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36.

DFA cv NLRC
FIRST DIVISION
[G.R. No. 113191. September 18, 1996.]
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LAB
OR 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. PhilippineRyukyus
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 non-suability 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 quasidelict, 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. L15416, 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. 51.04-B 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
particularly the halogen derivatives.

or

its

substitution

derivatives,

Examples of these
are
polyethylene,
polytetrafluro-ethylene
and
polychlorotrifluro-ethylene. 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) including woven
fabrics of monofil or strip of heading No. 51.01 or 51.02"
"This heading covers woven fabrics (as described in Part [I] [C] of the
General Explanatory Note on Section XI) made ofyarns of continuous manmade 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. PHILIPPINE GOLF
DEVELOPMENT & EQUIPMENT, INC.,respondent.
RESOLUTION
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 60-66) 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 subcontract 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
special
civil
action
under
Rule
65
is
proper
there
is
no
other
plain,
adequate remedy

for

certiorari
only
when
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
for certiorari. No costs.

considered,

we

hereby DISMISS the

petition

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 A
PPEALS 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 "nonbuildable", 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 nonbuildability 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 highdensity. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and nonbuildable. 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 more than five (5) percent of the total
land area of the DONOR's subdivision) shall constitute the entire open space
for DONOR's subdivision and all other lands or areas previously reserved or
designated, including Lot 1 and Lot 2A of Block 72 and the whole 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
donation of the open space may be revoked at all.

the

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,
by virtue of the powers vested in me by the Constitution, do hereby order
and decree:
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


Planting of Trees in Certain Places, etc."), section 2 of which reads:

the

"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 highdensity. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and nonbuildable. 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 "non-buildable" 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 selfserving 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
Mandatory
Because of Non-compliance With an Illegal Condition

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 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. 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 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 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


MODIFIED as follows:

Decision of the Court of Appeals is

hereby

(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 812-840)

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 COURT OF APPEALS,
THE
CHIEFOF PHILIPPINE
CONSTABULARY and PHILIPPINE CONSTABULARY SUPERVISORY
UNIT FOR SECURITY AND INVESTIGATION AGENCIES (PCSUSIA), 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 non-renewal 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 nonrenewal 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 likewise recommended the
cancellation of VMPSI's license (Annex E, Petition).
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 nonrenewal 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 the petition.
dispositive portion of its decision reads:

The

"WHEREFORE, the petition for certiorari filed by petitioners PC Chief and PCSUSIA 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 PhilippineAmerican 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 RPUS 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 nonaccountability 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 NONACCOUNTABILITY 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. 88-43351.
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 copetitioners 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 non-accountability 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 coworkers 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 63-76)

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 respondentsappellees, 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 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.
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 respondentsappellees "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 petitionerappellant 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 respondents-appellees 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.). Petitionerappellant, 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 petitionerappellant 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.). Petitioner-appellant 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 petitioner-appellant'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 respondents-appellees, 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
Agro-Commercial 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. L17532, March 30, 1963; Mangubat vs. Osmea, G.R. No. L-12837, 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-10943-44, 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
respondents-appellees 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 PETITIONERAPPELLANT.
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 co-respondent
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 CAG.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 non-governmental
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 so-called 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. PABLO FELICIANO
and INTERMEDIATE APPELLATE COURT, respondents-appellants.
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 non-suability 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 predecessor-in-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 391399)

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 non-suability 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 quasidelict, 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, vs. GOVERNMENT OF THE PHILIPPINE
ISLANDS, defendant-appellant.
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 mancaused 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 partydefendant . . .
"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.,
defendant-appellant, 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
DULY-ENACTED 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 non-suability; 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 PhilippineAmerican 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 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.' 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 individuallynamed 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 Defensor-Santiago, 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. 779M 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 abovementioned 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, YnaresSantiago, 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 1100-1111)

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 647-B 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], 148-B 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 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.
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. IN-651, 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
Administration who, at the time
driver and who qualified for
respondent after having passed
rules and maintenance of
Administration authorities. prLL

driver of respondent National Irrigation


of the accident, was a licensed professional
employment as such regular driver of
the written and oral examinations on traffic
vehicles given by National Irrigation

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 PlaintiffAppellee's Brief' dated December 28, 1981 by petitioners in the appeal (CAG.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 pre-existing 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 non-governmental functions, it now becomes liable for the
damage caused by the accident resulting from the tortious act of its driveremployee. 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
petitioners-spouses 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 302-313)

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 PROVINCIALSHERIFF 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 well-settled
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, well-settled 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 nonextendible 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 re-raffled 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 109. 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
and allowed civilians to seek exemption from the
to the Office of the Governor and obtaining the
cards. The said guidelines also allowed general
designated checkpoints and chokepoints.

by the Chief of the PNP,


gun ban only by applying
appropriate identification
searches and seizures in

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 commanderin-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.
xxx

xxx

xxx

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 dayto-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.
xxx

xxx

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.
xxx

xxx

xxx

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-in-Chief 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
Compensation.
xxx

xxx

Chief

Executive:

Powers,

Duties,

Functions,

and

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:
xxx

xxx

xxx

(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:
xxx

xxx

xxx

(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-inCharge, 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 (PNP
Ilocos 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, twenty-four (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 PNPIlocos 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. 1-04INV-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 above-mentioned 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 intelligencegathering 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


pronouncement as to costs. So ordered.

is

hereby

denied,

without

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 SEVENTHDAY 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

B.

Allowance

4,770.83

C.

Service Incentive

Leave Pay

Moral Damages

E.

Exemplary

F.

21,060.00

3,461.85

D.

Damages

50,000.00

25,000.00

Attorney's Fee

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 excommunicated 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 postemployment 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 accusedappellant 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 accusedappellant Carmen that this was not possible as she and the other accusedappellants 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 accused-appellant Carmen and after
admitting that she and the other accused-appellants conducted a "pray-over
healing" session on the victim on January 27, 1997, accused-appellant
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 accusedappellant 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
accused-appellant 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 accused-appellant 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, accused-appellant 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 accused-appellant 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 "prayover" of their son from beginning to end. She denied that accusedappellants Fabie and Delia Sibonga struck the victim on his chest with their
fists. According to her, neither did accused-appellant 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 accused-appellants. 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 accusedappellants.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


accused-appellants 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 accusedappellants. 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
follows:jgc:chanrobles.com.ph

Act

No.

548

reads

as

"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 well-being 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
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."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

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 lumpsum 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 27/31, 1998 (5 days) incl. Leave pay


June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

US$ 413.90

August 01/31, 1998 2,590.00


Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 01/30, 1998

2,590.00

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00


-------------------------------------------------------------------------------25,382.23
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +

1,060.5010

---------------------------------------------------------------------------------------------TOTAL CLAIM

US$ 26,442.7311

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$4,200.00

2. Salary differential 45.00


US$4,245.00
3. 10% Attorneys fees
TOTAL

424.50

US$4,669.50

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:

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 lump-sum 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 fixed-period 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 co-equals, 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,50 otherwise 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 a
competent 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 for
Certiorari 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.56 Petitioner'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 receive57 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,58 and 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 the least 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 of one 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 well-established 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 Contract Period


Period of Service
Unexpired
Period Applied in the Computation of the Monetary Award
Skippers v. Maguad84

Period

6 months 2 months 4 months 4 months

Bahia Shipping v. Reynaldo Chua 85


months

9 months 8 months 4 months 4

Centennial Transmarine 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. CA 88

12 months

3 months 9 months 3 months

Oriental v. CA 89
months

12 months

more than 2 months10 months

PCL v. NLRC90 12 months


3 months

more than 2 monthsmore or less 9 months

Olarte v. Nayona91 12 months


months
JSS v.Ferrer92 12 months

21 days

16 days

Pentagon v. Adelantar93 12 months


and 23 days
2 months and 23 days
Phil. Employ v. Paramio, et al.94
Unexpired portion

11 months and 9 days

11 months and 24 days

3 months

9 months and 7 days

2 months

12 months

10 months

Flourish Maritime v. Almanzor 95


2 years 26 days
days 6 months or 3 months for each year of contract

2 months

23 months and 4

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
Unexpired
Period Applied in the Computation of the Monetary Award
ATCI v. CA, et al.98 2 years

2 months 22 months

Phil. Integrated v. NLRC99


23 months and 23 days

2 years

JGB v. NLC100 2 years


Agoy v. NLRC101

9 months 15 months

2 years

EDI v. NLRC, et al.102

7 days

22 months

23 months and 23 days


15 months

2 months 22 months

2 years

22 months

5 months 19 months

Barros v. NLRC, et al.103 12 months

Period

19 months

4 months 8 months 8 months

Philippine Transmarine 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 for every 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 fixedterm 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 fixed-term 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,119 involving 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 fixed-period
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 fixedterm 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 Land-Based 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 3,131 Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed selfexecuting,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 DECLARED
UNCONSTITUTIONAL; 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 onehalf 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
well-compensated 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 lowsalaried 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 crossappealed 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. 163164; 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 nowvindicated 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 plaintiff-intervenor, 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. C-69-5307-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
representations as to
representations were
support of his motion

for leave to intervene, the doctor made like


the abortion charges pending in the state court. These
also repeated in the affidavit he executed and filed in
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 free-abortion
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 long-accepted 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 postquickening 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 mid-19th 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 second-degree 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 onethird 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 twenty-five 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 one-half (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 privately-owned
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 whose names alone evoke qualifications,
platforms, programs and ideologies which the voter may accept or reject.
When a person attaches a sticker with such a candidate's name on his car
bumper, he is expressing more than the name; he is espousing ideas. 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 biodata 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 self-executing." 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, VicePresident, 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, L25467, 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 COMPUTERIZED IDENTIFICATION
REFERENCE SYSTEM REQUIRES A LEGISLATIVE ACT. THE ISSUANCE OF A.O.

NO. 308 BY THE PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES IS,


THEREFORE, AN UNCONSTITUTIONAL USURPATION OF THE LEGISLATIVE
POWERS OF THE CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.
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 quasijudicial 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 quasi-legislative 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 quasi-legislative 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. 587589.
(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. 587-589.
(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 litigationbreeding 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. 3962-3963; 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 disputeshandling 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
COMPENSATION

SCOPE

OF

AUTHORITY

EXERCISE

SEIZURE

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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 railjudgment 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
equipnance 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 con- Exercisable "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 property 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 Presi- a. 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 adpromptly 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 posments 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 AUTHORITY
CITED{5} STOPPAGE SEIZURE{7} BASIS FOR CHANGES ACTION{8}
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------From To From To{6}
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

North American Aviation, Inc., 6/9/41 7/2/71 8773. None. (Order cites
contracts of com- 6/5/41 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 of machinery, mate- maintenance of membership. Board
recommendation.
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 replaceAgreement of parties on Na6 Fed.Reg. 5559. pany with Government and ownership ments hired by
company prior tional Defense Mediation
by Government of facilities in plant.) 9/30/41 10/24/41 to seizure. Board
recommendation.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------[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 recommendaIn 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 checkoff. 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 overdation. 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 recommendaCleveland, 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
recommenda-

Inc., 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 recommenda- National 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
Agreement of parties.

5/12/45

9536.

4/1/45

4/11/45

Wage

increase.

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 Na9690. 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 com- Board 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 Disrecession 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 deand 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 unacceptDesignees 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, time-consuming, 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 self-serving 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, 76-117; 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" 139140.
[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. CurtissWright 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,
Dictatorship, 33-61; Brecht, Prelude to Silence, 138.

Constitutional

[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. 803812, 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. 15011511, 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 shut-down 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 shutdown 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 ex-President 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
over-age 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 antiinflation 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. TaftHartley 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 Taft-Hartley 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 management-Government 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 messenger-boy 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. 1364713649.
[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.), 277281.
[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, 8890.
[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 38853887, 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).
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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-theboard 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....

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 farreaching 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 Socalled "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-in-fact."40
Respecting petitioner Chavez, respondents contend that Chavez may not
claim an interest as a taxpayer for the implementation of E.O. 464 does not
involve the exercise of taxing or spending power.41
With regard to the petition filed by the Senate, respondents argue that in
the absence of a personal or direct injury by reason of the issuance of E.O.
464, the Senate and its individual members are not the proper parties to
assail the constitutionality of E.O. 464.
Invoking this 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 co-extensive with the power to legislate.60 The


matters which may be a proper subject of legislation and those which may
be a proper subject of investigation are one. It follows that the operation of
government, being a legitimate subject for legislation, is a proper subject for
investigation.
Thus, the Court found that the Senate investigation of the government
transaction involved in Arnault was a proper exercise of the power of inquiry.
Besides being related to the expenditure of public funds of which Congress
is the guardian, the transaction, the Court held, "also involved government
agencies created by Congress and officers whose positions it is within the
power of Congress to regulate or even abolish."
Since Congress has authority to inquire into the operations of the executive
branch, it would be incongruous to hold that the power of inquiry does not
extend to executive officials who are the most familiar with and informed on
executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it," is
grounded on the necessity of information in the legislative process. If the
information possessed by executive officials on the operation of their offices
is necessary for wise legislation on that subject, by parity of reasoning,
Congress has the right to that information and the power to compel the
disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy
era," however, the right of Congress to conduct inquiries in aid of legislation
is, in theory, no less susceptible to abuse than executive or judicial power. It
may thus be subjected to judicial review pursuant to the 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 intragovernmental 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 coequal 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 decision-making of those tasked to exercise Presidential,
Legislative and Judicial power. This is not the situation in the instant case.91
(Emphasis and underscoring supplied)
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by
the mere fact that it sanctions claims of executive privilege. This Court must
look further and assess the claim of privilege authorized by the Order to
determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case
basis, examining the ground invoked therefor and the particular
circumstances surrounding it, there is, in an implied claim of privilege, a
defect that renders it invalid per se. By its very nature, and as
demonstrated by the letter of respondent Executive Secretary quoted
above, the implied claim authorized by Section 3 of E.O. 464 is not
accompanied by any specific allegation of the basis thereof (e.g., whether
the information demanded involves military or diplomatic secrets, closeddoor 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 nondisclosure 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 factfinding 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 co-principals, 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 petitionerslegislators 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 fact-finding 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
petitioners-legislators 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 realparty-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 fact-finding 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 constitutionallymandated 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 quasi-judicial 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 ill-gotten 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 factfinding 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 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", 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 nondeprivation 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 valueadded 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 singlestage 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 multistage 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 VATregistered 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, . . .
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 passthough 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 valueadded 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 "No-Amendment 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 valueadded 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 nondelegation 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 GURO
Party List, et al. that the law effectively nullified the Presidents power of
control over the Secretary of Finance by mandating the fixing of the tax rate
by the President upon the recommendation of the Secretary of Finance. The
Court cannot also subscribe to the position of petitioners
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 valueadded 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 onehalf 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% non-creditable 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 valueadded 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 valueadded 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 value-added 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 value-added 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, onesided. 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 VATexempt 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 VATexempt 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 taxoutput 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. L-81311, 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 Value-Added 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-120912, 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, 513514, 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 AustriaMartinez 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 non-resident 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 partylist 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 inservice 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 farm-to-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. 436-437, 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 AustriaMartinez 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
all-encompassing 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 nonconflictingprovisions, 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 threereading 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 threereading 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 60-month 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 nonconflicting 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 non-conflicting 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 two-fold: (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 nonVAT 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-ownedand-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 governmentowned 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
Sandoval-Gutierrez, 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, 107108, 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 three-reading, 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 non-disagreeing 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.

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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 "no-pass 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 "ThreeReading 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 reexamine 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, twothirds 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 "threereading" 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 "noamendment" 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 "threereading" 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 "threereading 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 no-amendment 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 "no-amendment" 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 "three-reading 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 "threereading" 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 E-VAT
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 EVAT, 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 non-resident 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 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" 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 ANTONINOCUSTODIO, 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 law-making 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
facts or conditions as the basis of
delegated by Congress,8 and that
administration of an exercise of

points out, the power to ascertain the


the taking into effect of a law may be
the details as to the enforcement and
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 valueadded 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 valueadded 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 EVAT 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 E-VAT 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 E-VAT 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 VATregistered 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 VATregistered 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

Output VAT

60,000

2nd Quarter

60,000

Input VAT (Actual) + Carry Over

3rd Quarter

100,000

50,000

100,000

100,000 [input] +58,000

[excess creditable]
158,000

34,000

[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)

4th Quarter

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

(130,000- 35,000)

95,000
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

Output VAT

60,000

2nd Quarter

60,000

Input VAT (Actual) + Carry Over


+40,000
[excess creditable]
140,000

34,000

[input]
+80,000
[excess creditable]
114,000
[input]
+ 14,000

50,000

3rd Quarter

4th Quarter

100,000

50,000

100,000

100,000 [input]

(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

3,274,853.40

Gross Margin

913,817

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

59,623.30982,456.02

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 VAT-registered 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 valueadded 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 singular-minded 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.free-financial-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. L-81311, 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. L-31156, 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 VAT-registered 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 VATtaxpayer, at least, on equal footing with a VAT-exempt 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 VAT-taxpayer 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. L3054 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 L-3055 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 two-third
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. R. No. L-2044; Araneta vs. Angeles, G. R. No. L-2756 and
Guerrero vs. Commissioner of Customs, G. R. No. L-3055, and that judgment
must be deferred in Rodriguez vs. El Tesorero de Filipinas, G. R. No. L-3054
and Barredo vs. The Commission on Election, G. R. No. L-3056.

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 or
instrumentalities of government and to abolish any of those already
existing:
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 partiespetitioners 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 by-pass 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 eight-hour 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 coequal 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. L3054, 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 Secretary of Justice, had
advised the President on the question of emergency powers, does not
disqualify him to act in these cases, for he cannot be considered as having
acted previously in these actions as counsel of any of the parties. The
President is not 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 life-line 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 lawmaking 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 well-known 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-the-record 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 L3054-56* 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 co-extensive 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 StatesPhilippine 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 273A 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 age-old 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 presentday 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 counterbalanced 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 Geo-Sciences, 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 production-sharing 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, coproduction, 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, co-production 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 productionsharing 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 rulemaking 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 under legislative authority by a
particular department must be in harmony with the provisions of the law,
and should be for the sole purpose of carrying into effect its general
provision. By such regulations, of course, the law itself cannot be extended
(U.S. 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. 845-46. 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 privatelyowned 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 nonimpairment 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 production-sharing 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 productionsharing 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 production-sharing 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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