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THE CITY OF DAVAO, CITY G.R. No. 127383

TREASURER AND THE

CITY ASSESSOR OF DAVAO Present:

CITY,

Petitioners, PUNO, J.,

Chairman,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,

- versus - TINGA, and

CHICO-NAZARIO, JJ.

THE REGIONAL TRIAL Promulgated:

COURT, BRANCH XII, DAVAO

CITY AND THE GOVERNMENT August 18, 2005

SERVICE INSURANCE SYSTEM

(GSIS),Respondents.

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

D E C I S I O N

TINGA, J.:

A Davao City Regional Trial Court (RTC) upheld the

status of the Government Service Insurance System (GSIS) fo

1992 to 1994 in contravention of the mandate under

Government Code of 1992,[1]

the precedent set by this Court

Cebu International Airport Authority v. Hon. Marcos ,[2] and

policy on local autonomy enshrined in the Constitution.[3]

The matter was elevated to this Court directly from the

on a pure question of law.[4]

The facts are uncontroverted.

On 8 April 1994, the GSIS Davao City branch office

Notice of Public Auction scheduling the public bidding of GSIS

located in Matina and Ulas, Davao City for non-payment of r

for the years 1992 to 1994 totaling Two Hundred Ninety Fiv

Seven Hundred Twenty One Pesos and Sixty One

(P295,721.61).[5] The auction was subsequently reset by

deadline extension allowed by Davao City for the payment of

real property taxes.[6]

http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/127383.htm#_ftn1
























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On 28 July 1994, the GSIS received Warrants of Levy and Notices

of Levy on three parcels of land owned by the GSIS. Another Notice of

Public Auction was received by the GSIS on 29 August 1994, setting the

date of auction sale for 20 September 1994.

On 13 September 1994, the GSIS filed a Petition for Certiorari,

Prohibition, Mandamus And/Or Declaratory Relief with the RTC of Davao

City. It also sought the issuance of a temporary restraining order. The

case was raffled to Branch 12, presided by Judge Maximo Magno Libre.

On 13 September 1994, the RTC issued a temporary restraining order for

a period of twenty (20) days,[7]

effectively enjoining the auction sale

scheduled seven days later. Following exchange of arguments, the RTC

issued an Order dated 3 April 1995 issuing a writ of preliminary

injunction effective for the duration of the suit.[8]

At the pre-trial, it was agreed that the sole issue for reso

purely a question of law, that is, whether Sections 234 and

Local Government Code, which have withdrawn real pr

exemptions of government owned and controlled corporatio

have also withdrawn from the GSIS its right to be exem

payment of the realty taxes sought to be levied by Davao

parties submitted their respective memoranda.

On 28 May 1996, the RTC rendered the Decision[10]

n

before this Court. It concluded that notwithstanding the en

the Local Government Code, the GSIS retained its exempti

taxes, including real estate taxes. The RTC cited Sec

Presidential Decree (P.D.) No. 1146, the Revised Governm

Insurance Act of 1977, as amended by P. D. No. 1981, which

such exemption.

The RTC conceded that the tax exempting statute, P.D

was enacted prior to the Local Government Code. Howev

that the earlier law had prescribed two conditions in order












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exemption provided therein could be withdrawn by future enactments,

namely: (1) that Section 33 be expressly and categorically repealed by

law; and (2) that a provision be enacted to substitute the declared policy

of exemption from any and all taxes as an essential factor for the

solvency of the GSIS fund.[11] The RTC concluded that





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both conditions had not been satisfied by the Local Government Code.

The RTC likewise accorded weight to Legal Opinion No. 165 of the

Secretary of Justice dated 16 December 1996 concluding that Section 33

was not repealed by the Local Government Code, and a memorandum

emanating from the Office of the President dated 14 February 1995

expressing the same opinion.[12]

The dispositive portion of the assailed Decision reads:

Now then, in light of the foregoing observation, the court perceives,

that the cause of action asseverated by petitioner in its petition has been

well established by law and jurisprudence, and therefore the following

relief should be granted:

a) The tax exemption privilege of petitioner should be upheld and

continued and that the warrants of levy and notices of levy

issued by the respondent Treasurer is hereby voided and

declared of no effect; b) Let a writ of prohibition be issued restraining the City Treasurer

from proceeding with the auction sale of the subject properties,

as well as the respondents Register of Deeds from annotating

the warrants/notices of levy on the certificate of titles of

petitioners real properties subject of this suit; and c) Compelling the City Assessor of Davao City to include the

properties of petitioner in the list of properties exempt from

payment of realty tax and if the warrants and levies issue

City Treasurer had been annotated in the memoran

encumbrance on the certificates of title of pet

properties, to cancel such annotation so that the certif

titles of petitioners will be free from such lie

encumbrances.

SO ORDERED.[13]

Petitioners’ Motion for Reconsideration was denied by

an Order dated 30 October 1996, hence the present petition.

Petitioners argue that the exemption granted in Sectio

No. 1146, as amended, was effectively withdrawn upon the

of the Local Government Code, particularly Sections 19

thereof. These provisions made the GSIS, along with all ot

subject to realty taxes. Petitioners point out that under Secti

the Local Government Code, even special laws, such as PD

which are inconsistent with the Local Government Code, are

modified accordingly.









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On the other hand, GSIS contends, as the RTC held, that the

requisites for repeal are laid down in Section 33 of P.D. No. 1146, as

amended, namely that it be done expressly and categorically by law, and

that a provision be enacted to substitute the declared policy of

exemption from taxes as an essential factor for the solvency of the

GSIS fund. It stresses that it had been exempt from taxation as far back

as 1936, when its original charter was enacted through Commonwealth

Act No. 186.[14]

It asserts further that this Court had previously

recognized the “extraordinary exemption” of GSIS in Testate Estate of

Concordia T. Lim v. City of Manila ,[15]

and such exemption has similarly

been affirmed by the Secretary of Justice and the Office of the President

in the aforementioned issuances also cited by the RTC.[16]

GSIS likewise notes that had it been the intention of the legislature

to repeal Section 33 of P.D. No. 1146 through the Local Government

Code, said law would have included the appropriate retraction in its

repealing clause found in Section 534(f). However, said section,

according to the GSIS, partakes the nature of a general repealing

provision which is accorded less weight in light of the rule that implied

repeals are not favored. Consequently with its position that

exempt from realty taxation, the GSIS argues that the

Assessment, Warrants and Notices of Levy, Notices of Pub

Sale and the Annotations of the Notice of Levy are void ab ini

A review of the relevant statutory provisions is in order.

Presidential Decree No. 1146 was enacted in 1977 b

Marcos in the exercise of his legislative powers. Section 33, a

enacted, read:

Sec. 33. Exemption from tax, Legal Process and Lien.-hereby declared to be the policy of the State that the act

solvency of the funds of the System shall be preserved

maintained at all times and that the contribution rates necessa

sustain the benefits under this Act shall be kept as low as possib

order not to burden the members of the system and/or

employees. . . . Accordingly, notwithstanding any laws to

contrary, the System, its assets, revenues including the acc

thereto, and benefits paid, shall be exempt from all taxes. T

exemptions shall continue unless expressly and specifically rev

and any assessment against the System as of the approval of th

are hereby considered paid.













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As it stood then, Section 33 merely provided a general rule

exempting the GSIS from all taxes. However, Section 33 of P.D. No. 1146

was amended in 1985 by President Marcos, again in the exercise of his

legislative powers, through P.D. No. 1981. It was through this latter

decree that a second paragraph was added to Section 33 delineating the

requisites for repeal of the tax exemption enjoyed by the GSIS by

incorporating the following:

…

Moreover, these exemptions shall not be affected by

subsequent laws to the contrary, such as the provisions of

Presidential Decree No. 1931 and other similar laws that

have been or will be enacted, unless this section is

expressly and categorically repealed by law and a provision

is enacted to substitute the declared policy of exemption

from any and all taxes as an essential factor for the

solvency of the fund.[17]

It bears noting though, and it is perhaps key to underst

necessity of the addendum provided under P.D. No. 19

presidential decree enacted a year earlier, P.D. No. 1931,

withdrew all tax exemption privileges granted to GOCCs.[18]

No. 1931 was specifically named in the afore-quoted ad

among those laws which, despite passage, would not aff

exempt status of GSIS. Section 1 of P.D. No. 1931 states:

Sec. 1. The provisions of special or general law to t

contrary notwithstanding, all exemptions from the payment

duties, taxes, fees, imposts and other charges heretofore grant

in favor of government-owned or controlled corporatio

including their subsidiaries, are hereby withdrawn.

There is no doubt that the GSIS which was established

1937 is a GOCC, a fact that GSIS itself admits in its petition fo

before the RTC.[19]

It thus clear that Section 1 of P.D. No. 193

withdrew those exemptions granted to the GSIS. Presidentia

1931 did allow the exemption to be restored in special cases

application for restoration with the Secretary of Finance, but













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the exemptions granted to the GSIS prior to the enactment of P.D. No.

1931 were withdrawn.

Notably, P.D. No. 1931 was also an exercise of legislative powers

then accorded to President Marcos by virtue of Amendment No. 6 to the

1973 Constitution. Whether he was aware of the effect of P.D. No. 1931

on the GSIS’s tax-exempt status or the ramifications of the decree

thereon is unknown; but apparently, he immediately reconsidered the

withdrawal of the exemptions on the GSIS. Thus, P.D. No. 1981 was

enacted, expressly stating that the tax-exempt status of the GSIS under

Section 33 of P.D. No. 1146 remained in place, notwithstanding the

passage of P.D. No. 1931.

However, P.D. No. 1981 did not stop there, serving merely as it

should to restore the previous exemptions on the GSIS. It also attempted

to proscribe future attempts to alter the tax-exempt status of the GSIS

by imposing unorthodox conditions for its future repeal. Thus, as

intimated earlier, a second paragraph was added to Section 33,

containing the restrictions relied upon by the RTC and prese

by the GSIS before this Court.

These laws have to be weighed against the Local G

Code of 1992, a landmark law which implemented the co

aspirations for a more extensive breadth of local autonomy

in Mactan, was asked to consider the effect of the Local G

Code on the taxability by local governments of GOCCs s

Mactan Cebu International Airport Authority (MCIAA).

MCIAA invoked Section 133(o) of the Local Government C

basis for its claimed exemption, the provision reading:

SECTION 133. Common Limitations on the Taxing Powers

Government Units.— Unless otherwise provided herein, the e

the taxing powers of provinces, cities, municipalities, and baran

not extend to the levy of the following:

. . . .

(o) Taxes, fees or charges of any kind on the Nation

Government, its agencies and instrumentalities a

local government units.

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However, the Court, in ruling MCIAA non-exempt from realty

taxes, considered that Section 133 qualified the exemption of the

National Government, its agencies and instrumentalities from local

taxation with the phrase “unless otherwise provided herein.” The Court

then considered the other relevant provisions of the Local Government

Code, particularly the following:

SECTION 193. Withdrawal of Tax Exemption Privileges. – Unless

otherwise provided in this Code, tax exemption or incentives granted to,

or enjoyed by all persons, whether natural or juridical , including

government-owned and controlled corporations, except local water

districts, cooperatives duly registered under R.A. No. 6938, non-stock and

non-profit hospitals and educational institutions, are hereby withdrawn

upon the effectivity of this Code.

SECTION 232. Power to Levy Real Property Tax. – A province or city or a

municipality within the Metropolitan Manila area may levy an annual ad

valorem tax on real property such as land, building, machinery, and other

improvements not hereafter specifically exempted.

SECTION 234. Exemptions from Real Property Tax. -- The following are

exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of

its political subdivisions except when the beneficial use thereof

has been granted, for consideration or otherwise, to a taxable

person;

(b) Charitable institutions, churches, parsonages or

appurtenant thereto, mosques, non-profit or religious c

and all lands, buildings, and improvements actually, dire

exclusively used for religious charitable or educational pu

(c) All machineries and equipment that are actually, dir

exclusively used by local water districts and governme

and controlled corporations engaged in the distribution

and/or generation and transmission of electric p ower; (d) All real property owned by duly registered cooper

provided for under R.A. No. 6938; and (e) Machinery and equipment used for pollution con

environmental protection.

Except as provided herein, any exemption from payme

property tax previously granted to, or presently enjoyed by, al

whether natural or juridical, including all government-o

controlled corporations are hereby withdrawn upon the effe

this Code. (Emphasis supplied.)

Evidently, Section 133 was not intended to be so

prohibition on the power of LGUs to tax the National Gove

agencies and instrumentalities, as evidenced by these cited

which “otherwise provided.” But what was the extent of th

under Section 133? This is how the Court, in a discussion of f

consequence, defined the parameters in Mactan:

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The foregoing sections of the LGC speak of: (a) the

limitations on the taxing powers of local government units

and the exceptions to such limitations; and (b) the rule on tax

exemptions and the exceptions thereto. The use of exceptions or

provisos in these sections, as shown by the following clauses:

(1) "unless otherwise provided herein" in the opening

paragraph of Section 133; (2) "Unless otherwise provided in this Code" in Section 193; (3) "not hereafter specifically exempted" in Section 232;

and (4) "Except as provided herein" in the last paragraph of

Section 234

initially hampers a ready understanding of the sections. Note, too,

that the aforementioned clause in Section 133 seems to be

inaccurately worded. Instead of the clause "unless otherwise

provided herein," with the "herein" to mean, of course, the

section, it should have used the clause "unless otherwise providedin this Code." The former results in absurdity since the section

itself enumerates what are beyond the taxing powers of local

government units and, where exceptions were intended, the

exceptions are explicitly indicated in the next. For instance, in item

(a) which excepts income taxes "when levied on banks and other

financial institutions"; item (d) which excepts "wharfage on

wharves constructed and maintained by the local government unit

concerned"; and item (1) which excepts taxes, fees and charges

for the registration and issuance of licenses or permits for the

driving of "tricycles." It may also be observed that within the body

itself of the section, there are exceptions which can be found only

in other parts of the LGC, but the section interchangeably us

therein the clause, "except as otherwise provided herein" as

items (c) and (i), or the clause "except as provided in this Code"

item (j). These clauses would be obviously unnecessary or me

surplusages if the opening clause of the section were "Unle

otherwise provided in this Code" instead of "Unless otherw

provided herein." In

any event, even if the latter is used, since under Section 232 locgovernment units have the power to levy real property tax, exce

those exempted therefrom under Section 234, then Section 2

must be deemed to qualify Section 133.

Thus, reading together Sections 133, 232, and 234 of t

LGC, we conclude that as a general rule, as laid down in Sectio

133, the taxing powers of local government units cannot exten

to the levy of, inter alia, "taxes, fees and charges of any kind o

the National Government, its agencies and instrumentalitie

and local government units"; however, pursuant to Section 23

provinces, cities, and municipalities in the Metropolitan Man

Area may impose the real property tax except on, inter al"real property owned by the Republic of the Philippines or a

of its political subdivisions except when the beneficial u

thereof has been granted, for consideration or otherwise, to

taxable person," as provided in item (a) of the first paragraph

Section 234.

As to tax exemptions or incentives granted to or presen

enjoyed by natural or judicial persons, including governme

owned and controlled corporations, Section 193 of the L

prescribes the general rule, viz., they are withdrawn upon t

effectivity of the LGC, except those granted to local wat

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districts, cooperatives duly registered under R.A. No. 6938, non-

stock and non-profit hospitals and educational institutions, and

unless otherwise provided in the LGC. The latter proviso could

refer to Section 234 which enumerates the properties exempt

from real property tax. But the last paragraph of Section 234

further qualifies the retention of the exemption insofar as real

property taxes are concerned by limiting the retention only to

those enumerated therein; all others not included in theenumeration lost the privilege upon the effectivity of the LGC.

Moreover, even as to real property owned by the Republic of the

Philippines or any of its political subdivisions covered by item (a)

of the first paragraph of Section 234, the exemption is withdrawn

if the beneficial use of such property has been granted to a

taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally

withdrew, upon the effectivity of the LGC, exemptions from

payment of real property taxes granted to natural or juridical

persons, including government-owned or controlled corporations,

except as provided in the said section, and the petitioner is,undoubtedly, a government-owned corporation, it necessarily

follows that its exemption from such tax granted it in Section 14

of its Charter, R.A. No. 6958, has been withdrawn. Any claim to

the contrary can only be justified if the petitioner can seek refuge

under any of the exceptions provided in Section 234, but not

under Section 133, as it now asserts, since, as shown above, the

said section is qualified by Sections 232 and 234 .[20]

(Emphasis

supplied.)

This Court, in Mactan, acknowledged that under Se

instrumentalities were generally exempt from all form

government taxation, unless otherwise provided in the Co

other hand, Section 232 “otherwise provides” insofar as it al

government units to levy an ad valorem real property tax, irr

who owned the property. At the same time, the imposi

property taxes under Section 232 is in turn qualified by the p

hereinafter specifically exempted.” The exemptions from re

taxes are enumerated in Section 234, which specifically state

real properties owned “by the Republic of the Philippines o

political subdivisions” are exempted from the payment

Clearly, instrumentalities or GOCCs do not fall within the

under Section 234.

Worth reckoning, however, is an essential difference b

situation of the MCIAA (and most other GOCCs, for that matt

of the GSIS. Unlike most other GOCCs, there is a statutory

Section 33 of P.D. No. 1146, as amended—which imposes co

the subsequent withdrawal of the GSIS’s tax exemption





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justified the affirmance of the tax exemptions based on the non-

compliance by the Local Government Code with these conditionalities,

and not by reason of a general proposition that GOCCs or

instrumentalities remain exempt from local government taxation.

Absent Section 33 of P.D. No. 1146, as amended, there would be no

impediment in squarely applying the express provisions of Sections 193,

232 and 234 of the Local Government Code, as the Court did

in Mactan and recently in Philippine Rural Electric Cooperatives

Association, Inc. et al. v. Secretary of Interior And Local Government, et

al. [21]

and in ruling that the tax exemptions of GSIS were withdrawn by

the Code. Thus, the crucial proposition is whether the GSIS tax

exemptions can be deemed as withdrawn by the Local Government Code

notwithstanding Section 33 of P.D. No. 1146 as amended.

Concededly, it does not appear that at the very least,

conditionality of Section 33 has been met. No provisio

enacted “to substitute the declared policy of exemption from

taxes as an essential factor for the solvency of the fund.”[22]

Y

is averse to employing this framework, in the first place as ut

RTC, for we recognize a fundamental flaw in Section 33, par

amendatory second paragraph introduced by P.D. No. 1981.

The second paragraph of Section 33 of P.D. No. 1146, a

effectively imposes restrictions on the competency of the

enact future legislation on the taxability of the GSIS. Thi

undue restraint on the plenary power of the legislature to

repeal laws, especially considering that it is a lawmake

imposes such burden. Only the Constitution may operate to

place restrictions on the amendment or repeal of laws. Co

dicta is of higher order than legislative statutes, and the la

always yield to the former in cases of irreconcilable conflict.









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It is a basic precept that among the implied substantive limitations

on the legislative powers is the prohibition against the passage of

irrepealable laws.[23]

Irrepealable laws deprive succeeding legislatures of

the fundamental best senses carte blanche in crafting laws appropriate

to the operative milieu. Their allowance promotes an unhealthy stasis in

the legislative front and dissuades dynamic democratic impetus that may

be responsive to the times. As Senior Associate Justice Reynato S. Puno

once observed, “*t+o be sure, there are no irrepealable laws just as there

are no irrepealable Constitutions. Change is the predicate of progress

and we should not fear change.”[24]

Moreover, it would be noxious anathema to democratic principles

for a legislative body to have the ability to bind the actions of future

legislative body, considering that both assemblies are regarded with

equal footing, exercising as they do the same plenary powers. Perpetual

infallibility is not one of the attributes desired in a legislative body, and a

legislature which attempts to forestall future amendments or repeals of

its enactments labors under delusions of omniscience.

It might be argued that Section 33 of P.D. No. 1146, a

does not preclude the repeal of the tax-exempt status o

merely imposes conditions for such to validly occur.

conditions, if honored, have the precise effect of limiting th

Congress. Thus, the same rationale for prohibiting irrepe

applies in prohibiting restraints on future amendatory law

Marcos, who exercised his legislative powers in amending P.

could not have demanded obeisance from future legislators

restrictions on their ability to legislate amendments or r

concerns that may have militated his enactment of these

need not necessarily be shared by subsequent Congresses.

We do not mean to trivialize the need to ensure the solv

GSIS fund, a concern that has seen legislative expression, ev

most recently enacted Government Service Insurance Sys

1997.[25] Yet at the same time, we recognize that Congr

putative authority, through valid legislation, to diminish su

even abolish the GSIS itself if it so desires. The GSIS may p












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services and security to employees of the civil service, yet it is not a

sacred cow that is beyond abolition by Congress if, for example, more

innovative methods are devised to ensure stable pension funds for

government employees. If Congress has the inherent power to abrogate

the GSIS itself, then it necessarily has the ability to inflict less detrimental

burdens, such as abolishing its tax-exempt status. If there could be legal

authority proscribing the Congress from enacting such legislation, such

should be sourced from the Constitution itself, and not from antecedent

statutes which were themselves enacted by legislative power.

The Court’s position is aligned with entrenched norms of statutory

construction. In Duarte v. Dade,[26]

the Court cited with approval Lewis’

Southerland on Statutory Construction, which states:

A state legislature has a plenary law-making power over all

subjects, whether pertaining to persons or things, within its territorial

jurisdiction, either to introduce new laws or repeal the old, unless

prohibited expressly or by implication by the federal constit

limited or restrained by its own. It cannot bind itself or its succe

enacting irrepealable laws except when so restrained. Every le

body may modify or abolish the acts passed by itself or its prede

This power of repeal may be exercised at the same session at w

original act was passed; and even while a bill is in its progr

before it becomes a law. This legislature cannot bind a

legislature to a particular mode of repeal. It cannot declare in athe intent of subsequent legislatures or the effect of sub

legislation upon existing statutes. (Emphasis supplied.)[27]

The citation is particularly apropos to our present tas

question for resolution is primarily one of statutory const

whether or not Section 33 of P.D. No. 1146 has been repe

Local Government Code. It is evident that we cannot rende

the amendatory second paragraph of Section 33

as the RTC did, for by doing so, we would be giving sa

disingenuous means employed through legislative pow

subsequent legislators to a particular mode of repeal.









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Thus, the two conditionalities of Section 33 cannot bear relevance

on whether the Local Government Code removed the tax-exempt status

of the GSIS. The express withdrawal of all tax exemptions accorded to all

persons, natural or juridical, as stated in Section 193 of the Local

Government Code, applies without impediment to the present case.

Such position is bolstered by the other cited provisions of the Local

Government Code, and by the Mactan ruling.

There are other reasons that guide us to construe the Local

Government Code in favor of the City of Davao’s position. Section 5 of

the Local Government Code provides the guidelines on how to construe

the Code’s provisions in cases of doubt, and they are self -explanatory,

thus:

Section 5. Rules of Interpretation. – In the interpretation of the

provisions of this Code, the following rules shall apply:

(a) Any provision on a power of a local government unit shall be

liberally interpreted in its favor, and in case of doubt, any question

thereon shall be resolved in favor of devolution of powers and of the

lower local government unit. Any fair and reasonable doubt as to the

existence of the power shall be interpreted in favor of

government unit concerned;

(b) In case of doubt, any tax ordinance or revenue measur

construed strictly against the local government unit enactin

liberally in favor of the taxpayer. Any tax exemption, incentive

granted by any local government unit pursuant to the provisio

Code shall be construed strictly against the person cla(Emphasis supplied.)

Also worthy of note is that the Constitution itself pr

principles of local autonomy as embodied in the Local Govern

The State is mandated to ensure the autonomy

governments,[28]

and local governments are empowered to

fees and charges that accrue exclusively to them,

congressional guidelines and limitations.[29]

The principl

autonomy is no mere passing dalliance but a constitutionall

precept that deserves respect and appropriate enforcem

Court.









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We are aware that this stance runs contrary to that which was

adopted by the Secretary of Justice in his Opinion dated 22 July 1993, as

well as the memorandum from the Office of the President dated 14

February 1995, expressing the same opinion. However, statutory

interpretations of these executive bodies do not hold decisive sway upon

the judiciary but are merely persuasive. These issuances cannot derogate

from the binding precept that one legislature cannot enact irrepealable

legislation or limit or restrict its own power or the power of its

successors as to the repeal of statutes.[30]

The act of one legislature is

not binding upon and does not tie the hands of future legislatures.[31]

The GSIS’s tax-exempt status, in sum, was withdrawn in 1992 by

the Local Government Code but restored by the Government Service

Insurance System

Act of 1997, the operative provision of which is Section

39.[32] The subject real property taxes for the years 1992 to 1994 were

assessed against GSIS while the Local Government Code provisions

prevailed and, thus, may be collected by the City of Davao.

WHEREFORE, premises considered, the Petition fo

hereby GRANTED. The appealed

the Regional Trial Court ofDavao City, Branch 12 is REVERS

ASIDE.

Costs de oficio.

SO ORDERED.

KIDA VS. SENATE

We resolve: (a) the motion for reconsideration filed by petitioners Datu Mi

Kida, et al. in G.R. No. 196271; (b) the motion for reconsideration filed by p

Rep. Edcel Lagman in G.R. No. 197221; (c) the ex abundante ad cautelam m

reconsideration filed by petitioner Basari Mapupuno in G.R. No. 196305; (dfor reconsideration filed by petitioner Atty. Romulo Macalintal in G.R. No. 1

the motion for reconsideration filed by petitioners Almarim Centi Tillah, Da

Conding Cana and Partido Demokratiko Pilipino Lakas ng Bayan in G.R. No.

the manifestation and motion filed by petitioners Almarim Centi Tillah, et a

197280; and (g) the very urgent motion to issue clarificatory resolution tha

temporary restraining order (TRO) is still existing and effective.

These motions assail our Decision dated October 18, 2011, where we uphe

constitutionality of Republic Act (RA) No. 10153. Pursuant to the constituti

of synchronization, RA No. 10153 postponed the regional elections in the A

Region in Muslim Mindanao (ARMM) (which were scheduled to be held on

Monday of August 2011) to the second Monday of May 2013 and recogniz













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President’s power to appoint officers-in-charge (OICs) to temporarily assume these

positions upon the expiration of the terms of the elected officials.

The Motions for Reconsideration

The petitioners in G.R. No. 196271 raise the following grounds in support of their

motion:

I. THE HONORABLE COURT ERRED IN CONCLUDING THAT THE ARMM ELECTIONS

ARE LOCAL ELECTIONS, CONSIDERING THAT THE CONSTITUTION GIVES THE

ARMM A SPECIAL STATUS AND IS SEPARATE AND DISTINCT FROM ORDINARY

LOCAL GOVERNMENT UNITS.

II. R.A. 10153 AND R.A. 9333 AMEND THE ORGANIC ACT.

III. THE SUPERMAJORITY PROVISIONS OF THE ORGANIC ACT (R.A. 9054) ARE NOT

IRREPEALABLE LAWS.

IV. SECTION 3, ARTICLE XVII OF R.A. 9054 DOES NOT VIOLATE SECTION 18,

ARTICLE X OF THE CONSTITUTION.

V. BALANCE OF INTERESTS TILT IN FAVOR OF THE DEMOCRATIC PRINCIPLE[.]1

The petitioner in G.R. No. 197221 raises similar grounds, arguing that:

I. THE ELECTIVE REGIONAL EXECUTIVE AND LEGISLATIVE OFFICIALS OF ARMM

CANNOT BE CONSIDERED AS OR EQUATED WITH THE TRADITIONAL LOCAL

GOVERNMENT OFFICIALS IN THE LOCAL GOVERNMENT UNITS (LGUs) BECAUSE

(A) THERE IS NO EXPLICIT CONSTITUTIONAL PROVISION ON SUCH PARITY; AND

(B) THE ARMM IS MORE SUPERIOR THAN LGUs IN STRUCTURE, POWERS AND

AUTONOMY, AND CONSEQUENTLY IS A CLASS OF ITS OWN APART FROM

TRADITIONAL LGUs.

II. THE UNMISTAKABLE AND UNEQUIVOCAL CONSTITUTIONAL MAN

AN ELECTIVE AND REPRESENTATIVE EXECUTIVE DEPARTMENT AND

ASSEMBLY IN ARMM INDUBITABLY PRECLUDES THE APPOINTMENT

PRESIDENT OF OFFICERS-IN-CHARGE (OICs), ALBEIT MOMENTARY O

TEMPORARY, FOR THE POSITIONS OF ARMM GOVERNOR, VICE GOV

MEMBERS OF THE REGIONAL ASSEMBLY.

III. THE PRESIDENT’S APPOINTING POWER IS LIMITED TO APPOINTI

AND DOES NOT EXTEND TO ELECTIVE OFFICIALS EVEN AS THE PRES

ONLY VESTED WITH SUPERVISORY POWERS OVER THE ARMM, THE

NEGATING THE AWESOME POWER TO APPOINT AND REMOVE OICs

ELECTIVE POSITIONS.

IV. THE CONSTITUTION DOES NOT PROSCRIBE THE HOLDOVER OF A

ELECTED OFFICIALS PENDING THE ELECTION AND QUALIFICATION O

SUCCESSORS.

V. THE RULING IN OSMENA DOES NOT APPLY TO ARMM ELECTED O

WHOSE TERMS OF OFFICE ARE NOT PROVIDED FOR BY THE CONST

PRESCRIBED BY THE ORGANIC ACTS.

VI. THE REQUIREMENT OF A SUPERMAJORITY OF ¾ VOTES IN THE H

REPRESENTATIVES AND THE SENATE FOR THE VALIDITY OF A SUBST

AMENDMENT OR REVISION OF THE ORGANIC ACTS DOES NOT IMP

IRREPEALABLE LAW.

VII. THE REQUIREMENT OF A PLEBISCITE FOR THE EFFECTIVITY OF A

SUBSTANTIVE AMENDMENT OR REVISION OF THE ORGANIC ACTS D

UNDULY EXPAND THE PLEBISCITE REQUIREMENT OF THE CONSTITU

VIII. SYNCHRONIZATION OF THE ARMM ELECTION WITH THE NATIO

LOCAL ELECTIONS IS NOT MANDATED BY THE CONSTITUTION.

http://www.lawphil.net/judjuris/juri2012/feb2012/gr_196271_2012.html#fnt1




8/21/2019 art. vi- SEC 1


IX. THE COMELEC HAS THE AUTHORITY TO HOLD AND CONDUCT SPECIAL

ELECTIONS IN ARMM, AND THE ENACTMENT OF AN IMPROVIDENT AND

UNCONSTITUTIONAL STATUTE IS AN ANALOGOUS CAUSE WARRANTING

COMELEC’S HOLDING OF SPECIAL ELECTIONS.2 (italics supplied)

The petitioner in G.R. No. 196305 further asserts that:

I. BEFORE THE COURT MAY CONSTRUE OR INTERPRET A STATUTE, IT IS A

CONDITION SINE QUA NON THAT THERE BE DOUBT OR AMBIGUITY IN ITS

LANGUAGE.

THE TRANSITORY PROVISIONS HOWEVER ARE CLEAR AND UNAMBIGUOUS: THEY

REFER TO THE 1992 ELECTIONS AND TURN-OVER OF ELECTIVE OFFICIALS.

IN THUS RECOGNIZING A SUPPOSED "INTENT" OF THE FRAMERS, AND APPLYING

THE SAME TO ELECTIONS 20 YEARS AFTER, THE HONORABLE SUPREME COURT

MAY HAVE VIOLATED THEFOREMOST RULE IN STATUTORY CONSTRUCTION.

x x x x

II. THE HONORABLE COURT SHOULD HAVE CONSIDERED THAT RA 9054, ANORGANIC ACT, WAS COMPLETE IN ITSELF. HENCE, RA 10153 SHOULD BE

CONSIDERED TO HAVE BEEN ENACTED PRECISELY TO AMEND RA 9054.

x x x x

III. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS ERROR IN

DECLARING THE 2/3 VOTING REQUIREMENT SET FORTH IN RA 9054 AS

UNCONSTITUTIONAL.

x x x x

IV. THE HONORABLE COURT MAY HAVE COMMITTED A SERIOUS ER

HOLDING THAT A PLEBISCITE IS NOT NECESSARY IN AMENDING TH

ACT.

x x x x

V. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN DEC

HOLD-OVER OF ARMM ELECTIVE OFFICIALS UNCONSTITUTIONAL.

x x x x

VI. THE HONORABLE COURT COMMITTED A SERIOUS ERROR IN UPH

APPOINTMENT OF OFFICERS-IN-CHARGE.3 (italics and underscoring

The petitioner in G.R. No. 197282 contends that:

A.

ASSUMING WITHOUT CONCEDING THAT THE APPOINTMENT OF OI

REGIONAL GOVERNMENT OF THE ARMM IS NOT UNCONSTITUTION

WITH, SUCH APPOINTMENT OF OIC REGIONAL OFFICIALS WILL CREFUNDAMENTAL CHANGE IN THE BASIC STRUCTURE OF THE REGION

GOVERNMENT SUCH THAT R.A. NO. 10153 SHOULD HAVE BEEN SU

A PLEBISCITE IN THE ARMM FOR APPROVAL BY ITS PEOPLE, WHICH

REQUIREMENT CANNOT BE CIRCUMVENTED BY SIMPLY CHARACTE

PROVISIONS OF R.A. NO. 10153 ON APPOINTMENT OF OICs AS AN "

MEASURE".

B.

THE HONORABLE COURT ERRED IN RULING THAT THE APPOINTMEN

PRESIDENT OF OICs FOR THE ARMM REGIONAL GOVERNMENT IS N

OF THE CONSTITUTION.









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C.

THE HOLDOVER PRINCIPLE ADOPTED IN R.A. NO. 9054 DOES NOT VIOLATE THE

CONSTITUTION, AND BEFORE THEIR SUCCESSORS ARE ELECTED IN EITHER AN

ELECTION TO BE HELD AT THE SOONEST POSSIBLE TIME OR IN MAY 2013, THE

SAID INCUMBENT ARMM REGIONAL OFFICIALS MAY VALIDLY CONTINUE

FUNCTIONING AS SUCH IN A HOLDOVER CAPACITY IN ACCORDANCE WITH

SECTION 7, ARTICLE VII OF R.A. NO. 9054.

D.

WITH THE CANCELLATION OF THE AUGUST 2011 ARMM ELECTIONS, SPECIAL

ELECTIONS MUST IMMEDIATELY BE HELD FOR THE ELECTIVE REGIONAL

OFFICIALS OF THE ARMM WHO SHALL SERVE UNTIL THEIR SUCCESSORS ARE

ELECTED IN THE MAY 2013 SYNCHRONIZED ELECTIONS.4

Finally, the petitioners in G.R. No. 197280 argue that:

a) the Constitutional mandate of synchronization does not apply to the ARMM

elections;

b) RA No. 10153 negates the basic principle of republican democracy which, by

constitutional mandate, guides the governance of the Republic;

c) RA No. 10153 amends the Organic Act (RA No. 9054) and, thus, has to comply

with the 2/3 vote from the House of Representatives and the Senate, voting

separately, and be ratified in a plebiscite;

d) if the choice is between elective officials continuing to hold their offices even

after their terms are over and non-elective individuals getting into the vacant

elective positions by appointment as OICs, the holdover option is the better

choice;

e) the President only has the power of supervision over autonomo

which does not include the power to appoint OICs to take the place

elective officials; and

f) it would be better to hold the ARMM elections separately from th

and local elections as this will make it easier for the authorities to i

election laws.

In essence, the Court is asked to resolve the following questions:

(a) Does the Constitution mandate the synchronization of ARMM r

elections with national and local elections?

(b) Does RA No. 10153 amend RA No. 9054? If so, does RA No. 101

comply with the supermajority vote and plebiscite requirements?

(c) Is the holdover provision in RA No. 9054 constitutional?

(d) Does the COMELEC have the power to call for special elections i

(e) Does granting the President the power to appoint OICs violate tand representative nature of ARMM regional legislative and execut

(f) Does the appointment power granted to the President exceed t

supervisory powers over autonomous regions?

The Court’s Ruling

We deny the motions for lack of merit.

Synchronization mandate includes ARMM elections





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The Court was unanimous in holding that the Constitution mandates the

synchronization of national and local elections. While the Constitution does not

expressly instruct Congress to synchronize the national and local elections, the intention

can be inferred from the following provisions of the Transitory Provisions (Article XVIII)

of the Constitution, which state:

Section 1. The first elections of Members of the Congress under this Constitution shall

be held on the second Monday of May, 1987.

The first local elections shall be held on a date to be determined by the President, which

may be simultaneous with the election of the Members of the Congress. It shall include

the election of all Members of the city or municipal councils in the Metropolitan Manila

area.

Section 2. The Senators, Members of the House of Representatives, and the local

officials first elected under this Constitution shall serve until noon of June 30, 1992.

Of the Senators elected in the elections in 1992, the first twelve obtaining the highest

number of votes shall serve for six years and the remaining twelve for three years.

x x x x

Section 5. The six-year term of the incumbent President and Vice-President elected in

the February 7, 1986 election is, for purposes of synchronization of elections, hereby

extended to noon of June 30, 1992.

The first regular elections for the President and Vice-President under this Constitution

shall be held on the second Monday of May, 1992.

To fully appreciate the constitutional intent behind these provisions, we refer to the

discussions of the Constitutional Commission:

MR. MAAMBONG. For purposes of identification, I will now read a section

temporarily indicate as Section 14. It reads: "THE SENATORS, MEMBERS OF

OF REPRESENTATIVES AND THE LOCAL OFFICIALS ELECTED IN THE FIRST EL

SERVE FOR FIVE YEARS, TO EXPIRE AT NOON OF JUNE 1992."

This was presented by Commissioner Davide, so may we ask that Commiss

be recognized.

THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner Davide is recognized

MR. DAVIDE. Before going to the proposed amendment, I would only state

of the action taken by the Commission on Section 2 earlier, I am formulatin

proposal. It will read as follows: "THE SENATORS, MEMBERS OF THE HOUSE

REPRESENTATIVES AND THE LOCAL OFFICIALS FIRST ELECTED UNDER THIS

CONSTITUTION SHALL SERVE UNTIL NOON OF JUNE 30, 1992."

I proposed this because of the proposed section of the Article on Transitor

giving a term to the incumbent President and Vice-President until 1992. Ne

then, since the term provided by the Commission for Members of the Lowe

for local officials is three years, if there will be an election in 1987, the nex

said officers will be in 1990, and it would be very close to 1992. We could nsubsequently, any synchronization of election which is once every three ye

So under my proposal we will be able to begin actual synchronization in 1

consequently, we should not have a local election or an election for Memb

Lower House in 1990 for them to be able to complete their term of three y

And if we also stagger the Senate, upon the first election it will result in an

1993 for the Senate alone, and there will be an election for 12 Senators in

the remaining 12 who will be elected in 1987, if their term is for six years, t

will be in 1993. So, consequently we will have elections in 1990, in 1992 an

The later election will be limited to only 12 Senators and of course to the lo

and the Members of the Lower House. But, definitely, thereafter we can ne

election once every three years, therefore defeating the very purpose of th

8/21/2019 art. vi- SEC 1


Commission when we adopted the term of six years for the President and another six

years for the Senators with the possibility of staggering with 12 to serve for six years and

12 for three years insofar as the first Senators are concerned. And so my proposal is the

only way to effect the first synchronized election which would mean, necessarily, a

bonus of two years to the Members of the Lower House and a bonus of two years to

the local elective officials.

THE PRESIDING OFFICER (Mr. Rodrigo). What does the committee say?

MR. DE CASTRO. Mr. Presiding Officer.

THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner de Castro is recognized.

MR. DE CASTRO. Thank you.

During the discussion on the legislative and the synchronization of elections, I was the

one who proposed that in order to synchronize the elections every three years, which

the body approved — the first national and local officials to be elected in 1987 shall

continue in office for five years, the same thing the Honorable Davide is now proposing.

That means they will all serve until 1992, assuming that the term of the President will be

for six years and continue beginning in 1986. So from 1992, we will again have national,local and presidential elections. This time, in 1992, the President shall have a term until

1998 and the first 12 Senators will serve until 1998, while the next 12 shall serve until

1995, and then the local officials elected in 1992 will serve until 1995. From then on,

we shall have an election every three years.

So, I will say that the proposition of Commissioner Davide is in order, if we have to

synchronize our elections every three years which was already approved by the body.

Thank you, Mr. Presiding Officer.

x x x x

MR. GUINGONA. What will be synchronized, therefore, is the election of th

President and Vice-President in 1992.

MR. DAVIDE. Yes.

MR. GUINGONA. Not the reverse. Will the committee not synchronize the

the Senators and local officials with the election of the President?

MR. DAVIDE. It works both ways, Mr. Presiding Officer. The attempt here i

assumption that the provision of the Transitory Provisions on the term of th

President and Vice-President would really end in 1992.

MR. GUINGONA. Yes.

MR. DAVIDE. In other words, there will be a single election in 1992 for all,

President up to the municipal officials.5 (emphases and underscoring ours

The framers of the Constitution could not have expressed their objective m

there was to be a single election in 1992 for all elective officials – from the

down to the municipal officials. Significantly, the framers were even willing

temporarily lengthen or shorten the terms of elective officials in order to mobjective, highlighting the importance of this constitutional mandate.

We came to the same conclusion in Osmeña v. Commission on Elections ,6 w

unequivocally stated that "the Constitution has mandated synchronized na

local elections."7 Despite the length and verbosity of their motions, the pet

failed to convince us to deviate from this established ruling.

Neither do we find any merit in the petitioners’ contention that the ARMM

not covered by the constitutional mandate of synchronization because the

elections were not specifically mentioned in the above-quoted Transitory P

the Constitution.













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That the ARMM elections were not expressly mentioned in the Transitory Provisions of

the Constitution on synchronization cannot be interpreted to mean that the ARMM

elections are not covered by the constitutional mandate of synchronization. We have to

consider that the ARMM, as we now know it, had not yet been officially organized at the

time the Constitution was enacted and ratified by the people. Keeping in mind that a

constitution is not intended to provide merely for the exigencies of a few years but is to

endure through generations for as long as it remains unaltered by the people as

ultimate sovereign, a constitution should be construed in the light of what actually is a

continuing instrument to govern not only the present but also the unfolding events of

the indefinite future. Although the principles embodied in a constitution remain fixed

and unchanged from the time of its adoption, a constitution must be construed as a

dynamic process intended to stand for a great length of time, to be progressive and not

static.8

To reiterate, Article X of the Constitution, entitled "Local Government," clearly shows

the intention of the Constitution to classify autonomous regions, such as the ARMM, as

local governments. We refer to Section 1 of this Article, which provides:

Section 1. The territorial and political subdivisions of the Republic of the Philippines are

the provinces, cities, municipalities, and barangays. There shall be autonomous regions

in Muslim Mindanao and the Cordilleras as hereinafter provided.

The inclusion of autonomous regions in the enumeration of political subdivisions of the

State under the heading "Local Government" indicates quite clearly the constitutional

intent to consider autonomous regions as one of the forms of local governments.

That the Constitution mentions only the "national government" and the "local

governments," and does not make a distinction between the "local government" and

the "regional government," is particularly revealing, betraying as it does the intention of

the framers of the Constitution to consider the autonomous regions not as separate

forms of government, but as political units which, while having more powers and

attributes than other local government units, still remain under the category of local

governments. Since autonomous regions are classified as local government

that elections held in autonomous regions are also considered as local elec

The petitioners further argue that even assuming that the Constitution ma

synchronization of elections, the ARMM elections are not covered by this m

they are regional elections and not local elections.

In construing provisions of the Constitution, the first rule is verba legis, "th

wherever possible, the words used in the Constitution must be given their

meaning except where technical terms are employed."9 Applying this princ

determine the scope of "local elections," we refer to the meaning of the w

understood in its ordinary sense. As defined in Webster’s Third New Intern

Dictionary Unabridged, "local" refers to something "that primarily serves t

particular limited district, often a community or minor political subdivision

the ARMM elections, which are held within the confines of the autonomou

Muslim Mindanao, fall within this definition.

To be sure, the fact that the ARMM possesses more powers than other pro

or municipalities is not enough reason to treat the ARMM regional election

from the other local elections. Ubi lex non distinguit nec nos distinguire deb

the law does not distinguish, we must not distinguish.10

RA No. 10153 does not amend RA No. 9054

The petitioners are adamant that the provisions of RA No. 10153, in postpo

ARMM elections, amend RA No. 9054.

We cannot agree with their position.

A thorough reading of RA No. 9054 reveals that it fixes the schedule for on

the first ARMM elections;11 it does not provide the date for the succeeding

ARMM elections. In providing for the date of the regular ARMM elections, R

and RA No. 10153 clearly do not amend RA No. 9054 since these laws do n

















8/21/2019 art. vi- SEC 1


revise any provision in RA No. 9054. In fixing the date of the ARMM elections

subsequent to the first election, RA No. 9333 and RA No. 10153 merely filled the gap left

in RA No. 9054.

We reiterate our previous observations:

This view – that Congress thought it best to leave the determination of the date of

succeeding ARMM elections to legislative discretion – finds support in ARMM’s recent

history.

To recall, RA No. 10153 is not the first law passed that rescheduled the ARMM elections.

The First Organic Act – RA No. 6734 – not only did not fix the date of the subsequent

elections; it did not even fix the specific date of the first ARMM elections, leaving the

date to be fixed in another legislative enactment. Consequently, RA No. 7647, RA No.

8176, RA No. 8746, RA No. 8753, and RA No. 9012 were all enacted by Congress to fix

the dates of the ARMM elections. Since these laws did not change or modify any part or

provision of RA No. 6734, they were not amendments to this latter law. Consequently,

there was no need to submit them to any plebiscite for ratification.

The Second Organic Act – RA No. 9054 – which lapsed into law on March 31, 2001,

provided that the first elections would be held on the second Monday of September2001. Thereafter, Congress passed RA No. 9140 to reset the date of the ARMM

elections. Significantly, while RA No. 9140 also scheduled the plebiscite for the

ratification of the Second Organic Act (RA No. 9054), the new date of the ARMM

regional elections fixed in RA No. 9140 was not among the provisions ratified in the

plebiscite held to approve RA No. 9054. Thereafter, Congress passed RA No. 9333,

which further reset the date of the ARMM regional elections. Again, this law was not

ratified through a plebiscite.

From these legislative actions, we see the clear intention of Congress to treat the laws

which fix the date of the subsequent ARMM elections as separate and distinct from the

Organic Acts. Congress only acted consistently with this intent when it passed RA No.

10153 without requiring compliance with the amendment prerequisites em

Section 1 and Section 3, Article XVII of RA No. 9054.12 (emphases supplied)

The petitioner in G.R. No. 196305 contends, however, that there is no lacun

9054 as regards the date of the subsequent ARMM elections. In his estimat

implied from the provisions of RA No. 9054 that the succeeding elections a

three years after the date of the first ARMM regional elections.

We find this an erroneous assertion. Well-settled is the rule that the court m

the guise of interpretation, enlarge the scope of a statute and include ther

not provided nor intended by the lawmakers. An omission at the time of en

whether careless or calculated, cannot be judicially supplied however later

recommend the inclusion.13 Courts are not authorized to insert into the law

think should be in it or to supply what they think the legislature would hav

its attention had been called to the omission.14Providing for lapses within t

within the exclusive domain of the legislature, and courts, no matter how w

have no authority to intrude into this clearly delineated space.

Since RA No. 10153 does not amend, but merely fills in the gap in RA No. 9

no need for RA No. 10153 to comply with the amendment requirements se

Article XVII of RA No. 9054.

Supermajority vote requirement makes RA No. 9054 an irrepealable law

Even assuming that RA No. 10153 amends RA No. 9054, however, we have

established that the supermajority vote requirement set forth in Section 1,

of RA No. 905415

is unconstitutional for violating the principle that Congres

irrepealable laws.

The power of the legislature to make laws includes the power to amend an

these laws. Where the legislature, by its own act, attempts to limit its powe

or repeal laws, the Court has the duty to strike down such act for interferin

plenary powers of Congress. As we explained in Duarte v. Dade:16





















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A state legislature has a plenary law-making power over all subjects, whether pertaining

to persons or things, within its territorial jurisdiction, either to introduce new laws or

repeal the old, unless prohibited expressly or by implication by the federal constitution

or limited or restrained by its own. It cannot bind itself or its successors by enacting

irrepealable laws except when so restrained. Every legislative body may modify or

abolish the acts passed by itself or its predecessors. This power of repeal may be

exercised at the same session at which the original act was passed; and even while a bill

is in its progress and before it becomes a law. This legislature cannot bind a future

legislature to a particular mode of repeal. It cannot declare in advance the intent of

subsequent legislatures or the effect of subsequent legislation upon existing statutes.

[emphasis ours]

Under our Constitution, each House of Congress has the power to approve bills by a

mere majority vote, provided there is quorum.17 In requiring all laws which amend RA

No. 9054 to comply with a higher voting requirement than the Constitution provides

(2/3 vote), Congress, which enacted RA No. 9054, clearly violated the very principle

which we sought to establish in Duarte. To reiterate, the act of one legislature is not

binding upon, and cannot tie the hands of, future legislatures .18

We also highlight an important point raised by Justice Antonio T. Carpio in his dissenting

opinion, where he stated: "Section 1, Article XVII of RA 9054 erects a high vote thresholdfor each House of Congress to surmount, effectively and unconstitutionally, taking RA

9054 beyond the reach of Congress’ amendatory powers. One Congress cannot limit or

reduce the plenary legislative power of succeeding Congresses by requiring a higher

vote threshold than what the Constitution requires to enact, amend or repeal laws. No

law can be passed fixing such a higher vote threshold because Congress has no power,

by ordinary legislation, to amend the Constitution."19

Plebiscite requirement in RA No. 9054 overly broad

Similarly, we struck down the petitioners’ contention that the plebiscite

requirement20

applies to all amendments of RA No. 9054 for being an unreasonable

enlargement of the plebiscite requirement set forth in the Constitution.

Section 18, Article X of the Constitution provides that "[t]he creation of the

region shall be effective when approved by majority of the votes cast by th

units in a plebiscite called for the purpose[.]" We interpreted this to mean

amendments to, or revisions of, the Organic Act constitutionally-essential

creation of autonomous regions – i.e., those aspects specifically mentioned

Constitution which Congress must provide for in the Organic Act21 – requir

through a plebiscite. We stand by this interpretation.

The petitioners argue that to require all amendments to RA No. 9054 to co

plebiscite requirement is to recognize that sovereignty resides primarily in

While we agree with the petitioners’ underlying premise that sovereignty

resides with the people, we disagree that this legal reality necessitates com

the plebiscite requirement for all amendments to RA No. 9054. For if we w

the petitioners’ interpretation of Section 18, Article X of the Constitution th

amendments to the Organic Act have to undergo the plebiscite requireme

becoming effective, this would lead to impractical and illogical results – ha

ARMM’s progress by impeding Congress from enacting laws that timely ad

problems as they arise in the region, as well as weighing down the ARMM g

with the costs that unavoidably follow the holding of a plebiscite.

Interestingly, the petitioner in G.R. No. 197282 posits that RA No. 10153, in

President the power to appoint OICs to take the place of the elective officia

ARMM, creates a fundamental change in the basic structure of the governm

thus requires compliance with the plebiscite requirement embodied in RA

Again, we disagree.

The pertinent provision in this regard is Section 3 of RA No. 10153, which re

Section 3. Appointment of Officers-in-Charge. — The President shall appoin

charge for the Office of the Regional Governor, Regional Vice Governor and

the Regional Legislative Assembly who shall perform the functions pertain





















8/21/2019 art. vi- SEC 1


offices until the officials duly elected in the May 2013 elections shall have qualified and

assumed office.

We cannot see how the above-quoted provision has changed the basic structure of the

ARMM regional government. On the contrary, this provision clearly preserves the basic

structure of the ARMM regional government when it recognizes the offices of the

ARMM regional government and directs the OICs who shall temporarily assume these

offices to "perform the functions pertaining to the said offices."

Unconstitutionality of the holdover provision

The petitioners are one in defending the constitutionality of Section 7(1), Article VII of

RA No. 9054, which allows the regional officials to remain in their positions in a holdover

capacity. The petitioners essentially argue that the ARMM regional officials should be

allowed to remain in their respective positions until the May 2013 elections since there

is no specific provision in the Constitution which prohibits regional elective officials from

performing their duties in a holdover capacity.

The pertinent provision of the Constitution is Section 8, Article X which provides:

Section 8. The term of office of elective local officials, except barangay officials, whichshall be determined by law, shall be three years and no such official shall serve for more

than three consecutive terms. [emphases ours]

On the other hand, Section 7(1), Article VII of RA No. 9054 provides:

Section 7. Terms of Office of Elective Regional Officials. – (1) Terms of Office. The terms

of office of the Regional Governor, Regional Vice Governor and members of the

Regional Assembly shall be for a period of three (3) years, which shall begin at noon on

the 30th day of September next following the day of the election and shall end at noon

of the same date three (3) years thereafter. The incumbent elective officials of the

autonomous region shall continue in effect until their successors are elected and

qualified.

The clear wording of Section 8, Article X of the Constitution expresses the in

framers of the Constitution to categorically set a limitation on the period w

all elective local officials can occupy their offices. We have already establis

elective ARMM officials are also local officials; they are, thus, bound by the

term limit prescribed by the Constitution. It, therefore, becomes irrelevant

Constitution does not expressly prohibit elective officials from acting in a h

capacity. Short of amending the Constitution, Congress has no authority to

three-year term limit by inserting a holdover provision in RA No. 9054. Thu

three years for local officials should stay at three (3) years, as fixed by the C

and cannot be extended by holdover by Congress.

Admittedly, we have, in the past, recognized the validity of holdover provis

various laws. One significant difference between the present case and thes

cases22 is that while these past cases all refer to electivebarangay or sangg

kabataan officials whose terms of office are not explicitly provided for in t

Constitution, the present case refers to local elective officials - the ARMM G

ARMM Vice Governor, and the members of the Regional Legislative Assem

terms fall within the three-year term limit set by Section 8, Article X of the

Even assuming that a holdover is constitutionally permissible, and there ha

statutory basis for it (namely Section 7, Article VII of RA No. 9054), the rule can only apply as an available option where no express or implied legislativ

the contrary exists; it cannot apply where such contrary intent is evident.23

Congress, in passing RA No. 10153 and removing the holdover option, has m

that it wants to suppress the holdover rule expressed in RA No. 9054. Cong

exercise of its plenary legislative powers, has clearly acted within its discre

deleted the holdover option, and this Court has no authority to question th

this decision, absent any evidence of unconstitutionality or grave abuse of

is for the legislature and the executive, and not this Court, to decide how to

vacancies in the ARMM regional government which arise from the legislatu

with the constitutional mandate of synchronization.








8/21/2019 art. vi- SEC 1


COMELEC has no authority to hold special elections

Neither do we find any merit in the contention that the Commission on Elections

(COMELEC) is sufficiently empowered to set the date of special elections in the ARMM.

To recall, the Constitution has merely empowered the COMELEC to enforce and

administer all laws and regulations relative to the conduct of an election.24 Although the

legislature, under the Omnibus Election Code (Batas Pambansa Bilang [BP] 881), has

granted the COMELEC the power to postpone elections to another date, this power is

confined to the specific terms and circumstances provided for in the law. Specifically,

this power falls within the narrow confines of the following provisions:

Section 5. Postponement of election. - When for any serious cause such

as violence, terrorism, loss or destruction of election paraphernalia or records, force

majeure, and other analogous causes of such a nature that the holding of a free,

orderly and honest election should become impossible in any political subdivision, the

Commission,motu proprio or upon a verified petition by any interested party, and after

due notice and hearing, whereby all interested parties are afforded equal opportunity to

be heard, shall postpone the election therein to a date which should be reasonably

close to the date of the election not held, suspended or which resulted in a failure to

elect but not later than thirty days after the cessation of the cause for such

postponement or suspension of the election or failure to elect.

Section 6. Failure of election. - If, on account of force

majeure, violence, terrorism, fraud, or other analogous causes the election in any

polling place has not been held on the date fixed, or had been suspended before the

hour fixed by law for the closing of the voting, or after the voting and during the

preparation and the transmission of the election returns or in the custody or canvass

thereof, such election results in a failure to elect, and in any of such cases the failure or

suspension of election would affect the result of the election, the Commission shall, on

the basis of a verified petition by any interested party and after due notice and hearing,

call for the holding or continuation of the election not held, suspended or which

resulted in a failure to elect on a date reasonably close to the date of the election not

held, suspended or which resulted in a failure to elect but not later than thirty days after

the cessation of the cause of such postponement or suspension of the elec

to elect. [emphases and underscoring ours]

As we have previously observed in our assailed decision, both Section 5 and

BP 881 address instances where elections have already been scheduled to

but do not occur or had to be suspended because

of unexpected and unforeseen circumstances, such as violence, fraud, ter

other analogous circumstances.

In contrast, the ARMM elections were postponed by law, in furtherance of

constitutional mandate of synchronization of national and local elections.

this does not fall under any of the circumstances contemplated by Section

of BP 881.

More importantly, RA No. 10153 has already fixed the date for the next AR

and the COMELEC has no authority to set a different election date.

Even assuming that the COMELEC has the authority to hold special election

Court can compel the COMELEC to do so, there is still the problem of havin

the terms of the newly elected officials in order to synchronize the ARMM

the May 2013 national and local elections. Obviously, neither the Court norCOMELEC has the authority to do this, amounting as it does to an amendm

8, Article X of the Constitution, which limits the term of local officials to th

President’s authority to appoint OICs

The petitioner in G.R. No. 197221 argues that the President’s power to app

only to appointive positions and cannot extend to positions held by electiv

The power to appoint has traditionally been recognized as executive in nat

16, Article VII of the Constitution describes in broad strokes the extent of t

thus:





8/21/2019 art. vi- SEC 1


Section 16. The President shall nominate and, with the consent of the Commission on

Appointments, appoint the heads of the executive departments, ambassadors, other

public ministers and consuls, or officers of the armed forces from the rank of colonel or

naval captain, and other officers whose appointments are vested in him in this

Constitution. He shall also appoint all other officers of the Government whose

appointments are not otherwise provided for by law, and those whom he may be

authorized by law to appoint. The Congress may, by law, vest the appointment of other

officers lower in rank in the President alone, in the courts, or in the heads of

departments, agencies, commissions, or boards. [emphasis ours]

The 1935 Constitution contained a provision similar to the one quoted above. Section

10(3), Article VII of the 1935 Constitution provides:

(3) The President shall nominate and with the consent of the Commission on

Appointments, shall appoint the heads of the executive departments and bureaus,

officers of the Army from the rank of colonel, of the Navy and Air Forces from the rank

of captain or commander, and all other officers of the Government whose appointments

are not herein otherwise provided for, and those whom he may be authorized by law to

appoint; but the Congress may by law vest the appointment of inferior officers, in the

President alone, in the courts, or in the heads of departments. [emphasis ours]

The main distinction between the provision in the 1987 Constitution and its counterpart

in the 1935 Constitution is the sentence construction; while in the 1935 Constitution,

the various appointments the President can make are enumerated in a single sentence,

the 1987 Constitution enumerates the various appointments the President is

empowered to make and divides the enumeration in two sentences. The change in style

is significant; in providing for this change, the framers of the 1987 Constitution clearly

sought to make a distinction between the first group of presidential appointments and

the second group of presidential appointments, as made evident in the following

exchange:

MR. FOZ. Madame President x x x I propose to put a period (.) after "captain" and x x x

delete "and all" and substitute it with HE SHALL ALSO APPOINT ANY.

MR. REGALADO. Madam President, the Committee accepts the proposed a

because it makes it clear that those other officers mentioned therein do no

confirmed by the Commission on Appointments.26

The first group of presidential appointments, specified as the heads of the

departments, ambassadors, other public ministers and consuls, or officers

Forces, and other officers whose appointments are vested in the President

Constitution, pertains to the appointive officials who have to be confirmed

Commission on Appointments.

The second group of officials the President can appoint are "all other office

Government whose appointments are not otherwise provided for by law, a

whom he may be authorized by law to appoint."27The second sentence act

"catch-all provision" for the President’s appointment power, in recognition

that the power to appoint is essentially executive in nature.28 The wide lati

the President to appoint is further demonstrated by the recognition of the

power to appoint officials whose appointments are not even provided for

other words, where there are offices which have to be filled, but the law do

provide the process for filling them, the Constitution recognizes the power

President to fill the office by appointment.

Any limitation on or qualification to the exercise of the President’s appoint

should be strictly construed and must be clearly stated in order to be

recognized.29

Given that the President derives his power to appoint OICs in

regional government from law, it falls under the classification of president

appointments covered by the second sentence of Section 16, Article VII of

Constitution; the President’s appointment power thus rests on clear const

The petitioners also jointly assert that RA No. 10153, in granting the Presid

power to appoint OICs in elective positions, violates Section 16, Article X of

Constitution,30 which merely grants the President the power of supervision

autonomous regions.





















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This is an overly restrictive interpretation of the President’s appointment power. There

is no incompatibility between the President’s power of supervision over local

governments and autonomous regions, and the power granted to the President, within

the specific confines of RA No. 10153, to appoint OICs.

The power of supervision is defined as "the power of a superior officer to see to it that

lower officers perform their functions in accordance with law." 31 This is distinguished

from the power of control or "the power of an officer to alter or modify or set aside

what a subordinate officer had done in the performance of his duties and to substitutethe judgment of the former for the latter."

32

The petitioners’ apprehension regarding the President’s alleged power of control over

the OICs is rooted in their belief that the President’s appointment power includes the

power to remove these officials at will. In this way, the petitioners foresee that the

appointed OICs will be beholden to the President, and act as representatives of the

President and not of the people.

Section 3 of RA No. 10153 expressly contradicts the petitioners’ supposition. The

provision states:

Section 3. Appointment of Officers-in-Charge. — The President shall appoint officers-in-charge for the Office of the Regional Governor, Regional Vice Governor and Members of

the Regional Legislative Assembly who shall perform the functions pertaining to the said

offices until the officials duly elected in the May 2013 elections shall have qualified and

assumed office.

The wording of the law is clear. Once the President has appointed the OICs for the

offices of the Governor, Vice Governor and members of the Regional Legislative

Assembly, these same officials will remain in office until they are replaced by the duly

elected officials in the May 2013 elections. Nothing in this provision even hints that the

President has the power to recall the appointments he already made. Clearly, the

petitioners’ fears in this regard are more apparent than real.

RA No. 10153 as an interim measure

We reiterate once more the importance of considering RA No. 10153 not in

but within the context it was enacted in. In the first place, Congress enacte

10153 primarily to heed the constitutional mandate to synchronize the AR

elections with the national and local elections. To do this, Congress had to

scheduled ARMM elections for another date, leaving it with the problem o

provide the ARMM with governance in the intervening period, between t

of the term of those elected in August 2008 and the assumption to office –(21) months away – of those who will win in the synchronized elections on

2013.

In our assailed Decision, we already identified the three possible solutions

Congress to address the problem created by synchronization – (a) allow th

officials to remain in office after the expiration of their terms in a holdover

call for special elections to be held, and shorten the terms of those to be el

next ARMM regional elections can be held on May 13, 2013; or (c) recogniz

President, in the exercise of his appointment powers and in line with his po

supervision over the ARMM, can appoint interim OICs to hold the vacated

the ARMM regional government upon the expiration of their terms. We ha

established the unconstitutionality of the first two options, leaving us to colast available option.

In this way, RA No. 10153 is in reality an interim measure, enacted to respo

adjustment that synchronization requires. Given the context, we have to ju

10153 by the standard of reasonableness in responding to the challenges b

by synchronizing the ARMM elections with the national and local elections

words, "given the plain unconstitutionality of providing for a holdover an

unavailability of constitutional possibilities for lengthening or shortening

the elected ARMM officials, is the choice of the President’s power to appo

fixed and specific period as an interim measure, and as allowed under Se

Article VII of the Constitution – an unconstitutional or unreasonable choic

Congress to make? " 33












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We admit that synchronization will temporarily disrupt the election process in a local

community, the ARMM, as well as the community’s choice of leaders. However, we

have to keep in mind that the adoption of this measure is a matter of necessity in order

to comply with a mandate that the Constitution itself has set out for us. Moreover, the

implementation of the provisions of RA No. 10153 as an interim measure is comparable

to the interim measures traditionally practiced when, for instance, the President

appoints officials holding elective offices upon the creation of new local government

units.

The grant to the President of the power to appoint OICs in place of the elective

members of the Regional Legislative Assembly is neither novel nor innovative. The

power granted to the President, via RA No. 10153, to appoint members of the Regional

Legislative Assembly is comparable to the power granted by BP 881 (the Omnibus

Election Code) to the President to fill any vacancy for any cause in the Regional

Legislative Assembly (then called the Sangguniang Pampook).34

Executive is not bound by the principle of judicial courtesy

The petitioners in G.R. No. 197280, in their Manifestation and Motion dated December

21, 2011, question the propriety of the appointment by the President of Mujiv Hataman

as acting Governor and Bainon Karon as acting Vice Governor of the ARMM. They argue

that since our previous decision was based on a close vote of 8-7, and given the

numerous motions for reconsideration filed by the parties, the President, in recognition

of the principle of judicial courtesy, should have refrained from implementing our

decision until we have ruled with finality on this case.

We find the petitioners’ reasoning specious.

Firstly, the principle of judicial courtesy is based on the hierarchy of courts and applies

only to lower courts in instances where, even if there is no writ of preliminary injunction

or TRO issued by a higher court, it would be proper for a lower court to suspend its

proceedings for practical and ethical considerations.35

In other words, the principle of

"judicial courtesy" applies where there is a strong probability that the issues before the

higher court would be rendered moot and moribund as a result of the cont

the proceedings in the lower court or court of origin .36Consequently, this p

cannot be applied to the President, who represents a co-equal branch of g

To suggest otherwise would be to disregard the principle of separation of p

which our whole system of government is founded upon.

Secondly, the fact that our previous decision was based on a slim vote of 8-

and cannot, have the effect of making our ruling any less effective or bindi

of how close the voting is, so long as there is concurrence of the majority omembers of the en banc who actually took part in the deliberations of the

decision garnering only 8 votes out of 15 members is still a decision of the S

Court en banc and must be respected as such. The petitioners are, therefor

position to speculate that, based on the voting, "the probability exists that

for reconsideration may be granted."38

Similarly, the petitioner in G.R. No. 197282, in his Very Urgent Motion to Is

Clarificatory Resolution, argues that since motions for reconsideration wer

aggrieved parties challenging our October 18, 2011 decision in the present

TRO we initially issued on September 13, 2011 should remain subsisting an

He further argues that any attempt by the Executive to implement our Oct

decision pending resolution of the motions for reconsideration "borders o

not outright insolence"39 to this Court.

In support of this theory, the petitioner cites Samad v. COMELEC,40

where t

that while it had already issued a decision lifting the TRO, the lifting of the T

final and executory, and can also be the subject of a motion for reconsider

petitioner also cites the minute resolution issued by the Court in Tolentino

of Finance,41 where the Court reproached the Commissioner of the Bureau

Revenue for manifesting its intention to implement the decision of the Cou

that the Court had not yet lifted the TRO previously issued.42

We agree with the petitioner that the lifting of a TRO can be included as a s

motion for reconsideration filed to assail our decision. It does not follow, h
































8/21/2019 art. vi- SEC 1


the TRO remains effective until after we have issued a final and executory decision,

especially considering the clear wording of the dispositive portion of our October 18,

2011 decision, which states:

WHEREFORE, premises considered, we DISMISS the consolidated petitions assailing the

validity of RA No. 10153 for lack of merit, and UPHOLD the constitutionality of this law.

We likewise LIFT the temporary restraining order we issued in our Resolution of

September 13, 2011. No costs.43 (emphases ours)

In this regard, we note an important distinction between Tolentino and the present

case. While it may be true that Tolentino and the present case are similar in that, in

both cases, the petitions assailing the challenged laws were dismissed by the Court, an

examination of the dispositive portion of the decision in Tolentino reveals that the Court

did not categorically lift the TRO. In sharp contrast, in the present case, we expressly

lifted the TRO issued on September 13, 2011. 1âwphi1 There is, therefore, no legal impediment

to prevent the President from exercising his authority to appoint an acting ARMM

Governor and Vice Governor as specifically provided for in RA No. 10153.

Conclusion

As a final point, we wish to address the bleak picture that the petitioner in G.R. No.

197282 presents in his motion, that our Decision has virtually given the President the

power and authority to appoint 672,416 OICs in the event that the elections of barangay

and Sangguniang Kabataan officials are postponed or cancelled.

We find this speculation nothing short of fear-mongering.

This argument fails to take into consideration the unique factual and legal circumstances

which led to the enactment of RA No. 10153. RA No. 10153 was passed in order to

synchronize the ARMM elections with the national and local elections. In the course of

synchronizing the ARMM elections with the national and local elections, Congress had

to grant the President the power to appoint OICs in the ARMM, in light of the fact that:

(a) holdover by the incumbent ARMM elective officials is legally impermissible; and (b)

Congress cannot call for special elections and shorten the terms of elective

for less than three years.

Unlike local officials, as the Constitution does not prescribe a term limit for

and Sangguniang Kabataan officials, there is no legal proscription which pr

specific government officials from continuing in a holdover capacity should

exigency require the postponement of barangay or Sangguniang Kabataan

Clearly, these fears have neither legal nor factual basis to stand on.

For the foregoing reasons, we deny the petitioners’ motions for reconside

WHEREFORE, premises considered, we DENY with FINALITY the motions fo

reconsideration for lack of merit and UPHOLD the constitutionality of RA N

SO ORDERED.

LEAGUE OF CITIES 2008

The Case

These are consolidated petitions for prohibition [1] with

the issuance of a writ of preliminary injunction or temporary

order filed by the League of Cities of the Philippines, City of I

Calbayog, and Jerry P. Treñas[2]

assailing the constitutiona

subject Cityhood Laws and enjoining the Commission o

(COMELEC) and respondent municipalities from conducting

pursuant to the Cityhood Laws.




http://sc.judiciary.gov.ph/jurisprudence/2008/november2008/176951.htm#_ftn1







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The Facts

During the 11th

Congress,[3]

Congress enacted into law 33 bills

converting 33 municipalities into cities. However, Congress did not act

on bills converting 24 other municipalities into cities.

During the 12th Congress,[4] Congress enacted into law

Republic Act No. 9009 (RA 9009),[5]

which took effect on 30 June

2001. RA 9009 amended Section 450 of the Local Government Code by

increasing the annual income requirement for conversion of a

municipality into a city from P20 million to P100 million. The rationale

for the amendment was to restrain, in the words of Senator Aquilino

Pimentel, “the mad rush” of municipalities to convert into cities solely to

secure a larger share in the Internal Revenue Allotment despite the fact

that they are incapable of fiscal independence.[6]

After the effectivity of RA 9009, the House of Representatives of

the 12th

Congress[7]

adopted Joint Resolution No. 29,[8]

which sought to

exempt from the P100 million income requirement in RA 9009 the 24

municipalities whose cityhood bills were not approved in the

11th

Congress. However, the 12th

Congress ended without the Senate

approving Joint Resolution No. 29.

During the 13th

Congress,[9]

the House of Represen

adopted Joint Resolution No. 29 as Joint Resolution No. 1 and

it to the Senate for approval. However, the Senate aga

approve the Joint Resolution. Following the advice of Senat

Pimentel, 16 municipalities filed, through their respective

individual cityhood bills. The 16 cityhood bills contained provision exempting all the 16 municipalities from the P

income requirement in RA 9009.

On 22 December 2006, the House of Representatives ap

cityhood bills. The Senate also approved the cityhood bills

2007, except that of Naga, Cebuwhich was passed on 7 June

cityhood bills lapsed into law (Cityhood Laws[10]

) on various

March to July 2007 without the President’s signature.[11]

The Cityhood Laws direct the COMELEC to hold ple

determine whether the voters in each respondent municipal

of the conversion of their municipality into a city.

Petitioners filed the present petitions to declare the Cit

unconstitutional for violation of Section 10, Article X of the C

as well as for violation of the equal protection clause.[12]

Peti

lament that the wholesale conversion of municipalities int








































8/21/2019 art. vi- SEC 1


reduce the share of existing cities in the Internal Revenue Allotment

because more cities will share the same amount of internal revenue set

aside for all cities under Section 285 of the Local Government Code.[13]

The Issues

The petitions raise the following fundamental issues:

1. Whether the Cityhood Laws violate Section 10, Article X of

the Constitution; and

2. Whether the Cityhood Laws violate the equal protection clause.

The Ruling of the Court

We grant the petitions.

The Cityhood Laws violate Sections 6 and 10, Article X of the

Constitution, and are thus unconstitutional.

First , applying the P100 million income requirement in

the present case is a prospective, not a retroactive applicatio

RA 9009 took effect in 2001 while the cityhood bills becam

than five years later.

Second , the Constitution requires that Congress shall pthe criteria for the creation of a city in the Local Governmen

not in any other law, including the Cityhood Laws.

Third , the Cityhood Laws violate Section 6, Article

Constitution because they prevent a fair and just distribu

national taxes to local government units.

Fourth, the criteria prescribed in Section 450 of

Government Code, as amended by RA 9009, for comunicipality into a city are clear, plain and unambiguous,

resort to any statutory construction.

Fifth, the intent of members of the 11th

Congress

certain municipalities from the coverage of RA 9009 remaine

and was never written into Section 450 of the Local Governm





8/21/2019 art. vi- SEC 1


Sixth, the deliberations of the 11th

or 12th

Congress on

unapproved bills or resolutions are not extrinsic aids in interpreting a

law passed in the 13th

Congress.

Seventh, even if the exemption in the Cityhood Laws were writtenin Section 450 of the Local Government Code, the exemption would still

be unconstitutional for violation of the equal protection clause.

Preliminary Matters

Prohibition is the proper action for testing the constitutionality of

laws administered by the COMELEC,[14]

like the Cityhood Laws, which

direct the COMELEC to hold plebiscites in implementation of theCityhood Laws. Petitioner League of Cities of the Philippines has legal

standing because Section 499 of the Local Government Code tasks the

League with the “primary purpose of ventilating, articulating and

crystallizing issues affecting city government administration and

securing, through proper and legal means, solutions

thereto.”[15]

Petitioners-in-intervention,[16]

which are existing cities,

have legal standing because their Internal Revenue Allotment will be

reduced if the Cityhood Laws are declared constitutional. Mayor Jerry P.

Treñas has legal standing because as Mayor of Iloilo Cit

taxpayer he has sufficient interest to prevent the unlawful e

of public funds, like the release of more Internal Revenue A

political units than what the law allows.

Applying RA 9009 is a Prospective Application of the Law

RA 9009 became effective on 30 June 2001 d

11th

Congress. This law specifically amended Section 450 o

Government Code, which now provides:

Section 450. Requisites for Creation. — (a) A municipa

a cluster of barangays may be converted into a compo

city if it has a locally generated average annual incom

certified by the Department of Finance, of at least

hundred million pesos (P100,000,000.00) for the last twconsecutive years based on 2000 constant prices, and if

either of the following requisites:

(i)

a contig

territory of at least one hundred (100) sq

kilometers, as certified by the Land Manage

Bureau; or












8/21/2019 art. vi- SEC 1


(ii) a population of not less than one hundred fifty

thousand (150,000) inhabitants, as certified by the

National Statistics Office.

The creation thereof shall not reduce the land area,

population and income of the original unit or units at the time

of said creation to less than the minimum requirements

prescribed herein.

(b) The territorial jurisdiction of a newly-created city shall

be properly identified by metes and bounds. The requirement

on land area shall not apply where the city proposed to be

created is composed of one (1) or more islands. The territory

need not be contiguous if it comprises two (2) or more

islands.

(c) The average annual income shall include the income

accruing to the general fund, exclusive of special funds,

transfers, and non-recurring income. (Emphasis supplied)

Thus, RA 9009 increased the income requirement for conversion of a

municipality into a city from P20 million to P100 million. Section 450 of

the Local Government Code, as amended by RA 9009, does not provide

any exemption from the increased income requirement.

Prior to the enactment of RA 9009, a total of 57 munici

cityhood bills pending in Congress. Thirty-three cityhood b

law before the enactment of RA 9009. Congress did not

cityhood bills during the 11th Congress.

During the 12

th

Congress, the House of RepresentativJoint Resolution No. 29, exempting from the income re

of P100 million in RA 9009 the 24 municipalities whose cit

were not acted upon during the 11th

Congress. This Resolut

the Senate. However, the 12th

Congress adjourned without

approving Joint Resolution No. 29.

During the 13th

Congress, 16 of the 24 municipalities m

the unapproved Joint Resolution No. 29 filed between Nov

December of 2006, through theirrespective spoCongress, individual cityhood bills containing a common p

follows:

Exemption from Republic Act No. 9009. — The City of

shall be exempted from the income requirement presc

under Republic Act No. 9009.

8/21/2019 art. vi- SEC 1


This common provision exempted each of the 16 municipalities from

the income requirement of P100 million prescribed in Section 450 of

the Local Government Code, as amended by RA 9009. These cityhood

bills lapsed into law on various dates from March to July 2007 after

President Gloria Macapagal-Arroyo failed to sign them.

Indisputably, Congress passed the Cityhood Laws long after the

effectivity of RA 9009. RA 9009 became effective on 30 June 2001 or

during the 11th

Congress. The 13th

Congress passed in December 2006

the cityhood bills which became law only in 2007. Thus, respondent

municipalities cannot invoke the principle of non-retroactivity of

laws.[17] This basic rule has no application because RA 9009, an earlier

law to the Cityhood Laws, is not being applied retroactively but

prospectively.

Congress Must Prescribe in the Local Government Code All Criteria

Section 10, Article X of the 1987 Constitution provides:

No province, city, municipality, or barangay shall be

created, divided, merged, abolished or its boundary

substantially altered, except in accordance with the criteria

established in the local government code and subject to

approval by a majority of the votes cast in a plebiscite i

political units directly affected. (Emphasis supplied)

The Constitution is clear. The creation of local govern

must follow the criteria established in the Local Governmennot in any other law. There is only one Local Government C

Constitution requires Congress to stipulate in the Local G

Code all the criteria necessary for the creation of a city, in

conversion of a municipality into a city. Congress cannot

criteria in any other law, like the Cityhood Laws.

The criteria prescribed in the Local Government Co

exclusively the creation of a city. No other law, not even th

the city, can govern such creation. The clear intent of the Coto insure that the creation of cities and other political

follow the same uniform, non-discriminatory criteria foun

the Local Government Code. Any derogation or deviatio

criteria prescribed in the Local Government Code violates

Article X of the Constitution.





8/21/2019 art. vi- SEC 1


RA 9009 amended Section 450 of the Local Government Code to

increase the income requirement from P20 million to P100 million for

the creation of a city. This took effect on 30 June 2001. Hence, from

that moment the Local Government Code required that any

municipality desiring to become a city must satisfy the P100 million

income requirement. Section 450 of the Local Government Code, as

amended by RA 9009, does not contain any exemption from this income

requirement.

In enacting RA 9009, Congress did not grant any exemption to

respondent municipalities, even though their cityhood bills were

pending in Congress when Congress passed RA 9009. The Cityhood

Laws, all enacted after the effectivity of RA 9009, explicitly exempt

respondent municipalities from the increased income requirement in

Section 450 of the Local Government Code, as amended by RA9009. Such exemption clearly violates Section 10, Article X of the

Constitution and is thus patently unconstitutional. To be valid, such

exemption must be written in the Local Government Code and not in

any other law, including the Cityhood Laws.

Cityhood Laws Violate Section 6, Article X of the Constitution

Uniform and non-discriminatory criteria as prescribed

Government Code are essential to implement a fair and

distribution of national taxes to all local government units

Article X of the Constitution provides:

Local government units shall have a just share, as determ

by law, in the national taxes which shall be automat

released to them. (Emphasis supplied)

If the criteria in creating local government units are not u

discriminatory, there can be no fair and just distribution of t

taxes to local government units.

A city with an annual income of only P20 million, all ot

being equal, should not receive the same share in nationa

city with an annual income of P100 million or more. The crit

area, population and income, as prescribed in Section 450 o

Government Code, must be strictly followed because su

prescribed by law, are material in determining the “just sha

government units in national taxes. Since the Cityhood L

follow the income criterion in Section 450 of the Local G

Code, they prevent the fair and just distribution of the Intern

Allotment in violation of Section 6, Article X of the Constitutio

8/21/2019 art. vi- SEC 1


Section 450 of the Local Government Code is Clear,

Plain and Unambiguous

There can be no resort to extrinsic aids — like deliberations ofCongress — if the language of the law is plain, clear and

unambiguous. Courts determine the intent of the law from the literal

language of the law, within the law’s four corners.[19]

If the language of

the law is plain, clear and unambiguous, courts simply apply the law

according to its express terms. If a literal application of the law results

in absurdity, impossibility or injustice, then courts may resort to

extrinsic aids of statutory construction like the legislative history of the

law.[20]

Congress, in enacting RA 9009 to amend Section 450 of the Local

Government Code, did not provide any exemption from the increased

income requirement, not even to respondent municipalities whose

cityhood bills were then pending when Congress passed RA

9009. Section 450 of the Local Government Code, as amended by RA

9009, contains no exemption whatsoever. Since the law is

and unambiguous that any municipality desiring to convert

must meet the increased income requirement, there is no re

beyond the letter of the law in applying Section 450 of

Government Code, as amended by RA 9009.

The 11th

Congress’ Intent was not Written into the Local G

Code

True, members of Congress discussed exempting

municipalities from RA 9009, as shown by the various delibe

the matter during the 11th

Congress. However, Congress di

this intended exemption into law. Congress could have eas

such exemption in RA 9009 but Congress did not. This is fcause of respondent municipalities because such exem

appear in RA 9009 as an amendment to Section 450 of

Government Code. The Constitution requires that the crite

conversion of a municipality into a city, including any exem

such criteria, must all be written in the Local G

Code. Congress cannot prescribe such criteria or exemption

criteria in any other law. In short, Congress cannot cre









8/21/2019 art. vi- SEC 1


through a law that does not comply with the criteria or exemption

found in the Local Government Code.

Section 10 of Article X is similar to Section 16, Article XII of the

Constitution prohibiting Congress from creating private corporations

except by a general law. Section 16 of Article XII provides:

The Congress shall not, except by general law, provide for

the formation, organization, or regulation of private

corporations. Government-owned or controlled corporations

may be created or established by special charters in the

interest of the common good and subject to the test of

economic viability. (Emphasis supplied)

Thus, Congress must prescribe all the criteria for the “formation,

organization, or regulation” of private corporations in a general

law applicable to all without discrimination.[21]

Congress cannot create

a private corporation through a special law or charter.

Deliberations of the 11th

Congress on Unapproved Bills Inapplicable

Congress is not a continuing body.[22]

The unapprov

bills filed during the 11th

Congress became mere scraps of

the adjournment of the 11th

Congress. All the hearings and d

conducted during the 11th

Congress on unapproved bills a

worthless upon the adjournment of the 11th

Congress. The

and deliberations cannot be used to interpret bills enacted

the 13th

or subsequent Congresses.

The members and officers of each Congress are di

unapproved bills filed in one Congress become functus

adjournment of that Congress and must be re-filed anew in o

taken up in the next Congress. When their respective auth

the cityhood bills in 2006 during the 13th

Congress, the bills

from square one again, going through the legislative mill ju

taken up for the first time, from the filing to the approval. SRule XLIV of the Rules of the Senate, on Unfinished Business,

Sec. 123. x x x

All pending matters and proceedings shall term

upon the expiration of one (1) Congress, but may be tak

the succeeding Congress as if presented for the

time. (Emphasis supplied)









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Similarly, Section 78 of the Rules of the House of Representatives,

on Unfinished Business, states:

Section 78. Calendar of Business. The Calendar of Business

shall consist of the following:

a.

Unfinished Business. This is

business being considered by the House at the time of its

last adjournment. Its consideration shall be resumed until

it is disposed of. The Unfinished Business at the end of a

session shall be resumed at the commencement of the

next session as if no adjournment has taken place. At the

end of the term of a Congress, all Unfinished Business are

deemed terminated. (Emphasis supplied)

Thus, the deliberations during the 11th

Congress on theunapproved cityhood bills, as well as the deliberations during the

12th

and 13th

Congresses on the unapproved resolution exempting from

RA 9009 certain municipalities, have no legal significance. They do not

qualify as extrinsic aids in construing laws passed by subsequent

Congresses.

Applicability of Equal Protection Clause

If Section 450 of the Local Government Code, as amen

9009, contained an exemption to the P100 million annu

requirement, the criteria for such exemption could be scru

possible violation of the equal protection clause. Thus, the

the exemption, if found in the Local Government Code

assailed on the ground of absence of a valid classification

Section 450 of the Local Government Code, as amended b

does not contain any exemption. The exemption is conta

Cityhood Laws, which are unconstitutional because such

must be prescribed in the Local Government Code as m

Section 10, Article X of the Constitution.

Even if the exemption provision in the Cityhood

written in Section 450 of the Local Government Code, as aRA 9009, such exemption would still be unconstitutional for

the equal protection clause. The exemption provision me

“Exemption from Republic Act No. 9009 ─ The City of x x

exempted from the income requirement prescribed unde

Act No. 9009.” This one sentence exemption provision c

classification standards or guidelines differentiating the

municipalities from those that are not exempted.

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Even if we take into account the deliberations in the 11th

Congress

that municipalities with pending cityhood bills should be exempt from

the P100 million income requirement, there is still no valid classification

to satisfy the equal protection clause. The exemption will be

based solely on the fact that the 16 municipalities had cityhood bills

pending in the 11th Congress when RA 9009 was enacted. This is not a

valid classification between those entitled and those not entitled to

exemption from the P100 million income requirement.

To be valid, the classification in the present case must be based

on substantial distinctions, rationally related to a legitimate government

objective which is the purpose of the law,[23] not limited to existing

conditions only, and applicable to all similarly situated. Thus, this Court

has ruled:

The equal protection clause of the 1987 Constitution

permits a valid classification under the following conditions:

1. The classification must rest on substantial

distinctions;

2. The classification must be germane to the purpose of

the law;

3. The classification must not be limited to existing

conditions only; and

4. The classification must apply equally to all mem

of the same class.[24]

There is no substantial distinction between municip

pending cityhood bills in the 11th

Congress and municipalit

not have pending bills. The mere pendency of a cityhood

11th

Congress is not a material difference to distinguish one m

from another for the purpose of the income require

pendency of a cityhood bill in the 11th

Congress does no

determine the level of income of a municipality. Municip

pending cityhood bills in the 11th

Congress might even

annual income than municipalities that did not have pendin

bills. In short, the classification criterion − mere pendency of

bill in the 11th

Congress − is not rationally related to the pur

law which is to prevent fiscally non-viable municipa

converting into cities.

Municipalities that did not have pending cityhood bill

informed that a pending cityhood bill in the 11th

Congress

condition for exemption from the increased P100 milli

requirement. Had they been informed, many municipalities

caused the filing of their own cityhood bills. These municipa









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if they have bigger annual income than the 16 respondent

municipalities, cannot now convert into cities if their income is less

than P100 million.

The fact of pendency of a cityhood bill in the 11th

Congress limits

the exemption to a specific condition existing at the time of passage of

RA 9009. That specific condition will never happen again. This violates

the requirement that a valid classification must not be limited to

existing conditions only. This requirement is illustrated in Mayflower

Farms, Inc. v. Ten Eyck ,[25] where the challenged law allowed milk

dealers engaged in business prior to a fixed date to sell at a price lower

than that allowed to newcomers in the same business. In Mayflower ,

the U.S. Supreme Court held:

We are referred to a host of decisions to the effect that

a regulatory law may be prospective in operation and may

except from its sweep those presently engaged in the calling

or activity to which it is directed. Examples are statutes

licensing physicians and dentists, which apply only to those

entering the profession subsequent to the passage of the act

and exempt those then in practice, or zoning laws which

exempt existing buildings, or laws forbidding slaughterhouses

within certain areas, but excepting existing

establishments. The challenged provision is unlike such laws,

since, on its face, it is not a regulation of a business or an

activity in the interest of, or for the protection of, the p

but an attempt to give an economic advantage to t

engaged in a given business at an arbitrary date as ag

all those who enter the industry after that date

appellees do not intimate that the classification bear

relation to the public health or welfare generally; tha

provision will discourage monopoly; or that it was aim

any abuse, cognizable by law, in the milk business. Inabsence of any such showing, we have no right to conju

possible situations which might justify the discrimination

classification is arbitrary and unreasonable and denie

appellant the equal protection of the law. (Emp

supplied)

In the same vein, the exemption provision in the City

gives the 16 municipalities a unique advantage based on a

date − the filing of their cityhood bills before the e

11th

Congress – as against all other municipalities that want

into cities after the effectivity of RA 9009.

Furthermore, limiting the exemption only to the 16 m

violates the requirement that the classification must a

similarly situated. Municipalities with the same income

respondent municipalities cannot convert into cities, wh





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respondent municipalities can. Clearly, as worded the exemption

provision found in the Cityhood Laws, even if it were written in Section

450 of the Local Government Code, would still be unconstitutional for

violation of the equal protection clause.

WHEREFORE, we GRANT the petitions and

declare UNCONSTITUTIONAL the Cityhood Laws, namely: Republic Act

Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408,

9409, 9434, 9435, 9436, and 9491.

SO ORDERED.


Ratio legis est anima. The spirit rather than the letter of the law. A

statute must be read according to its spirit or intent,[1] for what is within

the spirit is within the statute although it is not within its letter, and that

which is within the letter but not within the spirit is not within the

statute.[2]

Put a bit differently, that which is within the intent of the

lawmaker is as much within the statute as if within the letter; and that

which is within the letter of the statute is not within the statute unless

within the intent of the lawmakers.[3]

Withal, courts ought not to

interpret and should not accept an interpretation that would

intent of the law and its legislators.[4]

So as it is exhorted to pass on a challenge against the v

act of Congress, a co-equal branch of government, it behoove

to have at once one principle in mind: the presu

constitutionality of statutes.[5]

This presumption finds its roo

partite system of government and the corollary separation

which enjoins the three great departments of the governme

a becoming courtesy for each other’s acts, and not to

inordinately with the exercise by one of its official function

this end, courts ought to reject assaults against the validity

barring of course their clear unconstitutionality. To doubt is

the theory in context being that the law is the product of earby Congress to ensure that no constitutional prescription or

infringed.[6] Consequently, before a law duly challenged is n

unequivocal breach of, or a clear conflict with, the Const

merely a doubtful or argumentative one, must be demonstra

a manner as to leave no doubt in the mind of the Court.[7]

http://sc.judiciary.gov.ph/jurisprudence/2009/december2009/176951.htm#_ftn2



























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BACKGROUND

The consolidated petitions for prohibition commenced by the

League of Cities of the Philippines (LCP), City of Iloilo, City of Calbayog,

and Jerry P. Treñas[8]

assail the constitutionality of the sixteen (16)

laws,[9] each converting the municipality covered thereby into a city

(cityhood laws, hereinafter) and seek to enjoin the Commission on

Elections (COMELEC) from conducting plebiscites pursuant to subject

laws.

By Decision[10]

dated November 18, 2008, the Court en banc, by a

6-5 vote, granted the petitions and nullified the sixteen (16) cityhood

laws for being violative of the Constitution, specifically its Section 10,

Article X and the equal protection clause.

Subsequently, respondent local government units (LGUs) moved

for reconsideration, raising, as one of the issues, the validity of the

factual premises not contained in the pleadings of the partie

established, which became the bases of the Decision

reconsideration.[11]

By Resolution of March 31, 2009, a div

denied the motion for reconsideration.

A second motion for reconsideration followed

respondent LGUs prayed as follows:

WHEREFORE, respondents respectfully pray that

Honorable Court reconsider its “Resolution” dated March 31, 20

so far as it denies for “lack of merit” respondents’ “Motio

Reconsideration” dated December 9, 2008 and in lieu th

considering that new and meritorious arguments are rais

respondents’ “Motion for Reconsideration” dated December 9,

to grant afore-mentioned “Motion for Reconsideration”

December 9, 2008 and dismiss the “Petitions For Prohibition”

instant case.
















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Per Resolution dated April 28, 2009, the Court, voting 6-6,

disposed of the motion as follows:

By a vote of 6-6, the Motion for Reconsideration of the

Resolution of 31 March 2009 is DENIED for lack of merit. The motion

is denied since there is no majority that voted to overturn theResolution of 31 March 2009.

The Second Motion for Reconsideration of the Decision of 18

November 2008 is DENIED for being a prohibited pleading, and the

Motion for Leave to Admit Attached Petition in Intervention x x x filed

by counsel for Ludivina T. Mas, et al. are also DENIED. No further

pleadings shall be entertained. Let entry of judgment be made in due

course. x x x

On May 14, 2009, respondent LGUs filed a Motion to Amend the

Resolution of April 28, 2009 by Declaring Instead that

Respondents’ “Motion for Reconsideration of the Resolution of March

31, 2009” and “Motion for Leave to File and to Admit Attached ‘Second

Motion for Reconsideration of the Decision Dated November 18, 2008’

Remain Unresolved and to Conduct Further Proceedings Thereon.”

Per its Resolution of June 2, 2009, the Court declared t

2009 motion adverted to as expunged in light of the entry o

made on May 21, 2009. Justice Leonardo-De Castro, howe

common cause with Justice Bersamin to grant the m

reconsideration of the April 28, 2009 Resolution and to reca

of judgment, stated the observation, and with reason, tha

was effected “before the Court could act on the aforesaid m

was filed within the 15-day period counted from receipt of t

2009 Resolution.”[12]

Forthwith, respondent LGUs filed a Motion for Recons

the Resolution of June 2, 2009 to which some of the peti

petitioners-in-intervention filed their respective comments




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will now rule on this incident. But first, we set and underscore some

basic premises:

(1) The initial motion to reconsider the November 18, 2008

Decision, as Justice Leonardo-De Castro noted, indeed raised new and

substantial issues, inclusive of the matter of the correctness of the

factual premises upon which the said decision was predicated. The 6-6

vote on the motion for reconsideration per the Resolution of March 31,

2009, which denied the motion on the sole ground that “the basic issues

have already been passed upon” reflected a divided Court on the issue

of whether or not the underlying Decision of November 18, 2008 had

indeed passed upon the basic issues raised in the motion for

reconsideration of the said decision;

(2) The aforesaid May 14, 2009 Motion to Amend Re

April 28, 2009 was precipitated by the tie vote which served

the issuance of said resolution. This May 14, 2009 mot

mainly argued that a tie vote is inadequate to decl

unconstitutional –– remains unresolved; and

(3) Pursuant to Sec. 4(2), Art. VIII of the Constitutio

involving the constitutionality of a law shall be heard by th

banc and decided with the concurrence of a majority of th

who actually took part in the deliberations on the issues in th

voted thereon.

The basic issue tendered in this motion for reconsider

June 2, 2009 Resolution boils down to whether or not the re

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set forth in the aforesaid Sec. 4(2), Art. VIII is limited only to the initial

vote on the petition or also to the subsequent voting on the motion for

reconsideration where the Court is called upon and actually votes on the

constitutionality of a law or like issuances. Or, as applied to this case,

would a minute resolution dismissing, on a tie vote, a motion for

reconsideration on the sole stated ground ––that the “basic issues have

already been passed”–– suffice to hurdle the voting requirement

required for a declaration of the unconstitutionality of the cityhood laws

in question?

The 6-6 vote on the motion to reconsider the Resolution of March

31, 2009, which denied the initial motion on the sole ground that “the

basic issues had already been passed upon” betrayed an evenly divided

Court on the issue of whether or not the underlying Decision of

November 18, 2008 had indeed passed upon the issues ra

motion for reconsideration of the said decision. But at the

day, the single issue that matters and the vote that really co

turn on the constitutionality of the cityhood laws.

remembered that the inconclusive 6-6 tie vote reflected in t

2009 Resolution was the last vote on the issue of whether

cityhood laws infringe the Constitution. Accordingly, the mo

respondent LGUs, in light of the 6-6 vote, should be delibe

until the required concurrence on the issue of the validity or

the laws in question is, on the merits, secured.

It ought to be clear that a deadlocked vote does not

“majority of the Members” contemplated in Sec. 4 (2) of Art

Constitution, which requires that:

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All cases involving the constitutionality of a treaty,

international or executive agreement, or law shall be heard by the

Supreme Court en banc, x x x shall be decided with the concurrence

of a majority of the Members who actually took part in the

deliberations on the issues in the case and voted thereon. (Emphasis

added.)

Webster defines “majority” as “a number greater than half of a

total.”[13]

In plain language, this means 50% plus one. In Lambino v.

Commission on Elections, Justice, now Chief Justice, Puno, in a separate

opinion, expressed the view that “a deadlocked vote of six (6) is not a

majority and a non-majority cannot write a rule with precedential

value.”[14]

As may be noted, the aforequoted Sec. 4 of Art. VIII, as couched,

exacts a majority vote in the determination of a case involving the

constitutionality of a statute, without distinguishing whether such

determination is made on the main petition or thereafter o

for reconsideration. This is as it should be, for, to borrow fro

Justice Ricardo J. Francisco: “x x x *E+ven assuming x x

constitutional requirement on the concurrence of the ‘ma

initially reached in the x x x ponencia, the same is inconclusi

still open for review by way of a motion for reconsideration.”

To be sure, the Court has taken stock of the rule on

situation, i.e., Sec. 7, Rule 56 and the complementary A.M. N

SC, respectively, providing that:

SEC. 7. Procedure if opinion is equally divided . – Whe

court en banc is equally divided in opinion, or the necessary m

cannot be had, the case shall again be deliberated on, and if

such deliberation no decision is reached, the original

commenced in the court shall be dismissed; in appealed case

judgment or order appealed from shall stand affirmed; and

incidental matters, the petition or motion shall be denied.










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A.M. No. 99-1-09-SC – x x x A motion for reconsideration of a

decision or resolution of the Court En Banc or of a Division may be

granted upon a vote of a majority of the En Banc or of a Division, as

the case may be, who actually took part in the deliberation of the

motion.

If the voting results in a tie, the motion for reconsideration is

deemed denied.

But since the instant cases fall under Sec. 4 (2), Art. VIII of the

Constitution, the aforequoted provisions ought to be applied in

conjunction with the prescription of the Constitution that the cases

“shall be decided with the concurrence of a majority of the Members

who actually took part in the deliberations on the issues in the instant

cases and voted thereon.” To repeat, the last vote on the issue of the

constitutionality of the cityhood bills is that reflected in the April 28,

2009 Resolution ––a 6-6 deadlock.

On the postulate then that first , the finality of the No

2008 Decision has yet to set in, the issuance of the precipita

of judgment notwithstanding, andsecond , the deadlocked v

second motion for reconsideration did not definitely

constitutionality of the cityhood laws, the Court is inclin

another hard look at the underlying decision. Without be

their smallest details the arguments for and against the

dimension of this disposition, it bears to stress that the Co

power to suspend its own rules when the ends of justice

served thereby.[17] In the performance of their duties, courts

be shackled by stringent rules which would result i

injustice. Rules of procedure are only tools crafted to fa

attainment of justice. Their strict and rigid application

eschewed, if they result in technicalities that tend to frust

than promote substantial justice. Substantial rights mu

prejudiced by a rigid and technical application of the rules in

expediency. When a case is impressed with public interest,

of the application of the rules is in order.[18]

Time and again

has suspended its own rules or excepted a particular case

operation whenever the higher interests of justice so require










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While perhaps not on all fours with the case, because it involved a

purely business transaction, what the Court said in Chuidian v.

Sandiganbayan[20]

is most apropos:

To reiterate what the Court has said in Ginete vs. Court of

Appeals and other cases, the rules of procedure should be viewed as

mere instruments designed to facilitate the attainment of justice.

They are not to be applied with severity and rigidity when such

application would clearly defeat the very rationale for their

conception and existence. Even the Rules of Court reflects this

principle. The power to suspend or even disregard rules, inclusive of

the one-motion rule, can be so pervasive and compelling as to alter

even that which this Court has already declared to be final. The

peculiarities of this case impel us to do so now.

The Court, by a vote of 6-4, grants the respondent LGUs’ motion

for reconsideration of the Resolution of June 2, 2009, as well as their

May 14, 2009 motion to consider the second motion for reconsideration

of the November 18, 2008 Decision unresolved, and also grants said

second motion for reconsideration.

This brings us to the substantive aspect of the case.

The Undisputed Factual Antecedents in Brief

During the 11th Congress,[21] fifty-seven (57) cityhood

filed before the House of Representatives.[22]

Of the fifty-

thirty-three (33) eventually became laws. The twenty-four

bills were not acted upon.

Later developments saw the introduction in the Senat

Bill (S. Bill) No. 2157[23]

to amend Sec. 450 of Republic Act No

otherwise known as the Local Government Code (LGC) of

proposed amendment sought to increase the income requ

qualify for conversion into a city from PhP 20 million aver

income to PhP 100 million locally generated income.

In March 2001, S. Bill No. 2157 was signed into law as

take effect on June 30, 2001. As thus amended by RA 9009,

the LGC of 1991 now provides that “*a+ municipality x x















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converted into a component city if it has a [certified] locally generated

average annual income x x x of at least [PhP 100 million] for the last two

(2) consecutive years based on 2000 constant prices.”

After the effectivity of RA 9009, the Lower House of the

12th Congress adopted in July 2001 House (H.) Joint Resolution No.

29[24]

which, as its title indicated, sought to exempt from the income

requirement prescribed in RA 9009 the 24 municipalities whose

conversions into cities were not acted upon during the previous

Congress. The 12th

Congress ended without the Senate approving H.

Joint Resolution No. 29.

Then came the 13th

Congress (July 2004 to June 2007), which saw

the House of Representatives re-adopting H. Joint Resolution No. 29 as

H. Joint Resolution No. 1 and forwarding it to the Senate for approval.

The Senate, however, again failed to approve the joint

resolution. During the Senate session held on November 6, 2006,

Senator Aquilino Pimentel, Jr. asserted that passing H. Resolution No. 1

would, in net effect, allow a wholesale exemption from the income

requirement imposed under RA 9009 on the municipalitie

reason, he suggested the filing by the House of Represe

individual bills to pave the way for the municipalities to be

and then forwarding them to the Senate for proper action.[25]

Heeding the advice, sixteen (16) municipalities filed, th

respective sponsors, individual cityhood bills. Common

measures was a provision exempting the municipality covere

PhP 100 million income requirement.

As of June 7, 2007, both Houses of Congress had ap

individual cityhood bills, all of which eventually lapsed i

various dates. Each cityhood law directs the COMELEC, withi

days from its approval, to hold a plebiscite to determine w

voters approve of the conversion.

As earlier stated, the instant petitions seek to declare t

laws unconstitutional for violation of Sec. 10, Art. X of the Co

as well as for violation of the equal-protection clause. The

conversion of municipalities into cities, the petitioners be







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reduce the share of existing cities in the Internal Revenue Allotment

(IRA), since more cities will partake of the internal revenue set aside for

all cities under Sec. 285 of the LGC of 1991.[26]

Petitioners-in-intervention, LPC members themselves, would later

seek leave and be allowed to intervene.

Aside from their basic plea to strike down as unconstitutional the

cityhood laws in question, petitioners and petitioners-in-intervention

collectively pray that an order issue enjoining the COMELEC from

conducting plebiscites in the affected areas. An alternative prayer would

urge the Court to restrain the poll body from proclaiming the plebiscite

results.

On July 24, 2007, the Court en banc resolved to consolidate the

petitions and the petitions-in-intervention. On March 11, 2008, it heard

the parties in oral arguments.

The Issues

In the main, the issues to which all others must yie

whether or not the cityhood laws violate (1) Sec. 10. A

Constitution and (2) the equal protection clause.

In the November 18, 2008 Decision granting the petiti

Antonio T. Carpio, for the Court, resolved the twin pos

affirmative and accordingly declared the cityhood laws uncon

deviating as they do from the uniform and non-discriminat

criterion prescribed by the LGC of 1991. In

the ponencia veritably agreed with the petitioners that the C

in clear and unambiguous language, requires that all the crit

creation of a city shall be embodied and written in the LGC,

any other law.

After a circumspect reflection, the Court is disposed to

Petitioners’ threshold posture, characterized by

interpretation of the Constitution, if accorded cogency, wou

curtail and cripple Congress’ valid exercise of its authorit

political subdivisions.

[ ]







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By constitutional design[27]

and as a matter of long-established

principle, the power to create political subdivisions or LGUs is essentially

legislative in character.[28]

But even without any constitutional grant,

Congress can, by law, create, divide, merge, or altogether abolish or

alter the boundaries of a province, city, or municipality. We said as

much in the fairly recent case, Sema v. CIMELEC .[29]

The 1987

Constitution, under its Art. X, Sec. 10, nonetheless provides for the

creation of LGUs, thus:

Section 10. No province, city, municipality,

or barangay shall be created, divided, merged, abolished, or

its boundary substantially altered, except in accordance with

the criteria established in the local government code and

subject to approval by a majority of the votes cast in a

plebiscite in the political units directly affected. (Emphasissupplied.)

As may be noted, the afore-quoted provision specifically provides

for the creation of political subdivisions “in accordance with the criteria

established in the local government code,” subject to the approval of

the voters in the unit concerned. The criteria referred

verifiable indicators of viability, i.e., area, population, and in

set forth in Sec. 450 of the LGC of 1991, as amended by RA

petitioners would parlay the thesis that these indicators or c

be written only in the LGC and not in any other statute. Dou

code they are referring to is the LGC of 1991. Pushing their

conclude that the cityhood laws that exempted the respon

from the income standard spelled out in the amendator

offend the Constitution.

Petitioners’ posture does not persuade.

The supposedly infringed Art. X, Sec. 10 is n

constitutional provision. Save for the use of the term “barrio

“barangay,” “may be” instead of “shall,” the change of the p

or units” to “political unit” and the addition of the modifier “

the word “affected,” the aforesaid provision is a

reproduction of Art. XI, Sec. 3 of the 1973 Constitution, which

S ti 3 N i it i i lit b i P i t 1965 th t i l k f l it












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Section 3. No province, city, municipality, or barrio may

be created, divided, merged, abolished, or its boundary


established in the local government code and subject to

approval by a majority of the votes cast in a plebiscite in

the unit or units affected. (Emphasis supplied.)

It bears notice, however, that the “code” similarly referred to in

the 1973 and 1987 Constitutions is clearly but a law Congress enacted.

This is consistent with the aforementioned plenary power of Congress to

create political units. Necessarily, since Congress wields the vast poser

of creating political subdivisions, surely it can exercise the lesser

authority of requiring a set of criteria, standards, or ascertainable

indicators of viability for their creation. Thus, the only conceivable

reason why the Constitution employs the clause “ in accordance with

the criteria established in the local government code” is to lay stress

that it is Congress alone, and no other, which can impose the criteria.

The eminent constitutionalist, Fr. Joaquin G. Bernas, S.J., in his treatise

on Constitutional Law, specifically on the subject provision, explains:

Prior to 1965, there was a certain lack of clarity

regard to the power to create, divide, merge, dissolv

change the boundaries of municipal corporations. The e

to which the executive may share in this power was obs

by Cardona v. Municipality of Binangonan.[30] Pelaez v. Au

General subsequently clarified the Cardona case when

Supreme Court said that “the authority to create muncorporations is essentially legislative in nature.”[31] P

however, conceded that “the power to fix such com

boundary, in order to avoid or settle conflicts of jurisd

between adjoining municipalities, may partake

an administrative nature-involving as it does, the adopti

means and ways to carry into effect the law creating

municipalities.”[32] Pelaez was silent about division, me

and dissolution of municipal corporations. But since div

in effect creates a new municipality, and both dissolutio

merger in effect abolish a legal creation, it may fair

inferred that these acts are also legislative in nature.

Section 10 [Art. X of the 1987 Constitution], whic

legacy from the 1973 Constitution, goes further than

doctrine in the Pelaez case. It not only makes cre

division, merger, abolition or substantial alteratio

boundaries of provinces cities municipalities x x x subject to h l l l












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boundaries of provinces, cities, municipalities x x x subject to

“criteria established in the local government code,” thereby

declaring these actions properly legislative, but it also makes

creation, division, merger, abolition or substantial alteration

of boundaries “subject to approval by a majority of the votes

cast in a plebiscite in the political units directly affected.”[33] x

x x (Emphasis added.)

It remains to be observed at this juncture that when the 1987

Constitution speaks of the LGC, the reference cannot be to any specific

statute or codification of laws, let alone the LGC of 1991.[34]

Be it noted

that at the time of the adoption of the 1987 Constitution, Batas

Pambansa Blg. (BP) 337, the then LGC, was still in effect. Accordingly,

had the framers of the 1987 Constitution intended to isolate the

embodiment of the criteria only in the LGC, then they would have

actually referred to BP 337. Also, they would then not have provided for

the enactment by Congress of a new LGC, as they did in Art. X, Sec.

3[35]

of the Constitution.

Consistent with its plenary legislative power on t

Congress can, via either a consolidated set of laws or a mu

single-subject enactment, impose the said verifiable criteria

These criteria need not be embodied in the local governm

albeit this code is the ideal repository to ensure, as much a

the element of uniformity. Congress can even, after

codification, enact an amendatory law, adding to the existin

indicators earlier codified, just as efficaciously as it may

same. In this case, the amendatory RA 9009 upped the alrea

income requirement from PhP 20 million to PhP 100 million.

of the day, the passage of amendatory laws is no differen

enactment of laws, i.e., the cityhood laws specifically ex

particular political subdivision from the criteria earlier

Congress, in enacting the exempting law/s, effectively dec

already codified indicators.

Petitioners’ theory that Congress must provide

solely in the LGC and not in any other law strikes th

illogical. For if we pursue their contention to its logical

then RA 9009 embodying the new and increased incom

would, in a way, also suffer the vice of unconstitutio

startling, however, that petitioners do not que

tit ti lit f RA 9009 th i f t id l












8/21/2019 art. vi- SEC 1


constitutionality of RA 9009, as they in fact use said law as an

argument for the alleged unconstitutionality of the cityhood laws.

As it were, Congress, through the medium of the cityhood

laws, validly decreased the income criterion vis-à-vis the respondent

LGUs, but without necessarily being unreasonably discriminatory, asshall be discussed shortly, by reverting to the PhP 20 million

threshold what it earlier raised to PhP 100 million. The legislative

intent not to subject respondent LGUs to the more stringent

requirements of RA 9009 finds expression in the following uniform

provision of the cityhood laws:

Exemption from Republic Act No. 9009. – The City of x x

x shall be exempted from the income requirement prescribed

under Republic Act No. 9009.

In any event, petitioners’ constitutional objection would still be

untenable even if we were to assume purely ex hypothesi the

correctness of their underlying thesis, viz: that the conversion of a

municipality to a city shall be in accordance with, among other things,

the income criterion set forth in the LGC of 1991, and in no other;

otherwise, the conversion is invalid. We shall explain.

Looking at the circumstances behind the enactment

subject of contention, the Court finds that the LGC-amendin

no less, intended the LGUs covered by the cityhood laws to

from the PhP 100 million income criterion. In other words, t

laws, which merely carried out the intent of RA 9009, adhefinal analysis, to the “criteria established in the Local G

Code,” pursuant to Sec. 10, Art. X of the 1987 Constitutio

now proceed to discuss this exemption angle.[36]

Among the criteria established in the LGC pursuan

Art. X of the 1987 Constitution are those detailed in Sec.

LGC of 1991 under the heading “Requisites for Creation.”

sets the minimum income qualifying bar before a municcluster of barangay s may be considered for cityhood. Orig

164 of BP 337 imposed an average regular annual income

ten million pesos for the last three consecutive years” as

income standard for a municipal-to-city conversion. The L

337 established was superseded by the LGC of 1991 whos

450 provided that “*a+ municipality or cluster of barang

converted into a component city if it has an average annu

x x of at least twenty million pesos (P20 000 000 00) for at least two The legislative intent is not at all times accurately refle





8/21/2019 art. vi- SEC 1


x x of at least twenty million pesos (P20,000,000.00) for at least two

(2) consecutive years based on 1991 constant prices x x x.” RA 9009

in turn amended said Sec. 450 by further increasing the income

requirement to PhP 100 million, thus:

Section 450. Requisites for Creation. – (a) A

municipality or a cluster of barangays may be converted into

a component city if it has a locally generated average annual

income, as certified by the Department of Finance, of at

least One Hundred Million Pesos (P100,000,000.00) for the

last two (2) consecutive years based on 2000 constant prices,

and if it has either of the following requisites:

x x x x

(c) The average annual income shall include the income

accruing to the general fund, exclusive of special funds,

transfers, and non-recurring income. (Emphasis supplied.)

The legislative intent is not at all times accurately refle

manner in which the resulting law is couched. Thus, apply

legi s[37]

or strictly literal interpretation of a statute may

meaningless and lead to inconvenience, an absurd si

injustice.[38]

To obviate this aberration, and bearing in mind t

that the intent or the spirit of the law is the law itself ,[39]

re

be to the rule that the spirit of the law controls its letter.[40]

It is in this respect that the history of the passage of RA

the logical inferences derivable therefrom assume re

discovering legislative intent.[41]

The rationale behind the enactment of RA 9009 to a

450 of the LGC of 1991 can reasonably be deduced fro

Pimentel’s sponsorship speech on S. Bill No. 2157. Of

significance is his statement regarding the basis for the

increase from PhP 20 million to PhP 100 million in t

requirement for municipalities wanting to be converted into c

Senator Pimentel. Mr. President, I would have wanted municipalities were qualified under the then obtaining PhP





















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Senator Pimentel. Mr. President, I would have wanted

this bill to be included in the whole set of proposed

amendments that we have introduced to precisely amend the

[LGC]. However, it is a fact that there is a mad rush of

municipalities wanting to be converted into cities. Whereas

in 1991, when the [LGC] was approved, there were only 60

cities, today the number has increased to 85 cities, with 41

more municipalities applying for conversion x x x. At the rate

we are going, I am apprehensive that before long this nation

will be a nation of all cities and no municipalities.

It is for that reason, Mr. President, that we are

proposing among other things, that the financial requirement,

which, under the [LGC], is fixed at P20 million, be raised

to P100 million to enable a municipality to have the right to

be converted into a city, and the P100 million should be

sourced from locally generated funds.

Congress to be sure knew, when RA 9009 was being deliberated

upon, of the pendency of several bills on cityhood, wherein the applying

municipalities were qualified under the then obtaining PhP

income threshold. These included respondent LGUs. Th

noteworthy is the ensuing excerpts from the floor exchang

then Senate President Franklin Drilon and Senator Pimente

stopping short of saying that the income threshold of PhP

under S. Bill No. 2157 would not apply to municipalities

pending cityhood bills, thus:

THE PRESIDENT. The Chair would like to ask

clarificatory point. x x x

THE PRESIDENT. This is just on the point of the pe

bills in the Senate which propose the conversion of a nu

of municipalities into cities and which qualify undepresent standard.

We would like to know the view of

sponsor: Assuming that this bill becomes a law, w

Chamber apply the standard as proposed in this bill to

bills which are pending for consideration?

8/21/2019 art. vi- SEC 1


SENATOR PIMENTEL, Mr. President, it might not be fair

to make this bill x x x [if] approved, retroact to the bills that are

pending in the Senate for conversion from municipalities to

cities.

THE PRESIDENT. Will there be an appropriate language

crafted to reflect that view? Or does it not become a policy of

the Chamber, assuming that this bill becomes a law x x x that it

will apply to those bills which are already approved by the

House under the old version of the [LGC] and are now pending

in the Senate? The Chair does not know if we can craft a

language which will limit the application to those which are not

yet in the Senate. Or is that a policy that the Chamber will

adopt?

SENATOR PIMENTEL. Mr. President, personally, I do not

think it is necessary to put that provision because what we are

saying here will form part of the interpretation of this

bill. Besides, if there is no retroactivity clause, I do not think

that the bill would have any retroactive effect.

THE PRESIDENT. So the understanding is that tho

which are already pending in the Chamber will not be aff

SENATOR PIMENTEL. These will not be affecte

President.[42] (Emphasis and underscoring supplied.)

What the foregoing Pimental-Drilon exchange

indicates are the following complementary legislative intenti

then pending cityhood bills would be outside the pale of th

income requirement of PhP 100 million that S. Bill No. 2159

and (2) RA 9009 would not have any retroactive effect ins

cityhood bills are concerned.

Given the foregoing perspective, it is not amiss to sta

basis for the inclusion of the exemption clause of the cityh

the clear-cut intent of Congress of not according retroactive

9009. Not only do the congressional records bear the legis

of exempting the cityhood laws from the income requirem

100 million. Congress has now made its intention to exemp

the challenged cityhood laws.

proper course is to start out and follow the true intent o





8/21/2019 art. vi- SEC 1


Legislative intent is part and parcel of the law, the controlling

factor in interpreting a statute. In construing a statute, the proper

course is to start out and follow the true intent of the Legislature and to

adopt the sense that best harmonizes with the context and promotes in

the fullest manner the policy and objects of the legislature.[43]

In fact,

any interpretation that runs counter to the legislative intent is

unacceptable and invalid.[44]

Torres v. Limjap could not have been more

precise:

The intent of a Statute is the Law. – If a statute is valid,

it is to have effect according to the purpose and intent of the

lawmaker. The intent is x x x the essence of the law and the

primary rule of construction is to ascertain and give effect to

that intent. The intention of the legislature in enacting a law

is the law itself, and must be enforced when

ascertained, although it may not be consistent with the strict

letter of the statute. Courts will not follow the letter of a

statute when it leads away from the true intent and purpose

of the legislature and to conclusions inconsistent with the

general purpose of the act. Intent is the spirit which gives

life to a legislative enactment. In construing statutes the

p p

legislature x x x.[45] (Emphasis supplied.)

As emphasized at the outset, behind every law

presumption of constitutionality.[46]

Consequently, to him

assert the unconstitutionality of a statute belongs the burden

otherwise. Laws will only be declared invalid if a conflic

Constitution is beyond reasonable doubt.[47]

Unfortu

petitioners and petitioners-in-intervention, they failed to disc

heavy burden.

It is contended that the deliberations on the cityhood b

covering joint resolution were undertaken in the 11th

12th

Congress. Accordingly, so the argument goes, such de

more particularly those on the unapproved resolution exemRA 9009 certain municipalities, are without significance and

qualify as extrinsic aids in construing the cityhood laws that w

during the 13th

Congress, Congress not being a continuing bo

The argument is specious and glosses over the reali

cityhood bills ––which were already being deliberated

perhaps before the conception of RA 9009––were again being





















8/21/2019 art. vi- SEC 1


perhaps before the conception of RA 9009 were again being

considered during the 13th

Congress after being tossed around in the

two previous Congresses. And specific reference to the cityhood bills

was also made during the deliberations on RA 9009. At the end of the

day, it is really immaterial if Congress is not a continuing legislative

body. What is important is that the debates, deliberations, and

proceedings of Congress and the steps taken in the enactment of the

law, in this case the cityhood laws in relation to RA 9009 or vice versa,

were part of its legislative history and may be consulted, if appropriate,

as aids in the interpretation of the law.[48] And of course the earlier

cited Drilon-Pimentel exchange on whether or not the 16 municipalities

in question would be covered by RA 9009 is another vital link to the

historical chain of the cityhood bills. This and other proceedings on the

bills are spread in the Congressional journals, which cannot be

conveniently reduced to pure rhetoric without meaning whatsoever, on

the simplistic and non-sequitur pretext that Congress is not a continuing

body and that unfinished business in either chamber is deemed

terminated at the end of the term of Congress.

This brings us to the challenge to the constitutionality of cityhood

laws on equal protection grounds.

To the petitioners, the cityhood laws, by grant

treatment to respondent municipalities/LGUs by way of exem

the standard PhP 100 million minimum income requirem

Sec.1, Art. III of the Constitution, which in part provides that

shall “be denied the equal protection of the laws.”

Petitioners’ challenge is not well taken. At its most

equal protection clause proscribes undue favor as well

discrimination. Hence, a law need not operate with equal f

persons or things to be conformable with Sec. 1, Art.

Constitution.

The equal protection guarantee is embraced in the b

elastic concept of due process, every unfair discriminatio

offense against the requirements of justice and fair p

nonetheless come as a separate clause in Sec. 1, Art.

Constitution to provide for a more specific protection against

discrimination or antagonism from government. Arbitrarines

may be assailed on the basis of the due process clause. But if

challenged act partakes of an unwarranted partiality or prejudice, the As a matter of settled legal principle, the fundamen





8/21/2019 art. vi- SEC 1


g p p y p j ,

sharper weapon to cut it down is the equal protection clause.[49]

This

constitutional protection extends to all persons, natural or artificial,

within the territorial jurisdiction. Artificial persons, as the respondent

LGUs herein, are, however, entitled to protection only insofar as their

property is concerned.[50]

In the proceedings at bar, petitioner LCP and the intervenors

cannot plausibly invoke the equal protection clause, precisely because

no deprivation of property results by virtue of the enactment of the

cityhood laws. The LCP’s claim that the IRA of its member-cities will be

substantially reduced on account of the conversion into cities of the

respondent LGUs would not suffice to bring it within the ambit of the

constitutional guarantee. Indeed, it is presumptuous on the part of the

LCP member-cities to already stake a claim on the IRA, as if it were their

property, as the IRA is yet to be allocated. For the same reason, the

municipalities that are not covered by the uniform exemption clause in

the cityhood laws cannot validly invoke constitutional protection. For, at

this point, the conversion of a municipality into a city will only affect its

status as a political unit, but not its property as such.

g p p ,

equal protection does not require absolute equality. It is eno

persons or things similarly situated should be treated alike,

rights or privileges conferred and responsibilities or

imposed. The equal protection clause does not preclude the

recognizing and acting upon factual differences between indi

classes. It recognizes that inherent in the right to legislate is

classify,[51]

necessarily implying that the equality guarant

violated by a legislation based on reasonable cla

Classification, to be reasonable, must (1) rest on substantial d

(2) be germane to the purpose of the law; (3) not be limited

conditions only; and (4) apply equally to all members of

class.[52]

The Court finds that all these requisites have been

laws challenged as arbitrary and discriminatory under

protection clause.

As things stand, the favorable treatment accorded the

municipalities by the cityhood laws rests on substantial

Indeed, respondent LGUs, which are subjected only to the er

20 million income criterion instead of the stringent income r

prescribed in RA 9009, are substantially different f

municipalities desirous to be cities. Looking back, we

respondent LGUs had pending cityhood bills before the passage of RA struggled to beat the effectivity of the law on June 30,

















8/21/2019 art. vi- SEC 1


9009. There lies part of the tipping difference. And years before the

enactment of the amendatory RA 9009, respondents LGUs had already

met the income criterion exacted for cityhood under the LGC of 1991.

Due to extraneous circumstances, however, the bills for their conversion

remained unacted upon by Congress. As aptly observed by then Senator,

now Manila Mayor, Alfredo Lim in his speech sponsoring H. JointResolution No. 1, or the cityhood bills, respondent LGUs saw themselves

confronted with the “changing of the rules in the middle of the

game.” Some excerpts of Senator Lim’s sponsorship speech:

x x x [D]uring the Eleventh Congress, fifty-seven (57)

municipalities applied for city status, confident that each has

met the requisites for conversion under Section 450 of the

[LGC], particularly the income threshold of P20 million. Of the57 that filed, thirty-two (32) were enacted into law; x x x while

the rest – twenty-four (24) in all – failed to pass through

Congress. Shortly before the long recess of Congress in

February 2001, to give way to the May elections x x x, Senate

Bill No. 2157, which eventually became [RA] 9009, was passed

into law, effectively raising the income requirement for

creation of cities to a whooping P100 million x x x. Much as

the proponents of the 24 cityhood bills then pending

events that then unfolded were swift and overwhel

that Congress just did not have the time to act on

measures.

Some of these intervening events were x

the impeachment of President Estrada x x x and the

2001 elections.

The imposition of a much higher income require

for the creation of a city x x x was unfair; like any sp

changing the rules in the middle of the game.

Undaunted, they came back during the [12th] Con

x x x. They filed House Joint Resolution No. 29 se

exemption from the higher income requirement o

9009. For the second time, [however], time ran out

them.

For many of the municipalities whose Cityhood Bills are each of them from the higher income requirement o

8/21/2019 art. vi- SEC 1


now under consideration, this year, at the closing days of the

[13th

] Congress, marks their ninth year appealing for fairness

and justice. x x x

I, for one, share their view that fairness dictates that

they should be given a legal remedy by which they could be

allowed to prove that they have all the necessary

qualifications for city status using the criteria set forth under

the [LGC] prior to its amendment by RA 9009. Hence, when

House Joint Resolution No. 1 reached the Senate x x x I

immediately set the public hearing x x x. On July 25, 2006, I

filed Committee Report No. 84 x x x. On September 6, I

delivered the sponsorship x x x.

x x x By November 14, the measure had reverted to the

period of individual amendments. This was when the then

acting majority leader, x x x informed the Body that Senator

Pimentel and the proponents of House Joint Resolution No. 1

have agreed to the proposal of the Minority Leader for the

House to first approve the individual Cityhood Bills of the

qualified municipalities, along with the provision exempting

9009. x x x This led to the certification issued by

proponents short-listing fourteen (14) municipalities de

to be qualified for city-status.

Acting on the suggestion of Senator Pimentel

proponents lost no time in working for the approval b

House of Representatives of their individual Cityhood

each containing a provision of exemption from the h

income requirement of RA 9009. On the last session d

last year, December 21, the House transmitted to the Se

the Cityhood Bills of twelve out of the 14 pre-qua

municipalities. Your Committee immediately conducte

public hearing x x x.

The whole process I enumerated [span]

Congresses x x x.

In essence, the Cityhood Bills now under consider

will have the same effect as that of House Joint Resol

No. 1 because each of the 12 bills seeks exemption from

higher income requirement of RA 9009. The proponents are

k h h b f d fcity status, using the criteria set forth under the LGC of 19

8/21/2019 art. vi- SEC 1


invoking the exemption on the basis of justice and fairness.

Each of the 12 municipalities has all the requisites for

conversion into a component city based on the old

requirements set forth under Section 450 of the [LGC], prior

to its amendment by RA 9009, namely: x x x [53] (Emphasis

supplied.)

In hindsight, the peculiar conditions, as depicted in Senator

Lim’s speech, which respondent LGUs found themselves in were

unsettling. They were qualified cityhood applicants before the

enactment of RA 009. Because of events they had absolutely nothing

to do with, a spoiler in the form of RA 9009 supervened. Now, then,

to impose on them the much higher income requirement after what

they have gone through would appear to be indeed “unfair,” to

borrow from Senator Lim. Thus, the imperatives of fairness dictate

that they should be given a legal remedy by which they would be

allowed to prove that they have all the necessary qualifications for

its amendment by RA 9009. Truly, the peculiar co

respondent LGUs, which are actual and real, provide

grounds for legislative classification.

To be sure, courts, regardless of doubts they

entertaining, cannot question the wisdom of the co

classification, if reasonable, or the motivation underp

classification.[54]

By the same token, they do not sit to det

propriety or efficacy of the remedies Congress has specifical

extend. That is its prerogative. The power of the Legislatu

distinctions and classifications among persons is, to reitera

curtailed nor denied by the equal protection clause. A l

violative of the constitutional limitation only when the clas

without reasonable basis.

The classification is also germane to the purpose of t

exemption of respondent LGUs/municipalities from the PhP

income requirement was meant to reduce the inequality occ

the passage of the amendatory RA 9009. From another persp

exemption was unquestionably designed to insure that fa

justice would be accorded respondent LGUs. Let it be noted that what municipalities are under like circumstances and condition








8/21/2019 art. vi- SEC 1


were then the cityhood bills covering respondent LGUs were part and

parcel of the original 57 conversion bills filed in the 11th

Congress, 33 of

those became laws before the adjournment of that Congress. The then

bills of the challenged cityhood laws were not acted upon due, inter alia,

to the impeachment of then President Estrada, the

related jueteng scandal investigations conducted before, and the EDSAevents that followed the aborted impeachment.

While the equal protection guarantee frowns upon the creation of

a privileged class without justification, inherent in the equality clause is

the exhortation for the Legislature to pass laws promoting equality or

reducing existing inequalities. The enactment of the cityhood laws was

in a real sense an attempt on the part of Congress to address the

inequity dealt the respondent LGUs. These laws positively promoted the

equality and eliminated the inequality, doubtless unintended, between

respondent municipalities and the thirty-three (33) other municipalities

whose cityhood bills were enacted during the 11th

Congress. Respondent municipalities and the 33 other municipalities,

which had already been elevated to city status, were all found to be

qualified under the old Sec. 450 of the LGC of 1991 during the

11th

Congress. As such, both respondent LGUs and the 33 other former

thus, no rhyme or reason why an exemption from the PhP

requirement cannot be given to respondent LGUs. Indee

respondent LGUs/municipalities the same rights and privileg

to the 33 other municipalities when, at the outset they we

situated, is tantamount to denying the former the protectiv

the equal protection clause. In effect, petitioners and petintervention are creating an absurd situation in which

violation of the equal protection clause of the Constitution i

by another violation of the same clause. The irony is not

Court.

Then too the non-retroactive effect of RA 9009 is no

application only to conditions existing at the time of its enac

intended to apply for all time, as long as the contemplated

obtain. To be more precise, the legislative intent und

enactment of RA 9009 to exclude would-be-cities from th

million criterion would hold sway, as long as the correspondi

bill has been filed before the effectivity of RA 9009 and the

municipality qualifies for conversion into a city under t

version of Sec. 450 of the LGC of 1991.

plebiscites held in the affected LGUs is now an operativ

8/21/2019 art. vi- SEC 1


Viewed in its proper light, the common exemption clause in the

cityhood laws is an application of the non-retroactive effect of RA 9009

on the cityhood bills. It is not a declaration of certain rights, but a mere

declaration of prior qualification and/or compliance with the non-

retroactive effect of RA 9009.

Lastly and in connection with the third requisite, the uniform

exemption clause would apply to municipalities that had pending

cityhood bills before the passage of RA 9009 and were compliant with

then Sec. 450 of the LGC of 1991, which prescribed an income

requirement of PhP 20 million. It is hard to imagine, however, if there

are still municipalities out there belonging in context to the same class

as the sixteen (16) respondent LGUs. Municipalities that cannot claim to

belong to the same class as the 16 cannot seek refuge in the cityhood

laws. The former have to comply with the PhP 100 million income

requirement imposed by RA 9009.

A final consideration. The existence of the cities consequent to

the approval of the creating, but challenged, cityhood laws in the

cities appear to have been organized and are functioning

with new sets of officials and employees. Other resulting e

not be enumerated. The operative fact doctrine provid

reason for upholding the constitutionality of the cityho

question.

In view of the foregoing discussion, the Cour

abandon as it hereby abandons and sets aside the D

November 18, 2008 subject of reconsideration. And

summing up the main arguments in support of this disp

Court hereby declares the following:

(1) Congress did not intend the increased income req

RA 9009 to apply to the cityhood bills which became the city

in question. In other words, Congress intended the subje

laws to be exempted from the income requirement of PhP

prescribed by RA 9009;

million income level exacted under the original Sec. 450 o

8/21/2019 art. vi- SEC 1


(2) The cityhood laws merely carry out the intent of RA 9009, now

Sec. 450 of the LGC of 1991, to exempt respondent LGUs from the PhP

100 million income requirement;

(3) The deliberations of the 11th or 12th Congress on unapproved

bills or resolutions are extrinsic aids in interpreting a law passed in the

13th Congress. It is really immaterial if Congress is not a continuing

body. The hearings and deliberations during the 11th

and 12th

Congress

may still be used as extrinsic reference inasmuch as the same cityhood

bills which were filed before the passage of RA 9009 were being

considered during the 13th

Congress. Courts may fall back on the history

of a law, as here, as extrinsic aid of statutory construction if the literal

application of the law results in absurdity or injustice.

(4) The exemption accorded the 16 municipalities is based on the

fact that each had pending cityhood bills long before the enactment of

RA 9009 that substantially distinguish them from other municipalities

aiming for cityhood. On top of this, each of the 16 also met the PhP 20

LGC.

And to stress the obvious, the cityhood laws are

constitutional. As we see it, petitioners have not over

presumptive constitutionality of the laws in question.

WHEREFORE, respondent LGUs’ Motion for Reco

dated June 2, 2009, their “Motion to Amend the Resolution

2009 by Declaring Instead that Respondents’ ‘M

Reconsideration of the Resolution of March 31, 2009’ and

Leave to File and to Admit Attached Second Motion for Reco

of the Decision Dated November 18, 2008’ Remain Unreso

Conduct Further Proceedings,” dated May 14, 2009, and their second1. Motion for Reconsideration of the “Resolution” da

24 2010 dated and filed on September 14

8/21/2019 art. vi- SEC 1


g , y , ,

Motion for Reconsideration of the Decision dated November 18, 2008

are GRANTED. The June 2, 2009, the March 31, 2009, and April 31, 2009

Resolutions are REVERSED and SET ASIDE. The entry of judgment made

on May 21, 2009 must accordingly be RECALLED.

The instant consolidated petitions and petitions-in-intervention

are DISMISSED. The cityhood laws, namely Republic Act Nos. 9389,

9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409,

9434, 9435, 9436, and 9491 are declared VALID and CONSTITUTIONAL.

SO ORDERED.


For consideration of this Court are the following pleadings:

24, 2010 dated and filed on September 14

respondents Municipality of Baybay, et al.; and

2. Opposition *To the “Motion for Reconsiderati

‘Resolution’ dated August 24, 2010”+.

Meanwhile, respondents also filed on September Motion to Set “Motion for Reconsideration of the ‘

dated August 24, 2010” for Hearing. This motion was, howe

denied by the Court En Banc.

A brief background —

These cases were initiated by the consolidated pe

prohibition filed by the League of Cities of the Philippines (L

Iloilo, City of Calbayog, and Jerry P. Treñas, assailing the cons

of the sixteen (16) laws,[1]

each converting the municipal

thereby into a component city (Cityhood Laws), and seekin

the Commission on Elections (COMELEC) from conducting

pursuant to the subject laws.

In the Decision dated November 18, 2008, the Court En

6-5 vote,[2]

granted the petitions and struck down the Cityho

unconstitutional for violating Sections 10 and 6, Article X, and the equal

protectionclause

reconsideration. In such a case, the second motio

reconsideration is no longer a prohibited pleading.

http://sc.judiciary.gov.ph/jurisprudence/2011/february2011/176951.htm#_ftn1








8/21/2019 art. vi- SEC 1


protection clause.

In the Resolution dated March 31, 2009, the Court En Banc, by a

7-5 vote,[3]

denied the first motion for reconsideration.

On April 28, 2009, the Court En Banc issued a Resolution, with avote of 6-6,

[4] which denied the second motion for reconsideration for

being a prohibited pleading.

In its June 2, 2009 Resolution, the Court En Banc clarified its April

28, 2009 Resolution in this wise—

As a rule, a second motion for reconsideration is a

prohibited pleading pursuant to Section 2, Rule 52 of the

Rules of Civil Procedure which provides that: “No second

motion for reconsideration of a judgment or final resolution

by the same party shall be entertained.” Thus, a decision

becomes final and executory after 15 days from receipt of the

denial of the first motion for reconsideration.

However, when a motion for leave to file and admit a

second motion for reconsideration is granted by the Court,

the Court therefore allows the filing of the second motion for

g p p g

In the present case, the Court voted on the se

motion for reconsideration filed by respondent citie

effect, the Court allowed the filing of the second motio

reconsideration. Thus, the second motion for reconside

was no longer a prohibited pleading. However, for lack o

required number of votes to overturn the 18 Nove

2008 Decision and 31 March 2009 Resolution, the

denied the second motion for reconsideration in its 28

2009 Resolution.[5]

Then, in another Decision dated December 21, 2009, t

Banc, by a vote of 6-4,[6]

declared the Cityhood Laws as const

On August 24, 2010, the Court En Banc, through a Reso

vote of 7-6,[7]

resolved the Ad Cautelam Motion for Reconsid

Motion to Annul the Decision of December 21, 2009, bo

petitioners, and the Ad Cautelam Motion for Reconsiderat

petitioners-in-intervention Batangas City, Santiago City, Le

Iriga City, Cadiz City, and Oroquieta City, reinstating the No

2008 Decision. Hence, the aforementioned pleadings.

Considering these circumstances where the Court En Banc has

twice changed its position on the constitutionality of the 16 Cityhood

thereof, as amended by Republic Act (R.A.) No. 9009, which

on June 30 2001 viz





















8/21/2019 art. vi- SEC 1


twice changed its position on the constitutionality of the 16 Cityhood

Laws, and especially taking note of the novelty of the issues involved in

these cases, the Motion for Reconsideration of the “Resolution” dated

August 24, 2010 deserves favorable action by this Court on the basis of

the following cogent points:

1.

The 16 Cityhood Bills do not violate Article X, Section 10 of

the Constitution.

Article X, Section 10 provides—

Section 10. No province, city, municipality, or barangay

may be created, divided, merged, abolished, or its boundary


established in the local government code and subject toapproval by a majority of the votes cast in a plebiscite in the

political units directly affected.

The tenor of the ponencias of the November 18, 2008 Decision

and the August 24, 2010 Resolution is that the exemption clauses in the

16 Cityhood Laws are unconstitutional because they are not written in

the Local Government Code of 1991 (LGC), particularly Section 450

on June 30, 2001, viz.—

Section 450. Requisites for Creation. –a) A munici

or a cluster of barangays may be converted into a comp

city if it has a locally generated annual income, as certifi

the Department of Finance, of at least One Hundred M

Pesos (P100,000,000.00) for at least two (2) consecyears based on 2000 constant prices, and if it has either

following requisites:

x x x x

(c) The average annual income shall include the in

accruing to the general fund, exclusive of special f

transfers, and non-recurring income. (Emphasis supplied

Prior to the amendment, Section 450 of the LGC requi

average annual income, as certified by the Department of Fin

least P20,000,000.00 for the last two (2) consecutive years

1991 constant prices.

Before Senate Bill No. 2157, now R.A. No. 9009, was int

Senator Aquilino Pimentel, there were 57 bills filed for conve

municipalities into component cities. During the 11th

Congress (June

1998-June 2001) 33 of these bills were enacted into law while 24

have the right to be converted into a city, and the

million should be sourced from locally generated funds.

8/21/2019 art. vi- SEC 1


1998-June 2001), 33 of these bills were enacted into law, while 24

remained as pending bills. Among these 24 were the 16 municipalities

that were converted into component cities through the Cityhood Laws.

The rationale for the enactment of R.A. No. 9009 can be gleaned

from the sponsorship speech of Senator Pimentel on Senate Bill No.2157, to wit—

Senator Pimentel. Mr. President, I would have wanted

this bill to be included in the whole set of proposed

amendments that we have introduced to precisely amend the

Local Government Code. However, it is a fact that there is

a mad rush of municipalities wanting to be converted into

cities. Whereas in 1991, when the Local Government was

approved, there were only 60 cities, today the number has

increased to 85 cities, with 41 more municipalities applying

for conversion to the same status. At the rate we are going, I

am apprehensive that before long this nation will be a

nation of all cities and no municipalities.

It is for that reason, Mr. President, that we are

proposing among other things, that the financial requirement,

which, under the Local Government Code, is fixed at P20

million, be raised to P100 million to enable a municipality to

What has been happening, Mr. President, is

municipalities aspiring to become cities say that they q

in terms of financial requirements by incorporating

Internal Revenue share of the taxes of the nation on to

regularly generated revenue. Under that requireme

looks clear to me that practically all municipalities in

country would qualify to become cities.

It is precisely for that reason, therefore, that w

seeking the approval of this Chamber to amend, partic

Section 450 of Republic Act No. 7160, the requisite fo

average annual income of a municipality to be converted

a city or cluster of barangays which seek to be converted

a city, raising that revenue requirement from P20 m

to P100 million for the last two consecutive years base

2000 constant prices.[8]

While R.A. No. 9009 was being deliberated upon, Co

well aware of the pendency of conversion bills of several mu

including those covered by the Cityhood Laws, desiring

component cities which qualified under the P20 milli

requirement of the old Section 450 of the LGC. The interp

Senate President Franklin Drilon of Senator Pimentel is revea

THE PRESIDENT. The Chair would like to ask for some

the application to those which are not yet in the Senate.

that a policy that the Chamber will adopt?





8/21/2019 art. vi- SEC 1


clarificatory point.

SENATOR PIMENTEL. Yes, Mr. President.

THE PRESIDENT. This is just on the point of the pending bills

in the Senate which propose the conversion of a number of

municipalities into cities and which qualify under the

present standard.

We would like to know the view of the

sponsor: Assuming that this bill becomes a law, will the

Chamber apply the standard as proposed in this bill to those

bills which are pending for consideration?

SENATOR PIMENTEL. Mr. President, it might not be fair to

make this bill, on the assumption that it is approved,

retroact to the bills that are pending in the Senate

conversion from municipalities to cities.

THE PRESIDENT. Will there be an appropriate language

crafted to reflect that view? Or does it not become a policy of

the Chamber, assuming that this bill becomes a law

tomorrow, that it will apply to those bills which are already

approved by the House under the old version of the Local

Government Code and are now pending in the Senate? The

Chair does not know if we can craft a language which will limit

SENATOR PIMENTEL. Mr. President, personally, I do not

it is necessary to put that provision because what we

saying here will form part of the interpretation of

bill. Besides, if there is no retroactivity clause, I do not

that the bill would have any retroactive effect.

THE PRESIDENT. So the understanding is that those

which are already pending in the Chamber will no

affected.

SENATOR PIMENTEL. These will not be affected,

President.

THE PRESIDENT. Thank you Mr. Chairman.[9]

Clearly, based on the above exchange, Congress int

those with pending cityhood bills during the 11th

Congress w

covered by the new and higher income requirement of P

imposed by R.A. No. 9009. When the LGC was amended b

9009, the amendment carried with it both the letter and th

the law, and such were incorporated in the LGC by

compliance of the Cityhood Laws was gauged.

Notwithstanding that both the 11th

and 12th

Congress failed to act

town in the province of Ilocos Norte and the n

convergence point for the neighboring towns to transact

l d h d l





8/21/2019 art. vi- SEC 1


Notwithstanding that both the 11 and 12 Congress failed to act

upon the pending cityhood bills, both the letter and intent of Section

450 of the LGC, as amended by R.A. No. 9009, were carried on until the

13th

Congress, when the Cityhood Laws were enacted. The exemption

clauses found in the individual Cityhood Laws are the express

articulation of that intent to exempt respondent municipalities from thecoverage of R.A. No. 9009.

Even if we were to ignore the above quoted exchange between

then Senate President Drilon and Senator Pimentel, it cannot be denied

that Congress saw the wisdom of exempting respondent municipalities

from complying with the higher income requirement imposed by the

amendatory R.A. No. 9009. Indeed, these municipalities have proven

themselves viable and capable to become component cities of their

respective provinces. It is also acknowledged that they were centers oftrade and commerce, points of convergence of transportation, rich

havens of agricultural, mineral, and other natural resources, and

flourishing tourism spots. In this regard, it is worthy to mention the

distinctive traits of each respondent municipality, viz—

Batac, Ilocos Norte – It is the biggest municipality of the

2nd

District of Ilocos Norte, 2nd

largest and most progressive

commercial ventures and other daily activities. A gro

metropolis, Batac is equipped with amenities of modern

like banking institutions, satellite cable syst

telecommunications systems. Adequate roads, ma

hospitals, public transport systems, sports, and entertain

facilities. [Explanatory Note of House Bill No.

introduced by Rep. Imee R. Marcos.]

El Salvador, Misamis Oriental – It is located at the cent

the Cagayan-Iligan Industrial Corridor and home to a nu

of industrial companies and corporations. Investment

financial affluence ofEl Salvador is aptly credited t

industrious and preserving people. Thus, it has becom

growing investment choice even besting nearby cities

municipalities. It is home to Asia Brewery as distribution

of their product in Mindanao. The Gokongwei Grou

Companies is also doing business in the area. So

conversion is primarily envisioned to spur economic

financial prosperity to this coastal place in North-We

Misamis Oriental. [Explanatory Note of House Bill No. 6

introduced by Rep. Augusto H. Bacullo.]

Cabadbaran, Agusan del Norte – It is the largest of the e

(11) municipalities in the province of Agusan del Nor

plays strategic importance to the administrative and s

economic life and development of Agusan del Norte. It

foremost in terms of trade, commerce, and industry. H

the municipality was declared as the new seat and capital of

the provincial government of Agusan del Norte pursuant to

R bli A t N 8811 t d i t l A t 16

Sumisip. [Explanatory Note of House Bill No.

introduced by Rep. Gerry A. Salapuddin.]

8/21/2019 art. vi- SEC 1


Republic Act No. 8811 enacted into law on August 16,

2000. Its conversion will certainly promote, invigorate, and

reinforce the economic potential of the province in

establishing itself as an agro-industrial center in the Caraga

region and accelerate the development of the

area. [Explanatory Note of House Bill No. 3094, introduced by

Rep. Ma. Angelica Rosedell M. Amante.]

Borongan, Eastern Samar – It is the capital town of Eastern

Samar and the development of Eastern Samar will depend to

a certain degree of its urbanization. It will serve as a catalyst

for the modernization and progress of adjacent towns

considering the frequent interactions between the

populace. [Explanatory Note of House Bill No. 2640,

introduced by Rep. Marcelino C. Libanan.]

Lamitan, Basilan – Before Basilan City was converted into a

separate province, Lamitan was the most progressive part of

the city. It has been for centuries the center of commerce

and the seat of the Sultanate of the Yakan people of

Basilan. The source of its income is agro-industrial and others

notably copra, rubber, coffee and host of income generating

ventures. As the most progressive town in Basilan, Lamitan

continues to be the center of commerce catering to the

municipalities of Tuburan, Tipo-Tipo and

Catbalogan, Samar – It has always been the socio-econ

political capital of the Island of Samar even during the Sp

era. It is the seat of government of the two congress

districts of Samar. Ideally located at the crossroad betw

Northern and Eastern Samar, Catbalogan also hosts trad

commerce activates among the more prosperous cities oVisayas like Tacloban City, Cebu Cityand the cities of

region. The numerous banks and telecommunication fac

showcases the healthy economic environment of

municipality. The preeminent and sustainable econ

situation of Catbalogan has further boosted the ca

residents for a more vigorous involvement of governan

the municipal government that is inherent in a

government. [Explanatory Note of House Bill No.

introduced by Rep. Catalino V. Figueroa.]

Bogo, Cebu – Bogo is very qualified for a city in term

income, population and area among others. It has

elevated to the Hall of Fame being a five-time w

nationwide in the clean and green program. [Explan

Note of House Bill No. 3042, introduced by Rep. Clav

Martinez.]

Tandag, Surigao del Sur – This over 350 year old capital

the province has long sought its conversion into a city tha

pave the way not only for its own growth and advancement

but also help in the development of its neighboring

municipalities and the province as a whole Furthermore it

Guihulngan, Negros Oriental – Its population is se

highest in the province next only to the provincial capita

8/21/2019 art. vi- SEC 1


municipalities and the province as a whole. Furthermore, it

can enhance its role as the province’s trade, financial and

government center. [Explanatory Note of House Bill No.

5940, introduced by Rep. Prospero A. Pichay, Jr.]

Bayugan, Agusan del Sur – It is a first class municipality and

the biggest in terms of population in the entire province. Ithas the most progressive and thickly populated area among

the 14 municipalities that comprise the province. Thus, it has

become the center for trade and commerce in Agusan del

Sur. It has a more developed infrastructure and facilities than

other municipalities in the province. [Explanatory Note of

House Bill No. 1899, introduced by Rep. Rodolfo “Ompong” G.

Plaza.]

Carcar, Cebu – Through the years, Carcar metamorphosed

from rural to urban and now boast of its manufacturing

industry, agricultural farming, fishing and prawn industry and

its thousands of large and small commercial establishments

contributing to the bulk of economic activities in the

municipality. Based on consultation with multi-sectoral

groups, political and non-government agencies, residents and

common folk in Carcar, they expressed their desire for the

conversion of the municipality into a component

city. [Explanatory Note of House Bill No. 3990, introduced by

Rep. Eduardo R. Gullas.]

highest in the province, next only to the provincial capita

higher than Canlaon City and Bais City. Agric

contributes heavily to its economy. There are very

prospects in agricultural production brought about b

favorable climate. It has also the Tanon Strait that prov

good fishing ground for its numerous fishermen. Its pot

to grow commercially is certain. Its strategic location brabout by its existing linkage networks and the m

transportation corridors traversing the municipality

established Guihulngan as the center of commerce and

in this part of Negros Oriental with the first congress

district as its immediate area of influence. Moreover,

beautiful tourist spots that are being availed of by loca

foreign tourists. [Explanatory Note of House Bill No.

introduced by Rep. Jacinto V. Paras.]

Tayabas, Quezon – It flourished and expanded int

important politico-cultural center in [the] Tagalog region

131 years (1179-1910), it served as the cabecera o

province which originally carried the cabecera’s own n

Tayabas. The locality is rich in culture, heritage and tra

was at the outset one of the more active cente

coordination and delivery of basic, regular and diverse g

and services within the first district of Qu

Province. [Explanatory Note of House Bill No.

introduced by Rep. Rafael P. Nantes.]

Tabuk, Kalinga – It not only serves as the main hub of

commerce and trade but also the cultural center of the rich

Mill. Various cottage industries can also be found in th

such as bamboo and rattan craft, ceramics, dress-ma

fiber craft food preservation mat weaving metal craft

8/21/2019 art. vi- SEC 1


commerce and trade, but also the cultural center of the rich

customs and traditions of the different municipalities in the

province. For the past several years, the income of Tabuk has

been steadily increasing, which is an indication that its

economy is likewise progressively growing. [Explanatory Note

of House Bill No. 3068, introduced by Rep. Laurence P.

Wacnang.]

Available information on Baybay, Leyte;

Mati, Davao Oriental; and Naga, Cebu shows their economic

viability, thus:

Covering an area of 46,050 hectares, Baybay [Leyte] is

composed of 92 barangays, 23 of which are in

the poblacion. The remaining 69 are

rural barangays. Baybay City is classified as a first class

city. It is situated on the western coast of

the province of Leyte. It has a Type 4 climate, which is

generally wet. Its topography is generally mountainous in the

eastern portion as it slopes down west towards the shore

line. Generally an agricultural city, the common means of

livelihood are farming and fishing. Some are engaged in

hunting and in forestall activities. The most common crops

grown are rice, corn, root crops, fruits, and

vegetables. Industries operating include the Specialty

Products Manufacturing, Inc. and the Visayan Oil

fiber craft, food preservation, mat weaving, metal craft

Philippine furniture manufacturing and other re

activities. Baybay has great potential as a tourist destin

especially for tennis players. It is not only rich in biodiv

and history, but it also houses the campu

the Visayas State University (formerly the Leyte

University/Visayas State College of Agriculture/ViAgricultural College/Baybay National Agricu

School/Baybay Agricultural High School

the Jungle Valley Park.) Likewise, it has river systems f

river cruising, numerous caves for spelunking, fo

beaches, and marine treasures. This richness, coupled

the friendly Baybayanos, will be an element of a succe

tourism program. Considering the role of tourism

development, Baybay City intends to harness its to

potential. (<http://en.wikipedia.org/wiki/Baybay

visited September 19, 2008)

Mati [Davao Oriental] is located on the eastern pa

the island of Mindanao. It is one hundred sixty-five

kilometers away from Davao City, a one and a half-hour

from Tagum City. Visitors can travel from Davao City th

the Madaum diversion road, which is shorter than takin

Davao-Tagum highway. Travels by air and sea are pos

with the existence of an airport and seaport. Mati boas

being the coconut capital of Mindanao if not the w

country. A large portion of its fertile land is planted to

coconuts, and a significant number of its population is largely

dependent on it Other agricultural crops such as mango

(<http://www.pia.gov.ph/default.asp?m=12&sec=reader

1&fi=p080115.htm&no.=9&date, accessed on Septembe

2008)

8/21/2019 art. vi- SEC 1


dependent on it. Other agricultural crops such as mango,

banana, corn, coffee and cacao are also being cultivated, as

well as the famous Menzi pomelo and Valencia oranges. Mati

has a long stretch of shoreline and one can find beaches of

pure, powder-like white sand. A number of resorts have been

developed and are now open to serve both local and

international tourists. Some of these resorts are situatedalong the coast of Pujada Bay and the Pacific Ocean. Along

the western coast of the bay lies Mt. Hamiguitan, the home of

the pygmy forest, where bonsai plants and trees grow, some

of which are believed to be a hundred years old or more. On

its peak is a lake, called “Tinagong Dagat,” or hidden sea, so

covered by dense vegetation a climber has to hike trails for

hours to reach it. The mountain is also host to rare species of

flora and fauna, thus becoming a wildlife sanctuary for these

life forms. (<http://mati.wetpain.com/?t=anon> accessed

on September 19, 2008.)

Mati is abundant with nickel, chromite, and

copper. Louie Rabat, Chamber President of the Davao

Oriental Eastern Chamber of Commerce and Industry,

emphasized the big potential of the mining industry in

the province of Davao Oriental. As such, he strongly

recommends Mati as the mining hub in the Region.

2008)

Naga [Cebu]: Historical Background—In the early time

place now known as Naga was full of huge trees locally c

as “Narra.” The first settlers referred to this place as N

derived from the huge trees, which later simply be

Naga. Considered as one of the oldest settlementhe Province of Cebu, Naga became a municipality on Jun

1829. The municipality has gone through a serie

classifications as its economic development has unde

changes and growth. The tranquil farming and fishing vi

of the natives were agitated as the Spaniards came

discovered coal in the uplands. Coal was the first expo

the municipality, as the Spaniards mined and se

to Spain. The mining industry triggered the indu

development of Naga. As the years progre

manufacturing and other industries followed, making

one of the industrialized municipalities

the Province of Cebu.

Class of Municipality 1st

class

Province Cebu

Distance from Cebu City 22 kms.

Number of Barangays 28

No. of Registered Voters 44,643 as o

14, 2007

Total No. of Precincts 237 (as of May 14,

2007)

Ann Income (as of Dec 31

power embraces all subjects, and extends to matters of gene

or common interest.[11]





8/21/2019 art. vi- SEC 1


Ann. Income (as of Dec. 31,

2006) Php112,219,7

18.35

Agricultural, Industrial,

Agro-Industrial,

Mining Product(<http://www.nagacebu.com/index.php?option=com.content

&view=article id=53:naga-facts-and-figures&catid=51:naga-

facts-and-figures&Itemid=75> visited September 19, 2008)

The enactment of the Cityhood Laws is an exercise by Congress of

its legislative power. Legislative power is the authority, under the

Constitution, to make laws, and to alter and repeal them.[10]

The

Constitution, as the expression of the will of the people in their original,

sovereign, and unlimited capacity, has vested this power in the Congress

of the Philippines. The grant of legislative power to Congress is broad,

general, and comprehensive. The legislative body possesses plenary

powers for all purposes of civil government. Any power, deemed to be

legislative by usage and tradition, is necessarily possessed by Congress,

unless the Constitution has lodged it elsewhere. In fine, except as

limited by the Constitution, either expressly or impliedly, legislative

Without doubt, the LGC is a creation of Congress thro

making powers. Congress has the power to alter or modify

when it enacted R.A. No. 9009. Such power of amendment o

again exercised when Congress enacted the Cityhood LCongress enacted the LGC in 1991, it provided for quantifiabl

of economic viability for the creation of local governme

income, population, and land area. Congress deemed it fit to

income requirement with respect to the conversion of mu

into component cities when

it enacted R.A. No. 9009, imposing an amount of P1

computed only from locally-generated sources. However

deemed it wiser to exempt respondent municipalities fr

belatedly imposed modified income requirement in order tohigher calling of putting flesh and blood to the very intent an

the LGC, which is countryside development and autonomy

accounting for these municipalities as engines for economi

their respective provinces.

Undeniably, R.A. No. 9009 amended the LGC. But it i

that, in effect, the Cityhood Laws amended R.A. No. 9009 t

exemption clauses found therein. Since the Cityhood Laws explicitly

exempted the concerned municipalities from the amendatory R.A. No.

Upon more profound reflection and deliberation, we d

there was valid classification, and the Cityhood Laws do not





8/21/2019 art. vi- SEC 1


9009, such Cityhood Laws are, therefore, also amendments to the LGC

itself. For this reason, we reverse the November 18, 2008 Decision and

the August 24, 2010 Resolution on their strained and stringent view that

the Cityhood Laws, particularly their exemption clauses, are not found in

the LGC.

2.

The Cityhood Laws do not violate Section 6, Article X and

the equal protection clause of the Constitution.

Both the November 18, 2008 Decision and the August 24,

2010 Resolution impress that the Cityhood Laws violate the equal

protection clause enshrined in the Constitution. Further, it was also

ruled that Section 6, Article X was violated because the Cityhood Laws

infringed on the “just share” that petitioner and petitioners-in-

intervention shall receive from the national taxes (IRA) to be

automatically released to them.

equal protection clause.

As this Court has ruled, the equal protection clause o

Constitution permits a valid classification, provided that it:

substantial distinctions; (2) is germane to the purpose of thnot limited to existing conditions only; and (4) applies eq

members of the same class.[12]

The petitioners argue that there is no substantial

between municipalities with pending cityhood bills in the 11

and municipalities that did not have pending bills, such tha

pendency of a cityhood bill in the 11th

Congress is not

difference to distinguish one municipality from another for t

of the income requirement. This contention misses the point

It should be recalled from the above quoted porti

interpellation by Senate President Drilon of Senator Piment

purpose of the enactment of R.A. No 9009 was merely to sto

rush of municipalities wanting to be converted into citie

apprehension that before long the country will be a country o

without municipalities. It should be pointed out that the imposition of

the P100 million average annual income requirement for the creation of

b l d b h

The P100 million income requirement imposed by R.A

being an arbitrary amount, cannot be conclusively said to b

“ ff b d bl d d





8/21/2019 art. vi- SEC 1


component cities was arbitrarily made. To be sure, there was no

evidence or empirical data, such as inflation rates, to support the choice

of this amount. The imposition of a very high income requirement

of P100 million, increased from P20 million, was simply to make it

extremely difficult for municipalities to become component cities. And

to highlight such arbitrariness and the absurdity of the situation created

thereby, R.A. No. 9009 has, in effect, placed component cities at a

higher standing than highly urbanized cities under Section 452 of the

LGC, to wit—

Section 452. Highly Urbanized Cities. – (a) Cities with a

minimum population of two hundred thousand (200,000)

inhabitants, as certified by the National Statistics Office,

and with the latest annual income of at least Fifty Million

Pesos (P50,000,000.00) based on 1991 constant prices, ascertified by the city treasurer, shall be classified as highly

urbanized cities.

(b) Cities which do not meet above requirements

shall be considered component cities of the province in

which they are geographically located. (Emphasis supplied)

amount “sufficient, based on acceptable standards, to pro

essential government facilities and services and spec

ons

commensurate with the size of its population,” per Section

LGC. It was imposed merely because it is difficult to comply w

it could be argued that P100 million, being more than P20 mi

of course, provide the essential government facilities, se

special functions vis-à-vis the population of a municipality

become a component city, it cannot be said that the minimu

of P20 million would be insufficient. This is evident from t

cities whose income, up to now, do not comply with the P

income requirement, some of which have lower than the

average annual income. Consider the list[14]

below—

CITY AVERAGE ANN

INCOME

1. Marawi City 5,291,522.

2. Palayan City 6,714,651.

3. Sipalay City 9,713,120.

4. Canlaon City 13,552,493.

5. Himamaylan City 15,808,530.

6. Isabela City 16,811,246.

7. Munoz City 19,693,358.61

8. Dapitan City 20,529,181.08

9. Tangub City 20,943,810.04

36. Malaybalay City 54,423,408.

37. La Carlota City 54,760,290.

38. Vigan City 56,831,797.





8/21/2019 art. vi- SEC 1


10. Bayawan City 22,943,810.04

11. Island Garden City of Samal 23,034,731.83

12. Tanjay City 23,723,612.44

13. Tabaco City 24,152,853.71

14. Oroquieta City 24,279,966.51

15. Ligao City 28,326,745.86

16. Sorsogon City 30,403,324.59

17. Maasin City 30,572,113.65

18. Escalante City 32,113,970.00

19. Iriga City 32,757,871.44

20. Gapan City 34,254,986.47

21. Candon City 36,327,705.86

22. Gingoog City 37,327,705.86

23. Masbate City 39,454,508.28

24. Passi City 40,314,620.00

25. Calbayog City 40,943,128.73

26. Calapan City 41,870,239.21

27. Cadiz City 43,827,060.00

28. Alaminos City 44,352,501.00

29. Bais City 44, 646,826.48

30. San Carlos City 46,306,129.13

31. Silay City 47,351,730.00

32. Bislig City 47,360,716.24

33. Tacurong City 49,026,281.56

34. Talisay City (Negros Occidental) 52,609,790.00

35. Kabankalan City 53,560,580.00

39. Balanga City 61,556,700.

40. Sagay City 64,266,350.

41. Cavite City 64,566,079.

42. Koronadal City 66,231,717.

43. Cotabato City 66,302,114.

44. Toledo City 70,157,331.

45. San Jose City 70,309,233.

46. Danao City 72,621,955.

47. Bago City 74,305,000.

48. Valencia City 74,557,298.

49. Victorias City 75,757,298.

50. Cauayan City 82,949,135.

51. Santiago City 83,816,025.

52. Roxas City 85,397,830.

53. Dipolog City 85,503,262.

54. Trece Martires City 87,413,786.

55. Talisay City (Cebu) 87,964,972.

56. Ozamis city 89,054,056.

57. Surigao City 89,960,971.

58. Panabo City 91,425,301.

59. Digos City 92,647,699.

The undeniable fact that these cities remain viable as compo

of their respective provinces emphasizes the arbitrariness of

of P100 million as the new income requirement for the conversion of

municipalities into component cities. This arbitrariness can also be

clearly gleaned from the respective distinctive traits and level of

shall proceed from the National Government to the

government units.

8/21/2019 art. vi- SEC 1


clearly gleaned from the respective distinctive traits and level of

economic development of the individual respondent municipalities as

above submitted.

Verily, the determination of the existence of substantial distinction

with respect to respondent municipalities does not simply lie on the

mere pendency of their cityhood bills during the 11th

Congress. This

Court sees the bigger picture. The existence of substantial distinction

with respect to respondent municipalities covered by the Cityhood Laws

is measured by the purpose of the law, not by R.A. No. 9009, but by the

very purpose of the LGC, as provided in its Section 2 (a), thus—

SECTION 2. Declaration of Policy .—(a) It is hereby

declared the policy of the State that the territorial and

political subdivisions of the State shall enjoy genuine and

meaningful local autonomy to enable them to attain their

fullest development as self-reliant communities and make

them more effective partners in the attainment of national

goals. Toward this end, the State shall provide for a more

responsive and accountable local government structure

instituted through a system of decentralization whereby local

government units shall be given more powers, authority,

responsibilities and resources. The process of decentralization

Indeed, substantial distinction lies in the capacity and

respondent municipalities to become component citie

respective provinces. Congress, by enacting the Cityh

recognized this capacity and viability of respondent municbecome the State’s partners in accelerating economic g

development in the provincial regions, which is the very th

LGC, manifested by the pendency of their cityhood bills

11th Congress and their relentless pursuit for cityhood

present. Truly, the urgent need to become a component city

back in the 11th

Congress, and such condition continues to ex

Petitioners in these cases complain about the purporte

of their “just share” in the IRA. To be sure, petitioners are e

“just share,” not a specific amount. But the feared reductio

be false when, after the implementation of the Cityhood

respective shares increased, not decreased. Con

table[15]

below—

CITY CY 2006 IRA

(Before Implementation of

CY 200

(Actual Rel

Sixteen [16] Cityhood

Laws)

Implementation of Sixteen

[16] Cityhood Laws)

Bais 219,338,056.00 242,193,156.00

B t 334 371 984 00 388 871 770 00

Zamboanga 918,013,016.00 1,009,972



8/21/2019 art. vi- SEC 1


Batangas 334,371,984.00 388,871,770.00

Bayawan 353,150,158.00 388,840,062.00

Cadiz 329,491,285.00 361,019,211.00

Calapan 227,772,199.00 252,587,779.00

Calbayog 438,603,378.00 485,653,769.00

Cauayan 250,477,157.00 277,120,828.00

Gen. Santos 518,388,557.00 631,864,977.00

Gingoog 314,425,637.00 347,207,725.00

Himamaylan 248,154,381.00 277,532,458.00

Iloilo 358,394,268.00 412,506,278.00

Iriga 183,132,036.00 203,072,932.00

Legaspi 235,314,016.00 266,537,785.00

Ligao 215,608,112.00 239,696,441.00

Oroquieta 191,803,213.00 211,449,720.00

Pagadian 292,788,255.00 327,401,672.00

San Carlos 239,524,249.00 260,515,711.00

San Fernando 182,320,356.00 204,140,940.00

Santiago 508,326,072.00 563,679,572.00Silay 216,372,314.00 241,363,845.00

Surigao 233,968,119.00 260,708,071.00

Tacurong 179,795,271.00 197,880,665.00

Tagaytay 130,159,136.00 152,445,295.00

Tarlac 348,186,756.00 405,611,581.00

Tangub 162,248,610.00 180,640,621.00

Urdaneta 187,721,031.00 207,129,386.00

Victorias 176,367,959.00 194,162,687.00

What these petitioner cities were stating as a reduct

respective IRA shares was based on a computation of what t

receive if respondent municipalities were not to become

cities at all. Of course, that would mean a bigger amount to

have staked their claim. After considering these, it all boimoney and how much more they would receive if

municipalities remain as municipalities and not share in the

IRA from the national government for cities.

Moreover, the debates in the Senate on R.A. No. 90

prove enlightening:

SENATOR SOTTO. Mr. President, we just want to

enlightened again on the previous qualification andpresent one being proposed. Before there were three…

SENATOR PIMENTEL. There are three requisites f

municipality to become a city. Let us start with the finan

SENATOR SOTTO. Will the distinguished sponsor p

refresh us? I used to be the chairman of the Committe

Local Government, but the new job that was given to m

the Senate has erased completely my memory as far as the

Local Government Code is concerned.

S O id i h

included the internal revenue share as a part of

municipality, demonstration that they are now finan

capable and can measure up to the requirement of the

G C d f h i f l

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SENATOR PIMENTEL. Yes, Mr. President, with

pleasure. There are three requirements. One is financial.

SENATOR SOTTO. All right. It used to be P20 million.

SENATOR PIMENTEL. It is P20 million. Now we are raising itto P100 million of locally generated funds.

SENATOR SOTTO. In other words, the P20 million before

includes the IRA.

SENATOR PIMENTEL. No, Mr. President.

SENATOR SOTTO. It should not have been included?

SENATOR PIMENTEL. The internal revenue share should

never have been included. That was not the intention whenwe first crafted the Local Government Code. The financial

capacity was supposed to be demonstrated by the

municipality wishing to become a city by its own effort,

meaning to say, it should not rely on the internal revenue

share that comes from the government. Unfortunately, I

think what happened in past conversions of municipalities

into cities was, the Department of Budget and

Management, along with the Department of Finance, had

Government Code of having a revenue of at least

million.

SENATOR SOTTO. I am glad that the sponsor, Mr. Presi

has spread that into the Record because otherwise, if h

not mention the Department of Finance and the Departof Budget and Management, then I would have been bla

for the misinterpretation. But anyway, the gentlem

correct. That was the interpretation given to us during

hearings.

So now, from P20 million, we make it

million from locally generated income as far as populat

concerned.

SENATOR PIMENTEL. As far as population is concerned,

will be no change, Mr. President. Still 150,000.

SENATOR SOTTO. Still 150,000?

SENATOR PIMENTEL. Yes.

SENATOR SOTTO. And then the land area?

SENATOR PIMENTEL. As to the land area, there is no change;

it is still 100 square kilometers.

SENATOR SOTTO B t b f it “ ith / ”?

produce more babies. I do not know—expand

territories, whatever, by reclamation or otherwise. Bu

whole proposal is geared towards making it difficul

i i liti t t i t iti

8/21/2019 art. vi- SEC 1


SENATOR SOTTO. But before it was “either/or”?

SENATOR PIMENTEL. That is correct. As long as it has one of

the three requirements, basically, as long as it meets the

financial requirement, then it may meet the territorial

requirement or the population requirement.

SENATOR SOTTO. So, it remains “or”?

SENATOR PIMENTEL. We are now changing it into AND.

SENATOR SOTTO. AND?

SENATOR PIMENTEL. Yes.

SENATOR SOTTO. I see.

SENATOR PIMENTEL. That is the proposal, Mr. President. In

other words…

SENATOR SOTTO. Does the gentleman not think there will no

longer be any municipality that will qualify, Mr. President?

SENATOR PIMENTEL. There may still be municipalities which

can qualify, but it will take a little time. They will have to

municipalities to convert into cities.

On the other hand, I would like to advert t

fact that in the amendments that we are proposing fo

entire Local Government Code, we are also raising

internal revenue share of the municipalities.

SENATOR SOTTO. I see.

SENATOR PIMENTEL. So that, more or less, hindi nama

dehado in this particular instance.

SENATOR SOTTO. Well, then, because of that informa

Mr. President, I throw my full support behind the meas

Thank you, Mr. President.

SENATOR PIMENTEL. Thank you very much, Mr. Presi

(Emphasis supplied)[16]

From the foregoing, the justness in the act of Congress

the Cityhood Laws becomes obvious, especially consider

municipalities were converted into component citi

immediately prior to the enactment of R.A. No. 9009. In the enactment

of the Cityhood Laws, Congress merely took the 16 municipalities

covered thereby from the disadvantaged position brought about by the

There was a landowner who went out at dawn to hire

for his vineyard. After reaching an agreement with them fo





8/21/2019 art. vi- SEC 1


covered thereby from the disadvantaged position brought about by the

abrupt increase in the income requirement of R.A. No. 9009,

acknowledging the “privilege” that they have already given to those

newly-converted component cities, which prior to the enactment of R.A.

No. 9009, were undeniably in the same footing or “class” as the

respondent municipalities. Congress merely recognized the capacity and

readiness of respondent municipalities to become component cities of

their respective provinces.

Petitioners complain of the projects that they would not be able

to pursue and the expenditures that they would not be able to meet,

but totally ignored the respondent municipalities’ obligations arising

from the contracts they have already entered into, the employees that

they have already hired, and the projects that they have alreadyinitiated and completed as component cities. Petitioners have

completely overlooked the need of respondent municipalities to

become effective vehicles intending to accelerate economic growth in

the countryside. It is like the elder siblings wanting to kill the newly-

borns so that their inheritance would not be diminished.

Apropos is the following parable:

for his vineyard. After reaching an agreement with them fo

daily wage, he sent them out to his vineyard. He came

midmorning and saw other men standing around the m

without work, so he said to them, “You too go along to my v

I will pay you whatever is fair.” They went. He came

around noon and mid-afternoon and did the same. Finally, g

late afternoon he found still others standing around. To the

“Why have you been standing here idle all day?” “No one ha

they told him. He said, “You go to the vineyard too.” Wh

came, the owner of the vineyard said to his foreman, “Call th

and give them their pay, but begin with the last group and e

first.” When those hired late in the afternoon came up they

full day’s pay, and when the first group appeared they th

would get more, yet they received the same daily wage. they complained to the owner, “This last group did only an h

but you have paid them on the same basis as us who have w

day in the scorching heat.” “My friend,” he said to one in

you no injustice. You agreed on the usual wage, did you not

pay and go home. I intend to give this man who was hired la

pay as you. I am free to do as I please with my money, am I

you envious because I am generous?”[17]

Congress, who holds the power of the purse, in enacting the

Cityhood Laws, only sought the well-being of respondent municipalities,

duty. The courts invariably give the most c

consideration to questions involving the interpretation

application of the Constitution, and approach constitut

questions with great deliberation exercising their pow




8/21/2019 art. vi- SEC 1


y , y g g p p ,

having seen their respective capacities to become component cities of

their provinces, temporarily stunted by the enactment of R.A. No.

9009. By allowing respondent municipalities to convert into component

cities, Congress desired only to uphold the very purpose of the LGC, i.e.,

to make the local government units “enjoy genuine and meaningful local

autonomy to enable them to attain their fullest development as self-

reliant communities and make them more effective partners in the

attainment of national goals,” which is the very mandate of the

Constitution.

Finally, we should not be restricted by technical rules of

procedure at the expense of the transcendental interest of justice and

equity. While it is true that litigation must end, even at the expense oferrors in judgment, it is nobler rather for this Court of last resort, as

vanguard of truth, to toil in order to dispel apprehensions and doubt, as

the following pronouncement of this Court instructs:

The right and power of judicial tribunals to declare

whether enactments of the legislature exceed the

constitutional limitations and are invalid has always been

considered a grave responsibility, as well as a solemn

questions with great deliberation, exercising their pow

this respect with the greatest possible caution and

reluctance; and they should never declare a statute

unless its invalidity is, in their judgment, beyond reaso

doubt. To justify a court in pronouncing a legislativ

unconstitutional, or a provision of a state constitution tocontravention of the Constitution x x x, the case must

clear to be free from doubt, and the conflict of the st

with the constitution must be irreconcilable, because it

a decent respect to the wisdom, the integrity, and

patriotism of the legislative body by which any law is p

to presume in favor of its validity until the contrary is sh

beyond reasonable doubt. Therefore, in no doubtful cas

the judiciary pronounce a legislative act to be contrary t

constitution. To doubt the constitutionality of a law

resolve the doubt in favor of its validity.[18]

WHEREFORE, the Motion for Reconsideration of the “

dated August 24, 2010, dated and filed on Septe

2010 by respondents Municipality of Baybay, et al. is GRA

Resolution dated August 24, 2010 is REVERSED and SET A

Cityhood Laws—Republic Acts Nos. 9389, 9390, 9391, 9392, 9

9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491—are

declared CONSTITUTIONAL.

House Bill No. 35552 was introduced on first reading on January 7, 2005. Th

Committee on Ways and Means approved the bill, in substitution of House

which Representative (Rep.) Eric D. Singson introduced on August 8, 2004.

certified the bill on January 7, 2005 for immediate enactment. On January 2

H f R i d h bill d d hi d di





http://www.lawphil.net/judjuris/juri2005/sep2005/gr_168056_2005.html#fnt2



8/21/2019 art. vi- SEC 1


SO ORDERED.

ABAKADA VS EXEC

The expenses of government, having for their object the interest of all, should be borneby 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 notonly 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 of Representatives approved the bill on second and third reading.

House Bill No. 37053 on the other hand, substituted House Bill No. 3105 int

Rep. Salacnib F. Baterina, and House Bill No. 3381 introduced by Rep. Jacin

Its "mother bill" is House Bill No. 3555. The House Committee on Ways and

approved the bill on February 2, 2005. The President also certified it as urge

February 8, 2005. The House of Representatives approved the bill on secon

reading on February 28, 2005.

Meanwhile, the Senate Committee on Ways and Means approved Senate B

1950 4 on March 7, 2005, "in substitution of Senate Bill Nos. 1337, 1838 and

into consideration House Bill Nos. 3555 and 3705." Senator Ralph G. Recto

Senate Bill No. 1337, while Senate Bill Nos. 1838 and 1873 were both spon

Sens. Franklin M. Drilon, Juan M. Flavier and Francis N. Pangilinan. The Pres

certified the bill on March 11, 2005, and was approved by the Senate on se

third reading on April 13, 2005.

On the same date, April 13, 2005, the Senate agreed to the request of the

Representatives for a committee conference on the disagreeing provisions proposed bills.

Before long, the Conference Committee on the Disagreeing Provisions of H

3555, House Bill No. 3705, and Senate Bill No. 1950, "after having met and

full free and conference," recommended the approval of its report, which t

on May 10, 2005, and with the House of Representatives agreeing thereto

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.

J l 1 2005 i th ff ti it d t f R A N 9337 5 Wh id d t th C t

ATTY. BANIQUED : . . . and therefore that was meant to temper the impact

interrupted

J. PANGANIBAN : . . . mitigating measures . . .















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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 o’clock 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 they’ll 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, that’s not true. It’s not true that the e-vat law necessarily increased prices by

10% uniformly isn’t it?

ATTY. BANIQUED : No, Your Honor.

J. PANGANIBAN : It is not?

ATTY. BANIQUED : It’s not, because, Your Honor, there is an Executive Order that

granted the Petroleum companies some subsidy . . . interrupted

J. PANGANIBAN : That’s correct . . .

ATTY. BANIQUED : Yes, Your Honor.

J. PANGANIBAN : As a matter of fact a part of the mitigating measures wou

elimination of the Excise Tax and the import duties. That is why, it is not co

that the VAT as to petroleum dealers increased prices by 10%.


J. PANGANIBAN : And therefore, there is no justification for increasing the

10% to cover the E-Vat tax. If you consider the excise tax and the import du

Tax would probably be in the neighborhood of 7%? We are not going into e

am just trying to deliver a point that different industries, different products

services are hit differently. So it’s not correct to say that all prices must go u

ATTY. BANIQUED : You’re right, Your Honor.

J. PANGANIBAN : Now. For instance, Domestic Airline companies, Mr. Coun

present imposed a Sales Tax of 3%. When this E-Vat law took effect the Salalso removed as a mitigating measure. So, therefore, there is no justificatio

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 complaini

first day, were being increased arbitrarily by 10%. And that’s one reason am

others this Court had to issue TRO because of the confusion in the impleme

That’s why we added as an issue in this case, even if it’s tangentially taken

pleadings of the parties, the confusion in the implementation of the E-vat.

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 isn’t it?

(ii) National government deficit as a percentage of GDP of the previous yea

one and one-half percent (1 ½%).

Petitioners argue that the law is unconstitutional, as it constitutes abandon

Congress of its exclusive authority to fix the rate of taxes under Article VI S





8/21/2019 art. vi- SEC 1


each company, isn t it?


J. PANGANIBAN : Alright. So that’s 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 GUROParty 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 questionedprovisions contain a uniform provisoauthorizing 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

Congress of its exclusive authority to fix the rate of taxes under Article VI, S

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 o9337.

Aside from questioning the so-called stand-by authority of the President to

VAT rate to 12%, on the ground that it amounts to an undue delegation of

power, petitioners also contend that the increase in the VAT rate to 12% co

any of the two conditions being satisfied violates the due process clause em

Article III, Section 1 of the Constitution, as it imposes an unfair and additio

burden on the people, in that: (1) the 12% increase is ambiguous because i

state if the rate would be returned to the original 10% if the conditions are

satisfied; (2) the rate is unfair and unreasonable, as the people are unsure

applicable VAT rate from year to year; and (3) the increase in the VAT rate,

supposed to be an incentive to the President to raise the VAT collection to 2 4/5 of the GDP of the previous year, should only be based on fiscal adequa

Petitioners further claim that the inclusion of a stand-by authority granted

President by the Bicameral Conference Committee is a violation of the "no

rule" upon last reading of a bill laid down in Article VI, Section 26(2) of the

G.R. No. 168461

Thereafter, a petition for prohibition was filed on June 29, 2005, by the

of Pilipinas Shell Dealers, Inc.,et al., assailing the following provisions of R

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

Lastly, petitioners contend that the 70% limit is anything but progressive, v

Article VI, Section 28(1) of the Constitution, and that it is the smaller busin

higher input tax to output tax ratio that will suffer the consequences thereo

out whatever meager margins the petitioners make.





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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 anduse or lease of properties) of the NIRC.

Petitioners contend that these provisions are unconstitutional for being arbitrary,

oppressive, excessive, and confiscatory.

Petitioners’ argument is premised on the constitutional right of non-deprivation of life,

liberty or property without due process of law under Article III, Section 1 of the

Constitution. According to petitioners, the contested sections impose limitations on the

amount of input tax that may be claimed. Petitioners also argue that the input tax

partakes the nature of a property that may not be confiscated, appropriated, or limited

without due process of law. Petitioners further contend that like any other property or

property right, the input tax credit may be transferred or disposed of, and that bylimiting the same, the government gets to tax a profit or value-added even if there is no

profit or value-added.

Petitioners also believe that these provisions violate the constitutional guarantee of

equal protection of the law under Article III, Section 1 of the Constitution, as the

limitation on the creditable input tax if: (1) the entity has a high ratio of input tax; or (2)

invests in capital equipment; or (3) has several transactions with the government, is not

based on real and substantial differences to meet a valid classification.

G.R. No. 168463

Several members of the House of Representatives led by Rep. Francis Jose

Escudero filed this petition forcertiorari on June 30, 2005. They question th

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 l

power, in violation of Article VI, Section 28(2) of the Constitution;

2) The Bicameral Conference Committee acted without jurisdiction in delet

pass on provisions present in Senate Bill No. 1950 and House Bill No. 3705;

3) Insertion by the Bicameral Conference Committee of Sections 27, 28, 34,

119, 121, 125,7 148, 151, 236, 237 and 288, which were present in Senate B

violates Article VI, Section 24(1) of the Constitution, which provides that al

appropriation, revenue or tariff bills shall originate exclusively in the House

Representatives

G.R. No. 168730

On the eleventh hour, Governor Enrique T. Garcia filed a petition for ce

prohibition on July 20, 2005, alleging unconstitutionality of the law on the

the limitation on the creditable input tax in effect allows VAT-registered e

to retain a portion of the taxes they collect, thus violating the principle

collection and revenue should be solely allocated for public purposes and

Petitioner Garcia further claims that allowing these establishments to pass

the consumers is inequitable, in violation of Article VI, Section 28(1) of the

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.

a. Article VI, Section 24, and

b. Article VI, Section 26(2)

SUBSTANTIVEISSUES





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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 theissue 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 government’s 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:

SUBSTANTIVE ISSUES

1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 10

the NIRC, violate the following provisions of the Constitution:

a. Article VI, Section 28(1), and


2. Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and 11

NIRC; and Section 12 of R.A. No. 9337, amending Section 114(C) of the NIR

following provisions of the Constitution:


b. Article III, Section 1

RULING OF THE COURT

As a prelude, the Court deems it apt to restate the general principles and c

value-added tax (VAT), as the confusion and inevitably, litigation, breeds fr

fallacious notion of its nature.

The VAT is a tax on spending or consumption. It is levied on the sale, barter

lease of goods or properties and services.8 Being an indirect tax on expend

seller of goods or services may pass on the amount of tax paid to the buyer

seller acting merely as a tax collector.10

The burden of VAT is intended to fa

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,

A. The Bicameral Conference Committee

Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral

Committee exceeded its authority by:

















8/21/2019 art. vi- SEC 1


pp , y g ,

albeit in a different mode. Prior to 1978, the system was a single-stage tax computed

under the "cost deduction method" and was payable only by the original sellers. The

single-stage system was subsequently modified, and a mixture of the "cost deduction

method" and "tax credit method" was used to determine the value-added tax

payable.13

Under the "tax credit method," an entity can credit against or subtract from

the VAT charged on its sales or outputs the VAT paid on its purchases, inputs andimports.14

It was only in 1987, when President Corazon C. Aquino issued Executive Order No. 273,

that the VAT system was rationalized by imposing a multi-stage tax rate of 0% or 10% on

all sales using the "tax credit method."15

E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT Law,16

R.A. No. 8241 or

the Improved VAT Law,17 R.A. No. 8424 or the Tax Reform Act of 1997,18 and finally, the

presently beleaguered R.A. No. 9337, also referred to by respondents as the VAT Reform

Act.

The Court will now discuss the issues in logical sequence.

PROCEDURAL ISSUE

I.

Whether R.A. No. 9337 violates the following provisions of the Constitution:

a. Article VI, Section 24, and


1) Inserting the stand-by authority in favor of the President in Sections 4, 5

No. 9337;

2) Deleting entirely the no pass-on provisions found in both the House and

3) Inserting the provision imposing a 70% limit on the amount of input tax against the output tax; and

4) Including the amendments introduced only by Senate Bill No. 1950 regar

kinds of taxes in addition to the value-added tax.

Petitioners now beseech the Court to define the powers of the Bicameral C

Committee.

It should be borne in mind that the power of internal regulation and discip

intrinsic in any legislative body for, as unerringly elucidated by Justice Story

power did not exist, it would be utterly impracticable to transact the bus

nation, either at all, or at least with decency, deliberation, and order."19

T

VI, Section 16 (3) of the Constitution provides that "each House may determ

of its proceedings." Pursuant to this inherent constitutional power to prom

implement its own rules of procedure, the respective rules of each house o

provided for the creation of a Bicameral Conference Committee.

Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives

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,

. . .

The creation of such conference committee was apparently in response to

not addressed by any constitutional provision, where the two houses of Co

themselves in disagreement over changes or amendments introduced by t





























8/21/2019 art. vi- SEC 1


g p p

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 latter’s 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.

g g y

house in a legislative bill. Given that one of the most basic powers of the le

branch is to formulate and implement its own rules of proceedings and to

members, may the Court then delve into the details of how Congress comp

internal rules or how it conducts its business of passing legislation? Note th

present petitions, the issue is not whether provisions of the rules of both h

creating the bicameral conference committee are unconstitutional, but whbicameral conference committee has strictly complied with the rules of b

thereby remaining within the jurisdiction conferred upon it by Congress.

In the recent case of Fariñas vs. The Executive Secretary ,20 the Court En

Banc, unanimously reiterated and emphasized its adherence to the "enrol

doctrine," thus, declining therein petitioners’ plea for the Court to go behin

enrolled copy of the bill. Assailed in said case was Congress’s creation of tw

bicameral conference committees, the lack of records of said committees’

the alleged violation of said committees of the rules of both houses, and th

disappearance or deletion of one of the provisions in the compromise bill s

the bicameral conference committee. It was argued that such irregularities

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

the Senate President and the certification of the Secretaries of both House

that it was passed are conclusive of its due enactment. A review of cases re

Court’s consistent adherence to the rule. The Court finds no reason to dev

salutary rule in this case where the irregularities alleged by the petitione

involved the internal rules of Congress, e.g., creation of the 2nd or 3rd Bic

Conference Committee by the House.This Court is not the proper forum f

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.:

internal operation of Congress, thus, the Court is wont to deny a review of

proceedings of a co-equal branch of government.

Moreover, as far back as 1994 or more than ten years ago, in the case of T

Secretary of Finance ,23 the Court already made the pronouncement that "[









8/21/2019 art. vi- SEC 1


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 Osmeña

v. Pendatun, it was held: "At any rate, courts have declared that ‘the rules adopted bydeliberative 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 Fariñas 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

desired in the practice [of the Bicameral Conference Committee] it must

Congress since this question is not covered by any constitutional provisio

an internal rule of each house." 24 To date, Congress has not seen it fit to m

changes adverted to by the Court. It seems, therefore, that Congress finds

of the bicameral conference committee to be very useful for purposes of p

efficient legislative action.

Nevertheless, just to put minds at ease that no blatant irregularities tainte

proceedings of the bicameral conference committees, the Court deems it n

dwell on the issue. The Court observes that there was a necessity for a con

committee because a comparison of the provisions of House Bill Nos. 3555

one hand, and Senate Bill No. 1950 on the other, reveals that there were in

disagreements. As pointed out in the petitions, said disagreements were as

House Bill No. 3555 House Bill No.3705 Senate B

With regard to "Stand-By Authority" in favor of President

Provides for 12% VAT on

every sale of goods orproperties (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 orproperties 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

Provides for

of 10% VAT goods or pro

(amending S

NIRC), 10% V

services incl

electricity by

companies, t

and distribu

companies,

lease of prop

(amending S

including petroleum

products (amending Sec. 107

of NIRC); and 12% VAT on

sale of services and use or

lease of properties and a

NIRC)

5 years or the

depreciable life of such

capital goods; the input

tax credit for goods and

services other than

or the depre

such capital

input tax cre

and services

capital good













8/21/2019 art. vi- SEC 1


reduced rate for certain

services including power

generation (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 beabsorbed 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

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

capital goods shall not

exceed 5% of the total

amount of such goods

and services; and for

persons engaged in retail

trading of goods, theallowable input tax credit

shall not exceed 11% of

the total amount of

goods purchased.

exceed 90%

VAT.

With regard to amendments to be made to NIRC provisions regarding in

No similar provision No similar provision Prov

seve

rega

perc

excis

The disagreements between the provisions in the House bills and the Senawith regard to (1) what rate of VAT is to be imposed; (2) whether only the V

on electricity generation, transmission and distribution companies should n

on to consumers, as proposed in the Senate bill, or both the VAT imposed o

generation, transmission and distribution companies and the VAT imposed

petroleum products should not be passed on to consumers, as proposed in

bill; (3) in what manner input tax credits should be limited; (4) and whethe

provisions on corporate income taxes, percentage, franchise and excise tax

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:

Provided , The input tax on goods purchased or imported in a calendar mon

trade or business for which deduction for depreciation is allowed under th

be spread evenly over the month of acquisition and the fifty-nine (59) succ

months if the aggregate acquisition cost for such goods, excluding the VAT

thereof, exceeds one million Pesos (P1,000,000.00): PROVIDED, however, t

i d f l lif f h i l d i l h fi (5) d f

8/21/2019 art. vi- SEC 1


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 untilcertain 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 1½%, 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. – . . .

. . .

estimated useful life of the capital good is less than five (5) years, as used f

depreciation purposes, then the input VAT shall be spread over such short

(B) Excess Output or Input Tax. – If at the end of any taxable quarter the ou

exceeds the input tax, the excess shall be paid by the VAT-registered perso

tax exceeds the output tax, the excess shall be carried over to the succeedquarters: PROVIDED that the input tax inclusive of input VAT carried over f

previous quarter that may be credited in every quarter shall not exceed se

(70%) of the output VAT: PROVIDED, HOWEVER, THAT any input tax attribu

rated sales by a VAT-registered person may at his option be refunded or cr

other internal revenue taxes, . . .

4. With regard to the amendments to other provisions of the NIRC on corp

tax, franchise, percentage and excise taxes, the conference committee dec

include such amendments and basically adopted the provisions found in Se

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

Rules, the Bicameral Conference Committee is mandated to settle the diffe

between the disagreeing provisions in the House bill and the Senate bill. Th

"settle" is synonymous to "reconcile" and "harmonize."25 To reconcile or h

disagreeing provisions, the Bicameral Conference Committee may then (a)

specific provisions of either the House bill or Senate bill, (b) decide that ne

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 compro

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.

Th ll d t d b th it i f f th P id t h b th t f 10% VAT

credited against the output tax. From the inception of the subject revenue

House of Representatives, one of the major objectives was to "plug a glarin

the tax policy and administration by creating vital restrictions on the claimi

VAT tax credits . . ." and "[b]y introducing limitations on the claiming of tax

are capping a major leakage that has placed our collection efforts at an ap

di d t "28








8/21/2019 art. vi- SEC 1


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 let’s keep

it plain and simple. Let’s not confuse the bill and put a no pass -on provision. Two-thirds

of the world have a VAT system and in this two-thirds of the globe, I have yet to see a

VAT with a no pass-though provision. So, the thinking of the Senate is basically simple,

let’s 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

disadvantage."28

As to the amendments to NIRC provisions on taxes other than the value-ad

proposed in Senate Bill No. 1950, since said provisions were among those r

the conference committee had to act on the same and it basically adopted

of the Senate.

Thus, all the changes or modifications made by the Bicameral Conference C

were germane to subjects of the provisions referred

to it for reconciliation. Such being the case, the Court does not see any grav

discretion amounting to lack or excess of jurisdiction committed by the Bic

Conference Committee. In the earlier cases of Philippine Judges Associatio

Prado29 and Tolentino vs. Secretary of Finance ,30 the Court recognized the l

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

new provision that is not found either in the House bill or in the Senate bill

committee can propose an amendment consisting of one or two provision

reason why it cannot propose several provisions, collectively considered as

"amendment in the nature of a substitute," so long as such amendment is g

the subject of the bills before the committee. After all, its report was not fin

needed the approval of both houses of Congress to become valid as an act

legislative department. The charge that in this case the Conference Comm

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

constitutional power to amend or introduce changes to said bill. Thus, Art.

of the Constitution cannot be taken to mean that the introduction by the B

Conference Committee of amendments and modifications to disagreeing p

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
























8/21/2019 art. vi- SEC 1


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 Committee’s 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

C. R.A. No. 9337 Does Not Violate Article VI, Section 24 of the Constitution

Origination of Revenue Bills

Coming to the issue of the validity of the amendments made regarding the

provisions on corporate income taxes and percentage, excise taxes. Petitio

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

originate from the House. They aver that House Bill No. 3555 proposed am

only regarding Sections 106, 107, 108, 110 and 114 of the NIRC, while Hous

3705 proposed amendments only to Sections 106, 107,108, 109, 110 and 1

NIRC; thus, the other sections of the NIRC which the Senate amended but w

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

same as the House bill would be to deny the Senate’s power not only to "

amendments" but also to " propose amendments." It would be to violate t

of legislative power of the two houses of Congress and in fact make the Ho

to the Senate.





8/21/2019 art. vi- SEC 1


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 ofRepresentatives 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

…

…Given, then, the power of the Senate to propose amendments, the Sen

propose its own version even with respect to bills which are required by t

Constitution to originate in the House.

. . .

Indeed, what the Constitution simply means is that the initiative for filing r

or tax bills, bills authorizing an increase of the public debt, private bills and

application must come from the House of Representatives on the theory th

they are from the districts, the members of the House can be expected to

sensitive to the local needs and problems. On the other hand, the senato

elected at large, are expected to approach the same problems from the n

perspective. Both views are thereby made to bear on the enactment of su

laws.33

(Emphasis supplied)

Since there is no question that the revenue bill exclusively originated in the

Representatives, the Senate was acting within its

constitutional power to introduce amendments to the House bill when it in

provisions in Senate Bill No. 1950 amending corporate income taxes, perce

and franchise taxes. Verily, Article VI, Section 24 of the Constitution does n

any prohibition or limitation on the extent of the amendments that may be

by the Senate to the House revenue bill.

Furthermore, the amendments introduced by the Senate to the NIRC prov

had not been touched in the House bills are still in furtherance of the inten

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 country’s serious financial problems. To do this, government

these house bills were transmitted to the Senate, the latter, approaching t

from the point of national perspective, can introduce amendments within

of those bills. It can provide for ways that would soften the impact of the V

on the consumer, i.e., by distributing the burden across all sectors instead

entirely on the shoulders of the consumers. The sponsorship speech of Sen

on why the provisions on income tax on corporation were included is worth





8/21/2019 art. vi- SEC 1


task of solving the country s 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 revenuemeasures 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 country’s serious financial problems, and improve tax administration

and control of the leakages in revenues from income taxes and value-added taxes. As

on why the provisions on income tax on corporation were included is worth

All in all, the proposal of the Senate Committee on Ways and Means will ra

billion in additional revenues annually even while by mitigating prices of po

and petroleum products.

However, not all of this will be wrung out of VAT. In fact, only P48.7 billion

from the VAT on twelve goods and services. The rest of the tab – P10.5 bill

picked by corporations.

What we therefore prescribe is a burden sharing between corporate Philip

consumer. Why should the latter bear all the pain? Why should the fiscal sa

only on the burden of the consumer?

The corporate world’s equity is in form of the increase in the corporate inco

32 to 35 percent, but up to 2008 only. This will raise P10.5 billion a year. Af

rate will slide back, not to its old rate of 32 percent, but two notches lower

percent.

Clearly, we are telling those with the capacity to pay, corporations, to bear

emergency provision that will be in effect for 1,200 days, while we put our

in order. This fiscal medicine will have an expiry date.

For their assistance, a reward of tax reduction awaits them. We intend to k

length of their sacrifice brief. We would like to assure them that not becau

light at the end of the tunnel, this government will keep on making the tun

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.

The other sections amended by the Senate pertained to matters of tax adm

which are necessary for the implementation of the changes in the VAT syst

To reiterate, the sections introduced by the Senate are germane to the sub

and purposes of the house bills, which is to supplement our country’s fisca

among others. Thus, the Senate acted within its power to propose those a









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p p g

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 beburdened 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

g , p p p

SUBSTANTIVE ISSUES

I.

Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107

the NIRC, violate the following provisions of the Constitution:



A. No Undue Delegation of Legislative Power

Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and Escud

al. contend in common that Sections 4, 5 and 6 of R.A. No. 9337, amending

106, 107 and 108, respectively, of the NIRC giving the President the stand-

authority to raise the VAT rate from 10% to 12% when a certain condition 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

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

(ii) national government deficit as a percentage of GDP of the previous ye


SEC. 6. Section 108 of the same Code, as amended, is hereby further amen

as follows:





8/21/2019 art. vi- SEC 1


y p ( ) y

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


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 dutiesare determined on the basis of the quantity or volume of the goods, the value-added tax

shall be based on the landed cost plus excise taxes, if any: provided, further, that the

President, upon the recommendation of the Secretary of Finance, shall, effective

January 1, 2006, raise the rate of value-added tax to twelve percent (12%) after any of

the following conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product (GDP) of the


SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properti

(A) Rate and Base of Tax. – There shall be levied, assessed and collected, a

tax equivalent to ten percent (10%) of gross receipts derived from the sale

of services: provided, that the President, upon the recommendation of thof Finance, shall, effective January 1, 2006, raise the rate of value-added

percent (12%), after any of the following conditions has been satisfied.

(i) value-added tax collection as a percentage of Gross Domestic Product


(ii) national government deficit as a percentage of GDP of the previous ye

one and one-half percent (1 ½%). (Emphasis supplied)

Petitioners allege that the grant of the stand-by authority to the President

the VAT rate is a virtual abdication by Congress of its exclusive power to ta

such delegation is not within the purview of Section 28 (2), Article VI of the

which provides:

The Congress may, by law, authorize the President to fix within specified lim

impose, tariff rates, import and export quotas, tonnage and wharfage dues

duties or imposts within the framework of the national development progr

government.

They argue that the VAT is a tax levied on the sale, barter or exchange of g

properties as well as on the sale or exchange of services, which cannot be

within the purview of tariffs under the exempted delegation as the latter r

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

corollary to the doctrine of separation of powers is the principle of non-de

powers, as expressed in the Latin maxim: potestas delegata non delegari p

means "what has been delegated, cannot be delegated."38

This doctrine is

ethical principle that such as delegated power constitutes not only a right b

be performed by the delegate through the instrumentality of his own judgm

through the intervening mind of another.39









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and they should not pass to the President the decision to impose taxes. They also argue

that the law also effectively nullified the President’s power of control, which inc ludes

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 thePresident 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

With respect to the Legislature, Section 1 of Article VI of the Constitution p

"the Legislative power shall be vested in the Congress of the Philippines wh

consist of a Senate and a House of Representatives." The powers which Co

prohibited from delegating are those which are strictly, or inherently and elegislative. Purely legislative power, which can never be delegated, has bee

as the authority to make a complete law – complete as to the time when

effect and as to whom it shall be applicable – and to determine the exped

enactment.40 Thus, the rule is that in order that a court may be justified in

statute unconstitutional as a delegation of legislative power, it must appea

power involved is purely legislative in nature – that is, one appertaining ex

the legislative department. It is the nature of the power, and not the liabilit

the manner of its exercise, which determines the validity of its delegation.

Nonetheless, the general rule barring delegation of legislative powers is su

following recognized limitations or exceptions:

(1) Delegation of tariff powers to the President under Section 28 (2) of ArticConstitution;

(2) Delegation of emergency powers to the President under Section 23 (2)

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 — to42

particular community. In Wayman vs. Southard, the Supreme Court of the

ruled that the legislature may delegate a power not legislative which it ma

rightfully exercise. The power to ascertain facts is such a power which ma

delegated. There is nothing essentially legislative in ascertaining the exist

or conditions as the basis of the taking into effect of a law. That is a ment

common to all branches of the government. Notwithstanding the apparen
















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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 theshoes 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 makethe 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

however, to relax the rule prohibiting delegation of legislative authority on

the complexity arising from social and economic forces at work in this mod

age, the orthodox pronouncement of Judge Cooley in his work on Constitut

Limitations finds restatement in Prof. Willoughby's treatise on the Constitu

United States in the following language — speaking of declaration of legislaadministrative agencies: The principle which permits the legislature to pro

administrative agent may determine when the circumstances are such as

application of a law is defended upon the ground that at the time this au

granted, the rule of public policy, which is the essence of the legislative a

determined by the legislature. In other words, the legislature, as it is its d

determines that, under given circumstances, certain executive or admini

action is to be taken, and that, under other circumstances, different or no

is to be taken. What is thus left to the administrative official is not the leg

determination of what public policy demands, but simply the ascertainm

the facts of the case require to be done according to the terms of the law

is governed. The efficiency of an Act as a declaration of legislative will mu

come from Congress, but the ascertainment of the contingency upon whi

shall take effect may be left to such agencies as it may designate. The legthen, may provide that a law shall take effect upon the happening of futu

contingencies leaving to some other person or body the power to determ

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

alter and repeal them; the test is the completeness of the statute in all its t

provisions when it leaves the hands of the legislature. To determine wheth

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

h i h ll b hi h i i ll b d d d l i f h i

legislative policy to particular facts and circumstances impossible for Cong

properly to investigate.52

In the present case, the challenged section of R.A. No. 9337 is the common

Sections 4, 5 and 6 which reads as follows:

Th h P id h d i f h S f Fi





























8/21/2019 art. vi- SEC 1


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

That the President, upon the recommendation of the Secretary of Finance,

effective January 1, 2006, raise the rate of value-added tax to twelve perce

after any of the following conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (Gprevious year exceeds two and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous yea


The case before the Court is not a delegation of legislative power. It is simp

delegation of ascertainment of facts upon which enforcement and adminis

increase rate under the law is contingent. The legislature has made the ope

12% rate effective January 1, 2006, contingent upon a specified fact or con

leaves the entire operation or non-operation of the 12% rate upon factual

outside of the control of the executive.

No discretion would be exercised by the President. Highlighting the absencdiscretion is the fact that the wordshall is used in the common proviso. The

word shall connotes a mandatory order. Its use in a statute denotes an imp

obligation and is inconsistent with the idea of discretion.53

Where the law i

unambiguous, it must be taken to mean exactly what it says, and courts ha

but to see to it that the mandate is obeyed.54

Thus, it is the ministerial duty of the President to immediately impose the 1

upon the existence of any of the conditions specified by Congress. This is a

cannot be evaded by the President. Inasmuch as the law specifically uses t

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.

Th C t fi d it t th t ti f titi ABAKADA GUROP t Li t t

control and direction of the President. He is acting as the agent of the legis

department, to determine and declare the event upon which its expressed

effect.56

The Secretary of Finance becomes the means or tool by which leg

is determined and implemented, considering that he possesses all the faci

data and information and has a much broader perspective to properly eva

His function is to gather and collate statistical data and other pertinent info

if if f th t diti l id t b C i t Hi





























8/21/2019 art. vi- SEC 1


The Court finds no merit to the contention of petitioners ABAKADA GUROParty List, et

al. that the law effectively nullified the President’s 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 bythe 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

verify if any of the two conditions laid out by Congress is present. His perso

instance is in reality but a projection of that of Congress. Thus, being the ag

Congress and not of the President, the President cannot alter or modify or

aside the findings of the Secretary of Finance and to substitute the judgme

former for that of the latter.

Congress simply granted the Secretary of Finance the authority to ascertain

existence of a fact, namely, whether by December 31, 2005, the value-add

collection as a percentage of Gross Domestic Product (GDP) of the previou

exceeds two and four-fifth percent (24/5%) or the national government def

percentage of GDP of the previous year exceeds one and one-half percent

either of these two instances has occurred, the Secretary of Finance, by leg

mandate, must submit such information to the President. Then the 12% VA

be imposed by the President effective January 1, 2006. There is no undue

legislative power but only of the discretion as to the execution of a law. T

constitutionally permissible.57 Congress does not abdicate its functions or

delegate power when it describes what job must be done, who must do it,

the scope of his authority; in our complex economy that is frequently the owhich the legislative process can go forward.

58

As to the argument of petitioners ABAKADA GUROParty List, et al. that de

the President the legislative power to tax is contrary to the principle of rep

the same deserves scant consideration. Congress did not delegate the pow

the mere implementation of the law. The intent and will to increase the VA

came from Congress and the task of the President is to simply execute the

policy. That Congress chose to do so in such a manner is not within the pro

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.

Sections 4, 5 and 6 are no longer present. The rule is that where the provis

is clear and unambiguous, so that there is no occasion for the court's seekin

legislative intent, the law must be taken as it is, devoid of judicial addition

subtraction.61

Petitioners also contend that the increase in the VAT rate, which was allege

incentive to the President to raise the VAT collection to at least 2 4/ of the





















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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 anunfair 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 1½%.

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

incentive to the President to raise the VAT collection to at least 2 /5 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 governmenpercentage of GDP of the previous year exceeds one and one-half percent

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 m

VAT/GDP is less than 2.8%, it means that government has weak or no capab

implementing the VAT or that VAT is not effective in the function of the tax

Therefore, there is no value to increase it to 12% because such action will a

ineffectual.

2. Nat’l Gov’t Deficit/GDP >1.5%

The condition set for increasing VAT when deficit/GDP is 1.5% or less mean

condition of government has reached a relatively sound position or is towa

direction of a balanced budget position. Therefore, there is no need to incr

rate since the fiscal house is in a relatively healthy position. Otherwise stat

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 increas

collection does not render it unconstitutional so long as there is a public p

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 hisCanons of Taxation (1776), as:

IV Every tax ought to be so contrived as both to take out and to keep out of the pockets

In the past five years, we’ve been lucky because we were operating in a pe

basically global growth and low interest rates. The past few months, we ha

inching up, in fact, a rapid increase in the interest rates in the leading econo

world. And, therefore, our ability to borrow at reasonable prices is going to

challenged. In fact, ultimately, the question is our ability to access the finan

When the President made her speech in July last year the environment wa









8/21/2019 art. vi- SEC 1


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 governmentexpenditures 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 country’s 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. That’s interest plus

amortization of our debt. So clearly, this is not a sustainable situation. That’s the first

fact.

The second fact is that our debt to GDP level is way out of line compared to other peercountries 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 I’d 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?

When the President made her speech in July last year, the environment wa

as it is now, at least based on the forecast of most financial institutions. So

assuming that raising 80 billion would put us in a position where we can th

them to improve our ability to borrow at lower rates. But conditions have c

because the interest rates have gone up. In fact, just within this room, we the market for a billion dollars because for this year alone, the Philippines

borrow 4 billion dollars. Of that amount, we have borrowed 1.5 billion. We

January a 25-year bond at 9.7 percent cost. We were trying to access last w

market was not as favorable and up to now we have not accessed and we m

back because the conditions are not very good.

So given this situation, we at the Department of Finance believe that we re

front-end our deficit reduction. Because it is deficit that is causing the incre

debt and we are in what we call a debt spiral. The more debt you have, the

you have because interest and debt service eats and eats more of your reve

need to get out of this debt spiral. And the only way, I think, we can get ou

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

inevitable catastrophe. Whether the law is indeed sufficient to answer the

economic dilemma is not for the Court to judge. In the Fariñascase, the Co

consider the various arguments raised therein that dwelt on the wisdom o

R.A. No. 9006 (The Fair Election Act), pronouncing that:

. . . policy matters are not the concern of the Court. Government policy is w

exclusive dominion of the political branches of the government. It is not for

look into the wisdom or propriety of legislative determination. Indeed, whe

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 doctrine is that where the due process and equal protection clauses ar

considering that they are not fixed rules but rather broad standards, there

proof of such persuasive character as would lead to such a conclusion. Abs

showing, the presumption of validity must prevail.68

Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes a

the amount of input tax that may be credited against the output tax It stat





















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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:


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 amount of input tax that may be credited against the output tax. It stat

"[P]rovided , that the input tax inclusive of the input VAT carried over from

quarter that may be credited in every quarter shall not exceed seventy per

the output VAT: …"

Input Tax is defined under Section 110(A) of the NIRC, as amended, as the v

tax due from or paid by a VAT-registered person on the importation of goo

purchase of good and services, including lease or use of property, in the co

or business, from a VAT-registered person, and Output Tax is the value-add

the sale or lease of taxable goods or properties or services by any person r

required to register under the law.

Petitioners claim that the contested sections impose limitations on the am

tax that may be claimed. In effect, a portion of the input tax that has alread

cannot now be credited against the output tax.

Petitioners’ argument is not absolute. It assumes that the input tax exceed

output tax, and therefore, the input tax in excess of 70% remains uncrediteto the extent that the input tax is less than 70% of the output tax, then 100

input tax is still creditable.

More importantly, the excess input tax, if any, is retained in a business’s bo

accounts and remains creditable in the succeeding quarter/s. This is explicit

Section 110(B), which provides that "if the input tax exceeds the output tax

shall be carried over to the succeeding quarter or quarters." In addition, Se

allows a VAT-registered person to apply for the issuance of a tax credit cer

refund for any unused input taxes, to the extent that such input taxes have

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

refunded to the taxpayer or credited against other internal revenue taxes,

taxpayer’s option.70

Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input

person can credit his input tax only up to the extent of 70% of the output t

layman’s term, the value-added taxes that a person/taxpayer paid and pass

by a seller can only be credited up to 70% of the value-added taxes that is d









8/21/2019 art. vi- SEC 1


pp / p g q p

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 equalto 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

y y p

a taxable transaction. There is no retention of any tax collection because th

person/taxpayer has already previously paid the input tax to a seller, and t

subsequently remit such input tax to the BIR. The party directly liable for th

the tax is the seller.71 What only needs to be done is for the person/taxpay

credit these input taxes, as evidenced by receipts, against his output taxes

Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that

partakes the nature of a property that may not be confiscated, appropriate

without due process of law.

The input tax is not a property or a property right within the constitutional

the due process clause. A VAT-registered person’s entitlement to the credi

tax is a mere statutory privilege.

The distinction between statutory privileges and vested rights must be bor

persons have no vested rights in statutory privileges. The state may change

rights, which were created by the law of the state, although it may not takeproperty, which was vested by virtue of such rights.72

Under the previous system of single-stage taxation, taxes paid at every lev

distribution are not recoverable from the taxes payable, although it becom

cost, which is deductible from the gross revenue. When Pres. Aquino issue

273 imposing a 10% multi-stage tax on all sales, it was then that the crediti

input tax paid on purchase or importation of goods and services by VAT-re

persons against the output tax was introduced.73

This was adopted by the

Law (R.A. No. 7716),74

and The Tax Reform Act of 1997 (R.A. No. 8424).75

Th

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. –

creditable VAT, foreign investments were not deterred.78 Again, for whatev

purpose of the 60-month amortization, this involves executive economic p

legislative wisdom in which the Court cannot intervene.

With regard to the 5% creditable withholding tax imposed on payments ma

government for taxable transactions, Section 12 of R.A. No. 9337, which am

Section 114 of the NIRC, reads:





























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(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 delayin 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-

SEC. 114. Return and Payment of Value-added Tax. –

(C) Withholding of Value-added Tax. – The Government or any of its politic

subdivisions, instrumentalities or agencies, including government-owned o

corporations (GOCCs) shall, before making payment on account of each pu

goods and services which are subject to the value-added tax imposed in Se

and 108 of this Code, deduct and withhold a final value-added tax at the ra

percent (5%) of the gross payment thereof: Provided, That the payment fo

of properties or property rights to nonresident owners shall be subject to t

(10%) withholding tax at the time of payment. For purposes of this Section,

person in control of the payment shall be considered as the withholding ag

The value-added tax withheld under this Section shall be remitted within t

following the end of the month the withholding was made.

Section 114(C) merely provides a method of collection, or as stated by respmore simplified VAT withholding system. The government in this case is co

withholding agent with respect to their payments for goods and services.

Prior to its amendment, Section 114(C) provided for different rates of value

to be withheld -- 3% on gross payments for purchases of goods; 6% on gros

for services supplied by contractors other than by public works contractors

gross payments for services supplied by public work contractors; or 10% on

the lease or use of properties or property rights to nonresident owners. Un

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%)."

The Court need not explore the rationale behind the provision. It is clear th

intended to treat differently taxable transactions with the government.80 T

supported by the fact that under the old provision, the 5% tax withheld by

government remains creditable against the tax liability of the seller or cont

SEC. 114. Return and Payment of Value-added Tax. –













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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 creditablein 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

(C) Withholding of Creditable Value-added Tax. – The Government or any

subdivisions, instrumentalities or agencies, including government-owned o

corporations (GOCCs) shall, before making payment on account of each pu

goods from sellers and services rendered by contractors which are subject

added tax imposed in Sections 106 and 108 of this Code, deduct and withh

added tax due at the rate of three percent (3%) of the gross payment for th

of goods and six percent (6%) on gross receipts for services rendered by co

every sale or installment payment which shall be creditable against the va

liability of the seller or contractor: Provided, however, That in the case of

public works contractors, the withholding rate shall be eight and one-half p

(8.5%): Provided, further, That the payment for lease or use of properties o

rights to nonresident owners shall be subject to ten percent (10%) withhol

the time of payment. For this purpose, the payor or person in control of th

shall be considered as the withholding agent.

The valued-added tax withheld under this Section shall be remitted within

following the end of the month the withholding was made. (Emphasis supp

As amended, the use of the word final and the deletion of the word credita

Congress’s intention to treat transactions with the government differently.

not been shown that the class subject to the 5% final withholding tax has b

unreasonably narrowed, there is no reason to invalidate the provision. Pet

petroleum dealers, are not the only ones subjected to the 5% final withhold

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

the government, is not based on real and substantial differences to meet a

classification.

The argument is pedantic, if not outright baseless. The law does not make a

classification in the subject of taxation, the kind of property, the rates to be

amounts to be raised, the methods of assessment, valuation and collection

alleged distinctions are based on variables that bear different consequence









8/21/2019 art. vi- SEC 1


government gets to tax a profit or value-added even if there is no profit or value-added.

Petitioners’ stance is purely hypothetical, argumentative, and again, one-sided. The

Court will not engage in a legal joust where premises are what ifs, arguments,

theoretical and facts, uncertain. Any disquisition by the Court on this point will only be,

as Shakespeare describes life in Macbeth,82 "full of sound and fury, signifying nothing."

What’s 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 purposesof 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 State’s 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

implementation of the law may yield varying end results depending on one

margin and value-added, the Court cannot go beyond what the legislature

and interfere with the affairs of business.

The equal protection clause does not require the universal application of th

persons or things without distinction. This might in fact sometimes result in

protection. What the clause requires is equality among equals as determin

to a valid classification. By classification is meant the grouping of persons o

similar to each other in certain particulars and different from all others in t

particulars.85

Petitioners brought to the Court’s attention the introduction of Senate Bill

Sens. S.R. Osmeña III and Ma. Ana Consuelo A.S. – Madrigal on June 6, 200

Bill No. 4493 by Rep. Eric D. Singson. The proposed legislation seeks to ame

limitation by increasing the same to 90%. This, according to petitioners, su

stance that the 70% limitation is arbitrary and confiscatory. On this score, s

say that these are still proposed legislations. Until Congress amends the lawany 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 evo

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,

d l f h d f f % ( %) l f

It is admitted that R.A. No. 9337 puts a premium on businesses with low pr

and unduly favors those with high profit margins. Congress was not oblivio

Thus, to equalize the weighty burden the law entails, the law, under Sectio

imposed a 3% percentage tax on VAT-exempt persons under Section 109(v

transactions with gross annual sales and/or receipts not exceeding P1.5 M

acts as a equalizer because in effect, bigger businesses that qualify for VAT

VAT-exempt taxpayers stand on equal-footing.





















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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 exceeding P1,500,000.00.88Also, 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.

Moreover, Congress provided mitigating measures to cushion the impact o

imposition of the tax on those previously exempt. Excise taxes on petroleu

products91 and natural gas92 were reduced. Percentage tax on domestic car

removed.93 Power producers are now exempt from paying franchise tax.94

Aside from these, Congress also increased the income tax rates of corporat

to distribute the burden of taxation. Domestic, foreign, and non-resident c

are now subject to a 35% income tax rate, from a previous 32%.95 Intercor

dividends of non-resident foreign corporations are still subject to 15% final

tax but the tax credit allowed on the corporation’s domicile was increased

Philippine Amusement and Gaming Corporation (PAGCOR) is not exempt fr

taxes anymore.97 Even the sale by an artist of his works or services perform

production of such works was not spared.

All these were designed to ease, as well as spread out, the burden of taxat

would otherwise rest largely on the consumers. It cannot therefore be gainNo. 9337 is equitable.

C. Progressivity of Taxation

Lastly, petitioners contend that the limitation on the creditable input tax is

regressive. It is the smaller business with higher input tax-output tax ratio

suffer the consequences.

Progressive taxation is built on the principle of the taxpayer’s ability to pay. This

principle was also lifted from Adam Smith’s 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.

tax system. Otherwise, sales taxes, which perhaps are the oldest form of in

would have been prohibited with the proclamation of Art. VIII, §17 (1) of th

Constitution from which the present Art. VI, §28 (1) was taken. Sales taxes

regressive.

Resort to indirect taxes should be minimized but not avoided entirely beca

difficult, if not impossible, to avoid them by imposing such taxes according

t ' bilit t I th f th VAT th l i i i th








































8/21/2019 art. vi- SEC 1


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

taxpayers' ability to pay. In the case of the VAT, the law minimizes the regr

of this imposition by providing for zero rating of certain transactions (R.A. N

amending §102 (b) of the NIRC), while granting exemptions to other transa

No. 7716, §4 amending §103 of the NIRC)99

CONCLUSION

It has been said that taxes are the lifeblood of the government. In this cas

enema, a first-aid measure to resuscitate an economy in distress. The Cou

blind nor is it turning a deaf ear on the plight of the masses. But it does n

panacea for the malady that the law seeks to remedy. As in other cases,

cannot strike down a law as unconstitutional simply because of its

Let us not be overly influenced by the plea that for every wrong there is a r

that the judiciary should stand ready to afford relief. There are undoubted

wrongs the judicature may not correct, for instance, those involving politic

. .

Let us likewise disabuse our minds from the notion that the judiciary is the

remedies for all political or social ills; We should not forget that the Constit

judiciously allocated the powers of government to three distinct and separ

compartments; and that judicial interpretation has tended to the preservat

independence of the three, and a zealous regard of the prerogatives of eac

full well that one is not the guardian of the others and that, for official wro

each may be brought to account, either by impeachment, trial or by the ba

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'être 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

LTFRB) 2 which, among others, (a) authorize provincial bus and jeepney operators to i

decrease the prescribed transportation fares without application therefor with the LT

hearing and approval thereof by said agency in violation of Sec. 16(c) of Commonweal

as amended, otherwise known as the Public Service Act, and in derogation of LTFRB's d

determine just and reasonable fares by delegating that function to bus operators, and

presumption of public need in favor of applicants for certificates of public convenience

place on the oppositor the burden of proving that there is no need for the proposed se

violation not only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of the sam

mandating that fares should be "just and reasonable " It is likewise violative of the R












8/21/2019 art. vi- SEC 1


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.

KMU VS GARCIA

Public utilities are privately owned and operated businesses whose service are essential

to the general public. They are enterprises which specially cater to the needs of the

public and conduce to their comfort and convenience. As such, public utility services are

impressed with public interest and concern. The same is true with respect to the

business of common carrier which holds such a peculiar relation to the public interest

that there is superinduced upon it the right of public regulation when private properties

are affected with public interest, hence, they cease 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 the control by the

public for the common good, to the extent of the interest he has thus created. 1

An abdication of the licensing and regulatory government agencies of their functions as

the instant petition seeks to show, is indeed lamentable. Not only is it an unsound

administrative policy but it is inimical to public trust and public interest as well.

The instant petition for certiorari assails the constitutionality and validity of certain

memoranda, circulars and/or orders of the Department of Transportation and

Communications (DOTC) and the Land Transportation Franchising and Regulatory Board

mandating that fares should be just and reasonable. It is, likewise, violative of the R

which places upon each party the burden to prove his own affirmative allegations. 3

T

provisions contained in the questioned issuances pointed out by petitioner, have resu

introduction into our highways and thoroughfares thousands of old and smoke-belchi

of which are right-hand driven, and have exposed our consumers to the burden of spirpublic transportation without hearing and due process.

The following memoranda, circulars and/or orders are sought to be nullifie

instant petition, viz: (a) DOTC Memorandum Order 90-395, dated June 26,

to the implementation of a fare range scheme for provincial bus services in

(b) DOTC Department Order No.

92-587, dated March 30, 1992, defining the policy framework on the regula

transport services; (c) DOTC Memorandum dated October 8, 1992, laying d

and procedures to implement Department Order No. 92-587; (d) LTFRB Me

Circular No. 92-009, providing implementing guidelines on the DOTC Depar

No. 92-587; and (e) LTFRB Order dated March 24, 1994 in Case No. 94-311

The relevant antecedents are as follows:

On June 26, 1990; then Secretary of DOTC, Oscar M. Orbos, issued Memora

Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando allow

provincial bus operators to charge passengers rates within a range of 15%

15% below the LTFRB official rate for a period of one (1) year. The text of th

memorandum order reads in full:

One of the policy reforms and measures that is in line with

and the priorities set out in the Medium-Term Philippine D

Plan (MTPDP) 1987 — 1992) is the liberalization of regulations in the

transport sector. Along this line, the Government intends to move away

gradually from regulatory policies and make progress towards greater

reliance on free market forces.

Based on several surveys and observations, bus companies are already

charging passenger rates above and below the official fare declared by

LTFRB on many provincial routes It is in this context that some form of

allow operators "to charge passengers within a range of fift

(15%) above and fifteen percent (15%) below the LTFRB off

period of one year" the undersigned is respectfully advertin

Secretary's attention to the following for his consideration

1. Section 16(c) of the Public Service Act pre

following for the fixing and determination o

the rates to be approved should be propose

8/21/2019 art. vi- SEC 1


LTFRB on many provincial routes. It is in this context that some form of

liberalization on public transport fares is to be tested on a pilot basis.

In view thereof, the LTFRB is hereby directed to immediately publicize a

fare range scheme for all provincial bus routes in country (except those

operating within Metro Manila). Transport Operators shall be allowed to

charge passengers within a range of fifteen percent (15%) above and

fifteen percent (15%) below the LTFRB official rate for a period of one

year .

Guidelines and procedures for the said scheme shall be prepared by

LTFRB in coordination with the DOTC Planning Service.

The implementation of the said fare range scheme shall start on 6

August 1990.

For compliance. (Emphasis ours.)

Finding the implementation of the fare range scheme "not legally feasible," Remedios

A.S. Fernando submitted the following memorandum to Oscar M. Orbos on July 24,

1990, to wit:

With reference to DOTC Memorandum Order No. 90-395 dated 26 June

1990 which the LTFRB received on 19 July 1990, directing the Board "to

immediately publicize a fare range scheme for all provincial bus routes in

the country (except those operating within Metro Manila)" that will

the rates to be approved should be propose

service operators; (b) there should be a pub

notice to concerned or affected parties in th

affected; (c) a public hearing should be held

of the rates; hence, implementation of the

range scheme on August 6 without complyin

requirements of the Public Service Act may

feasible.

2. To allow bus operators in the country to c

fifteen (15%) above the present LTFRB fares

of the devastation, death and suffering caus

16 earthquake will not be socially warranted

politically unsound; most likely public critici

the DOTC and the LTFRB will be triggered by

untimely motu propioimplementation of the

the mere expedient of publicizing the fare rwithout calling a public hearing, which sche

early as during the Secretary's predecessor

newspaper reports and columnists' commen

Asian Development Bank and World Bank in

3. More than inducing a reduction in bus far

percent (15%) the implementation of the pr

instead trigger an upward adjustment in bu

fifteen percent (15%) at a time when hundr

thousands of people in Central and Northern Luzon,

particularly in Central Pangasinan, La Union, Baguio City,

Nueva Ecija, and the Cagayan Valley are suffering from

the devastation and havoc caused by the recent

earthquake.

4. In lieu of the said proposal, the DOTC with its agencies

involved in public transportation can consider measures

On December 14, 1990, public respondent LTFRB rendered a decision gran

rate increase in accordance with the following schedule of fares on a straig

computation method, viz:

AUTHORIZED FARES

LUZON

MIN. OF 5 KMS. SUCCEEDING KM.

8/21/2019 art. vi- SEC 1


involved in public transportation can consider measures

and reforms in the industry that will be socially uplifting,

especially for the people in the areas devastated by the

recent earthquake.

In view of the foregoing considerations, the undersigned respectfully

suggests that the implementation of the proposed fare range scheme

this year be further studied and evaluated.

On December 5, 1990, private respondent Provincial Bus Operators Association of the

Philippines, Inc. (PBOAP) filed an application for fare rate increase. An across-the-board

increase of eight and a half centavos (P0.085) per kilometer for all types of provincial

buses with a minimum-maximum fare range of fifteen (15%) percent over and below

the proposed basic per kilometer fare rate, with the said minimum-maximum fare range

applying only to ordinary, first class and premium class buses and a fifty-centavo (P0.50)

minimum per kilometer fare for aircon buses, was sought.

On December 6, 1990, private respondent PBOAP reduced its applied proposed fare to

an across-the-board increase of six and a half (P0.065) centavos per kilometer for

ordinary buses. The decrease was due to the drop in the expected price of diesel.

The application was opposed by the Philippine Consumers Foundation, Inc. and Perla C.

Bautista alleging that the proposed rates were exorbitant and unreasonable and that

the application contained no allegation on the rate of return of the proposed increase in

rates.

MIN. OF 5 KMS. SUCCEEDING KM.

REGULAR P1.50 P0.37

STUDENT P1.15 P0.28

VISAYAS/MINDANAO

REGULAR P1.60 P0.375

STUDENT P1.20 P0.285

FIRST CLASS (PER KM.)

LUZON P0.385

VISAYAS/

MINDANAO P0.395

PREMIERE CLASS (PER KM.)

LUZON P0.395

VISAYAS/

MINDANAO P0.405

AIRCON (PER KM.) P0.415. 4

On March 30, 1992, then Secretary of the Department of Transportation an

Communications Pete Nicomedes Prado issued Department Order No.

92-587 defining the policy framework on the regulation of transport servic

text of the said order is reproduced below in view of the importance of the

contained therein:

WHEREAS, Executive Order No. 125 as amended, designates the

Department of Transportation and Communications (DOTC) as the

primary policy, planning, regulating and implementing agency on

transportation;

WHEREAS, to achieve the objective of a viable, efficient, and dependable

transportation system, the transportation regulatory agencies under or

attached to the DOTC have to harmonize their decisions and adopt a

discontinued. The route measured capacity test or other sim

demand for vehicle/vessel fleet on any route shall be used o

guide in weighing the merits of each franchise application a

limit to the services offered.

Where there are limitations in facilities, such as congested

urban areas, or at airports and ports, the use of demand m

measures in conformity with market principles may be con

8/21/2019 art. vi- SEC 1


p

common philosophy and direction;

WHEREAS, the government proposes to build on the successful

liberalization measures pursued over the last five years and bring the

transport sector nearer to a balanced longer term regulatory framework;

NOW, THEREFORE, pursuant to the powers granted by laws to the DOTC,

the following policies and principles in the economic regulation of land,

air, and water transportation services are hereby adopted:

1. Entry into and exit out of the industry. Following the Constitutional

dictum against monopoly, no franchise holder shall be permitted to

maintain a monopoly on any route. A minimum of two franchise holders

shall be permitted to operate on any route.

The requirements to grant a certificate to operate, or certificate of publicconvenience, shall be: proof of Filipino citizenship, financial capability,

public need, and sufficient insurance cover to protect the riding public.

In determining public need, the presumption of need for a service shall be

deemed in favor of the applicant. The burden of proving that there is no

need for a proposed service shall be with the oppositor(s).

In the interest of providing efficient public transport services, the use of

the "prior operator" and the "priority of filing" rules shall be

y p p y

The right of an operator to leave the industry is recognized

decision, subject only to the filing of appropriate notice and

phase-out period, to inform the public and to minimize disr

services.

2. Rate and Fare Setting. Freight rates shall be freed gradua

government controls. Passenger fares shall also be deregul

for the lowest class of passenger service (normally third cla

transport) for which the government will fix indicative or ref

Operators of particular services may fix their own fares with

15% above and below the indicative or reference rate.

Where there is lack of effective competition for services, or

routes, or for the transport of particular commodities, max

mandatory freight rates or passenger fares shall be set temthe government pending actions to increase the level of co

For unserved or single operator routes, the government sha

such services in the most advantageous terms to the public

government, following public bids for the services. The adv

bidding out the services or using other kinds of incentives o

shall be studied by the government.

3. Special Incentives and Financing for Fleet Acquisition. As a matter of

policy, the government shall not engage in special financing and

incentive programs, including direct subsidies for fleet acquisition and

expansion. Only when the market situation warrants government

intervention shall programs of this type be considered. Existing programs

shall be phased out gradually.

The Land Transportation Franchising and Regulatory Board, the Civil

Order No. 92-587. The Circular provides, among others, the following chall

portions:

xxx xxx xxx

IV. Policy Guidelines on the Issuance of Certificate of Public

The issuance of a Certificate of Public Convenience is determ

8/21/2019 art. vi- SEC 1


p g g y

Aeronautics Board, the Maritime Industry Authority are hereby directed

to submit to the Office of the Secretary, within forty-five (45) days of this

Order, the detailed rules and procedures for the Implementation of the

policies herein set forth. In the formulation of such rules, the concernedagencies shall be guided by the most recent studies on the subjects, such

as the Provincial Road Passenger Transport Study, the Civil Aviation

Master Plan, the Presidential Task Force on the Inter-island Shipping

Industry, and the Inter-island Liner Shipping Rate Rationalization Study.

For the compliance of all concerned. (Emphasis ours)

On October 8, 1992, public respondent Secretary of the Department of Transportation

and Communications Jesus B. Garcia, Jr. issued a memorandum to the Acting Chairman

of the LTFRB suggesting swift action on the adoption of rules and procedures to

implement above-quoted Department Order No. 92-587 that laid down deregulation

and other liberalization policies for the transport sector. Attached to the saidmemorandum was a revised draft of the required rules and procedures covering (i)

Entry Into and Exit Out of the Industry and (ii) Rate and Fare Setting, with comments and

suggestions from the World Bank incorporated therein. Likewise, resplendent from the

said memorandum is the statement of the DOTC Secretary that the adoption of the

rules and procedures is a pre-requisite to the approval of the Economic Integration Loan

from the World Bank. 5

On February 17, 1993, the LTFRB issued Memorandum Circular

No. 92-009 promulgating the guidelines for the implementation of DOTC Department

public need. The presumption of public need for a service sh

deemed in favor of the applicant, while burden of proving t

need for the proposed service shall be the oppositor'(s).

xxx xxx xxx

V. Rate and Fare Setting

The control in pricing shall be liberalized to introduce price

complementary with the quality of service, subject to prior

public hearing. Fares shall not be provisionally authorized w

hearing.

A. On the General Structure of Rates

1. The existing authorized fare range system of plus or minu for provincial buses and jeepneys shall be widened to 20% a

in 1994 with the authorized fare to be replaced by an indica

reference rate as the basis for the expanded fare range.

2. Fare systems for aircon buses are liberalized to cover firs

premier services.

xxx xxx xxx

(Emphasis ours).

Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation

policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25%

of the prescribed fare without first having filed a petition for the purpose and without

the benefit of a public hearing, announced a fare increase of twenty (20%) percent of

the existing fares. Said increased fares were to be made effective on March 16, 1994.

Petitioner KMU anchors its claim on two (2) grounds. First, the authority gi

respondent LTFRB to provincial bus operators to set a fare range of plus or

(15%) percent, later increased to plus twenty (20%) and minus twenty-five

percent, over and above the existing authorized fare without having to file

the purpose, is unconstitutional, invalid and illegal. Second, the establishm

presumption of public need in favor of an applicant for a proposed transpo

without having to prove public necessity, is illegal for being violative of the

Service Act and the Rules of Court.

8/21/2019 art. vi- SEC 1


On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the

upward adjustment of bus fares.

On March 24, 1994, the LTFRB issued one of the assailed orders dismissing the petitionfor lack of merit. The dispositive portion reads:

PREMISES CONSIDERED, this Board after considering the arguments of

the parties, hereby DISMISSES FOR LACK OF MERIT the petition filed in

the above-entitled case. This petition in this case was resolved with

dispatch at the request of petitioner to enable it to immediately avail of

the legal remedies or options it is entitled under existing laws.

SO ORDERED. 6

Hence, the instant petition for certiorari with an urgent prayer for issuance of a

temporary restraining order.

The Court, on June 20, 1994, issued a temporary restraining order enjoining, prohibiting

and preventing respondents from implementing the bus fare rate increase as well as the

questioned orders and memorandum circulars. This meant that provincial bus fares

were rolled back to the levels duly authorized by the LTFRB prior to March 16, 1994. A

moratorium was likewise enforced on the issuance of franchises for the operation of

buses, jeepneys, and taxicabs.

In its Comment, private respondent PBOAP, while not actually touching up

raised by the petitioner, questions the wisdom and the manner by which th

petition was filed. It asserts that the petitioner has no legal standing to sue real interest in the case at bench and in obtaining the reliefs prayed for.

In their Comment filed by the Office of the Solicitor General, public respon

Secretary Jesus B. Garcia, Jr. and the LTFRB asseverate that the petitioner d

the standing to maintain the instant suit. They further claim that it is within

LTFRB's authority to set a fare range scheme and establish a presumption o

in applications for certificates of public convenience.

We find the instant petition impressed with merit.

At the outset, the threshold issue of locus standi must be struck. Petitione

standing to sue.

The requirement of locus standi inheres from the definition of judicial pow

of Article VIII of the Constitution provides:

xxx xxx xxx

Judicial power includes the duty of the courts of justice to s

controversies involving rights which are legally demandable

enforceable, and to determine whether or not there has be

abuse of discretion amounting to lack or excess of jurisdiction on the

part of any branch or instrumentality of the Government.

In Lamb v. Phipps, 7 we ruled that judicial power is the power to hear and decide causes pending

between parties who have the right to sue in the courts of law and equity. Corollary to this provision

is the principle of locus standi of a party litigant. One who is directly affected by and whose interest is

immediate and substantial in the controversy has the standing to sue. The rule therefore requires

that a party must show a personal stake in the outcome of the case or an injury to himself that can be

redressed by a favorable decision so as to warrant an invocation of the court's jurisdiction and to

(Barredo v. Commission on Elections), 84 Phil. 368 (1949)],

brushed aside this technicality because "the transcendenta

to the public of these cases demands that they be settled p

definitely, brushing aside, if we must, technicalities of proc

(Avelino vs. Cuenco, G.R. No. L-2621)." Insofar as taxpayers

concerned, this Court had declared that it "is not devoid of

to whether or not it should be entertained," (Tan v. Macapa

677, 680 [1972]) or that it "enjoys an open discretion to ent

8/21/2019 art. vi- SEC 1


redressed by a favorable decision so as to warrant an invocation of the court s jurisdiction and to

justify the exercise of the court's remedial powers in h is behalf. 8

In the case at bench, petitioner, whose members had suffered and continue to suffer

grave and irreparable injury and damage from the implementation of the questioned

memoranda, circulars and/or orders, has shown that it has a clear legal right that was

violated and continues to be violated with the enforcement of the challenged

memoranda, circulars and/or orders. KMU members, who avail of the use of buses,

trains and jeepneys everyday, are directly affected by the burdensome cost of arbitrary

increase in passenger fares. They are part of the millions of commuters who comprise

the riding public. Certainly, their rights must be protected, not neglected nor ignored.

Assuming arguendo that petitioner is not possessed of the standing to sue, this court is

ready to brush aside this barren procedural infirmity and recognize the legal standing of

the petitioner in view of the transcendental importance of the issues raised. And this act

of liberality is not without judicial precedent. As early as the Emergency Powers Cases,

this Court had exercised its discretion and waived the requirement of proper party. Inthe recent case of Kilosbayan, Inc., et al. v. Teofisto Guingona, Jr., et al., 9

we ruled in the

same lines and enumerated some of the cases where the same policy was adopted, viz:

. . . A party's standing before this Court is a procedural technicality which

it may, in the exercise of its discretion, set aside in view of the

importance of the issues raised. In the landmark Emergency Powers

Cases, [G.R. No. L-2044 (Araneta v. Dinglasan); G.R. No. L-2756 (Araneta

v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas); G.R. No.

L-3055 (Guerrero v. Commissioner of Customs); and G.R. No. L-3056

same or not." [Sanidad v. COMELEC, 73 SCRA 333 (1976)].

xxx xxx xxx

In line with the liberal policy of this Court on locus standi , o

taxpayers, members of Congress, and even association of p

non-profit civic organizations were allowed to initiate and p

actions before this court to question the constitutionality o

laws, acts, decisions, rulings, or orders of various governme

or instrumentalities. Among such cases were those assailin

constitutionality of (a) R.A. No. 3836 insofar as it allows ret

gratuity and commutation of vacation and sick leave to Sen

Representatives and to elective officials of both Houses of C

(Philippine Constitution Association, Inc. v. Gimenez, 15 SC

[1965]); (b) Executive Order No. 284, issued by President Co

Aquino on 25 July 1987, which allowed members of the cabundersecretaries, and assistant secretaries to hold other go

offices or positions (Civil Liberties Union v. Executive Secret

317 [1991]); (c) the automatic appropriation for debt servic

General Appropriations Act (Guingona v. Carague, 196 SCRA

(d) R.A. No. 7056 on the holding of desynchronized election

Commission on Elections, 199 SCRA 750 [1991]); (e) P.D. No

charter of the Philippine Amusement and Gaming Corporat

ground that it is contrary to morals, public policy, and orde

Philippine Amusement and Gaming Corp., 197 SCRA 52 [199

R.A. No. 6975, establishing the Philippine National Police. (Carpio v.

Executive Secretary, 206 SCRA 290 [1992]).

Other cases where we have followed a liberal policy regarding locus

standi include those attacking the validity or legality of (a) an order

allowing the importation of rice in the light of the prohibition imposed

by R.A. No. 3452 (Iloilo Palay and Corn Planters Association, Inc. v.

Feliciano, 13 SCRA 377 [1965]; (b) P.D. Nos. 991 and 1033 insofar as they

d d h d f

[1992]); and (i) memorandum orders issued by a Mayor aff

Chief of Police of Pasay City (Pasay Law and Conscience Un

Cuneta, 101 SCRA 662 [1980]).

In the 1975 case of Aquino v. Commission on Elections (62 S

[1975]), this Court, despite its unequivocal ruling that the p

therein had no personality to file the petition, resolved nev

pass upon the issues raised because of the far-reaching imp

h d d l ( )

8/21/2019 art. vi- SEC 1


proposed amendments to the Constitution and P.D. No. 1031 insofar as

it directed the COMELEC to supervise, control, hold, and conduct the

referendum-plebiscite on 16 October 1976 (Sanidad v. Commission on

Elections, supra); (c) the bidding for the sale of the 3,179 square metersof land at Roppongi, Minato-ku, Tokyo, Japan (Laurel v. Garcia, 187 SCRA

797 [1990]); (d) the approval without hearing by the Board of

Investments of the amended application of the Bataan Petrochemical

Corporation to transfer the site of its plant from Bataan to Batangas and

the validity of such transfer and the shift of feedstock from naphtha only

to naphtha and/or liquefied petroleum gas (Garcia v. Board of

Investments, 177 SCRA 374 [1989]; Garcia v. Board of Investments, 191

SCRA 288 [1990]); (e) the decisions, orders, rulings, and resolutions of

the Executive Secretary, Secretary of Finance, Commissioner of Internal

Revenue, Commissioner of Customs, and the Fiscal Incentives Review

Board exempting the National Power Corporation from indirect tax and

duties (Maceda v. Macaraig, 197 SCRA 771 [1991]); (f) the orders of the

Energy Regulatory Board of 5 and 6 December 1990 on the ground that

the hearings conducted on the second provisional increase in oil prices

did not allow the petitioner substantial cross-examination; (Maceda v.

Energy Regulatory Board, 199 SCRA 454 [1991]); (g) Executive Order No.

478 which levied a special duty of P0.95 per liter of imported oil

products (Garcia v. Executive Secretary, 211 SCRA 219 [1992]); (h)

resolutions of the Commission on Elections concerning the

apportionment, by district, of the number of elective members of

Sanggunians (De Guia vs. Commission on Elections, 208 SCRA 420

the petition. We did no less in De Guia v. COMELEC (Supra)

although we declared that De Guia "does not appear to hav

standi , a s tanding in law, a personal or substantial interest,

aside the procedural infirmity "considering the importance involved, concerning as it does the political exercise of qua

affected by the apportionment, and petitioner alleging abu

discretion and violation of the Constitution by respondent."

Now on the merits of the case.

On the fare range scheme.

Section 16(c) of the Public Service Act, as amended, reads:

Sec. 16. Proceedings of the Commission, upon notice and he

Commission shall have power, upon proper notice and hear

accordance with the rules and provisions of this Act, subjec

limitations and exceptions mentioned and saving provisions

contrary:

xxx xxx xxx

(c) To fix and determine individual or joint rates, tolls, charg

classifications, or schedules thereof, as well as commutatio

kilometrage, and other special rates which shall be impose

and followed thereafter by any public service: Provided , That the

Commission may, in its discretion, approve rates proposed by public

services provisionally and without necessity of any hearing; but it shall

call a hearing thereon within thirty days thereafter, upon publication and

notice to the concerns operating in the territory affected: Provided,

further , That in case the public service equipment of an operator is used

principally or secondarily for the promotion of a private business, the net

profits of said private business shall be considered in relation with the

bli i f h t f th f fi i th t

the regulatory bodies, the PSC and LTFRB alike, authorized to delegate that

common carrier, a transport operator, or other public service.

In the case at bench, the authority given by the LTFRB to the provincial bus

set a fare range over and above the authorized existing fare, is illegal and in

tantamount to an undue delegation of legislative authority. Potestas deleg

delegari potest . What has been delegated cannot be delegated. This doctr

on the ethical principle that such a delegated power constitutes not only a

d t t b f d b th d l t th h th i t t lit f hi

8/21/2019 art. vi- SEC 1


public service of such operator for the purpose of fixing the rates.

(Emphasis ours).

xxx xxx xxx

Under the foregoing provision, the Legislature delegated to the defunct Public

Service Commission the power of fixing the rates of public services. Respondent

LTFRB, the existing regulatory body today, is likewise vested with the same

under Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said

executive order authorizes LTFRB "to determine, prescribe, approve and

periodically review and adjust, reasonable fares, rates and other related charges,

relative to the operation of public land transportation services provided by

motorized vehicles."

Such delegation of legislative power to an administrative agency is permitted in order to

adapt to the increasing complexity of modern life. As subjects for governmental

regulation multiply, so does the difficulty of administering the laws. Hence,

specialization even in legislation has become necessary. Given the task of determining

sensitive and delicate matters as

route-fixing and rate-making for the transport sector, the responsible regulatory body is

entrusted with the power of subordinate legislation. With this authority, an

administrative body and in this case, the LTFRB, may implement broad policies laid

down in a statute by "filling in" the details which the Legislature may neither have time

or competence to provide. However, nowhere under the aforesaid provisions of law are

duty to be performed by the delegate through the instrumentality of his ow

and not through the intervening mind of another. 10 A further delegation of suc

indeed constitute a negation of the duty in violation of the trust reposed in the delega

discharge it directly. 11

The policy of allowing the provincial bus operators to change antheir fares at will would result not only to a chaotic situation but to an anarchic state o

would leave the riding public at the mercy of transport operators who may increase fa

every day, every month or every year, whenever it pleases them or whenever they dee

"necessary" to do so. In Panay Autobus Co. v. Philippine Railway Co .,12

where respond

Railway Co. was granted by the Public Service Commission the authority to change its f

will, this Court categorically declared that:

In our opinion, the Public Service Commission was not auth

to delegate to the Philippine Railway Co. the power of alter

rates whenever it should find it necessary to do so in order t

competition of road trucks and autobuses, or to change its f

at will, or to regard its present rates as maximum rates, and

rates whenever in the opinion of the Philippine Railway Co.

its advantage to do so.

The mere recital of the language of the application of the P

Railway Co. is enough to show that it is untenable. The Leg

delegated to the Public Service Commission the power of fix

of public services, but it has not authorized the Public Servic

to delegate that power to a common carrier or other public

rates of public services like the Philippine Railway Co. have

approved or fixed by the Public Service Commission, and an

such rates must be authorized or approved by the Public Service

Commission after they have been shown to be just and reasonable. The

public service may, of course, propose new rates, as the Philippine

Railway Co. did in case No. 31827, but it cannot lawfully make said new

rates effective without the approval of the Public Service Commission,

and the Public Service Commission itself cannot authorize a public

service to enforce new rates without the prior approval of said rates by

the commission. The commission must approve new rates when they are

submitted to it if the evidence shows them to be just and reasonable

allowed rate in 1990. Supposing the LTFRB grants another five (P0.05) cent

per kilometer in 1994, then, the base or reference for computation would h

P0.47 centavos (which is P0.42 + P0.05 centavos). If bus operators will exer

authority to impose an additional 20% over and above the authorized fare,

to be collected shall amount to P0.56 (that is, P0.47 authorized LTFRB rate

P0.47 which is P0.29). In effect, commuters will be continuously subjected,

double fare adjustment but to a compounding fare as well. On their part, t

operators shall enjoy a bigger chunk of the pie. Aside from fare increase ap

they can still collect an additional amount by virtue of the authorized fare

8/21/2019 art. vi- SEC 1


submitted to it, if the evidence shows them to be just and reasonable,

otherwise it must disapprove them. Clearly, the commission cannot

determine in advance whether or not the new rates of the Philippine

Railway Co. will be just and reasonable, because it does not know whatthose rates will be.

In the present case the Philippine Railway Co. in effect asked for

permission to change its freight rates at will. It may change them every

day or every hour, whenever it deems it necessary to do so in order to

meet competition or whenever in its opinion it would be to its

advantage. Such a procedure would create a most unsatisfactory state of

affairs and largely defeat the purposes of the public service

law.13 (Emphasis ours).

One veritable consequence of the deregulation of transport fares is a compounded fare.

If transport operators will be authorized to impose and collect an additional amount

equivalent to 20% over and above the authorized fare over a period of time, this will

unduly prejudice a commuter who will be made to pay a fare that has been computed in

a manner similar to those of compounded bank interest rates.

Picture this situation. On December 14, 1990, the LTFRB authorized provincial bus

operators to collect a thirty-seven (P0.37) centavo per kilometer fare for ordinary buses.

At the same time, they were allowed to impose and collect a fare range of plus or minus

15% over the authorized rate. Thus P0.37 centavo per kilometer authorized fare plus

P0.05 centavos (which is 15% of P0.37 centavos) is equivalent to P0.42 centavos, the

they can still collect an additional amount by virtue of the authorized fare

Mathematically, the situation translates into the following:

Year** LTFRB authorized Fare Range Fare to berate*** collected per

kilometer

1990 P0.37 15% (P0.05) P0.42

1994 P0.42 + 0.05 = 0.47 20% (P0.09) P0.56

1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73

2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94

Moreover, rate making or rate fixing is not an easy task. It is a delicate and

government function that requires dexterity of judgment and sound discre

settled goal of arriving at a just and reasonable rate acceptable to both the

and the public. Several factors, in fact, have to be taken into consideration

balance could be achieved. A rate should not be confiscatory as would plac

in a situation where he will continue to operate at a loss. Hence, the rate sh

public utilities to generate revenues sufficient to cover operational costs a

reasonable return on the investments. On the other hand, a rate which is t

becomes discriminatory. It is contrary to public interest. A rate, therefore,

reasonable and fair and must be affordable to the end user who will utilize

Given the complexity of the nature of the function of rate-fixing and its far

effects on millions of commuters, government must not relinquish this imp

function in favor of those who would benefit and profit from the industry. Neither

should the requisite notice and hearing be done away with. The people, represented by

reputable oppositors, deserve to be given full opportunity to be heard in their

opposition to any fare increase.

The present administrative procedure, 14 to our mind, already mirrors an orderly and

satisfactory arrangement for all parties involved. To do away with such a procedure and allow just

one party, an interested party at that, to determine what the rate should be, will undermine the right

of the other parties to due process. The purpose of a hearing is precisely to determine what a just

is no need for the proposed service shall be the oppositor's.

ours).

The above-quoted provision is entirely incompatible and inconsistent with

16(c)(iii) of the Public Service Act which requires that before a CPC will be i

applicant must prove by proper notice and hearing that the operation of th

service proposed will promote public interest in a proper and suitable man

contrary, the policy guideline states that the presumption of public need fo

service shall be deemed in favor of the applicant In case of conflict betwe

8/21/2019 art. vi- SEC 1


and reasonable rate is. 15

Discarding such procedural and constitutional right is certainly inimical to

our fundamental law and to public interest.

On the presumption of public need .

A certificate of public convenience (CPC) is an authorization granted by the LTFRB for

the operation of land transportation services for public use as required by law. Pursuant

to Section 16(a) of the Public Service Act, as amended, the following requirements must

be met before a CPC may be granted, to wit: (i) the applicant must be a citizen of the

Philippines, or a corporation or co-partnership, association or joint-stock company

constituted and organized under the laws of the Philippines, at least 60 per centum of its

stock or paid-up capital must belong entirely to citizens of the Philippines; (ii) the

applicant must be financially capable of undertaking the proposed service and meeting

the responsibilities incident to its operation; and (iii) the applicant must prove that the

operation of the public service proposed and the authorization to do business will

promote the public interest in a proper and suitable manner . It is understood that theremust be proper notice and hearing before the PSC can exercise its power to issue a CPC.

While adopting in toto the foregoing requisites for the issuance of a CPC, LTFRB

Memorandum Circular No. 92-009, Part IV, provides for yet incongruous and

contradictory policy guideline on the issuance of a CPC. The guidelines states:

The issuance of a Certificate of Public Convenience is determined by

public need. The presumption of public need for a service shall be

deemed in favor of the applicant, while the burden of proving that there

service shall be deemed in favor of the applicant. In case of conflict betwe

and an administrative order, the former must prevail.

By its terms, public convenience or necessity generally means something fisuited to the public need. 16

As one of the basic requirements for the grant of a CP

convenience and necessity exists when the proposed facility or service meets a reason

the public and supply a need which the existing facilities do not adequately supply. Th

non-existence of public convenience and necessity is therefore a question of fact that

established by evidence, real and/or testimonial; empirical data; statistics and such ot

necessary, in a public hearing conducted for that purpose. The object and purpose of

among other things, is to look out for, and protect, the interests of both the public and

transport operators.

Verily, the power of a regulatory body to issue a CPC is founded on the con

after full-dress hearing and investigation, it shall find, as a fact, that the pro

operation is for the convenience of the public. 17 Basic convenience is the prima

consideration for which a CPC is issued, and that fact alone must be consistently born

existing operators in subject routes must be given an opportunity to offer proof and o

application. Therefore, an applicant must, at all times, be required to prove his capaci

capability to furnish the service which he has undertaken to

render.18

And all this will be possible only if a public hearing were conducted for that

Otherwise stated, the establishment of public need in favor of an applicant

well-settled and institutionalized judicial, quasi-judicial and administrative

allows the party who initiates the proceedings to prove, by mere applicatio

affirmative allegations. Moreover, the offending provisions of the LTFRB m

circular in question would in effect amend the Rules of Court by adding another

disputable presumption in the enumeration of 37 presumptions under Rule 131, Section

5 of the Rules of Court. Such usurpation of this Court's authority cannot be

countenanced as only this Court is mandated by law to promulgate rules concerning

pleading, practice and procedure. 19

Deregulation, while it may be ideal in certain situations, may not be ideal at all in our

country given the present circumstances. Advocacy of liberalized franchising and

regulatory process is tantamount to an abdication by the government of its inherent

for a service in favor of the applicant for a certificate of public convenience

the burden of proving that there is no need for the proposed service to the

The Temporary Restraining Order issued on June 20, 1994 is hereby MADE

insofar as it enjoined the bus fare rate increase granted under the provisio

aforementioned administrative circulars, memoranda and/or orders declar

No pronouncement as to costs.

8/21/2019 art. vi- SEC 1


regulatory process is tantamount to an abdication by the government of its inherent

right to exercise police power, that is, the right of government to regulate public utilities

for protection of the public and the utilities themselves.

While we recognize the authority of the DOTC and the LTFRB to issue administrative

orders to regulate the transport sector, we find that they committed grave abuse of

discretion in issuing DOTC Department Order

No. 92-587 defining the policy framework on the regulation of transport services and

LTFRB Memorandum Circular No. 92-009 promulgating the implementing guidelines on

DOTC Department Order No. 92-587, the said administrative issuances being

amendatory and violative of the Public Service Act and the Rules of Court. Consequently,

we rule that the twenty (20%) per centum fare increase imposed by respondent PBOAP

on March 16, 1994 without the benefit of a petition and a public hearing is null and void

and of no force and effect. No grave abuse of discretion however was committed in the

issuance of DOTC Memorandum Order No. 90-395 and DOTC Memorandum dated

October 8, 1992, the same being merely internal communications between

administrative officers.

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the

challenged administrative issuances and orders, namely: DOTC Department Order No.

92-587, LTFRB Memorandum Circular

No. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby

DECLARED contrary to law and invalid insofar as they affect provisions therein (a)

delegating to provincial bus and jeepney operators the authority to increase or decrease

the duly prescribed transportation fares; and (b) creating a presumption of public need

SO ORDERED.

ECHEGARAY VS SECRETARY

On June 25, 1996, this Court affirmed[1] the conviction of p

Echegaray y Pilo for the crime of rape of the 10 year-old daughter of

law spouse and the imposition upon him of the death penalty for the sa

Petitioner duly filed a Motion for Reconsideration raising mainly f

and on its heels, a Supplemental Motion for Reconsideration raising for

the issue of the constitutionality of Republic Act No. 7659[2] (the death

and the imposition of the death penalty for the crime of rape.

On February 7, 1998, this Court denied[3] petitioner's

Reconsideration and Supplemental Motion for Reconsideration with a

Congress duly complied with the requirements for the reimposition penalty and therefore the death penalty law is not unconstitutional.

In the meantime, Congress had seen it fit to change the mode of

the death penalty from electrocution to lethal injection,[4] and passed

No. 8177, AN ACT DESIGNATING DEATH BY LETHAL INJECTION AS THE

CARRYING OUT CAPITAL PUNISHMENT, AMENDING FOR THE PURPOS

OF THE REVISED PENAL CODE, AS AMENDED BY SECTION 24 OF REPU

7659.[5] Pursuant to the provisions of said law, the Secretary of Justice

the Rules and Regulations to Implement Republic Act No. 8177 ("implementing

rules")[6] and directed the Director of the Bureau of Corrections to prepare the Lethal

Injection Manual.[7]

On March 2, 1998, petitioner filed a Petition [8] for Prohibition, Injunction and/or

Temporary Restraining Order to enjoin respondents Secretary of Justice and Director

of the Bureau of Prisons from carrying out the execution by lethal injection of

petitioner under R.A. No. 8177 and its implementing rules as these are

unconstitutional and void for being: (a) cruel, degrading and inhuman

On March 16, 1998, petitioner filed a Very Urgent Motion (1) To

Quo Order, and (2) For the Issuance of a Temporary Restraining Or

enjoining public respondents from taking any action to carry out

execution until the petition is resolved.

On March 16, 1998, the Office of the Solicitor General[11] filed a C

the Petition and the Amended Supplemental Petition)[12] stating that

has already upheld the constitutionality of the Death Penalty L

repeatedly declared that the death penalty is not cruel, unjust, excessi

http://sc.judiciary.gov.ph/jurisprudence/1998/oct1998/132601.htm#_edn1




































8/21/2019 art. vi- SEC 1


punishment per se as well as by reason of its being (b) arbitrary, unreasonable and a

violation of due process, (c) a violation of the Philippines' obligations under

international covenants, (d) an undue delegation of legislative power by Congress,(e) an unlawful exercise by respondent Secretary of the power to legislate, and (f) an

unlawful delegation of delegated powers by the Secretary of Justice to respondent

Director.

On March 3, 1998, petitioner, through counsel, filed a Motion for Leave of

Court[9] to Amend and Supplement Petition with the Amended and Supplemental

Petition[10] attached thereto, invoking the additional ground of violation of equal

protection, and impleading the Executive Judge of the Regional Trial Court of

Quezon City and the Presiding Judge of the Regional Trial Court, Branch 104, in order

to enjoin said public respondents from acting under the questioned rules by setting

a date for petitioner's execution.

On March 3, 1998, the Court resolved, without giving due course to the petition,to require the respondents to COMMENT thereon within a non-extendible period of

ten (10) days from notice, and directed the parties "to MAINTAIN the status

quo prevailing at the time of the filing of this petition."

On March 10, 1998, the Court granted the Motion for Leave of Court to Amend

and Supplement Petition, and required respondents to COMMENT thereon within

ten (10) days from notice.

punishment; (2) execution by lethal injection, as authorized under R.A.

the questioned rules, is constitutional, lethal injection being the most m

humane, more economical, safer and easier to apply (than electrocutiochamber); (3) the International Covenant on Civil and Political Rig

expressly or impliedly prohibit the imposition of the death penalty; (4)

properly delegated legislative power to respondent Director; and tha

8177 confers the power to promulgate the implementing rules to the

Justice, Secretary of Health and the Bureau of Corrections.

On March 17, 1998, the Court required the petitioner to file a R

within a non-extendible period of ten days from notice.

On March 25, 1998, the Commission on Human Rights[13] filed

Leave of Court to Intervene and/or Appear as Amicus Curiae[14] with

Petition to Intervene and/or Appear as Amicus Curiae[15] alleging th

penalty imposed under R.A. No. 7659 which is to be implemented by R.Acruel, degrading and outside the limits of civil society standards,

invoking (a) Article II, Section 11 of the Constitution which provides

values the dignity of every human person and guarantees full respe

rights."; (b) Article III of the Universal Declaration of Human Rightswhi

"Everyone has the right to life, liberty and security of person, " and Arti

which states that "No one shall be subjected to torture or to cruel,

degrading treatment or punishment ."; (c) The International Covenan

Political Rights, in particular, Article 6 thereof, and the Second Option

the International Covenant on Civil and Political Rights Aiming At The Abolition of the

Death Penalty ; (d) Amnesty International statistics showing that as of October 1996,

58 countries have abolished the death penalty for all crimes, 15 countries have

abolished the death penalty for ordinary crimes, and 26 countries are

abolitionistsde facto, which means that they have retained the death penalty for

ordinary crimes but are considered abolitionists in practice that they have not

executed anyone during the past ten (10) years or more, or in that they have made

an international commitment not to carry out executions, for a total of 99 countries

which are total abolitionists in law or practice and 95 countries as

DEATH BY LETHAL INJECTION IS UNCONSTITUTIONAL FOR

CRUEL, DEGRADING AND INHUMAN PUNISHMENT.

II.

THE DEATH PENALTY VIOLATES THE INTERNATIONAL COVE

CIVIL AND POLITICAL RIGHTS, WHICH IS PART OF THE LAW

LAND.


















8/21/2019 art. vi- SEC 1


which are total abolitionists in law or practice, and 95 countries as

retentionists;[16] and (e) Pope John Paul II's encyclical, " Evangelium Vitae." In a

Resolution dated April 3, 1998, the Court duly noted the motion.

On March 27, 1998, petitioner filed a Reply[17] stating that (1) this Court is not

barred from exercising judicial review over the death penalty per se, the death

penalty for rape and lethal injection as a mode of carrying out the death penalty; (2)

capital punishment is a cruel, degrading and inhuman punishment; (3) lethal

injection is cruel, degrading and inhuman punishment, and that being the "most

modern" does not make it less cruel or more humane, and that the Solicitor

General's "aesthetic" criteria is short-sighted, and that the lethal injection is not risk

free nor is it easier to implement; and (4) the death penalty violates

the International Covenant on Civil and Political Rights considering that the

Philippines participated in the deliberations of and voted for the Second Optional

Protocol .

After deliberating on the pleadings, the Court gave due course to the petition,

which it now resolves on the merits.

In the Amended and Supplemental Petition, petitioner assails the

constitutionality of the mode of carrying out his death sentence by lethal injection

on the following grounds:[18]

I.

III.

LETHAL INJECTION, AS AUTHORIZED UNDER REPUBLIC ACT

AND THE QUESTIONED RULES, IS UNCONSTITUTIONAL BEC

AN UNNECESSARY AND WANTON INFLICTION OF PAIN ON

AND IS, THUS, A CRUEL, DEGRADING, AND INHUMAN PUN

IV.

REPUBLIC ACT NO. 8177 UNDULY DELEGATES LEGISLATIVE

RESPONDENT DIRECTOR.

V.

RESPONDENT SECRETARY UNLAWFULLY DELEGATED THE L

POWERS DELEGATED TO HIM UNDER REPUBLIC ACT NO. 8

RESPONDENT DIRECTOR.

VI.

RESPONDENT SECRETARY EXCEEDED THE AUTHORITY DELE

HIM UNDER REPUBLIC ACT NO. 8177 AND UNLAWFULLY U

THE POWER TO LEGISLATE IN PROMULGATING THE QUESTIONED

RULES.

VII.

SECTION 17 OF THE QUESTIONED RULES IS UNCONSTITUTIONAL FOR

BEING DISCRIMINATORY AS WELL AS FOR BEING AN INVALID

EXERCISE BY RESPONDENT SECRETARY OF THE POWER TO LEGISLATE.

the subject, and settling the succession of the crown,' passed in the

has been incorporated into the Constitution of the United States (of

into most constitutions of the various States in substantially the same

that used in the original statute. The exact language of the Constit

United States is used in the Philippine Bill."[19] "The counterpart of Sec

the 1935 Constitution reads: 'Excessive fines shall not be imposed, n

inhuman punishment inflicted.' xxx In the 1973 Constitution the ph

'cruel or unusual punishment.' The Bill of Rights Committee o

Constitutional Commission read the 1973 modification as prohibit

















8/21/2019 art. vi- SEC 1


VIII.

INJUCTION MUST ISSUE TO PREVENT IRREPARABLE DAMAGE AND

INJURY TO PETITIONER'S RIGHTS BY REASON OF THE EXISTENCE,

OPERATION AND IMPLEMENTATION OF AN UNCONSTITUTIONAL

STATUTE AND EQUALLY INVALID AND IMPLEMENTING RULES.

Concisely put, petitioner argues that R.A. No. 8177 and its implementing rules

do not pass constitutional muster for: (a) violation of the constitutional proscription

against cruel, degrading or inhuman punishment, (b) violation of our international

treaty obligations, (c) being an undue delegation of legislative power, and (d) being

discriminatory.

The Court shall now proceed to discuss these issues in seriatim.

I. LETHAL INJECTION, NOT CRUEL, DEGRADING OR INHUMAN PUNISHMENT UNDER

SECTION 19, ARTICLE III OF THE 1987 CONSTITUTION.

The main challenge to R.A. 8177 and its implementing rules is anchored on

Article III, Section 19 (1) of the 1987 Constitution which proscribes the imposition of

"cruel, degrading or inhuman" punishment. "The prohibition in the Philippine Bill

against cruel and unusual punishments is an Anglo-Saxon safeguard against

governmental oppression of the subject, which made its first appearance in the

reign of William and Mary of England in 'An Act declaring the rights and liberties of

Constitutional Commission read the 1973 modification as prohibit

punishment even if not 'cruel.' It was thus seen as an obstacle to exper

penology. Consequently, the Committee reported out the presen

prohibits 'cruel, degrading or inhuman punishment' as more conson

meaning desired and with jurisprudence on the subject."[20]

Petitioner contends that death by lethal injection constitutes cru

and inhuman punishment considering that (1) R.A. No. 8177 fails to pr

drugs to be used in carrying out lethal injection, the dosage for eac

administered, and the procedure in administering said drug/s into the

R.A. No. 8177 and its implementing rules are uncertain as to the

execution, time of notification, the court which will fix the date of exe

uncertainties cause the greatest pain and suffering for the convict

possibility of "botched executions" or mistakes in administering the d

lethal injection inherently cruel.

Before the Court proceeds any further, a brief explanation of th

administering lethal injection is in order.

In lethal injection, the condemned inmate is strapped on a hospita

wheeled into the execution room. A trained technician inserts a need

in the inmate's arm and begins an intravenous flow of saline solu

warden's signal, a lethal combination of drugs is injected into the

line. The deadly concoction typically includes three drugs: (1) a nonl

sodium thiopenthotal, a sleep inducing barbiturate; (2) lethal doses of

bromide, a drug that paralyzes the muscles; and (3) potassium chloride, which stops

the heart within seconds. The first two drugs are commonly used during surgery to

put the patient to sleep and relax muscles; the third is used in heart bypass

surgery.[21]

Now it is well-settled in jurisprudence that the death penalty per se is not a

cruel, degrading or inhuman punishment.[22] In the oft-cited case of Harden v.

Director of Prisons,[23] this Court held that "[p]unishments are cruel when they

involve torture or a lingering death; but the punishment of death is not cruel, within

h i f h d d i h i i i li h hi

death convict is in effect assured of eighteen (18) months from t

judgment imposing the death penalty became final and executory[28] w

seek executive clemency[29] and attend to all his temporal and spiritual a

Petitioner further contends that the infliction of "wanton pain

possible complications in the intravenous injection, considering and

claims, that respondent Director is an untrained and untested person

choice and administration of lethal injection is concerned, renders leth

cruel, degrading and inhuman punishment. Such supposition is high

d b i d























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the meaning of that word as used in the constitution. It implies there something

inhuman and barbarous, something more than the mere extinguishment of

life." Would the lack in particularity then as to the details involved in the executionby lethal injection render said law "cruel, degrading or inhuman"? The Court

believes not. For reasons hereafter discussed, the implementing details of R.A. No.

8177 are matters which are properly left to the competence and expertise of

administrative officials.[24]

Petitioner contends that Sec. 16[25] of R.A. No. 8177 is uncertain as to which

"court" will fix the time and date of execution, and the date of execution and time of

notification of the death convict. As petitioner already knows, the "court" which

designates the date of execution is the trial court which convicted the accused, that

is, after this Court has reviewed the entire records of the case [26] and has affirmed

the judgment of the lower court. Thereupon, the procedure is that the "judgment is

entered fifteen (15) days after its promulgation, and 10 days thereafter, the records

are remanded to the court below including a certified copy of the judgment for

execution.[27] Neither is there any uncertainty as to the date of execution nor the

time of notification. As to the date of execution, Section 15 of the implementing

rules must be read in conjunction with the last sentence of Section 1 of R.A. No.

8177 which provides that the death sentence shall be carried out "not earlier than

one (1) year nor later then eighteen (18) months from the time the judgment

imposing the death penalty became final and executory, without prejudice to the

exercise by the President of his executive clemency powers at all times." Hence, the

and unsubstantiated.

First. Petitioner has neither alleged nor presented evidence that le

required the expertise only of phlebotomists and not trained personne

drugs to be administered are unsafe or ineffective.[31]Petitioner

situations in the United States wherein execution by lethal inject

resulted in prolonged and agonizing death for the convict,[32] witho

evidence whatsoever.

Second. Petitioner overlooked Section 1, third paragraph of R.

which requires that all personnel involved in the execution proceedin

trained prior to the performance of such task. We must presume th

officials entrusted with the implementation of the death penalty (by let

will carefully avoid inflicting cruel punishment.[33]

Third. Any infliction of pain in lethal injection is merely incidental i

the execution of death penalty and does not fall within the c

proscription against cruel, degrading and inhuman punishment. "In a

anything is cruel which is calculated to give pain or distress, and since

imports pain or suffering to the convict, it may be said that all pun

cruel. But of course the Constitution does not mean that crime, for thi

go unpunished."[34] The cruelty against which the Constitution protect

man is cruelty inherent in the method of punishment, not the neces

involved in any method employed to extinguish life humanely.[35] Num

and state courts of the United States have been asked to review whether lethal

injections constitute cruel and unusual punishment. No court has found lethal

injections to implicate prisoner's Eighth Amendment rights. In fact, most courts that

have addressed the issue state in one or two sentences that lethal injection clearly is

a constitutional form of execution.[36] A few jurisdictions, however, have addressed

the merits of the Eighth Amendment claims. Without exception, these courts have

found that lethal injection does not constitute cruel and unusual punishment. After

reviewing the medical evidence that indicates that improper doses or improper

administration of the drugs causes severe pain and that prison officials tend to have

Nations on December 16, 1996, signed and ratified by the Philippines

19, 1966 and October 23, 1986,[41] respectively.

Article 6 of the International Covenant on Civil and Political Rights p

"1. Every human being has the inherent right to life. This right

protected by law. No one shall be arbitrarily deprived of his life

2. In countries which have not abolished the death penalty, sent










































8/21/2019 art. vi- SEC 1


g p p

little training in the administration of the drugs, the courts have found that the few

minutes of pain does not rise to a constitutional violation .[37]

What is cruel and unusual "is not fastened to the obsolete but may acquire

meaning as public opinion becomes enlightened by a humane justice" and "must

draw its meaning from the evolving standards of decency that mark the progress of

a maturing society."[38] Indeed, "[o]ther (U.S.) courts have focused on 'standards of

decency' finding that the widespread use of lethal injections indicates that it

comports with contemporary norms."[39]the primary indicator of society's standard

of decency with regard to capital punishment is the response of the country's

legislatures to the sanction.[40] Hence, for as long as the death penalty remains in our

statute books and meets the most stringent requirements provided by the

Constitution, we must confine our inquiry to the legality of R.A. No. 8177, whose

constitutionality we duly sustain in the face of petitioner's challenge. We find that

the legislature's substitution of the mode of carrying out the death penalty fromelectrocution to lethal injection infringes no constitutional rights of petitioner

herein.

II. REIMPOSITION OF THE DEATH PENALTY LAW DOES NOT VIOLATE

INTERNATIONAL TREATY OBLIGATIONS

Petitioner assiduously argues that the reimposition of the death penalty law

violates our international obligations, in particular, the International Covenant on

Civil And Political Rights, which was adopted by the General Assembly of the United

death may be imposed only for the most serious crimes in accor

the law in force at the time of the commission of the crime and n

to the provisions of the present Covenant and to the Convention

Prevention and Punishment of the Crime of Genocide. This pena

be carried out pursuant to a final judgment rendered by a comp

court." (emphasis supplied)

3. When deprivation of life constitutes the crime of genocide, it i

understood that nothing in this article shall authorize any State

present Covenant to derogate in any way from any obligation a

under the provisions of the Convention on the Prevention and Pu

of the Crime of Genocide.

4. Anyone sentenced to death shall have the right to seek pardon

commutation of the sentence. Amnesty, pardon or commutatio

sentence of death may be granted in all-cases.

5. Sentence of death shall not be imposed for crimes committed

below eighteen years of age and shall not be carried out on preg

women.

6. Nothing in this article shall be invoked to delay or to prevent the

abolition of capital punishment by any State. Party to the present

Covenant."

Indisputably, Article 6 of the Covenant enshrines the individual's right to

life. Nevertheless, Article 6 (2) of the Covenant explicitly recognizes that capital

punishment is an allowable limitation on the right to life, subject to the limitation

that it be imposed for the "most serious crimes". Pursuant to Article 28 of

the Covenant a Human Rights Committee was established and under Article 40 of

Committee shall receive and consider communications from individua

be victims of violations of any of the rights set forth in the Covenant.

On the other hand, the Second Optional Protocol to the Internatio

on Civil and Political Rights, Aiming at the Abolition of the Death

adopted by the General Assembly on December 15, 1989. The Philip

signed nor ratified said document.[44] Evidently, petitioner's asse

obligation under the Second Optional Protocol is misplaced.

III. THERE IS NO UNDUE DELEGATION OF LEGISLATIVE POWER IN R.A. NO




















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the Covenant , a Human Rights Committee was established and under Article 40 of

the Covenant , State parties to the Covenant are required to submit an initial report

to the Committee on the measures they have adopted which give effect to the rightsrecognized within the Covenant and on the progress made on the enjoyment of

those rights one year of its entry into force for the State Party concerned and

thereafter, after five years. On July 27, 1982, the Human Rights Committee

issued General Comment No. 6 interpreting Article 6 of the Covenant stating that

"(while) it follows from Article 6 (2) to (6) that State parties are not obliged to

abolish the death penalty totally, they are obliged to limit its use and, in particular,

to abolish it for other than the 'most serious crimes.' Accordingly, they ought to

consider reviewing their criminal laws in this light and, in any event, are obliged to

restrict the application of the death penalty to the most serious crimes.' The article

strongly suggests (pars. 2 (2) and (6) that abolition is desirable. xxx The Committee is

of the opinion that the expression 'most serious crimes' must be read restrictively to

mean that the death penalty should be a quite exceptional measure." Further,theSafeguards Guaranteeing Protection of Those Facing the Death

Penalty [42] adopted by the Economic and Social Council of the United Nations declare

that the ambit of the term 'most serious crimes' should not go beyond intentional

crimes, with lethal or other extremely grave consequences.

The Optional Protocol to the International Covenant on Civil and Political

Rights was adopted by the General Assembly of the United Nations on December 16,

1966, and signed and ratified by the Philippines on December 19, 1966 and August

22, 1989,[43] respectively. The Optional Protocol provides that the Human Rights

THE SECRETARY OF JUSTICE AND THE DIRECTOR OF BUREAU OF CORR

BUT SECTION 19 OF THE RULES AND REGULATIONS TO IMPLEMENT

8177 IS INVALID.

The separation of powers is a fundamental principle in ou

government. It obtains not through express provision but by actual d

framing of our Constitution. Each department of the government

cognizance of matters placed within its jurisdiction, and is supreme w

sphere.[45] Corollary to the doctrine of separation of powers is the prin

delegation of powers. "The rule is that what has been delegated

delegated or as expressed in a Latin maxim: potestas d

delegari potest ."[46] The recognized exceptions to the rule are as follows

(1) Delegation of tariff powers to the President under Section 28 (2) of Ar

the Constitution;

(2) Delegation of emergency powers to the President under Section Article VI of the Constitution;

(3) Delegation to the people at large;

(4) Delegation to local governments; and

(5) Delegation to administrative bodies.[47]

Empowering the Secretary of Justice in conjunction with the Secret

and the Director of the Bureau of Corrections, to promulgate rules an

on the subject of lethal injection is a form of delegation of legislative authority to

administrative bodies.

The reason for delegation of authority to administrative agencies is the

increasing complexity of the task of government requiring expertise as well as 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

to attend to by itself. Specialization even in legislation has become necessary. On

many problems involving day-to-day undertakings the legislature may not have the

under the sentence during the lethal injection as well as during the

prior to the execution."[53] Further, "[t]he Director of the Bureau of Cor

take steps to ensure that the lethal injection to be administered is

cause the instantaneous death of the convict."[54] The legislature also m

"all personnel involved in the administration of lethal injection sha

prior to the performance of such task."[55] The Court cannot see th

purpose would be served by requiring greater detail.[56] The question ra

definition of what constitutes a criminal offense,[57] but the mode of ca

penalty already imposed by the Courts. In this sense, R.A. No. 8177








































8/21/2019 art. vi- SEC 1


many problems involving day-to-day undertakings, the legislature may not have the

needed 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.[48]

Although Congress may delegate to another branch of the Government the

power to fill in the details in the execution, enforcement or administration of a law,

it is essential, to forestall a violation of the principle of separation of powers, that

said law: (a) be complete in itself - it must set forth therein the policy to be

executed, carried out or implemented by the delegate[49] - and (b) fix a standard - the

limits of which are sufficiently determinate or determinable - to which the delegate

must conform in the performance of his functions.[50]

Considering the scope and the definiteness of R.A. No. 8177, which changed the

mode of carrying out the death penalty, the Court finds that the law sufficiently

describes what job must be done, who is to do it, and what is the scope of hisauthority.[51]

R.A. No. 8177 likewise provides the standards which define the legislative policy,

mark its limits, map out its boundaries, and specify the public agencies which will

apply it. it indicates the circumstances under which the legislative purpose may be

carried out.[52] R.A. No. 8177 specifically requires that "[t]he death sentence shall be

executed under the authority of the Director of the Bureau of

Corrections, endeavoring so far as possible to mitigate the sufferings of the person

definite and the exercise of discretion by the administrative officials co

use the words of Justice Benjamin Cardozo, canalized within banks that

overflowing.

Thus, the Court finds that the existence of an area for exercise of

the Secretary of Justice and the Director of the Bureau of Corre

delegated legislative power is proper where standards are formul

guidance and the exercise of limited discretion, which though general, a

reasonable application.[58]

It is also noteworthy that Article 81 of the Revised Penal Code wh

provided for the death penalty by electrocution was not subjected to

ground that it failed to provide for details such as the kind of chair to

amount of voltage, volume of amperage or place of attachment of elec

death convict. Hence, petitioner's analogous argument with resp

injection must fail.

A careful reading of R.A. No. 8177 would show that there is no und

of legislative power from the Secretary of Justice to the Director of t

Corrections for the simple reason that under the Administrative Code

Bureau of Corrections is a mere constituent unit of the De

Justice.[59] Further, the Department of Justice is tasked, among others, t

of the "administration of the correctional system."[60] Hence, the im

phraseology of the law is that the Secretary of Justice should supervise

of the Bureau of Corrections in promulgating the Lethal Injection Manual, in

consultation with the Department of Health.[61]

However, the Rules and Regulations to Implement Republic Act No. 8177 suffer

serious flaws that could not be overlooked. To begin with, something basic appears

missing in Section 19 of the implementing rules which provides:

"SEC. 19. EXECUTION PROCEDURE . - Details of the procedure prior

to, during and after administering the lethal injection shall be set forth

in a manual to be prepared by the Director The manual shall contain

obtain a copy of the manual. The contents of the manual are matt

concern "which the public may want to know, either because these d

their lives, or simply because such matters naturally arouse the in

ordinary citizen."[62] Section 7 of Article III of the 1987 Constitution prov

"SEC. 7. The right of the people to information on matt

public concern shall be recognized. Access to official record

documents and papers pertaining to official acts, transactio

decisions, as well as to government research data used as a








































8/21/2019 art. vi- SEC 1


in a manual to be prepared by the Director. The manual shall contain

details of, among others, the sequence of events before and after

execution; procedures in setting up the intravenous line; the

administration of the lethal drugs; the pronouncement of death; and

the removal of the intravenous system.

Said manual shall be confidential and its distribution shall be

limited to authorized prison personnel."

Thus, the Courts finds in the first paragraph of Section 19 of the implementing

rules a veritable vacuum. The Secretary of Justice has practically abdicated the

power to promulgate the manual on the execution procedure to the Director of the

Bureau of Corrections, by not providing for a mode of review and approval

thereof. Being a mere constituent unit of the Department of Justice, the Bureau ofCorrections could not promulgate a manual that would not bear the imprimatur of

the administrative superior, the Secretary of Justice as the rule-making authority

under R.A. No. 8177. Such apparent abdication of departmental responsibility

renders the said paragraph invalid.

As to the second paragraph of section 19, the Court finds the requirement of

confidentiality of the contents of the manual even with respect to the convict unduly

suppressive. It sees no legal impediment for the convict, should he so desire, to

decisions, as well as to government research data used as a

policy development, shall be afforded the citizen, subject to

limitation as may be provided by law."

The incorporation in the Constitution of a guarantee of access to i

public concern is a recognition of the essentiality of the free flow

information in a democracy.[63] In the same way that free discus

members of society to cope with the exigencies of their time

information of general interest aids the people in democratic decision

giving them a better perspective of the vital issues confronting the natio

D. SECTION 17 OF THE RULES AND REGULATIONS TO IMPLEMENT R.A. N

INVALID FOR BEING DISCRIMINATORY AND CONTRARY TO LAW .

Even more seriously flawed than Section 19 is Section of the imple

which provides:

"SEC. 17. SUSPENSION OF THE EXECUTION OF THE DEA

SENTENCE. Execution by lethal injection shall not be inflicte

woman within the three years next following the date of th

or while she is pregnant, nor upon any person over seventy

of age. In this latter case, the death penalty shall be comm

penalty of reclusion perpetua with the accessory penalties provided in

Article 40 of the Revised Penal Code."

Petitioner contends that Section 17 is unconstitutional for being discriminatory

as well as for being an invalid exercise of the power to legislate by respondent

Secretary. Petitioner insists that Section 17 amends the instances when lethal

injection may be suspended, without an express amendment of Article 83 of the

Revised Penal Code, as amended by section 25 of R.A. No. 7659.

Article 83 f the Revised Penal Code as amended by section 25 of R A No 7659

implement. Administrative rules and regulations are intended to carry

to supplant nor to modify, the law."[67] An administrative agency cann

act of Congress.[68] In case of discrepancy between a provision of statu

or regulation issued to implement said statute, the statuto

prevails. Since the cited clause in Section 17 which suspends the ex

woman within the three (3) years next following the date of sente

supports in Article 83 of the Revised Penal Code as amended, perforc

must be declared invalid.

One member of the Court voted to declare Republic Act.













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Article 83 f the Revised Penal Code, as amended by section 25 of R.A. No. 7659

now reads as follows:

"ART. 83, Suspension of the execution of the death sentence.- The

death sentence shall not be inflicted upon a woman while she is

pregnant or within one (1) year after delivery, nor upon any person

over seventy years of age. In this last case, the death sentence shall be

commuted to the penalty of reclusion perpetua with the accessory

penalty provided in Article 40. x x x".

On this point, the Courts finds petitioner's contention impressed with

merit. While Article 83 of the Revised Penal Code, as amended by Section 25 of

Republic Act No. 7659, suspends the implementation of the death penalty while a

woman is pregnant or within one (1) year after delivery, Section 17 of the

implementing rules omits the one (1) year period following delivery as an instance

when the death sentence is suspended, andadds a ground for suspension of

sentence no longer found under Article 83 of the Revised Penal Code as amended,

which is the three-year reprieve after a woman is sentenced. This addition is, in

petitioner's view, tantamount to a gender-based discrimination sans statutory basis,

while the omission is an impermissible contravention of the applicable law.

Being merely an implementing rule, Section 17 aforecited must not override,

but instead remain consistent and in harmony with the law it seeks to apply and

One member of the Court voted to declare Republic Act.

unconstitutional insofar as it delegates the power to make rules ov

subject matter to two persons (the Secretary of Justice and the DiBureau of Corrections) and constitutes a violation of the international n

the abolition of the death penalty. One member of the Court, consis

view in People v. Echegaray , 267 SCRA 682, 734-758 (1997) that the d

law (Republic Act. No. 7659) is itself unconstitutional, believes that Rep

8177 which provides for the means of carrying out the death sentenc

unconstitutional. Two other members of the court concurred in

Separate Opinions in that the death penalty law (Republic Act No. 76

with the assailed statute (Republic Act No. 8177) are unconstitutional.

members of the Court voted to declare Republic Act. N

unconstitutional. These Separate Opinions are hereto annexed, infra.

WHEREFORE, the petition is DENIED insofar as petitioner seeks t

assailed statute (Republic Act No. 8177) as unconstitutional; but GRANTSections 17 and 19 of the Rules and Regulations to Implement Republic

are concerned, which are hereby declared INVALID because (a)

contravenes Article 83 of the Revised Penal Code, as amended by Sect

Republic Act No. 7659; and (b) Section 19 fails to provide for review an

the Lethal Injection Manual by the Secretary of Justice, and unjustifiab

manual confidential, hence unavailable to interested parties in

accused/convict and counsel. Respondents are hereby enjoined from

implementing Republic Act No. 8177 until the aforesaid Sections 17 and 19 of the

Rules and Regulations to Implement Republic Act No. 8177 are appropriately

amended, revised and/or corrected in accordance with this Decision.

NO COSTS.

SO ORDERED.

NPCDAMA VS NPC

Before Us is a special civil action for Injunction to enjoin public respondents from

Under the EPIRA Law,2 a new National Power Board of Directors was const

composed of the Secretary of Finance as Chairman, with the Secretary of E

Secretary of Budget and Management, the Secretary of Agriculture, the Di

General of the National Economic and Development Authority, the Secreta

Environment and Natural Resources, the Secretary of Interior and Local Go

the Secretary of the Department of Trade and Industry, and the President o

National Power Corporation as members.

On 27 February 2002, the Secretary of the Department of Energy (DOE) pro

the Implementing Rules and Regulations (IRR) of the EPIRA Law, pursuant t





8/21/2019 art. vi- SEC 1


Before Us is a special civil action for Injunction to enjoin public respondents from

implementing the National Power Board (NPB) Resolutions No. 2002-124 and No. 2002-

125, both dated 18 November 2002, directing, among other things, the termination ofall employees of the National Power Corporation (NPC) on 31 January 2003 in line with

the restructuring of the NPC.

On 8 June 2001, Republic Act No. 9136, otherwise known as the "Electric Power Industry

Reform Act of 2001" (EPIRA Law), was approved and signed into law by President Gloria

Macapagal-Arroyo, and took effect on 26 June 2001. Section 2(i) and Section 3 of the

EPIRA Law states:

Section 2. Declaration of Policy . – It is hereby declared the policy of the State:

x x x x

(i) To provide for an orderly and transparent privatization of the assets andliabilities of the National Power Corporation (NPC);

x x x x

Section 3. Scope. – This Act shall provide a framework for the restructuring of

the electric power industry, including the privatization of the assets of NPC, the

transition to the desired competitive structure, and the definition of the

responsibilities of the various government agencies and private entities.1

the Implementing Rules and Regulations (IRR) of the EPIRA Law, pursuant t

773 thereof. Said IRR were approved by the Joint Congressional Power Com

even date. Meanwhile, also in pursuant to the provisions of the EPIRA Law,created the Energy Restructuring Steering Committee (Restructuring Comm

manage the privatization and restructuring of the NPC, the National Transm

Corporation (TRANSCO), and the Power Sector Assets and Liabilities Corpo

(PSALM).

To serve as the overall organizational framework for the realigned function

mandated under the EPIRA Law, the Restructuring Committee proposed a

Table of Organization which was approved by the NPB through NPB Resolu

2002-53 dated 11 April 2002. Likewise, the Restructuring Committee review

proposed 2002 NPC Restructuring Plan and assisted in the implementation

(Realignment) of said Plan, and thereafter recommended to the NPB for ap

adoption of measures pertaining to the separation and hiring of NPC perso

NPB, taking into consideration the recommendation of the Restructuring Cthus amended the Restructuring Plan approved under NPB Resolution No.

On 18 November 2002, pursuant to Section 634 of the EPIRA Law and Rule

IRR, the NPB passed NPB Resolution No. 2002-124 which provided for the

the Separation Program of the NPC and the Selection and Placement of Per

NPC Table of Organization. Under said Resolution, all NPC personnel shall b

terminated on 31 January 2003, and shall be entitled to separation benefits

same day, the NPB approved NPB Resolution No. 2002-125, whereby a Transition Team

was constituted to manage and implement the NPC's Separation Program.

In a Memorandum dated 21 November 2002, the NPC OIC-President and CEO Rolando S.

Quilala circulated the assailed Resolutions and directed the concerned NPC officials to

disseminate and comply with said Resolutions and implement the same within the

period provided for in the timetable set in NPB Resolution No. 2002-125. As a result

thereof, Mr. Paquito F. Garcia, Manager – HRSD and Resources and Administration

Coordinator of NPC, circulated a Memorandum dated 22 November 2002 to all NPC

officials and employees providing for a checklist of the documents required for securing

violative of the well-settled principle that "delegated power cannot be furt

delegated." Thus, petitioners conclude that the questioned Resolutions ha

illegally issued as it were not issued by a duly constituted board since no q

because only three of the nine members, as provided under Section 48 of t

Law, were present and qualified to sit and vote.

It is petitioners' submission that even assuming arguendo that there was n

delegation of power to the four representatives who signed the assailed Re

said Resolutions cannot still be given legal effect because the same did not

the mandatory requirement of endorsement by the Joint Congressional Po












8/21/2019 art. vi- SEC 1


p y p g q g

clearances for the processing of separation benefits of all employees who shall be

terminated under the Restructuring Plan.

Contending that the assailed NPB Resolutions are void and without force and effect,

herein petitioners, in their individual and representative capacities, filed the present

Petition for Injunction to restrain respondents from implementing NPB Resolutions No.

2002-124 and No. 2002-125. In support thereof, petitioners invoke Section 78 of the

EPIRA Law, to wit:

Section 78. Injunction and Restraining Order. – The implementation of the

provisions of this Act shall not be restrained or enjoined except by an order

issued by the Supreme Court of the Philippines.

In assailing the validity of NPB Resolutions No. 2002-124 and No. 2002-125, petitioners

maintain that said Resolutions were not passed and issued by a majority of themembers of the duly constituted Board of Directors since only three of its members, as

provided under Section 486 of the EPIRA Law, were present, namely: DOE Secretary

Vincent S. Perez, Jr.; Department of Budget and Management Secretary Emilia T.

Boncodin; and NPC OIC-President Rolando S. Quilala. According to petitioners, the other

four members who were present at the meeting and signed the Resolutions were not

the secretaries of their respective departments but were merely representatives or

designated alternates of the officials who were named under the EPIRA Law to sit as

members of the NPB. Petitioners claim that the acts of these representatives are

y q y g

Commission and approval of the President of the Philippines, as provided u

47 of the EPIRA Law which states that:

Section 47. NPC Privatization. – Except for the assets of SPUG, the g

assets, real estate, and other disposable assets as well as IPP contr

shall be privatized in accordance with this Act. Within six (6) month

effectivity of this Act, the PSALM Corp. shall submit a plan for the e

by the Joint Congressional Power Commission and the approval of

of the Philippines, on the total privatization of the generation asset

other disposable assets as well as existing IPP contracts of NPC and

implement the same, in accordance with the following guidelines, e

provided for in paragraph (f) herein: x x x.

Petitioners insist that if ever there exists a valid wholesale abolition of thei

and their concomitant separation form the service, such a process is an int"privatization" and "restructuring" as defined under the EPIRA Law and, the

comply with the above-quoted provision requiring the endorsement of the

Congressional Power Commission and the approval of the President of the

Furthermore, petitioner highlight the fact that said Resolutions will have an

effect on about 5,648 employees of the NPC and will result in the displacem

2,370 employees, which, petitioners argue, is contrary to the mandate of t

Constitution to promote full employment and security of tenure.

Respondents, on the other hand, uphold the validity of the assailed Resolutions by

arguing that while it is true that four members of the National Power Board of Directors,

particularly the respective Secretaries of the Department of Interior and Local

Government, the Department of Trade and Industry, and the Department of Finance, as

well as the Director-General of the National Economic and Development Authority,

were not the actual signatories in NPB Resolutions No. 2002-124 and No. 2002-125, they

were, however, ably represented by their respective alternates. Respondents claim that

the validity of such administrative practice whereby an authority is exercised by persons

or subordinates appointed by the responsible official has long been settled.

Respondents further contend that Section 48 of the EPIRA Law does not in any way

acumen which made them eligible to occupy their present positions as dep

heads. Thus, the department secretaries cannot delegate their duties as m

NPB, much less their power to vote and approve board resolutions, becaus

personal judgment that must be exercised in the fulfillment of such respon

There is no question that the enactment of the assailed Resolutions involve

exercise of discretion and not merely a ministerial act that could be validly

a delegate, thus, the rule enunciated in the case of Binamira v. Garrucho10 i

the present controversy, to wit:







8/21/2019 art. vi- SEC 1


prohibit any member of the NPB from authorizing his representative to sign resolutions

adopted by the Board.

From the arguments put forward by herein parties, it is evident that the pivotal issue to

be resolved in this Petition for Injunction is whether or not NPB Resolutions No. 2002-

124 and No. 2002-125 were properly enacted. It is petitioners' contention that the

failure of the four specifically identified department heads7 under Section 48 of the

EPIRA Law to personally approve and sign the assailed Resolutions invalidates the

adoption of said Resolutions. Petitioners maintain that there was undue delegation of

delegated power when only the representatives of certain members of the NPB

attended the board meetings and passed and signed the questioned Resolutions.

We agree with petitioners. In enumerating under Section 48 those who shall compose

the National Power Board of Directors, the legislature has vested upon these persons

the power to exercise their judgment and discretion in running the affairs of the NPC.Discretion may be defined as "the act or the liberty to decide according to the principles

of justice and one's ideas of what is right and proper under the circumstances, without

willfulness or favor.8 Discretion, when applied to public functionaries, means a power or

right conferred upon them by law of acting officially in certain circumstances, according

to the dictates of their own judgment and conscience, uncontrolled by the judgment or

conscience of others.9 It is to be presumed that in naming the respective department

heads as members of the board of directors, the legislature chose these secretaries of

the various executive departments on the basis of their personal qualifications and

An officer to whom a discretion is entrusted cannot delegate it to a

presumption being that he was chosen because he was deemed fit competent to exercise that judgment and discretion, and unless th

substitute another in his place has been given to him, he cannot de

duties to another.

In those cases in which the proper execution of the office requires,

of the officer, the exercise of judgment or discretion, the presumpt

was chosen because he was deemed fit and competent to exercise

judgment and discretion, and, unless power to substitute another

has been given to him, he cannot delegate his duties to another.

Respondents' assertion to the contrary is not tenable. The ruling in the case

respondents to support their contention is not applicable in the case at bar

true that the Court has determined in the case of American Tobacco CompDirector of Patent s

11 that a delegate may exercise his authority through pe

appoints to assist him in his functions, it must be stressed that the Court e

in the same case that said practice is permissible only when the judgment

discretion finally exercised are those of the officer authorized by law. Acc

Court, the rule that requires an administrative officer to exercise his own ju

discretion does not preclude him from utilizing, as a matter of practical adm

procedure, the aid of subordinates, so long as it is the legally authorized of

makes the final decision through the use of his own personal judgment.

In the case at bar, it is not difficult to comprehend that in approving NPB Resolutions

No. 2002-124 and No. 2002-125, it is the representatives of the secretaries of the

different executive departments and not the secretaries themselves who exercised

judgment in passing the assailed Resolution, as shown by the fact that it is the

signatures of the respective representatives that are affixed to the questioned

Resolutions. This, to our mind, violates the duty imposed upon the specifically

enumerated department heads to employ their own sound discretion in exercising the

corporate powers of the NPC. Evidently, the votes cast by these mere representatives in

favor of the adoption of the said Resolutions must not be considered in determining

whether or not the necessary number of votes was garnered in order that the assailed

Before the Court is a petition for prohibition and

assailing Executive Order No. 566 (EO 566)[1]

and Commissio

Education (CHED) Memorandum Order No. 30, series of 2007

The Antecedent Facts

On 11 and 12 June 2006, the Professional Regulation C

















http://sc.judiciary.gov.ph/jurisprudence/2009/april2009/180046.htm#_ftn1




8/21/2019 art. vi- SEC 1


Resolutions may be validly enacted. Hence, there being only three valid votes cast out of

the nine board members, namely those of DOE Secretary Vincent S. Perez, Jr.;Department of Budget and Management Secretary Emilia T. Boncodin; and NPC OIC-

President Rolando S. Quilala, NPB Resolutions No. 2002-124 and No. 2002-125 are void

and are of no legal effect.

Having determined that the assailed Resolutions are void as they lack the necessary

number of votes for their adoption, We no longer deem it necessary to pass upon the

other issues raised in the instant petition

WHEREFORE, premises considered, National Power Board Resolutions No. 2002-124 and

No. 2002-125 are hereby declared VOID and WITHOUT LEGAL EFFECT. The Petition for

Injunction is hereby GRANTED and respondents are hereby ENJOINED from

implementing said NPB Resolutions No. 2002-124 and No. 2002-125.

SO ORDERED.

REVIEW CENTER ASSOCIATION VS EXEC

The Case

(PRC) conducted the Nursing Board Examinations nationwi

2006, licensure applicants wrote the PRC to report that h

copies of two sets of examinations were circulated

examination period among the examinees reviewing at the

Review Center and Inress Review Center. George Cord

Review Center’s President, was then the incumbent Presid

Philippine Nurses Association. The examinees were provide

of 500 questions and answers in two of the examinations’ fiv

particularly Tests III (Psychiatric Nursing) and V (Medi

Nursing). The PRC later admitted the leakage and traced it to

of Nursing members.[3]

On 19 June 2006, the PRC released th

the Nursing Board Examinations. On 18 August 2006, th

Appeals restrained the PRC from proceeding with the oat

the successful examinees set on 22 August 2006.

Consequently, President Gloria Macapagal-Arroyo (President

Arroyo) replaced all the members of the PRC’s Board of

Nursing. President Arroyo also ordered the examinees to re-take the

Nursing Board Examinations.

On 8 September 2006, President Arroyo issued EO 566 which

authorized the CHED to supervise the establishment and operation of all

implementation of the IRR would be inconsistent with the m

EO 566. Chairman Puno wrote that the IRR was presen

stakeholders during a consultation process prior to its fina

publication on 13 November 2006. Chairman Puno also

petitioner’s comments and suggestions would be conside

event of revisions to the IRR.





8/21/2019 art. vi- SEC 1


review centers and similar entities in the Philippines.

On 3 November 2006, the CHED, through its then Chairman Carlito

S. Puno (Chairman Puno), approved CHED Memorandum Order No. 49,

series of 2006 (IRR).[4]

In a letter dated 24 November 2006,[5]

the Review Center

Association of the Philippines (petitioner), an organization of

independent review centers, asked the CHED to “amend, if not

withdraw” the IRR arguing, among other things, that giving permits to

operate a review center to Higher Education Institutions (HEIs) or

consortia of HEIs and professional organizations will effectively abolish

independent review centers.

In a letter dated 3 January 2007,[6]

Chairman Puno wrote petitioner,

through its President Jose Antonio Fudolig (Fudolig), that to suspend the

In view of petitioner’s continuing request to suspe

evaluate the IRR, Chairman Puno, in a letter dated 9

2007,[7] invited petitioner’s representatives to a dialogue o

2007. In accordance with what was agreed upon during th

petitioner submitted to the CHED its position pape

IRR. Petitioner also requested the CHED to confirm in writin

Puno’s statements during the dialogue, particularly on lowe

registration fee from P400,000 to P20,000 and the requi

reviewers to have five years’ teaching experience instead of

administrative experience. Petitioner likewise request

categorical answer to their request for the suspension of t

CHED did not reply to the letter.

On 7 May 2007, the CHED approved the RIRR. On 22 A

petitioner filed before the CHED a Petition to Clarify/Ame

Implementing Rules and Regulations[8]

praying for a ruling:

1. Amending the RIRR by excluding independent review

centers from the coverage of the CHED;

2. Clarifying the meaning of the requirement for existing

review centers to tie-up or be integrated with HEIs,

consortium or HEIs and PRC-recognized professional

associations with recognized programs, or in the

lt ti t t i t h l d

While it may be true that regulation of review cent

not one of the mandates of CHED under Republic Act

however, on September 8, 2006, Her Excellency, Pres

Gloria Macapagal-Arroyo, issued Executive Order No

directing the Commission on Higher Education to regulat

establishment and operation of review centers and s

entities in the entire country.

With the issuance of the aforesaid Executive Orde




















8/21/2019 art. vi- SEC 1


alternative, to convert into schools; and

3. Revising the rules to make it conform with Republic Act

No. 7722 (RA 7722)[9]

limiting the CHED’s coverage to public

and private institutions of higher education as well as

degree-granting programs in post-secondary educational

institutions.

On 8 October 2007, the CHED issued Resolution No. 718-

2007[10] referring petitioner’s request to exclude independent review

centers from CHED’s supervision and regulation to the Office of thePresident as the matter requires the amendment of EO 566. In a letter

dated 17 October 2007,[11]

then CHED Chairman Romulo L. Neri

(Chairman Neri) wrote petitioner regarding its petition to be excluded

from the coverage of the CHED in the RIRR. Chairman Neri stated:

With the issuance of the aforesaid Executive Orde

CHED now is the agency that is mandated to regulat

establishment and operation of all review centers as pro

for under Section 4 of the Executive Order which pro

that “No review center or similar entities shall be establ

and/or operate review classes without the favo

expressed indorsement of the CHED and without the issu

of the necessary permits or authorizations to conduct re

classes. x x x”

To exclude the operation of independent re

centers from the coverage of CHED would clearly contr

the intention of the said Executive Order No. 566.

Considering that the requests requires the amend

of Executive Order No. 566, the Commission, durin

305th

Commission Meeting, resolved that the said reque

directly referred to the Office of the President for appro

action.

As to the request to clarify what is meant by tie-up/be

integrated with an HEI, as required under the Revised

Implementing Rules and Regulations, tie-up/be integrated

simply means, to be in partner with an HEI.[12] (Boldfacing and

underscoring in the original)

On 26 October 2007, petitioner filed a petition for Prohibition and

Mandamus before this Court praying for the annulment of the RIRR

are not designed to deprive existing review centers of t

business. The Court granted the Motion for Leave to Interv

Admit Comment-in-Intervention in its 11 March 2008 Resolut

On 23 April 2008, a Motion for Leave of Court for Inte

Support of the Petition and a Petition In Intervention were f

Review School of the Philippines, Inc. (CPAR), Professional R
















8/21/2019 art. vi- SEC 1


Mandamus before this Court praying for the annulment of the RIRR,

the declaration of EO 566 as invalid and unconstitutional, and theprohibition against CHED from implementing the RIRR.

Dr. Freddie T. Bernal, Director III, Officer-In-Charge, Office of the

Director IV of CHED, sent a letter[13]

to the President of Northcap Review

Center, Inc., a member of petitioner, that it had until 27 November 2007

to comply with the RIRR.

On 15 February 2008,[14]

PIMSAT Colleges (respondent-intervenor)

filed a Motion For Leave to Intervene and To Admit Comment-in-

Intervention and a Comment-in-Intervention praying for the dismissal of

the petition. Respondent-intervenor alleges that the Office of the

President and the CHED did not commit any act of grave abuse of

discretion in issuing EO 566 and the RIRR. Respondent-intervenor

alleges that the requirements of the RIRR are reasonable, doable, and

Training Center, Inc. (PRTC), ReSA Review School, Inc. (ReSA

Review School, Inc. (CRC-ACE), all independent CP

centers operating in Manila (collectively,

intervenors). Petitioners-intervenors pray for the declaratio

and the RIRR as invalid on the ground that both con

unconstitutional exercise of legislative power. The Court g

intervention in its 29 April 2008 Resolution.[16]

On 21 May 2008, the CHED issued CHED Me

Order No. 21, Series of 2008 (CMO 21, s. 2008)[17]

ext

deadline for six months from 27 May 2008 for all existing in

review centers to tie-up or be integrated with HEIs in accor

the RIRR.

In its 25 November 2008 Resolution, this Court resolved to require

the parties to observe the status quo prevailing before the issuance of

EO 566, the RIRR, and CMO 21, s. 2008.

The Assailed Executive Order and the RIRR

WHEREAS, the lack of regulatory framework fo

establishment and operation of review centers and s

entities, as shown in recent events, have ad

consequences and affect public interest and welfare;

WHEREAS, the overriding necessity to protec

public against substandard review centers and une

practices committed by some review centers demand t

















8/21/2019 art. vi- SEC 1


Executive Order No. 566 states in full:

EXECUTIVE ORDER NO. 566

DIRECTING THE COMMISSION ON HIGHER EDUCATION TO

REGULATE THE ESTABLISHMENT AND OPERATION OF REVIEW

CENTERS AND SIMILAR ENTITIES

WHEREAS, the State is mandated to protect the right of

all citizens to quality education at all levels and shall take

appropriate steps to make education accessible to all,

pursuant to Section 1, Article XIV of the 1987 Constitution;

WHEREAS, the State has the obligation to ensure and

promote quality education through the proper supervision

and regulation of the licensure examinations given through

the various Boards of Examiners under the Professional

Regulation Commission;

regulatory framework for the establishment and operat

review centers and similar entities be immediately institu

WHEREAS, Republic Act No. 7722, otherwise kno

the Higher Education Act of 1994, created the Commissi

Higher Education, which is best equipped to carry ou

provisions pertaining to the regulation of the establish

and operation of review centers and similar entities.

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARR

the President of the Republic of the Philippines, by virt

the powers vested in me by law, do hereby order:

SECTION 1. Establishment of a System of Regulati

Review Centers and Similar Entities. The Commissio

Higher Education (CHED), in consultation with

concerned government agencies, is hereby directe

formulate a framework for the regulation of review ce

and similar entities, including but not limited to

development and institutionalization of policies, standards,

guidelines for the establishment, operation and accreditation

of review centers and similar entities; maintenance of a

mechanism to monitor the adequacy, transparency and

propriety of their operations; and reporting mechanisms to

review performance and ethical practice.

SEC. 2. Coordination and Support. The Professional

Regulation Commission (PRC), Technical Skills Development

development. The CHED shall submit the staffing patter

budgetary requirements to the Department of Budge

Management (DBM) for approval.

SEC. 4. Indorsement Requirement. No review c

or similar entities shall be established and/or operate re

classes without the favorable expressed indorsement o

CHED and without the issuance of the necessary perm

authorizations to conduct review classes. After

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Authority (TESDA), Securities and Exchange Commission

(SEC), the various Boards of Examiners under the PRC, as well

as other concerned non-government organizations life

professional societies, and various government agencies, such

as the Department of Justice (DOJ), National Bureau of

Investigation (NBI), Office of the Solicitor General (OSG), and

others that may be tapped later, shall provide the necessary

assistance and technical support to the CHED in the successful

operationalization of the System of Regulation envisioned by

this Executive Order.

SEC. 3. Permanent Office and Staff. To ensure the

effective implementation of the System of Regulation, the

CHED shall organize a permanent office under its supervision

to be headed by an official with the rank of Director and to be

composed of highly competent individuals with expertise in

educational assessment, evaluation and testing; policies and

standards development, monitoring, legal and enforcement;

and statistics as well as curriculum and instructional materials

consultation with the stakeholders, the concerned re

centers and similar entities shall be given a reasonable p

at the discretion of the CHED, to comply with the policie

standards, within a period not exceeding three (3) years,

due publication of this Executive Order. The CHED shall s

it that the System of Regulation including

implementing mechanisms, policies, guidelines and

necessary procedures and documentation for the effe

implementation of the System, are completed within

days (60) upon effectivity of this Executive Order.

SEC. 5. Funding. The initial amount necessary fo

development and implementation of the System of Regu

shall be sourced from the CHED Higher Educ

Development Fund (HEDF), subject to the usual govern

accounting and auditing practices, or from any appl

funding source identified by the DBM. For the succe

fiscal year, such amounts as may be necessary fo

budgetary requirement of implementing the Syste

Regulation and the provisions of this Executive Order shall be

provided for in the annual General Appropriations Act in the

budget of the CHED. Whenever necessary, the CHED may tap

its Development Funds as supplemental source of funding for

the effective implementation of the regulatory system. In this

connection, the CHED is hereby authorized to create special

accounts in the HEDF exclusively for the purpose of

implementing the provisions of this Executive Order.

SEC. 9. Effectivity. This Executive Order shall take

immediately upon its publication in a national newspap

general circulation.

DONE in the City of Manila, this 8th

day of Septe

in the year of Our Lord, Two Thousand and Six.

(Sgd.) Gloria Macapagal-Arroyo

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SEC. 6. Review and Reporting. The CHED shall providefor the periodic review performance of review centers and

similar entities and shall make a report to the Office of the

President of the results of such review, evaluation and

monitoring.

SEC. 7. Separability. Any portion or provision of this

Executive Order that may be declared unconstitutional shall

not have the effect of nullifying other provisions hereof, as

long as such remaining provisions can still subsist and be given

effect in their entirely.

SEC. 8. Repeal. All rules and regulations, other

issuances or parts thereof, which are inconsistent with this

Executive Order, are hereby repealed or modified accordingly.

By the President:

(Sgd.) Eduardo R. Ermita

Executive Secretary

The pertinent provisions of the RIRR affecting independ

centers are as follows:

Rule VII

IMPLEMENTING GUIDELINES AND PROCEDURES

Section 1. Authority to Establish and Operate – Only

recognized, accredited and reputable HEIs may be autho

to establish and operate review center/course by the

upon full compliance with the conditions and requirem

provided herein and in other pertinent laws, rules

regulations. In addition, a consortium or consortia of qua

schools and/or entities may establish and operate review

centers or conduct review classes upon compliance with the

provisions of these Rules.

Section 2. Only after full compliance with the requirem

shall a Permit be given by the CHED to review ce

contemplated under this Rule.

Section 3. Failure of existing review centers to fully co

with the above shall bar them from existing as review ce

and they shall be deemed as operating illegally as su

addition, appropriate administrative and legal procee

shall be commence[d] against the erring entities that con

d i i h ll b i d

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Rule XIVTRANSITORY PROVISIONS

Section 1. Review centers that are existing upon the approval

of Executive Order No. 566 shall be given a grace period of up

to one (1) year, to tie-up/be integrated with existing HEIs[,]

consortium of HEIs and PRC recognized Professional

Associations with recognized programs under the conditions

set forth in this Order and upon mutually acceptable

covenants by the contracting parties. In the alternative, they

may convert as a school and apply for the course covered by

the review subject to rules and regulations of the CHED and

the SEC with respect to the establishment of schools. In the

meantime, no permit shall be issued if there is non-compliance

with these conditions or non-compliance with the

requirements set forth in these rules.

to operate and appropriate sanctions shall be imposed

due process.

The Issues

The issues raised in this case are the following:

1. Whether EO 566 is an unconstitutional exercise b

Executive of legislative power as it expands the C

jurisdiction; and

2. Whether the RIRR is an invalid exercise of the Execu

rule-making power.

The Ruling of this Court

The petition has merit.

Violation of Judicial Hierarchy

The Office of the Solicitor General (OSG) prays for the dismissal of

certainly indicates that petitions for the issuanc

extraordinary writs against first level (“inferior”) courts s

be filed with the Regional Trial Court, and those agains

latter, with the Court of Appeals. A direct invocation o

Supreme Court’s original jurisdiction to issue these

should be allowed only when there are special and impo

reasons therefor, clearly and specifically set out in

petition. This is [an] established policy. It is a policy nece

to prevent inordinate demands upon the Court’s time

tt ti hi h b tt d t d t th tt ith

8/21/2019 art. vi- SEC 1


the petition. Among other grounds, the OSG alleges that petitionerviolated the rule on judicial hierarchy in filing the petition directly with

this Court.

This Court’s original jurisdiction to issue a writ of certiorari,

prohibition, mandamus, quo warranto, habeas corpus, and injunction is

not exclusive but is concurrent with the Regional Trial Courts and the

Court of Appeals in certain cases.[18] The Court has explained:

This concurrence of jurisdiction is not, however, to betaken as according to parties seeking any of the writs an

absolute, unrestrained freedom of choice of the court to

which application therefor will be directed. There is after all a

hierarchy of courts. That hierarchy is determinative of the

venue of appeals, and also serves as a general determinant of

the appropriate forum for petitions for the extraordinary

writs. A becoming regard of that judicial hierarchy most

attention which are better devoted to those matters with

exclusive jurisdiction, and to prevent further over-crowdthe Court’s docket.

[19]

The Court has further explained:

The propensity of litigants and lawyers to disregar

hierarchy of courts in our judicial system by seeking

directly from this Court must be put to a halt for

reasons: (1) it would be an imposition upon the precious

of this Court; and (2) it would cause an inevitable

resultant delay, intended or otherwise, in the adjudicat

cases, which in some instances had to be remande

referred to the lower court as the proper forum unde

rules of procedure, or as better equipped to resolve

issues because this Court is not a trier of facts.[20]

The rule, however, is not absolute, as when exceptional and

compelling circumstances justify the exercise of this Court of its primary

jurisdiction. In this case, petitioner alleges that EO 566 expands the

coverage of RA 7722 and in doing so, the Executive Department usurps

the legislative powers of Congress. The issue in this case is not only the

validity of the RIRR. Otherwise, the proper remedy of petitioner and

petitioners-intervenors would have been an ordinary action for the

nullification of the RIRR before the Regional Trial Court.[21]

The alleged

this Court on behalf of petitioner and to execute any and all

necessary to implement the resolution.

The OSG also alleges that the petition should be dis

violation of the 2004 Rules on Notarial Practice because F

presented his community tax certificate as competent proof

before the notary public. The Court would have required

comply with the 2004 Rules on Notarial Practice except t

















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nullification of the RIRR before the Regional Trial Court. The alleged

violation of the Constitution by the Executive Department when it issued

EO 566 justifies the exercise by the Court of its primary jurisdiction over

the case. The Court is not precluded from brushing aside technicalities

and taking cognizance of an action due to its importance to the public

and in keeping with its duty to determine whether the other branches of

the Government have kept themselves within the limits of the

Constitution.[22]

OSG’s Technical Objections

The OSG alleges that the petition should be dismissed because the

verification and certification of non-forum shopping were signed only by

Fudolig without the express authority of any board resolution or power

of attorney. However, the records show that Fudolig was authorized

under Board Resolution No. 3, series of 2007[23]

to file a petition before

comply with the 2004 Rules on Notarial Practice except t

already presented his Philippine passport before the notary p

petitioner submitted its reply to the OSG’s comment.

EO 566 Expands the Coverage of RA 7722

The OSG alleges that Section 3 of RA 7722 should

conjunction with Section 8, enumerating the CHED’s p

functions. In particular, the OSG alleges that the CHED has

under paragraphs (e) and (n) of Section 8 to:

(e) monitor and evaluate the performance of prog

and institutions of higher learning for appropriate incen

as well as the imposition of sanctions such as, but not lim

to, diminution or withdrawal of subsidy, recommendati

the downgrading or withdrawal of accreditation, pro

termination or school closure;

(n) promulgate such rules and regulations and exercise

such other powers and functions as may be necessary to carry

out effectively the purpose and objectives of this Act[.]

The OSG justifies its stand by claiming that the term “programs x x

x of higher learning” is broad enough to include programs offered by

review centers.

public and private institutions of higher education as w

degree-granting programs in all post-secondary educat

institutions, public and private. (Emphasis supplied)

Neither RA 7722 nor CHED Order No. 3, series

(Implementing Rules of RA 7722)[24]

defines an institution

learning or a program of higher learning.















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We do not agree.

Section 3 of RA 7722 provides:

Sec. 3. Creation of Commission on Higher Education. - In

pursuance of the abovementioned policies, the Commission

on Higher Education is hereby created, hereinafter referred to

as the Commission.

The Commission shall be independent and separate

from the Department of Education, Culture and Sports

(DECS), and attached to the Office of the President for

administrative purposes only. Its coverage shall be both

“Higher education,” however, is defined as “education

secondary level”[25]

or “education provided by a c

university.”[26]

Under the “plain meaning” or verba legis rule

construction, if the statute is clear, plain, and free from a

must be given its literal meaning and applied

interpretation.[27]

The legislature is presumed to know the

the words, to have used words advisedly, and to have ex

intent by use of such words as are found in the statute .[28]

term “higher education” should be taken in its ordinary should be read and interpreted together with the phras

granting programs in all post-secondary educational institut

and private.” Higher education should be taken to me

education or that which grants a degree after its completion.

Further, Articles 6 and 7 of the Implementing Rules provide:

Article 6. Scope of Application. - The coverage of the

Commission shall be both public and private institutions of

higher education as well as degree granting programs in all

post-secondary educational institutions, public and private.

These Rules shall apply to all public and private

Sections 1 and 8, Rule IV of the RIRR define a review

similar entities as follows:

Section 1. REVIEW CENTER. - refers to a center ope

and owned by a duly authorized entity pursuant to

Rules intending to offer to the public and/or to specia

groups whether for a fee or for free a program or cour

study that is intended to refresh and enhance the know
















8/21/2019 art. vi- SEC 1


educational institutions offering tertiary degree programs.

The establishment, conversion, or elevation of degree-

granting institutions shall be within the responsibility of the

Commission.

Article 7. Jurisdiction. - Jurisdiction over institutions of

higher learning primarily offering tertiary degree

programs shall belong to the Commission. (Emphasis

supplied)

Clearly, HEIs refer to degree-granting institutions, or those offering

tertiary degree or post-secondary programs. In fact, Republic Act No.

8292 or the Higher Education Modernization Act of 1997 covers

chartered state universities and colleges. State universities and colleges

primarily offer degree courses and programs.

study that is intended to refresh and enhance the know

and competencies and skills of reviewees obtained iformal school setting in preparation for the lice

examinations given by the Professional Regula

Commission (PRC). The term review center as understo

these rules shall also embrace the operation or condu

review classes or courses provided by individuals wheth

a fee or not in preparation for the licensure examina

given by the Professional Regulations Commission.

x x x

Section 8. SIMILAR ENTITIES – the term refer to

review centers providing review or tutorial services in

not covered by licensure examinations given by

Professional Regulations Commission including but not limited

to college entrance examinations, Civil Service examinations,

tutorial services in specific fields like English, Mathematics

and the like.

The same Rule defines a review course as follows:

Section 3. REVIEW COURSE – refers to the set of non-

degree instructional program of study and/or instructional

refresh and enhance the knowledge or competencies an

reviewees obtained in the formal school setting in preparat

licensure examinations” given by the PRC. It also covers th

or conduct of review classes or courses provided by individu

for a fee or not in preparation for the licensure examinatio

the PRC.

A review center is not an institution of higher l

8/21/2019 art. vi- SEC 1


deg ee s uc o a p og a o s udy a d/o s uc o a

materials/module, offered by a school with a recognizedcourse/program requiring licensure examination, that are

intended merely to refresh and enhance the knowledge or

competencies and skills of reviewees.

The scopes of EO 566 and the RIRR clearly expand the CHED’s

coverage under RA 7722. The CHED’s coverage under RA 7722 is limited

to public and private institutions of higher education and degree-

granting programs in all public and private post-secondary educationalinstitutions. EO 566 directed the CHED to formulate a framework for

the regulation of review centers and similar entities.

The definition of a review center under EO 566 shows that it refers

to one which offers “a program or course of study that is intended to

contemplated by RA 7722. It does not offer a degree-grantithat would put it under the jurisdiction of the CHED. A revie

only intended to “refresh and enhance the knowledge or co

and skills of reviewees.” A reviewee is not even required to

review center or to take a review course prior to taking an e

given by the PRC. Even if a reviewee enrolls in a revi

attendance in a review course is not mandatory. The revie

required to attend each review class. He is not required to t

an examination, and neither is he given a grade. He is also n

to submit any thesis or dissertation. Thus, programs given

centers could not be considered “programs x x x of higher le

would put them under the jurisdiction of the CHED.

Further, the “similar entities” in EO 566 cover center

“review or tutorial services” in areas not covered by

examinations given by the PRC, which include, although not limited to,

college entrance examinations, Civil Services examinations, and tutorial

services. These review and tutorial services hardly qualify as programs

of higher learning.

Usurpation of Legislative Power

The OSG argues that President Arroyo was merely exercising her

Section 20, Title I of Book III of EO 292 speaks of oth

vested in the President under the law.[30]

The exercise of the

residual powers under this provision requires legislatio

provision clearly states that the exercise of the President’s ot

and functions has to be “provided for under the law.” The

granting the President the power to amend the functio

CHED. The President may not amend RA 7722 through an

Order without a prior legislation granting her such power.





8/21/2019 art. vi- SEC 1


executive power to ensure that the laws are faithfully executed. TheOSG further argues that President Arroyo was exercising her residual

powers under Executive Order No. 292 (EO 292),[29]

particularly Section

20, Title I of Book III, thus:

Section 20. Residual Powers. - Unless Congress provides

otherwise, the President shall exercise such other powers

and functions vested in the President which are provided for

under the laws and which are not specifically enumerated

above, or which are not delegated by the President in

accordance with law. (Emphasis supplied)

The President has no inherent or delegated legislativ

amend the functions of the CHED under RA 7722. Legislativ

the authority to make laws and to alter or repeal them,

power is vested with the Congress under Section 1, Articl

1987 Constitution which states:

Section 1. The legislative power shall be vested i

Congress of the Philippines which shall consist of a Se

and a House of Representatives, except to the ereserved to the people by the provision on initiative

referendum.

In Ople v. Torres,[33]

the Court declared void, as a us

legislative power, Administrative Order No. 308 (AO 308) is

President to create a national identification system. AO 308 mandates

the adoption of a national identification system even in the absence of

an enabling legislation. The Court distinguished between Legislative and

Executive powers, as follows:

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.” The Constitution, as the will of the people in their

As head of the Executive Department, the Presid

the Chief Executive. He represents the government

whole and sees to it that all laws are enforced by the of

and employees of his department. He has control ove

executive department, bureaus and offices. This mean

he has the authority to assume directly the functions o

executive department, bureau and office, or interfere wit

discretion of its officials. Corollary to the power of co

the President also has the duty of supervising











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t e e Co st tut o , as t e o t e peop e t e

original, sovereign and unlimited capacity, has vested thispower in the Congress of the Philippines. The grant of

legislative power to Congress is broad, general and

comprehensive. The legislative body possesses plenary power

for all purposes of civil government. Any power, deemed to

be legislative by usage and tradition, is necessarily possessed

by Congress, unless the Constitution has lodged it

elsewhere. 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.

While Congress is vested with the power to enact

laws, the President executes the law s. The executive power is

vested in the President. It is generally defined as the power to

enforce and administer laws. It is the power of carrying the

laws into practical operation and enforcing their due

observance.

enforcement of laws for the maintenance of general and public order. Thus, he is granted administ

power over bureaus and offices under his control to e

him to discharge his duties effectively.

Administrative power is concerned with the wo

applying policies and enforcing orders as determined by p

governmental organs. It enables the President to fix a un

standard of administrative efficiency and check the o

conduct of his agents. To this end, he can issue administ

orders, rules and regulations.

x x x. An administrative order is:

“Sec. 3. Administrative Orders. - Acts o

President which relate to particular aspec

governmental operation in pursuance of his dut

administrative head shall be promulgated in

administrative orders.”

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. x x x.[34]

Administrative agencies exercise their quasi-legislati

making power through the promulgation of r

regulations.[36]

The CHED may only exercise its rule-mak

within the confines of its jurisdiction under RA 7722. The R

review centers and similar entities which are neither ins

higher education nor institutions offering degree-granting pro









8/21/2019 art. vi- SEC 1


Just like AO 308 in Ople v. Torres, EO 566 in this case is not

supported by any enabling law. The Court further stated in Ople:

x x x. 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 makelaws.”

[35]

Since EO 566 is an invalid exercise of legislative power, the RIRR is

also an invalid exercise of the CHED’s quasi-legislative power.

Exercise of Police Power

Police power to prescribe regulations to promote

morals, education, good order or safety, and the general we

people flows from the recognition thatsalus populi est suprem

welfare of the people is the supreme law.[37] Police powe

rests with the legislature although it may be exercised by th

and administrative boards by virtue of a valid delegation.[3

delegation of police power exists under RA 7722 auth

President to regulate the operations of non-degree grant

centers.

Republic Act No. 8981 is Not the Appropriate Law

It is argued that the President of the Philippines has adequate

powers under the law to regulate review centers and this could have

been done under an existing validly delegated authority, and that the

appropriate law is Republic Act No. 8981[39]

(RA 8981). Under Section 5

of RA 8981, the PRC is mandated to “establish and maintain a high

standard of admission to the practice of all professions and at all times

ensure and safeguard the integrity of all licensure

examinations.” Section 7 of RA 8981 further states that the PRC shall

The PRC has the power to investigate any of the mem

Professional Regulatory Boards (PRB) for “commissio

irregularities in the licensure examinations which taint

the integrity and authenticity of the results of

examinations.”[40]

This is an administrative power whic

exercises over members of the PRB. However, this power ha

do with the regulation of review centers. The PRC has the p

PRB members from conducting review classes

















8/21/2019 art. vi- SEC 1


adopt “measures to preserve the integrity and inviolability of licensureexaminations.”

There is no doubt that a principal mandate of the PRC is to

preserve the integrity of licensure examinations. The PRC has the power

to adopt measures to preserve the integrity and inviolability of licensure

examinations. However, this power should properly be interpreted to

refer to the conduct of the examinations. The enumeration of PRC’s

powers under Section 7(e) includes among others, the fixing of dates

and places of the examinations and the appointment of supervisors and

watchers. The power to preserve the integrity and inviolability of

licensure examinations should be read together with these

functions. These powers of the PRC have nothing to do at all with the

regulation of review centers.

centers. However, to interpret this power to extend to thregulate review centers is clearly an unwarranted interpret

8981. The PRC may prohibit the members of the PRB from

review classes at review centers because the PRC has adm

supervision over the members of the PRB. However, such p

not extend to the regulation of review centers.

Section 7(y) of RA 8981 giving the PRC the power to pe

other functions and duties as may be necessary to car

provisions” of RA 8981 does not extend to the regulation

centers. There is absolutely nothing in RA 8981 that

regulation by the PRC of review centers.

The Court cannot likewise interpret the fact that RA 898

“any person who manipulates or rigs licensure examinat

secretly informs or makes known licensure examination questions prior

to the conduct of the examination or tampers with the grades in the

professional licensure examinations”[41]

as a grant of power to regulate

review centers. The provision simply provides for the penalties for

manipulation and other corrupt practices in the conduct of the

professional examinations.

The assailed EO 566 seeks to regulate not only review centers but

Higher Education Memorandum Order No. 30, series of 200

being unconstitutional.

SO ORDERED.

PEOPLE VS DACUYCUY

Involved in this special civil action is the unique situation, to use an ephrase, of an alternative penal sanction of imprisonment imposed by





8/21/2019 art. vi- SEC 1


also “similar entities.” The questioned CHED RIRR defines “similarentities” as referring to “other review centers providing review or

tutorial services in areas not covered by licensure examinations given by

the PRC including but not limited to college entrance examinations, Civil

Service examinations, tutorial services in specific fields like English,

Mathematics and the like.”[42]

The PRC has no mandate to supervise

review centers that give courses or lectures intended to prepare

examinees for licensure examinations given by the PRC. It is like the

Court regulating bar review centers just because the Court conducts the

bar examinations. Similarly, the PRC has no mandate to regulate

similar entities whose reviewees will not even take any licensure

examination given by the PRC.

WHEREFORE, we GRANT the petition and the petition-in-

intervention. We DECLARE Executive Order No. 566 and Commission on

p , p p p y

without a specification as to the term or duration thereof.

As a consequence of such legislative faux pas or oversight, the petitseeks to set aside the decision of the then Court of First Instance of LBranch IV, dated September 8,1976, 1

penned by herein respondent judgthe petition for certiorari and prohibition with preliminary injunction filed by hererespondents and docketed therein as Civil Case No. 5428, as well as his resoluOctober 19, 1976

2 denying the motions for reconsideration filed by the parties

Subject of said decision were the issues on jurisdiction over violations of Repub4670, otherwise known as the Magna Carta for Public School Teachers, and thconstitutionality of Section 32 thereof.

In a complaint filed by the Chief of Police of Hindang, Leyte on April 4herein private respondents Celestino S. Matondo, Segundino A. Cav

M. Zanoria, public school officials of Leyte, were charged before the Court of Hindang, Leyte in Criminal Case No. 555 thereof for violatioRepublic Act No. 4670. The case was set for arraignment and trial on1975. At the arraignment, the herein private respondents, as the accpleaded not guilty to the charge. Immediately thereafter, they orally mquash the complaint for lack of jurisdiction over the offense allegedlycorrectional nature of the penalty of imprisonment prescribed for the motion to quash was subsequently reduced to writing on June 13, 19 August 21, 1975, the municipal court denied the motion to quash for lack of me

September 2, 1975, private respondents filed a motion for the reconsideration of theaforesaid denial order on the same ground of lack of jurisdiction, but with the furtherallegation that the facts charged do not constitute an offense considering that Section 32 ofRepublic Act No. 4670 is null and void for being unconstitutional. In an undated orderreceived by the counsel for private respondents on October 20,1975, the motion forreconsideration was denied.

5

On October 26, 1975, private respondents filed a petitions 6 for certiorari and

prohibition with preliminary injunction before the former Court of First Instance of Leyte,Branch VIII, where it was docketed as Civil Case No. B-622, to restrain the Municipal Judge,Provincial Fiscal and Chief of Police of Hindang, Leyte from proceeding with the trial of saidCriminal Case No. 555 upon the ground that the former Municipal Court of Hindang had no jurisdiction over the offense charged. Subsequently, an amended petition

7 alleged the

additional ground that the facts charged do not constitute an offense since the penal

As earlier stated, on September 25, 1976, petitioner filed a motion foreconsideration. 12

Likewise, private respondents filed a motion for reconside

lower court's decision but the same was limited only to the portion thereof whichvalidity of Section 32 of Republic Act No. 4670.

13 Respondent judge denied bo

reconsideration in a resolution dated October 19, 1976.14

The instant petition to review the decision of respondent judge posesfollowing questions of law: (1) Whether the municipal and city courts jurisdiction over violations of Republic Act No. 4670; and (2) Whetheof said Republic Act No. 4670 is constitutional.

We shall resolve said queries in inverse order, since prior determinatconstitutionality of the assailed provision of the law involved is neces




8/21/2019 art. vi- SEC 1


provision, which is Section 32 of said law, is unconstitutional for the following reasons: (1) Itimposes a cruel and unusual punishment, the term of imprisonment being unfixed and mayrun to reclusion perpetua; and (2) It also constitutes an undue delegation of legislative power,the duration of the penalty of imprisonment being solely left to the discretion of the court as ifthe latter were the legislative department of the Government.

On March 30, 1976, having been advised that the petition of herein privaterespondents was related to Criminal Case No. 1978 for violation of PresidentialDecree No. 442 previously transferred from Branch VIII to Branch IV of theerstwhile Court of First Instance of Leyte, Judge Fortunate B. Cuna of the formerbranch transferred the said petition to the latter branch for further proceedingsand where it was subsequently docketed therein as Civil Case No. 5428. 8

On

March 15, 1976, the petitioner herein filed an opposition to the admission of the saidamended petitions

9but respondent judge denied the same in his resolution of April 20,

1976.10

On August 2, 1976, herein petitioner filed a supplementary memorandum in answerto the amended petition. 11

On September 8, 1976, respondent judge rendered the aforecited challengeddecision holding in substance that Republic Act No. 4670 is valid andconstitutional but cases for its violation fall outside of the jurisdiction of municipaland city courts, and remanding the case to the former Municipal Court ofHindang, Leyte only for preliminary investigation.

adjudication of the jurisdictional issue raised in this petition.

1. The disputed section of Republic Act No. 4670 prov

Sec. 32. Penal Provision.— A person who shall wilfullwith, restrain or coerce any teacher in the exercise of hguaranteed by this Act or who shall in any other mannany act to defeat any of the provisions of this Act shallconviction, be punished by a fine of not less than one hpesos nor more than one thousand pesos, or by impristhe discretion of the court. (Emphasis supplied).

Two alternative and distinct penalties are consequently imposed, to w

ranging from P100.00 to P1,000.00; or (b) imprisonment. It is apparelaw has no prescribed period or term for the imposable penalty of imWhile a minimum and maximum amount for the penalty of fine is speis no equivalent provision for the penalty of imprisonment, although bto be qualified by the phrase "in the discretion of the court.

Private respondents contend that a judicial determination of what Cointended to be the duration of the penalty of imprisonment would be vthe constitutional prohibition against undue delegation of legislative p

that the absence of a provision on the specific term of imprisonment constitutesthat penalty into a cruel and unusual form of punishment. Hence, it is vigorouslyasserted, said Section 32 is unconstitutional.

The basic principle underlying the entire field of legal concepts pertaining to thevalidity of legislation is that in the enactment of legislation a constitutionalmeasure is thereby created. In every case where a question is raised as to theconstitutionality of an act, the court employs this doctrine in scrutinizing the termsof the law. In a great volume of cases, the courts have enunciated thefundamental rule that there is a presumption in favor of the constitutionality of alegislative enactment. 15

It is contended that Republic Act No. 4670 is unconstitutional on the ground that

inflicted.' The prohibition of cruel and unpunishments is generally aimed at the focharacter of the punishment rather than in respect of duration or amount, and appunishments which never existed in Amwhich public sentiment has regarded as obsolete (15 Am. Jur., p. 172), for instan(sic) inflicted at the whipping post, or in tburning at the stake, breaking on the whdisemboweling, and the like (15 Am. JurNote 35 L.R.A. p. 561). Fine and imprisowould not thus be within the prohibition.de la Cruz, 92 Phil. 906). 16

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p gthe imposable but indefinite penalty of imprisonment provided therein constitutesa cruel and unusual punishment, in defiance of the express mandate of theConstitution. This contention is inaccurate and should be rejected.

We note with approval the holding of respondent judge that—

The rule is established beyond question that a punishmentauthorized by statute is not cruel or unusual or disproportionate tothe nature of the offense unless it is a barbarous one unknown tothe law or so wholly disproportionate to the nature of the offenseas to shock the moral sense of the community. Based on theprinciple, our Supreme Court has consistently overruledcontentions of the defense that the punishment of fine or

imprisonment authorized by the statute involved is cruel andunusual. (Legarda vs. Valdez, 1 Phil. 146; U.S. vs. Pico, 18 Phil.386; People vs. Garay, 2 ACR 149; People vs. Estoista 93 Phil.647; People vs. Tiu Ua. 96 Phil. 738; People vs. Dionisio, 22 SCRA1299). The language of our Supreme Court in the first of the casesit decided after the last world war is appropriate here:

The Constitution directs that 'Excessive fines shallnot be imposed, nor cruel and unusual punishment

)

The question that should be asked, further, is whether the constitutioprohibition looks only to the form or nature of the penalty and not to tproportion between the penalty and the crime.

The answer thereto may be gathered from the pronouncement in PeEstoista, 17

where an "excessive" penalty was upheld as constitutional and wa

with a recommendation for executive clemency, thus:

... If imprisonment from 5 to 10 years is out of proportiopresent case in view of certain circumstances, the lawdeclared unconstitutional for this reason. The constitutact of the legislature is not to be judged in the light of e

cases. Small transgressors for which the heavy net waare, like small fishes, bound to be caught, and it is to msituation as this that courts are advised to make a recoto the Chief Executive for clemency or reduction of the

That the penalty is grossly disproportionate to the crime is an insufficdeclare the law unconstitutional on the ground that it is cruel and unufact that the punishment authorized by the statute is severe does notcruel or unusual. 18

In addition, what degree of disproportion the Court will co

obnoxious to the Constitution has still to await appropriate determination in due time since, tothe credit of our legislative bodies, no decision has as yet struck down a penalty for being"cruel and unusual" or "excessive."

We turn now to the argument of private respondents that the entire penalprovision in question should be invalidated as an 49 "undue delegation oflegislative power, the duration of penalty of imprisonment being solely left to thediscretion of the court as if the lattter were the legislative department of thegovernment."

Petitioner counters that the discretion granted therein by the legislature to thecourts to determine the period of imprisonment is a matter of statutoryconstruction and not an undue delegation of legislative power. It is contended

process of laws which precludes the transfer of regulafunctions to private persons. Lastly, there is the maxim"Delegata potestas non potest delegari." 20

An apparent exception to the general rule forbidding the delegation oauthority to the courts exists in cases where discretion is conferred ucourts. It is clear, however, that when the courts are said to exercise it must be a mere legal discretion which is exercised in discerning theprescribed by law and which, when discerned, it is the duty of the cofollow. 21

So it was held by the Supreme Court of the United States that the prseparation of powers is not violated by vesting in courts discretion as

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that the prohibition against undue delegation of legislative power is concernedonly with the delegation of power to make laws and not to interpret the same. It isalso submitted that Republic Act No. 4670 vests in the courts the discretion, notto fix the period of imprisonment, but to choose which of the alternative penaltiesshall be imposed.

Respondent judge sustained these theses of petitioner on his theory that "theprinciple of separation of powers is not violated by vesting in courts discretion asto the length of sentence or amount of fine between designated limits insentencing persons convicted of crime. In such instance, the exercise of judicialdiscretion by the courts is not an attempt to use legislative power or to prescribeand create a law but is an instance of the administration of justice and theapplication of existing laws to the facts of particular cases." 19

What respondent judge obviously overlooked is his own reference to penalties "between designated limits."

In his commentary on the Constitution of the United States, Corwin wrote:

.. At least three distinct ideas have contributed to the developmentof the principle that legislative power cannot be delegated. One isthe doctrine of separation of powers: Why go to the trouble ofseparating the three powers of government if they can straightwayremerge on their own motion? The second is the concept of due

p p y glength of sentence or the amount of fine between designated limits inpersons convicted of a crime. 22

In the case under consideration, the respondent judge erronneously that since the penalty of imprisonment has been provided for by the the court is endowed with the discretion to ascertain the term or perioimprisonment. We cannot agree with this postulate. It is not for the cothe term of imprisonment where no points of reference have been prothe legislature. What valid delegation presupposes and sanctions is aof discretion to fix the length of service of a term of imprisonment whencompassed within specific or designated limits provided by law, thwhich designated limits well constitute such exercise as an undue denot-an outright intrusion into or assumption, of legislative power.

Section 32 of Republic Act No. 4670 provides for an indeterminable imprisonment, with neither a minimum nor a maximum duration havinby the legislative authority. The courts are thus given a wide latitude to fix the term of imprisonment, without even the benefit of any sufficstandard, such that the duration thereof may range, in the words of re judge, from one minute to the life span of the accused. Irremissibly, tbe allowed. It vests in the courts a power and a duty essentially legisnature and which, as applied to th is case, does violence to the rules

separation of powers as well as the non-delegability of legislative powers. Thistime, the preumption of constitutionality has to yield.

On the foregoing considerations, and by virtue of the separability clause inSection 34 of Republic Act No. 4670, the penalty of imprisonment provided inSection 32 thereof should be, as it is hereby, declared unconstitutional.

It follows, therefore, that a ruling on the proper interpretation of the actual term ofimprisonment, as may have been intended by Congress, would be pointless andacademic. It is, however, worth mentioning that the suggested application of theso-called rule or principle of parallelism, whereby a fine of P1,000.00 would beequated with one year of imprisonment, does not merit judicial acceptance. Afine, whether imposed as a single or as an alternative penalty, should not and

private respondents falls within the original jurisdiction of the MunicipCourt of Hindang, Leyte.

WHEREFORE, the decision and resolution of respondent judge are REVERSED and SET ASIDE. Criminal Case No. 555 filed against prrespondents herein is hereby ordered to be remanded to the MunicipCourt of Hindang, Leyte for trial on the merits.

SO ORDERED.

PELAEZ VS AUDITOR

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cannot be reduced or converted into a prison term; it is to be considered as aseparate and independent penalty consonant with Article 26 of the RevisedPenal Code. 23

It is likewise declared a discrete principal penalty in the graduated scales ofpenalties in Article 71 of said Code. There is no rule for transmutation of the amount of a fineinto a term of imprisonment. Neither does the Code contain any provision that a fine whenimposed in conjunction with imprisonment is subordinate to the latter penalty. In sum, a fine isas much a principal penalty as imprisonment. Neither is subordinate to the other.

24

2. It has been the consistent rule that the criminal jurisdiction of the court isdetermined by the statute in force at the time of the commencement of theaction. 25

With the deletion by invalidation of the provision on imprisonment in Section 32 of

Republic Act No. 4670, as earlier discussed, the imposable penalty for violationsof said law should be limited to a fine of not less than P100.00 and not more thanP1,000.00, the same to serve as the basis in determining which court mayproperly exercise jurisdiction thereover. When the complaint against privaterespondents was filed in 1975, the pertinent law then in force was Republic ActNo. 296, as amended by Republic Act No. 3828, under which crimes punishableby a fine of not more than P 3,000.00 fall under the original jurisdiction of theformer municipal courts. Consequently, Criminal Case No. 555 against herein

During the period from September 4 to October 29, 1964 the PresidePhilippines, purporting to act pursuant to Section 68 of the Revised Administrative Code, issued Executive Orders Nos. 93 to 121, 124 a129; creating thirty-three (33) municipalities enumerated in the margafter the date last mentioned, or on November 10, 1964 petitioner EmPelaez, as Vice President of the Philippines and as taxpayer, institutpresent special civil action, for a writ of prohibition with preliminary inagainst the Auditor General, to restrain him, as well as his representaagents, from passing in audit any expenditure of public funds in impleof said executive orders and/or any disbursement by said municipalit

Petitioner alleges that said executive orders are null and void, upon tthat said Section 68 has been impliedly repealed by Republic Act No

constitutes an undue delegation of legislative power. Respondent macontrary view and avers that the present action is premature and thaproper parties— referring to the officials of the new political subdivisquestion— have been impleaded. Subsequently, the mayors of sevemunicipalities adversely affected by the aforementioned executive orbecause the latter have taken away f rom the former the barrios compnew political subdivisions — intervened in the case. Moreover, AttornM. Fernando and Emma Quisumbing-Fernando were allowed to andasamici curiae.

The third paragraph of Section 3 of Republic Act No. 2370, reads:

Barrios shall not be created or their boundaries altered nor their nameschanged except under the provisions of this Act or by Act of Congress.

Pursuant to the first two (2) paragraphs of the same Section 3:

All barrios existing at the time of the passage of this Act shall come underthe provisions hereof.

Upon petition of a majority of the voters in the areas affected, a new barriomay be created or the name of an existing one may be changed by theprovincial board of the province, upon recommendation of the council of

questioned. Founded upon logic and experience, it cannot be offset eclear manifestation of the intent of Congress to the contrary, and no smanifestation, subsequent to the passage of Republic Act No. 2379,brought to our attention.

Moreover, section 68 of the Revised Administrative Code, upon whicdisputed executive orders are based, provides:

The (Governor-General) President of the Philippines may by eorder define the boundary, or boundaries, of any province, sumunicipality, [township] municipal district, or other political suand increase or diminish the territory comprised therein, may province into one or more subprovinces, separate any politica

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the municipality or municipalities in which the proposed barrio isstipulated. The recommendation of the municipal council shall beembodied in a resolution approved by at least two-thirds of the entiremembership of the said council: Provided, however, That no new barriomay be created if its population is less than five hundred persons.

Hence, since January 1, 1960, when Republic Act No. 2370 became effective,barrios may "not be created or their boundaries altered nor their names changed"except by Act of Congress or of the corresponding provincial board "upon petitionof a majority of the voters in the areas affected" and the "recommendation of thecouncil of the municipality or municipalities in which the proposed barrio issituated." Petitioner argues, accordingly: "If the President, under this new law,cannot even create a barrio, can he create a municipality which is composed of

several barrios, since barrios are units of municipalities?"

Respondent answers in the affirmative, upon the theory that a new municipalitycan be created without creating new barrios, such as, by placing old barriosunder the jurisdiction of the new municipality. This theory overlooks, however, themain import of the petitioner's argument, which is that the statutory denial of thepresidential authority to create a new barrio implies a negation of the biggerpower to create municipalities, each of which consists of several barrios. Thecogency and force of this argument is too obvious to be denied or even

other than a province, into such portions as may be required, of such subdivisions or portions with another, name any new so created, and may change the seat of government within ansubdivision to such place therein as the public welfare may reProvided, That the authorization of the (Philippine Legislatureof the Philippines shall first be obtained whenever the boundaprovince or subprovince is to be defined or any province is to into one or more subprovinces. When action by the (GovernoPresident of the Philippines in accordance herewith makes nechange of the territory under the jurisdiction of any administraany judicial officer, the (Governor-General) President of the Pwith the recommendation and advice of the head of the Depahaving executive control of such officer, shall redistrict the ter

several officers affected and assign such officers to the new dformed.

Upon the changing of the limits of political divisions in pursuaforegoing authority, an equitable distribution of the funds and of the divisions thereby affected shall be made in such mannerecommended by the (Insular Auditor) Auditor General and apthe (Governor-General) President of the Philippines.

Respondent alleges that the power of the President to create municipalitiesunder this section does not amount to an undue delegation of legislative power,relying upon Municipality of Cardona vs. Municipality of Binañgonan (36 Phil.547), which, he claims, has settled it. Such claim is untenable, for said caseinvolved, not the creation of a new municipality, but a mere transfer of territory — from an already existing municipality (Cardona) to another municipality(Binañgonan), likewise, existing at the time of and prior to said transfer(SeeGov't of the P.I. ex rel. Municipality of Cardona vs. Municipality, of Binañgonan[34 Phil. 518, 519-5201)— in consequence of the f ixing and definition, pursuantto Act No. 1748, of the common boundaries of two municipalities.

It is obvious, however, that, whereas the power to fix such common boundary, inorder to avoid or settle conflicts of jurisdiction between adjoining municipalities,

t k f d i i t ti t i l i it d th d ti f

make the law, but, also— and this is worse— to unmake it, by adopmeasures inconsistent with the end sought to be attained by the Act thus nullifying the principle of separation of powers and the system obalances, and, consequently, undermining the very foundation of oursystem.

Section 68 of the Revised Administrative Code does not meet these requirements for a valid delegation of the power to fix the details in thenforcement of a law. It does not enunciate any policy to be carried oimplemented by the President. Neither does it give a standard sufficito avoid the evil effects above referred to. In this connection, we do nthe fact that, under the last clause of the f irst sentence of Section 68President:

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may partake of an administrative nature—

involving, as it does, the adoption ofmeans and ways to carry into effect the law creating said municipalities— theauthority to create municipal corporations is essentially legislative in nature. Inthe language of other courts, it is "strictly a legislative function" (State ex rel.Higgins vs. Aicklen, 119 S. 425, January 2, 1959) or "solely and exclusively theexercise of legislative power" (Udall vs. Severn, May 29, 1938, 79 P. 2d 347-349). As the Supreme Court of Washington has put it (Territory ex rel. Kelly vs.Stewart, February 13, 1890, 23 Pac. 405, 409), "municipal corporationsare purely the creatures of statutes."

Although1a Congress may delegate to another branch of the Government thepower to fill in the details in the execution, enforcement or administration of alaw, it is essential, to forestall a violation of the principle of separation of powers,

that said law: (a) be complete in itself—

it must set forth therein the policy to beexecuted, carried out or implemented by the delegate2 — and (b) fix a standard— the limits of which are sufficiently determinate or determinable— to which thedelegate must conform in the performance of his functions.2a Indeed, without astatutory declaration of policy, the delegate would in effect, make or formulatesuch policy, which is the essence of every law; and, without the aforementionedstandard, there would be no means to determine, with reasonable certainty,whether the delegate has acted within or beyond the scope of hisauthority.2b Hence, he could thereby arrogate upon himself the power, not only to

... may change the seat of the government within any subdivis place therein as the public welfare may require.

It is apparent, however, from the language of this clause, that the phpublic welfare may require" qualified, not the clauses preceding the oquoted, but only the place to which the seat of the government may btransferred. This fact becomes more apparent when we consider thaSection 68 was originally Section 1 of Act No. 1748,3 which provided"whenever in the judgment of the Governor-General the public welfahe may, by executive order," effect the changes enumerated therein section 68), including the change of the seat of the government "to sas the public interest requires." The opening statement of said Sectio

No. 1748—

which was not included in Section 68 of the Revised AdCode— governed the time at which, or the conditions under which, ttherein conferred could be exercised; whereas the last part of the firsof said section referred exclusively to the place to which the seat of tgovernment was to be transferred.

At any rate, the conclusion would be the same, insofar as the case aconcerned, even if we assumed that the phrase "as the public welfarrequire," in said Section 68, qualifies all other clauses thereof. It is tr

inCalalang vs. Williams (70 Phil. 726) and People vs. Rosenthal (68 Phil. 328),this Court had upheld "public welfare" and "public interest," respectively, assufficient standards for a valid delegation of the authority to execute the law. But,the doctrine laid down in these cases — as all judicial pronouncements— mustbe construed in relation to the specific facts and issues involved therein, outsideof which they do not constitute precedents and have no binding effect.4 The lawconstrued in the Calalang case conferred upon the Director of Public Works, withthe approval of the Secretary of Public Works and Communications, the power toissue rules and regulations to promote safe transit upon national roads andstreets. Upon the other hand, the Rosenthal case referred to the authority of theInsular Treasurer, under Act No. 2581, to issue and cancel certificates or permitsfor the sale of speculative securities. Both cases involved grantsto administrative officers of powers related to the exercise of their administrative

f ti lli f th d t i ti f ti f f t

petition of a majority of the taxable inhabitants thereof, setting forth thdesired to be included in such village (Territory ex rel Kelly vs. Stewa405-409); or authorizing the territory of a town, containing a given arepopulation, to be incorporated as a town, on certain steps being takeinhabitants thereof and on certain determination by a court and subsof the inhabitants in favor thereof, insofar as the court is allowed to dwhether the lands embraced in the petition "ought justly" to be includvillage, and whether the interest of the inhabitants will be promoted bincorporation, and to enlarge and diminish the boundaries of the prop"as justice may require" (In re Villages of North Milwaukee, 67 N.W. or creating a Municipal Board of Control which shall determine whethlaying out, construction or operation of a toll road is in the "public intewhether the requirements of the law had been complied with, in whic

b d h ll t d ti i i l ti d fi i

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functions, calling for the determination of questions of fact .

Such is not the nature of the powers dealt with in section 68. As above indicated,the creation of municipalities, is not an administrative function, but one which isessentially and eminently legislative in character. The question of whether or not"public interest" demands the exercise of such power is not one of fact . it is" purely a legislativequestion "(Carolina-Virginia Coastal Highway vs. CoastalTurnpike Authority, 74 S.E. 2d. 310-313, 315-318), or a political question (Udallvs. Severn, 79 P. 2d. 347-349). As the Supreme Court of Wisconsin has aptlycharacterized it, "the question as to whether incorporation is for the bestinterest of the community in any case is emphatically aquestion of public policyand statecraft " (In re Village of North Milwaukee, 67 N.W. 1033, 1035-1037).

For this reason, courts of justice have annulled, as constituting undue delegationof legislative powers, state laws granting the judicial department, the power todetermine whether certain territories should be annexed to a particularmunicipality (Udall vs. Severn, supra, 258-359); or vesting in a Commission theright to determine the plan and frame of government of proposed villages andwhat functions shall be exercised by the same, although the powers andfunctions of the village are specifically limited by statute (In re MunicipalCharters, 86 Atl. 307-308); or conferring upon courts the authority to declare agiven town or village incorporated, and designate its metes and bounds, upon

board shall enter an order creating a municipal corporation and fixingof the same (Carolina-Virginia Coastal Highway vs. Coastal Turnpike74 S.E. 2d. 310).

Insofar as the validity of a delegation of power by Congress to the Prconcerned, the case of Schechter Poultry Corporation vs. U.S. (79 Lis quite relevant to the one at bar. The Schechter case involved theconstitutionality of Section 3 of the National Industrial Recovery Act athe President of the United States to approve "codes of fair competitsubmitted to him by one or more trade or industrial associations or cowhich "impose no inequitable restrictions on admission to membershand are truly representative," provided that such codes are not desigpromote monopolies or to eliminate or oppress small enterprises and

operate to discriminate against them, and will tend to effectuate the psaid Act. The Federal Supreme Court held:

To summarize and conclude upon this point: Sec. 3 of the Rewithout precedent. It supplies no standards for any trade, induactivity. It does not undertake to prescribe rules of conduct to to particular states of fact determined by appropriate administprocedure. Instead of prescribing rules of conduct, it authorizemaking of codes to prescribe them. For that legislative undert

sets up no standards, aside from the statement of the general aims ofrehabilitation, correction and expansion described in Sec. 1. In view of thescope of that broad declaration, and of the nature of the few restrictionsthat are imposed, the discretion of the President in approving orprescribing codes, and thus enacting laws for the government of trade andindustry throughout the country, is virtually unfettered. We think that thecode making authority thus conferred is an unconstitutional delegation oflegislative power.

If the term "unfair competition" is so broad as to vest in the President a discretionthat is "virtually unfettered." and, consequently, tantamount to a delegation oflegislative power, it is obvious that "public welfare," which has even a broaderconnotation, leads to the same result. In fact, if the validity of the delegation of

powers made in Section 68 were upheld there would no longer be any legal

The power of control under this provision implies the right of the Presinterfere in the exercise of such discretion as may be vested by law iof the executive departments, bureaus, or offices of the national govewell as to act in lieu of such officers. This power is denied by the Conthe Executive, insofar as local governments are concerned. With reslatter, the fundamental law permits him to wield no more authority thachecking whether said local governments or the officers thereof perfoduties as provided by statutory enactments. Hence, the President cainterfere with local governments, so long as the same or its officers ascope of their authority. He may not enact an ordinance which the mcouncil has failed or refused to pass, even if it had thereby violated aimposed thereto by law, although he may see to it that the corresponprovincial officials take appropriate disciplinary action therefor. Neith

vote set aside or annul an ordinance passed by said council within t

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powers made in Section 68 were upheld, there would no longer be any legalimpediment to a statutory grant of authority to the President to do anything which,in his opinion, may be required by public welfare or public interest. Such grant ofauthority would be a virtual abdication of the powers of Congress in favor of theExecutive, and would bring about a total collapse of the democratic systemestablished by our Constitution, which it is the special duty and privilege of thisCourt to uphold.

It may not be amiss to note that the executive orders in question were issuedafter the legislative bills for the creation of the municipalities involved in this casehad failed to pass Congress. A better proof of the fact that the issuance of saidexecutive orders entails the exercise of purely legislative functions can hardly begiven.

Again, Section 10 (1) of Article VII of our fundamental law ordains:

The President shall have control of all the executive departments,bureaus, or offices, exercise general supervision over all localgovernments as may be provided by law, and take care that the laws befaithfully executed.

vote, set aside or annul an ordinance passed by said council within tits jurisdiction, no matter how patently unwise it may be. He may not suspend an elective official of a regular municipality or take any discaction against him, except on appeal from a decision of the correspoprovincial board.5

Upon the other hand if the President could create a municipality, he ceffect, remove any of its officials, by creating a new municipality and therein the barrio in which the official concerned resides, for his officthereby become vacant.6 Thus, by merely brandishing the power to cmunicipality (if he had it), without actually creating it, he could compeofficials to submit to his dictation, thereby, in effect, exercising over tpower of control denied to him by the Constitution.

Then, also, the power of control of the President over executive depabureaus or offices implies no morethan the authority to assume direcfunctions thereof or to interfere in the exercise of discretion by its offiManifestly, such control does not include the authority either to abolexecutive department or bureau, or to create a new one. As a consealleged power of the President to create municipal corporations wounecessarily connote the exercise by him of an authority even greatercontrol which he has over the executive departments, bureaus or offi

words, Section 68 of the Revised Administrative Code does not merely fail tocomply with the constitutional mandate above quoted. Instead of giving thePresident less power over local governments than that vested in him over theexecutive departments, bureaus or offices, it reverses the process and doesthe exact opposite, by conferring upon him more power over municipalcorporations than that which he has over said executive departments, bureaus oroffices.

In short, even if it did entail an undue delegation of legislative powers, as itcertainly does, said Section 68, as part of the Revised Administrative Code,approved on March 10, 1917, must be deemed repealed by the subsequentadoption of the Constitution, in 1935, which is utterly incompatible andinconsistent with said statutory enactment.7

years, issued executive orders creating municipal corporations and thave been organized and in actual operation, thus indicating, withoutperadventure of doubt, that the expenditures incidental thereto have sanctioned, approved or passed in audit by the General Auditing Offofficials. There is no reason to believe, therefore, that respondent wodifferent policy as regards the new municipalities involved in this casabsence of an allegation to such effect, and none has been made by

WHEREFORE, the Executive Orders in question are hereby declarevoid ab initio and the respondent permanently restrained from passinany expenditure of public funds in implementation of said Executive any disbursement by the municipalities above referred to. It is so ord

Bengzon C J Bautista Angelo Reyes J B L Barrera and Dizon J

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There are only two (2) other points left for consideration, namely, respondent'sclaim (a) that "not all the proper parties"— referring to the officers of the newlycreated municipalities— "have been impleaded in this case," and (b) that "thepresent petition is premature."

As regards the first point, suffice it to say that the records do not show, and theparties do not claim, that the officers of any of said municipalities have beenappointed or elected and assumed office. At any rate, the Solicitor General, whohas appeared on behalf of respondent Auditor General, is the officer authorizedby law "to act and represent the Government of the Philippines, its off ices andagents, in any official investigation, proceeding or matter requiring the services ofa lawyer" (Section 1661, Revised Administrative Code), and, in connection with

the creation of the aforementioned municipalities, which involves a political, notproprietary, function, said local officials, if any, are mere agents orrepresentatives of the national government. Their interest in the case at bar has,accordingly, been, in effect, duly represented.8

With respect to the second point, respondent alleges that he has not as yet actedon any of the executive order & in question and has not intimated how he wouldact in connection therewith. It is, however, a matter of common, publicknowledge, subject to judicial cognizance, that the President has, for many

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, J

Zaldivar, J., took no part.

Separate Opinions

BENGZON, J.P., J., concurring and dissenting:

A sign of progress in a developing nation is the rise of new municipaFostering their rapid growth has long been the aim pursued by all thr

of our Government.

So it was that the Governor-General during the time of the Jones Lawauthority by the Legislature (Act No. 1748) to act upon certain detailsrespect to said local governments, such as fixing of boundaries, subdmergers. And the Supreme Court, within the framework of the Jonesin 1917 that the execution or implementation of such details, did not eabdication of legislative power (Government vs. Municipality of Binañ

Phil. 518; Municipality of Cardona vs. Municipality of Binañgonan, 36 Phil. 547).Subsequently, Act No. 1748's aforesaid statutory authorization was embodied inSection 68 of the Revised Administrative Code. And Chief Executives since thenup to the present continued to avail of said provision, time and again invoking itto issue executive orders providing for the creation of municipalities.

From September 4, 1964 to October 29, 1964 the President of the Philippinesissued executive orders to create thirty-three municipalities pursuant to Section68 of the Revised Administrative Code. Public funds thereby stood to bedisbursed in implementation of said executive orders.

Suing as private citizen and taxpayer, Vice President Emmanuel Pelaez filed inthis Court a petition for prohibition with preliminary injunction against the Auditor

General It seeks to restrain the respondent or any person acting in his behalf

subdivision to such place therein as the public welfare may reProvided, That the authorization of the [Philippine Legislatureof the Philippines shall first be obtained whenever the boundaprovince or subprovince is to be defined or any province is to into one or more subprovinces. When action by the [GovernoPresident of the Philippines in accordance herewith makes nechange of the territory under the jurisdiction of any administraany judicial officer, the [Governor-General] President of the Pwith the recommendation and advice of the head of the Depahaving executive control of such officer, shall redistrict the terseveral officers to the new districts so formed.

Upon the changing of the limits of political divisions in pursua

foregoing authority an equitable distribution of the funds and

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General. It seeks to restrain the respondent or any person acting in his behalf,from passing in audit any expenditure of public funds in implementation of theexecutive orders aforementioned.

Petitioner contends that the President has no power to create a municipality byexecutive order. It is argued that Section 68 of the Revised Administrative Codeof 1917, so far as it purports to grant any such power, is invalid or, at the least,already repealed, in light of the Philippine Constitution and Republic Act 2370(The Barrio Charter).

Section 68 is again reproduced hereunder for convenience:

SEC. 68. General authority of [Governor-General) President of the

Philippines to fix boundaries and make new subdivisions.—

The[Governor-General] President of the Philippines may by executive orderdefine the boundary, or boundaries, of any province, subprovince,municipality, [township] municipal district, or other political subdivision,and increase or diminish the territory comprised therein, may divide anyprovince into one or more subprovinces, separate any political divisionother than a province, into such portions as may be required, merge anyof such subdivisions or portions with another, name any new subdivisionso created, and may change the seat of government within any

foregoing authority, an equitable distribution of the funds and of the divisions thereby affected shall be made in such mannerecommended by the [Insular Auditor] Auditor General and apthe [Governor-General] President of the Philippines.

From such working I believe that power to create a municipality is inc"separate any political division other than a province, into such portiobe required, merge any such subdivisions or portions with another, nnew subdivision so created." The issue, however, is whether the legivalidly delegate to the Executive such power.

The power to create a municipality is legislative in character. Americauthorities have therefore favored the view that it cannot be delegate

is delegable is not the power to create municipalities but only the powdetermine the existence of facts under which creation of a municipal(37 Am. Jur. 628).

The test is said to lie in whether the statute allows any discretion on tas to whether the municipal corporation should be created. If so, theattempted delegation of legislative power and the statute is invalid (IbSection 68 no doubt gives the President such discretion, since it say

President "may by executive order" exercise the powers therein granted.Furthermore, Section 5 of the same Code states:

SEC. 5. Exercise of administrative discretion— The exercise of thepermissive powers of all executive or administrative officers and bodies isbased upon discretion, and when such officer or body is given authority todo any act but not required to do such act, the doing of the same shall bedependent on a sound discretion to be exercised for the good of theservice and benefit of the public, whether so expressed in the statutegiving the authority or not.

Under the prevailing rule in the United States — and Section 68 is of Americanorigin— the provision in question would be an invalid attempt to delegate purely

legislative powers contrary to the principle of separation of powers

local governments as may be provided by law, and take care that thefaithfully executed.

In short, the power of control over local governments had now been from the Chief Executive. Again, to fully understand the significance provision, one must trace its development and growth.

As early as April 7, 1900 President McKinley of the United States, in Instructions to the Second Philippine Commission, laid down the polimunicipal governments should be "subject to the least degree of supcontrol" on the part of the national government. Said supervision andto be confined within the "narrowest limits" or so much only as "may necessary to secure and enforce faithful and efficient administration

officers " And the national government "shall have no direct administ

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legislative powers, contrary to the principle of separation of powers.

It is very pertinent that Section 68 should be considered with the stream ofhistory in mind. A proper knowledge of the past is the only adequate backgroundfor the present. Section 68 was adopted half a century ago. Political change, twoworld wars, the recognition of our independence and rightful place in the family ofnations, have since taken place. In 1917 the Philippines had for its Organic Actthe Jones Law. And under the setup ordained therein no strict separation ofpowers was adhered to. Consequently, Section 68 was not constitutionallyobjectionable at the time of its enactment.

The advent of the Philippine Constitution in 1935 however altered the situation.For not only was separation of powers strictly ordained, except only in specific

instances therein provided, but the power of the Chief Executive over localgovernments suffered an explicit reduction.

Formerly, Section 21 of the Jones Law provided that the Governor-General "shallhave general supervision and control of all the departments and bureaus of thegovernment in the Philippine Islands." Now Section 10 (1), Article VII of thePhilippine Constitution provides: "The President shall have control of all theexecutive departments, bureaus, or offices, exercise general supervision over all

officers. And the national government shall have no direct administof matters of purely general concern." (See Hebron v. Reyes, L-91581958.)

All this had one aim, to enable the Filipinos to acquire experience in self-government, with the end in view of later allowing them to assummanagement and control of the administration of their local affairs. Sthe policy now embodied in Section 10 (1), Article VII of the Constitu(Rodriguez v. Montinola, 50 O.G. 4820).

It is the evident decree of the Constitution, therefore, that the Presidehave no power of control over local governments. Accordingly, Congby law grant him such power (Hebron v. Reyes, supra). And any suc

formerly granted under the Jones Law thereby became unavoidably with the Philippine Constitution.

It remains to examine the relation of the power to create and the powlocal governments. Said relationship has already been passed upon in Hebron v. Reyes, supra. In said case, it was ruled that the power tan incident of the power to create or abolish municipalities. Respondtherefore, that creating municipalities and controlling their local gove"two worlds apart," is untenable. And since as stated, the power to co

governments can no longer be conferred on or exercised by the President, itfollows a fortiori that the power to create them, all the more cannot be soconferred or exercised.

I am compelled to conclude, therefore, that Section 10 (1), Article VII of theConstitution has repealed Section 68 of the Revised Administrative Code as faras the latter empowers the President to create local governments. Repeal by theConstitution of prior statutes inconsistent with it has already been sustained in Delos Santos v. MaIlare, 87 Phil. 289. And it was there held that such repeal differsfrom a declaration of unconstitutionality of a posterior legislation, so much so thatonly a majority vote of the Court is needed to sustain a finding of repeal.

Since the Constitution repealed Section 68 as far back as 1935, it is academic to

ask whether Republic Act 2370 likewise has provisions in conflict with Section 68

It is my view, therefore, that the Constitution, and not Republic Act 23repealed Section 68 of the Revised Administrative Code's provision gPresident authority to create local governments. And for this reason the ruling in the majority opinion that the executive orders in questionvoid.

In thus ruling, the Court is but sustaining the fulfillment of our historicfree and independent under a republican form of government, and exfunction derived from the very sovereignty that it upholds. Executive declared null and void.

BELTRAN VS SECRETARY

Before this Court are petitions assailing prim

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ask whether Republic Act 2370 likewise has provisions in conflict with Section 68so as to repeal it. Suffice it to state, at any rate, that statutory prohibition on thePresident from creating a barrio does not, in my opinion, warrant the inference ofstatutory prohibition for creating a municipality. For although municipalitiesconsist of barrios, there is nothing in the statute that would preclude creation ofnew municipalities out of pre-existing barrios.

It is not contrary to the logic of local autonomy to be able to create larger politicalunits and unable to create smaller ones. For as long ago observed in PresidentMcKinley's Instructions to the Second Philippine Commission, greater autonomyis to be imparted to the smaller of the two political units. The smaller the unit oflocal government, the lesser is the need for the national government'sintervention in its political affairs. Furthermore, for practical reasons, local

autonomy cannot be given from the top downwards. The national government, insuch a case, could still exercise power over the supposedly autonomous unit,e.g., municipalities, by exercising it over the smaller units that comprise them,e.g., the barrios. A realistic program of decentralization therefore calls forautonomy from the bottom upwards, so that it is not surprising for Congress todeny the national government some power over barrios without denying it overmunicipalities. For this reason, I disagree with the majority view that because thePresident could not create a barrio under Republic Act 2370, a fortiori he cannotcreate a municipality.

Before this Court are petitions assailing prim

constitutionality of Section 7 of Republic Act No. 7719,

known as the “National Blood Services Act of 1994,

validity of Administrative Order (A.O.) No. 9, series of 1

Rules and Regulations Implementing Republic Act No. 7

G.R. No. 133640,[1] entitled “Rodolfo S. Beltr

business under the name and style, Our Lady of Fat

Bank, et al., vs. The Secretary of Health” and 133661,[2] entitled “Doctors Blood Bank Center vs. Dep

Health” are petitions for certiorari and mandamus, re

seeking the annulment of the following: (1) Sec

Republic Act No. 7719; and, (2) Administrative Order (A

series of 1995. Both petitions likewise pray for the iss

writ of prohibitory injunction enjoining the Secretary of Health

from implementing and enforcing the aforementioned law and its

Implementing Rules and Regulations; and, for a mandatory

injunction ordering and commanding the Secretary of Health to

grant, issue or renew petitioners’ license to operate free standing

blood banks (FSBB).

The above cases were consolidated in a resolution of the

Court En Banc dated June 2 1998[3]

stock and non-profit association composed of free stand

banks.

Public respondent Secretary of Health is being s

capacity as the public official directly involved and cha

the enforcement and implementation of the law in quest

The facts of the case are as follows:

R bli A t N 7719 th N ti l Bl d S

http://sc.judiciary.gov.ph/jurisprudence/2005/nov2005/133640.htm#_ftn2












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Court En Banc dated June 2, 1998.

G.R. No. 139147,[4] entitled “Rodolfo S. Beltran, doing

business under the name and style, Our Lady of Fatima Blood

Bank, et al., vs. The Secretary of Health,” on the other hand, is a

petition to show cause why respondent Secretary of Health should

not be held in contempt of court.

This case was originally assigned to the Third Division of

this Court and later consolidated with G.R. Nos. 133640 and133661 in a resolution datedAugust 4, 1999.[5]

Petitioners comprise the majority of the Board of Directors of

the Philippine Association of Blood Banks, a duly registered non-

Republic Act No. 7719 or the National Blood Serv

1994 was enacted into law on April 2, 1994. The Ac

provide

an adequate supply of safe blood by promoting volun

donation and by regulating blood banks in the count

approved by then President Fidel V. Ramos on May 15

was subsequently published in the Official Gazette on A

1994. The law took effect on August 23, 1994.

On April 28, 1995, Administrative Order No. 9

1995, constituting the Implementing Rules and Regulati

law was promulgated by respondent Secretary of the D

of Health (DOH).[6]

Section 7 of R.A. 7719 [7] provides:

“Section 7. Phase-out of Commercial BloodBanks - All commercial blood banks shall be phased-outover a period of two (2) years after the effectivity of thisAct, extendable to a maximum period of two (2) years bythe Secretary.”

Section 23 of Administrative Order No 9 provides:

run blood services, private hospital blood banks, and c

blood services.

Years prior to the passage of the National Blood Se

of 1994, petitioners have already been operating comme

banks under Republic Act No. 1517, entitled “An Act R

the Collection, Processing and Sale of Human Blood

Establishment and Operation of Blood Banks a

Processing Laboratories.” The law, which was enacted1956 ll d th t bli h t d ti b


















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Section 23 of Administrative Order No. 9 provides:

“Section 23. Process of Phasing Out. -- TheDepartment shall effect the phasing-out of allcommercial blood banks over a period of two (2) years,extendible for a maximum period of two (2) years afterthe effectivity of R.A. 7719. The decision to extend shallbe based on the result of a careful study and review ofthe blood supply and demand and public safety.”[8]

Blood banking and blood transfusion services in the

country have been arranged in four (4) categories: blood centers

run by the Philippine National Red Cross (PNRC), government-

Processing Laboratories. The law, which was enacted 1956, allowed the establishment and operation by

physicians of blood banks and blood processing labora

Bureau of Research and Laboratories (BRL) was creat

and was given the power to regulate clinical laboratori

under Republic Act No. 4688. In 1971, the Licensure Se

created within the BRL. It was given the duty to e

licensure requirements for blood banks as well a

laboratories. Due to this development, Administrative

156, Series of 1971, was issued. The new rules and rtriggered a stricter enforcement of the Blood Banking L

was characterized by frequent spot checks, immediate s

and communication of such suspensions to hospital

systematic record-keeping and frequent communica

blood banks through monthly information

Unfortunately, by the 1980’s, financial difficulties constrained the

BRL to reduce the frequency of its supervisory visits to the blood

banks.[9]

Meanwhile, in the international scene, concern for the safety

of blood and blood products intensified when the dreaded disease

Acute Immune Deficiency Syndrome (AIDS) was first described in

1979. In 1980, the International Society of Blood Transfusion (ISBT)

formulated the Code of Ethics for Blood Donation and

Transfusion In 1982 the first case of transfusion associated AIDS

guidelines likewise required Hepatitis B and HIV testin

the blood bank be headed by a pathologist or a hematolo

In 1992, the DOH issued Administrative Order

institutionalizing the National Blood Services Program

The BRL was designated as the central office primarily r

for the NBSP. The program paved the way for the cre

committee that will implement the policies of the progra

formation of the Regional Blood Councils.








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Transfusion. In 1982, the first case of transfusion-associated AIDS

was described in an infant. Hence, the ISBT drafted in 1984, a

model for a national blood policy outlining certain principles that

should be taken into consideration. By 1985, the ISBT had

disseminated guidelines requiring AIDS testing of blood and

blood products for transfusion.[10]

In 1989, another revision of the Blood Banking Guidelines

was made. The DOH issued Administrative Order No. 57, Seriesof 1989, which classified banks into primary, secondary and

tertiary depending on the services they provided. The standards

were adjusted according to this classification. For instance, floor

area requirements varied according to classification level. The new

In August 1992, Senate Bill No. 1011, entitled

Promoting Voluntary Blood Donation, Providing for an

Supply of Safe Blood, Regulating Blood Banks and

Penalties for Violations Thereof, and for other Purp

introduced in the Senate.[12]

Meanwhile, in the House of Representatives, Hous

384, 546, 780 and 1978 were being deliberated to addresof safety of the Philippine blood bank system. Subsequ

Senate and House Bills were referred to the a

committees and subsequently consolidated.[13]

In January of 1994, the New Tropical Medicine Foundation,

with the assistance of the U.S. Agency for International

Development (USAID) released its final report of a study on the

Philippine blood banking system entitled “Project to Evaluate the

Safety of the Philippine Blood Banking System.” It was revealed that of

the blood units collected in 1992, 64.4 % were supplied by

commercial blood banks, 14.5% by the PNRC, 13.7% by

government hospital-based blood banks, and 7.4% by private

hospital-based blood banks. During the time the study was made,

there were only twenty four (24) registered or licensed free

It was further found, among other things, that blo

persons to blood commercial banks are three times mor

have any of the four (4) tested infections or blood t

transmissible diseases, namely, malaria, syphilis, Hepa

Acquired Immune Deficiency Syndrome (AIDS) th

donated to PNRC.[15]

Commercial blood banks give paid donors var

around P50 to P150, and because of this arrangement

these donors are poor and often they are students who

















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there were only twenty-four (24) registered or licensed free-

standing or commercial blood banks in the country. Hence, with

these numbers in mind, the study deduced that each commercial

blood bank produces five times more blood than the Red Cross

and fifteen times more than the government-run blood banks. The

study, therefore, showed that the Philippinesheavily relied on

commercial sources of blood. The study likewise revealed that

99.6% of the donors of commercial blood banks and 77.0% of the

donors of private-hospital based blood banks are paid donors.Paid donors are those who receive remuneration for donating

their blood. Blood donors of the PNRC and government-run

hospitals, on the other hand, are mostly voluntary.[14]

these donors are poor, and often they are students, who

immediately. Since they need the money, these dono

usually honest about their medical or social history. Th

from healthy, voluntary donors who give their true m

social history are about three times much safer than b

paid donors.[16]

What the study also found alarming is that man

doctors are not yet fully trained on the specific indicblood component transfusion. They are not aware of t

blood supply and do not feel the need to adjust their pra

use of blood and blood products. It also does not matt

where the blood comes from.[17]

On August 23, 1994, the National Blood Services Act

providing for the phase out of commercial blood banks took effect.

On April 28, 1995, Administrative Order No. 9, Series of 1995,

constituting the Implementing Rules and Regulations of said law

was promulgated by DOH.

The phase-out period was extended for two years by the

DOH pursuant to Section 7 of Republic Act No. 7719 and Section

23 of its Implementing Rules and Regulations. Pursuant to said

Act all commercial blood banks should have been phased out

On June 1, 1998, petitioners filed an Amended P

Certiorari with Prayer for Issuance of a Temporary R

Order, writ of preliminary mandatory injunction and/o

ante order.[18]

In the aforementioned petition, petitioners

constitutionality of the questioned legal provisions

Section 7 of Republic Act No. 7719 and Sectio

Administrative Order No 9 Series of 1995 on the

















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Act, all commercial blood banks should have been phased out

by May 28, 1998. Hence, petitioners were granted by the Secretary

of Health their licenses to open and operate a blood bank only

until May 27, 1998.

On May 20, 1998, prior to the expiration of the licenses

granted to petitioners, they filed a petition for certiorari with

application for the issuance of a writ of preliminary injunction or

temporary restraining order under Rule 65 of the Rules of Courtassailing the constitutionality and validity of the aforementioned

Act and its Implementing Rules and Regulations. The case was

entitled “Rodolfo S. Beltran, doing business under the name and

style, Our Lady of Fatima Blood Bank,” docketed as G. R. No.

133640.

Administrative Order No. 9, Series of 1995, on the

grounds: [19]

1. The questioned legal provisions of the National Services Act and its Implementing Rules violatequal protection clause for irratiodiscriminating against free standing blood bin a manner which is not germane to the purof the law;

2. The questioned provisions of the National Services Act and its Implementing Rules reprundue delegation if not outright abdication opolice power of the state; and,

3. The questioned provisions of the National BloodServices Act and its Implementing Rules areunwarranted deprivation of personal liberty.

On May 22, 1998, the Doctors Blood Center filed a similar

petition for mandamus with a prayer for the issuance of a

temporary restraining order, preliminary prohibitory and

mandatory injunction before this Court entitled

“Doctors Blood Center vs. Department of Health,” docketed as

2. Does it not amount to deprivatioproperty without due process?

3. Does it not unlawfully impair obligation of contracts?

4. With the commercial blood banks being aboland with no ready machinery to deliver the ssupply and services, does R.A. 7719 truly servpublic welfare?

O J 2 1998 thi C t i d R l ti





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Doctors Blood Center vs. Department of Health, docketed as

G.R. No. 133661. [20] This was consolidated with G.R. No.

133640.[21]

Similarly, the petition attacked the constitutionality of

Republic Act No. 7719 and its implementing rules and regulations,

thus, praying for the issuance of a license to operate commercial

blood banks beyond May 27, 1998. Specifically, with regard to

Republic Act No. 7719, the petition submitted the followingquestions[22] for resolution:

1. Was it passed in the exercise of policepower, and was it a valid exercise of such power?

On June 2, 1998, this Court issued a Resolution

respondent DOH to file a consolidated comment. In

Resolution, the Court issued a temporary restraining or

for respondent to cease and desist from impleme

enforcing Section 7 of Republic Act No. 7719 and its imp

rules and regulations until further orders from the Cour

On August 26, 1998, respondent Secretary of Hea

Consolidated Comment on the petitions for certimandamus in G.R. Nos. 133640 and 133661, with opposi

issuance of a temporary restraining order.[24]

In the Consolidated Comment, respondent Secretary of

Health submitted that blood from commercial blood banks is

unsafe and therefore the State, in the exercise of its police power,

can close down commercial blood banks to protect the public. He

cited the record of deliberations on Senate Bill No. 1101 which

later became Republic Act No. 7719, and the sponsorship speech of

Senator Orlando Mercado.

The rationale for the closure of these commercial blood

banks can be found in the deliberations of Senate Bill No. 1011,

BLOOD. THE SERVICE FEE SHALL BE MUNIFORM THROUGH GUIDELINES TO BE SETTHE DEPARTMENTOF HEALTH.”

I am supporting Mr. President, the findingstudy called “Project to Evaluate the Safety ofPhilippine Blood Banking System.” This has been tnote of. This is a study done with the assistance oUSAID by doctors under the New Tropical MedFoundation in Alabang.

Part of the long-term measures proposed by
















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,

excerpts of which are quoted below:

Senator Mercado: I am providing over a periodof two years to phase out all commercial blood banks. Sothat in the end, the new section would have a provisionthat states:

“ALL COMMERCIAL BLOOD BANKS SHALL BEPHASED OUT OVER A PERIOD OF TWO YEARSAFTER THE EFFECTIVITY OF THIS ACT. BLOODSHALL BE COLLECTED FROM VOLUNTARYDONORS ONLY AND THE SERVICE FEE TO BECHARGED FOR EVERY BLOOD PRODUCT ISSUEDSHALL BE LIMITED TO THE NECESSARY EXPENSESENTAILED IN COLLECTING AND PROCESSING OF

g p p yparticular study is to improve laws, outlaw buyingselling of blood and legally define good manufactuprocesses for blood. This goes to the very heart oamendment which seeks to put into law the printhat blood should not be subject of commerce of man

…

The Presiding Officer Senator Aquino : Wdoes the sponsor say?

Senator Webb: Mr. President, just for clarwould like to find out how the Gentleman defincommercial blood bank. I am at a loss at times wcommercial blood bank really is.

Senator Mercado: We have a definition, I believe,in the measure, Mr. President.

The Presiding Officer [Senator Aquino]: It is abusiness where profit is considered.

Senator Mercado: If the Chairman of theCommittee would accept it, we can put a provision onSection 3, a definition of a commercial blood bank,which, as defined in this law, exists for profit and

engages in the buying and selling of blood or itscomponents.

to provide an adequate supply of blood for the neethe nation...the use of blood for transfusion is a meservice and not a sale of commodity.”

Taking into consideration the experience oNational Kidney Institute, which has succeedemaking the hospital 100 percent dependent on volunblood donation, here is a success story of a hospitaldoes not buy blood. All those who are operated onneed blood have to convince their relatives or have t

volunteers who would donate blood…

8/21/2019 art. vi- SEC 1


p

Senator Webb: That is a good description, Mr.President.

…

Senator Mercado: I refer, Mr. President, to aletter written by Dr. Jaime Galvez-Tan, the Chief of Staff,Undersecretary of Health, to the good Chairperson of theCommittee on Health.

In recommendation No. 4, he says:

“The need to phase out all commercial blood bankswithin a two-year period will give the Department ofHealth enough time to build up government’s capability

If we give the responsibility of the testing of bto those commercial blood banks, they will cut corbecause it will protect their profit.

In the first place, the people who sell their bare the people who are normally in the highcategory. So we should stop the system of sellingbuying blood so that we can go into a national volublood program.

It has been said here in this report, and I quote

“Why is buying and selling of blood not safe?is not safe because a donor who expects payment foblood will not tell the truth about his illnesses and

deny any risky social behavior such as sexualpromiscuity which increases the risk of having syphilisor AIDS or abuse of intravenous addictive drugs.Laboratory tests are of limited value and will not detectearly infections. Laboratory tests are required only forfour diseases in the Philippines. There are other bloodtransmissible diseases we do not yet screen for and therecould be others where there are no tests available yet.

A blood bank owner expecting to gain profit from

selling blood will also try his best to limit his expenses.Usually he tries to increase his profit by buying cheaper

…

Senator Mercado: Today, across the couhundreds of poverty-stricken, sickly and weak Filipwho, unemployed, without hope and without monbuy the next meal, will walk into a commercial bbank, extend their arms and plead that their bloobought. They will lie about their age, their mehistory. They will lie about when they last sold

blood. For doing this, they will receive close hundred pesos This may tide them over for the nex

8/21/2019 art. vi- SEC 1


y p y y g preagents or test kits, hiring cheaper manpower orskipping some tests altogether. He may also try to sellblood even though these have infections in them.Because there is no existing system of countercheckingthese, the blood bank owner can usually get away withmany unethical practices.

The experience of Germany, Mr. President isillustrative of this issue. The reason why contaminated

blood was sold was that there were corners cut bycommercial blood banks in the testing process. Theywere protecting their profits.[25]

The sponsorship speech of Senator Mercado further

elucidated his stand on the issue:

hundred pesos. This may tide them over for the nexdays. Of course, until the next bloodletting.

This same blood will travel to the poshhospitals and urbane medical centers. This same bwill now be bought by the rich at a price over 500the value for which it was sold. Between this buyingselling, obviously, someone has made a very fast buc

Every doctor has handled at least one transfurelated disease in an otherwise normal patient. Patcome in for minor surgery of the hand or whateverthey leave with hepatitis B. A patient comes in foappendectomy and he leaves with malaria. The wnightmare: A patient comes in for a Caesarian seand leaves with AIDS.

We do not expect good blood from donors who

sell their blood because of poverty. The humanedimension of blood transfusion is not in the act ofreceiving blood, but in the act of giving it…

For years, our people have been at the mercy ofcommercial blood banks that lobby their interests amongmedical technologists, hospital administrators andsometimes even physicians so that a proactive system for

collection of blood from healthy donors becomesdifficult, tedious and unrewarding.

cannot and will never work because their intereblood donation is merely monetary. We cannot excommercial blood banks to take the lead in volunblood donation. Only the Government can do it, anGovernment must do it.”[26]

On May 5, 1999, petitioners filed a Motion for Is

Expanded Temporary Restraining Order for the Cour

respondent Secretary of Health to cease and de

announcing the closure of commercial blood banks, cthe public to source the needed blood from voluntary do








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The Department of Health has neverinstitutionalized a comprehensive national program forsafe blood and for voluntary blood donation even if thisis a serious public health concern and has fallen for thelinen of commercial blood bankers, hook, line and sinkerbecause it is more convenient to tell the patient to buyblood.

Commercial blood banks hold us hostage to theirthreat that if we are to close them down, there will be noblood supply. This is true if the Government does notstep in to ensure that safe supply of blood. We cannotallow commercial interest groups to dictate policy onwhat is and what should be a humanitarian effort. This

p y

and committing similar acts “that will ultimately

shutdown of petitioners’ blood banks.”[27]

On July 8, 1999, respondent Secretary filed his

and/or Opposition to the above motion stating that h

ordered the closure of commercial blood banks on acco

Temporary Restraining Order (TRO) issued on June 2, 1

Court. In compliance with the TRO, DOH had likewisedistribute the health advisory leaflets, posters and fly

public which state that “blood banks are closed or will b

According to respondent Secretary, the same were pr

circulated in anticipation of the closure of the commer

banks in accordance with R.A. No. 7719, and were printed and

circulated prior to the issuance of the TRO.[28]

On July 15, 1999, petitioners in G.R. No. 133640 filed a

Petition to Show Cause Why Public Respondent Should Not be

Held in Contempt of Court, docketed as G.R. No. 139147, citing

public respondent’s willful disobedience of or resistance to the

restraining order issued by the Court in the said case. Petitioners

alleged that respondent’s act constitutes circumvention of the

temporary restraining order and a mockery of the authority of the

the lives of the people.” These were all posted in bulle

and other conspicuous places in all government hospit

as other medical and health centers.[31]

In respondent Secretary’s Comment to the Petitio

Cause Why Public Respondent Should Not Be Held in

of Court, dated January 3, 2000, it was explained that no

issued by the department ordering the closure of co

blood banks. The subject health advisory leaflets per

said closure pursuant to Republic Act No. 7719 were p













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Court and the orderly administration of justice.[29] Petitioners

added that despite the issuance of the temporary restraining order

in G.R. No. 133640, respondent, in his effort to strike down the

existence of commercial blood banks, disseminated misleading

information under the guise of health advisories, press releases,

leaflets, brochures and flyers stating, among others, that “this year

[1998] all commercial blood banks will be closed by 27 May. Those

who need blood will have to rely on government bloodbanks.”[30] Petitioners further claimed that respondent Secretary of

Health announced in a press conference during the Blood Donor’s

Week that commercial blood banks are “illegal and dangerous”

and that they “are at the moment protected by a restraining order

on the basis that their commercial interest is more important than

circulated prior to the Court’s issuance of a temporary r

order on June 21, 1998.[32]

Public respondent further claimed that the primar

of the information campaign was “to promote the impo

safety of voluntary blood donation and to educate

about the hazards of patronizing blood supplies from c

blood banks.”[33]

In doing so, he was merely perforegular functions and duties as the Secretary of Health

the health and welfare of the public. Moreover, the D

main proponent of the voluntary blood donation

espoused by Republic Act No. 7719, particularly Section

which provides that, in order to ensure the adequate

human blood, voluntary blood donation shall be promoted

through public education, promotion in schools, professional

education, establishment of blood services network, and walking

blood donors.

Hence, by authority of the law, respondent Secretary

contends that he has the duty to promote the program of

voluntary blood donation. Certainly, his act of encouraging the

public to donate blood voluntarily and educating the people on

the risks associated with blood coming from a paid donor

promotes general health and welfare and which should be given

The intervenors contended that Republic Act

constitutes undue delegation of legislative pow

unwarranted deprivation of personal liberty.[36]

In a resolution, dated September 7, 1999, and with

due course to the aforementioned petition, the Court g

Motion for Intervention that was filed by the above in

on August 9, 1999.

In his Comment to the petition-in-intervention, re




















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more importance than the commercial businesses of petitioners.[34]

On July 29, 1999, interposing personal and substantial

interest in the case as taxpayers and citizens, a Petition-in-

Intervention was filed interjecting the same arguments and issues

as laid down by petitioners in G.R. No. 133640 and 133661,

namely, the unconstitutionality of the Acts, and, the issuance of a

writ of prohibitory injunction. The intervenors are the immediate

relatives of individuals who had died allegedly because of

shortage of blood supply at a critical time.[35]

Secretary of Health stated that the sale of blood is contr

spirit and letter of the Act that “blood donation is a hum

act” and “blood transfusion is a professional medical s

not a sale of commodity (Section 2[a] and [b] of Republ

7719). The act of selling blood or charging fees other t

allowed by law is even penalized under Section 12.”[37]

Thus, in view of these, the Court is now tasked to

the constitutionality of Section 7 of Republic Act No. 7

National Blood Services Act of 1994 and its Implemen

and Regulations.

In resolving the controversy, this Court deems it necessaryto address the issues and/or questions raised by petitioners

concerning the constitutionality of the aforesaid Act in G.R. No.

133640 and 133661 as summarized hereunder:

I WHETHER OR NOT SECTION 7 OF R.A. 7719

CONSTITUTES UNDUE DELEGATION OFLEGISLATIVE POWER;

II WHETHER OR NOT SECTION 7 OF R A 7719












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WHETHER OR NOT SECTION 7 OF R.A. 7719AND ITS IMPLEMENTING RULES ANDREGULATIONS VIOLATE THE EQUAL PROTECTIONCLAUSE;

III WHETHER OR NOT SECTION 7 OF R.A. 7719

AND ITS IMPLEMENTING RULES ANDREGULATIONS VIOLATE THE NON-IMPAIRMENT

CLAUSE;

IV WHETHER OR NOT SECTION 7 OF R.A. 7719

AND ITS IMPLEMENTING RULES ANDREGULATIONS CONSTITUTE DEPRIVATION OFPERSONAL LIBERTYAND PROPERTY;

V

WHETHER OR NOT R.A. 7719 IS A VALIDEXERCISE OF POLICE POWER; and,

VI WHETHER OR NOT SECTION 7 OF R.A. 7719

AND ITS IMPLEMENTING RULES AND

by the Secretary of Health for the phasing out of commebanks pursuant to Section 7 of the Act constrained the S

legislate, thus constituting undue delegation of legislativ

In testing whether a statute constitutes an undue

of legislative power or not, it is usual to inquire wh

statute was complete in all its terms and provisions whe

hands of the Legislature so that nothing was left to the

of the administrative body or any other appointee or d

the Legislature.[38] Except as to matters of detail that ma

b fill d i b l d l ti t b d t d





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AND ITS IMPLEMENTING RULES ANDREGULATIONS TRULY SERVE PUBLIC WELFARE.

As to the first ground upon which the constitutionality of the

Act is being challenged, it is the contention of petitioners that the

phase out of commercial or free standing blood banks is

unconstitutional because it is an improper and unwarranted

delegation of legislative power. According to petitioners, the Actwas incomplete when it was passed by the Legislature, and the

latter failed to fix a standard to which the Secretary of Health must

conform in the performance of his functions. Petitioners also

contend that the two-year extension period that may be granted

be filled in by rules and regulations to be adopted or pr

by executive officers and administrative boards, an

Legislature, as a general rule, is incomplete and hence i

does not lay down any rule or definite standard by

administrative board may be guided in the exerci

discretionary powers delegated to it.[39]

Republic Act No. 7719 or the National Blood Serv

1994 is complete in itself. It is clear from the provisions

that the Legislature intended primarily to safeguard the

the people and has mandated several measures to

objective. One of these is the phase out of commercial bl

in the country. The law has sufficiently provided

standard for the guidance of the Secretary of Health in carryingout its provisions, that is, the promotion of public health by

providing a safe and adequate supply of blood through voluntary

blood donation. By its provisions, it has conferred the power and

authority to the Secretary of Health as to its execution, to be

exercised under and in pursuance of the law.

Congress may validly delegate to administrative agencies

the authority to promulgate rules and regulations to implement a

given legislation and effectuate its policies.[40] The Secretary of

H lth h b i d R bli A t N 7719 b d

7719. Administrative Order. No. 9 effectively filled in ththe law for its proper implementation.

Specifically, Section 23 of Administrative Ord

provides that the phase-out period for commercial blo

shall be extended for another two years until May 28, 19

on the result of a careful study and review of the blood s

demand and public safety.” This power to ascertain th

of facts and conditions upon which the Secretary ma

period of extension for said phase-out can be del

C Th t di ti ti b t th t









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Health has been given, under Republic Act No. 7719, broad

powers to execute the provisions of said Act. Section 11 of the Act

states:

“SEC. 11. Rules and Regulations. – Theimplementation of the provisions of the Act shall be inaccordance with the rules and regulations to bepromulgated by the Secretary, within sixty (60) days

from the approval hereof…”

This is what respondent Secretary exactly did when DOH,

by virtue of the administrative body’s authority and expertise in

the matter, came out with Administrative Order No.9, series of

1995 or the Rules and Regulations Implementing Republic Act No.

Congress. The true distinction between the power to m

and discretion as to its execution is illustrated by the fa

delegation of power to make the law, which necessarily

discretion as to what it shall be, and conferring an au

discretion as to its execution, to be exercised und

pursuance of the law. The first cannot be done; to th

valid objection can be made.[41]

In this regard, the Secretary did not go beyond t

granted to him by the Act when said phase-out p

extended in accordance with the Act as laid out in

thereof:

“SECTION 2. Declaration of Policy – In order topromote public health, it is hereby declared the policy ofthe state:

a) to promote and encourage voluntary blooddonation by the citizenry and to instill publicconsciousness of the principle that blooddonation is a humanitarian act;

b) to lay down the legal principle that theprovision of blood for transfusion is a medicalservice and not a sale of commodity;

c) to provide for adequate safe affordable and

f) to mobilize all sectors of the communiparticipate in mechanisms for voluntarynon-profit collection of blood;

g) to mandate the Department of Healtestablish and organize a National BTransfusion Service Network in orderationalize and improve the provisionadequate and safe supply of blood;

h) to provide for adequate assistanceinstitutions promoting voluntary bdonation and providing non-profit b





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c) to provide for adequate, safe, affordable andequitable distribution of blood supply andblood products;

d) to inform the public of the need for voluntaryblood donation to curb the hazards caused bythe commercial sale of blood;

e) to teach the benefits and rationale of

voluntary blood donation in the existing healthsubjects of the formal education system in allpublic and private schools as well as the non-formal system;

donation and providing non-profit bservices, either through a systemreimbursement for costs from patients whoafford to pay, or donations from governmand non-governmental entities;

i) to require all blood collection units and bbanks/centers to operate on a non-profit ba

j) to establish scientific and professstandards for the operation of blood colleunits and blood banks/centers the Philippines;

k) to regulate and ensure the safety of allactivities related to the collection, storage andbanking of blood; and,

l) to require upgrading of blood banks/centersto include preventive services and education tocontrol spread of blood transfusiontransmissible diseases.”

Petitioners also assert that the law and its implementing

rules and regulations violate the equal protection clause enshrinedin the Constitution because it unduly discriminates against

law; (c) must not be limited to existing conditions onlmust apply equally to each member of the class.[43]

Republic Act No. 7719 or The National Blood Serv

1994, was enacted for the promotion of public health an

In the aforementioned study conducted by the New

Medicine Foundation, it was revealed that the Philipp

banking system is disturbingly primitive and unsafe, an

current condition, the spread of infectious disease

malaria, AIDS, Hepatitis B and syphilis chiefly fr

transfusion is unavoidable The situation becom





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y g

commercial or free standing blood banks in a manner that is not

germane to the purpose of the law.[42]

What may be regarded as a denial of the equal protection of

the laws is a question not always easily determined. No rule that

will cover every case can be formulated. Class legislation,

discriminating against some and favoring others is prohibited but

classification on a reasonable basis and not made arbitrarily orcapriciously is permitted. The classification, however, to be

reasonable: (a) must be based on substantial distinctions which

make real differences; (b) must be germane to the purpose of the

transfusion is unavoidable. The situation becom

distressing as the study showed that almost 70% of

supply in the country is sourced from paid blood donor

three times riskier than voluntary blood donors becaus

unlikely to disclose their medical or social history d

blood screening.[44]

The above study led to the passage of Republic Ac

to instill public consciousness of the importance and b

voluntary blood donation, safe blood supply and pro

collection from healthy donors. To do this, the Legislatu

to order the phase out of commercial blood banks to im

Philippine blood banking system, to regulate the su

proper collection of safe blood, and so as not to derail theimplementation of the voluntary blood donation program of the

government. In lieu of commercial blood banks, non-profit blood

banks or blood centers, in strict adherence to professional and

scientific standards to be established by the DOH, shall be set in

place.[45]

Based on the foregoing, the Legislature never intended for

the law to create a situation in which unjustifiable discrimination

and inequality shall be allowed. To effectuate its policy, a

classification was made between nonprofit blood banks/centers

is, to provide the nation with an adequate supply of safpromoting voluntary blood donation and treati

transfusion as a humanitarian or medical service rath

commodity. This necessarily involves the phase out of c

blood banks based on the fact that they operate as a

enterprise, and they source their blood supply from p

donors who are considered unsafe compared to volun

donors as shown by the USAID-sponsored study on the

blood banking system.

Three the Legislature intended for the general app













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classification was made between nonprofit blood banks/centers

and commercial blood banks.

We deem the classification to be valid and reasonable for the

following reasons:

One, it was based on substantial distinctions. The former

operates for purely humanitarian reasons and as a medical service

while the latter is motivated by profit. Also, while the former

wholly encourages voluntary blood donation, the latter treats

blood as a sale of commodity.

Two, the classification, and the consequent phase out of

commercial blood banks is germane to the purpose of the law, that

Three, the Legislature intended for the general app

the law. Its enactment was not solely to address th

circumstances of the situation nor was it intended to app

the existing conditions.

Lastly, the law applies equally to all commercial bl

without exception.

Having said that, this Court comes to the inq

whether or not Republic Act No. 7719 constitutes a vali

of police power.

The promotion of public health is a fundamental

of the State. The health of the people is a primordial gov

concern. Basically, the National Blood Services Act was enacted inthe exercise of the State’s police power in order to promote and

preserve public health and safety.

Police power of the state is validly exercised if (a) the interest

of the public generally, as distinguished from those of a particular

class, requires the interference of the State; and, (b) the means

employed are reasonably necessary to the attainment of the

objective sought to be accomplished and not unduly oppressive

upon individuals.[46]

commercial blood banks but their interests must give wa higher end for the interest of the public.

The Court finds that the National Blood Service

valid exercise of the State’s police power. Ther

Legislature, under the circumstances, adopted a cours

that is both necessary and reasonable for the common g

power is the State authority to enact legislation that ma

with personal liberty or property in order to promote t

welfare.[47]









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In the earlier discussion, the Court has mentioned of the

avowed policy of the law for the protection of public health by

ensuring an adequate supply of safe blood in the country through

voluntary blood donation. Attaining this objective requires the

interference of the State given the disturbing condition of the

Philippine blood banking system.

In serving the interest of the public, and to give meaning to

the purpose of the law, the Legislature deemed it necessary to

phase out commercial blood banks. This action may seriously

affect the owners and operators, as well as the employees, of

It is in this regard that the Court finds the relate

and/or issues raised by petitioners, namely, depr

personal liberty and property, and violation of

impairment clause, to be unmeritorious.

Petitioners are of the opinion that the Act is uncon

and void because it infringes on the freedom of ch

individual in connection to what he wants to do with

which should be outside the domain of State int

Additionally, and in relation to the issue of cla

petitioners asseverate that, indeed, under the Civil

human body and its organs like the heart, the kidney an

are outside the commerce of man but this cannot be made to applyto human blood because the latter can be replenished by the body.

To treat human blood equally as the human organs would

constitute invalid classification. [48]

Petitioners likewise claim that the phase out of the

commercial blood banks will be disadvantageous to them as it will

affect their businesses and existing contracts with hospitals and

other health institutions, hence Section 7 of the Act should be

struck down because it violates the non-impairment clause

provided by the Constitution.

provision must submit to the demands and necessitState’s power of regulation. While the Court unders

grave implications of Section 7 of the law in question, th

of the Government in this case, however, is not nece

maintain profits of business firms. In the ordinary se

events, it is profits that suffer as a result of government r

Furthermore, the freedom to contract is not ab

contracts and all rights are subject to the police power o

and not only may regulations which affect them be esta

the State, but all such regulations must be subject to ch





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p y

As stated above, the State, in order to promote the general

welfare, may interfere with personal liberty, with property, and

with business and occupations. Thus, persons may be subjected to

certain kinds of restraints and burdens in order to secure the

general welfare of the State and to this fundamental aim of

government, the rights of the individual may be subordinated.[49]

Moreover, in the case of Philippine Association of Service

Exporters, Inc. v. Drilon ,[50] settled is the rule that the non-

impairment clause of the Constitution must yield to the loftier

purposes targeted by the government. The right granted by this

, g j

time to time, as the general well-being of the comm

require, or as the circumstances may change, or as exper

demonstrate the necessity.[51] This doctrine was reitera

case of Vda. de Genuino v. Court of Agrarian Relations[52]

Court held that individual rights to contract and to prop

to give way to police power exercised for public welfare

As for determining whether or not the shu

commercial blood banks will truly serve the gene

considering the shortage of blood supply in the c

proffered by petitioners, we maintain that the wisd

Legislature in the lawful exercise of its power to enact la

be inquired into by the Court. Doing so would be in derogation ofthe principle of separation of powers.[53]

That, under the circumstances, proper regulation of all blood

banks without distinction in order to achieve the objective of the

law as contended by petitioners is, of course, possible; but, this

would be arguing on what the law may be or should be and not

what the law is. Between is and ought there is a far cry. The

wisdom and propriety of legislation is not for this Court to pass

upon.[54]

In sum, the Court has been unable to find any con

infirmity in the questioned provisions of the Natio

Services Act of 1994 and its Implementing Rules and Reg

The fundamental criterion is that all reasonab

should be resolved in favor of the constitutionality of

Every law has in its favor the presumption of constitutio

a law to be nullified, it must be shown that there is a

unequivocal breach of the Constitution. The ground

must be clear and beyond reasonable doubt.[56] Those w




























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Finally, with regard to the petition for contempt in G.R. No.

139147, on the other hand, the Court finds respondent Secretary of

Health’s explanation satisfactory. The statements in the flyers and

posters were not aimed at influencing or threatening the Court in

deciding in favor of the constitutionality of the law.

Contempt of court presupposes a contumacious attitude, a

flouting or arrogant belligerence in defiance of the court.[55] There

is nothing contemptuous about the statements and information

contained in the health advisory that were distributed by DOH

before the TRO was issued by this Court ordering the former to

cease and desist from distributing the same.

y

this Court to declare a law, or parts thereof, unconstitut

clearly establish the basis therefor. Otherwise, the pet

fail.

Based on the grounds raised by petitioners to cha

constitutionality of the National Blood Services Act of 1

Implementing Rules and Regulations, the Court

petitioners have failed to overcome the presum

constitutionality of the law. As to whether the Act co

wise legislation, considering the issues being raised by p

is for Congress to determine.[57]

WHEREFORE, premises considered, the Court renders judgment as follows:

1. In G.R. Nos. 133640 and 133661, the

Court UPHOLDS THE VALIDITY of Section 7 of

Republic Act No. 7719, otherwise known as the

National Blood Services Act of 1994, and

Administrative Order No. 9, Series of 1995 or the Rules

and Regulations Implementing Republic Act No. 7719.

The petitions are DISMISSED. Consequently, theTemporary Restraining Order issued by this Court

For resolution are: (1) the motion for reconsideration filed by the pubrespondents; and (2) the partial motions for reconsideration filed by pEnrique T. Garcia and the intervenors. 1

In their Motion for Reconsideration, the public respondents contend:

I

Executive Order No. 392 is not a misapplication of Republic A

II

Sections 5(b), 6 and 9(b) of Republic Act No. 8180 do not consection 19, Article XII of the Constitution; and

III












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y g y

on June 2, 1998, is LIFTED.

2. In G.R. No. 139147, the petition seeking to cite

the Secretary of Health in contempt of court

is DENIED for lack of merit.

No costs.

SO ORDERED. TATAD VS SECRETARY

Sections 5(b), 6 and 9(b) of R.A. No. 8180 do not permeate thof the said law; hence their nullity will not vitiate the other part

In their Motion for Reconsideration, the intervenors argue:

2.1.1 The total nullification of Republic Act No. 8180 restores disproportionate advantage of the three big oil f irms— CaltexPetron— over the small oil firms;

2.1.2 The total nullification of Republic Act No. 8180 "disarmsentrants and seriously cripples their capacity to compete and

2.1.3 Ultimately the total nullification of Republic Act. No. 818substantial, albeit imperfect, barriers to monopolistic practicescompetition and trade practices harmful not only to movant-inbut also to the public in general.

In his Partial Motion for Reconsideration,

2 petitioner Garcia prays that only the

provisions of R.A. No. 8180 on the 4% tariff differential, predatory pricing and minimuminventory be declared unconstitutional. He cites the "pernicious effects" of a total declarationof unconstitutionality of R.A. No. 8180. He avers that "it is very problematic . . . if Congresscan fastrack an entirely new law."

We find no merit in the motions for reconsideration and partial motion forreconsideration.

We shall first resolve public respondents' motion for reconsideration. They insistthat there was no misapplication of Republic Act No. 8180 when the Executiveconsidered the depletion of the OPSF in advancing the date of full deregulationof the downstream oil industry. They urge that the consideration of this factor didnot violate the rule that the exercise of delegated power must be done strictly in

accord with the standard provided in the law. They contend that the rule prohibitsthe Executive from subtracting but not from adding to the standard set byCongress. This hair splitting is a sterile attempt to make a distinction when therei diff Th h i d fti f th t d d t id th i f

tariff differential is not a heavy disincentive. Acting as the mouthpiece of the newpublic respondents even lament that "unfortunately, the opportunity to get the afrom the 'horses' mouth' eluded this Honorable Court since none of the new plasupposedly adversely affected by the assailed provisions came forward to voiceposition."

5 They need not continue their lamentation. The new players represen

Eastern Petroleum, Seasoil Petroleum Corporation, Subic Bay Distribution, Incand DubPhil Gas have intervened in the cases at bar and have spoken for themtheir motion for intervention, they made it crystal clear that it is not their intentiothe reversal of the Court's nullification of the 4% differential in section 5(b) nor oinventory requirement of section 6, nor of the prohibition of predatory pricing in 9(b)."

6 They stressed that they only protest the restoration of the 10% oil tariff d

under the Tariff Code. 7 The horse's mouth therefore authoritatively tells us that

players themselves consider the 4% tariff differential in R.A. No. 8180 as oppreshould be nullified.

To give their argument a new spin, public respondents try to justify thdifferential on the ground that there is a substantial difference betweeand an importer just as there is a difference between raw material anproduct Obviously the effort is made to demonstrate that the unequ

8/21/2019 art. vi- SEC 1


is no difference. The choice and crafting of the standard to guide the exercise ofdelegated power is part of the lawmaking process and lies within the exclusive jurisdiction of Congress. The standard cannot be altered in any way by theExecutive for the Executive cannot modify the will of the Legislature. To be sure,public respondents do not cite any authority to support its strange thesis for thereis none in our jurisprudence.

The public respondents next recycle their arguments that sections 5(b), 6 and9(b) of R.A. No. 8180 do not contravene section 19, Article XII of theConstitution. 3 They reiterate that the 4% tariff differential would encourage the construction

of new refineries which will benefit the country for they Filipino labor and goods. We have

rejected this submission for a reality check will reveal that this 4% tariff differential gives adecisive edge to the existing oil companies even as it constitutes a substantial barrier to theentry of prospective players. We do not agree with the public respondents that there is noempirical evidence to support this ruling. In the recent hearing of the Senate Committee onEnergy chaired by Senator Freddie Webb, it was established that the 4% tariff differential oncrude oil and refined petroleum importation gives a 20-centavo per liter advantage to thethree big oil companies over the new players. It was also found that said tariff differentialserves as a protective shield for the big oil companies.

4 Nor do we approve public

respondents' submission that the entry of new players after deregulation is proof that the 4%

product. Obviously, the effort is made to demonstrate that the unequnot violate the unequal protection clause of the Constitution. The effoproves that the public respondents are still looking at the issue of tarfrom the wrong end of the telescope. Our Decision did not hold that tdifferential infringed the equal protection clause of the Constitution ewas contended by petitioner Tatad. 8

Rather, we held that said tariff differesubstantially occluded the entry point of prospective players in the downstreamWe further held that its inevitable result is to exclude fair and effective competitienhance the monopolists' ability to tamper with the mechanism of a free marketconsideration is basic in anti-trust suits and cannot be eroded by belaboring theprinciple in taxation that different things can be taxed differently.

The public respondents tenaciously defend the validity of the minimurequirement. They aver that the requirement will not prejudice new pduring their first year of operation because they do not have yet annufrom which the required minimum inventory may be determined. Comsuch requirement on their second and succeeding years of operationdifficult because the putting up of storage facilities in proportion to ththeir business becomes an ordinary and necessary business underta

the case of importers of finished products in other industries." 9 The contention is an

old one although it is purveyed with a new lipstick. The contention cannot convince for as wellarticulated by petitioner Garcia, "the prohibitive cost of the required minimum inventory willnot be any less burdensome on the second, third, fourth, etc. years of operations. Unlikemost products which can be imported and stored with facility, oil imports require oceanreceiving, storage facilities. Ocean receiving terminals are already very expensive, and torequire new players to put up more than they need is to compound and aggravate their costs,and consequently their great dis-advantage vis-a-vis the Big 3."

10 Again, the argument on

whether the minimum inventory requirement seriously hurts the new players is best settled byhearing the new players themselves. In their motion for intervention, they implicitly confirmedthat the high cost of meeting the inventory requirement has an inhibiting effect in theiroperation and hence, they support the ruling of this Court striking it down as unconstitutional.

Public respondents still maintain that the provision on predatory pricing does notoffend the Constitution. Again, their argument is not fresh though embellished

with citations of cases in the United States sustaining the validity of sales-below-costs statutes. 11 A quick look at these American cases will show that they are inapplicable.

R.A. No. 8180 has a different cast. As discussed, its provisions on tariff differential andminimum inventory erected high barriers to the entry of prospective players even as they

cannot catch the strong; it can stop the small oil players but cannot stop the bigfrom engaging in predatory pricing.

Public respondents insist on their thesis that the cases at bar actuallywisdom of R.A. No. 8180 and that this Court should refrain f rom examwisdom of legislations. They contend that R.A. No. 8180 involves anpolicy which this Court cannot review for lack of power and competenwith, no school of scholars can claim any infallibility. Historians with ulearning have chronicled 14

over the years the disgrace of many economists

one economic dogma after another. Be that as it may, the Court is aware that thseparation of powers prohibits the judiciary from interferring with the policy settithe legislature.

15 For this reason we italicized in our Decision that the Court did

wisdom of R.A. No. 8180 but its compatibility with the Constitution; the Court didthe economic policy of deregulation but vitiated its aspects which offended the cmandate on fair competition. It is beyond debate that the power of Congress to

does not include the right to pass unconstitutional laws. In fine, the Court did nopower of the Congress to enact laws but merely discharged its bounden duty toconstitutionality of laws when challenged in appropriate cases. Our Decision anNo 8180 is justified by the principle of check and balance

8/21/2019 art. vi- SEC 1


minimum inventory erected high barriers to the entry of prospective players even as theyraised their new rivals' costs, thus creating the clear danger that the deregulated market inthe downstream oil industry will not operate under an atmosphere of free and fair competition.It is certain that lack of real competition will allow the present oil oligopolists to dictateprices,

12 and can entice them to engage in predatory pricing to eliminate rivals. The fact that

R.A. No. 8180 prohibits predatory pricing will not dissolve this clear danger. In truth, itsdefinition of predatory pricing is too loose to be real deterrent. Thus, one of the law's principalauthors, Congressman Dante O. Tinga filed H.B. No. 10057 where he acknowledged in itsexplanatory note that "the definition of predatory pricing . . . needs to be tightened upparticularly with respect to the definitive benchmark price and the specific anti-competitiveintent. The definition in the bill at hand which was taken from the Areeda-Turner test in theUnited States on predatory pricing resolves the questions." Following the more effective Areeda-Turner test, Congressman Tinga has proposed to redefine predatory pricing, viz .:

"Predatory pricing means selling or offering to sell any oil product at a price below theaverage variable cost for the purpose of destroying competition, eliminating a competitor ordiscouraging a competitor from entering the market."

13 In light of its loose characterization in

R.A. 8180 and the law's anti-competitive provisions, we held that the provision on predatorypricing is constitutionally infirmed for it can be wielded more successfully by the oil oligopolist.Its cumulative effect is to add to the arsenal of power of the dominant oil companies. For asstructured, it has no more than the strength of a spider web — it can catch the weak but

No. 8180 is justified by the principle of check and balance.

We hold that the power and obligation of this Court to pass upon theconstitutionality of laws cannot be defeated by the fact that the challecarries serious economic implications. This Court has struck down lathe political and civil rights of our people even if it has to offend the opowerful branches of government. There is no reason why the Courtstrike down R.A. No. 8180 that violates the economic rights of our peit has to bridle the liberty of big business within reasonable bounds. Ivs. National Power Corporation 16

the Court, speaking thru Mr. Chief Justic

Fernando, held:

2. Nor is petitioner anymore successful in his plea for the nullthe challenged provision on the ground of his being deprived to contract without due process of law.

It is to be admitted of course that property rights find shelter inconstitutional provisions, one of which is the due process clau

equally certain that our fundamental law framed at a time of "surgingunrest and dissatisfaction," when there was the fear expressed in manyquarters that a constitutional democracy, in view of its commitment to theclaims of property, would not be able to cope effectively with the problemsof poverty and misery that unfortunately afflict so many of our people, isnot susceptible to the indictment that the government therein establishedis impotent to take the necessary remedial measures. The framers saw tothat. The welfare state concept is not alien to the philosophy of ourConstitution. It is implicit in quite a few of its provisions. It suffices tomention two.

There is the clause on the promotion of social justice to ensure the well-being and economic security of all the people, as well as the pledge ofprotection to labor with the specific authority to regulate the relations

between landowners and tenants and between labor and capital. Thisparticularized reference to the rights of working men whether in industryand agriculture certainly cannot preclude attention to and concern for the

validity of measures regulating the issuance of securities and services prevail.

The Constitution gave this Court the authority to strike down all laws the Constitution. 17

It did not exempt from the reach of this authority laws with

dimension. A 20-20 vision will show that the grant by the Constitution to this Coimportant power of review is written without any fine print.

The next issue is whether the Court should only declare as unconstitprovisions of R.A. No. 8180 on 4% tariff differential, minimum inventopredatory pricing.

Positing the affirmative view, petitioner Garcia proffered the following

5. Begging the kind indulgence and benign patience of the Cohumbly submit that the unconstitutionality of the aforementionprovisions of R.A. No. 8180 implies that the other provisions a

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g yrights of consumers, who are the objects of solicitude in the legislationnow complained of. The police power as an attr ibute to promote thecommon weal would be diluted considerably of its reach and effectivenessif on the mere plea that the liberty to contract would be restricted, thestatute complained of may be characterized as a denial of due process.The right to property cannot be pressed to such an unreasonableextreme.

It is understandable though why business enterprises, not unnaturallyevincing lack of enthusiasm for police power legislation that affect them

adversely and restrict their profits could predicate alleged violation of theirrights on the due process clause, which as interpreted by them is a bar toregulatory measures. Invariably, the response from this Court, from thetime the Constitution was enacted, has been far from sympathetic. Thus,during the Commonwealth, we sustained legislations providing forcollective bargaining, security of tenure, minimum wages, compulsoryarbitration, and tenancy regulation. Neither did the objections as to the

constitutional . Thus, said constitutional provisions of R . A. No.and can very well be spared .

5.1 With the striking down of "ultimately fullderegulation," we will simply go back to the tranunder R . A. 8180 which will continue until Congan amendatory law for the start of full oil deregtime, when free market forces are already in plathemonthly automatic price control mechanismSingapore Posted Prices (SPP) will be revived.

Regulatory Board (ERB), which still exist, woul jurisdiction and would easily compute the montceiling, based on SPP, of each and every petro product , effective upon finality of this Court's favresolution on this motion for partial reconsidera

5.2 Best of all, the oil deregulation can continueuninterrupted without the three other assailed p

namely, the 4% tariff differential, predatory pricing andminimum inventory .

6. We further humbly submit that a favorable resolution on this motion forpartial reconsideration would be consistent with public interest .

6.1 In consequence, new players that have already comein can uninterruptedly continue their operations morecompetitively and bullishly with an even playing field .

6.2 Further, an even playing field will attract many morenew players to come in in a much shorter time.

6.3 Correspondingly, Congress does not anymore have to

pass a new deregulation law, thus it can immediatelyconcentrate on just amending R . A. No. 8180 to abolish theOPSF , on the government's assumption that it is necessary

7.1 There is already limited time for Congress ta new law before it adjourns for the 1998 electi

7.2 At the very least, whether or not Congress wto fasttrack the enactment of a new oil deregulaconsistent with the Honorable Court's ruling, woon many unforseeable and uncontrollable factoseveral statements from legislators, senators ancongressmen alike, say that the new law can wof other pending legislative matters, etc. Given "realities" of politics, especially with the 1998 prpolls six months away, it is not far-fetched that twelfare could be sacrificed to gain political milefurther unduly delaying the enactment of a new

deregulation law.

8. Furthermore, if the entire R.A. No. 8180 remains nullified as

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g p yto do so. Parenthetically, it is neither correct nor fair for highgovernment officials to criticize and blame the HonorableCourt on the OPSF, considering that said OPSF is notinherent in nor necessary to the transition period and maybe removed at any time.

6.4 In as much as R.A. No. 8180 would continue to be inplace (sans its unconstitutional provisions), only theComprehensive Tax Reform Package (CTRP) would beneeded for the country to exit from IMF by December 1997 .

7. The Court, in declaring the entire R.A. No. 8180 unconstitutional, wasevidently expecting that Congress "can fasttrack the writing of a new lawon oil deregulation in accord with the Constitution" (Decision p. 38)However, it is very problematic, to say the least, if Congress can fasttrackan entirely new law .

unconstitutional, the following pernicious effects will happen:

8.1 Until the new oil deregulation law is enactedhave to go back to the old law. This means full i .e., higher tariff differential of 10%, higher petr product price ceilings based on transfer prices crude oil, and restrictions on the importation of petroleum products that would be allowed onlyshortages, etc .

8.2 In consequence of the above, the existing nplayers, would have to totally stop their operati

8.3 The existing new players would find themsebind on how to fulfill their contractual obligationon their delivery commitments of petroleum fue products. They will be in some sort of "limbo" unullification of the entire R . A. No. 8180 .

8.4 The investments that existing new players have alreadymade would become idle and unproductive. All their planned additional investments would be put on hold .

8.5 Needless to say, all this would translateinto tremendous losses for them.

8.6 And obviously, prospective new players cannot and willnot come in.

8.7 On top of everything, public interest will suffer . Firstly,the oil deregulation program will bedelayed . Secondly, the prices of petroleum products will be higher because of priceceilings based on transfer prices of imported crude.

9. When it passed R.A. No. 8180, Congress provided a safeguard againstthe possibility that any of its provisions could be declared unconstitutional,

imported refined petroleum products [10%-20%], (b) the unceregarding R.A. 8184, or the "Oil Tariff Law," which simplified tadministration by lowering the tax rates for socially-sensitive psuch as LPG, diesel, fuel oil and kerosene, and increasing taxgasoline products which are used mostly by consumers who bupper income group, and (c) the issue of wiping out the deficibillion and creating a subsidy fund in the Oil Price Stabilizatio

2. Importers, traders, and industrial end-users like the NationaCorporation will be constrained to source their oil requirementexisting oil companies because of the higher tariff on importedpetroleum products and restrictions on such importation that wallowed only if there are shortages;

3. Government control and regulation of all the activities of thewill discourage prospective investors and drive away the existplayers;

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thus the separability clause thereof, which the Court noted (Decision, p.29). We humbly submit that this is another reason to grant this motion for partial reconsideration.

In his Supplement to Urgent Motion for Partial Reconsideration, petitioner Garciaamplified his contentions.

In a similar refrain, the public respondents contend that the "unmistakableintention of Congress" is to make each and every provision of R.A. No. 8180"independent and separable from one another." To bolster this proposition, they

cite the separability clause of the law and the pending bills in Congressproposing to repeal said offensive provisions but not the entire law itself. Theyalso recite the "inevitable consequences of the declaration of unconstitutionalityof R.A. No. 8180" as follows:

1. There will be bigger price adjustments in petroleum products due to (a)the reimposition of the higher tariff rates for imported crude oil and

4. All expansion and investment programs of the oil companieplayers will be shelved indefinitely;

5. Petitions for price adjustments should be filed and approveERB.

Joining the chorus, the intervenors contend that:

2.1.1 The total nullification of Republic Act No. 8180 restores

disproportionate advantage of the three big oil f irms—

CaltexPetron— over the small oil firms;

2.1.2 The total nullification of Republic Act No. 8180 "disarmsentrants and seriously cripples their capacity to compete and

2.1.3 Ultimately, the total nullification of Republic Act No. 8180 removessubstantial, albeit imperfect, barriers to monopolistic practices and unfaircompetition and trade practices harmful not only to movant-intervenorsbut also to the public in general.

The intervenors further aver that under a regime of regulation, (1) the big oil firmscan block oil importation by the small oil firms; (2) the big oil firms can block theexpansion and growth of the small oil f irms. They likewise submit that theprovisions on tariff differential, minimum inventory, and predatory pricing areseparable from the body of R.A. No. 8180 because of its separability clause.They also allege that their separability is further shown by the pending bills inCongress which only seek the partial repeal of R.A. No. 8180.

We shall first resolve petitioner Garcia's linchpin contention that the full

deregulation decreed by R.A. No. 8180 to start at the end of March 1997 isunconstitutional. For prescinding from this premise, petitioner suggests that "wesimply go back to the transition period under R.A. No. 8180. Under the transition

i d i t l ill b i d th h th t ti i i h i

deregulation is a judgment of Congress and its judgment call cannot impugned by this Court.

We come to the submission that the provisions on 4% tariff differentiinventory and predatory pricing are separable from the body of R.A. and hence, should alone be declared as unconstitutional. In taking ththe movants rely heavily on the separability provision of R.A. No. 818cannot affirm the movants for the determine whether or not a particuis separable, the courts should consider the intent of the legislature. the most of the time, such intent is expressed in a separability clausethe invalidity or unconstitutionality of any provision or section of the laaffect the validity or constitutionality of the remainder. Nonetheless, tseparability clause only creates a presumption that the act is severabmerely an aid in statutory construction. It is not an inexorable comma

separability clause does not clothe the valid parts with immunity from the invalidthe law gives to the inseparable blending of the bad with the good .The separabcannot also be applied if it will produce an absurd result .

19 In sum, if the separa

statute will defeat the intent of the legislature, separation will not take place des

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period, price control will be revived through the automatic pricing mechanismbased on Singapore Posted Prices. The Energy Regulatory Board . . . would playa limited and ministerial role of computing the monthly price ceiling of each andevery petroleum fuel product, using the automatic pricing formula. While theOPSF would return, this coverage would be limited to monthly price increases inexcess of P0.50 per liter."

We are not impressed by petitioner Garcia's submission. Petitioner has no basisin condemning as unconstitutional per se the date fixed by Congress for thebeginning of the full deregulation of the downstream oil industry. Our Decision

merely faulted the Executive for factoring the depletion of OPSF in advancing thedate of full deregulation to February 1997. Nonetheless, the error of theExecutive is now a non-issue for the full deregulation set by Congress itself at theend of March 1997 has already come to pass. March 1997 is not an arbitrarydate. By that date, the transition period has ended and it was expected that thepeople would have adjusted to the role of market forces in shaping the prices ofpetroleum and its products. The choice of March 1997 as the date of full

g , p pinclusion of a separability clause in the law .

20

In the case of the Republic Act No. 8180, the unconstitutionality of thon tariff differential, minimum inventory and predatory pricing cannot the unconstitutionality of the entire law despite its separability clauseprovisions cannot be struck down alone for they were the ones intendout the policy of the law embodied in section 2 thereof which reads:

Sec. 2. Declaration of Policy — It shall be the policy of the Staderegulate the downstream oil industry to foster a truly compe

which can better achieve the social policy objectives of fair pradequate, continuous supply of environmentally-clean and higpetroleum products.

They actually set the stage for the regime of deregulation where govno longer intervene in fixing the price of oil and the operations of oil cis conceded that the success of deregulation lies in a truly competitiv

and there can be no competitive market without the easy entry and exit ofcompetitors. No less than President Fidel V . Ramos recognized this matrix whenhe declared the need is to ". . . recast our laws on trust, monopolies, oligopolies,cartels and combinations injurious to public welfare— to restore competitionwhere it has disappeared and to preserve it where it still exists. In a word, weneed to perpetuate competition as a system to regulate the economy andachieve global product quality ." 21

We held in our Decision that the provisions on 4% tariff differential, minimuminventory and predatory pricing are anti-competition, and they are the keyprovisions of R.A. No. 8180. Without these provisions in place, Congress couldnot have deregulated the downstream oil industry. Consider the 4% tariffdifferential on crude oil and refined petroleum. Before R.A. No. 8180, 22

there was aten-point difference between the tariff imposed on crude oil and that on refined petroleum.

Section 5(b) of R.A. No. 8180 lowered the difference to four by imposing a 3% tariff on crudeoil and a 7% tariff on refined petroleum. We ruled, however, that this reduced tariff differentialis unconstitutional for it still posed a substantial barrier to the entry of new players andenhanced the monopolistic power of the three existing oil companies. The ruling that the 4%

The movants warn that our Decision will throw us back to the undesiof regulation. They emphasize its pernicious consequences

— the re

10% tariff differential which will wipe out the new players, the return owhich is too burdensome to government, the unsatisfactory scheme regulation by the ERB, etc. To stress again, it is not the will of the Coeven temporarily to the regime of regulation. If we return to the regimregulation, it is because it is the inevitable consequence of the enactCongress of an unconstitutional law, R.A. No. 8180. It is settled juristhat the declaration of a law as unconstitutional revives the laws thatrepealed. Stated otherwise, an unconstitutional law returns us to theante and this return is beyond the power of the Court to stay. Under of government, however, the remedy to prevent the revival of an unquo ante or stop its continuation by immediately enacting the neceslegislation. We emphasize that in the cases at bar, the Court did not

the economic policy of deregulation as unconstitutional. It merely helcrafted, the law runs counter to the constitutional provision calling forcompetition. 23

Thus, there is no impediment in re-enacting R.A. No. 8180 minprovisions which are anti-competition The Court agrees that our return to the re

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differential is unconstitutional will unfortunately revive the 10% tariff differential of the Tariffand Customs Code. The high 10% tariff differential will certainly give a bigger edge to thethree existing oil companies, will form an insuperable barrier to prospective players, and willdrive out of business the new players. Thus, there can be no question that Congress will notallow deregulation if the tariff is 10% on crude oil and 20% on refined petroleum. To decreethe partial unconstitutionality of R.A. No. 8180 will bring about an absurdity — a fullyderegulated downstream oil industry where government is impotent to regulate run awayprices, where the oil oligopolists can engage in cartelization without competition, whereprospective players cannot come in, and where new players will close shop.

We also reject the argument that the bills pending in Congress merely seek to

remedy the partial defects of R.A No. 8180, and that this is proof that R.A. No.8180 can be declared unconstitutional minus its offensive provisions. We referredto the pending bills in Congress in our Decision only to show that Congress itselfis aware of the various defects of the law and not to prove the inseparability ofthe offending provisions from the body of R.A. No. 8180. To be sure, movantseven overlooked the fact that resolutions have been filed in both House ofCongress calling for atotal review of R.A. No. 8180.

provisions which are anti competition. The Court agrees that our return to the reregulation has pernicious consequences and it specially symphatizes with the ithat as it may, the Court is powerless to prevent this return just as it is powerlesthe 10% tariff differential of the Tariff Code. It is Congress that can give all these

Petitioner Garcia, however, injects a non-legal argument in his motioreconsideration. He avers that "given the 'realities' of politics, especia1998 presidential polls six months away, it is not far-fetched that the welfare could be sacrificed to gain political mileage, thus further undthe enactment of a new oil deregulation law." The short answer to peGarcia's argument is that when the Court reviews the constitutionalit

does not deal with the realities of politics nor does it delve into the mpolitics. The Court has no partisan political theology for as an institutbest apolitical, and at worse, politically agnostic. In any event, it shoulong time for Congress to enact a new oil deregulation law given its inthe welfare of our people. Petitioner Garcia himself has been quotedthat ". . . with the Court's decision, it would now be easy for Congressnew law, considering that lawmakers will be guided by the Court's po

before our Decision, bills amending the offensive provisions of R.A. No. 8180 have already

been filed in the Congress and under consideration by its committees. Speaker Jose deVenecia has assured after a meeting of the Legislative-Executive Advisory Council (LEDAC)that: "I suppose before Christmas, we should be able to pass a new oil deregulationlaw.

26 The Chief Executive himself has urged the immediate passage of a new and better oil

deregulation law. 27

Finally, public respondents raise the scarecrow argument that our Decision willdrive away foreign investors. In response to this official repertoire, suffice to statethat our Decision precisely levels the playing field for foreign investors as againstthe three dominant oil oligopolists. No less than the influential PhilippineChamber of Commerce and Industry whose motive is beyond question, statedthru its Acting President Jaime Ladao that ". . . this Decision, in fact tells us thatwe are for honest-to-goodness competition." Our Decision should be aconfidence-booster to foreign investors for its assures them of an effective

judicial remedy against an unconstitutional law. There is need to attract foreigninvestment but that policy has never been foreign investment at any cost. Wecannot trade-in the Constitution for foreign investment. I t is not economic heresyto hold that trade in is not a fair exchange

interdicts unfair competition. Thus, the Constitution provides a shield

economic rights of our people, especially the poor. It is the unyieldinCourt to uphold the supremacy of the Constitution not with a mere wwith a backbone that should neither bend nor break.

IN VIEW WHEREOF, the Motions for Reconsideration of the public reand of the intervenors as well as the Partial Motion for Reconsideratpetitioner Enrique Garcia are DENIED for lack of merit.

SO ORDERED.

Regalado, Davide, Jr., Romero, Bellosillo, Vitug, Mendoza and Pangconcur.

Martinez, J., took no part.

Narvasa, C.J., is on leave.

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to hold that trade-in is not a fair exchange.

To recapitulate, our Decision declared R.A. No. 8180 unconstitutional for threereasons: (1) it gave more power to an already powerful oil oligopoly; (2) itblocked the entry of effective competitors; and (3) it will sire an even morepowerful oligopoly whose unchecked power will prejudice the interest of theconsumers and compromise the general welfare.

A weak and developing country like the Philippines cannot risk a downstream oilindustry controlled by a foreign oligopoly that can run riot. Oil is our most socially

sensitive commodity and for it to be under the control of a foreign oligopolywithout effective competitors is a clear and present danger. A foreign oil oligopolycan undermine the security of the nation; it can exploit the economy if greedbecomes its creed; it will have the power to drive the Filipino to a prayerful pose.Under a deregulated regime, the people's only hope to check the overwhelmingpower of the foreign oil oligopoly lies on a market where there is fair competition.With prescience, the Constitution mandates the regulation of monopolies and

Melo and Francisco, JJ., maintain their dissent.

Separate Opinions

KAPUNAN, J., concurring and dissenting:

Brought before us are the motion for reconsideration of publicrespondents and the partial motions for reconsideration of pe

Enrique T. Garcia and the movants-in-intervention. The majority, acting on

the motions, resolves to deny the same for lack of merit. With due respect,I concur in part and dissent in part.

At the outset let me clarify that, although I concurred with the enlightenedponencia of Mr. Justice Reynato S. Puno in the decision sought to bereconsidered, I did not go along with his conclusion declaring theDownstream Oil Industry Deregulation Act (R.A. No. 8180)unconstitutional in its entirety . In the dispositive portion of my separateopinion, I explicitly stated that only the three anti-competition provisions ofthe said law should be deemed unconstitutional. The rest of the law, freefrom the taint of unconstitutionality, should remain in force and effect inview of the separability clause contained therein. 1

Let me explain. A separability clause states that if for any reason, anysection or provision of the statute is held to unconstitutional or (invalid),the other section(s) or provision(s) of the law shall not be affectedthereby 2

It is a legislative expression of intent that the nullity of one provision shall

must be eliminated without causing results affecting th

purpose of the act in a manner contrary to the intentionlegislature. The language used in the invalid part of thehave no legal effect or efficacy for any purpose whatsowhat remains must express the legislative will indepenvoid part, since the court has no power to legislate.

The exception to the general rule is that when the partare so mutually dependent and connected, as conditioconsiderations, inducements, or compensations for eato warrant a belief that the legislature intended them asthe nullity of one part will vitiate the rest. In making thestatute dependent, conditional, or connected with one legislature intended the statute to be carried out as a w

would not have enacted it if one part is void, in which cparts are unconstitutional, all the other provisions thus conditional, or connected must fall with them. 4

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thereby. It is a legislative expression of intent that the nullity of one provision shall

not invalidate the other provisions of the act. Such a clause is not, however,controlling and the court may, in spite of it, invalidate the whole statute where what isleft, after the void part, is not complete and workable.

3

The rules on statutory construction, thus, prescribe that:

The general rule is that where part of a statute is void as repugnantto the Constitution, while another part is valid, the valid portion, ifseparable from the invalid, may stand and be enforced. Thepresence of a separability clause in a statute creates thepresumption that the legislature intended separability, rather thancomplete nullity, of the statute. To justify this result, the validportion must be so far independent of the invalid portion that it isfair to presume that the legislature would have enacted it by itself ifit had supposed that it could not constitutionally enact the other.Enough must remain to make a complete, intelligible, and validstatute, which carriers out the legislative intent. The void provisions

However, in the instant case, the exception rather than the gewas applied. The majority opinion enunciated, thus:

. . .This separability clause not withstanding, we hold toffending provisions of R.A. No. 8180 so permeate its the entire law has to be struck down. The provisions odifferential, inventory and predatory pricing are amongprops of R.A. No. 8180. Congress could not have deredownstream oil industry without these provisions. Unfo

contrary to their intent, these provisions on tariff differeinventory and predatory pricing inhibit fair competition,monopolistic power and interfere with the free interactiforces. . . . 5

I beg to disagree.

The three provisions declared void are severable from the main statute

and their removal therefrom would not affect the validity and enforceabilityof the remaining provisions of the said law R.A. No. 8180, sans theconstitutionally infirmed portions, remains "complete in itself, sensible,capable of being executed and wholly independent of (those) which (are)rejected. 6 In other words, despite the elimination of some of its parts, the law can

still stand on its own.

The crucial test is to determine if expulsion of the assailed provisionscripples the whole statute, so much so, that it is no longer expressive ofthe legislative will and could no longer carry out the legislative purpose.

The principal intent of R.A. No. 8180 is to open the country's oil market tofair and free competition and the three provisions are assailed precisely

because they are anti-competition and they obstruct the entry of newplayers. Therefore, in order to make the deregulation law work, it isimperative that the anti-competition provisions found therein be taken out.In other words, it is only through the "separation" of these provisions that

obvious from the proviso contained in Sec. 5(b) 7 of R.A. No. 81

specifically states that:

. . . Provided, That beginning on January 1, 2004 the taimported crude oil and refined petroleum products shasame: Provided, further , That this provision may be amby an Act of Congress.

although said proviso equalizing the tariff rate takes effect on 2004. However, the nullification of the tariff differential renderprospective effectivity of the rate equalization irrelevant and sNaturally, there would no longer be any basis for postponing tof the tariff rate to a later date. The provision that the tariff rateequalized on January 1, 2004 is premised on the validity of th

differential, without which there is nothing to equalize. Stated the imposition of a single uniform tariff rate on imported crudeimported petroleum products is to take effect immediately. A dof interpreting the law would be less than faithful to the legisla

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, y g p pthe deregulation law be able to fully realize its objective.

Take the tariff provision for instance. The repudiation of the tariffdifferential will not revive the 10% and 20% tariff rates. What is beingdiscarded is the differential not the tariff itself, hence, the removal of the4% differential would result in the imposition of a single uniform tariff rateon the importation of both crude oil and refined petroleum products at 3%as distinctly and deliberately set in sec. 5(b) of R.A. No. 8180 itself. Thetariff provision which, admittedly, is among the "principal props" of R.A.No. 8180 remains intact in substance and the elimination of the tariffdifferential would, in effect, transform it into one of the statute's"vouchsafing provisions," a tool to effectively carry out the legislativeintent of fostering a truly competitive market.

There is no question that the legislature intended a single uniform tariffrate for imported crude oil and imported petroleum products. This is

p g genhance free competition in the oil industry for the purpose offair prices for high-quality petroleum products.

The provision requiring a minimum inventory was similarly foumajority to be anti-competition. Its exclusion, therefore, wouldany deleterious effect on the oil deregulation law. On the contessence of R.A. No. 8180, which is free and fair competition,

The same rationale applies to the provision concerning preda

and may be subsumed (at least in the meantime pending the of the law) under Sec. 9 (a):

Sec. 9. Prohibited Acts. — To ensure fair competition cartels and monopolies in the downstream oil industry,following acts are hereby prohibited:

a) Cartelization which means any agreement,

combination or concerted action by refiners and/orimporters or their representatives to fix prices,restrict outputs or divide markets, either by productsor by areas, or allocating markets, either by productsor by areas, in restraint of trade or f ree competition;and

xxx xxx xxx

The answer is not the wholesale rejection of R.A. No. 8180. To strikedown the whole statute would go against the very ideal that our country isstriving for. The goal is to unshackle the oil industry from the restraints ofregulation. To declare R.A. No. 8180 void in its entirety would bring us

back to where we started. Worse, as pointed out by the eminentconstitutionalist, Joaquin G. Bernas, SJ, the hardest hit would be the fewnew players who have entered the oil business and have begun investingin our country under the deregulated regime. He expounds, thus:

Copies of applications filed with the EIAB had to be giv

competing oil companies which, under the rules, were file their opposition. The EIAB was duty bound to evaluapplication against the opposition. This rule made it pothe big players to block the expansion of competing fac

These barriers were eradicated by R.A. No. 8180, as expressin Sec. 5(a) thereof:

Sec. 5. Liberalization of Downstream Oil Industry and TTreatment— a) Any law to the contrary notwithstandinperson or entity may import or purchase any quantity oand petroleum products from a foreign or domestic souor own and operate refineries and other downstream o

and market such crude oil and petroleum products eithgeneric name or its own trade name, or use the same requirement: Provided. That any person or entity who in any such activity shall give prior notice thereof to the

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y g g p ,

. . . Under the regulated regime, importation of oil was controlled bythe Energy Industry Administrative Bureau (EIAB). The procedurefollowed was that, whenever there was an application to import oilproducts, the EIAB was required to inform the oil companies of theproposed importation in order to give them the option to match thedesired importation with locally available products. Equivalently,therefore, the large oil companies could block imports by thesmaller players.

xxx xxx xxx

Another barrier to equalization concerns the expansion of servicesof small players. Under the regulated regime, expansion of facilitieswas also under the control of the EIAB. Any person wishing tobuild and establish or operate, remodel or refurbish any retail outletfor petroleum products had to obtain approval from the EIAB.

y y g pmonitoring purposes: Provided further , That such noticexempt such person or entity from securing certificateshealth and safety and environmental clearance from thgovernmental agencies: Provided, furthermore, That sor entity shall, for monitoring purposes, report to the Devery importation/exportation; Provided, finally , That aimportations shall be in accordance with the Basel Con

xxx xxx xxx

The nullification of the whole law would, therefore, considerab jeopardize the chances of the new entrants to survive and remcompetitive in the market.

As a consequence thereof, Eastern Petroleum Corp., Seaoil PCorp., Subic Bay Distribution, Inc., TWA, Inc. and Dubphil Gasome of the oil industry's new entrants, filed a motion for inter

18 November 1997 urging the Court to reconsider its decision declaring

the whole R.A. No. 8180 unconstitutional. The intervenors raise similarapprehensions concerning the power of the existing oil firms, under theregulated industry, to block the importation of petroleum products by thesmall oil companies and likewise impede their expansion and growth. 9

Even the public respondents in their motion for reconsideration concedesthat if R.A. No. 8180 should be declared unconstitutional, theunconstitutionality is partial, that is, only the three (3) anti-competitionprovisions should be declared void. Public respondents, thus, opine:

Thus, even assuming that the assailed provisions areconstitutionally defective, they cannot be that contagious as toinfect or contaminate the other valid parts of the law which are

complete in themselves, or capable of bringing about the fullderegulation of the oil industry.

To apply the exception to the general rule of separability will

The public need not fear that prices of petroleum products, pa

gasoline, will soar if R.A. No. 8180 is declared only partiallyunconstitutional. The oil deregulation law itself provides adeqsafeguards that would effectively avert and preclude such a dFor instance, Sec. 8 of the said law provides that:

xxx xxx xxx

Any report from any person of an unreasonable rise inpetroleum products shall be immediately acted upon. Fpurpose, the creation of a Department of Energy (DOEDepartment of Justice (DOJ) Task Force is hereby madetermine the merits of the report and the initiate the nactions warranted under the circumstances to prevent

among others.

The law also tasks the Department of Energy (DOE) to "take ato promote fair t rade and to prevent cartelization, monopolies

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pp y p g p yrequire a clear and overwhelming demonstration which will eraseany and all doubts on the unconstitutionality of R.A. 8180.

Moreover, the separable and independent character of theassailed provisions may be inferred from the various bills f iled byleading legislators which, as noted by the Honorable Court, seek"the repeal of this odious and offensive provisions in R.A. No.8180." In fact, the original as well as the final versions of the HouseBill 5264 and Senate Bill No. 1253, which later became R.A. No.

8180, did not contain any tariff differential.

The foregoing instances clearly demonstrate that the assailedprovisions were indeed separable and independent of the otherprovisions of R.A. 8180 and Congress did not consider the same tobe that indispensable, without which Congress would not havepassed R.A. 8180 into law. 10

p p , pcombinations in restraint of trade and any unfair competition, Articles 186, 188 and 189 of the Revised Penal Code, in the doil industry. The DOE shall continue to encourage certain pracoil industry which serve the public interest and are intended toefficiency and cost reduction, ensure continuous supply of petproducts, or enhance environmental protection. These practicinclude borrow-and-loan agreements, rationalized deport opehospitality agreements, joint tanker and pipeline utilization, anactions on oil spill control and fire prevention." 11

Likewise, the DOE is endowed with monitoring powers as amSec. 6 of R.A. No. 8180:

Sec. 8. Monitoring.— The DOE shall monitor and pubinternational oil prices to enable the public to determincurrent market oil prices are reasonable. It shall likewisthe quality of petroleum products and stop the operatio

businesses involved in the sale of petroleum products which do not

comply with the national standards of quality. The Bureau ofProduct Standards (BPS), in coordination with DOE, shall setnational standards of quality that are aligned with the internationalstandards/protocols of quality.

The DOE shall monitor the refining and manufacturing processesof local petroleum products to ensure that clean and safe(environment and worker-benign) technologies are applied. Thisshall also apply to the process of marketing local and importedpetroleum products.

The DOE shall maintain in a periodic schedule of present andfuture total industry inventory of petroleum products for the

purpose of determining the level of supply. To implement this, theimporters, refiners, and marketers are hereby required to submitmonthly to the DOE their actual and projected importations, localpurchases, sales and/or consumption, and inventory on a per

they were the ones intended to carry out the policy of (R.A. N

and that "without these provisions in place. Congress could noderegulated the downstream oil industry." As I have previouslout, the aforementioned provisions were declared unconstitutprecisely because they were found to be anti-competition. Hocompetition provisions, therefore, have any place in a law whpromote and achieve fair and f ree competition?

The oil deregulation law was not built upon and do not center provisions on tariff differential, minimum inventory requiremenpredatory pricing. These are not the only provisions of R.A. Nintended to implement the legislative intent as expressed in seThe heart and soul of R.A. No. 8180 is embodied is sec. 5(a) "Liberalization of Downstream Oil Industry and Tariff Treatme

provision which does away with the burdensome requirementprocedures for the importation of petroleum products (the maimpediments to the entry of new players in the oil market). Wiprovision the "entry and exit of competitors" is made relativelyf hi h i i k i bli h d

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crude/product basis.

xxx xxx xxx

Reverting to a regulated oil industry, even if only for a short period whilethe legislature "fasttracks" the passage of a new oil deregulation law (thefeasibility of which remains a big "if") defeats the whole purpose and onlysucceeds in retarding the country's economic growth.

R.A. No. 8180 is a bold and progressive piece of legislation. It must begiven a chance to work and prove its worth. Thus, the better solution is toretain the foundations of the law and leave it to Congress to pass thenecessary amendments and enact the appropriate supporting legislationto fortify R.A. No. 8180.

In view of the foregoing, I find myself unable to concur with the majority'sthesis that the three assailed provisions "cannot be struck down alone for

from this the competitive market is established.

The other remaining provisions are, likewise, sufficient to servlegislative will. There is among others, sec. 7 mandating the pfair trade practices and sec. 9(a) on the prevention of cartels amonopolies.

The point is, even without the subject three provisions what recomprehensible and workable law. The infirmities of some pa

statute should not taint the whole when these parts could sucincised.

I also take exception to the majority's observation that ". . . a pdeclaration of unconstitutionality of R.A. No. 8180 will bring abderegulated downstream oil industry where government will bto regulate run away prices, where the oil oligopolists can engcartelization without competition, where prospective players c

in, and where new players will close shop. . ." As I have earlier discussed,

R.A. No. 8180 has armed the government with adequate measures todeal with the above problems, should any of these arise. Theimplementation, therefore, of R.A. No. 8180 (sans the void provisions) isnot an absurdity, on the contrary as shown above, it is the sensible thingto do.

ACCORDINGLY, resolving the pending motion for reconsideration andpartial motions for reconsideration, I CONCUR with the majority insofar asit maintains the opinion to strike down as unconstitutional the three (3)anti-competition provisions of R.A. No. 8180, but I register my DISSENTto its ruling declaring the entire law as unconstitutional.

Separate Opinions

KAPUNAN, J., concurring and dissenting:

Let me explain. A separability clause states that if for any reas

section or provision of the statute is held to unconstitutional othe other section(s) or provision(s) of the law shall not be affethereby. 2 It is a legislative expression of intent that the nullity of one pnot invalidate the other provisions of the act. Such a clause is not, howecontrolling and the court may, in spite of it, invalidate the whole statute left, after the void part, is not complete and workable.

3

The rules on statutory construction, thus, prescribe that:

The general rule is that where part of a statute is void ato the Constitution, while another part is valid, the validseparable from the invalid, may stand and be enforcedpresence of a separability clause in a statute creates tpresumption that the legislature intended separability, complete nullity, of the statute. To justify this result, theportion must be so far independent of the invalid portiofair to presume that the legislature would have enactedit had supposed that it could not constitutionally enact

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Brought before us are the motion for reconsideration of publicrespondents and the partial motions for reconsideration of petitionerEnrique T. Garcia and the movants-in-intervention. The majority, acting onthe motions, resolves to deny the same for lack of merit. With due respect,I concur in part and dissent in part.

At the outset let me clarify that, although I concurred with the enlightenedponencia of Mr. Justice Reynato S. Puno in the decision sought to be

reconsidered, I did not go along with his conclusion declaring theDownstream Oil Industry Deregulation Act (R.A. No. 8180)unconstitutional in its entirety . In the dispositive portion of my separateopinion, I explicitly stated that only the three anti-competition provisions ofthe said law should be deemed unconstitutional. The rest of the law, freefrom the taint of unconstitutionality, should remain in force and effect inview of the separability clause contained therein. 1

it had supposed that it could not constitutionally enact Enough must remain to make a complete, intelligible, astatute, which carriers out the legislative intent. The vomust be eliminated without causing results affecting thpurpose of the act in a manner contrary to the intentiolegislature. The language used in the invalid part of thehave no legal effect or efficacy for any purpose whatsowhat remains must express the legislative will indepenvoid part, since the court has no power to legislate.

The exception to the general rule is that when the partare so mutually dependent and connected, as conditioconsiderations, inducements, or compensations for eato warrant a belief that the legislature intended them asthe nullity of one part will vitiate the rest. In making thestatute dependent, conditional, or connected with one legislature intended the statute to be carried out as a w

would not have enacted it if one part is void, in which case if some

parts are unconstitutional, all the other provisions thus dependent,conditional, or connected must fall with them. 4

However, in the instant case, the exception rather than the general rulewas applied. The majority opinion enunciated, thus:

. . .This separability clause not withstanding, we hold that theoffending provisions of R.A. No. 8180 so permeate its essence thatthe entire law has to be struck down. The provisions on tariffdifferential, inventory and predatory pricing are among the principalprops of R.A. No. 8180. Congress could not have deregulated thedownstream oil industry without these provisions. Unfortunately,contrary to their intent, these provisions on tariff differential,

inventory and predatory pricing inhibit fair competition, encouragemonopolistic power and interfere with the free interaction of marketforces. . . . 5

I b t di

players. Therefore, in order to make the deregulation law wor

imperative that the anti-competition provisions found therein bIn other words, it is only through the "separation" of these prothe deregulation law be able to fully realize its objective.

Take the tariff provision for instance. The repudiation of the tadifferential will not revive the 10% and 20% tariff rates. What discarded is the differential not the tariff itself, hence, the rem4% differential would result in the imposition of a single uniforon the importation of both crude oil and refined petroleum proas distinctly and deliberately set in sec. 5(b) of R.A. No. 8180tariff provision which, admittedly, is among the "principal propNo. 8180 remains intact in substance and the elimination of thdifferential would, in effect, transform it into one of the statute

"vouchsafing provisions," a tool to effectively carry out the legintent of fostering a truly competitive market.

There is no question that the legislature intended a single unifrate for imported crude oil and imported petroleum products T

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I beg to disagree.

The three provisions declared void are severable from the main statuteand their removal therefrom would not affect the validity and enforceabilityof the remaining provisions of the said law R.A. No. 8180, sans theconstitutionally infirmed portions, remains "complete in itself, sensible,capable of being executed and wholly independent of (those) which (are)rejected. 6 In other words, despite the elimination of some of its parts, the law canstill stand on its own.

The crucial test is to determine if expulsion of the assailed provisionscripples the whole statute, so much so, that it is no longer expressive ofthe legislative will and could no longer carry out the legislative purpose.

The principal intent of R.A. No. 8180 is to open the country's oil market tofair and free competition and the three provisions are assailed preciselybecause they are anti-competition and they obstruct the entry of new

rate for imported crude oil and imported petroleum products. Tobvious from the proviso contained in Sec. 5(b) 7

of R.A. No. 81

specifically states that:

. . . Provided, That beginning on January 1, 2004 the taimported crude oil and refined petroleum products shasame: Provided, further , That this provision may be amby an Act of Congress.

although said proviso equalizing the tariff rate takes effect on 2004. However, the nullification of the tariff differential renderprospective effectivity of the rate equalization irrelevant and sNaturally, there would no longer be any basis for postponing tof the tariff rate to a later date. The provision that the tariff rateequalized on January 1, 2004 is premised on the validity of thdifferential, without which there is nothing to equalize. Stated the imposition of a single uniform tariff rate on imported crude

imported petroleum products is to take effect immediately. A different way

of interpreting the law would be less than faithful to the legislative intent toenhance free competition in the oil industry for the purpose of obtainingfair prices for high-quality petroleum products.

The provision requiring a minimum inventory was similarly found by themajority to be anti-competition. Its exclusion, therefore, would not haveany deleterious effect on the oil deregulation law. On the contrary, theessence of R.A. No. 8180, which is free and fair competition, is preserved.

The same rationale applies to the provision concerning predatory pricingand may be subsumed (at least in the meantime pending the amendmentof the law) under Sec. 9 (a):

Sec. 9. Prohibited Acts.—

To ensure fair competition and preventcartels and monopolies in the downstream oil industry, thefollowing acts are hereby prohibited:

a) Cartelization which means any agreement

new players who have entered the oil business and have beg

in our country under the deregulated regime. He expounds, th

. . . Under the regulated regime, importation of oil wasthe Energy Industry Administrative Bureau (EIAB). Thefollowed was that, whenever there was an application tproducts, the EIAB was required to inform the oil compproposed importation in order to give them the option tdesired importation with locally available products. Equtherefore, the large oil companies could block imports smaller players.

xxx xxx xxx

Another barrier to equalization concerns the expansionof small players. Under the regulated regime, expansiowas also under the control of the EIAB. Any person wisbuild and establish or operate, remodel or refurbish anfor petroleum products had to obtain approval from the

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a) Cartelization which means any agreement,combination or concerted action by refiners and/orimporters or their representatives to f ix prices,restrict outputs or divide markets, either by productsor by areas, or allocating markets, either by productsor by areas, in restraint of trade or f ree competition;and

xxx xxx xxx

The answer is not the wholesale rejection of R.A. No. 8180. To strikedown the whole statute would go against the very ideal that our country isstriving for. The goal is to unshackle the oil industry from the restraints ofregulation. To declare R.A. No. 8180 void in its entirety would bring usback to where we started. Worse, as pointed out by the eminentconstitutionalist, Joaquin G. Bernas, SJ, the hardest hit would be the few

for petroleum products had to obtain approval from theCopies of applications filed with the EIAB had to be givcompeting oil companies which, under the rules, were file their opposition. The EIAB was duty bound to evaluapplication against the opposition. This rule made it pothe big players to block the expansion of competing fac

These barriers were eradicated by R.A. No. 8180, as expressin Sec. 5(a) thereof:

Sec. 5. Liberalization of Downstream Oil Industry and TTreatment— a) Any law to the contrary notwithstandinperson or entity may import or purchase any quantity oand petroleum products from a foreign or domestic souor own and operate refineries and other downstream oand market such crude oil and petroleum products eithgeneric name or its own trade name, or use the same

requirement: Provided. That any person or entity who shall engage

in any such activity shall give prior notice thereof to the DOE formonitoring purposes: Provided further , That such notice shall notexempt such person or entity f rom securing certificates of quality,health and safety and environmental clearance from the propergovernmental agencies: Provided, furthermore, That such personor entity shall, for monitoring purposes, report to the DOE his or itsevery importation/exportation; Provided, finally , That all oilimportations shall be in accordance with the Basel Convention.

xxx xxx xxx

The nullification of the whole law would, therefore, considerably jeopardize the chances of the new entrants to survive and remain

competitive in the market.

As a consequence thereof, Eastern Petroleum Corp., Seaoil PetroleumCorp., Subic Bay Distribution, Inc., TWA, Inc. and Dubphil Gas, which aresome of the oil industry's new entrants filed a motion for intervention on

To apply the exception to the general rule of separabil

require a clear and overwhelming demonstration whichany and all doubts on the unconstitutionality of R.A. 81

Moreover, the separable and independent character ofassailed provisions may be inferred from the various bleading legislators which, as noted by the Honorable C"the repeal of this odious and offensive provisions in R8180." In fact, the original as well as the final versions Bill 5264 and Senate Bill No. 1253, which later becam8180, did not contain any tariff differential.

The foregoing instances clearly demonstrate that the aprovisions were indeed separable and independent of

provisions of R.A. 8180 and Congress did not considebe that indispensable, without which Congress would npassed R.A. 8180 into law. 10

The public need not fear that prices of petroleum products pa

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some of the oil industry s new entrants, filed a motion for intervention on18 November 1997 urging the Court to reconsider its decision declaringthe whole R.A. No. 8180 unconstitutional. The intervenors raise similarapprehensions concerning the power of the existing oil firms, under theregulated industry, to block the importation of petroleum products by thesmall oil companies and likewise impede their expansion and growth. 9

Even the public respondents in their motion for reconsideration concedesthat if R.A. No. 8180 should be declared unconstitutional, theunconstitutionality is partial, that is, only the three (3) anti-competitionprovisions should be declared void. Public respondents, thus, opine:

Thus, even assuming that the assailed provisions areconstitutionally defective, they cannot be that contagious as toinfect or contaminate the other valid parts of the law which arecomplete in themselves, or capable of bringing about the fullderegulation of the oil industry.

The public need not fear that prices of petroleum products, pagasoline, will soar if R.A. No. 8180 is declared only partiallyunconstitutional. The oil deregulation law itself provides adeqsafeguards that would effectively avert and preclude such a dFor instance, Sec. 8 of the said law provides that:

xxx xxx xxx

Any report from any person of an unreasonable rise inpetroleum products shall be immediately acted upon. Fpurpose, the creation of a Department of Energy (DOEDepartment of Justice (DOJ) Task Force is hereby madetermine the merits of the report and the initiate the nactions warranted under the circumstances to prevent among others.

The law also tasks the Department of Energy (DOE) to "take all measures

to promote fair trade and to prevent cartelization, monopolies andcombinations in restraint of trade and any unfair competition, as defined in Articles 186, 188 and 189 of the Revised Penal Code, in the downstreamsoil industry. The DOE shall continue to encourage certain practices in theoil industry which serve the public interest and are intended to achieveefficiency and cost reduction, ensure continuous supply of petroleumproducts, or enhance environmental protection. These practices mayinclude borrow-and-loan agreements, rationalized deport operations,hospitality agreements, joint tanker and pipeline utilization, and jointactions on oil spill control and fire prevention." 11

Likewise, the DOE is endowed with monitoring powers as amended inSec. 6 of R.A. No. 8180:

Sec. 8. Monitoring.— The DOE shall monitor and publish dailyinternational oil prices to enable the public to determine whethercurrent market oil prices are reasonable. It shall likewise monitorthe quality of petroleum products and stop the operation of

monthly to the DOE their actual and projected importa

purchases, sales and/or consumption, and inventory ocrude/product basis.

xxx xxx xxx

Reverting to a regulated oil industry, even if only for a short pthe legislature "fasttracks" the passage of a new oil deregulatfeasibility of which remains a big "if") defeats the whole purposucceeds in retarding the country's economic growth.

R.A. No. 8180 is a bold and progressive piece of legislation. Igiven a chance to work and prove its worth. Thus, the better sretain the foundations of the law and leave it to Congress to p

necessary amendments and enact the appropriate supportingto fortify R.A. No. 8180.

In view of the foregoing, I find myself unable to concur with ththesis that the three assailed provisions "cannot be struck dow

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the quality of petroleum products and stop the operation ofbusinesses involved in the sale of petroleum products which do notcomply with the national standards of quality. The Bureau ofProduct Standards (BPS), in coordination with DOE, shall setnational standards of quality that are aligned with the internationalstandards/protocols of quality.

The DOE shall monitor the refining and manufacturing processesof local petroleum products to ensure that clean and safe(environment and worker-benign) technologies are applied. Thisshall also apply to the process of marketing local and importedpetroleum products.

The DOE shall maintain in a periodic schedule of present andfuture total industry inventory of petroleum products for thepurpose of determining the level of supply. To implement this, theimporters, refiners, and marketers are hereby required to submit

thesis that the three assailed provisions cannot be struck dowthey were the ones intended to carry out the policy of (R.A. Nand that "without these provisions in place. Congress could noderegulated the downstream oil industry." As I have previouslout, the aforementioned provisions were declared unconstitutprecisely because they were found to be anti-competition. Hocompetition provisions, therefore, have any place in a law whpromote and achieve fair and f ree competition?

The oil deregulation law was not built upon and do not center provisions on tariff differential, minimum inventory requiremenpredatory pricing. These are not the only provisions of R.A. Nintended to implement the legislative intent as expressed in seThe heart and soul of R.A. No. 8180 is embodied is sec. 5(a) "Liberalization of Downstream Oil Industry and Tariff Treatmeprovision which does away with the burdensome requirementprocedures for the importation of petroleum products (the ma

impediments to the entry of new players in the oil market). With this

provision the "entry and exit of competitors" is made relatively easy andfrom this the competitive market is established.

The other remaining provisions are, likewise, sufficient to serve thelegislative will. There is among others, sec. 7 mandating the promotion offair trade practices and sec. 9(a) on the prevention of cartels andmonopolies.

The point is, even without the subject three provisions what remains is acomprehensible and workable law. The infirmities of some parts of thestatute should not taint the whole when these parts could successfully beincised.

I also take exception to the majority's observation that ". . . a partialdeclaration of unconstitutionality of R.A. No. 8180 will bring about a fullyderegulated downstream oil industry where government will be impotentto regulate run away prices, where the oil oligopolists can engage incartelization without competition, where prospective players cannot come

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cartelization without competition, where prospective players cannot comein, and where new players will close shop. . ." As I have earlier discussed,R.A. No. 8180 has armed the government with adequate measures todeal with the above problems, should any of these arise. Theimplementation, therefore, of R.A. No. 8180 (sans the void provisions) isnot an absurdity, on the contrary as shown above, it is the sensible thingto do.

ACCORDINGLY, resolving the pending motion for reconsideration andpartial motions for reconsideration, I CONCUR with the majority insofar asit maintains the opinion to strike down as unconstitutional the three (3)anti-competition provisions of R.A. No. 8180, but I register my DISSENTto its ruling declaring the entire law as unconstitutional.

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