an import control law, has
been brought about by the inaction of the Congress unaffected by the last war, and such
emergency, if it may be called so, is not of the kind contemplated in Commonwealth Act
No. 671.
The government has for four years since liberation been normally functioning; election
had been regularly held; a national census had been taken; Congress had held regular
and special session; "people travel freely most everywhere and more quickly, by land,
sea and air, to an extent that was not hitherto enjoyed," and "business is more brisk than
ever, goods are plentiful, our people even in the remotest communities and barrios of
the country are better dressed, their diet has been immensely improved, and they look
more healthy than they ever did" (President's fifth monthly radio chat, March 15, 1949);
and the sporadic depredations of the outlaws in isolated areas of the country are but the
last paroxysms of a dying movement (President's State-of-the-Nation Message, January
24, 1949), all these certainly negative the existence of any real (much less total)
emergency.
That the Congress had heretofore recognized the cessation of the emergency is
conclusively established by the fact that it had assumed the task of directly enacting,
during its past sessions, measures dealing with all the matters covered by the specific
legislative powers conceded to the President in Commonwealth Act No. 671. This is in
line with the fundamental reason for the approval of said Act, as may be gathered from
the following statement of President Quezon: "When it became evident that we were
completely helpless against air attack and that it was most unlikely the Philippine
Legislature would hold its next regular session which was to open on January 1, 1942, the
National Assembly passed into history approving a resolution which reaffirmed the
abiding faith of the Filipino people in, and their loyalty to, the United States. The
assembly also enacted a law granting the President of the Philippines all the powers that
under the Philippine Constitution may be delegated to him in time of war." (The Good
Fight, pp. 204-205.) When President Quezon said "in time of war", he undoubtedly meant
factual war, a situation that existed at the time of the passage of Commonwealth Act No.
671.
Indeed, the dissenters admit that any delegated power directly exercised by the principal
is considered withdrawn from the agent. A cursory examination of Commonwealth Act

No. 671 will show that the legislative function therein specified had been discharged by
the Congress. The following illustrates the powers delegated in the Act and the measures
enacted by the Congress itself covering each:
Section 2 of Commonwealth Act No. 671
(a) to transfer the seat of the Government or any of its subdivisions, branches,
departments, offices, agencies or instrumentalities:
Republic Act No. 333
An Act to establish the Capital of the Philippines and the permanent seat of the National
Government, to create a capital city planning commission, to appropriate funds for the
acquisition of private estates within the boundary limits of said city, and to authorize the
issuance of bonds of the National Government for the acquisition of private estates, for
the subdivision thereof, and for the construction of streets, bridges, waterworks,
sewerage and other municipal improvements in the capital City. (Approved, July 17,
1948.)
(b) to reorganize the Government of the Commonwealth including the determination of
the order of precedence of the heads of the Executive Departments:
Republic Act No. 51
Act authorizing the President of the Philippines to reorganize within one year the
different Executive departments, bureaus, offices, agencies and their instrumentalities of
the government, including the corporations owned or controlled by it. (Approved,
October 4, 1946.)
(c) to create new subdivisions, branches, departments, offices, agencies
instrumentalities of government and to abolish any of those already existing:

or

Commonwealth Act No. 732

An Act to create the Department of Foreign Affairs and to authorize the President of the
Philippines to organize said department as well as the foreign service of the Republic of
the Philippines. (Approved, July 3, 1946.)
(d) to continue in force laws and appropriations which would lapse or otherwise become
inoperative, and to modify or suspend the operation or application of those of an
administrative character:
Commonwealth Act No. 709
An Act appropriating the sum of five million pesos to enable the national housing
commission to resume its functions" (Approved, November 1, 1945.)
Commonwealth Act No. 710

An Act to appropriate funds to continue the payment of Retirement gratuities or pensions

under existing laws. (Approved, November 1, 1945.)
(e) to impose new taxes or to increase, reduce, suspend, or abolish those in existence:
Republic Act No. 215
An Act to amend Section One of the Republic Act numbered eighty-one providing a new
time limit for the waiver of, and/or extension of the period, within which to perform,
accomplish or comply with, any term, condition, or stipulation required of locators,
holders, lessees, operators of mining claims or concessions, and of water rights and
timber concessions with the mining industry and the condonation of mining, specific and
real estate taxes, under certain terms and conditions. (Approved, June 1, 1948.)
Ley No. 321 de la Republica
Ley que eleva los derechos de transferencia de ganado mayor, enmendado al efecto el
articulo quinientos veintiochos del Codigo Administrativo Revisado. (Apobada, Junio 9,
1948.)
(f) to raise funds through the issuance of bonds or otherwise, and to authorize the
expenditure of proceeds thereof:
Republic Act No. 265
An Act establishing the Central Bank of the Philippines . . . . (Section 87 [e] No. 7.)
Approved, June 15, 1948.)
Republic Act No. 266
An Act appropriating such sums as may from time to time be released by the Central
Bank representing excess monetary reserves, and authorizing the President of the
Philippines to issue bonds, certificates or other evidences of indebtedness covering such
amounts. (Approved, June 15, 1948.)
Republic Act No. 85
An Act creating the Rehabilitation Finance Corporation. (Section 2 [f].) (Approved, Oct.
29, 1946.)
(g) to authorize the National, provincial, city or municipal government to incur in
overdrafts for the purposes that he may approve:
Various Appropriation Acts.
(h) to declare the suspension of the collection of credits or the payments of debts:
Republic Act No. 342, approved, July 26, 1948.

(i) to exercise such other powers as he may deem necessary to enable the Government
to fulfill its responsibilities and to maintain and enforce its authority.
The powers included in this subdivision (i) are of course covered by hundreds of other
acts approved by the Congress which, it cannot be denied, all tend to "enable the
Government to fulfill its responsibilities and to maintain and enforce its authority."
Moreover, the withdrawal of the greater and more important powers may be presumed
to have carried the accessory and less important powers.
There is no merit in the contention that Commonwealth Act No. 671 was enacted by
virtue of the war powers of the Congress. As the Act itself expressly states, its basis is
section 26 of Article VI of the Constitution which merely authorizes delegation of
legislative powers to the President in times of war or other national emergency. The
phrase "in times of war or other national emergency" is solely indicative or descriptive of
the occasions during which the delegation may be extended and does not classify the act
of delegating legislative functions as a war power. It must be borne in mind that said
section 26 is peculiar to our Constitution, with the result that the decisions of the
Supreme Court of the United States cited on behalf of the respondents, expounding the
theory that the exercise by the President of his war powers granted by the Congress
cannot be interfered with by the courts, are not controlling. Particularly, the case of
Ludecke vs. Watkins, 92 L. ed., 1883, in which the opinion of the United States Supreme
Court was written by Mr. Justice Frankfurter, cannot apply, for the further reason that it
merely involved the power of deportation which, even in our jurisdiction, is recognized, it
being the rule here that the courts cannot control the right of the Chief Executive to
determine the existence or sufficiency of the facts justifying an order of deportation.
Upon the other hand, the war power of the President is separately covered by section 10,
paragraph (2), of Article VII, and that of the Congress by section 25.
Article VI, of the Constitution, which are not invoked for the passage of Commonwealth
Act No. 671.
MONTEMAYOR, J., concurring and dissenting:.
The majority opinion holds that Executive Order No. 62 dated June 21, 1947; Executive
Order No. 192 dated December 24, 1948; and Executive Orders Nos. 225 and 226 both
dated June 15, 1949 were issued without authority of law and therefore illegal and of no
legal force and effect. I concur only in the result. Ordinarily, such concurrence without
comment or explanation would be sufficient and satisfactory. However, in view of the
radical difference between the reasons had and given by the majority in arriving at the
result and those entertained by me, and considering the transcendental importance of
these cases, not only because of the vast amounts of public funds and the rights of
citizens affected but also of the principles of law involved, and the fact that not only the
force and the effect of a law (Commonwealth Act No. 671) but also the legality and the
force and effect of numerous executive orders issued by several Presidents during a

period of about three years, affecting as they do not only citizens, their interest and their
properties but also the different departments and offices of the Government, I deem it
my duty to set forth my views and the reasons in support of the same.
There is a claim made about lack of personality of some of the parties-petitioners
particularly, the petitioners in G. R. Nos. L-3054 and L-3056. Much could be said for and
against that claim, but I am willing to brush aside all defenses and technicalities on this
point in order to be able to consider and decide the more important question of the
legality of the executive orders involved and whether or not Commonwealth Act No. 671
is still in force.
The aforementioned executive orders were issued on the straight of and by virtue of
Commonwealth Act No. 671. The majority holds that Commonwealth Act No. 671 ceased
to have any force and effect on May 25, 1946 when Congress first convened in regular
session after liberation. In This, I disagree for I believe and hold that Commonwealth Act
No. 671 is still in force and in effect. But despite this view, I am not of the opinion that
the executive orders under consideration were issued without authority.
Starting with Executive Order No. 62, we find that it deals with and regulates houses and
lot rentals. If the legislature had not already acted and legislated on this matter since the
promulgation of Commonwealth Act No. 671, this would be a proper field for Presidential
action. However, the legislature had already promulgated Commonwealth Act No. 689
and Republic Act No. 66, regulating house rentals and, as late as the month of May,
1947, Congress passed House Bill No. 978 further amending Commonwealth Act No. 689.
In other words, in thus acting, the Legislature had already shown its readiness and ability
to legislate on this matter, and had withdrawn it from the realm of presidential legislation
or regulation under the powers delegated by Commonwealth Act No. 671. Not only this,
but in issuing rules and regulations in the form of executive orders under his delegated
powers, the Chief Executive merely acts as an agent of the legislature, his principal
which made the delegation. As such agent, he cannot go against the policy and
expressed desire of his principal.
There are radical differences between Commonwealth Act No. 689, Republic Act No. 66,
and House Bill No. 978 on one side and Executive Order No. 62 on the other. That was
the reason why President Roxas vetoed House Bill No. 978, believing in good faith that it
would not solve and remedy the problem of house rentals as explained by him in his
communication to the House of Representatives of June 21, 1947, setting forth his views
on the bill. The President may not and could not substitute his opinion however excellent
or superior for that of the legislature on matters of legislation when Congress has already
acted and expressed its opinion and desire on the matter.
With respect to Executive Order No. 192, it will be remembered that Congress passed
Commonwealth Act No. 728, approved on July 2, 1946, authorizing the President to
regulate, curtail, control, and prohibit the exportation of certain products, merchandise

and materials. Under said authority the President issued Executive Order No. 3 dated July
10, 1946, later amending section 2 of said Executive Order by issuing Executive Order
No. 23 dated November 1, 1946, regulating the exportation of certain products,
materials and merchandise. The important thing to consider is that section 4 of
Commonwealth Act No. 728 provided that the authority it granted to the President shall
terminate on December 31, 1948, that is to say, that after said date the Executive could
no longer validly regulate exports under said law. The President, however, overlooked or
ignored said injunction and invoking his emergency powers under Commonwealth Act
No. 671, promulgated Executive Order No. 192 regulating exports, to take effect on
January 1, 1949. What was said with regard to Executive Order No. 62 is applicable to the
lack of authority of the Executive to promulgate Executive Order No. 192, namely, that
on this matter of export control, the legislature had already withdrawn it from the
jurisdiction of the Executive under his emergency powers after the enactment of
Commonwealth Act No. 728. Any Presidential power or authority on the subject of export
control was derived from said Act. Not only this, but when in section 4 of Commonwealth
Act No. 728 the legislature terminated the authority given the President to regulate and
control exports on December 31, 1948 and failed or refused to renew said authority, the
inference or conclusion and that after said date Congress deemed any presidential
regulation on exports unnecessary and inadvisable. Therefore, in promulgating Executive
Order No. 192 the Chief Executive acted not only without legislative authority but also
against the wishes and policy of Congress. This he may not validly do.
With respect to Executive Orders Nos. 225 and 226, the considerations made with regard
to Executive Orders Nos. 62 and 192 are equally applicable. By previously enacting
necessary legislation on the yearly Government appropriation and on the appropriation
of funds for the expenses incurred in national elections, Congress has shown its
readiness and ability to cope with the financial problems of the Government on this
point. Republic Act No. 80, approved October 22, 1946, appropriating funds for the
operation of National Government from July 1, 1946 to June 30, 1947; Republic Act No.
156 appropriating funds for the fiscal year 1947-48 and Republic Act No. 320, the
appropriation law for the fiscal year 1948-49 show that Congress was in a position and
able to provide for the yearly expenditures of the Government. And Republic Act No. 73
appropriating P1,000,000 to defray election expenses on March 11, 1947; Republic Act
No. 147 appropriating P1,000,000 to defray expenses for the election of provincial city
and municipal officials and eight senators held on November 11, 1947, and Republic Act
No. 235 appropriating P100,000 for the special elections held on March 23, 1948, to fill
vacancies in Representative District No. 4 of Iloilo and No. 1 of Leyte, demonstrated the
ability of the Congress to appropriate money for election purposes. By so doing Congress
had tacitly and impliedly withdrawn this portion of the field where the President may
under his emergency power legislate or promulgate rules and regulations.
In this connection, it may be stated that in my opinion, the theory underlying the
delegation of emergency powers to the under Commonwealth Act No. 671 and the

similar laws is that the legislature because of the emergency resulting from the war,
would be unable to meet in order to legislate or although able to meet, because of the
emergency, the ordinary process of legislation would be too slow and inadequate and
could not cope with the emergency. So, as a remedy, the power and authority of
legislation are vested temporarily in the hands of one man, the Chief Executive. But as
regards Executive Orders Nos. 225 and 226, the legislature has demonstrated that not
only it could meet but also it could legislate on this point of appropriations by approving
general appropriation laws for the different fiscal years since liberation as well as
appropriations for the necessary funds for the different national and provincial elections.
Consequently, there no longer was any necessity for Presidential legislation in this
regard. Moreover, and this is not unimportant, the failure of the Legislature to pass an
appropriation law for the fiscal year 1949-50 and a law appropriating funds for the
elections in November, 1949 was not due to any emergency resulting from the war,
contemplated by Commonwealth Act No. 671, but rather and possibly due to lack of time
and because of the rather abrupt and adjourning of the last session of the Legislature
last May.
As already stated, the majority holds that Act No. 671 ceased to have force and effect on
May 25, 1946. The other view is that it is still in force. To me this is the main and the
more important issue involved in these cases. In fact the argument of the parties
centered on this point. The importance of this issue may readily be appreciated when it
is realized that on its determination is based, not only the validity or nullity (according to
the theory of the majority opinion), of the four Executive Orders now under
consideration, but also of all the Executive Orders promulgated under authority of
Commonwealth Act No. 671 after May 25, 1946, up to the present time. Its determination
will also decide whether or not the President may still exercise his emergency powers in
the future on matters and subjects not heretofore withdrawn by the Legislature. Because
of my disagreement with the majority on this point, I deem it necessary to explain and
elaborate on my reasons for my disagreement.
For purposes of reference and to facilitate the same, I am reproducing Commonwealth
Act No. 671 in full as well as section 26, Article VI of the Constitution on which said Act is
based:
AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR INVOLVING
THE PHILIPPINES AND AUTHORIZING THE PRESIDENT TO PROMULGATE RULES AND
REGULATIONS TO MEET SUCH EMERGENCY.
Be it enacted by the National Assembly of the Philippines:
SECTION 1. The existence of war between the United States and other countries of
Europe and Asia, which involves the Philippines, makes it necessary to invest the
President with extraordinary powers in order to meet the resulting emergency.

SEC. 2. Pursuant to the provisions of Article VI, section 26, of the Constitution, the
President is hereby authorize, during the existence of the emergency, to promulgate
such rules and regulations as he may deem necessary to carry out the national policy
declared in section 1 hereof. Accordingly, he is, among other things, empowered (a) to
transfer the seat of the Government or any of its subdivisions, branches, departments,
offices, agencies or instrumentalities; (b) to reorganize the Government of the
Commonwealth including the determination of the order of precedence of the heads of
the heads of Executive Departments; (c) to create new subdivisions, branches,
departments, offices, agencies or instrumentalities of government and to abolish any of
those already existing; (d) to continue in force laws and appropriations which would
lapse or otherwise become inoperative, and to modify or suspend the operation or
application of those of an administrative character; (e) to impose new taxes to increase,
reduce, suspend or abolish those in existence; (f) to raise funds through the issuance of
bonds or otherwise, and to authorize the expenditure of the proceeds thereof; (g) to
authorize the national, provincial, city or municipal governments to incur in overdrafts for
purposes that he may approve; (h) to declare the suspension of the collection of credits
or the payments of debts; and (i) to exercise such other powers as he may deem
necessary to enable the Government to fulfill its responsibilities and to maintain and
enforce the authority.
SEC. 3. The President of the Philippines shall as soon as practicable upon the convening
of the Congress of the Philippines report thereto all the rules and regulations
promulgated by him under the powers herein granted.
SEC. 4. This Act shall take effect upon its approval and the rules and regulations
promulgated hereunder shall be in force and effect until the Congress of the Philippines
shall otherwise provide.
In time of war or other national emergency, the Congress may by law authorize the
President, for a limited period and subject to such restrictions as it may prescribe, to
promulgate rules and regulations to carry our a declared national policy. (Section 26,
Article VI, Constitution.)
I fully agree with the majority when in its opinion it says:
Commonwealth Act No. 671 does not in term fix the duration of its effectiveness. The
intention of the Act has to be sought for in its nature, the object to be accomplished, the
purpose to be sub-served, and its relation to the Constitution. (Page 5, majority opinion.)
The main thesis of the majority is that the only reason for the delegation of legislative
powers to the Chief Executive under the Constitution, such as was done under
Commonwealth Act No. 671 was because due to the emergency resulting from the war,
the Legislature could not meet to enact legislation; that the moment of Legislature could
convene there would no longer be any reason for the exercise by the President of

emergency powers delegated to him; that if, when the Legislature could meet and
actually is in session, the President is allowed to exercise his delegated legislative
powers, there would be the serious anomaly of two legislative bodies acting at the same
time, namely, the Legislature and the Executive, "mutually nullifying each other's action"
; that the limited period fixed in Commonwealth Act No. 671 for its life and effectiveness
as required by the Constitution is the interval from the passage of said Act and the
moment that Congress could convene, not in special session where its power of
legislation is limited by the Chief Executive in his call for special session, but in regular
session where it could be free to enact general legislation; and that unless this automatic
ending or cessation of Act No. 671 is so held, there would be need of another Act or
legislation by the Congress to repeal Act No. 671 in which case, the Chief Executive may
by his veto power effectively block any effort in this direction.
I beg to differ with the foregoing thesis. I believe that, as I already had occasion to state
though incidentally, the real reason for the delegation of legislative powers to the Chief
Executive is not only because the Legislature is unable to meet due to a national
emergency but also because although it could and does actually meet, whether in
regular or special session, it is not in a position and able to cope with the problems
brought about by and arising from the emergency, problems which require urgent and
immediate action. Certainly, one man can act more quickly and expeditiously than about
one hundred members of the Legislature, especially when they are divided into
legislative chambers. That is why in times of emergency, much as we in democratic
countries dislike the system or idea of dictatorship, we hear of food dictator, fuel
dictator, transportation dictator, civilian evacuation dictator, etc., where the functions
which ordinarily belong to a council or board or to a legislative body, are entrusted under
certain limitations to one single official or individual.
Supposing that during a national emergency and while the Legislature is in session, the
legislators woke up one morning to find that there was extreme scarcity of imported
food, fuel, building materials, equipment required in agriculture and industry, etc.,
because of a monopoly, hoarding, injurious speculation, manipulation, private controls
and profiteering, or that there were wide-spread lockouts and strikes paralyzing
transportation, commerce and industry, or rampant espionage or sabotage endangering
the very life and security of the nation. How much time would it take the legislature to
enact the necessary legislation in order to cope with the situation and pass the
necessary emergency measures?
We are familiar with the practice and routine of enacting laws. A bill is introduced in the
Legislature; it is referred to the corresponding committee, it is studied by said
committee, which in some cases holds public hearings; the committee discusses the bill
and sometimes introduces amendments; if the bill is not killed in the committee or
shelved, it is submitted to the chamber for study, discussion and possible amendment by
all the members; it is finally voted and if approved, it is sent to the other house where it

undergoes the same process; and if it is finally approved by both houses of Congress, it
is submitted to the Chief Executive for his study and approval or veto. All these may
consume weeks or months as a result of which, ordinarily, many bills finally approved by
the Congress could be sent to the President for approval or veto only after adjournment
of the legislative session. And we should not overlook the fact that in some cases for lack
of time of due to disagreement among the legislators or between the two houses of
Congress, important pieces of legislations like the annual appropriation law for the fiscal
year 1949-50, appropriation of funds for the election to be held in November, 1949,
contained in Executive Orders Nos. 225 and 226, involved in the present cases, and the
proposed amendment to the Election Code etc. have not been passed by Congress in its
last session ending last May, 1949, which session lasted one hundred days. If we were to
rely on the ordinary process of legislation to meet a national emergency, by the time the
necessary and needed law is passed, the situation sought to be remedied, or the
problem sought to be solved may have become disastrous or ended in calamity or gone
beyond legislation or any remedy. It would be too late. It would be like locking the stable
door after the horse had been stolen.
Now, for some retrospect. The Philippine National Assembly delegated its legislative
powers because of the existence of a state of national emergency as early as the year
1939. During its second special session of that year, it promulgated the following laws:
(a) Commonwealth Act No. 494, authorizing the President of the Philippines to suspend
until the time of the adjournment of the next regular session of the National Assembly,
either wholly or partially and under such conditions as he may deem proper, the
operation of Commonwealth Act No. 444, commonly known as the Eight Hour Labor Law;
(b) Commonwealth Act No. 496, authorizing the President to take over, for use or
operation by the Government, any public service or enterprise and to pay just
compensation in the manner to be determined by him and to prescribe and promulgate
regulations he may deem essential to carry out the purposes of the Act;
(c) Commonwealth Act No. 498 declaring a state of national emergency due to a state of
war among several nations and as a measure to prevent scarcity, monopolization,
hoarding, injurious speculations, profiteering, etc. affecting the supply, distribution
movement of foods, clothing, fuel, building materials, agricultural equiptments etc.
authorized the President to purchase any of the articles or commodities available for
storage, for re-sale or distribution, to fix the maximum selling price of said articles or
commodities and to promulgated such rules and regulations as he may deem necessary;
and
(d) Commonwealth Act No. 500 authorizing the President in view of the existence of a
state of national emergency to reduce the expenditures of the executive departments of
the Government by the suspension or abandonment of service, activities, or operations
of no immediate importance.

At the time, September, 1939 the second world war was only in Europe, quite far from
the Philippines and had just begun. There was then no likelihood of the Philippines being
involved in the war until more than two years later, in December, 1941. The National
Assembly was then free to meet either in regular or special session to enact legislation to
meet the emergency. In fact, it met in regular session in January, 1941 lasting 100 days
and in January, 1941 for another regular session of 100 days, excluding the several
special session held during those two years. And yet the Assembly delegated legislative
powers to the President under section 26, Article II of the Constitution. This is clear proof
that, contrary to the theory of the majority opinion, the Legislature delegated legislative
powers to the President even when it could meet and it actually met several times.
After passing the Acts just mentioned delegating legislative powers to the President, the
Assembly in its fourthly special session on August 19, 1940 repeated and reiterated this
practice and policy by passing Commonwealth Act No. 600 delegating additional and
more extensive powers to the President in spite of the fact that the war was still far away
in Europe and there was no danger or prospect of involving the Philippines, and the
Legislature was still free to meet as in fact it met again in regular session in January,
1941. During its regular session begun that month and year, instead of stopping or
ending the legislative powers delegated to the President, because according to the
theory of the majority opinion, the Legislature was able to meet, the Assembly allowed
them to continue by passing Commonwealth Act No. 620 which merely amended section
1 of Commonwealth Act No. 600. I repeat that all this, far from supporting the view of the
majority that the Legislature delegated legislative powers to the President only because
it could not meet, fairly and squarely refutes said view.
Now, let us consider the theory of the majority that it would be a great anomaly to have
two legislative bodies, the Legislature and the President to be acting at the same time,
each nullifying the acts of the other. I fail to see the suggested anomaly. In fact, under
the view and interpretation given by the majority of the delegation of contemplated the
simultaneous functioning of the Legislature and the President, both exercising legislative
powers. And it is a fact that there were several instances of the legislature and the
President both validly and simultaneously exercising legislative powers.
Under section 2 of Commonwealth Act No. 496 already referred to, approved on
September 30, 1939, the power delegated to the President to prescribe rules and
regulations he may deem essential to carry out the purposes of the Act, namely, the
taking over of and operation by the Government of any public service or enterprise and
to pay for the same, was to last until the date of the adjournment of the next regular
session of the National Assembly. This means that, during the regular session of the
Assembly which begun in January, 1940 and lasted 100 days, the President could
exercise the emergency powers delegated to him. Again, under Commonwealth Acts
Nos. 600 and 620 the President could and indeed he exercised his emergency powers
during the regular session of the Assembly which began in January, 1941, when President

Quezon issued at least nine Executive Orders numbered 321, 333, 335, 337, 339, 340,
342, 344 and 345.
The same thing obtains under Commonwealth Act 671. Since under the view of the
majority the emergency power of the President granted him in Commonwealth Act No.
671 ended only on May 25, 1946, then the extensive legislative powers delegated to the
President under that Act could be exercised and in fact they were exercised during the
five special session of Congress in the year 1945, which lasted a total of 84 days. During
those special session of 1945, President Osmea issued several Executive Orders in the
exercise of his emergency powers.
Is there further proof needed to show that the suggested and feared anomaly and
impropriety of the Legislature and the Executive both exercising legislative functions
simultaneously, is more fancied than real? The situation was contemplated and expressly
intended by the Legislature itself, evidently believing that said condition or state of
affairs was neither anomalous nor improper. There is to my mind really no
incompatibility. At such a time and during the period of their simultaneous functioning,
the Legislature may perform its ordinary legislative duties taking its time to study,
consider, amend and pass bills, reserving to the President matters requiring and
demanding immediate action.
After all, it is for the Legislature to say whether it wants the President to exercise his
emergency powers at the same time that it is in session. It may validly and properly
stipulate in its grant of emergency powers that they be exercised when the Legislature is
not in session. In fact, in one instance, in Commonwealth Act No. 500, section 2, the
Notional Assembly expressly provided "that the authority herein given shall be exercised
only when the National Assembly is not in session." When in its other acts of delegation,
like Commonwealth Act 671, the Legislature not only fails to stipulate this condition, but
on the contrary, contemplates Presidential exercise of legislative powers simultaneously
with the Legislature, it is to be presumed that the Legislature intended it and saw
nothing improper or anomalous in it, and it is not for the Court to pass upon the
supposed impropriety or anomaly.
As to the possibility of the Chief Executive validly and successfully nullifying the acts of
the Legislature, to me that is quite remote, if not impossible. As already stated at the
beginning of this opinion, the Chief Executive acting as an agent of the Legislative under
his emergency powers, may not go against the wishes and policies of his principal. He
can only carry out its wishes and policies, and where his acts and orders run counter to
those of the Legislature, or operate on a field already withdrawn because the Legislature
had already acted therein, his acts or Executive Orders must give way and will be
declared void and of no effect, by the Courts, as we are doing with the Executive Orders
involved in these cases.

With respect to the claim of the majority opinion that unless the emergency powers were
made to end at the time the President made his report to Congress when it convened, it
would be necessary to enact new legislation to repeal the act of delegation, in which
case the period for the delegation would be unlimited, indefinite, and uncertain, contrary
to the constitutional provision, I may say that the President was authorized by Act 671 to
exercise emergency powers "during the existence of the emergency," and not a day
longer. To me that is a limited period in contemplation of the Constitution. There would
be no need for a new law to repeal the Act of delegation, for said Act is self-liquidating.
The moment the emergency ceases, the law itself automatically ceases to have force
and effect, and the Presidential emergency powers also end with it.
Under my view, had the invasion of the Philippines by the Japanese forces, which we
feared and expected in December, 1941 failed to materialize either because the invasion
was repelled or because the Japanese high command at the last moment decided to bypass the Philippines and divert his forces further south to invade, say Australia, or if the
Pacific war had ended as we all or most of us then expected it to end sooner within
weeks or months after its commencement and that the emergency resulting therefrom
had also ceased soon thereafter, Commonwealth Act No. 671 would have automatically
ceased to have force and effect right in the year 1942 without any affirmative act or law
of the Legislature. There would be no point or reason for the President to continue
exercising emergency powers when there no longer was any emergency. But under the
view of the majority, emergency or no emergency even if Congress could meet in special
session to enact general legislation, the country must continue to be ruled by the
Presidential decree until the next regular session of Congress which may not come till
may months later. In my opinion this is not logical. To me the real and only reason and
test for the continuance of the exercise of emergency powers is the continued existence
of the emergency, not the inability of the Congress to meet in regular session.
The majority, and the parties who initiated these proceedings in court fear that the
President may promulgate rules and regulations contrary in purpose and effect to
legislation enacted by the Legislature; that he may reenact his rules and regulations
after being repealed by the legislature, and that he may even veto a bill passed by
Congress repealing the Act of delegation and ending his emergency powers. It is a fear
not well founded. It runs counter to the presumption that the Chief Executive like any
other public official would perform his functions and conduct himself in every respect for
the good and welfare of the people and in accordance with the Constitution. It is fear
based on the presumption that the Legislature and the Chief Executive are at
loggerheads, working at cross purposes and that the President though acting as a mere
agent of his principal, the legislature, would brazenly repudiate his principal and even
challenge its authority, and that the Chief Executive is so much in love with his
emergency powers that he would perpetuate them by going as far as vetoing an act of
Congress ending said emergency powers. Let it be said to the credit of and in justice to
the different Chief Executives who have wielded these emergency powers, President

Quezon, Osmea, Roxas and the present incumbent President Quirino, that no accusing
finger has ever been pointed at them, accusing or even insinuating that they have
abused their emergency powers or exercised them for any purpose other than the
welfare of the country, or that they had maliciously acted contrary to the wishes of the
Legislatures. Even after liberation there has been no claim not even from the
Legislatures itself, to the knowledge of this Court, at least to that of the undersigned,
that any Chief Executive exercised his delegated powers, knowing that they had ended
or had abused the same.
There is no charge or insinuation that any of the Executive Orders which we are now
holding to be invalid were issued from the ulterior motives or to further and favor the
political interest of the President issuing them. It is admitted in the majority opinion that
Executive Order No. 62, seeking to regulate house and lot rentals was issued in good
faith by President Roxas. Executive Order No. 192 was issued to regulate exports,
President Quirino presumably believing that exports at this time still needed regulation
and control as was formerly provided by Congress in its Act No. 728, and that the matter
was still within the field of his emergency powers as was also mistakenly believed by
President Roxas in issuing Executive Order No. 52. As to Executive Order No. 226, it
merely appropriated funds to defray the expenses in connection with the holding of the
national elections in November, 1949, without which, said election could not be held.
With respect to Executive Order No. 225, it merely continues in force Republic Act 320
which appropriated funds for the last fiscal year inasmuch as Congress had failed to pass
a General Appropriation Act for the operation of the National Government for the period
beginning July 1, 1949 to June 30, 1950. There is no insinuation that any political motives
or purposes are involved in these Executive Orders.
I agree with the majority that since the Constitution provides that the delegation of
legislative powers by the Legislature should be done for a limited period, it is to be
presumed that Commonwealth Act No. 671 was approved with this limitation in view. I
even agree to its definition of the word "limited." But I submit that Commonwealth Act
No. 671 itself, limited its operation and effectiveness to and make it coextensive with the
duration of the emergency resulting from the war and that furthermore, that duration is a
limited period within the meaning and contemplation of the Constitution. Surely the
emergency resulting from the war contemplated by the National Assembly when it acted
Act No. 671 is not permanent or indefinite. It is of limited duration. It may be long or it
may be short; but it cannot be for always. It has an end. Presumably the members of the
National Assembly thought that the emergency would not last as long as it did. The belief
entertained at the time by not a few, in fact by a great portion of the people here not
excluding the legislators, was that the war with Japan would be of short duration, a
question of months at the longest; that American reinforcements would come at the
beginning of the year 1942 and drive away the invading Japanese armies if they ever
were able to occupy the Philippines and that, consequently, the war as far as these
islands were concerned and the resulting emergency would soon pass away. The wisdom

or lack of wisdom of the National Assembly in limiting or rather making the life and
effectiveness of Commonwealth Act No. 671 coextensive with the resulting emergency,
viewed in the light of what had actually happened, cannot be passed upon this Court. So,
as I see it, so long as the emergency resulting from the War continues, Commonwealth
Act No. 671 subsists and so long the Chief Executive retains his emergency powers.
The majority believes that as already stated, Act No. 671 was in force only until Congress
could meet resume its legislatives functions. Naturally, this view is based on the theory
that legislative functions in times of emergency are delegated only because of the
inability of the Legislative Department to meet and exercise its functions. I believe I have
successfully demonstrated the flaw in this theory, not only by showing that the real
reason underlying the delegation of legislative powers is not inability of Legislature to
meet but rather it inability to consider and pass legislation in time to meet an emergency
which requires as it does urgent and immediate action and can be solved only by the
exercise of legislative functions by one single responsible individual, unhamppered by
study and prolonged discussion by many members of the legislative body, but also by
the fact that although since 1939 when the second world war broke out in Europe and for
a period of more than two years thereafter, when the National Assembly could still meet
and in fact convened on several occasions and for hundreds of days in regular and
special session, nevertheless, it had been delegating legislative powers to the President.
The majority view finds no support in the law. Section 26, Article VI of the Constitution
does not impose this condition or requirement. The only important conditions imposed by
the Constitution are that there be a national emergency and delegation be for a limited
period. The same thing is true with Act No. 671 which makes the delegation. The only
condition imposed by section 2 of said Act is that the delegated powers be exercised
during the emergency. Neither in the Constitution nor in Commonwealth Act No. 671 is
there any hint or insinuation, much less express mention about the inability of the
Legislature to meet. When every consideration for clearness and for Executive and
Judicial guidance loudly called for and demanded an unequivocal and clear expression of
Constitutional and legislative intent, both laws, the source and basis of the emergency
powers are conspicuously silent on this point. The only conclusion is that neither the
framers of the Constitution nor the members of the National Assembly had thought of
much less intended to impose this condition. To sustain the majority view would require
reading into the law what is not there. In further support of its view that emergency
powers may be exercised by the President only until the Legislature could meet, the
majority finds comfort in and cites section 3 of Act 671 which reads as follows:
SEC. 3. The President of the Philippines shall as soon as practicable upon the convening
of the Congress of the Philippines report thereto all the rules and regulation promulgated
by him under the powers herein granted.
I fail to see anything in said section that warrants a holding that upon filing his report
with Congress, about the rules and regulation promulgated by him under his emergency

powers under Commonwealth Act 671, his emergency powers automatically ceased. I
could well imagine that under an act of delegation of legislative powers where the
President is authorized to perform one single act such as the suspension of the eighthour labor law under Commonwealth Act No. 494, or the reduction of the expenditures of
the executive departments of the National Government by the suspension or
abandonment of services, activities or operations of no immediate necessity under
Commonwealth Act No. 500, when the President has exercised his delegated authority
and made his report to the Assembly as required by said laws, the latter, as well as his
delegated authority thereunder automatically ceased, for the simple reason that nothing
remains to be performed or done. However, treating of the grant of extensive emergency
powers as was done under Commonwealth Acts Nos. 600, 620 and 671 where said laws
contemplated many different acts, rules and regulations of varied categories and
objectives and to be performed not at one at time or instance but at different times
during the existence of the emergency, as the need or occasion arose, there is no reason
for the belief or the holding that upon submitting a partial report, the whole law making
the delegation including his powers under it automatically ended. The legislature during
the emergency might be able to convene and naturally, the President will immediately
make his report to it of the rules and regulations promulgated by him up to that time; but
if the emergency continued or even became more serious, would it be reasonable to hold
that his emergency powers ended right then and there? Would it not be more logical and
reasonable to believe that inasmuch as the grant and the exercise of his emergency
powers were motivated by and based upon the existence of the emergency and since
the emergency continued his work and responsibility were not ended and that his partial
report could not possibly affect the continuance of his emergency powers?
Section 3 of Commonwealth Act No. 671 provides for the filing of a report with Congress
by the President as soon as that body convened. According to the majority opinion on
that date the whole Act No. 671 ceased to have force and effect. Under that theory, as
soon as the Congress convened in June, 1945, and it is to be presumed that President
Osmea, complying with his duty, must have made his report of all the numerous
Executive Orders he had issued so far, perhaps including those issued by his predecessor
President Quezon who because of his premature death was unable to report his acts to
Congress, the President automatically lost his emergency powers. But the majority
opinion qualifies this convening of the Congress, for it says that it must be a regular
session and not a special session, thereby extending the life of Commonwealth act No.
671 one year longer, to May, 1946 when Congress held its first regular session after
liberation. I do not quite see the necessity or the reason for the distinction made
between the special and regular session, for at both sessions Congress could well receive
the report of the President. The reason given is that "in a special session Congress may
consider general legislation or only such subjects as he (President) may designate." But
as a matter of fact, the first two special sessions called by President Osmea in 1945,
after liberation, each for a period of thirty days were both to consider general legislation.
So, actually there is no reason for the distinction.

Furthermore, if it were the intention of the Legislature to fix the time at which
Commonwealth Act No. 671 would cease in its operation as of the date when the
President could file his report before Congress when it first convened not in special
session but in regular session, it would have expressly and unequivocally said so. In its
other acts of delegation of powers when the legislature wanted to have the report of the
President at its regular session, it expressly and explicitly said so. In section 3 of
Commonwealth Act 494, in section 5 of Commonwealth Act 496, in section 6 of
Commonwealth Act 498, in section 3 of Commonwealth Act 500 and in section 4 of
Commonwealth Act 600, the National Assembly provided that the President shall report
to the National Assembly within ten days after the opening of the next regular session of
the said Assembly of whatever acts have been taken by him under the authority of those
Acts. The Assembly left nothing for interpretation or speculation. In section 3 of
Commonwealth Act 671, however, the same Assembly has not specified the kind of
session before which the President should make his report. It merely said that upon the
convening of the Congress the President shall report thereto all the rules and regulations
promulgated by him. We should make no distinction where the law makes or calls for
none. Here again, to support the majority opinion would require reading into the law,
section 3 of Act 671, something that is not there.
In case like the present where there is room for doubt as to whether or not
Commonwealth Act No. 671 has ceased to operate, one view (of the majority) being that
it automatically ceased to have any force and effect on May 25, 1946, the other view
being that the law operated as long as the emergency resulting from the war existed, the
opinion of and the obvious interpretation given by the legislature which enacted the law
and made the delegation of powers and the President to whom the delegation was made
and who exercised said powers, should have much if not decisive weight. We must bear
in mind that we are not passing upon the validity or constitutionality of a law enacted by
the Legislature, in which case, the Court may find the act invalid and unconstitutional if it
is in violation of the basic law, regardless of the opinion or interpretation given by the
Legislature that passed it or of the Executive Department which may be trying to enforce
it. We assume that Act No. 671 is valid and constitutional. Here, we are merely trying to
ascertain the intention of the National Assembly as to the life and period of effectiveness
of Commonwealth Act No. 671.
Do the study and analysis of other acts of the Legislature similar to Commonwealth Act
671, favor the view of the majority? The answer in my opinion is clearly and decidedly in
the negative. The majority cites the Commonwealth Acts Nos. 600 and 620 to support
the theory that Commonwealth Act 671 automatically ceased to operate Congress met at
its next regular session. But the logical inference or conclusion to be drawn from these
two acts is, in my opinion, just the reverse. It is even fatal to the view of the majority as I
shall attempt to show. Let us consider Commonwealth Act 600 delegating extensive
legislative powers to the President, approved on August 19, 1940, which like Act 671 is
silent as to any express provision regarding its life or period of effectiveness, and as to

how long the emergency powers granted the President by it will last. Section 4 of said
Commonwealth Act No. 600 like section 3 of Act 671 provides that "the President shall
within the first ten days from the date of the opening of the Assembly's next regular
session report to said Assembly whatever action he had taken under the authority
therein granted." Said section 4 of Act 600 is clearly and more specific than section 3 of
Act 671 in that it clearly specifies the next regular session whereas the latter refers
merely to the convening of Congress. But let us assume arguendo as contended by the
majority that "the convening of the Congress" mentioned in section 3 of Commonwealth
Act 671, referred to regular session. According to the majority opinion, under section 4 of
the Commonwealth Act No. 600, as soon as the President made the report of the
National Assembly at its "next regular session" which was to be and was actually held in
January, 1941, Commonwealth Act 600 automatically ceased to operate and the
President automatically lost his delegated legislative powers. But this contrary to the
very view of the National Assembly which passed said Act 600. Commonwealth Act No.
620 of the National Assembly passed during that "next regular session" and approved on
June 6, 1941 merely amended section 1 of Commonwealth Act 600, which enumerated
the powers delegated to the Chief Executive. It left the rest of the provisions and
sections of Commonwealth Act 600 intact. So that, under section 4 (which was left intact)
of Act 600, the President was still required to report to National Assembly within the first
10 days from the date of the opening of its next regular session which should have
begun in January, 1942, despite the fact that he had already made a report to the
Legislature in January, 1941. Incidentally, this answer and refutes the contention of the
majority that the law of delegation of powers contemplated only one meeting of the
Congress at which the President was to report his acts of emergency, and that said
report was to be the first and the last.
Now, what inference may be drawn from this amending of section 1 only of
Commonwealth Act No. 600 by Commonwealth Act No. 620? The logical conclusion is
that in promulgating Commonwealth Act 620 on June 6, 1941, the National Assembly all
along regarded Commonwealth Act No. 600 which delegated legislative powers to the
President as still in force and effect despite the report filed with the Assembly by the
President at the beginning of its regular session in January, 1941. When the Legislature
merely amends a section of a law, leaving the rest of said law intact and unchanged, the
logical inference and conclusion is that the amended law was still in force because you
cannot amend a law which is no longer in force. The only thing that could be done with a
law that has ceased to operate is to reenact it. But in passing Commonwealth Act 620 in
July, 1941, the Assembly did not reenacted Commonwealth Act No. 600. By merely
amending one of its sections, the Assembly, as late as June 1941, considered said Act
600 as still effective and in operation and consequently, the emergency powers of the
President continued and subsisted despite his previously having made a report of his
actions in January 1941. This squarely refutes the theory that as soon as the President
filed his report on the exercise of his emergency powers with the Legislature, the Act
making the delegation ceased to operate and the President lost his emergency powers.

As I have already stated in the course of this opinion, in connection with another phrase
of this case from January to June, 1941, President Quezon had issued at least eight
Executive Orders in the exercise of his emergency powers, by authority of
Commonwealth Act 600. From this it is evident that he did not share the majority view,
because despite his having made his report to the Assembly in January, 1941, and even
before the enactment of Commonwealth Act No. 620, he believed and considered
Commonwealth Act No. 600 as still in force after that date and that he still retained his
emergency powers.
Then, let us see what was the attitude and conduct of the Chief Executive and of
Congress after May 25, 1946, when according to the majority opinion Commonwealth Act
No. 671 ceased to operate. After May 25, 1946, two Presidents, Roxas and Quirino had
issued numerous Executive Orders based upon and invoking Commonwealth Act No. 671.
Like President Quezon, they also evidently were of the opinion that despite the meeting
of the Legislature in regular session the act delegating legislative powers to them (in the
case of Roxas and QuirinoCommonwealth Act No. 671) was still in force, that they still
retained their emergency powers and so proceeded to exercise them in good faith.
Congress also, evidently, believed that Commonwealth Act No. 671 was still in force and
effect after said date, May 25, 1946. In spite of the several legislative sessions, regular
and special since then and up to and including the year 1949, Congress has not by law or
resolution said anything questioning or doubting the validity of said Executive Order on
the score of having been promulgated after Commonwealth Act No. 671 had supposedly
ceased to operate. Not only this, but at least in one instance, Congress had by a law
promulgated by it, considered one of those supposed illegal Executive Orders
promulgated after May 25, 1946, to be valid. I refer to Republic Act No. 224 approved on
June 5, 1948, creating the National Airport Corporation which considered and treated as
valid Executive Order No. 100, dated October 21, 1947, by providing in section 7 of said
Republic Act No. 224 for the abolishment of the Office of the Administrator of the Manila
International Airport established under the provisions of said Executive Order No. 100
and the transfer of the personnel and funds created under the same Executive Order to
the National Airport Corporation. This Executive Order No. 100 which appropriated public
funds and therefore, was of a legislative nature must have been issued under
Commonwealth Act No. 671. It cannot possibly be regarded as having been promulgated
by authority of Republic Act No. 51, for said Act approved on October 4, 1946, gave the
President only one year within which to reorganize the different executive departments,
offices, agencies, etc. and Executive Order No. 100 was promulgated on October 23,
1947, after the expiration of the one year period. Furthermore, it is a matter of common
knowledge that during the last session of Congress which ended in May, 1949, there was
talk if not a movement in the Congress to end the emergency powers of the President.
Nothing concrete in the form of legislation or resolution was done, for if we are to accept
newspaper reports and comment, the members of Congress or at least a majority of
them were willing and satisfied to have the Chief Executive continue in the exercise of

his emergency powers until the end of 1949. All this leads to no other conclusion but that
Congress believed all along that Commonwealth Act No. 671 is still in force and effect.
If Commonwealth Act No. 671 is still in force and effect the question arises: how long and
for what period will said Act continue to operate? As I have already stated, I believe that
the delegation of emergency powers was made coextensive with the emergency
resulting from the war, as long as that emergency continues and unless the Legislature
provides otherwise, Act 671 will continue to operate and the President may continue
exercising his emergency powers.
The last and logical question that one will naturally ask is: has the emergency resulting
from the war passed or does it still exist? This is a fair and decisive question inasmuch as
the existence of the emergency is, my opinion, the test and the only basis of the
operation or cessation of Act 671. The existence or non-existence of the emergency
resulting from the war is a question of fact. It is based on conditions obtaining among the
people and in the country and perhaps even near and around it. It is highly controversial
question on which people may honestly differ. There are those who in all good faith
believe and claim that conditions have returned to normal; that the people have now
enough to eat, sometimes even more than they had before the war; that people
nowadays especially in the cities are better nourished and clothed and transported and
better compensated for their labor, and that the President himself in his speeches, chats
and messages had assured the public that normal times have returned, that the problem
of peace and order had been solved, that the finances of the Government and the
national economy are sound, and that there is an adequate food supply. It is therefore,
claimed that there is no longer any emergency resulting from the war.
On the other hand, it is asserted with equal vehemence in the opposite camp that
conditions are still far from normal; that the picture painted by the President in cheerful
and reassuring colors is based on over optimism and, as to be expected, calculated to
show in bold relief the achievements of the administration, and so should be considered
with some allowance; that we are now importing more rice than before the war for the
reason that many rice farms are idle because of the farmer's fear of or interference by
dissidents; that the problem of peace and order is far from solved as shown by the
frequent hold-ups, kidnapping, loothing and killings and organized banditry not only in
Luzon but also in the Visayas and Mindanao; that whereas before the war, the
Constabulary force consisting of only about 6,000 officers and men could provide
complete protection to life and property and was adequate in all respects to enforce
peace and order, now this Constabulary enlarged to about 20,000 men, provided with
modern weapons and equipment and with the aid of thousands of civilians guards and of
the Philippine Army and Air Force cannot solve the peace and order problem; that the
dissidents who are well organized, armed and disciplined even attack and sack towns
and sometimes openly defy and engage the armed Government forces; that as long as
more than 100,000 firearms are loose and in the hands of irresponsible parties, not

excluding the seemingly regular mysterious supply to them of additional firearms and
ammunitions, there can be no peace and order; and as to the barrio folks in central
Luzon and now, even in provinces bordering central Luzon whose parents and relatives
had been killed by dissidents, whose women folk had been outraged by the same
elements, whose homes had been looted and burned and whose very lives had been
subjected to constant terror and peril, compelling them to leave their homes and their
farms and evacuate to and be concentrated in the poblaciones to live there in utter
discomfort and privation, it is said that it would be difficult to convince these unfortunate
people that normalcy has returned and that there is no longer any emergency resulting
from the war. To further support the claim of the existence of an emergency, the menace
of communism not only at home, particularly in central Luzon but from abroad, especially
China, is invoked. And it is asserted that all this is a result of the war.
I repeat that this question of the existence of an emergency is a controversial one, the
decision on which must be based on the ascertainment of facts, circumstances and
conditions and the situation obtaining in the country. This Court is not in a position to
decide that controversy. It does not have the facilities to obtain and acquire the
necessary facts and data on which to base a valid and just decision. Neither did it have
the opportunity to receive the necessary evidence as in a hearing or trial at which
evidence, oral or documentary, is introduced. We cannot invoked and resort to judicial
notice because this refers to things of public knowledge, and not controverted, whereas
things, facts and conditions necessary for the determination of whether or not there is
still an emergency, are often not of public knowledge but require investigation, accurate
reporting and close contact with the people to be able to ascertain their living conditions,
their needs, their fears, etc.
To me, the department of the Government equipped and in a position to decide this
question of emergency are the Chief Executive and the Legislature. The first has at his
command and beck and call all the executive officials and departments. He has the
Army, the Constabulary, Naval Patrol, the Police of the cities and towns and the barrio
lieutenants to inform him of the state of peace and order and the security of the states.
He has the Secretary of Education and all the subordinates officers and the school
officials under him to inform him as to whether or not there is a school crisis or
emergency as a result of the war. He has the Secretary of Agriculture and Natural
Resources and his men to advise him as to the agricultural needs and the food supply of
the country. He has the Secretary of Finance and all the officials under him to inform him
of the finances of the Government and the economy of the country as well as the officials
to advise him of the land shipping transportation situation. In other words, the President
is in a position to determine whether or not there is still an emergency as a result of the
war.
As to Congress, it is equally in a position and in fact it is the first to called upon to decide
as to the existence or non-existence of an emergency. According to the Constitution,

section 24, Article VI, either House of Congress may call upon the head of any
department of the Government on any matter pertaining to his departure. The members
of Congress come from all parts and the far corners of the country. They are supposed to
be in close contact with their constituents and know at first hand their needs, the way
they live, etc. Congress therefore should know. Moreover, it is the legislature that must
first determine as to whether or not there is a national emergency as a condition
precedent to the delegation of its legislative powers. Naturally, it is the one that is called
upon to say when that emergency ceases.
Now, one will ask, what does Congress think about the emergency? Does it believe that it
still exists? To me the answer is YES. What has been said about the acts, conduct and
attitude of the legislature as to its belief that Commonwealth Act No. 671 is still in force,
are all applicable and may be repeated to show that the Congress believes that the
emergency resulting from the war still exist. Under the theory that I maintain, Congress
must be of the opinion that the emergency still exists for the reason that as I have shown
Congress believes that Commonwealth Act No. 671 is still in force and the life and the
operation of said Act depends upon and is coextensive with the existence of the
emergency. To this may be added the attitude and the belief of the President as to the
continued existence of the emergency. It must be borne in mind that Commonwealth Act
No. 671 authorizes the President to exercise his emergency powers only during the
existence of the emergency. The inference is that before exercising his emergency
powers by promulgating an Executive Order he must first determine and decide that the
state of emergency still exists, for that is the condition precedent to the exercise of his
delegated powers. In other words, the two departments of the Government, the
Legislative and the Executive Departments, best qualified and called upon to determine
whether or not the emergency resulting from the war still exists have made manifest in
their acts and attitude that they believe that such emergency still exists. I may here
state that on this question of emergency, I entertain no personal opinion either way
lacking as I do the means of deciding fairly and justly. Neither has the Court. If the
decision of the courts on question of fact involved in a controversy are given due respect
and weight and are binding, it is because such decisions are based on evidence adduced
and received after a hearing. No such hearing was held for the purpose and no evidence
been received. In other words, we have nothing in which to decide a question of fact
which is the existence or non-existence of emergency.
In view of the conclusion we have arrived at, finding these Executive Orders to be void
and of no effect, particularly Executive Orders Nos. 225 and 226 with the evident result
that no funds are appropriated for the operation of the Government for the fiscal year
beginning July of this year and for the expenses in the coming national election next
November, one may inquire as to what will happen or what is to be done. The answer or
answers to this question lie with the Chief Executive. Congress will not meet in regular
session until next year. It is not for the court, not even the undersigned to suggest the
calling of a special legislative session to cope with the perilous situation thus created,

altho one may regard that as a logical remedy. But, should the President call a special
session and Congress for one reason or another fails to meet or though it meets, for one
reason or another it fails to pass an appropriation law, then a real crisis will have ensued.
I am confident that the Chief Executive, conscious of his responsibility as the Chief of the
nation would not just stand supine and idle and see the Government of the Republic of
the Philippines disintegrate and die. He would know what to do and he would do
something according to his sound discretion and in accordance with the law, statutory or
otherwise and in the discharge of his high executive powers, express or implied.
TORRES, J., concurring:
I concur in the foregoing opinion of Mr. Justice Montemayor on the existence of the
emergency powers. I reserve my opinion on the validity of Executive Orders Nos. 225
and 226.
REYES, J., concurring and dissenting:
The main issue in these cases is whether the emergency which on December 16, 1941
prompted the approval of Commonwealth Act No. 671, delegating extraordinary powers
to the President, still existed at the time the Chief Executive exercised those powers by
promulgating the executive orders whose validity is now challenged.
On issue similar to the one just formulated there is a diversity of opinions. While some
courts would rather leave the determination of such issues to the political department of
the Government, others are for making the determination subject to judicial review. But
the latest ruling of the United States Supreme Court on the point accords with first view
and declares that "these are matters of political judgment for which judges have neither
technical competence nor official responsibility." (Ludecke vs. Watkins, 92 L. ed., 1883.)
In any event the existence or non-existence of an emergency is a question of facts which
may not always be determine without the evidence by mere reference to facts within the
judicial notice. In the present cases, there has been no trial for the reception of proof,
and I am not aware that enough facts have been shown to justify the conclusion that the
emergency in question has already ceased. On the other hand, since the exercise of the
emergency powers by the President presupposes a determination of the existence of the
emergency, the President must be presumed to have satisfied himself in some
appropriate manner that the emergency existed when he issued his executive orders.
Under the theory of separation of powers and in accord with the latest ruling of the
United States Supreme Court, it is not for the judiciary to review the finding of the
Executive in this regard. Judicial review would in such case amount to control of
executive discretion and place the judicial branch above a co-equal department of the
Government. Only in case of a manifest abuse of the exercise of powers by a political
branch of the Government is judicial interference allowable in order to maintain the
supremacy of the Constitution. But with the cold war still going on though the shooting

war has already ended; with the world still in turmoil so much so that the American
Secretary of the State has declared that "the world has never before in peace time been
as troubled or hazardous as it is right now;" with most of the industries of the country
still unrihabilitated, so that a large proportion of our food and other necessaries have to
be imported; with a great portion of the population still living in temporary quarters; with
most of the war damage claims still unpaid; and with peace and other conditions in the
country far from normal, it would be presumptuous for this Court, without proof of the
actual condition obtaining in all parts of the Archipelago, to declare that the President
clearly abused his discretion when he considered the emergency not ended at the time
he promulgated the executive orders now questioned.
The majority opinion has skirted the issue of whether or not the question of the existence
or continuance of the emergency is one for the political department of the Government
to determine by restricting "the life of the emergency powers of the President to the time
the Legislature was prevented from holding session due to enemy action or other causes
brought on by the war." I cannot subscribe to this narrow interpretation of
Commonwealth Act No. 671, for in my opinion it is contrary to both the plain language
and manifest purpose of that enactment. The law invests the President with
extraordinary powers in order to meet the emergency resulting from the war and it
expressly says that the President is to exercise those powers "during the existence of the
emergency." The Act does not say that the President may exercise the powers only when
the Legislature is not session. Much less does it say that the emergency powers shall
cease as soon as the Legislature has convened in regular session. An emergency
resulting from a global war cannot end with the mere meeting of the Legislature. Neither
may be legislated out of existence. The Legislature, once it was convened, may, if it so
desire, revoked the emergency powers of the President, but it cannot by any form of
legislative action put an immediate end to the emergency itself. Well known is a fact that
a deliverative body, such as the Legislature, because of the time consumed in the study
and discussion of a measure, may not always act with the promptness which the
situation requires so that in an emergency there is really need for the concentration of
power in one man. This may well be the reason why Act No. 671 in express terms
authorizes the President to exercise the emergency powers "during the existence of the
emergency" and not merely during the time that the Legislature could be in session. For
one thing to make the life of the emergency powers depend upon the inability of the
Legislature to meet is the same as to declare those emergency powers automatically
ended the moment they were conferred, for at that very moment of the Legislature that
conferred them was in session.
The argument that, unless the emergency powers of the President were made to cease
the moment Congress convened in regular session, we should be having two legislatures
which could mutually annul each other, will not stand analysis. In supposing that the
President, in the exercise of the emergency powers could "repeal or modify a bill passed
by the Legislature," the argument overlooks the fact that the emergency powers

delegated to the President under Article VI, section 26 of the Constitution could only
authorize him "to promulgate rules and regulations to carry out a declared national
policy." Only the Legislature (with the concurrence of the President of course) may
declare the President may not, under the Constitution, depart from it. Moreover, unless
the Presidential veto could be overriden, no bill approved by Congress could become a
law if the President did not want it. And if the President approves a bill and allows it to
become a law, surely he can have no reason for repealing it; while, on the other hand,
there is no point in his repealing that bill, because if there are enough votes to override
his veto there must also be enough votes to repeal his emergency powers.
The majority opinion has I think placed a rather forced construction upon section 3 of
Commonwealth Act No. 671, which provides that
The President of the Philippines shall as soon as practicable upon the convening of the
Congress of the Philippines report thereto all the rules and regulations promulgated by
him under the powers herein granted.
As may be seen, the above provision does not say that the President has to report only
once, that is, the first time Congress is convened, and never again. But the majority
opinion wants to read that thought into the law in order to bolster up the theory that the
emergency powers of the President would end as soon as Congress could convene in a
regular session.
Invoking the rule of contemporary construction, the majority opinion makes reference to
a passage in President Quezon's book. "The Good Fight," to the effect that, according to
the author, Act No. 671, was only "for a certain period" and "would become valid unless
re-enacted." But I see nothing in the quoted phrases any suggestion that the emergency
powers of the President were to end the moment Congress was convened in regular
session regardless of the continuance of the emergency which gave birth to those
powers. A more valid application of the rule of contemporary construction may, I think,
be made by citing the executive orders promulgated by President Roxas by
Commonwealth Act No. 671. Many of those executive orders were issued after May 25,
1946 when Congress convened in regular session, an event which, according to the
majority opinion, automatically put an end to the emergency powers.
While we have adopted the republican form of government with its three co-equal
departments, each acting within its separate sphere, it would be well to remember that
we have not accepted the American theory of separation of powers to its full extent. For,
profiting from the experience of America when her Supreme Court, by the application
many a New Deal measure which her Congress had approved to meet a national crisis,
our Constitutional Convention in 1935, despite the warning of those who feared a
dictatorship in his country, decided to depart from the strict theory of separation of
powers by embodying a provision in our Constitution, authorizing the delegation of
legislative powers to the President "in times of war or other national emergency." It is my

surmise that this provision was intended to guard not only against the inability to meet
but also against its usual tardiness and inaction. We have proof of this last in the last
regular session of Congress, when this body failed to pass measures of pressing
necessity, especially the annual appropriation law and the appropriation for the
expenses of the coming elections.
It is said that the need for an appropriation law for the fiscal year 1949-1950 as well for
the coming elections is not an emergency resulting from the war. But I say that if the
emergency resulting from the war as contemplated in Commonwealth Act No. 671 still
exists, as the President believes it exists or he would not have issued the executive
orders in question (and it is not for the Court to change that belief in the absence of
proof that the President was clearly wrong) would it not be a dereliction of duty on his
part to fall to provide, during the emergency, for the continuance of the functions of
government, which is only possible with an appropriation law? What would be gained by
issuing rules and regulations to meet the emergency if there is no Government to
enforce and carry them out? The mere calling of a special is no guaranty that an
appropriation law will be passed or that one will be passed before the thousands of
officials and employees who work for the Government have starved. It is, probably,
because of these considerations that the National Assembly, in approving
Commonwealth Act No. 671, specifically empowered the President, during the existence
of the emergency, "to continue in force laws and appropriations which would lapse or
otherwise become inoperative." And that Act has authorized the President during the
existence of the same emergency "to exercise such other powers as he may deem
necessary to enable the government to fulfill its responsibilities and to maintain in force
this authority." Under this specific provision, the appropriation for the expenses of the
coming elections would, naturally, come, for, without doubt, it is a measure to enable the
Government "to fulfill its responsibilities."
Consistently with the views above express, I am of the opinion that Executive Order No.
225, appropriating funds for the operation of the Government of the Republic for the
fiscal year 1949-50, and Executive Order No. 226, appropriating funds for the expenses
of the coming national elections in November, 1949, are valid so that the petition in G.R.
No. L-3054, Eulogio Rodriguez, Sr. vs. Treasurer of the Philippines, and the petition in G.R.
No. L-3056, Antonio Barredo, etc., vs. Commissioner on Election, et al., in which the said
two executive orders are respectively challenged, should be denied.
But Executive Order No. 62 (regulating rents) and Executive Order No. 192 (controlling
exports) stand on a different footing. The validity of Executive Order No. 62 can no
longer be maintained because of the approval by the Legislature of Commonwealth Act
No. 689 and Republic Act No. 66, which regulate the same subject matter and which, as
an expression of the national policy, can not be deviated from by the President in the
exercise of the emergency powers delegated to him by Commonwealth Act No. 671. The
same is true with respect to Executive Order No. 192 (controlling exports) in view of the

passage of Commonwealth Act No. 728, regulating the same subject matter, especially
because section 4 of said Act terminates the power of the President thereunder on
December 31, 1948, if not sooner. Consequently, since the validity of these executive
orders (Nos. 62 and 192) can no longer be upheld, the petitions in G.R. Nos. L-2044, L2756 and L-3055, which seek to prohibit their enforcement, should be granted.
PADILLA, J., concurring and dissenting:
I join in this opinion of Mr. Justice Reyes. I wish to add that I agree with Mr. Justice
Bengzon that petitioners in G. R. Nos. L-3054 and L-3056 have no personality to institute
the proceedings.

BENGZON, J., dissenting:

The majority feels that it has to decide the question whether the President still has
emergency powers; but unable to determine in which of the above cases the issue may
properly be decided, it grouped them together. When the eye or the hand is unsure, it is
best to shoot at five birds in a group: firing at one after another may mean as many
misses.
It does not matter that the first two cases had been submitted and voted before the
submission of the last three. Neither does it matter that, of these last, two should be
thrown out in accordance with our previous rulings. The target must be large.
These cases could be, and should be decided separately. If they are, they may be
disposed of without ruling on the general question whether the President still has
emergency powers under Commonwealth Act No. 7671. How? This way, which is my
vote.
1. L-2044, Araneta vs. Dinglasan; L-2756, Araneta vs. Angeles. The President has
presently no power to regulate rents, because his power to do so is granted by
Commonwealth Acts Nos. 600 and 620 which have lapsed. Under Commonwealth Act No.
671 he has no power to regulate rents.
2. L-3056, Barredo vs. Commission, etc. Dismissed because petitioner has no personality
to sue. According to Custodio vs. President of the Senate et al., 42 Off. Gaz., 1243, a
citizen and taxpayer, as such, has no legal standing to institute proceedings for the
annulment of a statute.
3. L-3054, Rodriguez vs. Treasurer. Dismissed, like the Barredo case. The private rights of
petitioner and of his partymen are affected only as taxpayers.

4. L-3055, Guerrero vs. Commissioner of Customs. Supposing that the President still has
emergency powers under Commonwealth Act No. 671, and that they include regulation
of exportation, inasmuch as the Congress has chosen to legislate on exports
(Commonwealth Act No. 728), it has thereby pro tanto withdrawn the power delegated to
the President along that field.
It is a sound rule, I believe, for the Court to determine only those questions which are
necessary to decide a case.
Although I am favorably impressed by the considerations set forth by Mr. Justice
Montemayor and Mr. Justice Reyes on the existence of emergency powers, I prefer to
vote as herein indicated.
I reserve the right subsequently to elaborate on the above propositions.
For lack of the required number of votes, judgment was not obtained. However, after
rehearing, the required number of votes was had, by resolution of September 16, 1949,
which follows.

RESOLUTION
September 16, 1949
MORAN, C. J.:
Petitioners filed motions asking (1) that Mr. Justice Padilla be qualified to act in these
cases; (2) that the vote cast by the late Mr. Justice Perpecto before his death be counted
in their favor; and (3) that the opinion of the Chief Justice be counted as a vote for the
nullity of Executive Orders Nos. 225 and 226.
I
As regards the motion to disqualify Mr. Justice Padilla, the Court is of the opinion that it
must not be considered, it having been presented after Mr. Justice Padilla had given his
opinion on the merits of these cases. As we have once said "a litigant . . . cannot be
permitted to speculate upon the action of the court and raise an objection of this sort
after decision has been rendered." (Government of the Philippine Islands vs. Heirs of
Abella, 49 Phil., 374.)
Furthermore, the fact that Justice Padilla, while
President on the question of emergency powers,
cases, for he cannot be considered as having
counsel of any of the parties. The President is not

Secretary of Justice, had advised the

does not disqualify him to act in these
acted previously in these actions as
here a party.

All the members of this Court concur in the denial of the motion to disqualify Mr. Justice
Padilla, with the exception of Mr. Justice Ozaeta and Mr. Justice Feria who reserve their
vote.
II
With respect to the motion to include the vote and opinion of the late Mr. Justice Perfecto
in the decision of these cases, it appears that Mr. Justice Perfecto died and ceased to be
a member of this Court on August 17, 1949, and our decision in these cases was
released for publication on August 26, 1949. Rule 53, section 1, in connection with Rule
58, section 1, of the Rules of Court, is as follows:
SECTION 1. Judges: who may take part. All matters submitted to the court for its
consideration and adjudication will be deemed to be submitted for consideration and
adjudication by any and all of the justices who are members of the court at the time
when such matters are taken up for consideration and adjudication, whether such
justices were or not members of the court and whether they were or were not present at
the date of submission; . . . .
Under this provision, one who is not a member of the court at the time an adjudication is
made cannot take part in the adjudication. The word "adjudication" means decision. A
case can be adjudicated only by means of a decision. And a decision of this Court, to be
of value and binding force, must be in writing duly signed and promulgated (Article VIII,
sections 11 and 12, of the Constitution; Republic Act No. 296, section 21; Rule 53,
section 7, of the Rules of Court). Promulgated means the delivery of the decision to the
Clerk of Court for filing and publication.
Accordingly, one who is no longer a member of this Court at the time a decision is signed
and promulgated, cannot validly take part in that decision. As above indicated, the true
decision of the Court is the decision signed by the Justices and duly promulgated. Before
that decision is so signed and promulgated, there is no decision of the Court to speak of.
The vote cast by a member of the Court after deliberation is always understood to be
subject to confirmation at the time he has to sign the decision that is to be promulgated.
That vote is of no value if it is not thus confirmed by the Justice casting it. The purpose of
this practice is apparent. Members of this Court, even after they have cast their vote,
wish to preserve their freedom of action till the last moment when they have to sign the
decision, so that they may take full advantage of what they may believe to be the best
fruit of their most mature reflection and deliberation. In consonance with this practice,
before a decision is signed and promulgated, all opinions and conclusions stated during
and after the deliberation of the Court, remain in the breast of the Justices, binding upon
no one, not even upon the Justices themselves. Of course, they may serve for
determining what the opinion of the majority provisionally is and for designating a
member to prepare the decision binding unless and until duly signed and promulgated.

And this is practically what we have said in the contempt case against Abelardo Subido,1
promulgated on September 28, 1948:
que un asunto o causa pendiente en esta Corte Suprema solo se considera decidido una
vez registrada, promulgada y publicada la sentencia en la escribania, y que hasta
entonces el resultado de la votacion se estima como una materia absolutamente
reservada y confidencial, perteneciente exclusivamente a las camaras interiores de la
Corte.
In an earlier case we had occasion to state that the decisive point is the date of
promulgation of judgment. In that case a judge rendered his decision on January 14;
qualified himself as Secretary of Finance on January 16; and his decision was
promulgated on January 17. We held that the decision was void because at the time of its
promulgation the judge who prepared it was no longer a judge. (Lino Luna vs. Rodriquez,
37 Phil., 186.)
Another reason why the vote and opinion of the Mr. Justice Perfecto can not be
considered in these cases is that his successor, Mr. Justice Torres, has been allowed by
this Court to take part in the decision on the question of emergency powers because of
lack of majority on that question. And Mr. Justice Torres is not bound to follow any opinion
previously held by Mr. Justice Perfecto on that matter. There is no law or rule providing
that a successor is a mere executor of his predecessor's will. On the contrary, the
successor must act according to his own opinion for the simple reason that the
responsibility for his action is his and of no one else. Of course, where a valid and
recorded act has been executed by the predecessor and only a ministerial duty remains
to be performed for its completion, the act must be completed accordingly. For instance,
where the predecessor had rendered a valid judgment duly filed and promulgated, the
entry of that judgment which is a ministerial duty, may be ordered by the successor as a
matter of course. But even in that case, if the successor is moved to reconsider the
decision, and he still may do so within the period provided by the rules, he is not bound
to follow the opinion of his predecessor, which he may set aside according to what he
may believe to be for the best interests of justice.
We are of the opinion, therefore, that the motion to include the vote and opinion of the
late Justice Perfecto in the decision of these cases must be denied.
Mr. Justice Paras, Mr. Justice Bengzon, Mr. Justice Padilla, Mr. Justice Montemayor, Mr.
Justice Alex. Reyes, and Mr. Justice Torres concur in this denial. Mr. Justice Ozaeta, Mr.
Justice Feria and Mr. Justice Tuason dissent.
III
In connection with the motion to consider the opinion of the Chief Justice as a vote in
favor of petitioners, the writer has the following to say:

In my previous concurring opinion, I expressed the view that the emergency powers
vested in Commonwealth Act No. 671 had ceased in June 1945, but I voted for a
deferment of judgment in these two cases because of two circumstances then present,
namely, (1) the need of sustaining the two executive orders on appropriations as the lifeline of government and (2) the fact that a special session of Congress was to be held in a
few days. I then asked, "Why not defer judgment and wait until the special session of
Congress so that it may fulfill its duty as it clearly sees it?"
It seemed then to me unwise and inexpedient to force the Government into imminent
disruption by allowing the nullity of the executive orders to follow its reglementary
consequences when Congress was soon to be convened for the very purpose of passing,
among other urgent measures, a valid appropriations act. Considering the facility with
which Congress could remedy the existing anomaly, I deemed it a slavish submission to
a constitutional formula for this Court to seize upon its power under the fundamental law
to nullify the executive orders in question. A deferment of judgment struck me then as
wise. I reasoned that judicial statesmanship, not judicial supremacy, was needed.
However, now that the holding of a special session of Congress for the purpose of
remedying the nullity of the executive orders in question appears remote and uncertain, I
am compelled to, and do hereby, give my unqualified concurrence in the decision
penned by Mr. Justice Tuason declaring that these two executive orders were issued
without authority of law.
While in voting for a temporary deferment of the judgment I was moved by the belief
that the positive compliance with the Constitution by the other branches of the
Government, which is our prime concern in all these cases, would be effected, and
indefinite deferment will produce the opposite result because it would legitimize a
prolonged or permanent evasion of our organic law. Executive orders which are, in our
opinion, repugnant to the Constitution, would be given permanent life, opening the way
to practices which may undermine our constitutional structure.
The harmful consequences which, as I envisioned in my concurring opinion, would come
to pass should the said executive orders be immediately declared null and void, are still
real. They have not disappeared by reason of the fact that a special session of the
Congress is not now forthcoming. However, the remedy now lies in the hands of the
Chief Executive and of Congress, for the Constitution vests in the former the power to
call a special session should the need for one arise, and in the latter, the power to pass a
valid appropriation act.
That Congress may again fall to pass a valid appropriations act is a remote possibility, for
under the circumstances it fully realizes its great responsibility of saving the nation from
breaking down; and furthermore, the President in the exercise of his constitutional
powers may, if he so desires, compel Congress to remain in special session till it
approves the legislative measures most needed by the country.

Democracy is on trial in the Philippines, and surely it will emerge victorious as a

permanent way of life in this country, if each of the great branches of the Government,
within its own allocated spear, complies with its own constitutional duty,
uncompromisingly and regardless of difficulties.
Our Republic is still young, and the vital principle underlying its organic structure should
be maintained firm and strong, hard as the best of steel, so as to insure its growth and
development along solid lines of a stable and vigorous democracy.
With my declaration that Executive Orders Nos. 225 and 226 are null and void, and with
the vote to the effect of Mr. Justice Ozaeta, Mr. Justice Paras, Mr. Justice Feria, Mr. Justice
Tuason and Mr. Justice Montemayor, there is a sufficient majority to pronounce a valid
judgment on that matter.
It is maintained by the Solicitor General and the amicus curiae that eight Justices are
necessary to pronounce a judgment on the nullity of the executive orders in question,
under section 9 of Republic Act No. 296 and Article VIII, section 10 of the Constitution.
This theory is made to rest on the ground that said executive orders must be considered
as laws, they having been issued by the Chief Executive in the exercise of the legislative
powers delegated to him.
It is the opinion of the Court that the executive orders in question, even if issued within
the powers validly vested in the Chief Executive, are not laws, although they may have
the force of law, in exactly the same manner as the judgments of this Court, municipal
ordinances and ordinary executive orders cannot be considered as laws, even if they
have the force of law.
Under Article VI, section 26, of the Constitution, the only power which, in times of war or
other national emergency, may be vested by Congress in the President, is the power "to
promulgate rules and regulations to carry out a declared national policy." Consequently,
the executive orders issued by the President in pursuance of the power delegated to him
under that provision of the Constitution, may be considered only as rules and
regulations. There is nothing either in the Constitution or in the Judiciary Act requiring
the vote of eight Justices to nullify a rule or regulation or an executive order issued by
the President. It is very significant that in the previous drafts of section 10, Article VII of
the Constitution, "executive order" and "regulation" were included among those that
required for their nullification the vote of two thirds of all of the members of the Court.
But "executive order" and "regulations" were later deleted from the final draft (Aruego,
The Framing of the Philippine Constitution, Vol. I, pp. 495, 496), and thus a mere majority
of six members of this Court is enough to nullify them.
All the members of the Court concur in this view.
For all the foregoing, the Court denies the motion to disqualify Mr. Justice Padilla, and the
motion to include the vote of the late Mr. Justice Perfecto in the decision of these cases.

And it is the judgment of this Court to declare Executive Orders Nos. 225 and 226, null
and void, with the dissent of Mr. Justice Bengzon, Mr. Justice Padilla and Mr. Justice Reyes,
upon the grounds already stated in their respective opinions, and with Mr. Justice Torres
abstaining.
But in order to avoid a possible disruption or interruption in a normal operation of the
Government, it is decreed, by the majority, of course, that this judgment take effect
upon the expiration of fifteen days from the date of its entry. No costs to be charged.
Ozaeta, Paras, Bengzon, Padilla, Tuason, Montemayor, Reyes and Torres, JJ., concur.

FERIA, J., concurring:

The respondent in the cases G. R. Nos. L-3054 and L-3056 contend that the petitioners in
said cases can not institute an action to invalidate the Executive Orders Nos. 225 and
226 promulgated by the President, because they have no interest in preventing the
illegal expenditures of moneys raised by taxation, and can not therefore question the
validity of said executive orders requiring expenditures of public money.
Although the Supreme Court, in the case of Custodio vs. President of the Senate, G. R.
No. L-117 (42 Off. Gaz., 1243) held in a minute resolution "That the constitutionality of a
legislative act is open to attack only by person whose rights are affected thereby, that
one who invokes the power of the court to declare an Act of Congress to be
unconstitutional must be able to show not only that the statute is invalid, but that he has
sustained or is in immediate danger of sustaining some direct injury as the result of its
enforcement," that ruling was laid down without a careful consideration and is contrary
to the ruling laid down in the majority of jurisdictions in the United States that "In the
determination of the degree of interest essential to give the requisite standing to attack
the constitutionality of a statute, the general rule is that not only persons individually
affected, but also have taxpayers, have sufficient interest in preventing the illegal
expenditures of money raised by taxation and may therefore question the
constitutionality of statutes requiring expenditures of public moneys." (Am. Jur., Vol. 11,
p. 761) All the members of this Court, except two, in taking cognizance of those cases,
rejected the respondents' contention, reversed the ruling in said case and adopted the
general rule above mentioned; and we believe the latter is better than the one adopted
in said case of Custodio, which was based on a doctrine adhered to only in few
jurisdiction in the United States; because if a taxpayer can not attack the validity of the
executive orders in question or a law requiring the expenditure of public moneys, one
under our laws could question the validity of such laws or executive orders.

After laying down the fundamental principles involved in the case at bar, we shall discuss
and show that Commonwealth Act No. 671 was no longer in force at the time the
Executive Orders under consideration were promulgated, because even the respondents
in the cases G. R. Nos. L-2044 and L-2756, in sustaining the validity of the Executive
Order No. 62 rely not only on Commonwealth Act No. 600 as amended by
Commonwealth Act No. 620, but on Commonwealth Act No. 671; and afterwards we shall
refute the arguments in support of the contrary proposition that said Commonwealth Act
No. 671 is still in force and, therefore, the President may exercise now the legislative
powers therein delegated to him.
PRELIMINARY
The Constitution of the Philippines, drafted by the duly elected representatives of the
Filipino people, provides in its section 1, Article II, that "The Philippines is a republican
states, sovereignty resides in the people and all government authority emanates from
them." The people have delegated the government authority to three different and
separate Departments: Legislative, Executive, and Judicial. In section 1, Article VI, the
legislative power to make laws is conferred upon Congress; the executive power to
faithfully executed the laws is vested by sections 1 and 10 of Article VII, in the President;
and the judicial power is vested by section 1, Article VII, in one Supreme Court and in
such inferior courts as may be established by law, the Supreme Court having the
supremacy to pass upon "the constitutionality or validity of any treaty, law, ordinance, or
executive order or regulations."
The distribution by the Constitution of the powers of government to the Legislative,
Executive, and Judicial Departments operates, by implication, as an inhibition against the
exercise by one department of the powers which belong to another, and imposes upon
each of the three departments the duty of exercising its own peculiar powers by itself,
and prohibits the delegation of any of those powers except in cases expressly permitted
by the Constitution. The principle of the separation of the powers of government is
fundamental to the very existence of a constitutional government as established in the
Philippines patterned after that of the United States of America. The division of
governmental powers into legislative, executive, and judicial represents the most
important principle of government that guarantees the liberties of the people, for it
prevents a concentration of powers in the hands of one person or class of persons.
Under the doctrine of separation of the powers of government, the law-making functions
is assigned exclusively to the legislative, and the legislative branch cannot delegate the
power to make laws to any other authority. But it must be borne in mind that what
cannot be delegated is that which is purely legislative in nature, not administrative.
There are powers so far legislative that may properly be exercised by the legislature, but
which may nevertheless be delegated because they may be advantageously exercised in
proper cases by persons belonging to the other departments of the government, such as
the authority to make rules and regulations of administrative character to carry out an

legislative purposes or to effect the operation and enforcement of a law. As illustrations

of the proper exercise of the power of Congress to delegate the authority to promulgate
rules and regulations with the necessary details to carry into effect a law, are Act No.
3155 empowering the Governor General then, now the President, to suspend or not, at
his discretion, the prohibition of the importation of foreign cattle (Cruz vs. Youngberg, 56
Phil., 234; Act No. 3106 authorizing the Commissioner of the Public Service Commission
to regulate those engaged in various occupations or business affected with a public
interest, and to prescribe what the charges shall be for services rendered in the conduct
of such business (Cebu Autobus Co. vs.De Jesus, 56 Phil., 446); and the National
Industrial Recovery Act enacted by the Congress of the United States authorizing the
President to promulgate administrative rules and regulations to carry out the emergency
measure enacted by Congress, though a part thereof was declared unconstitutional for
producing a delegation of legislative authority which is unconfined, "and not canalized
within banks to keep it from ever flowing."
Athough, in principle, the power of the Legislature to make laws or perform acts purely
legislative in nature may only be delegated by Congress to another authority or officers
of either the executive or judicial department when expressly permitted by the
Constitution, no such delegation is authorized by the State constitution or Federal
Constitution of the Untied States. It is a fact admitted by the attorneys and amici curiae
for the petitioners and respondents in these case that section 26, Article VI, our
Constitution is unique and has no counterpart in said constitutions, and for that reason
not a single case involving a question similar to the one herein involved has never been
submitted to and passed upon by the courts of last resort in the United States. The
provision of our Constitution reads as follows:
SEC. 26. In times of war or other national emergency, the Congress may by law authorize
the President, for a limited period and subject to such restrictions as it may prescribe, to
promulgate rules and regulations to carry out a declared national policy.
It is important to observe that what the above-quoted constitutional provision empowers
Congress to delegate to the President, is not the power to promulgate rules and
regulations of administrative nature, for this may also be delegated at any time without
necessity of an express authority by the Constitution, but the power to promulgate rules
and regulations purely legislative in nature, leaving to the discretion of the President the
determination of what rules or regulations shall be or what acts are necessary to
effectuate the so-called declared national policy, for otherwise it would not have been
necessary for the Constitution to authorize Congress to make such delegation.
DEMONSTRATION
The Constitution permits Congress to authorize the President of the Philippines to
promulgate rules and regulations of legislative nature only (1) in times of war or (2) other

national emergency, such as rebellion, flood, earthquake, pestilence, economic

depression, famine or any other emergency different from war itself affecting the nation.
It is obvious that it is Congress and not a particular emergency and to authorize the
President to promulgate rules and regulations to cope with it. Therefore, if Congress
declares that there exist a war as a national emergency and empowers the President to
promulgate rules and regulations to tide over the emergency, the latter could not,
because he believes that there is an economic emergency or depression or any
emergency other than war itself, exercise the legislative power delegated to meet such
economic or other emergency.
The Constitution requires also that the delegation be for a limited period or other
authority so delegated shall cease ipso facto at the expiration of the period, because to
require an express legislation to repel or terminate the delegated legislative authority of
the President might be subversive to the constitutional separation of powers in out
democratic form of government, for the President my prevent indefinitely the repeal of
his delegated authority by the exercise of his veto power, since the veto could be
overridden only by two-thirds vote and it would be extremely difficult to repeal it in
subservient Congress dominated by the Chief Executive. Besides, to provide that the
delegated legislative powers shall continue to exist until repealed by the Congress,
would be delegation not for limited, but for an unlimited period or rather without any
limitation at all, because all acts enacted are always subjects to repeal by the Congress,
without necessity to providing so.
No question is raised as to the constitutionality of Commonwealth Act No. 671 under
which Executive Orders Nos. 62, 192, 225 and 226 were promulgated by the President of
the Philippines according to the contention of the respondents. The question involved is
the validity (not constitutionality) of said executive orders, that is, whether or not the
President had authority to promulgate them under Commonwealth Act No. 671; and
therefore the concurrence of two-thirds of all the members of this Court required by
section 10, Article VIII of the Constitution to declare a treaty or law unconstitutional is not
required for adjudging the executive orders in question invalid or not authorized by
Commonwealth Act No. 671, which read as follows:
COMMONWEALTH ACT NO. 671
AN ACT DECLARING A STATE OF TOTAL EMERGENCY AS A RESULT OF WAR INVOLVING
THE PHILIPPINES AND AUTHORIZING THE PRESIDENT TO PROMULGATE RULES AND
REGULATIONS TO MEET SUCH EMERGENCY.
Be it enacted by the National Assembly of the Philippines:
SECTION 1. The existence of war between the United States and other countries of
Europe and Asia, which involves the Philippines, makes it necessary to invest the
President with extraordinary powers in order to meet the resulting emergency.

SEC. 2. Pursuant to the provisions of Article VI, section 16, of the Constitution, the
President is hereby authorized, during the existence of the emergency, to promulgate
such rules and regulations as he may deem necessary to carry out the national policy
declared in section 1 hereof. Accordingly he is, among other things, empowered (a) to
transfer the seat of the Government or any of its subdivisions, branches, departments,
offices, agencies or instrumentalities; (b) to reorganize the government of the
Commonwealth including the determination of the order of procedure of the heads of the
Executive Departments; (c) to create new subdivisions, branches, departments, offices,
agencies or instrumentalities of Government and to abolish any of those already existing;
(d) to continue in force laws and appropriations which would lapse or otherwise become
inoperative, and to modify or suspend the operation or application of those of an
administrative character; (e) to impose new taxes or to increase, reduce, suspend, or
abolish those in existence; (f) to raise funds through the issuance of bonds or otherwise,
and to authorize the expenditure of the proceeds thereof (g) to authorize the National,
provincial, city or municipal governments to incur in overdrafts for purposes that he may
approve; (h) to declare the suspension of the collection of credits or the payment of
debts; and (i) to exercise such other powers as he may deem necessary to enable the
Government to fulfill its responsibilities and to maintain and enforce its authority.
SEC. 3. The President of the Philippines shall as soon as practicable upon the convening
of the Congress of the Philippines report thereto all the rules and regulations
promulgated by him under the powers herein granted.
SEC. 4. This Act shall take upon its approval, and the rules and regulations promulgated
hereunder shall be in force and effect until the Congress of the Philippines shall
otherwise provide.
Approved, December 16, 1941.
Taking into consideration the presumption that Congress was familiar with the wellknown limits of its powers under section 26, Article VI, of the Constitution and did not
intend to exceed said powers in enacting Commonwealth Act No. 671, the express
provisions of Commonwealth Acts. Nos. 494, 496, 498, 499, 500, 600 as amended by
620 and 671, and those of Commonwealth Act No. 689 as amended by Republic Act No.
66 and Republic Acts Nos. 51 and 728, we are of the opinion, and therefore so hold, that
the actual war in the Philippine territory and not any other national emergency is
contemplated in Commonwealth Act No. 671, and that the period of time during which
the President was empowered by said Commonwealth Act No. 671 to promulgate rules
and regulations was limited to the existence of such war or invasion of the Philippines by
the enemy, which prevented the Congress to meet in a regular session. Such emergency
having ceased to exist upon the complete liberation of the Philippines from the enemy's
occupation, Commonwealth Act No. 671 had ceased to be in force and effect at the date
of the adjournment of the next regular session of the Congress in 1946, before the
promulgation of said executive orders, and hence they are null and void.

In view of the existence of a state of national emergency caused by the last world war
among several nations of the world, the second National Assembly during its second
special session passed the following acts: (a) Commonwealth Act No. 494 authorizing the
President until the adjournment of the next regular session of the National Assembly, to
suspend the operation of Commonwealth Act No. 444, commonly known as the "EightHour Labor-Law," when in his judgment the public interest so required, in order to
prevent a dislocation of the productive forces of the country; (b) Commonwealth Act No.
496 delegating to the President the power expressly granted by section 6, Article XIII, of
the Constitution to the State "until the date of adjournment of the next regular session of
the National Assembly, to take over solely for use or operation by the Government during
the existence of the emergency any public service or enterprise and to operate the
same," upon payment of just compensation; (c) Commonwealth Act No. 498, authorizing
the President, among others, to fix the maximum selling prices of foods, clothing, fuel,
fertilizers, chemicals, building materials, implements, machinery, and equipment
required in agriculture and industry, and other articles or commodities of prime
necessity, and to promulgate such rules and regulations as he may deem necessary in
the public interest, which rules and regulations shall have the force and effect of law until
the date of the adjournment of the next regular session of the National Assembly; (d)
Commonwealth Act No. 499 providing that until the date of the adjournment of the next
regular session of the National Assembly, any sale, mortgage, lease, charter, delivery,
transfer of vessels owned in whole or in part by a citizen of the Philippines or by a
corporation organizes under the laws of the Philippines, to any person not a citizen of the
United States or of the Philippines, shall be null and void, without the approval of the
President of the Philippines; and Commonwealth Act No. 500 authorizing the President to
reduce the expenditure of the Executive Department of the National Government by the
suspension or abandonment of services, activities or operations of no immediate
necessity, which authority shall be exercised only when the National Assembly is not in
session. All these Commonwealth Acts took effect upon their approval on September 30,
1939, a short time after the invasion of Poland by Germany.
During the fourth special session of the second National Assembly, Commonwealth Act
No. 600, which superseded the above-mentioned emergency power acts, was passed
and took effect on its approval on August 19, 1940. This Act No. 600 expressly declared
that the existence of war in many parts of the world had created a national emergency
which made it necessary to invest the President with extraordinary powers in order to
safeguard the integrity of the Philippines and to insure the tranquility of its inhabitants,
by suppressing espionage, lawlessness, and all supervise activities, by preventing or
relieving unemployment, by insuring to the people adequate shelter and clothing and
sufficient food supply, etc. To carry out this policy the President was "authorized to
promulgate rules and regulations which shall have the force and effect of law until the
date of adjournment of the next regular session of the National Assembly," which rules
and regulations may embrace the objects therein enumerated. And the National
Assembly in its regular session commencing in January, 1941, in view of the fact that the

delegated authority granted to the President by Commonwealth Acts Nos. 494, 496, 498,
500, and 600 was to terminate at the date of the adjournment of that regular session of
the National Assembly, passed Act No. 620 which took effect upon its approval on June 6,
1941, amending section 1 of Commonwealth Act No. 600 by extending the delegated
legislative authority of the President until the date of the adjournment of the next regular
session of the Congress of the Philippines, instead of the National Assembly, the
Constitution having been amended by substituting the Congress of the Philippines for the
National Assembly..
Although Commonwealth Act No. 600, as amended by Commonwealth Act No. 620,
provides that "the President is authorized to promulgate rules and regulations which shall
have the force and effect of law until the date of adjournment of the next regular session
of the Congress of the Philippines," it is evident that this limitation was intended to
apply, not only to the effectivity of the rules and regulations already promulgated, but
specially to the authority granted to the President to promulgated them, for the following
reasons: First, because Commonwealth Act Nos. 494, 496, 498, 499, and 500 had
expressly limited the authority of the President to exercise the delegated power while the
Assembly was not in session until the date of the adjournment of the next regular
session of then National Assembly, and there was absolutely no reason whatsoever why
the National Assembly, in enacting Commonwealth Act No. 600 as amended, which
superseded said Act, would not impose the same limitation on the authority delegated in
Commonwealth Act No. 600 as amended in compliance with the requirement of the
Constitution; secondly, because it would have been useless to give the rules and
regulations the effect and force of law only until the date of the adjournment of the next
regular session of the Congress, if the President might, after said adjournment, continue
exercising his delegated legislative powers to promulgate again the same and other rules
and regulations; and lastly, because to construe Commonwealth Act No. 600, as
amended by Act No. 620, otherwise would be to make the delegation not for a limited
but for an indefinite period of time, in violation of the express provision of section 26,
Article VI of the Constitution.
All the above-mentioned Acts Nos. 494, 496, 499, 500, and 600 before its amendment
show that it was the intention or policy of the National Assembly, in delegating
legislative functions to the President, to limit the exercise of the latter's authority to the
interregnum while the National Assembly or Congress of the Philippines was not in
session until the date of the adjournment of the next regular session thereof, which
interregnum might have extended over a long period of time had the war in Europe
involved and made the Philippines a battle ground before the next regular session of the
Congress had convened. And the authority granted to the President of Commonwealth
Act No. 600, as amended, had to be extended over a long period of time during the
occupation because, before the meeting of the next regular session of the Congress, the
Philippines was involved in the war of the United States and invaded and occupied by the
Japanese forces. And the President was authorized to exercise his delegated powers until

the date of the adjournment of the next regular session of the Congress, for the reason
that although during the next regular session a bill may be passed, by the Congress, it
would not become a law until it was approved, expressly or impliedly, by the President
during the period of twenty days after it shall have been presented to him.
The reason of the limitation is that if Congress were in position to act it would not be
necessary for it to make such legislative delegation to the President, for Congress may in
all cases act, declare its will and, after fixing a primary standard or yardstick, authorize
the President to fill up the details by prescribing administrative rules and regulations to
cope with the actual conditions of any emergency; and it is inconceivable that there may
arise an emergency of such a nature that would require immediate action and can not
wait, without irreparable or great injury to the public interest, and action of the
legislative in regular or special session called by the Chief Executive for the purpose of
meeting it. If in the United States they could withstand and have withstood all kinds of
emergency without resorting to the delegation by the legislative body of legislative
power to the Executive except those of administrative nature, because no such
delegation is permitted by the States and Federal constitution, as above stated, there is
no reason why the same can not be done in the Philippines. The frames of our
Constitution and the national Assembly that enacted Commonwealth Act No. 671 are
presumed to be aware of the inconvenience and chaotical consequences of having two
legislative bodies acting at one and the same time.
It is true that Commonwealth Act No. 671 does not expressly say that the President is
authorized to promulgates rules and regulations until the date of the adjournment of the
next regular session of the National Assembly or Congress as the above-quoted
Commonwealth Acts; but it is also true that it clearly provides that "pursuant to the
provisions of Article VI, section 26, of the Constitution, the President is hereby
authorized, during the existence of the emergency, to promulgate such rules and
regulations as he may deem necessary to carry out the national policy declared"; and
that the definite and specific emergency therein referred to is no other that the "state of
total emergency as a result of war involving the Philippines", declared in the title of said
Act No. 671, that was the reason for which the President was "authorize to promulgate
rules and regulations to meet resulting emergency." It is obvious that what Act No. 671
calls "total emergency" was the invasion and occupation of the Philippines by the enemy
or Japanese forces which, at the time of the passage and approval of said Act, had
already landed in Philippine soil and was expected to paralyze the functioning of the
Congress during the invasion and enemy occupation of the Philippines.
The mere existence of the last world war in many parts of the world which had created a
national emergency made it necessary to invest the President with extraordinary powers
was not called total emergency by Commonwealth Act Nos. 600 and 620, because it had
not yet actually involved and engulfed the Philippines in the maelstrom of war. It does
not stand to reason that the authority given to the President to promulgate rules and

regulations of legislative nature by Commonwealth Acts Nos. 494, 496, 498, 499, 500,
600 and 620 was to terminate at the date of the adjournment of the next regular session
of the Congress of the Philippines in 1946, but those granted to the President by
Commonwealth Act No. 671 under the same war emergency should continue to exist
indefinitely even after the Congress of the Philippines had regularly convened, acted,
and adjourned in the year 1946 and subsequent years. Besides to give such construction
to Act No. 671 would make it violative of the express provision of section 26, Article VIII,
of the Constitution, under which said Commonwealth Act No. 671 was enacted, as
expressly stated in said Act, and which permits the Congress to authorize the President,
only for a limited period during a war emergency, to promulgate rules and regulations to
carry into effect a declared national policy.
By the special session of the first Congress of the Philippines commencing on the 9th day
of June, 1945, called by the President for the purpose of considering general legislation,
Commonwealth Act No. 671 did not cease to operate. As we have already said, the
emergency which prompted the second National Assembly to enact Commonwealth Act
No. 671 delegating legislative powers to the President, was the inability of Congress to
convene in regular session in January of every during the invasion of the Philippines by
the Japanese Imperial forces. The National Assembly could not have in mind any special
session which might have been called by the President immediately after liberation,
because the calling of a special session as well as the matters which may be submitted
by the President to Congress for consideration is a contingent event which depend upon
the possibility of convening it and the discretion of the President to call it, and the
matters he will submit to it for consideration; because it is to be presumed, in order to
comply with the provision of section 26, Article VI of the Constitution, that it was the
intention of the National Assembly to fix a limited period, independent of the President's
will, during which he is authorized to exercise his delegated legislative power.
The object of section 3 of Act No. 671 in requiring the President to report "as soon as
practicable upon the convening of the Congress of the Philippines all rules and
regulations promulgated by him under the powers therein granted" is to inform the
Congress of the contents of said rules and regulations so that the latter may modify or
repeal them if it sees fit to do so, inasmuch as, according to section 4 of the same Act,
"the rules and regulations promulgated hereunder shall be in force and effect until the
Congress shall otherwise provide." And although said section 3 does not specify whether
in regular or special session, it is evident that it refers to the next regular and not to the
special session of the Congress, because as a rule a special session is called to consider
only specific matters submitted by the President to Congress for consideration, and it
would be useless to submit such report to the Congress in special session if the latter can
not either modify or repeal such rules and regulations; and besides, it is to be presumed
that it was the intention of the National Assembly in enacting section 3 of
Commonwealth Act No. 671 to require the submission of a report to the next regular
session of the Assembly or Congress, as provided in section 4 Commonwealth Act No.

600, as amended by Commonwealth Act No. 620, which required a similar report, for
there was absolutely no plausible reason to provide otherwise.
Our conclusion is corroborated by the fact that section 3 of Act No. 671 only requires the
President to submit the report, "as soon as practicable upon the convening of the
Congress" and not to submit a report to the Congress every time it convenes, in order to
inform the Congress thereof so that the latter may modify or repeal any or all of them,
for under section 4 of the same Act "such rules and regulations shall continue in force
and effect until the Congress shall otherwise provide." It is obvious that the convening of
the Congress referred to in said section 3 is the next regular session of the Congress
after the passage of Act No. 671, and not any other subsequent session; because,
otherwise, it would not have required that it shall be submitted to the Congress as soon
as practicable and the purpose of the law already stated in requiring the submission of
the report would be defeated; and if it were the intention of said Commonwealth Act No.
671 to authorize the President to continue promulgating rules and regulations after the
next regular session of the Congress, it would have required the President to submit to
the Congress each and every time it convenes a report of the rules and regulations
promulgated after his previous reports had been submitted.
Furthermore, our conclusion is confirmed by the legislative interpretation give to
Commonwealth Act No. 671 by the same Congress in enacting Commonwealth Act No.
728 which took effect on July 2, 1946, authorizing the President to regulate, control,
curtail, and prohibit the exploration of agricultural or industrial products, merchandise,
articles, materials and supplies without the permit of the President until December 31,
1948 as expressly provided in section 4 thereof, because it would not have been
necessary for the Congress to promulgate said Act No. 728 if the President had authority
to promulgate Executive Order No. 62 in question on January 1, 1949, under
Commonwealth Act No. 671 as contended by the respondents; and Republic Act No. 51,
approved on October 4, 1946, authorizing within one year the different executive
departments, business, offices, agencies and other instrumentalities of the government,
including corporations controlled by it, would not have been passed by the Congress if
Commonwealth Act No. 671 under consideration was then still in force, for section 2 (b)
and (c) of said Act No. 671 authorizes the President to reorganize the Government and to
create new subdivisions, branches, department offices, agencies or instrumentalities of
government, and to abolish any of those already existing.
REPUTATION
There is no force in the argument that the executive orders in question are not valid, not
because the promulgation of the acts above mentioned and of Commonwealth Act No.
689 as amended by the Republic Act No. 66 on rentals, the appropriation acts or Republic
Act Nos. 1, 156, and 320 for the years 1946-47, 1947-48 and 1948-49, and of the
Republic Acts Nos. 73, 147, and 235 appropriating public finds to defray the expenses for
the elections held in 1947 and 1948, shows that the emergency powers granted by

Commonwealth Act No. 671 had already ceased to exist, but because Congress "has
shown by their enactment its readiness and ability to legislate on those matters, and had
withdrawn it from the realm of presidential legislation or regulations under the powers
delegated by Commonwealth Act No. 671." If the Congress was ready and able to
legislate on those matters since 1946 and for that reason the executive orders herein
involved are null and void, there is no valid reason for not concluding that the emergency
powers of the President has ceased to exist it did not, legislate on all matters on which
the President was granted and delegated power to legislate by the Commonwealth Act
No. 671. And if Commonwealth Act No. 671 continues to be in force and effect in so far
as it grants delegated legislative powers to the President and declares the national policy
to be carried out by the rules and regulations the President is authorize to promulgate,
the mere promulgation of the acts above described can not be considered as an implied
repeal or withdrawal of the authority of the President to promulgates rules and
regulations only on those matters, and the adoption of a contrary policy by the Congress,
because implied repeal is not favored in statutory construction, and the national policy
referred to in section 26, Article VIII of the Constitution is to be declared by the Congress
in delegating the legislative powers to the President, in order to establish the standard to
be carried out by him in exercising his delegated functions, and not in repealing said
powers.
As we have already said, section 26, Article VI of the Constitution expressly empowers
Congress, in times of war and other national emergency, to authorize the President to
promulgate rules and regulations to carry out a declared national policy, and therefore it
is for the National Assembly to determine the existence of a particular emergency
declare the national policy, and authorize the President to promulgate rules and
regulations of legislative nature to carry out that policy. As the Commonwealth Act No.
671 that the existence of war between the United States and other countries of Europe
and Asia which involves the Philippines is the emergency which made it necessary for
the National Assembly to invest the President with extraordinary powers to promulgate
rules and regulations to meet the resulting emergency from the actual existence of that
war which involved the Philippines, the President cannot, under said Act No. 671,
determine the existence of any other emergency, such as the state of cold war, the
continued military occupation of the enemy country, and the economic and political
instability throughout the world, cited by the respondents, and promulgate rules and
regulations to meet the emergency; because obviously it is not for the delegate but for
the delegation to say when and under what circumstances the former may act in behalf
of the latter, and not vice-versa.
The theory of those who are of the opinion that the President may determine "whether
the emergency which on December 16, 1941, prompted the approval of Commonwealth
Act No. 671 delegating extraordinary powers to the President, still existed at the time the
Chief Executive exercised those powers," is predicated upon the erroneous assumption
that said Commonwealth Act No. 671 contemplated any other emergency not expressly

mentioned in said Commonwealth Act. This assumption or premise is obviously wrong.

Section 1 of said Act No. 671 expressly states that "the existence of the war between the
United States and other countries of Europe and Asia which involves the Philippines
makes it necessary to invest the President with extraordinary power in order to meet the
resulting emergency." That is the war emergency. Ant it is evident, and therefore no
evidence is requires to prove, that the existence of the war which involved the
Philippines had already ceased before the promulgation of the executive orders in
question, or at least, if the last war has not yet technically terminated in so far as the
United States is concerned, it did no longer involve the Republic of the Philippines since
the inauguration of our Republic or independence from the sovereignty of the United
States.
It is untenable to contend that the words "resulting emergency from the existence of the
war" as used in section 1 of Commonwealth Act No. 671 should be construed to mean
any emergency resulting from or that is the effect of the last war, and not the war
emergency itself, and that therefore it is for the President to determine whether at the
time of the promulgation of the executive orders under consideration such emergency
still existed, because such contention would make Act No. 671 unconstitutional or
violative of the provisions of section 26, Article VI of the Constitution. This constitutional
precept distinguishes war emergency from any other national emergency, such as an
economic depression and others which may be the effect of a war, and empowers the
Congress in times of war and other national emergency, to be determined by Congress
itself as we have already said and shown, to authorize the President, for a limited period
that may short or of the same duration but not longer than that of the emergency, to
promulgate rules and regulations to carry out the policy declared by the Congress in
order to meet the emergency. To construe Commonwealth Act No. 671 as contended
would be to leave the determination of the existence of the emergency to the discretion
of the President, because the effects of the war such as those enumerated by the
respondents are not determined or stated in said Act and could not have been foreseen
by the Assembly in enacting said Act; and because it would make the delegation of
powers for an in definite period, since such an emergency may or may not become
depression, effect of the first world war, took place in the year 1929, or about ten years
after the cessation of hostilities in the year 1919; and by no stretch of imagination or
intellectual gymnastics may the failure of the Congress to appropriate funds for the
operation of the Government during the period from July 1, 1949 to June 30, 1950, and to
defray the expenses in connection with the holding of the national election on the
second Tuesday of November, 1949, be considered as an emergency resulting from the
last war.
In the enactment of emergency police measures, the questions as to whether an
emergency exists is primarily for the legislature to determine. Such determination,
although entitled to great respect, is not conclusive because the courts, in such cases,

posses the final authority to determine whether an emergency in fact exists. (American
Jurisprudence, Vol. XI, page 980.).
No case decided by the courts of last resort in the United States may be cited in support
of the proposition that it is for the President to determine whether there exist an
emergency in order to exercise his emergency powers, and "it is not for the judiciary to
review the finding of the Executive in this regard." There is none and there cannot be
any. Because, as we have already stated at the beginning of this opinion, and we are
supported by the above quotation from American Jurisprudence, the power to pass
emergency police legislation in the United States may be exercised only by the
legislature in the exercise of the police power of the State, and it can not be delegated to
the Executive because there is no provision in the State and Federal constitutions
authorizing such delegation as we have in section 26, Article VI, of our Constitution. As
we have already said before, the only legislative power which may be delegated to the
Executive and other administrative bodies or officers in the United States is the power to
promulgate rules and regulations of administrative nature, which does not include the
exercise of the police power of the State.
The ruling laid down by the United States Supreme Court in the case of Ludecke vs.
Watkins, 92 Law ed., 1883, quoted by the respondents and dissenters in support of the
proposition that "only in case of a manifest abuse of the exercise of powers by a political
branch of the government is judicial interference allowable in order to maintain the
supremacy of the Constitution," has no application to the present case; because the
question involved in the present case is not a political but a justiciable question, while
the question in issue in said Ludecke case was the power of the court to review "the
determination of the President in the postwar period that an alien enemy should be
deported, even though active hostilities have ceased," and it was held that it was a
political question and, therefore, was not subject to judicial review.
CONCLUSION
In view of all the foregoing, we have to conclude and declare that the executive orders
promulgated by the President under Commonwealth Act 671 before the date of the
adjournment of the regular session of the Congress on the Philippines in 1946 are valid,
because said Commonwealth Act was then still in force; but the executive orders
promulgated after the said date are null and void, because Commonwealth Act No. 671
had already ceased to be in force in so far as the delegation of powers was concerned.
Therefore, are null and void the Executive Order No. 192 promulgated on December 24,
1948, on the control of exports from the Philippines; the Executive Order No. 225 dated
June 15, 1949, appropriating funds for the operation of the Government of the Republic
of the Philippines during the period from July 1, 1949 to June 30, 1950; and the Executive
Order No. 226 promulgated on June 15, 1949, appropriating the sum of six million pesos
to defray the expenses in connection with, and incidental to, the holding of the national
election to be held on the second Tuesday of November, 1949

12.

RODRIGUEZ V GELLA

G.R. No. L-6266

February 2, 1953

EULOGIO RODRIGUEZ, SR., ETC., ET AL., petitioners,

vs.
VICENTE GELLA, ETC., ET AL., respondents.
Eulogio Rodriguez, Sr., Lorenzo M. Taada, Claro M. Recto, Jose P. Laurel, Jesus Barrera
and Leon Ma. Guerrero for petitioner.
Office of the Solicitor General Juan R. Liwag and Solicitor Martiniano P. Vivo for
respondents.
PARAS, C.J.:
As a fitting foreword, it may be recalled that on a previous occasion, on August 26, 1949
to be exact, this court had already passed upon the status of Commonwealth Act No.
671, approved on December 16, 1941, "declaring a state of total emergency as a result
of war involving the Philippines and authorizing the President to promulgate rules and
regulations to meet such emergency." Five members held that the Act ceased to be
operative in its totality, on May 25, 1946 (when the Congress convened in special
session) according to Chief Justice Moran. Justice Bengzon, Padilla, Montemayor, Reyes
and Torres in effect concluded that the powers delegated to the President had been
withdrawn as to matters already legislated upon by the Congress or on which the latter
had demonstrated its readiness or ability to act. Executive Orders No. 62 (dated June 21,
1947) regulating house and lot rentals, No. 192 (dated December 24, 1948) regulating
exports, Nos. 225 and 226 (dated June 15,1949) the first appropriation funds for the
operation of the Government from July 1, 1949 to June 30, 1950, and the second
appropriating funds for election expenses in November 1949, were therefore declared
null and void for having been issued after Act No. 671 had lapsed and/or after the
Congress had enacted legislation on the same subjects.1
More or less the same considerations that influenced our pronouncement of August 26,
1949 are and should be controlling in the case now before us, wherein the petitioners
seek to invalidate Executive Orders Nos. 545 and 546 issued on November 10, 1952, the
first appropriating the sum of P37,850,500 for urgent and essential public works, and the

second setting aside the sum of P11,367,600 for relief in the provinces and cities visited
by typhoons, floods, droughts, earthquakes, volcanic action and other calamities.
Section 26 of Article VI of the Constitution provides that "in times of war or other national
emergency, the Congress may by law authorize the President, for a limited period and
subject to such restrictions as it may prescribe, to promulgate rules and regulations to
carry out a declared national policy." Accordingly the National Assembly passed
Commonwealth Act No. 671, declaring (in section 1) the national policy that "the
existence of war between the United States and other countries of Europe and Asia,
which involves the Philippines makes it necessary to invest the President with
extraordinary powers in order to meet the resulting emergency," and (in section 2)
authorizing the President, "during the existence of the emergency, to promulgate such
rules and regulations as he may deem necessary to carry out the national policy
declared in section 1."
As the Act was expressly in pursuance of the constitutional provision, it has to be
assumed that the National Assembly intended it to be only for a limited period. If it be
contended that the Act has not yet been duly repealed, and such step is necessary to a
cessation of the emergency powers delegated to the President, the result would be
obvious unconstitutionality, since it may never be repealed by the Congress, or if the
latter ever attempts to do so, the President may wield his veto. This eventuality has in
fact taken place when the President disapproved House Bill No. 727, repealing all
Emergency Powers Acts. The situation will make the Congress and the President or either
as the principal authority to determine the indefinite duration of the delegation of
legislative powers, in palpable repugnance to the constitutional provision that any
grant thereunder must be for a limited period, necessarily to be fixed in the law itself and
not dependent upon the arbitrary or elastic will of either the Congress or the President.
Although House Bill No. 727, had been vetoed by the President and did not thereby
become a regular statute, it may at least be considered as a concurrent resolution of the
Congress formally declaring the termination of the emergency powers. To contend that
the Bill needed presidential acquiescence to produce effect, would lead to the
anomalous, if not absurd, situation that, "while Congress might delegate its power by a
simple majority, it might not be able to recall them except by two-third vote. In other
words, it would be easier for Congress to delegate its powers than to take them back.
This is not right and is not, and ought not to be the law."2
Act No. 671 may be likened to an ordinary contract of agency, whereby the consent of
the agent is necessary only in the sense that he cannot be compelled to accept the trust,
in the same way that the principal cannot be forced to keep the relation in eternity or at
the will of the agent. Neither can it be suggested that the agency created under the Act
is coupled with interest.

The logical view consistent with constitutionality is to hold that the powers lasted only
during the emergency resulting from the last world war which factually involved the
Philippines when Act No. 671 was passed on December 16, 1941. That emergency, which
naturally terminated upon the ending of the last world war, was contemplated by the
members of the National Assembly on the foresight that the actual state of war could
prevent it from holding its next regular session. This is confirmed by the following
statement of President Quezon: "When it became evident that we were completely
helpless against air attack and that it was most unlikely the Philippine Legislature would
hold its next regular session which was to open on January 1, 1942, the National
Assembly passed into history approving a resolution which reaffirmed the abiding faith of
the Filipino people in, and their loyalty to, the United States. The Assembly also enacted
a law granting the President of the Philippines all the powers that under the Philippine
Constitution may be delegated to him in time of war."3 When President Quezon said "in
time of war", he an doubtedly meant such factual war as that then raging.
As early as July 26, 1948, the Congress categorically declared that "since liberation
conditions have gradually returned to normal, but not so with regard to those who have
suffered the ravages of war and who have not received any relief for the loss and
destruction resulting therefrom," and that "the emergency created by the last war as
regards these war sufferers being still existent, it is the declared policy of the state that
as to them the debt moratorium should be continued in force in a modified form."4 It is
important to remember that Republic Act No. 342 in which this declaration was made
bore the approval of the President. Indeed, the latter in his speech delivered on July 4,
1949, plainly proclaimed that "what emergencies it (the Republic) faces today are
incidental passing rains artificially created by seasonal partisanship, very common
among democracies but will disappear with the rains that follow the thunderclaps not
later than November 8 of this year," an admission, that such emergencies not only are
not total but are not the result of the last war as envisaged in Act No. 671.
If more is necessary to demonstrate the unmistakable stand of the legislative
department on the alleged existence of emergency, reference may be had to House Bill
No. 727, hereinbefore referred to, repealing all Emergency Powers Acts.
Moreover, section 26 of Article VI of the constitution, in virtue of which Act No. 671 was
passed, authorizes the delegation of powers by the Congress (1) in times of war or (2)
other national emergency. The emergency expressly spoken of in the title and in section
1 of the Act is one "in time of war," as distinguished from "other national emergency"
that may arise as an after-effect of war or from natural causes such as widespread
earthquakes, typhoons, floods, and the like. Certainly the typhoons that hit some
provinces and cities in 1952 not only did not result from the last world war but were and
could not have been contemplated by the legislators. At any rate, the Congress is
available for necessary special sessions, and it cannot let the people down without
somehow being answerable thereover.

As a matter of fact, the President, in returning to the Congress without his signature
House Bill No. 727, did not invoke any emergency resulting from the last world war, but
only called attention to an impending emergency that may be brought about by present
complicated and troubled world conditions, and to the fact that our own soldiers are
fighting and dying in Korea in defense of democracy and freedom and for the
preservation of our Republic. The emergency thus feared cannot, however, be attributed
to the war mentioned in Act No. 671 and fought between Germany and Japan on one side
and the Allied Powers on the other; and indications are that in the next world war, if any,
the communist countries will be aligned against the democracies. No departure can be
made from the national policy declared in section 1 of Act No. 671. New powers may be
granted as often as emergencies contemplated in the Constitution arise.
There is no point in the argument that the Philippines is still technically at war with Japan
pending the ratification of the peace treaty. In the first place, Act No. 671 referred to a
factual war. In the second place, the last world war was between the United States and
Japan, the Philippines being involved only because it was then under American
sovereignty. In the third place, the United States had already signed the peace treaty
with Japan, and the Philippines has become an independent country since July 4, 1946.
It is pointed out that the passage of House Bill No. 727 is inconsistent with the claim that
the emergency powers are non-existent. But, from the debates in the House, it is patent
that the Bill had to be approved merely to remove all doubts, especially because this
Court had heretofore failed, for lack of necessary majority, to declare Act No. 671 entirely
inoperative.
Reliance is placed on the petition of about seventy Congressmen and Senators and on
House Resolution No. 99, urging the President to release and appropriate funds for
essential and urgent public works and for relief in the typhoon-stricken areas. It is
enough to state, in reply, that the said petition and resolution cannot prevail over the
force and effect of House Bill No. 727 formally passed by two chambers of the Congress.
If faith can be accorded to the resolution of one house, there is more reason for
accepting the solemn declarations of two houses.
Even under the theory of some members of this court that insofar as the Congress had
shown its readiness or ability to act on a given matter, the emergency powers delegated
to the President had been pro tanto withdrawn, Executive Orders Nos. 545 and 546 must
be declared as having no legal anchorage. We can take judicial notice of the fact that the
Congress has since liberation repeatedly been approving acts appropriating funds for the
operation of the Government, public works, and many others purposes, with the result
that as to such legislative task the Congress must be deemed to have long decided to
assume the corresponding power itself and to withdraw the same from the President. If
the President had ceased to have powers with regards to general appropriations, none
can remain in respect of special appropriations; otherwise he may accomplish indirectly
what he cannot do directly. Besides, it is significant that Act No. 671 expressly limited the

power of the President to that continuing "in force" appropriations which would lapse or
otherwise become inoperative, so that, even assuming that the Act is still effective, it is
doubtful whether the President can by executive orders make new appropriations. The
specific power "to continue in force laws and appropriations which would lapse or
otherwise become inoperative" is a limitation on the general power "to exercise such
other powers as he may deem necessary to enable the Government to fulfill its
responsibilities and to maintain and enforce its authority." Indeed, to hold that although
the Congress has, for about seven years since liberation, been normally functioning and
legislating on every conceivable field, the President still has any residuary powers under
the Act, would necessarily lead to confusion and overlapping, if not conflict.
Shelter may not be sought in the proposition that the President should be allowed to
exercise emergency powers for the sake of speed and expediency in the interest and for
the welfare of the people, because we have the Constitution, designed to establish a
government under a regime of justice, liberty and democracy. In line with such primordial
objective, our Government is democratic in form and based on the system of separation
of powers. Unless and until changed or amended, we shall have to abide by the letter
and spirit of the Constitution and be prepared to accept the consequences resulting from
or inherent in disagreements between, inaction or even refusal of the legislative and
executive departments. Much as it is imperative in some cases to have prompt official
action, deadlocks in and slowness of democratic processes must be preferred to
concentration of powers in any one man or group of men for obvious reasons. The
framers of the Constitution, however, had the vision of and were careful in allowing
delegation of legislative powers to the President for a limited period "in times of war or
other national emergency." They had thus entrusted to the good judgment of the
Congress the duty of coping with any national emergency by a more efficient procedure;
but it alone must decide because emergency in itself cannot and should not create
power. In our democracy the hope and survival of the nation lie in the wisdom and
unselfish patriotism of all officials and in their faithful adherence to the Constitution.
Wherefore, Executive Orders Nos. 545 and 546 are hereby declared null and void, and
the respondents are ordered to desist from appropriating, releasing, allotting, and
expending the public funds set aside therein. So ordered, without costs.
Feria, Pablo and Tuason, JJ., concur.
Bengzon, J., concur in the result.

Separate Opinions
PADILLA, J., concurring:

"All appropriation, revenue or tariff bills . . . shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments."1 "No money
shall be paid out of the Treasury except in pursuance of an appropriation made by law."2
The authority or power to appropriate government funds to be spent for public purposes
is lodged exclusively in the Congress because it is purely and essentially a legislative
function. The legislative power to appropriate government funds for public purposes
lodged exclusively in the Congress may, however, be delegated to the President "in
times of war or other national emergency," "for a limited period and subject to such
restrictions as it may prescribe," "to carry out a declared national policy."3 This
constitutional provision has no counterpart in the Constitution of the United States of
America and in those patterned after it. Under this provision of the Constitution several
emergency powers acts, notably Com. Acts Nos. 600 and 671, were passed.4 Being a
deviation from the principle of separation of powers the delegation of legislative powers
authorized by the Constitution may validly be made only by adhering strictly to its spirit
and letter. Pursuant thereto the legislative authority or power to be granted or delegated
to the President by the Congress must be "in times of war or other national emergency"
and "for a limited period and subject to such restrictions as it may prescribe," and the
Congress has to pass a law for that purpose. The reason why the Constitution is silent on
or does not provide for the manner the delegation of legislative powers may be
withdrawn, revoked or ended, is because if it is for a limited period it lapses at the end of
the period and because if the war or other national emergency which prompted it ceases
the delegation of legislative powers ceases also ipso facto. A law which delegates such
powers to the President for an indefinite period would be unconstitutional because it is
against the express provision of the Constitution. It would be an abdication of legislative
powers. If the law which delegates legislative powers does not fix or provide for a period
of time within or during which the President may exercise them and there is dispute or
doubt as to whether the national emergency which prompted the Congress to pass the
law delegating legislative powers to the President continues or has ceased, such dispute
or doubt may be determined in an appropriate case by the courts. Another way of
terminating such delegation is by the Congress itself which made the delegation. To
withdraw, terminate or revoke the delegation of legislative powers to the President a
concurrent resolution would be sufficient.5 The concurrence of the President is
superfluous and unnecessary, for if it be required then the law which delegated
legislative powers to him would suffer from a fatal defect, vice, or infirmity which would
render such delegation unconstitutional for lack of time limitation prescribed and
ordained by the Constitution.
It is claimed that just as the delegation of legislative powers to the President is to be
made by means of a law which requires the concurrence of the President, so the
withdrawal, termination or revocation of the legislative powers delegated to him must
also be with his concurrence and approval. The reason for the requirements that a law be
passed to make the delegation of legislative powers valid and effective is the fact that
whereas the Congress may deem it wise and expedient to make the delegation, the

President may hold a different view. In other words, he has to concur and accept the
powers delegated to him by the Congress. But when it comes to withdrawal, termination
or revocation of the legislative powers delegated to him his concurrence or consent is
not necessary. The absence of constitutional provision on how it should be done and
carried out is not due to an oversight or to an intention of the members of the
Constitutional Convention to require the concurrence of the President to make there
vocation valid and effective, because, as heretofore stated, if such concurrence be
required to make the revocation valid and effective, the law which delegated legislative
powers to the President would or might offend against the very provision of the
Constitution which requires and ordains that such delegation be for a limited period of
time only, and because the refusal to concur in by a President bent on or inclined to
continue exercising legislative powers delegated to him would result in a delegation of
legislative powers, at least during his incumbency or tenure of office, regardless of
whether the reason or reasons for the grant of the authority to exercise such legislative
powers have ceased to exist.
It is contended, however, that in withdrawing, terminating or revoking the legislative
powers delegated to the President the Congress did so by passing a bill evincing its
intention to have his assent, which he refused to give, and for that reason the revocation
of the legislative powers delegated to him was ineffective for lack of such concurrence.
To determine what the Congress intended when it passed the bill repealing the
Emergency Powers Acts the Senate approved it unanimously form must give way to
substance. If the contention that in passing the bill repealing the Emergency Powers Acts
the Congress intended to have the concurrence of the President be upheld, such a
construction would render the bill contradictory in itself, because in the explanatory
notes of H. No. 692 introduced by Congressman Roy and H. No. 727 by Congressman
Zosa, upon which the consolidated bill passed is based, it is declared "that war had long
ended," that "the need for the grant of such unusual powers to the President has
disappeared," and that for that reason the Congress repealed all Emergency Powers Acts.
The congress could not have meant or intended to subordinate its opinion or judgment
that the war had ended and that the national emergency had ceased to exist to that of
the President, the legislative and not the executive being the department of the
Government exclusively clothed or vested with the authority and power to make such a
declaration. In passing the bill the Congress committed a mistake in the matter of form
but not of substance because the latter is there in the explanatory note of the bill passed
by both houses, to wit: "that war had long ended," that "the need for the grant of such
unusual powers to the President has disappeared," and that for that reason it repealed all
the Emergency Powers Acts. After the Congress had made that declaration the President
could no longer exercise the legislative powers delegated to him. It was a complete and
absolute revocation of the delegation of such powers. His veto of the bill could not and
did not have the effect of reviving or continuing the delegation of legislative powers
which had been revoked by the Congress, the only constitutional body empowered and
authorized to make the revocation.

For this reasons I am of the opinion that Executive Orders No. 545 and 546 which
appropriate government funds for public works and relief for the victims of typhoons in
some provinces of the Republic are of no validity and legal effect because the President
no longer had the authority to issue such executive orders under the Emergency Powers
Act which had been withdrawn or revoked by the Congress. The writ of prohibition
prayed for should be granted.

BENGZON, J., concurring:

I have signed the majority opinion. But I also agree to the above views of Mr. Justice
Padilla.
Labrador, J., concurs.

REYES, J., concurring:

It being repugnant to the spirit of the Constitution to let Commonwealth Act No. 671
degenerate into a grant in perpetuity of legislative powers to the Executive, and taking
House Bill No. 727, approved by the Congress but vetoed by the President, as a for-therecord pronouncement on the part of the legislative branch of the Government that the
emergency which impelled it to delegate, through the said Commonwealth Act,
legislative powers to the President had already ceased, so that there was no longer any
need for the exercise of those delegated powers, and, lastly, considering that said Act
does not have to be repealed by another Act because, as an emergency measure, it
repeals itself with the cessation of the emergency, I concur in this opinion of Mr. Justice
Padilla.

JUGO, J., concurring:

In addition to the reasons set forth by Chief Justice Paras and Associate Justice Padilla, I
would like to make a few brief remarks:
Section 26 of Article VI of the Philippine Constitution provides as follows:

In times of war or other national emergency, the Congress may by law authorize the
President, for a limited period and subject to such restrictions as it may prescribed, to
promulgate rules and regulations to carry out a declared national policy.
Section 1 of Commonwealth Act No. 671, which is entitled "An Act Declaring a State of
Total Emergency as a Result of War Involving the Philippines and Authorizing the
President to Promulgate Rules and Regulations to Meet such Emergency," reads as
follows:
The existence of war between the United States and other countries of Europe and Asia,
which involves the Philippines, makes it necessary to invest the President with
extraordinary powers in order to meet the resulting emergency.
Section 2 of said Commonwealth Act No. 671 invoking section 26, Article VI, of the
Constitution above-quoted, authorized the President during the existence of the
emergency caused by said war to promulgate rules and regulations, etc.
Executive Order No. 545, dated November 10, 1952, appropriating funds for urgent and
essential public works, states in its preamble, in justification of said order, that the
Congress in its last special session had failed to appraise funds for the immediate repairs
and reconstruction of certain public buildings and public works, damages by the recent
typhoons, floods, and other calamities.
Executive Order No. 564, dated November 10, 1952, also declared as its cause that the
Congress had failed in its last special session to provide funds for relief to the victims of
the recent typhoons, floods, draughts, earthquakes, etc.
It will be seen that the authority given by the Constitution to the Congress to delegate
certain legislative powers to the President was for a limited time. This was naturally so,
because an emergency cannot be of a long, unlimited or indefinite duration, for
otherwise it would not be an emergency.
Commonwealth Act No. 671 was passed on December 16, 1941. Executive Orders Nos.
545 and 546 were issued on November 10, 1952; that is, almost eleven years from the
date Commonwealth Act No. 671 was enacted. It is hard to conceive of an emergency
which has lasted almost eleven years.
The emergency contemplated by Commonwealth Act No. 671 was not same emergency
invoked in said executive orders, for, whereas Commonwealth Act No. 671 refers to the
emergency created by the existence of war between the United States and other
countries of Europe involving the Philippines, the executive order above-mentioned deal
with the damages wrought by the recent typhoons, earthquakes, volcanic eruptions, etc.,
and the failure of the Congress to provide funds for the repair and reconstruction of
damaged buildings and public works and the relief of the victims. The recent typhoons,
earthquakes, volcanic eruptions, etc. and the failure of the Congress to provide for them

have nothing to do with the war mentioned in said Commonwealth Act No. 671 and are
not the consequences of said war.
For the foregoing reasons, I concur in the majority opinion.

MONTEMAYOR, J., concurring and dissenting:

With the majority I agree that Executive Order Nos. 545 and 546, the first
appropriating P37,850,500 for urgent and essential public works, the second
appropriating P11,367,600 for relief are invalid, for the same reasons given by me in
dissenting opinion in cases G.R. No. L-2044,* L-2756,* and L-3054-56* commonly called
the "Emergency Cases of 1949", namely, that the legislature had already withdrawn from
the realm of presidential legislation or regulation under the emergency powers to
delegate by Commonwealth Act No. 671, the power to appropriate funds for the
expenses of the Government and for other purposes.
To me, however, the more important point involved in the present case is not the validity
of the two executive orders but rather the question of whether or not Commonwealth Act
No. 671 is still has emergency powers under said Act. And the parties herein, not
excluding the Chief Executive and the Legislature, it is to be presumed, want this point
definitely settled. So, I proposed to devote the considerations in this modest dissenting
opinion to this matter. The majority opinion states that in the emergency cases of 1949,
five members of this tribunal held that Commonwealth Act 671 was still in force. Mr.
Justice Padilla concurred in that opinion. With the concurrence of Mr. Justice Torres in my
concurring and dissenting opinion I also held that Commonwealth Act. 671 was still in
force. Mr. Justice Bengzon in his dissenting opinion in those emergency cases said that
although he was favorably impressed by the reasons set forth by Mr. Justice Reyes and
particular point the existence or non-existence of the emergency powers of the
President. So that even if we do not include Mr. Justice Bengzon, we can correctly say
that four justices voted in those emergency cases in favor of the existence of emergency
powers of the President.
In those emergency cases of 1949 I prepared a more or less extensive opinion in support
of the theory that Commonwealth Act No. 671 was still in force. I wish to embody said
opinion in the present opinion by reference, without prejudice to reproducing portions of
the same.
I agree with the majority that Commonwealth Act 671 was to be in force only for a
limited period of time, otherwise be unconstitutional; and that limited period was coextensive with the existence of the emergency. But I emphatically disagree with the
majority when it says:

That emergency, which naturally terminated upon the ending of the last world war, was
contemplated by the members of the National Assembly on the foresight that the actual
state of war would prevent it fromholding its next regular session.
As regards the majority's view that emergency Act 671 because due to war delegated by
Commonwealth Act 671 because due to emergency the National Assembly would be
unable to hold its regular session, I discussed and I hope I refused this theory in my
dissenting opinion in the 1949 emergency cases and I take the liberty of quoting a
pertinent portion thereof:
I believe that, as I already had occasion to state though incidentally, the real reason for
the delegation of legislative powers to the Chief Executive is not only because the
Legislature is unable to meet due to a national emergency but also because although it
could and does actually meet, whether in regular or special session, it is not in a position
and able to cope with the problems brought about by and raising from the emergency,
problems which require urgent and immediate action. Certainly, one man can act more
quickly and expeditiously than about one hundred members of the Legislature, especially
when they are divided into Legislative chambers. That is why in times of emergency,
much as we in democratic countries dislike the system or idea of dictatorship, we hear of
food dictator, fuel dictator, transportations which ordinarily belong to a council or board
or to a legislative body, are entrusted under certain limitations to one single official or
individual.
Supposing that during a national emergency and while the legislature is in session, the
legislature woke up one morning to find that there was extreme scarcity of imported
foods, fuel, building materials, equipment required in agriculture and industry, etc.,
because of a monopoly, hoarding, injurious speculations, manipulations, private controls
and profiteering, or that there were widespread lockouts and strikes paralyzing
transportation, commerce and industry, or rampant espionage or sabotage endangering
the very life security of the necessary legislation in order to cope with the situation and
pass the necessary emergency measures?
We are all familiar with the practice and routine of enacting laws. A bill is introduced in
the Legislature; it is referred to the corresponding committee, it is studied by said
committee, which in some cases holds public hearings; the committee discusses the bill
and sometimes introduces amendments; if the bill is not killed in the committee or
shelved, it is submitted to the chamber for study, discussion, and possible amendment
by all the members; it is finally voted and if approved, it is sent to the other house where
it undergoes the same process; and if it is finally approved by both houses of Congress, it
is submitted to the Chief Executive for his study and approval or veto. All this may
consume weeks or months as a result of which, ordinarily, many bills finally approved by
Congress could be sent to the President for approval or veto only after adjournment of
the legislative session. And we should not overlook the fact that in some cases for lack of
time or due to disagreement among the legislators or between the two houses of

Congress, important pieces of legislations like the annual appropriation law for the fiscal
year 1949-50, appropriation founds for the elections to be held in November, 1949,
contained in Executive Orders Nos. 225 and 226, involved in the present cases, and the
proposed amendment to the Election Code etc., have not been passed by Congress in its
last session ending last May, 1949, which session lasted one hundred days. If we were to
rely on the ordinary process of legislation to meet a national emergency, by the time the
necessary and needed law is passed, the situation sought to be remedied, or the
problem sought to be solved may have become disastrous or ended in calamity or gone
beyond legislations or any remedy. It would be too late. It would be like locking the stable
door after the horse had been stolen.
Now, for some retrospect, The Philippine National Assembly delegated its legislative
powers because of the existence of a state of national emergency as early as the year
1939. During it second special session of that year, it promulgated the following laws:
(Commonwealth Acts Nos. 494, 496, 498 and 500).
At that time, September, 1939, the second world war was only in Europe, quite far from
the Philippines and had just begun. There was then no likelihood of the Philippines being
involved in the war. In fact, the Philippines did not get involved in the war until more than
two years, in December, 1941. The National Assembly was then free to meet either in
regular or special sessions to enact legislation to meet the emergency. In fact, it met in
regular session in January, 1940 lasting 100 days, excluding the several special sessions
held during those two years. And yet the Assembly delegated legislative powers to the
President under section 26, Article VI of the Constitution. This is clear proof that, contrary
to the theory of the majority opinion, the legislature delegated legislative powers to the
President even when it could meet and it actually met several times.
After passing the Acts just mentioned delegating legislative powers to the President, the
Assembly in its fourth special session on August 19, 1940 repeated and reiterated this
practice and policy by passing Commonwealth Act No. 600 delegating additional and
more extensive legislative powers to the President in spite of the fact that the war was
still far away in Europe and there was no danger or prospect of involving the Philippines,
and the legislature was still free to meet as in fact it met again in regular session in
January, 1941. During its regular session begun that month and year, instead of stopping
or ending the legislative powers delegated to the President, because according to the
theory of the majority opinion, the Legislature was able to meet, the Assembly allowed
them to continue by passing Commonwealth Act No. 620 which merely amended section
1 of Commonwealth Act No. 600. I repeat that all this, far from supporting the view of the
President only because it could not meet, fairly and squarely refutes said view.
As to the proposition in the majority opinion that the emergency terminated with the war.
I am afraid the majority confuses war with emergency. They are two different and
separate things and events. Even the Constitution (Article VI, section 26) which for

purposes of reference is reproduced below, considers war and emergency as separate

and distinct:
SEC. 26. In times of war or other national emergency, the Congress may by law authorize
the President, for a limited period and subject to such restrictions as it may prescribe, to
promulgate rules and regulations to carry out a declared national policy.
There maybe a national emergency without war. And so, when on the occasion of a war,
a national emergency ensues and is recognized and declared by Congress, said
emergency may continue even if and when the war that started it is ended. War may and
generally create an emergency, but the emergency thus created does not necessarily
end with the war. A war may last only several weeks or months but with the use of the
modern weapons of warfare it may cause such devastation, desolation and national
suffering and collapse not only economically but socially and morally that the resulting
emergency may last for years. A destructive flood, tornado, tidal wave or volcanic
eruption may last only minutes or hours but the destruction that it leaves in its wake
may take weeks, months or years to repair, and the emergency thereby created may last
that long.
To bolster its contention the majority cites President Quezon's book "The Good Fight" pp.
204-205, wherein he speaks in time of war. I am afraid the citation proves nothing. He
merely said that the delegation was made intime of war. He did not say or mean that the
powers thus delegated were to be exercised only during the war. The main thing to be
considered and which calls for the exercise of the powers delegated is the emergency,
not the war that merely started or caused it. Commonwealth Act 671 itself in its section
2 says that the President will exercise his emergency powers during the existence of the
emergency. It does not say during the existence of the war.
President Quezon is hardly the authority that the majority should quote to support its
theory that emergency powers are given to the Chief Executive just because due to the
emergency, the Legislature is unable to meet. It was President Quezon who was given
emergency powers as early as 1939 under Commonwealth Acts Nos. 494, 496, 498 and
500 when the war was still far away in Europe and we were not yet involved and the
National Assembly could still meet and actually did meet several times in two years,
1940 and 1941, in regular and special sessions, and during those two years when the
National Assembly was holding its sessions, he was exercising his emergency powers and
enacting legislation by means of Executive Orders. Evidently, he did not see any
incompatibility in the grant and exercise of emergency powers with the ability of the
Legislature to meet and in actually holding session, this, all contrary to the majority's
contention.
Hostilities incident to the last Pacific war have long ended since 1945; it does not
however necessarily mean that the emergency resulting from said war has ceased and
that the disruption of trade dislocation of the economy of the country, the destruction of

public and private property, the breakdown in honesty and morality and the collapse of
peace and order, all resulting from that war have disappeared, and that everything has
returned to normalcy. In support of its theory that the emergency has ceased the
majority makes reference to Republic Act 342 wherein it is stated that conditions have
gradually returned to normal. But this same law clearly says that the emergency created
by the last war as regards war sufferers who have not received any relief for the loss or
destruction resulting from the war, still exists and so postpones payment of their debts
or monetary obligations contracted before the war, for a period of eight (8) years from
and after the settlement of their war damage claims by the United States-Philippine War
Damage Commission. In other words, the Congress of the Philippines believes that at
least as regards war sufferers, the emergency resulting from the last war still exists, and
will exists not only up to the time that their war damage claims are paid but for a period
of eight years thereafter. This hardly supports the majority's theory that everything is
normal, and that there no longer is any emergency because the war has long ended.
In connection with this question of whether or not there is still an emergency resulting
from the last war and whether or not things and conditions have returned to normal, I
permit myself to reproduce a portion of my dissenting opinion in the 1949 emergency
cases:
The last logical question that one will naturally ask is: has the emergency resulting from
the war passed or does it still exists? This is a fair and decisive question inasmuch as the
existence of the emergency is, in my opinion, the test and the only basis of the operation
or cessation of Act 671. The existence or non-existence of the emergency resulting from
the war is question of fact. It is based on conditions obtaining among the people and in
the country and perhaps even near and around it. It is a highly controversial question on
which people may honestly differ. There are those who in all good faith believe and claim
that conditions have returned to normal; that the people have now enough to eat,
sometime even more than they had before the war; that people nowadays especially in
the cities are better nourished and clothed and transported and better compensated for
their labor, and that the President himself in his speeches, chats and messages had
assured the public that normal times have returned, that the problem of peace and order
had been solved, that the finances of the Government and the national economy are
sound, and that there is an adequate food supply. It is, therefore, claimed that there is no
longer any emergency resulting from the war.
On the other hand, it is asserted with equal vehemence in the opposite camp that
conditions are still far from normal; that the picture painted by the President in cheerful
and reassuring colors is based on over optimism and, as to be expected, calculated to
show in bold relief the achievements of the administration, and so should be considered
with some allowance; that we are now importing more rice than before the war for the
reason that many rice farms are idle because of the farmers fear of or interference by
dissidents; that the problem of peace and order is far from solved as shown by the

frequent hold-ups, kidnappings, lootings and killing and organized banditry not only in
Luzon but also in the Visayas and Mindanao; that whereas before the war, the
Constabulary force consisting of only about 6,000 officers and men could provide
complete protection to life and property was adequate in all respects to enforce peace
and order, now this Constabulary enlarged to about 20,000 men, provided with modern
weapons and equipment and with the aid of thousands of civilian guards and of the
Philippine Army and Air Force cannot solve the peace and order problem; that the
dissidents who are well-organized, armed and disciplined even attack and sack towns
and sometimes openly defy and engage the armed Government forces; that as long as
more than 100,000 firearms are loose and in the hands of irresponsible parties, not
excluding the seemingly regular mysterious supply to them of additional firearms and
ammunitions, there can be no peace and order; and as to the barrio folk in Central Luzon
and now, even in provinces bordering Central Luzon whose parents and relatives had
been killed by dissidents, whose women folk had been outraged by the same elements,
whose homes had been looted and burned and whose very lives had been subjected to
constant terror and peril, compelling them to leave their homes and their farms and
evacuate to and be concentrated in the poblaciones to live there in utter discomfort and
privation, it is said that it would be difficult to convince these unfortunate people that
normalcy has returned and that there is no longer emergency resulting from the war. To
further support the claim of the existence of an emergency, the menace of communism
not only at home, particularly in Central Luzon but from abroad, especially China, is
invoked. And it is asserted that all this is a result of the war.
To the above are those who claim and will add that since 1949 up to the present time,
although rehabilitation progressed substantially, there are still many people who have
not achieved rehabilitation. The economy of the country is still far from what it was
before the war. It is being bolstered temporarily by the millions of pesos being received
by war veterans, their widows and children in the form of pensions or insurance; by the
millions being spent by the Mutual Security Agent (MSA) in the Philippines to rehabilitate
agriculture, industry, commerce, etc.; by the millions being sent here by the United
States in war materials, equipment, etc. in relation with the United States military aid to
the Philippines, and with the enforcement of the Import Control, Exchange Control and
other laws all of a temporary nature intended to temper and minimize the financial and
economic crisis which otherwise would overwhelm the country. The coastwise trade is
being maintained with ships originally built for and used during the war, converted
provisionally into inter-island freight and passenger boats; and land transportation
specially in the centers of population like Manila is operated in great measure with
vehicles (used jeeps) obtained from the Surplus Property Commission. Everything is on a
provisional basis. What will happen after these boats and motor vehicles wear out and
become junk? Could they be readily replaced by their owners or operators? Sunken boats
will clutter the harbors of the country particularly Manila Bay, constituting a menace to
navigation. Squatters in great number are still a problem, claiming that they have
nowhere to go to live. Government and private buildings, and churches are still ruins,

tenanted by squatters. Intramuros, the Walled City, in the very City of Manila is a living
example of non-rehabilitation, with the hundreds and thousands of owners of lots therein
either financially unable to reconstruct or prohibited from rebuilding until the
Government has completed its plan about its reconstruction.
The War Damage Commission has paid war damage claims, it is true, but only a portion
of the amounts of the claims; and with prices as they are and the low purchasing power
of the peso, complete rehabilitation of war sufferers and substantial repair of the war
damage is impossible. The country is claiming reparations from Japan in the amount of
eight (8) billion dollars. It is not known if Japan can or will ever pay them and when. That
is why the legislature in Republic Act 342 wisely postponed payment of debts and
monetary obligations of sufferers, not up to the payment of their war damage claims, but
eight years thereafter, realizing perhaps that the amounts paid for war damage claims
are inadequate to achieve complete rehabilitation. So the Legislature says that as to
these war sufferers, the emergency still exists. And who has not suffered damage during
the last war?
We have not yet completely risen from the low level into which we had sunk during and
immediately after the war, in public and private morality, decency, honesty and personal
integrity as witnessed by the more or less rampant misappropriations and defalcations
by public officials, corruption and malfeasance, bribery, ten percentage, guerrilla
recognition and veterans benefits rackets, dynamite fishing, etc.
When the President makes his inspections, especially in the troubled area, he is escorted
by contingents of fully armed soldiers, sometimes with machine guns and tanks. High
officials of the Government using low plate numbers of their cars, use high plate
numbers called "security plate numbers" when travelling in the provinces to minimize
the danger hold-ups and attacks by dissidents who are said to be after the high
government officials. People are advised not to travel at night over certain provincial
highways even national roads.
Peace and order still leaves much to be desired. In 1949 when the emergency cases
were decided, five justices held the opinion that there no longer was any emergency. But
conditions of peace and order actually worsened thereafter. There was an uprising or
rebellion in Batangas by Medrano and his men after November, 1949, and it is said that
unable to cope with the uprising and bring the rebels to justice the Government was
compelled to offer them amnesty. Since 1949 the HUKS and the communists became
stronger, in fact became so strong that they actually threatened the existence of the
Government which was forced to increase its army and wage campaigns not only in the
field but also in centers of population where it was able to arrest and prosecute those
whom it claims to be high officials of the POLITBURO. In Sulu, the Government waged an
intensive campaign against Kamlon and his men spending several million pesos and
losing quite a number of soldiers and officers, with no decisive result, and it was only
after Kamlon and his men had been promised executive clemency that they surrendered

to the authorities, stood trial, were convicted and promptly pardoned. Some of Kamlon's
relatives with their followers are said to be still in the mountains and forests and refuse
to surrender unless offered the same conditions. Not long ago several hundred Chinese
said to be dangerous communists were rounded up in several towns and cities in the
Philippines. About two or three weeks ago, according to the papers the army authorities
said that up to that time they had through confiscation, capture, surrender and purchase,
been able to collect about 40,000 loose firearms but that there still remained about
100,000 more to be accounted for. The other day the Provincial Commander of Lanao
said that he is faced with the problem of eliminating or capturing ten outlaw bands in the
province with about 700 followers, The hold-ups, massacres, raids and ambushes in
different provinces, even near Manila have not ceased. As long as over 100,000 loose
firearms are still in the hands of lawless or irresponsible persons, there can be no
complete peace and order in the country. Before the war about 5,000 Constabulary
soldiers and officers with an appropriation of about three million pesos was able to
maintain peace and order throughout the country. The Armed Forces of the Philippines
including the Constabulary of the country in 1949 numbered 37,000. Realizing that this
number was unable to maintain peace and order it was increased substantially so that in
1952, it went up to 56,000 men and officers with an appropriation of over P151,000,000,
an amount by far larger than the appropriation for the Department of Public Schools
which gives instruction and education to school children and students. With the help of
thousands of temporary and special policemen, civilian guards and commandos the army
and the constabulary are still battling dissidents, communists and bandits. Hundreds and
thousands of families from Central Luzon, particularly Pampanga are still marooned in
Manila, Baguio and other centers of population, unable and afraid to return to their
homes, and a number of them more fearless and optimistic, who thought that peace and
order in Central Luzon had been restored, returned to their homes there but were
kidnapped and liquidate. Farmers harvesting rice in some barrios in Central Luzon have
to be guarded by the armed forces so as not to be molested by the dissidents. Only
yesterday the papers carried the news that 14,000 soldiers and officers have started an
intensive campaign in Central and Southern Luzon against lawless elements. All this,
many people still honestly believe.
Considering all this, one may well doubt that peace and order in the country has gone
back to normal, and that there is no longer any emergency. And this emergency clearly is
the result of the last war. The HUKS movement was born during that war and the
hundreds of thousands of loose firearms were also released and distributed
indiscriminately during that war. Lawlessness and banditry always follow a war, and it
takes several years thereafter to restore peace and order. In the face of all the foregoing
which may regard as facts and realities, the majority without any data in the form of
evidence received at a hearing or trial, but based perhaps on judicial notice and personal
knowledge and observation holds that everything has gone back to normal and that no
longer is any emergency.

Personally, I cannot say that the emergency resulting from the last war still exists, but
neither am I prepared to say that it no longer exists. It is such a controversial question
upon which people may not and could honestly differ. There are authorities to the effect
that the existence or non-existence of an emergency calling for the exercise of
emergency powers is a political question which can be decided only by the political
department, and that the courts are not called upon, neither are they authorized to pass
upon the question. This was one of the views maintained in the concurring and
dissenting opinion of Mr. Justice Alex. Reyes concurred in by Mr. Justice Padilla in the
1949 emergency cases. But assuming for a moment that this court had the authority to
pass upon this point and to bind the executive and legislative department with is finding,
I believe that we have no data or evidence on which to base our finding. If the findings of
courts on questions of facts are given authority or binding effect it is because those
findings are based on facts established during the hearing by means of evidence
adduced by both parties who given the right to present, cross-examine and impeach
witnesses, object to questions and object to the admission of evidence in general. In the
present case no such hearing or trial for the reception of evidence was ever had.
Consequently, in my opinion we are not warranted in finding that there still exist or there
no longer exists any emergency resulting from the last Pacific War.
It is the Legislature that granted or delegated the emergency powers or the Chief
Executive to whom the delegation was made that decide whether or not the emergency
continues. There has been lack of agreement between the two departments on this point
since the last session of the Legislature. While the President up to a few weeks ago has
been exercising his emergency still existed, because Commonwealth Act 671 provides
that he may exercise those powers only during the emergency, the Legislature has
passed House Bill No. 727 in an attempt to withdraw said emergency powers on the
theory that the emergency has ceased. To end and definitely settle this disagreement,
we are called upon to render decision.
In my dissenting opinion in the 1949 emergency cases I held that the President still had
the emergency powers delegated to him under Commonwealth Act 671. Three justices of
this court held that same view as I did excluding one Justice who was favorably
impressed with that view though he preferred not to vote directly upon it. Today, tho it
seems in the tribunal, I am the lone dissenter on this proposition and so mine is reduced
so to speak to the "voice in the wilderness," I still maintain the same view, and there is
reason to believe that there are many others who subscribe to the same opinion. The
Legislature in passing during its last session House Bill No. 727 repealing the latest
Commonwealth Acts including Commonwealth Act No. 671, delegating emergency
powers to the Chief Executive, must have believed and been satisfied that the President
still had those emergency powers otherwise, there would have been no need of going to
all the trouble and the tedious process of approving a bill withdrawing said powers from
him. There would have been no necessity for the Legislature to repeal a law which it

believed to be no longer operative. There is no reason or point in withdrawing something

that is not there or that no longer exists.
In previous sessions of the Legislature after Liberation there had been talk or move to
enact legislation withdrawing said emergency powers by presumably the atmosphere
was not favorable or the necessary votes to pass the corresponding measure was not
available. It was in the last session of the Legislature that a bill was finally approved by
both House of Congress. The Chief Executive, however, vetoed it and it was not repassed
over his veto. In spite of this, did the Legislature succeed in withdrawing his emergency
powers? The majority through a process of interpretation which to me, is strained and
unwarranted, voted in the affirmative. I disagree. We should not forget that in House Bill
No. 727 the Legislature was not only expressing its wish and desire to withdraw the
emergency powers of the President. It wanted to repeal the law or laws delegating said
emergency powers. A law can be repealed only by another law. Consequently, since
House Bill No 727 did not become a law because of the veto of the President, it could not
repeal the law or laws which it sought to abrogate.
I agree with the majority and also with Mr. Justice Padilla that the emergency powers
delegated to the President could be withdrawn by means of a mere concurrent
resolution. It is true that to delegate emergency powers under section 26, Art. VI of the
Constitution, a law is necessary. It is because the Constitution expressly says so.
Moreover, it is not only convenient but equally necessary that a law should be passed for
that purpose in whose approval the Chief Executive takes part, because after all he is the
one to whom the delegation is made and who would later exercise the powers so
delegated. If he believes that there is no emergency or that even if there were, it is not
of sufficient magnitude and seriousness as to call for the delegation and the exercise of
emergency powers, he may veto the bill of delegation and that would be the end of it. It
is far from likely that the bill would be repassed over his veto because it would be futile
and pointless to make delegation of powers to an unwilling delegate who later would
decline and refuse to exercise them. But if he approves the bill of delegation and it
becomes a law then the delegation is complete, successful and effective for the exercise
of the powers by the President would be assured. Not so with the withdrawal of the
powers delegated. The Constitution does not say or require a law for such withdrawal
and it may be withdrawn at any time even when the emergency which motivated said
delegation still exists. In such a case, the Legislature is the sole judge as to the necessity
and advisability of the continuance or cessation of the exercise of emergency powers by
its delegate, the President.
But how did the Legislature go about his attempt to withdraw the President's emergency
powers? It had the choice of approving a mere concurrent resolution or passing a bill.
Both houses of the Legislature are graced with the presence of constitutional lawyers
and legal luminaries for whom I have great respect. They must have known that a
concurrent resolution was sufficient for the purpose. Atty. Recto, counsel for the

petitioners and member of the Senate knew it and in his oral argument before this
Tribunal, he said that the Legislature merely made a mistake because it could have just
as well approved a concurrent resolution instead of passing a regular bill.
But to me, it is highly possible and not improbable that the Legislature knowing that it
could withdraw the President's emergency powers by means of a concurrent resolution
or by means of a law, deliberately and intentionally chose the latter for reasons of its
own. The mistake committed by the Legislature if any was that perhaps it believed that
the Chief Executive would not veto the bill; but veto it, he did and I am afraid the
Legislature has to abide by the consequences. The Legislature knew that in passing the
bill and in submitting it to the Chief Executive as required by the Constitution, it had to
be approved by him either with his signature or by letting it become a law without any
action on his part. He may also veto it. This was a hazard and a risk which the Legislature
assumed and of which it must have been perfectly aware. But they are willing to take the
risk. Another possible reason why the Legislature chose to pass a bill instead of a mere
concurrent resolution was that it sought and wanted the intervention and participation of
the Chief Executive himself in the withdrawal of the emergency powers so that he would
also share in the credit and the responsibility for said withdrawal. If he approved the bill
there would be complete understanding between the two departments of the
Government, and no hard feelings. Another reason not entirely improbable is that the
decision to withdraw the emergency powers from the Chief Executive was a compromise
arrangement between the two parties in the Legislature. We must remember that our
government is run on the basis of the party system. The President at present happens to
be the head of one of the two major parties in the Legislature. His party is in the minority
in the Senate by two or three votes but is in the majority by quite a number of votes in
the lower house. It is not conceivable that his party men in the two houses consented
and agreed to have the emergency powers withdrawn provided that the Chief Executive
consented to and approved of it. And so, they agreed to pass the bill for this purpose, but
that they would not agree to concurrent resolution where the Chief Executive would be
ignored and his emergency powers summarily withdrawn without consultation and
without his approval. This last view is in some measure supported and borne out by the
attitude of the Legislature when the House bill No. 727 was vetoed. The members of
Congress knew that the remedy was to override his veto if they wanted to. The Senate
approved the bill unanimously and judging from that unanimity, at least in the upper
house the 2/3 votes necessary to override the veto was available. But the fact is that the
Legislature did not only fail to override the veto but it did not even make any attempt
whatsoever to repass it over the President's veto. Added to this, it was a fact that, and
this is by no means unimportant, in the month of September, 1952, that is, about two
months after the veto of the bill, about sixty-seven Congressman and two Senators filed
a petition addressed to the President in which they not only recognized the existence of
his emergency powers but even asked him to exercise the same for the purpose of
releasing funds for public works projects. Excluding the two Senators, the signers
constituted more than the majority of the membership of the lower house. In other

words, after the veto of the bill and after a failure whether intentionally or otherwise of
the Legislative to override the veto, the majority of all the members of the lower house
believed that Congress failed to withdraw the President's emergency powers and
consequently, believed that he still had those powers, and was even requested to
exercise the same. And on November 8, 1952, the lower house of the Legislature passed
Resolution No. 99 strongly urging the President to exercise his emergency powers and
authorize the expenditure of funds for the relief to provinces visited by typhoons and
floods and other calamities and for other urgent essential public works projects. This
official action of the Lower House shows that one of the two Houses of Congress officially
believes that the emergency powers of the President had not been withdrawn. One view
of this action or inaction of the Legislature on the veto was that it could not get the 2/3
votes in both houses to override the veto because some members who voted in favor of
the House Bill No. 727, particularly members of the party of the Chief Executive vetoing
the bill and so either approved the stand taken by him or acquiesced in it and took it in
good grace and let the matter rest, at least for the time being.
In the foregoing considerations on this point are true or could have been true, then there
would absolutely be no reason or warrant for the majority's interpreting and considering
House Bill No. 727 as a concurrent resolution sufficient to repeal the several laws
mentioned in the bill and withdraw the emergency powers of the President. In effect, the
majority decided to think for the Legislature and to do for the latter what it failed or
perhaps did not want to do, namely, to withdraw the emergency powers by means of a
concurrent resolution. I repeat that both houses of Congress with the legal talent and
constitutional authorities, not only among its distinguished members but also among its
legal experts and assistants, did neither wish nor intend to approve a mere concurrent
resolution but deliberately and intentionally chose to pass a bill, House Bill No. 727
with full realization of the possibilities and chances of its approval or rejection by the
Chief Executive to whom it was submitted. Under these circumstances, the action of the
majority is practically telling the Legislature what it should have one and in finally doing
it for said Legislature in order to most easily achieve its purpose or wish might be
regarded by some as not only unwarranted but officious and uncalled for.
In view of the foregoing reasons, I beg to disagree with the majority.

13. AMPATUAN V PUNO

ATU ZALDY UY AMPATUAN, G.R. No. 190259

ANSARUDDIN ADIONG, REGIE

SAHALI-GENERALE
Petitioners, Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
- versus - BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.
HON. RONALDO PUNO, in his capacity
as Secretary of the Department of Interior
and Local Government and alter-ego of
President Gloria Macapagal-Arroyo,
and anyone acting in his stead and on
behalf of the President of the Philippines,
ARMED FORCES OF THE PHILIPPINES
(AFP), or any of their units operating in

the Autonomous Region in Muslim

Mindanao (ARMM), and PHILIPPINE
NATIONAL POLICE, or any of their Promulgated:
units operating in ARMM,
Respondents. June 7, 2011

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

DECISION

ABAD, J.:

On November 24, 2009, the day after the gruesome massacre of 57 men and women,
including some news reporters, then President Gloria Macapagal-Arroyo issued
Proclamation 1946,[1] placing the Provinces of Maguindanao and Sultan Kudarat and the
City of Cotabato under a state of emergency. She directed the Armed Forces of the
Philippines (AFP) and the Philippine National Police (PNP) to undertake such measures as
may be allowed by the Constitution and by law to prevent and suppress all incidents of
lawless violence in the named places.

Three days later or on November 27, President Arroyo also issued Administrative Order
273 (AO 273)[2] transferring supervision of the Autonomous Region of Muslim Mindanao
(ARMM) from the Office of the President to the Department of Interior and Local
Government (DILG). But, due to issues raised over the terminology used in AO 273, the
President issued Administrative Order 273-A (AO 273-A) amending the former, by
delegating instead of transferring supervision of the ARMM to the DILG.[3]

Claiming that the Presidents issuances encroached on the ARMMs autonomy, petitioners
Datu Zaldy Uy Ampatuan, Ansaruddin Adiong, and Regie Sahali-Generale, all ARMM
officials,[4] filed this petition for prohibition under Rule 65. They alleged that the
proclamation and the orders empowered the DILG Secretary to take over ARMMs
operations and seize the regional governments powers, in violation of the principle of
local autonomy under Republic Act 9054 (also known as the Expanded ARMM Act) and
the Constitution. The President gave the DILG Secretary the power to exercise, not
merely administrative supervision, but control over the ARMM since the latter could
suspend ARMM officials and replace them.[5]

Petitioner ARMM officials claimed that the President had no factual basis for declaring a
state of emergency, especially in the Province of Sultan Kudarat and the City of
Cotabato, where no critical violent incidents occurred. The deployment of troops and the
taking over of the ARMM constitutes an invalid exercise of the Presidents emergency
powers.[6] Petitioners asked that Proclamation 1946 as well as AOs 273 and 273-A be
declared unconstitutional and that respondents DILG Secretary, the AFP, and the PNP be
enjoined from implementing them.

In its comment for the respondents,[7] the Office of the Solicitor General (OSG) insisted
that the President issued Proclamation 1946, not to deprive the ARMM of its autonomy,
but to restore peace and order in subject places.[8] She issued the proclamation
pursuant to her calling out power[9] as Commander-in-Chief under the first sentence of
Section 18, Article VII of the Constitution. The determination of the need to exercise this
power rests solely on her wisdom.[10] She must use her judgment based on intelligence
reports and such best information as are available to her to call out the armed forces to
suppress and prevent lawless violence wherever and whenever these reared their ugly
heads.
On the other hand, the President merely delegated through AOs 273 and 273-A her
supervisory powers over the ARMM to the DILG Secretary who was her alter ego any way.
These orders did not authorize a take over of the ARMM. They did not give him blanket
authority to suspend or replace ARMM officials.[11] The delegation was necessary to
facilitate the investigation of the mass killings.[12] Further, the assailed proclamation
and administrative orders did not provide for the exercise of emergency powers.[13]

Although normalcy has in the meantime returned to the places subject of this petition, it
might be relevant to rule on the issues raised in this petition since some acts done
pursuant to Proclamation 1946 and AOs 273 and 273-A could impact on the

administrative and criminal cases that the government subsequently filed against those
believed affected by such proclamation and orders.

The Issues Presented

The issues presented in this case are:

1. Whether or not Proclamation 1946 and AOs 273 and 273-A violate the principle of local
autonomy under Section 16, Article X of the Constitution, and Section 1, Article V of the
Expanded ARMM Organic Act;

2. Whether or not President Arroyo invalidly exercised emergency powers when she
called out the AFP and the PNP to prevent and suppress all incidents of lawless violence
in Maguindanao, Sultan Kudarat, and Cotabato City; and

3. Whether or not the President had factual bases for her actions.

The Rulings of the Court

We dismiss the petition.

One. The claim of petitioners that the subject proclamation and administrative orders
violate the principle of local autonomy is anchored on the allegation that, through them,
the President authorized the DILG Secretary to take over the operations of the ARMM and
assume direct governmental powers over the region.

But, in the first place, the DILG Secretary did not take over control of the powers of the
ARMM. After law enforcement agents took respondent Governor of ARMM into custody for
alleged complicity in the Maguindanao massacre, the ARMM Vice-Governor, petitioner
Ansaruddin Adiong, assumed the vacated post on December 10, 2009 pursuant to the
rule on succession found in Article VII, Section 12,[14] of RA 9054. In turn, Acting
Governor Adiong named the then Speaker of the ARMM Regional Assembly, petitioner
Sahali-Generale, Acting ARMM Vice-Governor.[15] In short, the DILG Secretary did not
take over the administration or operations of the ARMM.

Two. Petitioners contend that the President unlawfully exercised emergency powers when
she ordered the deployment of AFP and PNP personnel in the places mentioned in the
proclamation.[16] But such deployment is not by itself an exercise of emergency powers
as understood under Section 23 (2), Article VI of the Constitution, which provides:

SECTION 23. x x x (2) In times of war or other national emergency, the Congress may, by
law, authorize the President, for a limited period and subject to such restrictions as it
may prescribe, to exercise powers necessary and proper to carry out a declared national
policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease
upon the next adjournment thereof.

The President did not proclaim a national emergency, only a state of emergency in the
three places mentioned. And she did not act pursuant to any law enacted by Congress
that authorized her to exercise extraordinary powers. The calling out of the armed forces
to prevent or suppress lawless violence in such places is a power that the Constitution
directly vests in the President. She did not need a congressional authority to exercise the
same.

Three. The Presidents call on the armed forces to prevent or suppress lawless violence
springs from the power vested in her under Section 18, Article VII of the Constitution,
which provides.[17]

SECTION 18. The President shall be the Commander-in-Chief of all armed forces of the
Philippines and whenever it becomes necessary, he may call out such armed forces to
prevent or suppress lawless violence, invasion or rebellion. x x x

While it is true that the Court may inquire into the factual bases for the Presidents
exercise of the above power,[18] it would generally defer to her judgment on the matter.
As the Court acknowledged in Integrated Bar of the Philippines v. Hon. Zamora,[19] it is
clearly to the President that the Constitution entrusts the determination of the need for
calling out the armed forces to prevent and suppress lawless violence.Unless it is shown
that such determination was attended by grave abuse of discretion, the Court will accord
respect to the Presidents judgment. Thus, the Court said:

If the petitioner fails, by way of proof, to support the assertion that the President acted
without factual basis, then this Court cannot undertake an independent investigation
beyond the pleadings. The factual necessity of calling out the armed forces is not easily
quantifiable and cannot be objectively established since matters considered for
satisfying the same is a combination of several factors which are not always accessible
to the courts. Besides the absence of textual standards that the court may use to judge
necessity, information necessary to arrive at such judgment might also prove
unmanageable for the courts. Certain pertinent information might be difficult to verify, or
wholly unavailable to the courts. In many instances, the evidence upon which the
President might decide that there is a need to call out the armed forces may be of a
nature not constituting technical proof.

On the other hand, the President, as Commander-in-Chief has a vast intelligence network
to gather information, some of which may be classified as highly confidential or affecting
the security of the state. In the exercise of the power to call, on-the-spot decisions may
be imperatively necessary in emergency situations to avert great loss of human lives and
mass destruction of property. Indeed, the decision to call out the military to prevent or
suppress lawless violence must be done swiftly and decisively if it were to have any
effect at all. x x x.[20]

Here, petitioners failed to show that the declaration of a state of emergency in the
Provinces of Maguindanao, Sultan Kudarat and Cotabato City, as well as the Presidents
exercise of the calling out power had no factual basis. They simply alleged that, since not
all areas under the ARMM were placed under a state of emergency, it follows that the
take over of the entire ARMM by the DILG Secretary had no basis too.[21]

But, apart from the fact that there was no such take over to begin with, the OSG also
clearly explained the factual bases for the Presidents decision to call out the armed
forces, as follows:

The Ampatuan and Mangudadatu clans are prominent families engaged in the political
control of Maguindanao. It is also a known fact that both families have an arsenal of
armed followers who hold elective positions in various parts of the ARMM and the rest of
Mindanao.

Considering the fact that the principal victims of the brutal bloodshed are members of
the Mangudadatu family and the main perpetrators of the brutal killings are members

and followers of the Ampatuan family, both the military and police had to prepare for and
prevent reported retaliatory actions from the Mangudadatu clan and additional offensive
measures from the Ampatuan clan.

xxxx

The Ampatuan forces are estimated to be approximately two thousand four hundred
(2,400) persons, equipped with about two thousand (2,000) firearms, about four hundred
(400) of which have been accounted for. x x x

As for the Mangudadatus, they have an estimated one thousand eight hundred (1,800)
personnel, with about two hundred (200) firearms. x x x

Apart from their own personal forces, both clans have Special Civilian Auxiliary Army
(SCAA) personnel who support them: about five hundred (500) for the Ampatuans and
three hundred (300) for the Mangudadatus.

What could be worse than the armed clash of two warring clans and their armed
supporters, especially in light of intelligence reports on the potential involvement of
rebel armed groups (RAGs).

One RAG was reported to have planned an attack on the forces of Datu Andal Ampatuan,
Sr. to show support and sympathy for the victims. The said attack shall worsen the ageold territorial dispute between the said RAG and the Ampatuan family.

xxxx

On the other hand, RAG faction which is based in Sultan Kudarat was reported to have
received three million pesos (P3,000,000.00) from Datu Andal Ampatuan, Sr. for the
procurement of ammunition. The said faction is a force to reckon with because the group
is well capable of launching a series of violent activities to divert the attention of the
people and the authorities away from the multiple murder case. x x x

In addition, two other factions of a RAG are likely to support the Mangudadatu family. The
Cotabato-based faction has the strength of about five hundred (500) persons and three
hundred seventy-two (372) firearms while the Sultan Kudarat-based faction has the
strength of about four hundred (400) persons and three hundred (300) firearms and was
reported to be moving towards Maguindanao to support the Mangudadatu clan in its
armed fight against the Ampatuans.[22]

In other words, the imminence of violence and anarchy at the time the President issued
Proclamation 1946 was too grave to ignore and she had to act to prevent further
bloodshed and hostilities in the places mentioned. Progress reports also indicated that
there was movement in these places of both high-powered firearms and armed men
sympathetic to the two clans.[23] Thus, to pacify the peoples fears and stabilize the
situation, the President had to take preventive action. She called out the armed forces to
control the proliferation of loose firearms and dismantle the armed groups that
continuously threatened the peace and security in the affected places.

Notably, the present administration of President Benigno Aquino III has not withdrawn
the declaration of a state of emergency under Proclamation 1946. It has been
reported[24] that the declaration would not be lifted soon because there is still a need to
disband private armies and confiscate loose firearms. Apparently, the presence of troops
in those places is still necessary to ease fear and tension among the citizenry and
prevent and suppress any violence that may still erupt, despite the passage of more than
a year from the time of the Maguindanao massacre.

Since petitioners are not able to demonstrate that the proclamation of state of
emergency in the subject places and the calling out of the armed forces to prevent or
suppress lawless violence there have clearly no factual bases, the Court must respect
the Presidents actions.

WHEREFORE, the petition is DISMISSED for lack of merit.

14.EASTERN SHIPPING V POEA

G.R. No. 76633 October 18, 1988

EASTERN SHIPPING LINES, INC., petitioner,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR AND
EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents.
Jimenea, Dala & Zaragoza Law Office for petitioner.
The Solicitor General for public respondent.
Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J.:
The private respondent in this case was awarded the sum of P192,000.00 by the
Philippine Overseas Employment Administration (POEA) for the death of her husband.
The decision is challenged by the petitioner on the principal ground that the POEA had
no jurisdiction over the case as the husband was not an overseas worker.
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive
Order No. 797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of
the vessel, argued that the complaint was cognizable not by the POEA but by the Social
Security System and should have been filed against the State Insurance Fund. The POEA
nevertheless assumed jurisdiction and after considering the position papers of the
parties ruled in favor of the complainant. The award consisted of P180,000.00 as death
benefits and P12,000.00 for burial expenses.
The petitioner immediately came to this Court, prompting the Solicitor General to move
for dismissal on the ground of non-exhaustion of administrative remedies.
Ordinarily, the decisions of the POEA should first be appealed to the National Labor
Relations Commission, on the theory inter alia that the agency should be given an
opportunity to correct the errors, if any, of its subordinates. This case comes under one
of the exceptions, however, as the questions the petitioner is raising are essentially
questions of law. 1 Moreover, the private respondent himself has not objected to the
petitioner's direct resort to this Court, observing that the usual procedure would delay
the disposition of the case to her prejudice.
The Philippine Overseas Employment Administration was created under Executive Order
No. 797, promulgated on May 1, 1982, to promote and monitor the overseas

employment of Filipinos and to protect their rights. It replaced the National Seamen
Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of
the said executive order, the POEA is vested with "original and exclusive jurisdiction over
all cases, including money claims, involving employee-employer relations arising out of
or by virtue of any law or contract involving Filipino contract workers, including seamen."
These cases, according to the 1985 Rules and Regulations on Overseas Employment
issued by the POEA, include "claims for death, disability and other benefits" arising out of
such employment. 2
The petitioner does not contend that Saco was not its employee or that the claim of his
widow is not compensable. What it does urge is that he was not an overseas worker but
a 'domestic employee and consequently his widow's claim should have been filed with
Social Security System, subject to appeal to the Employees Compensation Commission.
We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an
overseas employee of the petitioner at the time he met with the fatal accident in Japan
in 1985.
Under the 1985 Rules and Regulations on Overseas Employment, overseas employment
is defined as "employment of a worker outside the Philippines, including employment on
board vessels plying international waters, covered by a valid contract. 3 A contract
worker is described as "any person working or who has worked overseas under a valid
employment contract and shall include seamen" 4 or "any person working overseas or
who has been employed by another which may be a local employer, foreign employer,
principal or partner under a valid employment contract and shall include seamen." 5
These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while
under a contract of employment with the petitioner and alongside the petitioner's vessel,
the M/V Eastern Polaris, while berthed in a foreign country. 6
It is worth observing that the petitioner performed at least two acts which constitute
implied or tacit recognition of the nature of Saco's employment at the time of his death
in 1985. The first is its submission of its shipping articles to the POEA for processing,
formalization and approval in the exercise of its regulatory power over overseas
employment under Executive Order NO. 797. 7 The second is its payment 8 of the
contributions mandated by law and regulations to the Welfare Fund for Overseas
Workers, which was created by P.D. No. 1694 "for the purpose of providing social and
welfare services to Filipino overseas workers."
Significantly, the office administering this fund, in the receipt it prepared for the private
respondent's signature, described the subject of the burial benefits as "overseas contract
worker Vitaliano Saco." 9 While this receipt is certainly not controlling, it does indicate, in
the light of the petitioner's own previous acts, that the petitioner and the Fund to which
it had made contributions considered Saco to be an overseas employee.

The petitioner argues that the deceased employee should be likened to the employees of
the Philippine Air Lines who, although working abroad in its international flights, are not
considered overseas workers. If this be so, the petitioner should not have found it
necessary to submit its shipping articles to the POEA for processing, formalization and
approval or to contribute to the Welfare Fund which is available only to overseas workers.
Moreover, the analogy is hardly appropriate as the employees of the PAL cannot under
the definitions given be considered seamen nor are their appointments coursed through
the POEA.
The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was
made by the POEA pursuant to its Memorandum Circular No. 2, which became effective
on February 1, 1984. This circular prescribed a standard contract to be adopted by both
foreign and domestic shipping companies in the hiring of Filipino seamen for overseas
employment. A similar contract had earlier been required by the National Seamen Board
and had been sustained in a number of cases by this Court. 10 The petitioner claims that
it had never entered into such a contract with the deceased Saco, but that is hardly a
serious argument. In the first place, it should have done so as required by the circular,
which specifically declared that "all parties to the employment of any Filipino seamen on
board any ocean-going vessel are advised to adopt and use this employment contract
effective 01 February 1984 and to desist from using any other format of employment
contract effective that date." In the second place, even if it had not done so, the
provisions of the said circular are nevertheless deemed written into the contract with
Saco as a postulate of the police power of the State. 11
But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative
of the principle of non-delegation of legislative power. It contends that no authority had
been given the POEA to promulgate the said regulation; and even with such
authorization, the regulation represents an exercise of legislative discretion which, under
the principle, is not subject to delegation.
The authority to issue the said regulation is clearly provided in Section 4(a) of Executive
Order No. 797, reading as follows:
... The governing Board of the Administration (POEA), as hereunder provided shall
promulgate the necessary rules and regulations to govern the exercise of the
adjudicatory functions of the Administration (POEA).
Similar authorization had been granted the National Seamen Board, which, as earlier
observed, had itself prescribed a standard shipping contract substantially the same as
the format adopted by the POEA.
The second challenge is more serious as it is true that legislative discretion as to the
substantive contents of the law cannot be delegated. What can be delegated is the
discretion to determine how the law may be enforced, notwhat the law shall be. The

ascertainment of the latter subject is a prerogative of the legislature. This prerogative

cannot be abdicated or surrendered by the legislature to the delegate. Thus, in Ynot v.
Intermediate Apellate Court 12 which annulled Executive Order No. 626, this Court held:
We also mark, on top of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive order. It is there
authorized that the seized property shall be distributed to charitable institutions and
other similar institutions as the Chairman of the National Meat Inspection Commission
may see fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an
extremely generous and dangerous condition, if condition it is. It is laden with perilous
opportunities for partiality and abuse, and even corruption. One searches in vain for the
usual standard and the reasonable guidelines, or better still, the limitations that the
officers must observe when they make their distribution. There is none. Their options are
apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by
what criteria shall they be chosen? Only the officers named can supply the answer, they
and they alone may choose the grantee as they see fit, and in their own exclusive
discretion. Definitely, there is here a 'roving commission a wide and sweeping authority
that is not canalized within banks that keep it from overflowing,' in short a clearly
profligate and therefore invalid delegation of legislative powers.
There are two accepted tests to determine whether or not there is a valid delegation of
legislative power, viz, the completeness test and the sufficient standard test. Under the
first test, the law must be complete in all its terms and conditions when it leaves the
legislature such that when it reaches the delegate the only thing he will have to do is
enforce it. 13 Under the sufficient standard test, there must be adequate guidelines or
stations in the law to map out the boundaries of the delegate's authority and prevent the
delegation from running riot. 14
Both tests are intended to prevent a total transference of legislative authority to the
delegate, who is not allowed to step into the shoes of the legislature and exercise a
power essentially legislative.
The principle of non-delegation of powers is applicable to all the three major powers of
the Government but is especially important in the case of the legislative power because
of the many instances when its delegation is permitted. The occasions are rare when
executive or judicial powers have to be delegated by the authorities to which they legally
certain. In the case of the legislative power, however, such occasions have become more
and more frequent, if not necessary. This had led to the observation that the delegation
of legislative power has become the rule and its non-delegation the exception.
The reason is the increasing complexity of the task of government and the growing
inability of the legislature to cope directly with the myriad problems demanding its
attention. The growth of society has ramified its activities and created peculiar and
sophisticated problems that the legislature cannot be expected reasonably to

comprehend. Specialization even in legislation has become necessary. To many of the

problems attendant upon present-day undertakings, the legislature may not have the
competence to provide the required direct and efficacious, not to say, specific solutions.
These solutions may, however, be expected from its delegates, who are supposed to be
experts in the particular fields assigned to them.
The reasons given above for the delegation of legislative powers in general are
particularly applicable to administrative bodies. With the proliferation of specialized
activities and their attendant peculiar problems, the national legislature has found it
more and more necessary to entrust to administrative agencies the authority to issue
rules to carry out the general provisions of the statute. This is called the "power of
subordinate legislation."
With this power, administrative bodies may implement the broad policies laid down in a
statute by "filling in' the details which the Congress may not have the opportunity or
competence to provide. This is effected by their promulgation of what are known as
supplementary regulations, such as the implementing rules issued by the Department of
Labor on the new Labor Code. These regulations have the force and effect of law.
Memorandum Circular No. 2 is one such administrative regulation. The model contract
prescribed thereby has been applied in a significant number of the cases without
challenge by the employer. The power of the POEA (and before it the National Seamen
Board) in requiring the model contract is not unlimited as there is a sufficient standard
guiding the delegate in the exercise of the said authority. That standard is discoverable
in the executive order itself which, in creating the Philippine Overseas Employment
Administration, mandated it to protect the rights of overseas Filipino workers to "fair and
equitable employment practices."
Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public
interest" in People v. Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16
"public convenience and welfare" in Calalang v. Williams 17 and "simplicity, economy
and efficiency" in Cervantes v. Auditor General, 18 to mention only a few cases. In the
United States, the "sense and experience of men" was accepted in Mutual Film Corp. v.
Industrial Commission, 19 and "national security" in Hirabayashi v. United States. 20
It is not denied that the private respondent has been receiving a monthly death benefit
pension of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral
benefit by the Social Security System. In addition, as already observed, she also received
a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers. These payments
will not preclude allowance of the private respondent's claim against the petitioner
because it is specifically reserved in the standard contract of employment for Filipino
seamen under Memorandum Circular No. 2, Series of 1984, that
Section C. Compensation and Benefits.

1. In case of death of the seamen during the term of his Contract, the employer shall pay
his beneficiaries the amount of:
a. P220,000.00 for master and chief engineers
b. P180,000.00 for other officers, including radio operators and master electrician
c. P 130,000.00 for ratings.
2. It is understood and agreed that the benefits mentioned above shall be separate and
distinct from, and will be in addition to whatever benefits which the seaman is entitled to
under Philippine laws. ...
3. ...
c. If the remains of the seaman is buried in the Philippines, the owners shall pay the
beneficiaries of the seaman an amount not exceeding P18,000.00 for burial expenses.
The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued
by the National Seamen Board on July 12,1976, providing an follows:
Income Benefits under this Rule Shall be Considered Additional Benefits.
All compensation benefits under Title II, Book Four of the Labor Code of the Philippines
(Employees Compensation and State Insurance Fund) shall be granted, in addition to
whatever benefits, gratuities or allowances that the seaman or his beneficiaries may be
entitled to under the employment contract approved by the NSB. If applicable, all
benefits under the Social Security Law and the Philippine Medicare Law shall be enjoyed
by the seaman or his beneficiaries in accordance with such laws.
The above provisions are manifestations of the concern of the State for the working
class, consistently with the social justice policy and the specific provisions in the
Constitution for the protection of the working class and the promotion of its interest.
One last challenge of the petitioner must be dealt with to close t case. Its argument that
it has been denied due process because the same POEA that issued Memorandum
Circular No. 2 has also sustained and applied it is an uninformed criticism of
administrative law itself. Administrative agencies are vested with two basic powers, the
quasi-legislative and the quasi-judicial. The first enables them to promulgate
implementing rules and regulations, and the second enables them to interpret and apply
such regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its
own revenue regulations, the Central Bank on its own circulars, the Securities and
Exchange Commission on its own rules, as so too do the Philippine Patent Office and the
Videogram Regulatory Board and the Civil Aeronautics Administration and the
Department of Natural Resources and so on ad infinitumon their respective
administrative regulations. Such an arrangement has been accepted as a fact of life of

modern governments and cannot be considered violative of due process as long as the
cardinal rights laid down by Justice Laurel in the landmark case of Ang Tibay v. Court of
Industrial Relations 21 are observed.
Whatever doubts may still remain regarding the rights of the parties in this case are
resolved in favor of the private respondent, in line with the express mandate of the Labor
Code and the principle that those with less in life should have more in law.
When the conflicting interests of labor and capital are weighed on the scales of social
justice, the heavier influence of the latter must be counter-balanced by the sympathy
and compassion the law must accord the underprivileged worker. This is only fair if he is
to be given the opportunity and the right to assert and defend his cause not as a
subordinate but as a peer of management, with which he can negotiate on even plane.
Labor is not a mere employee of capital but its active and equal partner.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary
restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered.

15. MINERS V FACTORAN

G.R. No. 98332 January 16, 1995

MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner,
vs.
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment and Natural Resources,
and JOEL D. MUYCO, Director of Mines and Geosciences Bureau, respondents.

ROMERO, J.:
The instant petition seeks a ruling from this Court on the validity of two Administrative
Orders issued by the Secretary of the Department of Environment and Natural Resources
to carry out the provisions of certain Executive Orders promulgated by the President in
the lawful exercise of legislative powers.
Herein controversy was precipitated by the change introduced by Article XII, Section 2 of
the 1987 Constitution on the system of exploration, development and utilization of the
country's natural resources. No longer is the utilization of inalienable lands of public
domain through "license, concession or lease" under the 1935 and 1973 Constitutions 1
allowed under the 1987 Constitution.

The adoption of the concept of jura regalia 2 that all natural resources are owned by the
State embodied in the 1935, 1973 and 1987 Constitutions, as well as the recognition of
the importance of the country's natural resources, not only for national economic
development, but also for its security and national
defense, 3 ushered in the adoption of the constitutional policy of "full control and
supervision by the State" in the exploration, development and utilization of the country's
natural resources. The options open to the State are through direct undertaking or by
entering into co-production, joint venture; or production-sharing agreements, or by
entering into agreement with foreign-owned corporations for large-scale exploration,
development and utilization.
Article XII, Section 2 of the 1987 Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities, or it may enter
into co-production, joint venture, or product-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as
may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, beneficial use may be the
measure and limit of the grant.
xxx xxx xxx
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to the economic growth and
general welfare of the country. In such agreements, the State shall promote the
development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution. (Emphasis supplied)
Pursuant to the mandate of the above-quoted provision, legislative acts 4 were
successively issued by the President in the exercise of her legislative
power. 5

To implement said legislative acts, the Secretary of the Department of Environment and
Natural Resources (DENR) in turn promulgated Administrative Order Nos. 57 and 82, the
validity and constitutionality of which are being challenged in this petition.
On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative
powers under Article II, Section 1 of the Provisional Constitution and Article XIII, Section 6
of the 1987 Constitution, promulgated Executive Order No. 211 prescribing the interim
procedures in the processing and approval of applications for the exploration,
development and utilization of minerals pursuant to the 1987 Constitution in order to
ensure the continuity of mining operations and activities and to hasten the development
of mineral resources. The pertinent provisions read as follows:
Sec. 1. Existing mining permits, licenses, leases and other mining grants issued by the
Department of Environment and Natural Resources and Bureau of Mines and GeoSciences, including existing operating agreements and mining service contracts, shall
continue and remain in full force and effect, subject to the same terms and conditions as
originally granted and/or approved.
Sec. 2. Applications for the exploration, development and utilization of mineral resources,
including renewal applications for approval of operating agreements and mining service
contracts, shall be accepted and processed and may be approved; concomitantly
thereto, declarations of locations and all other kinds of mining applications shall be
accepted and registered by the Bureau of Mines and Geo-Sciences.
Sec. 3. The processing, evaluation and approval of all mining applications, declarations of
locations, operating agreements and service contracts as provided for in Section 2
above, shall be governed by Presidential Decree No. 463, as amended, other existing
mining laws and their implementing rules and regulations: Provided, however, that the
privileges granted, as well as the terms and conditions thereof shall be subject to any
and all modifications or alterations which Congress may adopt pursuant to Section 2,
Article XII of the 1987 Constitution.
On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279
authorizing the DENR Secretary to negotiate and conclude joint venture, co-production,
or production-sharing agreements for the exploration, development and utilization of
mineral resources, and prescribing the guidelines for such agreements and those
agreements involving technical or financial assistance by foreign-owned corporations for
large-scale exploration, development, and utilization of minerals. The pertinent
provisions relevant to this petition are as follows:
Sec. 1. The Secretary of the Department of Environment and Natural Resources
(hereinafter referred to as "the Secretary") is hereby authorized to negotiate and enter
into, for and in behalf of the Government, joint venture, co-production, or productionsharing agreements for the exploration, development, and utilization of mineral

resources with any Filipino citizens, or corporation or association at least sixty percent
(60%) of whose capital is owned by Filipino citizens. Such joint venture, co-production, or
production-sharing agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and shall include the minimum terms and
conditions prescribed in Section 2 hereof. In the execution of a joint venture, coproduction or production agreements, the contracting parties, including the Government,
may consolidate two or more contiguous or geologically related mining claims or
leases and consider them as one contract area for purposes of determining the subject of
the joint venture, co-production, or production-sharing agreement.
xxx xxx xxx
Sec. 6. The Secretary shall promulgate such supplementary rules and regulations as may
be necessary to effectively implement the provisions of this Executive Order.
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations, or parts thereof, which are not
inconsistent with the provisions of this Executive Order, shall continue in force and
effect.
Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23,
1989 DENR Administrative Order No. 57, series of 1989, captioned "Guidelines of Mineral
Production Sharing Agreement under Executive Order No. 279." 6 Under the transitory
provision of said DENR Administrative Order No. 57, embodied in its Article 9, all existing
mining leases or agreements which were granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211, except small scale mining leases and
those pertaining to sand and gravel and quarry resources covering an area of twenty
(20) hectares or less, shall be converted into production-sharing agreements within one
(1) year from the effectivity of these guidelines.
On November 20, 1980, the Secretary of the DENR Administrative Order No. 82, series of
1990, laying down the "Procedural Guidelines on the Award of Mineral Production Sharing
Agreement (MPSA) through Negotiation." 7
Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the
persons or entities required to submit Letter of Intent (LOIs) and Mineral Production
Sharing Agreement (MPSAs) within two (2) years from the effectivity of DENR
Administrative Order No. 57 or until July 17, 1991. Failure to do so within the prescribed
period shall cause the abandonment of mining, quarry and sand and gravel claims.
Section 3 of DENR Administrative Order No. 82 provides:
Sec. 3. Submission of Letter of Intent (LOIs) and MPSAs). The following shall submit their
LOIs and MPSAs within two (2) years from the effectivity of DENR A.O. 57 or until July 17,
1991.

i. Declaration of Location (DOL) holders, mining lease applicants, exploration permitees,

quarry applicants and other mining applicants whose mining/quarry applications have
not been perfected prior to the effectivity of DENR Administrative Order No. 57.
ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57.
iii. Holders of mining leases or similar agreements which were granted after (the)
effectivity of 1987 Constitution.
Failure to submit letters of intent and MPSA applications/proposals within the prescribed
period shall cause the abandonment of mining, quarry and sand and gravel claims.
The issuance and the impeding implementation by the DENR of Administrative Order
Nos. 57 and 82 after their respective effectivity dates compelled the Miners Association
of the Philippines, Inc. 8 to file the instant petition assailing their validity and
constitutionality before this Court.
In this petition for certiorari, petitioner Miners Association of the Philippines, Inc. mainly
contends that respondent Secretary of DENR issued both Administrative Order Nos. 57
and 82 in excess of his rule-making power under Section 6 of Executive Order No. 279.
On the assumption that the questioned administrative orders do not conform with
Executive Order Nos. 211 and 279, petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 of the 1987
Constitution on the ground that Administrative Order No. 57 unduly pre-terminates
existing mining agreements and automatically converts them into production-sharing
agreements within one (1) year from its effectivity date. On the other hand,
Administrative Order No. 82 declares that failure to submit Letters of Intent and Mineral
Production-Sharing Agreements within two (2) years from the date of effectivity of said
guideline or on July 17, 1991 shall cause the abandonment of their mining, quarry and
sand gravel permits.
On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of
a restraining order/preliminary injunction, issued a Temporary Restraining Order, upon
posting of a P500,000.00 bond, enjoining the enforcement and implementation of DENR
Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively.
9
On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe A.
David, sought to intervene 11in this case alleging that because of the temporary order
issued by the Court , the DENR, Regional Office No. 3 in San Fernando, Pampanga
refused to renew its Mines Temporary Permit after it expired on July 31, 1991. Claiming
that its rights and interests are prejudicially affected by the implementation of DENR
Administrative Order Nos. 57 and 82, it joined petitioner herein in seeking to annul
Administrative Order Nos. 57 and 82 and prayed that the DENR, Regional Office No. 3 be

ordered to issue a Mines Temporary Permit in its favor to enable it to operate during the
pendency of the suit.
Public respondents were acquired to comment on the Continental Marble Corporation's
petition for intervention in the resolution of November 28, 1991. 12
Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have the
effect of repealing or abrogating existing mining laws 13 which are not inconsistent with
the provisions of Executive Order No. 279. Invoking Section 7 of said Executive Order No.
279, 14 petitioner maintains that respondent DENR Secretary cannot provide guidelines
such as Administrative Order Nos. 57 and 82 which are inconsistent with the provisions
of Executive Order No. 279 because both Executive Order Nos. 211 and 279 merely
reiterated the acceptance and registration of declarations of location and all other kinds
of mining applications by the Bureau of Mines and Geo-Sciences under the provisions of
Presidential Decree No. 463, as amended, until Congress opts to modify or alter the
same.
In other words, petitioner would have us rule that DENR Administrative Order Nos. 57
and 82 issued by the DENR Secretary in the exercise of his rule-making power are
tainted with invalidity inasmuch as both contravene or subvert the provisions of
Executive Order Nos. 211 and 279 or embrace matters not covered, nor intended to be
covered, by the aforesaid laws.
We disagree.
We reiterate the principle that the power of administrative officials to promulgate rules
and regulations in the implementation of a statute is necessarily limited only to carrying
into effect what is provided in the legislative enactment. The principle was enunciated as
early as 1908 in the case of United States v. Barrias. 15 The scope of the exercise of such
rule-making power was clearly expressed in the case of United States v. Tupasi Molina,
16 decided in 1914, thus: "Of course, the regulations adopted under legislative authority
by a particular department must be in harmony with the provisions of the law, and for
the sole purpose of carrying into effect its general provisions. By such regulations, of
course, the law itself can not be extended. So long, however, as the regulations relate
solely to carrying into effect its general provisions. By such regulations, of course, the
law itself can not be extended. So long, however, as the regulations relate solely to
carrying into effect the provision of the law, they are valid."
Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of said
power of administrative officials:
Administrative regulations adopted
department must be in harmony with
sole purpose of carrying into effect its
the law itself cannot be extended (U.S.

under legislative authority by a particular

the provisions of the law, and should be for the
general provision. By such regulations, of course,
v. Tupasi Molina, supra). An administrative agency

cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs.
Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel
vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v.
Casteel, L-21906, August 29, 1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The power cannot be
extended to amending or expanding the statutory requirements or to embrace matters
not covered by the statute. Rules that subvert the statute cannot be sanctioned
(University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 84546. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319;
Wise & Co. v. Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299,
June 27, 1973, 51 SCRA 340, 349).
xxx xxx xxx
. . . The rule or regulation should be within the scope of the statutory authority granted
by the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197,
cited in Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to
implement said law, the basic prevails because said rule or regulations cannot go beyond
the terms and provisions of the basic law (People v. Lim, 108 Phil. 1091).
Considering that administrative rules draw life from the statute which they seek to
implement, it is obvious that the spring cannot rise higher than its source. We now
examine petitioner's argument that DENR Administrative Order Nos. 57 and 82
contravene Executive Order Nos. 211 and 279 as both operate to repeal or abrogate
Presidential Decree No. 463, as amended, and other mining laws allegedly acknowledged
as the principal law under Executive Order Nos. 211 and 279.
Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as
the governing law on the acceptance and approval of declarations of location and all
other kinds of applications for the exploration, development, and utilization of mineral
resources pursuant to Executive Order No. 211, is erroneous. Presidential Decree No.
463, as amended, pertains to the old system of exploration, development and utilization
of natural resources through "license, concession or lease" which, however, has been
disallowed by Article XII, Section 2 of the 1987 Constitution. By virtue of the said
constitutional mandate and its implementing law, Executive Order No. 279 which
superseded Executive Order No. 211, the provisions dealing on "license, concession or
lease" of mineral resources under Presidential Decree No. 463, as amended, and other
existing mining laws are deemed repealed and, therefore, ceased to operate as the
governing law. In other words, in all other areas of administration and management of

mineral lands, the provisions of Presidential Decree No. 463, as amended, and other
existing mining laws, still govern. Section 7 of Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations, or parts thereof, which are not
inconsistent with the provisions of this Executive Order, shall continue in force and
effect.
Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of
mining claims under Chapter VIII, quarry permits on privately-owned lands of quarry
license on public lands under Chapter XIII and other related provisions on lease, license
and permits are not only inconsistent with the raison d'etre for which Executive Order No.
279 was passed, but contravene the express mandate of Article XII, Section 2 of the
1987 Constitution. It force and effectivity is thus foreclosed.
Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State assumed
a more dynamic role in the exploration, development and utilization of the natural
resources of the country. Article XII, Section 2 of the said Charter explicitly ordains that
the exploration, development and utilization of natural resources shall be under the full
control and supervision of the State. Consonant therewith, the exploration, development
and utilization of natural resources may be undertaken by means of direct act of the
State, or it may opt to enter into co-production, joint venture, or production-sharing
agreements, or it may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to the economic growth and
general welfare of the country.
Given these considerations, there is no clear showing that respondent DENR Secretary
has transcended the bounds demarcated by Executive Order No. 279 for the exercise of
his rule-making power tantamount to a grave abuse of discretion. Section 6 of Executive
Order No. 279 specifically authorizes said official to promulgate such supplementary
rules and regulations as may be necessary to effectively implement the provisions
thereof. Moreover, the subject sought to be governed and regulated by the questioned
orders is germane to the objects and purposes of Executive Order No. 279 specifically
issued to carry out the mandate of Article XII, Section 2 of the 1987 Constitution.
Petitioner likewise maintains that Administrative Order No. 57, in relation to
Administrative Order No. 82, impairs vested rights as to violate the non-impairment of
contract doctrine guaranteed under Article III, Section 10 of the 1987 Constitution
because Article 9 of Administrative Order No. 57 unduly pre-terminates and
automatically converts mining leases and other mining agreements into productionsharing agreements within one (1) year from effectivity of said guideline, while Section 3
of Administrative Order No. 82, declares that failure to submit Letters of Intent (LOIs) and

MPSAs within two (2) years from the effectivity of Administrative Order No. 57 or until
July 17, 1991 shall cause the abandonment of mining, quarry, and sand gravel permits.
In Support of the above contention, it is argued by petitioner that Executive Order No.
279 does not contemplate automatic conversion of mining lease agreements into mining
production-sharing agreement as provided under Article 9, Administrative Order No. 57
and/or the consequent abandonment of mining claims for failure to submit LOIs and
MPSAs under Section 3, Administrative Order No. 82 because Section 1 of said Executive
Order No. 279 empowers the DENR Secretary to negotiate and enter into voluntary
agreements which must set forth the minimum terms and conditions provided under
Section 2 thereof. Moreover, petitioner contends that the power to regulate and enter
into mining agreements does not include the power to preterminate existing mining
lease agreements.
To begin with, we dispel the impression created by petitioner's argument that the
questioned administrative orders unduly preterminate existing mining leases in general.
A distinction which spells a real difference must be drawn. Article XII, Section 2 of the
1987 Constitution does not apply retroactively to "license, concession or lease" granted
by the government under the 1973 Constitution or before the effectivity of the 1987
Constitution on February 2, 1987. The intent to apply prospectively said constitutional
provision was stressed during the deliberations in the Constitutional Commission, 19
thus:
MR. DAVIDE: Under the proposal, I notice that except for the [inalienable] lands of the
public domain, all other natural resources cannot be alienated and in respect to
[alienable] lands of the public domain, private corporations with the required ownership
by Filipino citizens can only lease the same. Necessarily, insofar as other natural
resources are concerned, it would only be the State which can exploit, develop, explore
and utilize the same. However, the State may enter into a joint venture, co-production or
production-sharing. Is that not correct?
MR. VILLEGAS: Yes.
MR. DAVIDE: Consequently, henceforth upon, the approval of this Constitution, no timber
or forest concession, permits or authorization can be exclusively granted to any citizen of
the Philippines nor to any corporation qualified to acquire lands of the public domain?
MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer
is "yes."
MR. DAVIDE: So, what will happen now license or concessions earlier granted by the
Philippine government to private corporations or to Filipino citizens? Would they be
deemed repealed?
MR. VILLEGAS: This is not applied retroactively. They will be respected.

MR. DAVIDE: In effect, they will be deemed repealed?

MR. VILLEGAS: No. (Emphasis supplied)
During the transition period or after the effectivity of the 1987 Constitution on February
2, 1987 until the first Congress under said Constitution was convened on July 27, 1987,
two (2) successive laws, Executive Order Nos. 211 and 279, were promulgated to govern
the processing and approval of applications for the exploration, development and
utilization of minerals. To carry out the purposes of said laws, the questioned
Administrative Order Nos. 57 and 82, now being assailed, were issued by the DENR
Secretary.
Article 9 of Administrative Order No. 57 provides:
ARTICLE 9
TRANSITORY PROVISION
9.1. All existing mining leases or agreements which were granted after the effectivity of
the 1987 Constitution pursuant to Executive Order No. 211, except small scale mining
leases and those pertaining to sand and gravel and quarry resources covering an area of
twenty (20) hectares or less shall be subject to these guidelines. All such leases or
agreements shall be converted into production sharing agreement within one (1) year
from the effectivity of these guidelines. However, any minimum firm which has
established mining rights under Presidential Decree 463 or other laws may avail of the
provisions of EO 279 by following the procedures set down in this document.
It is clear from the aforestated provision that Administrative Order No. 57 applies only to
all existing mining leases or agreements which were granted after the effectivity of the
1987 Constitution pursuant to Executive Order No. 211. It bears mention that under the
text of Executive Order No. 211, there is a reservation clause which provides that the
privileges as well as the terms and conditions of all existing mining leases or agreements
granted after the effectivity of the 1987 Constitution pursuant to Executive Order No.
211, shall be subject to any and all modifications or alterations which Congress may
adopt pursuant to Article XII, Section 2 of the 1987 Constitution. Hence, the strictures of
the
non-impairment of contract clause under Article III, Section 10 of the 1987 Constitution
20 do not apply to the aforesaid leases or agreements granted after the effectivity of the
1987 Constitution, pursuant to Executive Order No. 211. They can be amended, modified
or altered by a statute passed by Congress to achieve the purposes of Article XII, Section
2 of the 1987 Constitution.
Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino
in the exercise of her legislative power has the force and effect of a statute or law passed
by Congress. As such, it validly modified or altered the privileges granted, as well as the

terms and conditions of mining leases and agreements under Executive Order No. 211
after the effectivity of the 1987 Constitution by authorizing the DENR Secretary to
negotiate and conclude joint venture, co-production, or production-sharing agreements
for the exploration, development and utilization of mineral resources and prescribing the
guidelines for such agreements and those agreements involving technical or financial
assistance by foreign-owned corporations for large-scale exploration, development, and
utilization of minerals.
Well -settled is the rule, however, that regardless of the reservation clause, mining
leases or agreements granted by the State, such as those granted pursuant to Executive
Order No. 211 referred to this petition, are subject to alterations through a reasonable
exercise of the police power of the State. In the 1950 case of Ongsiako v. Gamboa, 21
where the constitutionality of Republic Act No. 34 changing the 50-50 sharecropping
system in existing agricultural tenancy contracts to 55-45 in favor of tenants was
challenged, the Court, upholding the constitutionality of the law, emphasized the
superiority of the police power of the State over the sanctity of this contract:
The prohibition contained in constitutional provisions against: impairing the obligation of
contracts is not an absolute one and it is not to be read with literal exactness like a
mathematical formula. Such provisions are restricted to contracts which respect
property, or some object or value, and confer rights which may be asserted in a court of
justice, and have no application to statute relating to public subjects within the domain
of the general legislative powers of the State, and involving the public rights and public
welfare of the entire community affected by it. They do not prevent a proper exercise by
the State of its police powers. By enacting regulations reasonably necessary to secure
the health, safety, morals, comfort, or general welfare of the community, even the
contracts may thereby be affected; for such matter can not be placed by contract
beyond the power of the State shall regulates and control them. 22
In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic Act
No. 1199 authorizing the tenants to charge from share to leasehold tenancy was
challenged on the ground that it impairs the obligation of contracts, the Court ruled that
obligations of contracts must yield to a proper exercise of the police power when such
power is exercised to preserve the security of the State and the means adopted are
reasonably adapted to the accomplishment of that end and are, therefore, not arbitrary
or oppressive.
The economic policy on the exploration, development and utilization of the country's
natural resources under Article XII, Section 2 of the 1987 Constitution could not be any
clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the exploration,
development and utilization of natural resources under the new system mandated in
Section 2, is geared towards a more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and services produced by the nation

for the benefit of the people; and an expanding productivity as the key to raising the
quality of life for all, especially the underprivileged.
The exploration, development and utilization of the country's natural resources are
matters vital to the public interest and the general welfare of the people. The recognition
of the importance of the country's natural resources was expressed as early as the 1984
Constitutional Convention. In connection therewith, the 1986 U.P. Constitution Project
observed: "The 1984 Constitutional Convention recognized the importance of our natural
resources not only for its security and national defense. Our natural resources which
constitute the exclusive heritage of the Filipino nation, should be preserved for those
under the sovereign authority of that nation and for their prosperity. This will ensure the
country's survival as a viable and sovereign republic."
Accordingly, the State, in the exercise of its police power in this regard, may not be
precluded by the constitutional restriction on non-impairment of contract from altering,
modifying and amending the mining leases or agreements granted under Presidential
Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being
co-extensive with the necessities of the case and the demands of public interest;
extends to all the vital public needs. The passage of Executive Order No. 279 which
superseded Executive Order No. 211 provided legal basis for the DENR Secretary to carry
into effect the mandate of Article XII, Section 2 of the 1987 Constitution.
Nowhere in Administrative Order No. 57 is there any provision which would lead us to
conclude that the questioned order authorizes the automatic conversion of mining leases
and agreements granted after the effectivity of the 1987 Constitution, pursuant to
Executive Order No. 211, to production-sharing agreements. The provision in Article 9 of
Administrative Order No. 57 that "all such leases or agreements shall be converted into
production sharing agreements within one (1) year from the effectivity of these
guidelines" could not possibility contemplate a unilateral declaration on the part of the
Government that all existing mining leases and agreements are automatically converted
into
production-sharing agreements. On the contrary, the use of the term "production-sharing
agreement" if they are so minded. Negotiation negates compulsion or automatic
conversion as suggested by petitioner in the instant petition. A mineral productionsharing agreement (MPSA) requires a meeting of the minds of the parties after
negotiations arrived at in good faith and in accordance with the procedure laid down in
the subsequent Administrative Order No. 82.
We, therefore, rule that the questioned administrative orders are reasonably directed to
the accomplishment of the purposes of the law under which they were issued and were
intended to secure the paramount interest of the public, their economic growth and
welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82 must
be sustained, and their force and effect upheld.

We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised

Rules of Court, an intervention in a case is proper when the intervenor has a "legal
interest in the matter in litigation, or in the success of either of the parties, or an interest
against both, or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof.
"Continental Marble Corporation has not sufficiently shown that it falls under any of the
categories mentioned above. The refusal of the DENR, Regional Office No. 3, San
Fernando, Pampanga to renew its Mines Temporary Permit does not justify such an
intervention by Continental Marble Corporation for the purpose of obtaining a directive
from this Court for the issuance of said permit. Whether or not Continental Marble matter
best addressed to the appropriate government body but certainly, not through this Court.
Intervention is hereby DENIED.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on July 2, 1991 is hereby LIFTED.
SO ORDERED.

1.

VICTORIA MILLING V SSC

G.R. No. L-16704

March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant,

vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.
BARRERA, J.:
On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the
following tenor: .
Effective November 1, 1958, all Employers in computing the premiums due the System,
will take into consideration and include in the Employee's remuneration all bonuses and
overtime pay, as well as the cash value of other media of remuneration. All these will
comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2%
contributions will be based, up to a maximum of P500 for any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through
counsel, wrote the Social Security Commission in effect protesting against the circular as
contradictory to a previous Circular No. 7, dated October 7, 1957 expressly excluding
overtime pay and bonus in the computation of the employers' and employees' respective
monthly premium contributions, and submitting, "In order to assist your System in
arriving at a proper interpretation of the term 'compensation' for the purposes of" such
computation, their observations on Republic Act 1161 and its amendment and on the
general interpretation of the words "compensation", "remuneration" and "wages".
Counsel further questioned the validity of the circular for lack of authority on the part of
the Social Security Commission to promulgate it without the approval of the President
and for lack of publication in the Official Gazette.
Overruling these objections, the Social Security Commission ruled that Circular No. 22 is
not a rule or regulation that needed the approval of the President and publication in the
Official Gazette to be effective, but a mere administrative interpretation of the statute, a
mere statement of general policy or opinion as to how the law should be construed.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is whether or not Circular No. 22 is a rule or
regulation, as contemplated in Section 4(a) of Republic Act 1161 empowering the Social
Security Commission "to adopt, amend and repeal subject to the approval of the
President such rules and regulations as may be necessary to carry out the provisions and
purposes of this Act."
There can be no doubt that there is a distinction between an administrative rule or
regulation and an administrative interpretation of a law whose enforcement is entrusted
to an administrative body. When an administrative agency promulgates rules and
regulations, it "makes" a new law with the force and effect of a valid law, while when it
renders an opinion or gives a statement of policy, it merely interprets a pre-existing law
(Parker, Administrative Law, p. 197; Davis, Administrative Law, p. 194). Rules and
regulations when promulgated in pursuance of the procedure or authority conferred upon
the administrative agency by law, partake of the nature of a statute, and compliance
therewith may be enforced by a penal sanction provided in the law. This is so because
statutes are usually couched in general terms, after expressing the policy, purposes,
objectives, remedies and sanctions intended by the legislature. The details and the
manner of carrying out the law are often times left to the administrative agency
entrusted with its enforcement. In this sense, it has been said that rules and regulations
are the product of a delegated power to create new or additional legal provisions that
have the effect of law. (Davis,op. cit., p. 194.) .
A rule is binding on the courts so long as the procedure fixed for its promulgation is
followed and its scope is within the statutory authority granted by the legislature, even if
the courts are not in agreement with the policy stated therein or its innate wisdom

(Davis, op. cit., 195-197). On the other hand, administrative interpretation of the law is
at best merely advisory, for it is the courts that finally determine what the law means.
Circular No. 22 in question was issued by the Social Security Commission, in view of the
amendment of the provisions of the Social Security Law defining the term
"compensation" contained in Section 8 (f) of Republic Act No. 1161 which, before its
amendment, reads as follows: .
(f) Compensation All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except (1) that part of the
remuneration in excess of P500 received during the month; (2) bonuses, allowances or
overtime pay; and (3) dismissal and all other payments which the employer may make,
although not legally required to do so.
Republic Act No. 1792 changed the definition of "compensation" to:
(f) Compensation All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except that part of the remuneration
in excess of P500.00 received during the month.
It will thus be seen that whereas prior to the amendment, bonuses, allowances, and
overtime pay given in addition to the regular or base pay were expressly excluded, or
exempted from the definition of the term "compensation", such exemption or exclusion
was deleted by the amendatory law. It thus became necessary for the Social Security
Commission to interpret the effect of such deletion or elimination. Circular No. 22 was,
therefore, issued to apprise those concerned of the interpretation or understanding of
the Commission, of the law as amended, which it was its duty to enforce. It did not add
any duty or detail that was not already in the law as amended. It merely stated and
circularized the opinion of the Commission as to how the law should be
construed.1wph1.t
The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by
appellant, does not support its contention that the circular in question is a rule or
regulation. What was there said was merely that a regulation may be incorporated in the
form of a circular. Such statement simply meant that the substance and not the form of a
regulation is decisive in determining its nature. It does not lay down a general
proposition of law that any circular, regardless of its substance and even if it is only
interpretative, constitutes a rule or regulation which must be published in the Official
Gazette before it could take effect.
The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable
to the present case, because the penalty that may be incurred by employers and
employees if they refuse to pay the corresponding premiums on bonus, overtime pay,
etc. which the employer pays to his employees, is not by reason of non-compliance with

Circular No. 22, but for violation of the specific legal provisions contained in Section 27(c)
and (f) of Republic Act No. 1161.
We find, therefore, that Circular No. 22 purports merely to advise employers-members of
the System of what, in the light of the amendment of the law, they should include in
determining the monthly compensation of their employees upon which the social
security contributions should be based, and that such circular did not require presidential
approval and publication in the Official Gazette for its effectivity.
It hardly need be said that the Commission's interpretation of the amendment embodied
in its Circular No. 22, is correct. The express elimination among the exemptions excluded
in the old law, of all bonuses, allowances and overtime pay in the determination of the
"compensation" paid to employees makes it imperative that such bonuses and overtime
pay must now be included in the employee's remuneration in pursuance of the
amendatory law. It is true that in previous cases, this Court has held that bonus is not
demandable because it is not part of the wage, salary, or compensation of the employee.
But the question in the instant case is not whether bonus is demandable or not as part of
compensation, but whether, after the employer does, in fact, give or pay bonus to his
employees, such bonuses shall be considered compensation under the Social Security
Act after they have been received by the employees. While it is true that terms or words
are to be interpreted in accordance with their well-accepted meaning in law,
nevertheless, when such term or word is specifically defined in a particular law, such
interpretation must be adopted in enforcing that particular law, for it can not be gainsaid
that a particular phrase or term may have one meaning for one purpose and another
meaning for some other purpose. Such is the case that is now before us. Republic Act
1161 specifically defined what "compensation" should mean "For the purposes of this
Act". Republic Act 1792 amended such definition by deleting same exemptions
authorized in the original Act. By virtue of this express substantial change in the
phraseology of the law, whatever prior executive or judicial construction may have been
given to the phrase in question should give way to the clear mandate of the new law.
IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs
against appellant. So ordered.

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