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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-6791 March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,vs.QUE PO LAY, defendant-appellant.

Prudencio de Guzman for appellant.First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee.

MONTEMAYOR, J.:

Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty

of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, andsentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiaryimprisonment in case of insolvency, and to pay the costs.

The charge was that the appellant who was in possession of foreign exchange consisting of U.S.dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to theCentral Bank through its agents within one day following the receipt of such foreign exchange asrequired by Circular No. 20. the appeal is based on the claim that said circular No. 20 was notpublished in the Official Gazette prior to the act or omission imputed to the appellant, and thatconsequently, said circular had no force and effect. It is contended that Commonwealth Act. No.,638 and Act 2930 both require said circular to be published in the Official Gazette, it being an orderor notice of general applicability. The Solicitor General answering this contention says that

Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of saidcircular issued for the implementation of a law in order to have force and effect.

We agree with the Solicitor General that the laws in question do not require the publication of thecirculars, regulations and notices therein mentioned in order to become binding and effective. All thatsaid two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of

Appeals, notices and documents required by law to be of no force and effect. In other words, saidtwo Acts merely enumerate and make a list of what should be published in the Official Gazette,presumably, for the guidance of the different branches of the Government issuing same, and of theBureau of Printing.

However, section 11 of the Revised Administrative Code provides that statutes passed by Congressshall, in the absence of special provision, take effect at the beginning of the fifteenth day after thecompletion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code(Republic Act No. 386) equally provides that laws shall take effect after fifteen days following thecompletion of their publication in the Official Gazette, unless it is otherwise provided. It is true thatCircular No. 20 of the Central Bank is not a statute or law but being issued for the implementation ofthe law authorizing its issuance, it has the force and effect of law according to settled jurisprudence.(See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule,circulars and regulations especially like the Circular No. 20 of the Central Bank in question whichprescribes a penalty for its violation should be published before becoming effective, this, on thegeneral principle and theory that before the public is bound by its contents, especially its penal



provisions, a law, regulation or circular must first be published and the people officially andspecifically informed of said contents and its penalties.

Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws,(Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and thattheir promulgation shall be understood as made on the day of the termination of the publication of

the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws"include regulations and circulars issued in accordance with the same. He says:

El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 deJunio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprendentambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenesdictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien elpoder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas desus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de supublicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacional caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Español, Vol. I. p. 52 ).

In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it wasnot published until November 1951, that is, about 3 months after appellant's conviction of itsviolation. It is clear that said circular, particularly its penal provision, did not have any legal effect andbound no one until its publication in the Official Gazzette or after November 1951. In other words,appellant could not be held liable for its violation, for it was not binding at the time he was found tohave failed to sell the foreign exchange in his possession thereof.

But the Solicitor General also contends that this question of non-publication of the Circular is beingraised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, onemay raise on appeal any question of law or fact that has been raised in the court below and which iswithin the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court).But the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20had not been published as required by law before its violation, then in the eyes of the law there was

no such circular to be violated and consequently appellant committed no violation of the circular orcommitted any offense, and the trial court may be said to have had no jurisdiction. This questionmay be raised at any stage of the proceeding whether or not raised in the court below.

In view of the foregoing, we reverse the decision appealed from and acquit the appellant, withcosts de oficio.

Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno,JJ., concur.




Manila

EN BANC

G.R. No. L-63915 April 24, 1985

LORENZO M. TAÑADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FORBROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,vs.HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacañang Records Office, andFLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:

Invoking the people's right to be informed on matters of public concern, a right recognized in Section6, Article IV of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid andenforceable must be published in the Official Gazette or otherwise effectively promulgated, petitionersseek a writ of mandamus to compel respondent public officials to publish, and/or cause the publication inthe Official Gazette of various presidential decrees, letters of instructions, general orders, proclamations,executive orders, letter of implementation and administrative orders.

Specifically, the publication of the following presidential issuances is sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200,

234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404,406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574,594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961,1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278,1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.

b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153,155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224,226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358,362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498,501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642,

665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.

c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.

d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529,1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800,



1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836,1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870,1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984,1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.

e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507,

509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.

f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81,92, 94, 95, 107, 120, 122, 123.

g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.

The respondents, through the Solicitor General, would have this case dismissed outright on theground that petitioners have no legal personality or standing to bring the instant petition. The view issubmitted that in the absence of any showing that petitioners are personally and directly affected or

prejudiced by the alleged non-publication of the presidential issuances in question2

said petitionersare without the requisite legal personality to institute this mandamus proceeding, they are not being"aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:

SEC. 3. Petition for Mandamus.—When any tribunal, corporation, board or personunlawfully neglects the performance of an act which the law specifically enjoins as aduty resulting from an office, trust, or station, or unlawfully excludes another from theuse a rd enjoyment of a right or office to which such other is entitled, and there is noother plain, speedy and adequate remedy in the ordinary course of law, the personaggrieved thereby may file a verified petition in the proper court alleging the factswith certainty and praying that judgment be rendered commanding the defendant,immediately or at some other specified time, to do the act required to be done toProtect the rights of the petitioner, and to pay the damages sustained by the

petitioner by reason of the wrongful acts of the defendant.

Upon the other hand, petitioners maintain that since the subject of the petition concerns a publicright and its object is to compel the performance of a public duty, they need not show any specificinterest for their petition to be given due course.

The issue posed is not one of first impression. As early as the 1910 case of Severino vs. GovernorGeneral , 3 this Court held that while the general rule is that "a writ of mandamus would be granted to aprivate individual only in those cases where he has some private or particular interest to be subserved, orsome particular right to be protected, independent of that which he holds with the public at large," and "itis for the public officers exclusively to apply for the writ when public rights are to be subserved [Mithchellvs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the

mandamus is to procure the enforcement of a public duty, the people are regarded as the real party ininterest and the relator at whose instigation the proceedings are instituted need not show that he has anylegal or special interest in the result, it being sufficient to show that he is a citizen and as such interestedin the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].

Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a properparty to the mandamus proceedings brought to compel the Governor General to call a specialelection for the position of municipal president in the town of Silay, Negros Occidental. Speaking forthis Court, Mr. Justice Grant T. Trent said:



We are therefore of the opinion that the weight of authority supports the propositionthat the relator is a proper party to proceedings of this character when a public rightis sought to be enforced. If the general rule in America were otherwise, we think thatit would not be applicable to the case at bar for the reason 'that it is alwaysdangerous to apply a general rule to a particular case without keeping in mind thereason for the rule, because, if under the particular circumstances the reason for the

rule does not exist, the rule itself is not applicable and reliance upon the rule maywell lead to error'

No reason exists in the case at bar for applying the general rule insisted upon bycounsel for the respondent. The circumstances which surround this case are differentfrom those in the United States, inasmuch as if the relator is not a proper party tothese proceedings no other person could be, as we have seen that it is not the dutyof the law officer of the Government to appear and represent the people in cases ofthis character.

The reasons given by the Court in recognizing a private citizen's legal personality in theaforementioned case apply squarely to the present petition. Clearly, the right sought to be enforcedby petitioners herein is a public right recognized by no less than the fundamental law of the land. Ifpetitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive ofany other person to initiate the same, considering that the Solicitor General, the government officergenerally empowered to represent the people, has entered his appearance for respondents in thiscase.

Respondents further contend that publication in the Official Gazette is not a sine qua nonrequirement for the effectivity of laws where the laws themselves provide for their own effectivitydates. It is thus submitted that since the presidential issuances in question contain special provisionsas to the date they are to take effect, publication in the Official Gazette is not indispensable for theireffectivity. The point stressed is anchored on Article 2 of the Civil Code:

Art. 2. Laws shall take effect after fifteen days following the completion of their

publication in the Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article. In along line of decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in thosecases where the legislation itself does not provide for its effectivity date-for then the date of publication ismaterial for determining its date of effectivity, which is the fifteenth day following its publication-but notwhen the law itself provides for the date when it goes into effect.

Respondents' argument, however, is logically correct only insofar as it equates the effectivity of lawswith the fact of publication. Considered in the light of other statutes applicable to the issue at hand,the conclusion is easily reached that said Article 2 does not preclude the requirement of publicationin the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of

Commonwealth Act 638 provides as follows:

Section 1. There shall be published in the Official Gazette [1] all important legisiativeacts and resolutions of a public nature of the, Congress of the Philippines; [2] allexecutive and administrative orders and proclamations, except such as have nogeneral applicability; [3] decisions or abstracts of decisions of the Supreme Courtand the Court of Appeals as may be deemed by said courts of sufficient importanceto be so published; [4] such documents or classes of documents as may be requiredso to be published by law; and [5] such documents or classes of documents as the



President of the Philippines shall determine from time to time to have generalapplicability and legal effect, or which he may authorize so to be published. ...

The clear object of the above-quoted provision is to give the general public adequate notice of thevarious laws which are to regulate their actions and conduct as citizens. Without such notice andpublication, there would be no basis for the application of the maxim "ignorantia legis non excusat." It

would be the height of injustice to punish or otherwise burden a citizen for the transgression of a lawof which he had no notice whatsoever, not even a constructive one.

Perhaps at no time since the establishment of the Philippine Republic has the publication of lawstaken so vital significance that at this time when the people have bestowed upon the President apower heretofore enjoyed solely by the legislature. While the people are kept abreast by the massmedia of the debates and deliberations in the Batasan Pambansa—and for the diligent ones, readyaccess to the legislative records—no such publicity accompanies the law-making process of thePresident. Thus, without publication, the people have no means of knowing what presidentialdecrees have actually been promulgated, much less a definite way of informing themselves of thespecific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo ladenominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos,Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobiernoen uso de su potestad. 5

The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in theOfficial Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperativeduty. That duty must be enforced if the Constitutional right of the people to be informed on matters ofpublic concern is to be given substance and reality. The law itself makes a list of what should bepublished in the Official Gazette. Such listing, to our mind, leaves respondents with no discretionwhatsoever as to what must be included or excluded from such publication.

The publication of all presidential issuances "of a public nature" or "of general applicability" ismandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties fortheir violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall

within this category. Other presidential issuances which apply only to particular persons or class ofpersons such as administrative and executive orders need not be published on the assumption thatthey have been circularized to all concerned. 6

It is needless to add that the publication of presidential issuances "of a public nature" or "of generalapplicability" is a requirement of due process. It is a rule of law that before a person may be boundby law, he must first be officially and specifically informed of its contents. As Justice ClaudioTeehankee said in Peralta vs. COMELEC 7:

In a time of proliferating decrees, orders and letters of instructions which all form partof the law of the land, the requirement of due process and the Rule of Law demandthat the Official Gazette as the official government repository promulgate and publish

the texts of all such decrees, orders and instructions so that the people may knowwhere to obtain their official and specific contents.

The Court therefore declares that presidential issuances of general application, which have not beenpublished, shall have no force and effect. Some members of the Court, quite apprehensive about thepossible unsettling effect this decision might have on acts done in reliance of the validity of thosepresidential decrees which were published only during the pendency of this petition, have put thequestion as to whether the Court's declaration of invalidity apply to P.D.s which had been enforcedor implemented prior to their publication. The answer is all too familiar. In similar situations in the



past this Court had taken the pragmatic and realistic course set forth in Chicot County DrainageDistrict vs. Baxter Bank 8 to wit:

The courts below have proceeded on the theory that the Act of Congress, havingbeen found to be unconstitutional, was not a law; that it was inoperative, conferringno rights and imposing no duties, and hence affording no basis for the challenged

decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v.Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements asto the effect of a determination of unconstitutionality must be taken withqualifications. The actual existence of a statute, prior to such a determination, is anoperative fact and may have consequences which cannot justly be ignored. The pastcannot always be erased by a new judicial declaration. The effect of the subsequentruling as to invalidity may have to be considered in various aspects-with respect toparticular conduct, private and official. Questions of rights claimed to have becomevested, of status, of prior determinations deemed to have finality and acted uponaccordingly, of public policy in the light of the nature both of the statute and of itsprevious application, demand examination. These questions are among the mostdifficult of those which have engaged the attention of courts, state and federal and itis manifest from numerous decisions that an all-inclusive statement of a principle ofabsolute retroactive invalidity cannot be justified.

Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a partyunder the Moratorium Law, albeit said right had accrued in his favor before said law was declaredunconstitutional by this Court.

Similarly, the implementation/enforcement of presidential decrees prior to their publication in theOfficial Gazette is "an operative fact which may have consequences which cannot be justly ignored.The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of aprinciple of absolute retroactive invalidity cannot be justified."

From the report submitted to the Court by the Clerk of Court, it appears that of the presidential

decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos.1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neitherthe subject matters nor the texts of these PDs can be ascertained since no copies thereof are available.But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has everbeen implemented or enforced by the government. In Pesigan vs. Angeles, 11 the Court, through JusticeRamon Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal]regulations and make the said penalties binding on the persons affected thereby. " The cogency of thisholding is apparently recognized by respondent officials considering the manifestation in their commentthat "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until thesame shall have been published in the Official Gazette or in some other publication, even though somecriminal laws provide that they shall take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all

unpublished presidential issuances which are of general application, and unless so published, theyshall have no binding force and effect.

SO ORDERED.




Manila

EN BANC

G.R. No. 127882 January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONGMIGUEL M. LUMAYONG, WIGBERTO E. TAÑADA, PONCIANO BENNAGEN, JAIME TADEO,RENATO R. CONSTANTINO, JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIML. DABIE, SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L.GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA P. TACUAYAN, minorsJOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M. DADING,represented by his father ANTONIO L. DADING, ROMY M. LAGARO, represented by his fatherTOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by his father MIGUEL M.LUMAYONG, RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L.SAL, represented by his father DANNY M. SAL, DAISY RECARSE, represented by her mother

LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR, MARIO L. MANGCAL, ALDENS. TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINACULAR, GIAN CARLO CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIOCULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents JOSE VILLAMOR andELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO JOSEB. TALJA, SHARMAINE R. CUNANAN, represented by her father ALFREDO M. CUNANAN,ANTONIO JOSE A. VITUG III, represented by his mother ANNALIZA A. VITUG, LEAN D.NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAGLINGATING, represented by her father RIO OLIMPIO A. LINGATING, MARIO JOSE B. TALJA,DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO, OND, LOLITAG. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S.VERZOLA, EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented by his fatherELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS, (GF-

WV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGOSA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN(KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANGPANSAKAHAN (KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURALDEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THEDEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA),WOMEN'S LEGAL BUREAU (WLB), CENTER FOR ALTERNATIVE DEVELOPMENTINITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE (UDI), KINAIYAHANFOUNDATION, INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGALRIGHTS AND NATURAL RESOURCES CENTER, INC. (LRC), petitioners,vs.VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURALRESOURCES (DENR), HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES BUREAU(MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY, and WMC (PHILIPPINES),INC.4 respondents.

D E C I S I O N

CARPIO-MORALES, J.:



The present petition for mandamus and prohibition assails the constitutionality of Republic Act No.7942,5otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the ImplementingRules and Regulations issued pursuant thereto, Department of Environment and Natural Resources(DENR) Administrative Order 96-40, and of the Financial and Technical Assistance Agreement(FTAA) entered into on March 30, 1995 by the Republic of the Philippines and WMC (Philippines),Inc. (WMCP), a corporation organized under Philippine laws.

On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No.2796 authorizing the DENR Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts or agreements involving either technical orfinancial assistance for large-scale exploration, development, and utilization of minerals, which, uponappropriate recommendation of the Secretary, the President may execute with the foreignproponent. In entering into such proposals, the President shall consider the real contributions to theeconomic growth and general welfare of the country that will be realized, as well as the developmentand use of local scientific and technical resources that will be promoted by the proposed contract oragreement. Until Congress shall determine otherwise, large-scale mining, for purpose of thisSection, shall mean those proposals for contracts or agreements for mineral resources exploration,development, and utilization involving a committed capital investment in a single mining unit projectof at least Fifty Million Dollars in United States Currency (US $50,000,000.00). 7

On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern theexploration, development, utilization and processing of all mineral resources."8 R.A. No. 7942defines the modes of mineral agreements for mining operations,9 outlines the procedure for theirfiling and approval,10 assignment/transfer 11and withdrawal,12 and fixes their terms.13 Similarprovisions govern financial or technical assistance agreements.14

The law prescribes the qualifications of contractors15 and grants them certain rights, includingtimber,16 water 17and easement18 rights, and the right to possess explosives.19 Surface owners,occupants, or concessionaires are forbidden from preventing holders of mining rights from enteringprivate lands and concession areas.20 A procedure for the settlement of conflicts is likewise providedfor.21

The Act restricts the conditions for exploration,22 quarry23 and other 24 permits. It regulates thetransport, sale and processing of minerals,25 and promotes the development of mining communities,science and mining technology,26 and safety and environmental protection.27

The government's share in the agreements is spelled out and allocated,28 taxes and fees areimposed,29incentives granted.30 Aside from penalizing certain acts,31 the law likewise specifiesgrounds for the cancellation, revocation and termination of agreements and permits.32

On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times,two newspapers of general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity ofR.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP

covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and NorthCotabato.34

On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order(DAO) No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No.7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20,1996.



On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding thatthe DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40,35 giving the DENR fifteendays from receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners'letter.37

Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a

temporary restraining order. They allege that at the time of the filing of the petition, 100 FTAAapplications had already been filed, covering an area of 8.4 million hectares,38 64 of whichapplications are by fully foreign-owned corporations covering a total of 5.8 million hectares, and atleast one by a fully foreign-owned mining company over offshore areas.39

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:

I

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it allows fully foreign owned corporations toexplore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph

4, Article XII of the Constitution;

II

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it allows the taking of private property without thedetermination of public use and for just compensation;

III

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;

IV

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well asfully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of

Article XII of the Constitution;

V

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned

corporations in the exploration, development and utilization of mineral resources contrary to ArticleXII of the Constitution;

VI

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic ActNo. 7942, the latter being unconstitutional in that it allows the inequitable sharing of wealth contraryto Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;



VII

x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the President of the Republic of the Philippines and Western MiningCorporation Philippines Inc. because the same is illegal and unconstitutional.40

They pray that the Court issue an order:

(a) Permanently enjoining respondents from acting on any application for Financial orTechnical Assistance Agreements;

(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutionaland null and void;

(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act containedin DENR Administrative Order No. 96-40 and all other similar administrative issuances asunconstitutional and null and void; and

(d) Cancelling the Financial and Technical Assistance Agreement issued to Western MiningPhilippines, Inc. as unconstitutional, illegal and null and void.41

Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos,the then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau ofthe DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA withthe Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "awholly owned subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major

Australian mining and exploration company."42 By WMCP's information, "it is a 100% ownedsubsidiary of WMC LIMITED."43

Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial

inquiry have not been met and that the petition does not comply with the criteria for prohibition andmandamus. Additionally, respondent WMCP argues that there has been a violation of the rule onhierarchy of courts.

After petitioners filed their reply, this Court granted due course to the petition. The parties have sincefiled their respective memoranda.

WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23,2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporationorganized under Philippine laws.44 WMCP was subsequently renamed "Tampakan MineralResources Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is owned byFilipinos and/or Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an

Australian company.46 It further claims that by such sale and transfer of shares, "WMCP has ceasedto be connected in any way with WMC."47

By virtue of such sale and transfer, the DENR Secretary, by Order of December 18,2001,48 approved the transfer and registration of the subject FTAA from WMCP to Sagittarius. SaidOrder, however, was appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of thePresident which upheld it by Decision of July 23, 2002.49 Its motion for reconsideration having beendenied by the Office of the President by Resolution of November 12, 2002, 50 Lepanto filed a petitionfor review51 before the Court of Appeals. Incidentally, two other petitions for review related to the



approval of the transfer and registration of the FTAA to Sagittarius were recently resolved by thisCourt.52

It bears stressing that this case has not been rendered moot either by the transfer and registration ofthe FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order ora preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the

President.53 The validity of the transfer remains in dispute and awaits final judicial determination.This assumes, of course, that such transfer cures the FTAA's alleged unconstitutionality, on whichquestion judgment is reserved.

WMCP also points out that the original claimowners of the major mineralized areas included in theWMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation,are all Filipino-owned corporations,54 each of which was a holder of an approved Mineral ProductionSharing Agreement awarded in 1994, albeit their respective mineral claims were subsumed in theWMCP FTAA;55 and that these three companies are the same companies that consolidated theirinterests in Sagittarius to whom WMC sold its 100% equity in WMCP.56 WMCP concludes that in theevent that the FTAA is invalidated, the MPSAs of the three corporations would be revived and themineral claims would revert to their original claimants.57

These circumstances, while informative, are hardly significant in the resolution of this case, itinvolving the validity of the FTAA, not the possible consequences of its invalidation.

Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the firstand the last need be delved into; in the latter, the discussion shall dwell only insofar as it questionsthe effectivity of E. O. No. 279 by virtue of which order the questioned FTAA was forged.

I

Before going into the substantive issues, the procedural questions posed by respondents shall firstbe tackled.

REQUISITES FOR JUDICIAL REVIEW

When an issue of constitutionality is raised, this Court can exercise its power of judicial review only ifthe following requisites are present:

(1) The existence of an actual and appropriate case;

(2) A personal and substantial interest of the party raising the constitutional question;

(3) The exercise of judicial review is pleaded at the earliest opportunity; and

(4) The constitutional question is the lis mota of the case.58

Respondents claim that the first three requisites are not present.

Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable."The power of judicial review, therefore, is limited to the determination of actual cases andcontroversies.59



An actual case or controversy means an existing case or controversy that is appropriate or ripe fordetermination, not conjectural or anticipatory,60 lest the decision of the court would amount to anadvisory opinion.61 The power does not extend to hypothetical questions62 since any attempt atabstraction could only lead to dialectics and barren legal questions and to sterile conclusionsunrelated to actualities.63

"Legal standing" or locus standi has been defined as a personal and substantial interest in the casesuch that the party has sustained or will sustain direct injury as a result of the governmental act thatis being challenged,64alleging more than a generalized grievance.65 The gist of the question ofstanding is whether a party alleges "such personal stake in the outcome of the controversy as toassure that concrete adverseness which sharpens the presentation of issues upon which the courtdepends for illumination of difficult constitutional questions."66Unless a person is injuriously affectedin any of his constitutional rights by the operation of statute or ordinance, he has no standing.67

Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association,Inc., a farmers and indigenous people's cooperative organized under Philippine laws representing acommunity actually affected by the mining activities of WMCP, members of said cooperative,68 aswell as other residents of areas also affected by the mining activities of WMCP. 69 These petitionershave standing to raise the constitutionality of the questioned FTAA as they allege a personal andsubstantial injury. They claim that they would suffer "irremediable displacement" 70 as a result of theimplementation of the FTAA allowing WMCP to conduct mining activities in their area of residence.They thus meet the appropriate case requirement as they assert an interest adverse to that ofrespondents who, on the other hand, insist on the FTAA's validity.

In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O.No. 279, by authority of which the FTAA was executed.

Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or bothcontracting parties to annul it.71 In other words, they contend that petitioners are not real parties ininterest in an action for the annulment of contract.

Public respondents' contention fails. The present action is not merely one for annulment of contractbut for prohibition and mandamus. Petitioners allege that public respondents acted without or inexcess of jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the caseinvolves constitutional questions, this Court is not concerned with whether petitioners are real partiesin interest, but with whether they have legal standing. As held in Kilosbayan v. Morato:72

x x x. "It is important to note . . . that standing because of its constitutional and public policyunderpinnings, is very different from questions relating to whether a particular plaintiff is the realparty in interest or has capacity to sue. Although all three requirements are directed towardsensuring that only certain parties can maintain an action, standing restrictions require a partialconsideration of the merits, as well as broader policy concerns relating to the proper role of the

judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])

Standing is a special concern in constitutional law because in some cases suits are brought not byparties who have been personally injured by the operation of a law or by official action taken, but byconcerned citizens, taxpayers or voters who actually sue in the public interest. Hence, the questionin standing is whether such parties have "alleged such a personal stake in the outcome of thecontroversy as to assure that concrete adverseness which sharpens the presentation of issues uponwhich the court so largely depends for illumination of difficult constitutional questions." (Baker v.Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)



As earlier stated, petitioners meet this requirement.

The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills therequisites of justiciability. Although these laws were not in force when the subject FTAA was enteredinto, the question as to their validity is ripe for adjudication.

The WMCP FTAA provides:

14.3 Future Legislation

Any term and condition more favourable to Financial &Technical Assistance Agreement contractorsresulting from repeal or amendment of any existing law or regulation or from the enactment of a law,regulation or administrative order shall be considered a part of this Agreement.

It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable toWMCP, hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.

In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.

SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. – x x x That the provisions ofChapter XIV on government share in mineral production-sharing agreement and of Chapter XVI onincentives of this Act shall immediately govern and apply to a mining lessee or contractor unless themining lessee or contractor indicates his intention to the secretary, in writing, not to avail of saidprovisions x x x Provided, finally, That such leases, production-sharing agreements, financial ortechnical assistance agreements shall comply with the applicable provisions of this Act and itsimplementing rules and regulations.

As there is no suggestion that WMCP has indicated its intention not to avail of the provisions ofChapter XVI of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA.

Misconstruing the application of the third requisite for judicial review – that the exercise of the reviewis pleaded at the earliest opportunity – WMCP points out that the petition was filed only almost twoyears after the execution of the FTAA, hence, not raised at the earliest opportunity.

The third requisite should not be taken to mean that the question of constitutionality must be raisedimmediately after the execution of the state action complained of. That the question ofconstitutionality has not been raised before is not a valid reason for refusing to allow it to be raisedlater.73 A contrary rule would mean that a law, otherwise unconstitutional, would lapse intoconstitutionality by the mere failure of the proper party to promptly file a case to challenge the same.

PROPRIETY OF PROHIBITION AND MANDAMUS

Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:

SEC. 2. Petition for prohibition. – When the proceedings of any tribunal, corporation, board, orperson, whether exercising functions judicial or ministerial, are without or in excess of its or his

jurisdiction, or with grave abuse of discretion, and there is no appeal or any other plain, speedy, andadequate remedy in the ordinary course of law, a person aggrieved thereby may file a verifiedpetition in the proper court alleging the facts with certainty and praying that judgment be renderedcommanding the defendant to desist from further proceeding in the action or matter specifiedtherein.



Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist fromcontinuing with the commission of an act perceived to be illegal.75

The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contractitself may be fait accompli, its implementation is not. Public respondents, in behalf of theGovernment, have obligations to fulfill under said contract. Petitioners seek to prevent them from

fulfilling such obligations on the theory that the contract is unconstitutional and, therefore, void.

The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamusaspect of the petition is rendered unnecessary.

HIERARCHY OF COURTS

The contention that the filing of this petition violated the rule on hierarchy of courts does not likewiselie. The rule has been explained thus:

Between two courts of concurrent original jurisdiction, it is the lower court that should initially passupon the issues of a case. That way, as a particular case goes through the hierarchy of courts, it is

shorn of all but the important legal issues or those of first impression, which are the proper subject ofattention of the appellate court. This is a procedural rule borne of experience and adopted toimprove the administration of justice.

This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Courthas concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs ofcertiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrencedoes not give a party unrestricted freedom of choice of court forum. The resort to this Court's primary

jurisdiction to issue said writs shall be allowed only where the redress desired cannot be obtained inthe appropriate courts or where exceptional and compelling circumstances justify such invocation.We held in People v. Cuaresma that:

A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance ofextraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court'soriginal jurisdiction to issue these writs should be allowed only where there are special and importantreasons therefor, clearly and specifically set out in the petition. This is established policy. It is apolicy necessary to prevent inordinate demands upon the Court's time and attention which are betterdevoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of theCourt's docket x x x.76 [Emphasis supplied.]

The repercussions of the issues in this case on the Philippine mining industry, if not the nationaleconomy, as well as the novelty thereof, constitute exceptional and compelling circumstances to

justify resort to this Court in the first instance.

In all events, this Court has the discretion to take cognizance of a suit which does not satisfy therequirements of an actual case or legal standing when paramount public interest is involved. 77 Whenthe issues raised are of paramount importance to the public, this Court may brush asidetechnicalities of procedure.78

II



Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivitycame after President Aquino had already lost her legislative powers under the ProvisionalConstitution.

And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279,violates Section 2, Article XII of the Constitution because, among other reasons:

(1) It allows foreign-owned companies to extend more than mere financial or technicalassistance to the State in the exploitation, development, and utilization of minerals,petroleum, and other mineral oils, and even permits foreign owned companies to "operateand manage mining activities."

(2) It allows foreign-owned companies to extend both technical and financial assistance,instead of "either technical or financial assistance."

To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision,the concepts contained therein, and the laws enacted pursuant thereto, is in order.

Section 2, Article XII reads in full:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, allforces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other naturalresources are owned by the State. With the exception of agricultural lands, all other naturalresources shall not be alienated. The exploration, development, and utilization of natural resourcesshall be under the full control and supervision of the State. The State may directly undertake suchactivities or it may enter into co-production, joint venture, or production-sharing agreements withFilipino citizens, or corporations or associations at least sixty per centum of whose capital is ownedby such citizens. Such agreements may be for a period not exceeding twenty-five years, renewablefor not more than twenty-five years, and under such terms and conditions as may be provided bylaw. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than thedevelopment of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, andexclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, aswell as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technicalor financial assistance for large-scale exploration, development, and utilization of minerals,petroleum, and other mineral oils according to the general terms and conditions provided by law,based on real contributions to the economic growth and general welfare of the country. In such

agreements, the State shall promote the development and use of local scientific and technicalresources.

The President shall notify the Congress of every contract entered into in accordance with thisprovision, within thirty days from its execution.



THE SPANISH REGIME AND THE REGALIAN DOCTRINE

The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spaininto these Islands, this feudal concept is based on the State's power of dominium, which is thecapacity of the State to own or acquire property.79

In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has byvirtue of his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything inwhich a subject has a right of property or propriedad. These were rights enjoyed during feudal timesby the king as the sovereign.

The theory of the feudal system was that title to all lands was originally held by the King, and whilethe use of lands was granted out to others who were permitted to hold them under certainconditions, the King theoretically retained the title. By fiction of law, the King was regarded as theoriginal proprietor of all lands, and the true and only source of title, and from him all lands were held.The theory of jura regalia was therefore nothing more than a natural fruit of conquest.80

The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier Spanish

decrees declared that "all lands were held from the Crown."82

The Regalian doctrine extends not only to land but also to "all natural wealth that may be found inthe bowels of the earth."83 Spain, in particular, recognized the unique value of natural resources,viewing them, especially minerals, as an abundant source of revenue to finance its wars againstother nations.84 Mining laws during the Spanish regime reflected this perspective.85

THE AMERICAN OCCUPATION AND THE CONCESSION REGIME

By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the PhilippineIslands" to the United States. The Philippines was hence governed by means of organic acts thatwere in the nature of charters serving as a Constitution of the occupied territory from 1900 to

1935.86

Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902,more commonly known as the Philippine Bill of 1902, through which the United States Congressassumed the administration of the Philippine Islands.87 Section 20 of said Bill reserved thedisposition of mineral lands of the public domain from sale. Section 21 thereof allowed the free andopen exploration, occupation and purchase of mineral deposits not only to citizens of the PhilippineIslands but to those of the United States as well:

Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyedand unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase,and the land in which they are found, to occupation and purchase, by citizens of the United States orof said Islands: Provided, That when on any lands in said Islands entered and occupied asagricultural lands under the provisions of this Act, but not patented, mineral deposits have beenfound, the working of such mineral deposits is forbidden until the person, association, or corporation

who or which has entered and is occupying such lands shall have paid to the Government of saidIslands such additional sum or sums as will make the total amount paid for the mineral claim orclaims in which said deposits are located equal to the amount charged by the Government for thesame as mineral claims.

Unlike Spain, the United States considered natural resources as a source of wealth for its nationalsand saw fit to allow both Filipino and American citizens to explore and exploit minerals in publiclands, and to grant patents to private mineral lands.88 A person who acquired ownership over a



parcel of private mineral land pursuant to the laws then prevailing could exclude other persons, eventhe State, from exploiting minerals within his property.89Thus, earlier jurisprudence90 held that:

A valid and subsisting location of mineral land, made and kept up in accordance with the provisionsof the statutes of the United States, has the effect of a grant by the United States of the present andexclusive possession of the lands located, and this exclusive right of possession and enjoyment

continues during the entire life of the location. x x x.

x x x.

The discovery of minerals in the ground by one who has a valid mineral location perfects his claimand his location not only against third persons, but also against the Government. x x x. [Italics in theoriginal.]

The Regalian doctrine and the American system, therefore, differ in one essential respect. Under theRegalian theory, mineral rights are not included in a grant of land by the state; under the Americandoctrine, mineral rights are included in a grant of land by the government.91

Section 21 also made possible the concession (frequently styled "permit", license" or"lease")92 system.93 This was the traditional regime imposed by the colonial administrators for theexploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.). 94

Under the concession system, the concessionaire makes a direct equity investment for the purposeof exploiting a particular natural resource within a given area. 95 Thus, the concession amounts tocomplete control by the concessionaire over the country's natural resource, for it is given exclusiveand plenary rights to exploit a particular resource at the point of extraction.96 In consideration for theright to exploit a natural resource, the concessionaire either pays rent or royalty, which is a fixedpercentage of the gross proceeds.97

Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual

framework of the concession.98

For instance, Act No. 2932,99

approved on August 31, 1920, whichprovided for the exploration, location, and lease of lands containing petroleum and other mineral oilsand gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for theleasing and development of coal lands in the Philippines, both utilized the concession system. 101

THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES

By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffieLaw, the People of the Philippine Islands were authorized to adopt a constitution.102 On July 30,1934, the Constitutional Convention met for the purpose of drafting a constitution, and theConstitution subsequently drafted was approved by the Convention on February 8, 1935. 103 TheConstitution was submitted to the President of the United States on March 18, 1935. 104 On March 23,1935, the President of the United States certified that the Constitution conformed substantially with

the provisions of the Act of Congress approved on March 24, 1934. 105On May 14, 1935, theConstitution was ratified by the Filipino people.106

The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of thePhilippines, including mineral lands and minerals, to be property belonging to the State. 107 Asadopted in a republican system, the medieval concept of jura regalia is stripped of royal overtonesand ownership of the land is vested in the State.108



Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitutionprovided:

SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters,minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and othernatural resources of the Philippines belong to the State, and their disposition, exploitation,

development, or utilization shall be limited to citizens of the Philippines, or to corporations orassociations at least sixty per centum of the capital of which is owned by such citizens,subject to any existing right, grant, lease, or concession at the time of the inauguration of theGovernment established under this Constitution. Natural resources, with the exception ofpublic agricultural land, shall not be alienated, and no license, concession, or lease for theexploitation, development, or utilization of any of the natural resources shall be granted for aperiod exceeding twenty-five years, except as to water rights for irrigation, water supply,fisheries, or industrial uses other than the development of water power, in which casesbeneficial use may be the measure and the limit of the grant.

The nationalization and conservation of the natural resources of the country was one of the fixed anddominating objectives of the 1935 Constitutional Convention.109 One delegate relates:

There was an overwhelming sentiment in the Convention in favor of the principle of state ownershipof natural resources and the adoption of the Regalian doctrine. State ownership of natural resourceswas seen as a necessary starting point to secure recognition of the state's power to control theirdisposition, exploitation, development, or utilization. The delegates of the Constitutional Conventionvery well knew that the concept of State ownership of land and natural resources was introduced bythe Spaniards, however, they were not certain whether it was continued and applied by the

Americans. To remove all doubts, the Convention approved the provision in the Constitutionaffirming the Regalian doctrine.

The adoption of the principle of state ownership of the natural resources and of the Regaliandoctrine was considered to be a necessary starting point for the plan of nationalizing and conservingthe natural resources of the country. For with the establishment of the principle of state ownership of

the natural resources, it would not be hard to secure the recognition of the power of the State tocontrol their disposition, exploitation, development or utilization.110

The nationalization of the natural resources was intended (1) to insure their conservation for Filipinoposterity; (2) to serve as an instrument of national defense, helping prevent the extension to thecountry of foreign control through peaceful economic penetration; and (3) to avoid making thePhilippines a source of international conflicts with the consequent danger to its internal security andindependence.111

The same Section 1, Article XIII also adopted the concession system, expressly permitting the Stateto grant licenses, concessions, or leases for the exploitation, development, or utilization of any of thenatural resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of

which is owned by Filipinos.lawph!l.ne+

The swell of nationalism that suffused the 1935 Constitution was radically diluted when onNovember 1946, the Parity Amendment, which came in the form of an "Ordinance Appended to theConstitution," was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3,1974, the right to utilize and exploit our natural resources to citizens of the United States andbusiness enterprises owned or controlled, directly or indirectly, by citizens of the United States:113



Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, ofthe foregoing Constitution, during the effectivity of the Executive Agreement entered into by thePresident of the Philippines with the President of the United States on the fourth of July, nineteenhundred and forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven hundredand thirty-three, but in no case to extend beyond the third of July, nineteen hundred and seventy-four, the disposition, exploitation, development, and utilization of all agricultural, timber, and mineral

lands of the public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces andsources of potential energy, and other natural resources of the Philippines, and the operation ofpublic utilities, shall, if open to any person, be open to citizens of the United States and to all formsof business enterprise owned or controlled, directly or indirectly, by citizens of the United States inthe same manner as to, and under the same conditions imposed upon, citizens of the Philippines orcorporations or associations owned or controlled by citizens of the Philippines.

The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, alsoknown as the Laurel-Langley Agreement, embodied in Republic Act No. 1355.114

THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM

In the meantime, Republic Act No. 387,115

also known as the Petroleum Act of 1949, was approvedon June 18, 1949.

The Petroleum Act of 1949 employed the concession system for the exploitation of the nation'spetroleum resources. Among the kinds of concessions it sanctioned were exploration andexploitation concessions, which respectively granted to the concessionaire the exclusive right toexplore for 116 or develop117 petroleum within specified areas.

Concessions may be granted only to duly qualified persons118 who have sufficient finances,organization, resources, technical competence, and skills necessary to conduct the operations to beundertaken.119

Nevertheless, the Government reserved the right to undertake such work itself.120 This proceededfrom the theory that all natural deposits or occurrences of petroleum or natural gas in public and/orprivate lands in the Philippines belong to the State.121 Exploration and exploitation concessions didnot confer upon the concessionaire ownership over the petroleum lands and petroleumdeposits.122 However, they did grant concessionaires the right to explore, develop, exploit, and utilizethem for the period and under the conditions determined by the law. 123

Concessions were granted at the complete risk of the concessionaire; the Government did notguarantee the existence of petroleum or undertake, in any case, title warranty.124

Concessionaires were required to submit information as maybe required by the Secretary of Agriculture and Natural Resources, including reports of geological and geophysical examinations, aswell as production reports.125 Exploration126 and exploitation127 concessionaires were also required to

submit work programs.lavvphi1.net

Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax,128 theobject of which is to induce the concessionaire to actually produce petroleum, and not simply to siton the concession without developing or exploiting it.129 These concessionaires were also bound topay the Government royalty, which was not less than 12½% of the petroleum produced and saved,less that consumed in the operations of the concessionaire.130 Under Article 66, R.A. No. 387, theexploitation tax may be credited against the royalties so that if the concessionaire shall be actuallyproducing enough oil, it would not actually be paying the exploitation tax.131



Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to theGovernment within one year from the date it becomes due, 133 constituted grounds for thecancellation of the concession. In case of delay in the payment of the taxes or royalty imposed bythe law or by the concession, a surcharge of 1% per month is exacted until the same are paid. 134

As a rule, title rights to all equipment and structures that the concessionaire placed on the land

belong to the exploration or exploitation concessionaire.135 Upon termination of such concession, theconcessionaire had a right to remove the same.136

The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions ofthe law, through the Director of Mines, who acted under the Secretary's immediate supervision andcontrol.137 The Act granted the Secretary the authority to inspect any operation of the concessionaireand to examine all the books and accounts pertaining to operations or conditions related to paymentof taxes and royalties.138

The same law authorized the Secretary to create an Administration Unit and a TechnicalBoard.139 The Administration Unit was charged, inter alia, with the enforcement of the provisions ofthe law.140 The Technical Board had, among other functions, the duty to check on the performance of

concessionaires and to determine whether the obligations imposed by the Act and its implementingregulations were being complied with.141

Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed thebenefits and drawbacks of the concession system insofar as it applied to the petroleum industry:

Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect ofthe concession system is that the State's financial involvement is virtually risk free and administrationis simple and comparatively low in cost. Furthermore, if there is a competitive allocation of theresource leading to substantial bonuses and/or greater royalty coupled with a relatively high level oftaxation, revenue accruing to the State under the concession system may compare favorably withother financial arrangements.

Disadvantages of Concession. There are, however, major negative aspects to this system. Becausethe Government's role in the traditional concession is passive, it is at a distinct disadvantage inmanaging and developing policy for the nation's petroleum resource. This is true for several reasons.First, even though most concession agreements contain covenants requiring diligence in operationsand production, this establishes only an indirect and passive control of the host country in resourcedevelopment. Second, and more importantly, the fact that the host country does not directlyparticipate in resource management decisions inhibits its ability to train and employ its nationals inpetroleum development. This factor could delay or prevent the country from effectively engaging inthe development of its resources. Lastly, a direct role in management is usually necessary in orderto obtain a knowledge of the international petroleum industry which is important to an appreciation ofthe host country's resources in relation to those of other countries.142

Other liabilities of the system have also been noted:

x x x there are functional implications which give the concessionaire great economic power arisingfrom its exclusive equity holding. This includes, first, appropriation of the returns of the undertaking,subject to a modest royalty; second, exclusive management of the project; third, control ofproduction of the natural resource, such as volume of production, expansion, research anddevelopment; and fourth, exclusive responsibility for downstream operations, like processing,marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of thenatural resource being exploited, it has been shorn of all elements of control over such natural



resource because of the exclusive nature of the contractual regime of the concession. Theconcession system, investing as it does ownership of natural resources, constitutes a consistentinconsistency with the principle embodied in our Constitution that natural resources belong to thestate and shall not be alienated, not to mention the fact that the concession was the bedrock of thecolonial system in the exploitation of natural resources.143

Eventually, the concession system failed for reasons explained by Dimagiba:

Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could nothave properly spurred sustained oil exploration activities in the country, since it assumed that such acapital-intensive, high risk venture could be successfully undertaken by a single individual or a smallcompany. In effect, concessionaires' funds were easily exhausted. Moreover, since the concessionsystem practically closed its doors to interested foreign investors, local capital was stretched to thelimits. The old system also failed to consider the highly sophisticated technology and expertiserequired, which would be available only to multinational companies.144

A shift to a new regime for the development of natural resources thus seemed imminent.

PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACTSYSTEM

The promulgation on December 31, 1972 of Presidential Decree No. 87, 145 otherwise known as TheOil Exploration and Development Act of 1972 signaled such a transformation. P.D. No. 87 permittedthe government to explore for and produce indigenous petroleum through "service contracts." 146

"Service contracts" is a term that assumes varying meanings to different people, and it has carriedmany names in different countries, like "work contracts" in Indonesia, "concession agreements" in

Africa, "production-sharing agreements" in the Middle East, and "participation agreements" in Latin America.147 A functional definition of "service contracts" in the Philippines is provided as follows:

A service contract is a contractual arrangement for engaging in the exploitation and development ofpetroleum, mineral, energy, land and other natural resources by which a government or its agency,or a private person granted a right or privilege by the government authorizes the other party (servicecontractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, inthat the latter provides financial or technical resources, undertakes the exploitation or production of agiven resource, or directly manages the productive enterprise, operations of the exploration andexploitation of the resources or the disposition of marketing or resources.148

In a service contract under P.D. No. 87, service and technology are furnished by the servicecontractor for which it shall be entitled to the stipulated service fee. 149 The contractor must betechnically competent and financially capable to undertake the operations required in the contract. 150

Financing is supposed to be provided by the Government to which all petroleum produced

belongs.151 In case the Government is unable to finance petroleum exploration operations, thecontractor may furnish services, technology and financing, and the proceeds of sale of the petroleumproduced under the contract shall be the source of funds for payment of the service fee and theoperating expenses due the contractor.152 The contractor shall undertake, manage and executepetroleum operations, subject to the government overseeing the management of theoperations.153 The contractor provides all necessary services and technology and the requisitefinancing, performs the exploration work obligations, and assumes all exploration risks such that ifno petroleum is produced, it will not be entitled to reimbursement. 154 Once petroleum in commercialquantity is discovered, the contractor shall operate the field on behalf of the government. 155



P.D. No. 87 prescribed minimum terms and conditions for every service contract. 156 It also grantedthe contractor certain privileges, including exemption from taxes and payment of tariff duties,157 andpermitted the repatriation of capital and retention of profits abroad. 158

Ostensibly, the service contract system had certain advantages over the concession regime.159 It hasbeen opined, though, that, in the Philippines, our concept of a service contract, at least in the

petroleum industry, was basically a concession regime with a production-sharing element.160

On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a newConstitution.161 Article XIV on the National Economy and Patrimony contained provisions similar tothe 1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8,

Article XIV thereof provides:

Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, allforces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong tothe State. With the exception of agricultural, industrial or commercial, residential and resettlementlands of the public domain, natural resources shall not be alienated, and no license, concession, orlease for the exploration, development, exploitation, or utilization of any of the natural resources

shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-fiveyears, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than thedevelopment of water power, in which cases beneficial use may be the measure and the limit of thegrant.

While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of naturalresources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into servicecontracts with any person or entity for the exploration or utilization of natural resources.

Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the naturalresources of the Philippines shall be limited to citizens, or to corporations or associations at leastsixty per centum of which is owned by such citizens. The Batasang Pambansa, in the nationalinterest, may allow such citizens, corporations or associations to enter into service contracts forfinancial, technical, management, or other forms of assistance with any person or entity for theexploration, or utilization of any of the natural resources. Existing valid and binding service contractsfor financial, technical, management, or other forms of assistance are hereby recognized as such.[Emphasis supplied.]

The concept of service contracts, according to one delegate, was borrowed from the methodsfollowed by India, Pakistan and especially Indonesia in the exploration of petroleum and mineraloils.162 The provision allowing such contracts, according to another, was intended to "enhance theproper development of our natural resources since Filipino citizens lack the needed capital andtechnical know-how which are essential in the proper exploration, development and exploitation ofthe natural resources of the country."163

The original idea was to authorize the government, not private entities, to enter into service contractswith foreign entities.164 As finally approved, however, a citizen or private entity could be allowed bythe National Assembly to enter into such service contract.165 The prior approval of the National

Assembly was deemed sufficient to protect the national interest.166 Notably, none of the lawsallowing service contracts were passed by the Batasang Pambansa. Indeed, all of them wereenacted by presidential decree.

On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgatedPresidential Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired



lands of the public domain or which own, hold or control such lands to enter into service contracts forfinancial, technical, management or other forms of assistance with any foreign persons or entity forthe exploration, development, exploitation or utilization of said lands.168

Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974,was enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a

mining claim may enter into a service contract with a qualified domestic or foreign contractor for theexploration, development and exploitation of his claims and the processing and marketing of theproduct thereof.

Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowedFilipinos engaged in commercial fishing to enter into contracts for financial, technical or other formsof assistance with any foreign person, corporation or entity for the production, storage, marketingand processing of fish and fishery/aquatic products.171

Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19,1975, allowed "forest products licensees, lessees, or permitees to enter into service contracts forfinancial, technical, management, or other forms of assistance . . . with any foreign person or entity

for the exploration, development, exploitation or utilization of the forest resources."173

Yet another law allowing service contracts, this time for geothermal resources, was PresidentialDecree No. 1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized theGovernment to enter into service contracts for the exploration, exploitation and development ofgeothermal resources with a foreign contractor who must be technically and financially capable ofundertaking the operations required in the service contract.

Thus, virtually the entire range of the country's natural resources –from petroleum and minerals togeothermal energy, from public lands and forest resources to fishery products – was well covered byapparent legal authority to engage in the direct participation or involvement of foreign persons orcorporations (otherwise disqualified) in the exploration and utilization of natural resources throughservice contracts.175

THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS

After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under arevolutionary government. On March 25, 1986, President Aquino issued Proclamation No.3,176 promulgating the Provisional Constitution, more popularly referred to as the FreedomConstitution. By authority of the same Proclamation, the President created a ConstitutionalCommission (CONCOM) to draft a new constitution, which took effect on the date of its ratificationon February 2, 1987.177

The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XIIstates: "All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all

forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other naturalresources are owned by the State."

Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of thesame provision, prohibits the alienation of natural resources, except agricultural lands.

The third sentence of the same paragraph is new: "The exploration, development and utilization ofnatural resources shall be under the full control and supervision of the State." The constitutionalpolicy of the State's "full control and supervision" over natural resources proceeds from the concept



of jura regalia, as well as the recognition of the importance of the country's natural resources, notonly for national economic development, but also for its security and national defense. 178 Under thisprovision, the State assumes "a more dynamic role" in the exploration, development and utilization ofnatural resources.179

Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing

the State to grant licenses, concessions, or leases for the exploration, exploitation, development, orutilization of natural resources. By such omission, the utilization of inalienable lands of public domainthrough "license, concession or lease" is no longer allowed under the 1987 Constitution.180

Having omitted the provision on the concession system, Section 2 proceeded to introduce"unfamiliar language":181

The State may directly undertake such activities or it may enter into co-production, joint venture, orproduction-sharing agreements with Filipino citizens, or corporations or associations at least sixtyper centum of whose capital is owned by such citizens.

Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the

State two "options."182

One, the State may directly undertake these activities itself; or two, it mayenter into co-production, joint venture, or production-sharing agreements with Filipino citizens, orentities at least 60% of whose capital is owned by such citizens.

A third option is found in the third paragraph of the same section:

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, aswell as cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers,lakes, bays, and lagoons.

While the second and third options are limited only to Filipino citizens or, in the case of the former, tocorporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth

allows the participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2provide:

The President may enter into agreements with foreign-owned corporations involving either technicalor financial assistance for large-scale exploration, development, and utilization of minerals,petroleum, and other mineral oils according to the general terms and conditions provided by law,based on real contributions to the economic growth and general welfare of the country. In suchagreements, the State shall promote the development and use of local scientific and technicalresources.

The President shall notify the Congress of every contract entered into in accordance with thisprovision, within thirty days from its execution.

Although Section 2 sanctions the participation of foreign-owned corporations in the exploration,development, and utilization of natural resources, it imposes certain limitations or conditions toagreements with such corporations.

First, the parties to FTAAs. Only the President, in behalf of the State, may enter into theseagreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipinocitizen, corporation or association may enter into a service contract with a "foreign person orentity."



Second, the size of the activities: only large-scale exploration, development, and utilization isallowed. The term "large-scale usually refers to very capital-intensive activities."183

Third, the natural resources subject of the activities is restricted to minerals, petroleum andother mineral oils, the intent being to limit service contracts to those areas where Filipinocapital may not be sufficient.184

Fourth, consistency with the provisions of statute. The agreements must be in accordancewith the terms and conditions provided by law.

Fifth, Section 2 prescribes certain standards for entering into such agreements. Theagreements must be based on real contributions to economic growth and general welfare ofthe country.

Sixth, the agreements must contain rudimentary stipulations for the promotion of thedevelopment and use of local scientific and technical resources.

Seventh, the notification requirement. The President shall notify Congress of every financial

or technical assistance agreement entered into within thirty days from its execution.

Finally, the scope of the agreements. While the 1973 Constitution referred to "servicecontracts for financial, technical, management, or other forms of assistance" the 1987Constitution provides for "agreements. . . involving either financial or technical assistance." Itbears noting that the phrases "service contracts" and "management or other forms ofassistance" in the earlier constitution have been omitted.

By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July10, 1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing andapproval of applications for the exploration, development and utilization of minerals. The omission inthe 1987 Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to

them in Section 2 thereof:

Sec. 2. Applications for the exploration, development and utilization of mineral resources, includingrenewal applications and applications for approval of operating agreements and mining servicecontracts, shall be accepted and processed and may be approved x x x. [Emphasis supplied.]

The same law provided in its Section 3 that the "processing, evaluation and approval of all miningapplications . . . operating agreements and service contracts . . . shall be governed by PresidentialDecree No. 463, as amended, other existing mining laws, and their implementing rules andregulations. . . ."

As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority ofwhich the subject WMCP FTAA was executed on March 30, 1995.

On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares thatthe Act "shall govern the exploration, development, utilization, and processing of all mineralresources." Such declaration notwithstanding, R.A. No. 7942 does not actually cover all the modesthrough which the State may undertake the exploration, development, and utilization of naturalresources.



The State, being the owner of the natural resources, is accorded the primary power andresponsibility in the exploration, development and utilization thereof. As such, it may undertake theseactivities through four modes:

The State may directly undertake such activities.

(2) The State may enter into co-production, joint venture or production-sharing agreementswith Filipino citizens or qualified corporations.

(3) Congress may, by law, allow small-scale utilization of natural resources by Filipinocitizens.

(4) For the large-scale exploration, development and utilization of minerals, petroleum andother mineral oils, the President may enter into agreements with foreign-owned corporationsinvolving technical or financial assistance.186

Except to charge the Mines and Geosciences Bureau of the DENR with performing researches andsurveys,187and a passing mention of government-owned or controlled corporations,188 R.A. No. 7942

does not specify how the State should go about the first mode. The third mode, on the other hand, isgoverned by Republic Act No. 7076189 (the People's Small-Scale Mining Act of 1991) and otherpertinent laws.190 R.A. No. 7942 primarily concerns itself with the second and fourth modes.

Mineral production sharing, co-production and joint venture agreements are collectively classified byR.A. No. 7942 as "mineral agreements."191 The Government participates the least in a mineralproduction sharing agreement (MPSA). In an MPSA, the Government grants the contractor 192 theexclusive right to conduct mining operations within a contract area193 and shares in the grossoutput.194 The MPSA contractor provides the financing, technology, management and personnelnecessary for the agreement's implementation.195 The total government share in an MPSA is theexcise tax on mineral products under Republic Act No. 7729,196 amending Section 151(a) of theNational Internal Revenue Code, as amended.197

In a co-production agreement (CA),198 the Government provides inputs to the mining operationsother than the mineral resource,199 while in a joint venture agreement (JVA), where the Governmentenjoys the greatest participation, the Government and the JVA contractor organize a company withboth parties having equity shares.200 Aside from earnings in equity, the Government in a JVA is alsoentitled to a share in the gross output.201 The Government may enter into a CA202 or JVA203 with oneor more contractors. The Government's share in a CA or JVA is set out in Section 81 of the law:

The share of the Government in co-production and joint venture agreements shall be negotiated bythe Government and the contractor taking into consideration the: (a) capital investment of theproject, (b) the risks involved, (c) contribution of the project to the economy, and (d) other factorsthat will provide for a fair and equitable sharing between the Government and the contractor. TheGovernment shall also be entitled to compensations for its other contributions which shall be agreed

upon by the parties, and shall consist, among other things, the contractor's income tax, excise tax,special allowance, withholding tax due from the contractor's foreign stockholders arising fromdividend or interest payments to the said foreign stockholders, in case of a foreign national and allsuch other taxes, duties and fees as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct miningoperations and to extract all mineral resources found in the contract area.204 A "qualified person" mayenter into any of the mineral agreements with the Government.205 A "qualified person" is



any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, orcooperative organized or authorized for the purpose of engaging in mining, with technical andfinancial capability to undertake mineral resources development and duly registered in accordancewith law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippinesx x x.206

The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "acontract involving financial or technical assistance for large-scale exploration, development, andutilization of natural resources."207 Any qualified person with technical and financial capability toundertake large-scale exploration, development, and utilization of natural resources in thePhilippines may enter into such agreement directly with the Government through the DENR. 208 Forthe purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation,partnership, association, or cooperative duly registered in accordance with law in which less than50% of the capital is owned by Filipino citizens)209 is deemed a "qualified person."210

Other than the difference in contractors' qualifications, the principal distinction between mineralagreements and FTAAs is the maximum contract area to which a qualified person may hold or begranted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, asopposed to the amount invested (US $50,000,000.00), which was the standard under E.O. 279.

Like a CA or a JVA, an FTAA is subject to negotiation. 212 The Government's contributions, in theform of taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that inan FTAA:

The collection of Government share in financial or technical assistance agreement shall commenceafter the financial or technical assistance agreement contractor has fully recovered its pre-operatingexpenses, exploration, and development expenditures, inclusive.213

III

Having examined the history of the constitutional provision and statutes enacted pursuant thereto, aconsideration of the substantive issues presented by the petition is now in order.

THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279

Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did notcome into effect.

E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before theopening of Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effectimmediately." This provision, according to petitioners, runs counter to Section 1 of E.O. No.200,215 which provides:

SECTION 1. Laws shall take effect after fifteen days following the completion of their publicationeither in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it isotherwise provided.216[Emphasis supplied.]

On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days afterits publication at which time Congress had already convened and the President's power to legislatehad ceased.



Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issuedpursuant thereto.

Nevertheless, petitioners' contentions have no merit.

It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a dateother than – even before – the 15-day period after its publication. Where a law provides for its owndate of effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the veryessence of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200,therefore, applies only when a statute does not provide for its own date of effectivity.

What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Tañadav. Tuvera,217 is the publication of the law for without such notice and publication, there would be nobasis for the application of the maxim "ignorantia legis n[eminem] excusat." It would be the height ofinjustice to punish or otherwise burden a citizen for the transgression of a law of which he had nonotice whatsoever, not even a constructive one.

While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for itsinvalidation since the Constitution, being "the fundamental, paramount and supreme law of thenation," is deemed written in the law.218 Hence, the due process clause,219 which, so Tañada held,mandates the publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1of E.O. No. 200 which provides for publication "either in the Official Gazette or in a newspaper ofgeneral circulation in the Philippines," finds suppletory application. It is significant to note that E.O.No. 279 was actually published in the Official Gazette220 on August 3, 1987.

From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Tañada v. Tuvera,this Court holds that E.O. No. 279 became effective immediately upon its publication in the OfficialGazette on August 3, 1987.

That such effectivity took place after the convening of the first Congress is irrelevant. At the timePresident Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislativepowers under the Provisional Constitution.221 Article XVIII (Transitory Provisions) of the 1987Constitution explicitly states:

Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congressis convened.

The convening of the first Congress merely precluded the exercise of legislative powers by President Aquino; it did not prevent the effectivity of laws she had previously enacted.

There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.

THE CONSTITUTIONALITY OF THE WMCP FTAA

Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution,FTAAs should be limited to "technical or financial assistance" only. They observe, however, that,contrary to the language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-ownedmining corporation, to extend more than mere financial or technical assistance to the State, for itpermits WMCP to manage and operate every aspect of the mining activity. 222



Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that theinstrument must be so construed as to give effect to the intention of the people who adoptedit.223 This intention is to be sought in the constitution itself, and the apparent meaning of the words isto be taken as expressing it, except in cases where that assumption would lead to absurdity,ambiguity, or contradiction.224 What the Constitution says according to the text of the provision,therefore, compels acceptance and negates the power of the courts to alter it, based on the

postulate that the framers and the people mean what they say.225

Accordingly, following the literaltext of the Constitution, assistance accorded by foreign-owned corporations in the large-scaleexploration, development, and utilization of petroleum, minerals and mineral oils should be limited to"technical" or "financial" assistance only.

WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O.No. 279 encompasses a "broad number of possible services," perhaps, "scientific and/ortechnological in basis."226 It thus posits that it may also well include "the area of management oroperations . . . so long as such assistance requires specialized knowledge or skills, and are relatedto the exploration, development and utilization of mineral resources."227

This Court is not persuaded. As priorly pointed out, the phrase "management or other forms ofassistance" in the 1973 Constitution was deleted in the 1987 Constitution, which allows only"technical or financial assistance." Casus omisus pro omisso habendus est. A person, object or thingomitted from an enumeration must be held to have been omitted intentionally.228 As will be shownlater, the management or operation of mining activities by foreign contractors, which is the primaryfeature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought toeradicate.

Respondents insist that "agreements involving technical or financial assistance" is just another termfor service contracts. They contend that the proceedings of the CONCOM indicate "that although theterminology 'service contract' was avoided [by the Constitution], the concept it represented was not."They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technicalassistance.'"229 And point out how members of the CONCOM referred to these agreements as"service contracts." For instance:

SR. TAN. Am I correct in thinking that the only difference between these future servicecontracts and the past service contracts under Mr. Marcos is the general law to be enactedby the legislature and the notification of Congress by the President? That is the onlydifference, is it not?

MR. VILLEGAS. That is right.

SR. TAN. So those are the safeguards[?]

MR. VILLEGAS. Yes. There was no law at all governing service contracts before.

SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]

WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo andTadeo who alluded to service contracts as they explained their respective votes in theapproval of the draft Article:

MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, theprovision on service contracts. I felt that if we would constitutionalize any provision on



service contracts, this should always be with the concurrence of Congress and not guidedonly by a general law to be promulgated by Congress. x x x. 231 [Emphasis supplied.]

x x x.

MR. GARCIA. Thank you.

I vote no. x x x.

Service contracts are given constitutional legitimization in Section 3, even when they havebeen proven to be inimical to the interests of the nation, providing as they do the legalloophole for the exploitation of our natural resources for the benefit of foreign interests. Theyconstitute a serious negation of Filipino control on the use and disposition of the nation'snatural resources, especially with regard to those which are nonrenewable. 232 [Emphasissupplied.]

x x x

MR. NOLLEDO. While there are objectionable provisions in the Article on National Economyand Patrimony, going over said provisions meticulously, setting aside prejudice andpersonalities will reveal that the article contains a balanced set of provisions. I hope theforthcoming Congress will implement such provisions taking into account that Filipinosshould have real control over our economy and patrimony, and if foreign equity is permitted,the same must be subordinated to the imperative demands of the national interest.

x x x.

It is also my understanding that service contracts involving foreign corporations or entitiesare resorted to only when no Filipino enterprise or Filipino-controlled enterprise couldpossibly undertake the exploration or exploitation of our natural resources and that

compensation under such contracts cannot and should not equal what should pertain toownership of capital. In other words, the service contract should not be an instrument tocircumvent the basic provision, that the exploration and exploitation of natural resourcesshould be truly for the benefit of Filipinos.

Thank you, and I vote yes.233 [Emphasis supplied.]

x x x.

MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.

Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang

"imperyalismo." Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilangmonopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa NationalEconomy and Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on,"naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas ng hilaw nasangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang parity rights, angservice contract, ang 60-40 equity sa natural resources. Habang naghihirap angsambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman.Kailan man ang Article on National Economy and Patrimony ay hindi nagpaalis sapagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng



bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang nationalindustrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mgalandlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade naito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat saKanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I voteno.234 [Emphasis supplied.]

This Court is likewise not persuaded.

As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Articleon National Economy and Patrimony. If the CONCOM intended to retain the concept of servicecontracts under the 1973 Constitution, it could have simply adopted the old terminology ("servicecontracts") instead of employing new and unfamiliar terms ("agreements . . . involving eithertechnical or financial assistance"). Such a difference between the language of a provision in arevised constitution and that of a similar provision in the preceding constitution is viewed asindicative of a difference in purpose.235 If, as respondents suggest, the concept of "technical orfinancial assistance" agreements is identical to that of "service contracts," the CONCOM would nothave bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce thefirst to a mere euphemism for the second and render the change in phraseology meaningless.

An examination of the reason behind the change confirms that technical or financial assistanceagreements are not synonymous to service contracts.

[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished byits adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will beexamined in light of the history of the times, and the condition and circumstances under which theConstitution was framed. The object is to ascertain the reason which induced the framers of theConstitution to enact the particular provision and the purpose sought to be accomplished thereby, inorder to construe the whole as to make the words consonant to that reason and calculated to effectthat purpose.236

As the following question of Commissioner Quesada and Commissioner Villegas' answer shows thedrafters intended to do away with service contracts which were used to circumvent the capitalization(60%-40%) requirement:

MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particularSection 3, is there a safeguard against the possible control of foreign interests if the Filipinosgo into coproduction with them?

MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our firstattempt to avoid some of the abuses in the past regime in the use of service contracts to goaround the 60-40 arrangement. The safeguard that has been introduced – and this, of coursecan be refined – is found in Section 3, lines 25 to 30, where Congress will have to concur

with the President on any agreement entered into between a foreign-owned corporation andthe government involving technical or financial assistance for large-scale exploration,development and utilization of natural resources.237 [Emphasis supplied.]

In a subsequent discussion, Commissioner Villegas allayed the fears of CommissionerQuesada regarding the participation of foreign interests in Philippine natural resources,which was supposed to be restricted to Filipinos.



MS. QUESADA. Another point of clarification is the phrase "and utilization of naturalresources shall be under the full control and supervision of the State." In the 1973Constitution, this was limited to citizens of the Philippines; but it was removed andsubstituted by "shall be under the full control and supervision of the State." Was the conceptchanged so that these particular resources would be limited to citizens of the Philippines? Orwould these resources only be under the full control and supervision of the State; meaning,

noncitizens would have access to these natural resources? Is that the understanding?

MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, itstates:

Such activities may be directly undertaken by the State, or it may enter into co-production, jointventure, production-sharing agreements with Filipino citizens.

So we are still limiting it only to Filipino citizens.

x x x.

MS. QUESADA. Going back to Section 3, the section suggests that:

The exploration, development, and utilization of natural resources… may be directly undertaken bythe State, or it may enter into co-production, joint venture or production-sharing agreement with . . .corporations or associations at least sixty per cent of whose voting stock or controlling interest isowned by such citizens.

Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development andutilization of natural resources, the President with the concurrence of Congress may enter intoagreements with foreign-owned corporations even for technical or financial assistance.

I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that

foreign investors will use their enormous capital resources to facilitate the actual exploitation orexploration, development and effective disposition of our natural resources to the detriment ofFilipino investors. I am not saying that we should not consider borrowing money from foreignsources. What I refer to is that foreign interest should be allowed to participate only to the extent thatthey lend us money and give us technical assistance with the appropriate government permit. In thisway, we can insure the enjoyment of our natural resources by our own people.

MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investorsto participate. It is only technical or financial assistance – they do not own anything – but onconditions that have to be determined by law with the concurrence of Congress. So, it is veryrestrictive.

If the Commissioner will remember, this removes the possibility for service contracts which we saidyesterday were avenues used in the previous regime to go around the 60-40requirement.238 [Emphasis supplied.]

The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scopein proposing an amendment to the 60-40 requirement:

MR. DAVIDE. May I be allowed to explain the proposal?



MR. MAAMBONG. Subject to the three-minute rule, Madam President.

MR. DAVIDE. It will not take three minutes.

The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipinopeople are sovereign and that one of the objectives for the creation or establishment of a

government is to conserve and develop the national patrimony. The implication is that the nationalpatrimony or our natural resources are exclusively reserved for the Filipino people. No alien must beallowed to enjoy, exploit and develop our natural resources. As a matter of fact, that principleproceeds from the fact that our natural resources are gifts from God to the Filipino people and itwould be a breach of that special blessing from God if we will allow aliens to exploit our naturalresources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the aliencorporations but only for them to render financial or technical assistance. It is not for them to enjoyour natural resources. Madam President, our natural resources are depleting; our population isincreasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit ournatural resources, there will be no more natural resources for the next generations of Filipinos. It

may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a certainextent the exploitation of our natural resources, and we became victims of foreign dominance andcontrol. The aliens are interested in coming to the Philippines because they would like to enjoy thebounty of nature exclusively intended for Filipinos by God.

And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble"to preserve and develop the national patrimony for the sovereign Filipino people and for thegenerations to come," we must at this time decide once and for all that our natural resources mustbe reserved only to Filipino citizens.

Thank you.239 [Emphasis supplied.]

The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to theintention of the framers to eliminate service contracts altogether. He writes:

Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakingsfor which the President may enter into contracts with foreign-owned corporations, and enunciatesstrict conditions that should govern such contracts. x x x.

This provision balances the need for foreign capital and technology with the need to maintain thenational sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms intheir own territory, there is no danger of relinquishing sovereignty to foreign interests.

Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreigninvestors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1)

Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scaleenterprises.

The intent of this provision, as well as other provisions on foreign investments, is to prevent thepractice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover ofservice contracts.241[Emphasis supplied.]



Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on NationalEconomy and Patrimony, adopted the concept of "agreements . . . involving either technical orfinancial assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Lawdraft) which was taken into consideration during the deliberation of the CONCOM. 243 The former, aswell as Article XII, as adopted, employed the same terminology, as the comparative table belowshows:

DRAFT OF THE UP LAWCONSTITUTION

PROJECT

PROPOSEDRESOLUTION NO. 496

OF THECONSTITUTIONAL

COMMISSION

ARTICLE XII OF THE1987 CONSTITUTION

Sec. 1. All lands of thepublic domain, waters,minerals, coal, petroleum

and other mineral oils, allforces of potential energy,fisheries, flora and faunaand other naturalresources of thePhilippines are owned bythe State. With theexception of agriculturallands, all other naturalresources shall not bealienated. The exploration,development andutilization of naturalresources shall be underthe full control andsupervision of the State.Such activities may bedirectly undertaken by thestate, or it may enter intoco-production, jointventure, productionsharing agreements withFilipino citizens orcorporations orassociations sixty per cent

of whose voting stock orcontrolling interest isowned by such citizens fora period of not more thantwenty-five years,renewable for not morethan twenty-five years andunder such terms and

Sec. 3. All lands of thepublic domain, waters,minerals, coal, petroleum

and other mineral oils, allforces of potential energy,fisheries, forests, flora andfauna, and other naturalresources are owned bythe State. With theexception of agriculturallands, all other naturalresources shall not bealienated. The exploration,development, andutilization of naturalresources shall be underthe full control andsupervision of the State.Such activities may bedirectly undertaken by theState, or it may enter intoco-production, jointventure, production-sharing agreements withFilipino citizens orcorporations orassociations at least sixtyper cent of whose voting

stock or controlling interestis owned by such citizens.Such agreements shall befor a period of twenty-fiveyears, renewable for notmore than twenty-fiveyears, and under suchterm and conditions as

Sec. 2. All lands of thepublic domain, waters,minerals, coal, petroleum,

and other mineral oils, allforces of potential energy,fisheries, forests or timber,wildlife, flora and fauna,and other naturalresources are owned bythe State. With theexception of agriculturallands, all other naturalresources shall not bealienated. The exploration,development, andutilization of naturalresources shall be underthe full control andsupervision of the State.The State may directlyundertake such activitiesor it may enter into co-production, joint venture,or production-sharingagreements with Filipinocitizens, or corporations orassociations at least sixtyper centum of whose

capital is owned by suchcitizens. Such agreementsmay be for a period notexceeding twenty-fiveyears, renewable for notmore than twenty-fiveyears, and under suchterms and conditions as



conditions as may beprovided by law. In caseas to water rights forirrigation, water supply,fisheries, or industrial uses

other than thedevelopment of waterpower, beneficial use maybe the measure and limitof the grant.

The National Assemblymay by law allow smallscale utilization of naturalresources by Filipinocitizens.

The National Assembly,may, by two-thirds vote ofall its members by speciallaw provide the terms andconditions under which aforeign-owned corporationmay enter into agreementswith the governmentinvolving either technicalor financialassistance for large-scaleexploration, development,or utilization of natural

resources. [Emphasissupplied.]

may be provided by law. Incases of water rights forirrigation, water supply,fisheries or industrial usesother than the

development for waterpower, beneficial use maybe the measure and limitof the grant.

The Congress may by lawallow small-scaleutilization of naturalresources by Filipinocitizens, as well ascooperative fish farming inrivers, lakes, bays, and

lagoons.

The President with theconcurrence of Congress,by special law, shallprovide the terms andconditions under which aforeign-owned corporationmay enter into agreementswith the governmentinvolving either technicalor financialassistance for large-scale

exploration, development,and utilization of naturalresources. [Emphasissupplied.]

may be provided by law. Incase of water rights forirrigation, water supply,fisheries, or industrial usesother than the

development of waterpower, beneficial use maybe the measure and limitof the grant.

The State shall protect thenation's marine wealth inits archipelagic waters,territorial sea, andexclusive economic zone,and reserve its use andenjoyment exclusively to

Filipino citizens.

The Congress may, bylaw, allow small-scaleutilization of naturalresources by Filipinocitizens, as well ascooperative fish farming,with priority to subsistencefishermen and fish-workers in rivers, lakes,bays, and lagoons.

The President may enterinto agreements withforeign-ownedcorporationsinvolving either technicalor financialassistance for large-scaleexploration, development,and utilization of minerals,petroleum, and othermineral oils according tothe general terms and

conditions provided bylaw, based on realcontributions to theeconomic growth andgeneral welfare of thecountry. In suchagreements, the Stateshall promote the



development and use oflocal scientific andtechnical resources.[Emphasis supplied.]

The President shall notifythe Congress of everycontract entered into inaccordance with thisprovision, within thirty daysfrom its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting thephrase "technical or financial assistance."

In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A.

Agabin, who was a member of the working group that prepared the U.P. Law draft, criticized servicecontracts for they "lodge exclusive management and control of the enterprise to the servicecontractor, which is reminiscent of the old concession regime. Thus, notwithstanding the provision ofthe Constitution that natural resources belong to the State, and that these shall not be alienated, theservice contract system renders nugatory the constitutional provisions cited." 244 He elaborates:

Looking at the Philippine model, we can discern the following vestiges of the concession regime,thus:

1. Bidding of a selected area, or leasing the choice of the area to the interested party andthen negotiating the terms and conditions of the contract; (Sec. 5, P.D. 87)

2. Management of the enterprise vested on the contractor, including operation of the field ifpetroleum is discovered; (Sec. 8, P.D. 87)

3. Control of production and other matters such as expansion and development; (Sec. 8)

4. Responsibility for downstream operations – marketing, distribution, and processing maybe with the contractor (Sec. 8);

5. Ownership of equipment, machinery, fixed assets, and other properties remain withcontractor (Sec. 12, P.D. 87);

6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec.

13, P.D. 87); and

7. While title to the petroleum discovered may nominally be in the name of the government,the contractor has almost unfettered control over its disposition and sale, and even thedomestic requirements of the country is relegated to a pro rata basis (Sec. 8).

In short, our version of the service contract is just a rehash of the old concession regime x x x. Somepeople have pulled an old rabbit out of a magician's hat, and foisted it upon us as a new anddifferent animal.



The service contract as we know it here is antithetical to the principle of sovereignty over our naturalresources restated in the same article of the [1973] Constitution containing the provision for servicecontracts. If the service contractor happens to be a foreign corporation, the contract would also runcounter to the constitutional provision on nationalization or Filipinization, of the exploitation of ournatural resources.245 [Emphasis supplied. Underscoring in the original.]

Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach ofthe system:

x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, butthe essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that theexploitation or development of the country's natural resources be limited to Filipino citizens orcorporations owned or controlled by them. However, the martial-law Constitution allowed them, oncethese resources are in their name, to enter into service contracts with foreign investors for financial,technical, management, or other forms of assistance. Since foreign investors have the capitalresources, the actual exploitation and development, as well as the effective disposition, of thecountry's natural resources, would be under their direction, and control, relegating the Filipinoinvestors to the role of second-rate partners in joint ventures.

Through the instrumentality of the service contract, the 1973 Constitution had legitimized at thehighest level of state policy that which was prohibited under the 1973 Constitution, namely: theexploitation of the country's natural resources by foreign nationals. The drastic impact of [this]constitutional change becomes more pronounced when it is considered that the active party to anyservice contract may be a corporation wholly owned by foreign interests. In such a case, thecitizenship requirement is completely set aside, permitting foreign corporations to obtain actualpossession, control, and [enjoyment] of the country's natural resources. 246[Emphasis supplied.]

Accordingly, Professor Agabin recommends that:

Recognizing the service contract for what it is, we have to expunge it from the Constitution andreaffirm ownership over our natural resources. That is the only way we can exercise effective controlover our natural resources.

This should not mean complete isolation of the country's natural resources from foreign investment.Other contract forms which are less derogatory to our sovereignty and control over natural resources

– like technical assistance agreements, financial assistance [agreements], co-productionagreements, joint ventures, production-sharing – could still be utilized and adopted without violatingconstitutional provisions. In other words, we can adopt contract forms which recognize and assertour sovereignty and ownership over natural resources, and where the foreign entity is just a purecontractor instead of the beneficial owner of our economic resources. 247[Emphasis supplied.]

Still another member of the working group, Professor Eduardo Labitag, proposed that:

2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead thegovernment may be allowed, subject to authorization by special law passed by an extraordinarymajority to enter into either technical or financial assistance. This is justified by the fact that aspresently worded in the 1973 Constitution, a service contract gives full control over the contract areato the service contractor, for him to work, manage and dispose of the proceeds or production. It wasa subterfuge to get around the nationality requirement of the constitution.248 [Emphasis supplied.]

In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draftsummarized the rationale therefor, thus:



5. The last paragraph is a modification of the service contract provision found in Section 9, ArticleXIV of the 1973 Constitution as amended. This 1973 provision shattered the framework ofnationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in theConstitution"). Through the service contract, the 1973 Constitution had legitimized that which wasprohibited under the 1935 constitution—the exploitation of the country's natural resources by foreignnationals. Through the service contract, acts prohibited by the Anti-Dummy Law were recognized as

legitimate arrangements. Service contracts lodge exclusive management and control of theenterprise to the service contractor, not unlike the old concession regime where the concessionairehad complete control over the country's natural resources, having been given exclusive and plenaryrights to exploit a particular resource and, in effect, having been assured of ownership of thatresource at the point of extraction (see Agabin, "Service Contracts: Old Wine in New Bottles").Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources,as well as the constitutional provision on nationalization or Filipinization of the exploitation of ournatural resources.

Under the proposed provision, only technical assistance or financial assistance agreements may beentered into, and only for large-scale activities. These are contract forms which recognize and assertour sovereignty and ownership over natural resources since the foreign entity is just a purecontractor and not a beneficial owner of our economic resources. The proposal recognizes the needfor capital and technology to develop our natural resources without sacrificing our sovereignty andcontrol over such resources by the safeguard of a special law which requires two-thirds vote of allthe members of the Legislature. This will ensure that such agreements will be debated uponexhaustively and thoroughly in the National Assembly to avert prejudice to the nation. 249[Emphasissupplied.]

The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants ofbeneficial ownership of the country's natural resources to foreign owned corporations. While, intheory, the State owns these natural resources – and Filipino citizens, their beneficiaries – servicecontracts actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilizethe same. Foreigners, not Filipinos, became the beneficiaries of Philippine natural resources. Thisarrangement is clearly incompatible with the constitutional ideal of nationalization of natural

resources, with the Regalian doctrine, and on a broader perspective, with Philippine sovereignty.

The proponents nevertheless acknowledged the need for capital and technical know-how in thelarge-scale exploitation, development and utilization of natural resources – the second paragraph ofthe proposed draft itself being an admission of such scarcity. Hence, they recommended acompromise to reconcile the nationalistic provisions dating back to the 1935 Constitution, whichreserved all natural resources exclusively to Filipinos, and the more liberal 1973 Constitution, whichallowed foreigners to participate in these resources through service contracts. Such a compromisecalled for the adoption of a new system in the exploration, development, and utilization of naturalresources in the form of technical agreements or financial agreements which, necessarily, aredistinct concepts from service contracts.

The replacement of "service contracts" with "agreements… involving either technical or financialassistance," as well as the deletion of the phrase "management or other forms of assistance,"assumes greater significance when note is taken that the U.P. Law draft proposed other equallycrucial changes that were obviously heeded by the CONCOM. These include the abrogation of theconcession system and the adoption of new "options" for the State in the exploration, development,and utilization of natural resources. The proponents deemed these changes to be more consistentwith the State's ownership of, and its "full control and supervision" (a phrase also employed by theframers) over, such resources. The Project explained:



3. In line with the State ownership of natural resources, the State should take a more active role inthe exploration, development, and utilization of natural resources, than the present practice ofgranting licenses, concessions, or leases – hence the provision that said activities shall be under thefull control and supervision of the State. There are three major schemes by which the State couldundertake these activities: first, directly by itself; second, by virtue of co-production, joint venture,production sharing agreements with Filipino citizens or corporations or associations sixty per cent

(60%) of the voting stock or controlling interests of which are owned by such citizens; or third, with aforeign-owned corporation, in cases of large-scale exploration, development, or utilization of naturalresources through agreements involving either technical or financial assistance only. x x x.

At present, under the licensing concession or lease schemes, the government benefits from suchbenefits only through fees, charges, ad valorem taxes and income taxes of the exploiters of ournatural resources. Such benefits are very minimal compared with the enormous profits reaped bytheses licensees, grantees, concessionaires. Moreover, some of them disregard the conservation ofnatural resources and do not protect the environment from degradation. The proposed role of theState will enable it to a greater share in the profits – it can also actively husband its naturalresources and engage in developmental programs that will be beneficial to them.

4. Aside from the three major schemes for the exploration, development, and utilization of ournatural resources, the State may, by law, allow Filipino citizens to explore, develop, utilize naturalresources in small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers,gold panners, and others similarly situated who exploit our natural resources for their dailysustenance and survival.250

Professor Agabin, in particular, after taking pains to illustrate the similarities between the twosystems, concluded that the service contract regime was but a "rehash" of the concession system."Old wine in new bottles," as he put it. The rejection of the service contract regime, therefore, is inconsonance with the abolition of the concession system.

In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of otherproposed changes, there is no doubt that the framers considered and shared the intent of the U.P.

Law proponents in employing the phrase "agreements . . . involving either technical or financialassistance."

While certain commissioners may have mentioned the term "service contracts" during the CONCOMdeliberations, they may not have been necessarily referring to the concept of service contracts underthe 1973 Constitution. As noted earlier, "service contracts" is a term that assumes differentmeanings to different people.251 The commissioners may have been using the term loosely, and notin its technical and legal sense, to refer, in general, to agreements concerning natural resourcesentered into by the Government with foreign corporations. These loose statements do notnecessarily translate to the adoption of the 1973 Constitution provision allowing service contracts.

It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to

Sr. Tan's question, Commissioner Villegas commented that, other than congressional notification,the only difference between "future" and "past" "service contracts" is the requirement of a generallaw as there were no laws previously authorizing the same.252 However, such remark is faroutweighed by his more categorical statement in his exchange with Commissioner Quesada that thedraft article "does not permit foreign investors to participate" in the nation's natural resources – whichwas exactly what service contracts did – except to provide "technical or financial assistance."253

In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that thepresent charter prohibits service contracts.254 Commissioner Gascon was not totally averse to foreign



participation, but favored stricter restrictions in the form of majority congressional concurrence. 255 Onthe other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of thespectrum and their objections may be interpreted as votes against any foreign participation in ournatural resources whatsoever.

WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice,

expressing the view that a financial or technical assistance agreement "is no different in concept"from the service contract allowed under the 1973 Constitution. This Court is not, however, bound bythis interpretation. When an administrative or executive agency renders an opinion or issues astatement of policy, it merely interprets a pre-existing law; and the administrative interpretation of thelaw is at best advisory, for it is the courts that finally determine what the law means.258

In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is an exception to the rule that participation in the nation's natural resources isreserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against theirenjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "veryrestrictive."259 Commissioner Nolledo also remarked that "entering into service contracts is anexception to the rule on protection of natural resources for the interest of the nation and, therefore,being an exception, it should be subject, whenever possible, to stringent rules." 260Indeed, exceptionsshould be strictly but reasonably construed; they extend only so far as their language fairly warrantsand all doubts should be resolved in favor of the general provision rather than the exception. 261

With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. Although the statute employs the phrase "financial and technicalagreements" in accordance with the 1987 Constitution, it actually treats these agreements as servicecontracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.

Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A.No. 7942 states:

SEC. 33. Eligibility.— Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of mineral resources in the Philippines may enter intoa financial or technical assistance agreement directly with the Government through the Department.[Emphasis supplied.]

"Exploration," as defined by R.A. No. 7942,

means the searching or prospecting for mineral resources by geological, geochemical orgeophysical surveys, remote sensing, test pitting, trending, drilling, shaft sinking, tunneling or anyother means for the purpose of determining the existence, extent, quantity and quality thereof andthe feasibility of mining them for profit.262

A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests

it with the right to conduct exploration for all minerals in specified areas, 264 i.e., to enter, occupy andexplore the same.265Eventually, the foreign-owned corporation, as such permittee, may apply for afinancial and technical assistance agreement.266

"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit formining, including the construction of necessary infrastructure and related facilities.267

"Utilization" "means the extraction or disposition of minerals."268 A stipulation that the proponent shalldispose of the minerals and byproducts produced at the highest price and more advantageous terms



and conditions as provided for under the implementing rules and regulations is required to beincorporated in every FTAA.269

A foreign-owned/-controlled corporation may likewise be granted a mineral processingpermit.270 "Mineral processing" is the milling, beneficiation or upgrading of ores or minerals and rocksor by similar means to convert the same into marketable products.271

An FTAA contractor makes a warranty that the mining operations shall be conducted in accordancewith the provisions of R.A. No. 7942 and its implementing rules272 and for work programs andminimum expenditures and commitments.273 And it obliges itself to furnish the Government recordsof geologic, accounting, and other relevant data for its mining operation.274

"Mining operation," as the law defines it, means mining activities involving exploration, feasibility,development, utilization, and processing.275

The underlying assumption in all these provisions is that the foreign contractor manages the mineralresources, just like the foreign contractor in a service contract.

Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary miningrights that it grants contractors in mineral agreements (MPSA, CA and JV). 276 Parenthetically,Sections 72 to 75 use the term "contractor," without distinguishing between FTAA and mineralagreement contractors. And so does "holders of mining rights" in Section 76. A foreign contractormay even convert its FTAA into a mineral agreement if the economic viability of the contract area isfound to be inadequate to justify large-scale mining operations,277provided that it reduces its equity inthe corporation, partnership, association or cooperative to forty percent (40%).278

Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing,managerial, and technical expertise. . . ."279 This suggests that an FTAA contractor is bound toprovide some management assistance – a form of assistance that has been eliminated and,therefore, proscribed by the present Charter.

By allowing foreign contractors to manage or operate all the aspects of the mining operation, theabove-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over thenation's mineral resources to these contractors, leaving the State with nothing but bare title thereto.

Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of theconstitutionally ordained 60%-40% capitalization requirement for corporations or associationsengaged in the exploitation, development and utilization of Philippine natural resources.

In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, ArticleXII of the Constitution:

(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:

Provided, That a legally organized foreign-owned corporation shall be deemed a qualifiedperson for purposes of granting an exploration permit, financial or technical assistanceagreement or mineral processing permit.

(2) Section 23,280 which specifies the rights and obligations of an exploration permittee,insofar as said section applies to a financial or technical assistance agreement,



(3) Section 33, which prescribes the eligibility of a contractor in a financial or technicalassistance agreement;

(4) Section 35,281 which enumerates the terms and conditions for every financial or technicalassistance agreement;

(5) Section 39,282 which allows the contractor in a financial and technical assistanceagreement to convert the same into a mineral production-sharing agreement;

(6) Section 56,283 which authorizes the issuance of a mineral processing permit to acontractor in a financial and technical assistance agreement;

The following provisions of the same Act are likewise void as they are dependent on the foregoingprovisions and cannot stand on their own:

(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial ortechnical assistance agreement.

Section 34,285 which prescribes the maximum contract area in a financial or technicalassistance agreements;

Section 36,286 which allows negotiations for financial or technical assistance agreements;

Section 37,287 which prescribes the procedure for filing and evaluation of financial ortechnical assistance agreement proposals;

Section 38,288 which limits the term of financial or technical assistance agreements;

Section 40,289 which allows the assignment or transfer of financial or technical assistanceagreements;

Section 41,290 which allows the withdrawal of the contractor in an FTAA;

The second and third paragraphs of Section 81,291 which provide for the Government's sharein a financial and technical assistance agreement; and

Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies tosaid contractors;

When the parts of the statute are so mutually dependent and connected as conditions,considerations, inducements, or compensations for each other, as to warrant a belief that thelegislature intended them as a whole, and that if all could not be carried into effect, the legislature

would not pass the residue independently, then, if some parts are unconstitutional, all the provisionswhich are thus dependent, conditional, or connected, must fall with them.293

There can be little doubt that the WMCP FTAA itself is a service contract.

Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,]process and dispose of all Minerals products and by-products thereof that may be produced from theContract Area."294 The FTAA also imbues WMCP with the following rights:



(b) to extract and carry away any Mineral samples from the Contract area for the purpose ofconducting tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilised during theDevelopment/Operating Period and the project facilities to be constructed during theDevelopment and Construction Period;

(d) have the right of possession of the Contract Area, with full right of ingress and egress andthe right to occupy the same, subject to the provisions of Presidential Decree No. 512 (ifapplicable) and not be prevented from entry into private ands by surface owners and/oroccupants thereof when prospecting, exploring and exploiting for minerals therein;

x x x

(f) to construct roadways, mining, drainage, power generation and transmission facilities andall other types of works on the Contract Area;

(g) to erect, install or place any type of improvements, supplies, machinery and other

equipment relating to the Mining Operations and to use, sell or otherwise dispose of, modify,remove or diminish any and all parts thereof;

(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties,easement rights and the use of timber, sand, clay, stone, water and other natural resourcesin the Contract Area without cost for the purposes of the Mining Operations;

x x x

(i) have the right to mortgage, charge or encumber all or part of its interest and obligationsunder this Agreement, the plant, equipment and infrastructure and the Minerals producedfrom the Mining Operations;

x x x. 295

All materials, equipment, plant and other installations erected or placed on the Contract Area remainthe property of WMCP, which has the right to deal with and remove such items within twelve monthsfrom the termination of the FTAA.296

Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, managementand personnel necessary for the Mining Operations." The mining company binds itself to "perform allMining Operations . . . providing all necessary services, technology and financing in connectiontherewith,"297 and to "furnish all materials, labour, equipment and other installations that may berequired for carrying on all Mining Operations."298> WMCP may make expansions, improvements

and replacements of the mining facilities and may add such new facilities as it considers necessaryfor the mining operations.299

These contractual stipulations, taken together, grant WMCP beneficial ownership over naturalresources that properly belong to the State and are intended for the benefit of its citizens. Thesestipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamentallaw seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which theyspring must be struck down.



In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion andProtection of Investments between the Philippine and Australian Governments, which was signed inManila on January 25, 1995 and which entered into force on December 8, 1995.

x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus thefact that [WMCP's] FTAA was entered into prior to the entry into force of the treaty does not preclude

the Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3(1) of the treaty provides that "Each Party shall encourage and promote investments in its area byinvestors of the other Party and shall [admit] such investments in accordance with its Constitution,Laws, regulations and investment policies" and in Article 3 (2), it states that "Each Party shall ensurethat investments are accorded fair and equitable treatment." The latter stipulation indicates that itwas intended to impose an obligation upon a Party to afford fair and equitable treatment to theinvestments of the other Party and that a failure to provide such treatment by or under the laws ofthe Party may constitute a breach of the treaty. Simply stated, the Philippines could not, under saidtreaty, rely upon the inadequacies of its own laws to deprive an Australian investor (like [WMCP]) offair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the servicecontracts entered into before the enactment of RA 7942 such as those mentioned in PD 87 or EO279.

This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by amere Filipino citizen, but by the Philippine Government itself, through its President no less, which, inentering into said treaty is assumed to be aware of the existing Philippine laws on service contractsover the exploration, development and utilization of natural resources. The execution of the FTAA bythe Philippine Government assures the Australian Government that the FTAA is in accordance withexisting Philippine laws.300 [Emphasis and italics by private respondents.]

The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, inturn, would amount to a violation of Section 3, Article II of the Constitution adopting the generallyaccepted principles of international law as part of the law of the land. One of these generallyaccepted principles is pacta sunt servanda, which requires the performance in good faith of treatyobligations.

Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertionthat "the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitabletreatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts enteredinto before the enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breachof the treaty invoked. For this decision herein invalidating the subject FTAA forms part of the legalsystem of the Philippines.301 The equal protection clause302 guarantees that such decision shall applyto all contracts belonging to the same class, hence, upholding rather than violating, the "fair andequitable treatment" stipulation in said treaty.

One other matter requires clarification. Petitioners contend that, consistent with the provisions ofSection 2, Article XII of the Constitution, the President may enter into agreements involving "either

technical or financial assistance" only. The agreement in question, however, is a technical andfinancial assistance agreement.

Petitioners' contention does not lie. To adhere to the literal language of the Constitution would leadto absurd consequences.303 As WMCP correctly put it:

x x x such a theory of petitioners would compel the government (through the President) to enter intocontract with two (2) foreign-owned corporations, one for financial assistance agreement and withthe other, for technical assistance over one and the same mining area or land; or to execute two (2)



contracts with only one foreign-owned corporation which has the capability to provide both financialand technical assistance, one for financial assistance and another for technical assistance, over thesame mining area. Such an absurd result is definitely not sanctioned under the canons ofconstitutional construction.304 [Underscoring in the original.]

Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of

"either/or." A constitution is not to be interpreted as demanding the impossible or the impracticable;and unreasonable or absurd consequences, if possible, should be avoided.305 Courts are not to givewords a meaning that would lead to absurd or unreasonable consequences and a literalinterpretation is to be rejected if it would be unjust or lead to absurd results.306 That is a strongargument against its adoption.307 Accordingly, petitioners' interpretation must be rejected.

The foregoing discussion has rendered unnecessary the resolution of the other issues raised by thepetition.

WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:

(1) The following provisions of Republic Act No. 7942:

(a) The proviso in Section 3 (aq),

(b) Section 23,

(c) Section 33 to 41,

(d) Section 56,

(e) The second and third paragraphs of Section 81, and

(f) Section 90.

(2) All provisions of Department of Environment and Natural Resources Administrative Order96-40, s. 1996 which are not in conformity with this Decision, and

(3) The Financial and Technical Assistance Agreement between the Government of theRepublic of the Philippines and WMC Philippines, Inc.

SO ORDERED.

Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur.Vitug, J., see Separate Opinion.Panganiban, J., see Separate Opinion.

Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separateopinion.

Azcuna, no part, one of the parties was a client.



Republic of the Philippines

SUPREME COURT

Manila

EN BANC

REYNALDO V. UMALI,

Petitioner, G. R. No. 104037

May 29, 1992

-versus-

HON. JESUS P. ESTANISLAO, SECRETARY OF FINANCE,

and HON. JOSE U. ONG, COMMISSIONER OF INTERNAL

REVENUE,

Respondents.

______________________________________________

RENE B. GOROSPE, LEIGHTON R. SIAZON, MANUEL M. SUNGA,

PAUL D. UNGOS, BIENVENIDO T. JAMORALIN, JR., JOSE D.chanrobles virtual law library

FLORES, JR., EVELYN G. VILLEGAS, DOMINGO T. LIGOT,

HENRY E. LARON, PASTOR M. DALMACION, JR.,

and JULIUS NORMAN C. CERRADA,

Petitioners,

G. R. No. 104069 May 29, 1992

-versus-

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

D E C I S I O N

PADILLA, J .:

These consolidated cases are Petitions for Mandamus and Prohibition premised upon the following

undisputed facts:



Congress enacted Rep. Act 7167, entitled "AN ACT ADJUSTING THE BASIC PERSONAL AND ADDITIONAL

EXEMPTIONS ALLOWABLE TO INDIVIDUALS FOR INCOME TAX PURPOSES TO THE POVERTY THRESHOLD

LEVEL, AMENDING FOR THE PURPOSE SECTION 29, PARAGRAPH [L], ITEMS (1) AND (2) [A] OF THE

NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES ." It provides as

follows:

Sec. 1. The first paragraph of item [1], paragraph [1] of Section 29 of the National Internal Revenue

Code, as amended, is hereby further amended to read as follows:

[1] Personal exemptions allowable to individuals:

(1) Basic personal exemption as follows:

For single individual or married individual judicially decreed as legally separated with no qualified

dependents P9,000

For head of a family P12,000

For married individual P18,000

Provided , That husband and wife electing to compute their income tax separately shall be entitled to a

personal exemption of P9,000 each.

Sec. 2. The first paragraph of item [2] (A), paragraph (1) of Section 29 of the same Code, as amended, is

hereby further amended to read as follows:

(2) Additional exemption.

(a) Taxpayers with dependents. A married individual or a head of family shall be allowed an additional

exemption of Five Thousand Pesos (P5,000) for each dependent: Provided, That the total number of

dependents for which additional exemptions may be claimed shall not exceed four

dependents: Provided, further , That an additional exemption of One Thousand Pesos [1,000] shall be

allowed for each child who otherwise qualified as dependent prior to January 1, 1980: Provided,

finally, That the additional exemption for dependents shall be claimed by only one of the spouses in case

of married individuals electing to compute their income tax liabilities separately.

Sec. 3. This act shall take effect upon its approval.

Approved. [1]

The said Act was signed and approved by the President on 19 December 1991 and published on 14

January 1992 in "Malaya" a newspaper of general circulation.

On 26 December 1991, respondents promulgated Revenue Regulations No. 1-92, the pertinent portions

of which read as follows:

http://www.chanrobles.com/cralaw19927.htm#ENDNOTE






Sec. 1. Scope.- Pursuant to Sections 245 and 72 of the National Internal Revenue Code in relation to

Republic Act No. 7167, these Regulations are hereby promulgated prescribing the collection at source of

income tax on compensation income paid on or after January 1, 1992 under the Revised Withholding

Tax Tables [Annex "A"] which take into account the increase of personal and additional exemptions.

xxx xxx xxx

Sec. 3. Section 8 of Revenue Regulations No. 6-82 is amended by Revenue Regulations No. 1-86 is

hereby further amended to read as follows:

Section 8. Right to claim the following exemptions. -Each employee shall be allowed to claim the

following amount of exemption with respect to compensation paid on or after January 1, 1992.

xxx xxx xxx

Sec. 5. Effectivity.- These regulations shall take effect on compensation income from January 1, 1992.

On 27 February 1992, the petitioner in G. R. No. 104037, a taxpayer and a resident of Gitnang Bayan

Bongabong, Oriental Mindoro, filed a Petition for Mandamus for himself and in behalf all individualFilipino taxpayers, to compel the respondents to implement Rep. Act No. 7167 with respect to taxable

income of individual taxpayers earned or received on or after 1 January 1991 or as of taxable year

ending 31 December 1991.

On 28 February 1992, the petitioners in G. R. No. 104069 likewise filed a Petition for Mandamus and

Prohibition on their behalf as well as for those other individual taxpayers who might be similarly

situated, to compel the Commissioner of Internal Revenue to implement the mandate of Rep. Act 7167

adjusting the personal and additional exemptions allowable to individuals for income tax purposes in

regard to income earned or received in 1991, and to enjoin the respondents from implementing

Revenue Regulations No. 1-92.cralaw

In the Court's Resolution of 10 March 1992, these two [2] cases were consolidated. Respondents were

required to comment on the petitions, which they did within the prescribed period.cralaw

The principal issues to be resolved in these cases are: [1] whether or not Rep. Act 7167 took effect upon

its approval by the President on 19 December 1991, or on 30 January 1992, i.e., after fifteen [15] days

following its publication on 14 January 1992 in the "Malaya" a newspaper of general circulation; and [2]

assuming that Rep. Act 7167 took effect on 30 January 1992, whether or not the said law nonetheless

covers or applies to compensation income earned or received during calendar year 1991.cralaw

In resolving the first issue, it will be recalled that the Court in its resolution in Caltex [Phils.],, Inc. vs. The

Commissioner of Internal Revenue, G. R. No. 97282, 26 June 1991, which is on all fours with this case as

to the first issue, held:

The central issue presented in the instant petition is the effectivity of R. A. 6965 entitled "An Act

Revising The Form of Taxation on Petroleum Products from Ad Valorem to Specific, Amending For the

Purpose Section 145 of the National Internal Revenue Code, As amended by Republic Act Numbered Sixty

Seven Hundred Sixty Seven."

Sec. 3 of R.A. 6965 contains the effectivity clause which provides. "This Act shall take effect upon its

approval."



R. A. 6965 was approved on September 19, 1990. It was published in the Philippine Journal, a newspaper

of general circulation in the Philippines, on September 20, 1990. Pursuant to the Act, an implementing

regulation was issued by the Commissioner of Internal Revenue, Revenue Memorandum Circular 85-90,

stating that R. A. 6965 took effect on October 5, 1990. Petitioner took exception thereof and argued that

the law took effect on September 20, 1990 instead.

Pertinent is Article 2 of the Civil Code [as amended by Executive Order No. 200] which provides:

Art. 2. Laws shall take effect after fifteen days following the completion of their publication either in the

official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise

provided.

In the case of Tanada vs. Tuvera [L-63915, December 29, 1986, 146 SCRA 446, 452], We construed

Article 2 of the Civil Code and laid down the rule:

The clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement

of publication itself, which cannot in any event be omitted. This clause does not mean that the legislator

may make the law effective immediately upon approval, or on any other date without its previous

publication.

Publication is indispensable in every case, but the legislature may in its discretion provide that the usual

fifteen-day period shall be shortened or extended.

Inasmuch as R.A. 6965 has no specific date for its effectivity and neither can it become effective upon its

approval notwithstanding its express statement, following Article 2 of the Civil Code and the doctrine

enunciated in Tanada,supra, R.A. 6965 took effect fifteen days after September 20, 1990, or specifically,

on October 5, 1990.

Accordingly, the Court rules that Rep. Act 7167 took effect on 30 January 1992, which is after fifteen [15]days following its publication on 14 January 1992 in the "Malaya."

Coming now to the second issue, the Court is of the considered view that Rep. Act 7167 should cover or

extend to compensation income earned or received during calendar year 1991. Sec. 29, par. [L], Item

No. 4 of the National Internal Revenue Code, as amended, provides:

Upon the recommendation of the Secretary of Finance, the President shall automatically adjust not

more often than once every three years, the personal and additional exemptions taking into account,

among others, the movement in consumer price indices, levels of minimum wages, and bare subsistence

levels.

As the personal and additional exemptions of individual taxpayers were last adjusted in 1986, the

President, upon the recommendation of the Secretary of Finance, could have adjusted the personal and

additional exemptions in 1989 by increasing the same even without any legislation providing for such

adjustment. But the President did not.

However, House Bill 28970, which was subsequently enacted by Congress as Rep. Act 7167, was

introduced in the House of Representatives in 1989 although its passage was delayed and it did not



become effective law until 30 January 1992. A perusal, however, of the sponsorship remarks of

Congressman Hernando B. Perez, Chairman of the House Committee on Ways and Means, on House Bill

28970, provides an indication of the intent of Congress in enacting Rep. Act 7167. The pertinent

legislative journal contains the following:

At the outset, Mr. Perez explained that the Bill provides for increased personal additional exemptions to

individuals in view of the higher standard of living.

The Bill, he stated, limits the amount of income of individuals subject to income tax to enable them to

spend for basic necessities and have more disposable income.

xxx xxx xxx

Mr. Perez added that inflation has raised the basic necessities and that it had been three years since the

last exemption adjustment in 1986.

xxx xxx xxx

Subsequently, Mr. Perez stressed the necessity of passing the measure to mitigate the effects of thecurrent inflation and of the implementation of the salary standardization law. Stating that it is

imperative for the government to take measures to ease the burden of the individual income tax filers,

Mr. Perez then cited specific examples of how the measure can help assuage the burden to the

taxpayers.

He then reiterated that the increase in the prices of commodities has eroded the purchasing power of

the peso despite the recent salary increases and emphasized that the Bill will serve to compensate the

adverse effects of inflation on the taxpayers. [Journal of the House of Representatives, May 23, 1990,

pp. 32-33].

It will also be observed that Rep. Act 7167, speaks of the adjustments that it provides for, as

adjustments "to the poverty threshold level." Certainly, "the poverty threshold level" is the poverty

threshold level at the time Rep. Act 7167 was enacted by Congress, not poverty threshold levels in

futuro, at which time there may be need of further adjustments in personal exemptions. Moreover, the

Court can not lose sight of the fact that these personal and additional exemptions are fixed amounts to

which an individual taxpayer is entitled, as a means to cushion the devastating effects of high prices and

a depreciated purchasing power of the currency. In the end, it is the lower-income and the middle-

income groups of taxpayers [not the high-income taxpayers] who stand to benefit most from the

increase of personal and additional exemptions provided for by Rep. Act 7167. To that extent, the Act is

a social legislation intended to alleviate in part the present economic plight of the lower income

taxpayers. It is intended to remedy the inadequacy of the heretofore existing personal and additionalexemptions for individual taxpayers.

And then, Rep. Act 7167 says that the increased personal exemptions that it provides for shall be

available thenceforth, that is, after Rep. Act 7167 shall have become effective. In other words, these

exemptions are available upon the filing of personal income tax returns which is, under the National

Internal Revenue Code, done not later than the 15th day of April after the end of a calendar year. Thus,

under Rep. Act 7167, which became effective, as aforestated, on 30 January 1992, the increased



exemptions are literally available on or before 15 April 1992 [though not before 30 January 1992]. But

these increased exemptions can be available on 15 April 1992 only in respect of compensation income

earned or received during the calendar year 1991.cralaw

The personal exemptions as increased by Rep. Act 7167 cannot be regarded as available in respect of

compensation income received during the 1990 calendar year; the tax due in respect of said income had

already accrued, and been presumably paid, by 15 April 1991 and by 15 July 1991, at which time Rep.

Act 7167 had not been enacted. To make Rep. Act 7167 refer back to income received during 1990

would require language explicitly retroactive in purport and effect, language that would have to

authorize the payment of refunds of taxes paid on 15 April 1991 and 15 July 1991: such language is

simply not found in Rep. Act 7167.cralaw

The personal exemptions as increased by Rep. Act 7167 cannot be regarded as available only in respect

of compensation income received during 1992, as the implementing Revenue Regulations No. 1-92

purport to provide. Revenue Regulations No. 1-92 would, in effect, postpone the availability of the

increased exemptions to 1 January-15 April 1993, and thus, literally defer the effectivity of Rep. Act 7167

to 1 January 1993. Thus, the implementing regulations collide frontally with Section 3 of Rep. Act 7167

which states that the statute "shall take effect upon its approval." The objective of the Secretary of

Finance and the Commissioner of Internal Revenue in postponing through Revenue Regulations No. 1-92

the legal effectivity of Rep. Act 7167 is, of course, entirely understandable, To defer to 1993 the

reduction of governmental tax revenues which irresistibly follows from the application of Rep. Act 7167.

But the law-making authority has spoken and the Court cannot refuse to apply the lawmaker's words.

Whether or not the government can afford the drop in tax revenues resulting from such increased

exemptions was for Congress [not this Court] to decide.cralaw

WHEREFORE, Sections 1, 3 and 5 of Revenue Regulations No. 1-92 which provide that the regulations

shall take effect on compensation income earned or received from 1 January 1992 are hereby set aside.

They should take effect on compensation income earned or received from 1 January 1991.cralaw

Since this decision is promulgated after 15 April 1992, the individual taxpayers entitled to the increased

exemptions on compensation income earned during calendar year 1991 who may have filed their

income tax returns on or before 15 April 1992 [later extended to 24 April 1992] without the benefit of

such increased exemptions, are entitled to the corresponding tax refunds and/or credits and

respondents are ordered to effect such refunds and/or credits. No costs.cralaw

SO ORDERED.

Narvasa, C.J. , Gutierrez, Jr., Feliciano, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero,

Nocon and Bellosillo, JJ ., concur.

[G.R. No. 115068. November 28, 1996]



FORTUNE MOTORS (PHILS.) INC., pet i t ioner , vs . METROPOLITANBANK AND TRUST COMPANY, and THE COURT OFAPPEALS, respondents.

D E C I S I O N

HERMOSISIMA, JR., J .:

Before us is a petition for review of the decision of the Court of Appeals in CA-G.R.CV No. 38340 entitled Fortune Motors (Phils.) Inc., v. Metropolitan Bank and TrustCompany et al .[1] The appellate courts decision reversed the decision in Civil Case No.89-5637 of Branch 150 of the Regional trial Court of Makati City.

It appears that Fortune Motors (Phils.) Inc. obtained the following loans from theMetropolitan Bank and Trust company: (1) P20 Million, on March 31, 1982; (2) P8 Million,on April 30, 1983; (3) P2,500,000.00, on June 8, 1983 and; (4) P3 Million, on August 16,1983.

On January 6, 1984, respondent bank consolidated the loans of P8 Million and P3Million into one promissory note, which amounted toP12,650,000.00. This included theinterest that had accrued thereon in the amount of P1,650,000.00.

To secure the obligation in the total amount of P34,150,000.00, petitioner mortgagedcertain real estate in favor of respondent bank.

Due to financial constraints, petitioner failed to pay the loan uponmaturity. Consequently on May 25, 1984, respondent bank initiated extrajudicialforeclosure proceedings and in effect, foreclosed the real estate mortgage.

The extrajudicial foreclosure was actually conducted by Senior Deputy Sheriff Pablo

Y. Sy who had sent copies of the Notice of Extrajudicial Sale to the opposing parties byregistered mail. In accordance with law, he posted copies of the Notice of Sheriffs Sale atthree conspicuous public places in Makati -- the office of the Sheriff, the Assessors officeand the Register of Deeds in Makati. He thereafter executed the Certificates of PostingonMay 20, 1984. The said notice was in fact published on June 2, 9 and 16, 1984 in threeissues of The New Record. An affidavit of publication, datedJune 19, 1984,[2] wasexecuted by Teddy F. Borres, publisher of the said newspaper.

Subsequently, the mortgaged property was sold at public auction for P47,899,264.91to the mortgagee bank, the highest bidder.

Petitioner failed to redeem the mortgaged property within the one-year redemption

period and so, the titles thereto were consolidated in the name of respondent bank bywhich token the latter was entitled to the possession of the property mortgaged and, infact possessed the same.

Petitioner then filed a complaint for the annulment of the extrajudicial foreclosure,which covered TCT Nos. 461087, 432685, 457590, 432684, S-54185, S-54186, S-54187,and S-54188.

http://sc.judiciary.gov.ph/jurisprudence/1996/nov1996/115068.htm#_edn1










On December 27, 1991, the trial court rendered judgment annulling the extrajudicialforeclosure of the mortgage.

On May 14, 1992, an appeal was interposed by the respondent to the Court of Appeals. Acting thereon, the Court of Appeals reversed the decision rendered by thelower court. Subsequently, the motion for Reconsideration filed by petitioner was denied

on April 26, 1994.

Aggrieved by the decision rendered by the Court of appeals, petitioner appealedbefore this Court. On May 30, 1994, however, we issued a Resolution denying saidpetition. Hence, this motion for reconsideration.

Petitioner raises the following issues before us, to wit:

I

THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THEPUBLICATION OF THE NOTICE OF EXTRAJUDICIAL FORECLOSURE WAS

VALID.[3]

II

THAT THE RESPONDENT COURT OF APPEALS ERRED IN DECLARING THAT

THE NOTICES OF EXTRAJUDICIAL FORECLOSURE, ANDSALE WERE DULYRECEIVED BY THE PETITIONER .[4]

III

THAT THE COURT OF APPEALS ERRED IN FAILING TO ADJUDGE THEIRREGULARITIES IN THE BIDDING, POSTING, PUBLICATION, AND

THE SALE OF FORTUNE BUILDING.[5]

IV

THAT THE RESPONDENT COURT OF APPEALS ERRED IN RENDERING A

JUDGMENT BASED ON PRESUMPTION.[6]

Petitioner contends that the newspaper Daily Record [7] where the notice ofextrajudicial foreclosure was published does not qualify as a newspaper of generalcirculation.

It further contends that the population that can be reached by the Daily Record is only.004% as its circulation in Makati in 1984, was 1000 to 1500 per week. Hence, itconcludes that only 1648 out of a population of 412,069 were probable readers of theDaily Record, and that this is not the standard contemplated by law when it refers to a

newspaper of general circulation.In the case of Bonnevie v. Court of Appeals,[8] we had already made a ruling on this

point:

The argument that the publication of the notice in the Luzon Weekly Courier

was not in accordance with law as said newspaper is not of general circulation

must likewise be disregarded. The affidavit of publication, executed by the

publisher, business/advertising manager of the Luzon Weekly Courier, states


























that it is a newspaper of general circulation in x x x Rizal; and that the notice

of Sheriffs sale was published in said paper on June 30, July 7 and July 14,1968.This constitutes prima facie evidence of compliance with the requisite

publication. (Sadang v. GSIS, 18 SCRA 491).

To be a newspaper of general circulation, it is enough that it is published forthe dissemination of local news and general information; that it has a bona

fide subscription list of paying subscribers; that it is published at regular

intervals. (Basa v. Mercado, 61 Phil. 632). The newspaper need not have the

largest circulation so long as it is of general circulation. (Banta v. Pacheco, 74

Phil. 67).

In the case at bench, there was sufficient compliance with the requirements of thelaw regarding publication of the notice in a newspaper of general circulation. This isevidenced by the affidavit of publication executed by the New Records publisher, TeddyF. Borres, which stated that it is a newspaper edited in Manila and Quezon City and of

general circulation in the cities of Manila, Quezon City et al ., and in the Provinces of Rizalxxx, published every Saturday by the Daily Record, Inc. This was affirmed by PedroDeyto, who was the executive editor of the said newspaper and who was a witness forpetitioner. Deyto testified: a) that the New Record contains news; b) that it has subscribersfrom Metro Manila and from all over the Philippines; c) that it is published once a week orfour times a month ; and d) that he had been connected with the said paper since 1958,an indication that the said newspaper had been in existence even before that year .[9]

Another contention posited by petitioner is that the New Record is published andedited in Quezon City and not in Makati where the foreclosed property is situated, andthat, when New Records publisher enumerated the places where said newspaper is beingcirculated, Makati was not mentioned.

This contention of petitioner is untenable. In 1984, when the publishers affidavit reliedupon by petitioner was executed, Makati, Mandaluyong,San Juan, Paraaque et. al., werestill part of the province of Rizal. Apparently, this is the reason why in the New Recordsaffidavit of publication executed by its publisher, the enumeration of the places where itwas being circulated, only the cities of Manila, Quezon, Caloocan, Pasay, Tagaytay,et.al., were named. Furthermore, as aptly ratiocinated by the Court of Appeals:

The application given by the trial court to the provisions of P.D. No. 1079 is,

to our mind, too narrow and restricted and could not have been the intention

of the said law. Were the interpretation of the trial court (sic) to be followed,

even the leading dailies in the country like the Manila Bulletin, the PhilippineDaily Inquirer, or The Philippine Star which all enjoy a wide circulation

throughout the country, cannot publish legal notices that would be honoredoutside the place of their publication. But this is not the interpretation given

by the courts. For what is important is that a paper should be in general

circulation in the place where the properties to be foreclosed are located inorder that publication may serve the purpose for which it was intended.[10]











Petitioner also claims that the New Record is not a daily newspaper because it ispublished only once a week.

A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that the saidlaws do not require that the newspaper which publishes judicial notices should be a dailynewspaper. Under P.D. 1079, for a newspaper to qualify, it is enough that it be a

newspaper or periodical which is authorized by law to publish and which is regularlypublished for at least one (1) year before the date of publication which requirement wassatisfied by New Record. Nor is there a requirement, as stated in the said law, that thenewspaper should have the largest circulation in the place of publication.

Petitioner claims that, when its representative went to a newspaper stand to look fora copy of the new Record, he could not find any. This allegation can not be made a basisto conclude that the newspaper New Record is not of general circulation. By its ownadmission, petitioners representative was looking for a newspaper named DailyRecord. Naturally, he could not find a newspaper by that name as the newspapers nameis New Record and not Daily Record. Although it is the Daily Record Inc. which publishes

the New Record, it does not mean that the name of the newspaper is Daily Record.Petitioner contends that, since it was the Executive Judge who caused the publication

of the notice of the sale and not the Sheriff, the extrajudicial foreclosure of the mortgageshould be deemed annulled.

Petitioners contention in this regard is bereft of merit, because Sec. 2 of P.D. No.1079 clearly provides that:

The executive judge of the court of first instance shall designate a regular

working day and a definite time each week during which the said judicial

notices or advertisements shall be distributed personally by him[11] for

publication to qualified newspapers or periodicals xxx, which distributionshall be done by raffle.

The said provision of the law is clear as to who should personally distribute the judicialnotices or advertisements to qualified newspapers for publication. There was asubstantial compliance with the requirements when it was the Executive Judge of theRegional Trial Court of Makati who caused the publication of the said notice by thenewspaper selected by means of raffle.

With regard to the second assigned error wherein petitioner claims that it did notpersonally receive the notices of extrajudicial foreclosure and sale supposedly sent to itby Metrobank, we find the same unmeritorious.

Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosureproceedings is not necessary. Section 3 of Act No. 3135 governing extrajudicialforeclosure of real estate mortgages, as amended by Act No. 4118, requires only theposting of the notice of sale in three public places and the publication of that notice in anewspaper of general circulation. It is pristine clear from the above provision that the lackof personal notice to the mortgagor, herein petitioner, is not a ground to set aside theforeclosure sale.[12]










Petitioners expostulation that it did not receive the mailed notice to it of the sale ofthe mortgaged property should be brushed aside. The fact that respondent was able toreceive the registry return card from the mail in regular course shows that the postal itempresented by the return card had been received by the addressee. Otherwise, as correctlycontended by respondent, the mailed item should have been stamped Returned to

Sender, still sealed with all the postal markings, and the return card still attached to it. As to the contention that the signature appearing on the registry return card receipt

appears to be only a dot and that the photostat copy does not contain a signature at allwe find, after a close scrutiny of the registry return card, that there are strokes before andafter the dot. These strokes appear to be a signature which signifies: a) that the registryclaim card was received at the given address; b) that the addressee had authorized aperson to present the claim card at the post office and receive the registered mail matter;and c) that the authorized person signed the return card to acknowledge his receipt of themail matter. Even the trial court in its decision ruled that:

x x x the Court finds no cogent reason to overcome the presumption that

Sheriff Pablo Sy performed his task regularly and in accordance with therules. A closer look at the assailed xerox copy of the registry receipt and the

original form which said xerox was admittedly copied would indeed show that

the xerox is not a faithful reproduction of the original since it does not bearthe complete signature of the addressee as appearing on the original. It does

not, however, follow that the xerox is a forgery. The same bears slight traces

of the signature appearing on the original but, there is no indication that theone was altered to conform to the other. Rather, there must have been only a

misprint of the xerox but not amounting to any attempt to falsify the same.[13]

Petitioner also claims that it had transferred to a different location but the notice wassent to its old address. Petitioner failed to notify respondent of its supposed change ofaddress. Needless to say, it can be surmised that respondent had sent the notice topetitioners official address.

Anent its third assigned error, petitioner assails the posting of the notices of sale bythe Sheriff in the Office of the Sheriff, Office of the Assessor and the Register of Deedsas these are not the conspicuous public places required by law. Furthermore, it alsoquestions the non-posting of the notice of sale on the property itself which was to be sold.

Apparently, this assigned error of petitioner is tantamount to a last ditch effort toextricate itself from the quagmire it is in. Act 3135 does not require posting of the noticeof sale on the mortgaged property. Section 3 of the said law merely requires that the

notice of the sale be posted for not less than twenty days in at least three public placesof the municipality or city where the property is situated. The aforementioned places, towit: the Sheriffs Office, the Assessors Office and the Register of Deeds are certainly thepublic places contemplated by law, as these are places where people interested inpurchasing real estate congregate.

With regard to the fourth assigned error of petitioner, we do not subscribe to the lattersview that the decision of the Court of Appeals was mainly based on the presumption of







the regularity of the performance of official function of the officers involved. A perusal ofthe records indubitably shows that the requirement of Act No. 3135 on the extrajudicialforeclosure of real estate mortgage had been duly complied with by Senior Deputy SheriffSy.

WHEREFORE, the petition is DENIED and the decision rendered in CA-G.R. CV No.

38340 is hereby AFFIRMED.

SO ORDERED.

Padilla, (Chairman), Bellosillo, Vitug, and Kapunan, JJ., concur .




Manila

EN BANC

G.R. No. 100776 October 28, 1993

ALBINO S. CO, petitioner,vs.COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

Antonio P. Barredo for petitioner.

The Solicitor General for the people.

NARVASA, C.J.:

In connection with an agreement to salvage and refloat asunken vessel — and in payment of hisshare of the expenses of the salvage operations therein stipulated — petitioner Albino Co deliveredto the salvaging firm on September 1, 1983 a check drawn against the Associated Citizens' Bank,postdated November 30, 1983 in the sum of P361,528.00. 1 The check was deposited on January 3,1984. It was dishonored two days later, the tersely-stated reason given by the bank being: "CLOSED

ACCOUNT."

A criminal complaint for violation of Batas Pambansa Bilang 22 2 was filed by the salvage company

against Albino Co with the Regional Trial Court of Pasay City. The case eventuated in Co's conviction ofthe crime charged, and his being sentenced to suffer a term of imprisonment of sixty (60) days and toindemnify the salvage company in the sum of P361,528.00.

Co appealed to the Court of Appeals. There he sought exoneration upon the theory that it wasreversible error for the Regional Trial Court to have relied, as basis for its verdict of conviction, onthe ruling rendered on September 21, 1987 by this Court in Que v . People, 154 SCRA 160(1987) 3 — i.e., that a check issued merely to guarantee the performance of an obligation is neverthelesscovered by B.P. Blg. 22. This was because at the time of the issuance of the check on September 1,1983, some four (4) years prior to the promulgation of the judgment in Que v . People on September 21,1987 , the delivery of a "rubber" or "bouncing" check as guarantee for an obligation was not considered apunishable offense, an official pronouncement made in a Circular of the Ministry of Justice. That Circular(No. 4), dated December 15, 1981, pertinently provided as follows:

2.3.4. Where issuance of bouncing check is neither estafa nor violation of B.P. Blg.22.

Where the check is issued as part of an arrangement to guarantee or secure thepayment of an obligation, whether pre-existing or not, the drawer is not criminallyliable for either estafa or violation of B.P. Blg. 22 (Res. No. 438, s. 1981, VirginiaMontano vs. Josefino Galvez, June 19, 1981; Res. No. 707, s. 1989; Alice Quizon vs.Lydia Calingo, October 23, 1981, Res. No. 769, s. 1981, Alfredo Guido vs. Miguel A.



Mateo, et. al., November 17, 1981; Res. No. 589, s. 1981, Zenaida Lazaro vs. Maria Aquino, August 7, 1981).

This administrative circular was subsequently reversed by another issued on August 8, 1984(Ministry Circular No. 12) — almost one (1) year after Albino Co had delivered the "bouncing" checkto the complainant on September 1, 1983. Said Circular No. 12, after observing inter alia that

Circular No. 4 of December 15, 1981 appeared to have been based on "a misapplication of thedeliberation in the Batasang Pambansa, . . . (or) the explanatory note on the original bill, i.e. that theintention was not to penalize the issuance of a check to secure or guarantee the payment of anobligation," as follows: 4

Henceforth, conforming with the rule that an administrative agency havinginterpreting authority may reverse its administration interpretation of a statute, butthat its review interpretation applies only prospectively (Waterbury Savings Bank vs.Danaher, 128 Conn., 476; 20 a2d 455 (1941), in all cases involving violation of BatasPambansa Blg. 22 where the check in question is issued after this date, the claimthat the check is issued as a guarantee or part of an arrangement to secure anobligation collection will no longer be considered a valid defense .

Co's theory was rejected by the Court of Appeals which affirmed his conviction. Citing Senarillosv . Hermosisima, 101 Phil. 561, the Appellate Court opined that the Que doctrine did not amount tothe passage of new law but was merely a construction or interpretation of a pre-existing one, i.e., BP22, enacted on April 3, 1979.

From this adverse judgment of the Court of Appeals, Albino Co appealed to this Courton certiorari under Rule 45 of the Rules of Court. By Resolution dated September 9, 1991, the Courtdismissed his appeal. Co moved for reconsideration under date of October 2, 1991. The Courtrequired comment thereon by the Office of the Solicitor General. The latter complied and, in itscomment dated December 13, 1991, extensively argued against the merits of Albino Co's theory onappeal, which was substantially that proffered by him in the Court of Appeals. To this comment,

Albino Co filed a reply dated February 14, 1992. After deliberating on the parties' arguments and

contentions, the Court resolved, in the interests of justice, to reinstate Albino Co's appeal andadjudicate the same on its merits.

Judicial decisions applying or interpreting the laws or the Constitution shall form apart of the legal system of the Philippines," according to Article 8 of the Civil Code."Laws shall have no retroactive effect, unless the contrary is provided," declares

Article 4 of the same Code, a declaration that is echoed by Article 22 of the RevisedPenal Code: "Penal laws shall have, a retroactive effect insofar as they favor theperson guilty of a felony, who is not a habitual criminal . . . 5

The principle of prospectivity of statutes, original or amendatory, has been applied in many cases.These include: Buyco v. PNB, 961 2 SCRA 682 (June 30, 1961), holding that Republic Act No. 1576

which divested the Philippine National Bank of authority to accept back pay certificates in payment ofloans, does not apply to an offer of payment made before effectivity of the act; Largadov . Masaganda, et al ., 5 SCRA 522 (June 30, 1962), ruling that RA 2613, s amended by RA 3090 onJune, 1961, granting to inferior courts jurisdiction over guardianship cases, could not be givenretroactive effect, in the absence of a saving clause; Larga v . Ranada, Jr ., 64 SCRA 18, to the effectthat Sections 9 and 10 of Executive Order No. 90, amending Section 4 of PD 1752, could have noretroactive application; People v . Que Po Lay , 94 Phil. 640, holding that a person cannot beconvicted of violating Circular No. 20 of the Central, when the alleged violation occurred beforepublication of the Circular in the Official Gazette; Baltazar v . C . A., 104 SCRA 619, denying



retroactive application to P.D. No. 27 decreeing the emancipation of tenants from the bondage of thesoil, and P.D. No. 316 prohibiting ejectment of tenants from rice and corn farmholdings, pending thepromulgation of rules and regulations implementing P.D. No. 27; Nilo v . Court of Appeals, 128 SCRA519, adjudging that RA 6389 whichremoved "personal cultivation" as a ground for the ejectment of atenant cannot be given retroactive effect in the absence of a statutory statement for retroactivity;Tac-

An v . CA, 129 SCRA 319, ruling that the repeal of the old Administrative Code by RA 4252 could not

be accorded retroactive effect; Ballardo v . Borromeo, 161 SCRA 500, holding that RA 6389 shouldhave only prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA,205 SCRA 419).

The prospectivity principle has also been made to apply to administrative rulings and circulars, towit: ABS-CBN Broadcasting Corporation v . CTA, Oct. 12, 1981, 108 SCRA 142, holding that acircular or ruling of the Commissioner of Internal Revenue may not be given retroactive effectadversely to a taxpayer: Sanchez v .COMELEC , 193 SCRA 317, ruling that Resolution No. 90-0590of the Commission on Elections, which directed the holding of recall proceedings, had no retroactiveapplication; Romualdez v . CSC , 197 SCRA 168, where it was ruled that CSC Memorandum CircularNo. 29, s. 1989 cannot be given retrospective effect so as to entitle to permanent appointment anemployee whose temporary appointment had expired before the Circular was issued.

The principle of prospectivity has also been applied to judicial decisions which, "although inthemselves not laws, are nevertheless evidence of what the laws mean, . . . (this being) the reasonwhyunder Article 8 of the New Civil Code, 'Judicial decisions applying or interpreting the laws or theConstitution shall form a part of the legal system . . .'"

So did this Court hold, for example, in Peo. v . Jabinal , 55 SCRA 607, 611:

It will be noted that when appellant was appointed Secret Agent by the ProvincialGovernment in 1962, and Confidential Agent by the Provincial commander in 1964,the prevailing doctrine on the matter was that laid down by Us in Peoplev . Macarandang (1959) and People v . Lucero (1958). 6Our decision in Peoplev . Mapa, 7 reversing the aforesaid doctrine, came only in 1967. The sole question in this

appeal is: should appellant be acquitted on the basis of Our rulingsin Macarandang and Lucero, or should his conviction stand in view of the completereverse of the Macarandang and Lucero doctrine in Mapa? . . .

Decisions of this Court, although in themselves not laws, are nevertheless evidenceof what the laws mean, and this is the reason why under Article 8 of the New CivilCode, "Judicial decisions applying or interpreting the laws or the Constitution shallform a part of the legal system . . ."The interpretation upon a law by this Courtconstitutes, in a way, a part of the law as of the date that law was originally passed,since this Court's construction merely establishes the contemporaneous legislativeintent that the law thus construed intends to effectuate. The settled rule supported bynumerous authorities is a restatement of the legal maxim "legis interpretation legisvim obtinet" — the interpretation placed upon the written law by a competent courthas the force of law. The doctrine laid down in Lucero andMacarandang was part ofthe jurisprudence, hence, of the law, of the land, at the time appellant was found inpossession of the firearm in question and where he was arraigned by the trial court. Itis true that the doctrine was overruled in the Mapa case in 1967, but when a doctrineof this Court is overruled and a different view is adopted, the new doctrine should beapplied prospectively, and should not apply to parties who had relied on, the olddoctrine and acted on the faith thereof. This is especially true in the construction andapplication of criminal laws, where it is necessary that the punishment of an act bereasonably foreseen for the guidance of society.



So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v . Court of Appeals, et al .(G.R. No. 97973) and Development Bank of the Philippines v . Court of Appeals, et al (G.R. No97998), Jan. 27, 1992, 205 SCRA 515, 527-528: 8

We sustain the petitioners' position, It is undisputed that the subject lot wasmortgaged to DBP on February 24, 1970. It was acquired by DBP as the highest

bidder at a foreclosure sale on June 18, 1977, and then sold to the petitioners onSeptember 29, 1979.

At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 asamended was that enunciated in Monge and Tupas cited above. The petitionersBenzonan and respondent Pe and the DBP are bound by these decisions forpursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting thelaws or the Constitution shall form a part of the legal system of the Philippines." Butwhile our decisions form part of the law of the land, they are also subject to Article 4of the Civil Code which provides that "laws shall have no retroactive effect unless thecontrary is provided." This is expressed in the familiar legal maxim lex prospicit, nonrespicit , the law looks forward not backward. The rationale against retroactivity iseasy to perceive. The retroactive application of a law usually divests rights that havealready become vested or impairs the obligations of contract and hence, isunconstitutional (Francisco vs. Certeza, 3 SCRA 565 [1061]).

The same consideration underlies our rulings giving only prospective effect todecisions enunciating new doctrines. Thus, we emphasized in People v . Jabinal , 55SCRA 607 [1974]" . . . when a doctrine of this Court is overruled and a different viewis adopted, the new doctrine should be applied prospectively and should not apply toparties who had relied on the old doctrine and acted on the faith thereof.

A compelling rationalization of the prospectivity principle of judicial decisions is well set forth in theoft-cited case of Chicot County Drainage Dist . v . Baxter States Bank , 308 US 371, 374 [1940]. TheChicot doctrine advocates the imperative necessity to take account of the actual existence of a

statute prior to its nullification, as an operative fact negating acceptance of "a principle of absoluteretroactive invalidity.

Thus, in this Court's decision in Tañada v . Tuvera, 9 promulgated on April 24, 1985 — which declared"that presidential issuances of general application, which have not been published,shall have no forceand effect," and as regards which declaration some members of the Court appeared "quite apprehensiveabout the possible unsettling effect . . . (the) decision might have on acts done in reliance on the validityof these presidential decrees . . ." — the Court said:

. . . . The answer is all too familiar. In similar situation is in the past this Court, hadtaken the pragmatic and realistic course set forth in Chicot County Drainage Districtvs. Baxter Bank (308 U.S. 371, 374) to wit:

The courts below have proceeded on the theory that the Act of Congress, havingfound to be unconstitutional, was not a law; that it was inoperative, conferring norights and imposing no duties, and hence affording no basis for the challengeddecree. Norton vs. Shelby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v.Hackett, 228 U. S. 559, 566. It is quite clear, however, that such broad statements asto the effect of a determination of unconstitutionality must be taken withqualifications. The actual existence of a statute, prior to such a determination, is anoperative fact and may have consequences which cannot justly be ignored. The past



cannot always be erased by a new judicial declaration. The effect of the subsequentruling as to invalidity may have to be considered in various aspects — with respect toparticular conduct, private and official. Questions of rights claimed to have becomevested, of status, of prior determinations deemed to have finality and acted uponaccordingly, of public policy in the light of the nature both of the statute and of itsprevious application, demand examination. These questions are among the most

difficult of those who have engaged the attention of courts, state and federal, and it ismanifest from numerous decisions that an all-inclusive statement of a principle ofabsolute retroactive invalidity cannot be justified.

Much earlier, in De Agbayani v . PNB, 38 SCRA 429 — concerning the effects of the invalidation of"Republic Act No. 342, the moratorium legislation, which continued Executive Order No. 32, issuedby the then President Osmeña, suspending the enforcement of payment of all debts and othermonetary obligations payable by war sufferers," and which had been "explicitly held in Rutter v.Esteban (93 Phil. 68 [1953] 10 . . . (to be) in 1953 'unreasonable and oppressive, and should not beprolonged a minute longer . . ." — the Court made substantially the same observations, to wit: 11

. . . . The decision now on appeal reflects the orthodox view that an unconstitutionalact, for that matter an executive order or a municipal ordinance likewise sufferingfrom that infirmity, cannot be the source of any legal rights or duties. Nor can it justifyany official act taken under it. Its repugnancy to the fundamental law once judiciallydeclared results in its being to all intents and purposes amere scrap of paper. . . . It isunderstandable why it should be so, the Constitution being supreme and paramount.

Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. lt may nothowever be sufficiently realistic. It does not admit of doubt that prior to thedeclaration of nullity such challenged legislative or executive act must have been inforce and had to be compiled with. This is so as until after the judiciary, in anappropriate case, declares its invalidity,, it is entitled to obedience and respect.Parties may have acted under it and may have changed theirpositions, what could be

more fitting than that in a subsequent litigation regard be had to what has been donewhile such legislative or executive act was in operation and presumed to be valid inall respects. It is now accepted as a doctrine that prior to its being nullified, itsexistence is a fact must be reckoned with. This is merely to reflect awareness thatprecisely because the judiciary is the governmental organ which has the final say onwhether or not a legislative or executive measure is valid, a, period of time may haveelapsed before it can exercise the power of judicial review that may lead to adeclaration of nullity. It would be to deprive the law of its quality of fairness and

justice then, if there be no recognition of what had transpired prior to suchadjudication.

In the language of an American Supreme Court decision: 'The actual existence of astatute, prior to such a determination [of unconstitutionality], is an operative fact andmay have consequences which cannot justly be ignored. The past cannot always beerased by a new judicial declaration. The effect of the subsequent ruling as toinvalidity may have to be considered in various aspects, — with respect to particularrelations, individual and corporate, and particular conduct, private and official (ChicotCounty Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). Thislanguage has been quoted with approval in a resolution in Araneta v. Hill (93 Phil.1002 [1953]) and the decision in Manila Motor Co. Inc. v. Flores (99 Phil. 738 [1956]).

An even more recent instance is the opinion of Justice Zaldivar speaking for theCourt in Fernandez v. Cuerva and Co. (L-21114, Nov. 28, 1967, 21 SCRA 1095).



Again, treating of the effect that should be given to its decision in Olaguer v . Military Commission No34, 12 — declaring invalid criminal proceedings conducted during the martial law regime against civilians,which had resulted in the conviction and incarceration of numerous persons — this Court, in Tanvs. Barrios, 190 SCRA 686, at p. 700, ruled as follows:

In the interest of justice and consistently, we hold that Olaguer should, in principle,

be applied prospectively only to future cases and cases still ongoing or not yet finalwhen that decision was promulgated. Hence, there should be no retroactivenullification of final judgments, whether of conviction or acquittal, rendered by militarycourts against civilians before the promulgation of the Olaguer decision. Such finalsentences should not be disturbed by the State. Only in particular cases where theconvicted person or the State shows that there was serious denial of constitutionalrights of the accused, should the nullity of the sentence be declared and a retrial beordered based on the violation of the constitutional rights of the accused and not onthe Olaguer doctrine. If a retrial is no longer possible, the accused should bereleased since judgment against him is null on account of the violation of hisconstitutional rights and denial of due process.

xxx xxx xxx

The trial of thousands of civilians for common crimes before the military tribunals andcommissions during the ten-year period of martial rule (1971-1981) which werecreated under general orders issued by President Marcos in the exercise of hislegislative powers is an operative fact that may not just be ignored. The belateddeclaration in 1987 of the unconstitutionality and invalidity of those proceedings didnot erase the reality of their consequences which occurred long before our decisionin Olaguer was promulgated and which now prevent us from carrying Olaguer to thelimit of its logic. Thus did this Court rule in Municipality of Malabang v . Benito, 27SCRA 533, where the question arose as to whether the nullity of creation of amunicipality by executive order wiped out all the acts of the local governmentabolished. 13

It would seem then, that the weight of authority is decidedly in favor of the proposition that theCourt's decision of September 21, 1987 in Que v . People, 154 SCRA 160 (1987) 14 that a checkissued merely to guarantee the performance of an obligation is nevertheless covered by B.P. Blg. 22 — should not be given retrospective effect to the prejudice of the petitioner and other persons situated, whorelied on the official opinion of the Minister of Justice that such a check did not fall within the scope ofB.P. Blg. 22.

Inveighing against this proposition, the Solicitor General invokes U .S. v . Go Chico, 14 Phil. 128,applying the familiar doctrine that in crimes mala prohibita, the intent or motive of the offender isinconsequential, the only relevant inquiry being, "has the law been violated?" The facts in GoChico are substantially different from those in the case at bar. In the former, there was no officialissuance by the Secretary of Justice or other government officer construing the special lawviolated; 15 and it was there observed, among others, that "the defense . . . (of) an honest misconstructionof the law under legal advice" 16 could not be appreciated as a valid defense. In the present case on theother hand, the defense is that reliance was placed, not on the opinion of a private lawyer but upon anofficial pronouncement of no less than the attorney of the Government, the Secretary of Justice, whoseopinions, though not law, are entitled to great weight and on which reliance may be placed by privateindividuals is reflective of the correct interpretation of a constitutional or statutory provision; this,particularly in the case of penal statutes, by the very nature and scope of the authority that resides in asregards prosecutions for their violation. 17 Senarillos vs. Hermosisima, supra, relied upon by the



respondent Court of Appeals, is crucially different in that in said case, as in U .S. v . Go Chico, supra, noadministrative interpretation antedated the contrary construction placed by the Court on the law invoked.

This is after all a criminal action all doubts in which, pursuant to familiar, fundamental doctrine, mustbe resolved in favor of the accused. Everything considered, the Court sees no compelling reasonwhy the doctrine of mala prohibita should override the principle of prospectivity, and its clear

implications as herein above set out and discussed, negating criminal liability.

WHEREFORE, the assailed decisions of the Court of Appeals and of the Regional Trial Court arereversed and set aside, and the criminal prosecution against the accused-petitioner is DISMISSED,with costs de oficio.

SO ORDERED.

Padilla, Regalado, Nocon and Puno, JJ., concur.




Manila

EN BANC

G.R. No. 192074 June 10, 2014

LIGHT RAIL TRANSIT AUTHORITY, represented by its Administrator MELQUIADES A.ROBLES, Petitioner,vs.AURORA A. SALVAÑA, Respondent.

D E C I S I O N

LEONEN, J.:

An administrative agency has standing to appeal the Civil Service Commission's repeal or

modification of its original decision. In such instances, it is included in the concept of a "partyadversely affected" by a decision of the Civil Service Commission granted the statutory right toappeal:

We are asked in this petition for review1 filed by the Light Rail Transit Authority (LRTA), agovernment-owned and -controlled corporation, to modify the Civil Service Commission’s finding thatrespondent was guilty only of simple dishonesty.

This case developed as follows:

On May 12, 2006, then Administrator of the Light Rail Transit Authority, Melquiades Robles, issuedOffice Order No. 119, series of 2006.2 The order revoked Atty. Aurora A. Salvaña’s designation as

Officer-in-Charge (OIC) of the LRTA Administrative Department. It "direct[ed] her instead to handlespecial projects and perform such other duties and functions as may be assigned to her "3 by the

Administrator.

Atty. Salvaña was directed to comply with this office order through a memorandum issued on May22, 2006 by Atty. Elmo Stephen P. Triste, the newly designated OIC of the administrativedepartment. Instead of complying, Salvaña questioned the order with the Office of the President.4

In the interim, Salvaña applied for sick leave of absence on May 12, 2006 and from May 15 to May31, 2006.5 In support of her application, she submitted a medical certificate6 issued by Dr. GraceMarie Blanco of the Veterans Memorial Medical Center (VMMC).

LRTA discovered that Dr. Blanco did not issue this medical certificate. Dr. Blanco also denied havingseen or treated Salvaña on May 15, 2006, the date stated on her medical certificate .7 On June 23,2006, Administrator Robles issued a notice of preliminary investigation. The notice directed Salvañato explain in writing within 72 hours from her receipt of the notice "why no disciplinary action shouldbe taken against [her]"8 for not complying with Office Order No. 119 and for submitting a falsifiedmedical certificate.9

Salvaña filed her explanation on June 30, 2006.10 She alleged that as a member of the Bids and Awards Committee, she "refused to sign a resolution"11 favoring a particular bidder. She alleged that

http://www.lawphil.net/judjuris/juri2014/jun2014/gr_192074_2014.html#fnt1












































Office Order No. 119 was issued by Administrator Robles to express his "ire andvindictiveness"12 over her refusal to sign.

The LRTA’s Fact-finding Committee found her explanation unsatisfactory. On July 26, 2006, itissued a formal charge against her for Dishonesty, Falsification of Official Document, GraveMisconduct, Gross Insubordination, and Conduct Prejudicial to the Best Interest of the Service.13

On August 5, 2006, "Salvaña tendered her irrevocable resignation."14 None of the pleadings allegedthat this irrevocable resignation was accepted, although the resolution of the Fact-finding Committeealluded to Administrator Robles’ acceptance of the resignation letter.

In the meantime, the investigation against Salvaña continued, and the prosecution presented itswitnesses.15Salvaña "submitted a manifestation dated September 6, 2006, stating that theCommittee was biased and that [Administrator] Robles was both the accuser and the hearingofficer."16

On October 31, 2006, the Fact-finding Committee issued a resolution "finding Salvaña guilty of allthe charges against her and imposed [on] her the penalty of dismissal from . . . service with all the

accessory penalties."17 The LRTA Board of Directors approved the findings of the Fact-findingCommittee18

Salvaña appealed with the Civil Service Commission. "In her appeal, [she] claimed that she wasdenied due process and that there [was] no substantial evidence to support the charges againsther."19

On July 18, 2007, the Civil Service Commission modified the decision and issued Resolution No.071364.The Civil Service Commission found that Salvaña was guilty only of simple dishonesty. Shewas meted a penalty of suspension for three months.20

LRTA moved for reconsideration21 of the resolution. This was denied in a resolution dated May 26,

2008.22

LRTA then filed a petition for review with the Court of Appeals.23

On November 11, 2009, the Court of Appeals24 dismissed the petition and affirmed the Civil ServiceCommission’s finding that Salvaña was only guilty of simple dishonesty. The appellate court alsoruled that Administrator Robles had no standing to file a motion for reconsideration before the CivilService Commission because that right only belonged to respondent in an administrativecase.25 LRTA moved for reconsideration26 of this decision but was denied.27

Hence, LRTA filed this present petition.

Petitioner argues that it has the legal personality to appeal the decision of the Civil ServiceCommission before the Court of Appeals.28 It cites Philippine National Bank v. Garcia29 as basis for itsargument that it can be considered a "person adversely affected" under the pertinent rules andregulations on the appeal of administrative cases.30 It also argues that respondent’s falsification ofthe medical certificate accompanying her application for sick leave was not merely simple butserious dishonesty.31

Respondent agrees with the ruling of the Court of Appeals that petitioner had no legal personality tofile the appeal since it was not the "person adversely affected" by the decision. She counters that

Administrator Robles had no authority to file the appeal since he was unable to present a resolution

















































































from the Board of Directors authorizing him to do so.32 She also agrees with the Civil ServiceCommission’s finding that she was merely guilty of simple dishonesty.33

In its reply,34 petitioner points out that it presented a secretary’s certificate35 dated July 17, 2008 andwhich it attached to the petitions before the Civil Service Commission, Court of Appeals, and thiscourt. It argues that the certificate authorizes the LRTA and its Administrator to file the necessary

motion for reconsideration or appeal regarding this case, and this authorization has yet to berevoked.36

Both parties filed their respective memoranda before this court on May 23, 201237 and December 6,2012.38

The legal issues that will determine the results of this case are:

1. Whether the LRTA, as represented by its Administrator, has the standing to appeal themodification by the Civil Service Commission of its decision

2. Whether Salvaña was correctly found guilty of simple dishonesty only

We grant the petition.

The parties may appeal in administrative cases involving members of the civil service

It is settled that "[t]he right to appeal is not a natural right [or] a part of due process; it is merely astatutory privilege, and may be exercised only in the manner and in accordance with the provisionsof the law."39 If it is not granted by the Constitution, it can only be availed of when a statute providesfor it.40 When made available by law or regulation, however, a person cannot be deprived of that rightto appeal. Otherwise, there will be a violation of the constitutional requirement of due process of law.

Article IX (B), Section 3 of the Constitution mandates that the Civil Service Commission shall be "the

central personnel agency of the Government."41 In line with the constitutionally enshrined policy thata public office is a public trust, the Commission was tasked with the duty "to set standards and toenforce the laws and rules governing the selection, utilization, training, and discipline of civilservants."42

Civil servants enjoy security of tenure, and "[n]o officer or employee in the Civil Service shall besuspended or dismissed except for cause as provided by law and after due process."43 UnderSection 12, Chapter 3, Book V of the Administrative Code, it is the Civil Service Commission thathas the power to "[h]ear and decide administrative cases instituted by or brought before it directly oron appeal."

The grant of the right to appeal in administrative cases is not new. In Republic Act No. 2260 or the

Civil Service Law of 1959, appeals "by the respondent"44

were allowed on "[t]he decision of theCommissioner of Civil Service rendered in an administrative case involving discipline of subordinateofficers and employees."45

Presidential Decree No. 807, while retaining the right to appeal in administrative cases, amended thephrasing of the party allowed to appeal. Section 37, paragraph (a), and Section 39, paragraph (a),ofPresidential Decree No. 807 provide:

























































Sec. 37. Disciplinary Jurisdiction. - (a) The Commission shall decide upon appeal all administrativecases involving the imposition of a penalty of suspension for more than thirty days, or fine in anamount exceeding thirty days' salary, demotion in rank or salary or transfer, removal or dismissalfrom office.

Sec. 39. Appeals. - (a) Appeals, where allowable, shall be made by the party adversely affected by

the decision within fifteen days from receipt of the decision unless a petition shall be decided withinfifteen days. (Emphasis supplied)

Additionally, Section 47, paragraph (1), and Section 49, paragraph (1), of the Administrative Codeprovide:

SECTION 47. Disciplinary Jurisdiction.—(1) The Commission shall decide upon appeal alladministrative disciplinary cases involving the imposition of a penalty of suspension for more thanthirty days, or fine in an amount exceeding thirty days’ salary, demotion in rank or salary or transfer,removal or dismissal from office.

SECTION 49. Appeals.—(1) Appeals, where allowable, shall be made by the party adversely

affected by the decision within fifteen days from receipt of the decision unless a petition forreconsideration is seasonably filed, which petition shall be decided within fifteen days….(Emphasissupplied)

The phrase, "person adversely affected," was not defined in either Presidential Decree No. 807 orthe Administrative Code. This prompted a series of cases46 providing the interpretation of this phrase.

The first of these cases, Paredes v. Civil Service Commission,47 declared:

Based on [Sections 37 (a) and 39 (a) of Presidential Decree No. 807], appeal to the Civil ServiceCommission in an administrative case is extended to the party adversely affected by the decision,that is, the person or the respondent employee who has been meted out the penalty of suspension

for more than thirty days; or fine in an amount exceeding thirty days salary demotion in rank orsalary or transfer, removal or dismissal from office. The decision of the disciplining authority is evenfinal and not appealable to the Civil Service Commission in cases where the penalty imposed issuspension for not more than thirty days or fine in an amount not exceeding thirty dayssalary.48 (Emphasis supplied)

This ruling was repeated in Mendez v. Civil Service Commission49 where this court stated that:

A cursory reading of P.D. 807, otherwise known as "The Philippine Civil Service Law" shows thatsaid law does not contemplate a review of decisions exonerating officers or employees fromadministrative charges.

. . . .

By inference or implication, the remedy of appeal may be availed of only in a case where therespondent is found guilty of the charges filed against him. But when the respondent is exoneratedof said charges, as in this case, there is no occasion for appeal .50 (Emphasis supplied)

The same ratio would be reiterated and become the prevailing doctrine on the matter in Magpale, Jr.v. Civil Service Commission,51 Navarro v. Civil Service Commission and Export Processing



























Zone,52 University of the Philippines v. Civil Service Commission,53 and Del Castillo v. Civil ServiceCommission.54

In these cases, this court explained that the right to appeal being merely a statutory privilege canonly be availed of by the party specified in the law. Since the law presumes that appeals will only bemade in decisions prescribing a penalty, this court concluded that the only parties that will be

adversely affected are the respondents that are charged with administrative offenses. Since the rightto appeal is a remedial right that may only be granted by statute, a government party cannot byimplication assert that right as incidental to its power, since the right to appeal does not form part ofdue process.55

In effect, this court equated exonerations in administrative cases to acquittals in criminal caseswherein the State or the complainant would have no right to appeal .56 When the Civil ServiceCommission enacted the Uniform Rules on Administrative Cases in the Civil Service, or theURACCS, on September 27, 1999, it applied this court’s definition. Thus, Section 2, paragraph(l),Rule I, and Section 38,Rule III of the URACCS defined "party adversely affected" as follows:

Section 2. Coverage and Definition of Terms.

. . . .

(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in adisciplinary case has been rendered.

For some time, government parties were, thus, barred from appealing exonerations of civil servantsthey had previously sanctioned. It was not until the promulgation by this court of Civil ServiceCommission v. Dacoycoy57 on April 29, 1999 that the issue would be revisited.

Civil Service Commission v. Dacoycoyand Philippine National Bank v. Garcia

In Civil Service Commission v. Dacoycoy,58

an administrative complaint for habitual drunkenness,misconduct, and nepotism was filed against the Vocational School Administrator of BalicuatroCollege of Arts and Trade in Allen, Northern Samar. The Civil Service Commission found Dacoycoyguilty, but the Court of Appeals overturned this finding and exonerated Dacoycoy of all charges. TheCivil Service Commission then appealed the ruling of the appellate court. This court, in addressingthe issue of the Commission’s standing, stated that:

Subsequently, the Court of Appeals reversed the decision of the Civil Service Commission and heldrespondent not guilty of nepotism. Who now may appeal the decision of the Court of Appeals to theSupreme Court? Certainly not the respondent, who was declared not guilty of the charge. Nor thecomplainant George P. Suan, who was merely a witness for the government. Consequently, the CivilService Commission has become the party adversely affected by such ruling, which seriouslyprejudices the civil service system. Hence, as an aggrieved party, it may appeal the decision of the

Court of Appeals to the Supreme Court. By this ruling, we now expressly abandon and overruleextant jurisprudence that "the phrase ‘party adversely affected by the decision’ refers to thegovernment employee against whom the administrative case is filed for the purpose of disciplinaryaction which may take the form of suspension, demotion in rank or salary, transfer, removal ordismissal from office" and not included are "cases where the penalty imposed is suspension for notmore than thirty (30) days or fine in an amount not exceeding thirty days salary" or "when therespondent is exonerated of the charges, there is no occasion for appeal." In other words, weoverrule prior decisions holding that the Civil Service Law "does not contemplate a review ofdecisions exonerating officers or employees from administrative charges" enunciated in Paredes v.































Civil Service Commission; Mendez v. Civil Service Commission; Magpale v. Civil ServiceCommission; Navarro v. Civil Service Commission and Export Processing Zone Authority and morerecently Del Castillo v. Civil Service Commission.59 (Emphasis supplied; citations omitted)

In his concurring opinion, then Chief Justice Puno summed up the rationale for allowing governmentparties to appeal, thus:

In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For whatthe law declares as "final" are decisions of heads of agencies involving suspension for not more thanthirty (30) days or fine in an amount not exceeding thirty (30) days salary.

But there is a clear policy reason for declaring these decisions final. These decisions involve minoroffenses. They are numerous for they are the usual offenses committed by government officials andemployees. To allow their multiple level appeal will doubtless overburden the quasi-judicialmachinery of our administrative system and defeat the expectation of fast and efficient action fromthese administrative agencies. Nepotism, however, is not a petty offense. Its deleterious effect ongovernment cannot be over-emphasized. And it is a stubborn evil. The objective should be toeliminate nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from

review, especially judicial review. It is thus non sequitur to contend that since some decisionsexonerating public officials from minor offenses cannot be appealed, ergo, even a decision acquittinga government official from a major offense like nepotism cannot also be appealed.60 (Emphasissupplied)

The decision in Dacoycoy would be reiterated in 2002 when this court promulgated PhilippineNational Bank v. Garcia.61 Philippine National Bank categorically allowed the disciplining authority toappeal the decision exonerating the disciplined employee.

In that case, the bank charged Ricardo V. Garcia, Jr., one of its check processors and cashrepresentatives, with gross neglect of duty when he lost P7 million in connection with his duties. Boththe Civil Service Commission and the Court of Appeals reversed the bank and exonerated Garciafrom all liability.

This court, however, upheld Philippine National Bank’s right to appeal the case. Citing Dacoycoy,this court ruled:

Indeed, the battles against corruption, malfeasance and misfeasance will be seriously undermined ifwe bar appeals of exoneration. After all, administrative cases do not partake of the nature of criminalactions, in which acquittals are final and unappealable based on the constitutional proscription ofdouble jeopardy.

Furthermore, our new Constitution expressly expanded the range and scope of judicial review. Thus,to prevent appeals of administrative decisions except those initiated by employees will effectivelyand pervertedly erode this constitutional grant.

Finally, the Court in Dacoycoy ruled that the CSC had acted well within its rights in appealing theCA’s exoneration of the respondent public official therein, because it has been mandated by theConstitution to preserve and safeguard the integrity of our civil service system. In the same light,herein Petitioner PNB has the standing to appeal to the CA the exoneration of Respondent Garcia.

After all, it is the aggrieved party which has complained of his acts of dishonesty. Besides, this Courthas not lost sight of the fact that PNB was already privatized on May 27, 1996. Should respondentbe finally exonerated indeed, it might then be incumbent upon petitioner to take him back into itsfold. It should therefore be allowed to appeal a decision that in its view hampers its right to select















honest and trustworthy employees, so that it can protect and preserve its name as a premierbanking institution in our country.62 (Emphasis supplied) Thus, the Civil Service Commission issuedResolution No. 021600 published on December 29, 2002, which amended the URACCS, to allow thedisciplining authority to appeal the decision exonerating the employee:

Section 2. Coverage and Definition of Terms. –

. . . .

(l) PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in adisciplinary case has been rendered or to the disciplining authority in an appeal from a decisionexonerating the said employee.

Subsequent decisions continued to reiterate the rulings in Dacoycoy and Philippine National Bank.

In Constantino-David v. Pangandaman-Gania,63 this court explained the rationale of allowing the CivilService Commission to appeal decisions of exonerations as follows:

That the CSC may appeal from an adverse decision of the Court of Appeals reversing or modifyingits resolutions which may seriously prejudice the civil service system is beyond doubt. In CivilService Commission v. Dacoycoy[,] this Court held that the CSC may become the party adverselyaffected by such ruling and the aggrieved party who may appeal the decision to this Court.

The situation where the CSC’s participation is beneficial and indispensable often involves complaintsfor administrative offenses, such as neglect of duty, being notoriously undesirable, inefficiency andincompetence in the performance of official duties, and the like, where the complainant is more oftenthan not acting merely as a witness for the government which is the real party injured by the illicitact. In cases of this nature, a ruling of the Court of Appeals favorable to the respondent employee isunderstandably adverse to the government, and unavoidably the CSC as representative of thegovernment may appeal the decision to this Court to protect the integrity of the civil service system.

The CSC may also seek a review of the decisions of the Court of Appeals that are detrimental to itsconstitutional mandate as the central personnel agency of the government tasked to establish acareer service, adopt measures to promote morale, efficiency, integrity, responsiveness,progressiveness and courtesy in the civil service, strengthen the merit and rewards system, integrateall human resources development programs for all levels and ranks, and institutionalize amanagement climate conducive to public accountability. Nonetheless, the right of the CSC to appealthe adverse decision does not preclude the private complainant in appropriate cases from similarlyelevating the decision for review.64

Then in Civil Service Commission v. Gentallan,65 this court declared:

At the outset, it should be noted that the Civil Service Commission, under the Constitution, is thecentral personnel agency of the government charged with the duty of determining questions ofqualifications of merit and fitness of those appointed to the civil service. Thus, the CSC, as aninstitution whose primary concern is the effectiveness of the civil service system, has the standing toappeal a decision which adversely affects the civil service. We hold, at this juncture, that CSC hasthe standing to appeal and/or to file its motion for reconsideration.66

The right to appeal by government parties was not limited to the Civil Service Commission.























In Pastor v. City of Pasig,67 this court ruled that the City of Pasig had standing to appeal the decisionof the Civil Service Commission reinstating a city employee to her former position, despite the citygovernment having reassigned her to another unit.

In Geronga v. Varela,68 this court ruled that the Mayor of Cadiz City had the right to file a motion forreconsideration of a decision by the Civil Service Commission exonerating a city employee on the

ground that "as the appointing and disciplining authority, [he] is a real party in interest."69

In Department of Education v. Cuanan,70 this court ruled that the Department of Education "qualifie[d]as a party adversely affected by the judgment, who can file an appeal of a judgment of exonerationin an administrative case."71

There are, however, cases, which sought to qualify this right to appeal.

In National Appellate Board v. Mamauag,72 an administrative complaint for grave misconduct wasfiled by Quezon City Judge Adoracion G. Angeles against several members of the PhilippineNational Police (PNP). The Central Police District Command (CPDC) of Quezon City, uponinvestigation, dismissed the complaint. Dissatisfied, Judge Angeles moved for a reinvestigation by

then PNP Chief Recaredo Sarmiento II.

PNP Chief Sarmiento issued a decision finding the accused police officers guilty of the offensescharged. Some were meted the penalty of suspension while others were dismissed from service.Upon motion for reconsideration by Judge Angeles, Chief Sarmiento modified his ruling and orderedthe dismissal of the suspended police officers.

One of the officers, Police Inspector John Mamauag, appealed the decision with the National Appellate Board of the National Police Commission. The National Appellate Board, however, deniedthe appeal. Mamauag appealed the denial with the Court of Appeals. The Court of Appeals reversedthe decision of the National Appellate Board and ruled that it was the Philippine National Police, notJudge Angeles, which had the right to appeal the decision of PNP Chief Sarmiento, as it was theparty adversely affected. The National Appellate Board then appealed this decision with this court.

This court, while citing Dacoycoy, declared that Judge Angeles, as complainant, had no right toappeal the dismissal by CPDC of the complaint against Mamauag. It qualified the right ofgovernment agencies to appeal by specifying the circumstances by which the right may be given,thus:

However, the government party that can appeal is not the disciplining authority or tribunal whichpreviously heard the case and imposed the penalty of demotion or dismissal from the service. Thegovernment party appealing must be one that is prosecuting the administrative case against therespondent. Otherwise, an anomalous situation will result where the disciplining authority or tribunalhearing the case, instead of being impartial and detached, becomes an active participant inprosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after Dacoycoy, the

Court declared:

To be sure, when the resolutions of the Civil Service Commission were brought before the Court of Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicialbody, the Civil Service Commission can be likened to a judge who should "detach himself fromcases where his decision is appealed to a higher court for review."

In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role asadjudicator and became an advocate. Its mandated function is to "hear and decide administrative



























cases instituted by or brought before it directly or on appeal, including contested appointments andto review decisions and actions of its offices and agencies," not to litigate.73 (Emphasis supplied)

The ruling in National Appellate Boardwas applied in Montoya v. Varilla,74 Pleyto v. PNP-CIDG,75 andOmbudsman v. Liggayu.76

The present rule is that a government party is a "party adversely affected" for purposes of appealprovided that the government party that has a right to appeal must be the office or agencyprosecuting the case.

Despite the limitation on the government party’s right to appeal, this court has consistently upheldthat right in Dacoycoy. In Civil Service Commission v. Almojuela,77 we stated that:

More than ten years have passed since the Court first recognized in Dacoycoy the CS C’s standingto appeal the CA’s decisions reversing or modifying its resolutions seriously prejudicial to the civilservice system. Since then, the ruling in Dacoycoy has been subjected to clarifications andqualifications but the doctrine has remained the same: the CSC has standing as a real party ininterest and can appeal the CA’s decisions modifying or reversing the CSC’s rulings, when the CA

action would have an adverse impact on the integrity of the civil service. As the government’s centralpersonnel agency, the CSC is tasked to establish a career service and promote morale, efficiency,integrity, responsiveness, progressiveness, and courtesy in the civil service; it has a stake inensuring that the proper disciplinary action is imposed on an erring public employee, and this stakewould be adversely affected by a ruling absolving or lightening the CSC-imposed penalty. Further, adecision that declares a public employee not guilty of the charge against him would have no otherappellant than the CSC. To be sure, it would not be appealed by the public employee who has beenabsolved of the charge against him; neither would the complainant appeal the decision, as he actedmerely as a witness for the government. We thus find no reason to disturb the settled Dacoycoydoctrine.78 (Citations omitted)

Indeed, recent decisions showed that this court has allowed appeals by government parties.Notably, the government parties’ right to appeal in these cases was not brought up as an issue by

either of the parties.

In Civil Service Commission v. Yu,79 this court allowed the Civil Service Commission to appeal theCourt of Appeals’ decision granting the reinstatement of a government employee whoseappointment had been revoked by the Commission.

In National Power Corporation v. Civil Service Commission and Tanfelix,80 the National PowerCorporation had previously filed an administrative complaint against one of its employees, RodrigoTanfelix, resulting in his dismissal from service. When the Civil Service Commission exoneratedTanfelix and the Court of Appeals affirmed the exoneration, the National Power Corporation wasallowed to appeal.

These cases, however, allowed the disciplining authority to appeal only from a decision exoneratingthe said employee. In this case, respondent was not exonerated; she was found guilty, but thefinding was modified. This court previously stated that:

If the administrative offense found to have been actually committed is of lesser gravity than theoffense charged, the employee cannot be considered exonerated if the factual premise for theimposition of the lesser penalty remains the same.81







































Dacoycoy, Philippine National Bank, and the URACCS failed to contemplate a situation where theCivil Service Commission modified the penalty from dismissal to suspension. The erring civil servantwas not exonerated, and the finding of guilt still stood. In these situations, the disciplinary authorityshould be allowed to appeal the modification of the decision.

The LRTA had standing to appeal the modification by the Civil Service Commission of its decision

The employer has the right "to select honest and trustworthy employees."82 When the governmentoffice disciplines an employee based on causes and procedures allowed by law, it exercises itsdiscretion. This discretion is inherent in the constitutional principle that "[p]ublic officers andemployees must, at all times, be accountable to the people, serve them with utmost responsibility,integrity, loyalty, and efficiency; act with patriotism and justice, and lead modest lives."83 This is aprinciple that can be invoked by the public as well as the government office employing the publicofficer.

Here, petitioner already decided to dismiss respondent for dishonesty. Dishonesty is a seriousoffense that challenges the integrity of the public servant charged. To bar a government office fromappealing a decision that lowers the penalty of the disciplined employee prevents it from ensuring its

mandate that the civil service employs only those with the utmost sense of responsibility, integrity,loyalty, and efficiency.

Honesty and integrity are important traits required of those in public service. If all decisions by quasi- judicial bodies modifying the penalty of dismissal were allowed to become final and unappealable, itwould, in effect, show tolerance to conduct unbecoming of a public servant. The quality of civilservice would erode, and the citizens would end up suffering for it.

During the pendency of this decision, or on November 18, 2011, the Revised Rules on Administrative Cases in the Civil Service or RACCS was promulgated. The Civil Service Commissionmodified the definition of a "party adversely affected" for purposes of appeal.

Section 4. Definition of Terms. –

. . . .

k. PARTY ADVERSELY AFFECTED refers to the respondent against whom a decision in anadministrative case has been rendered or to the disciplining authority in an appeal from a decisionreversing or modifying the original decision. (Emphasis supplied)

Procedural laws have retroactive application. In Zulueta v. Asia Brewery:84

As a general rule, laws have no retroactive effect. But there are certain recognized exceptions, suchas when they are remedial or procedural in nature. This Court explained this exception in thefollowing language:

It is true that under the Civil Code of the Philippines, "(l)aws shall have no retroactive effect, unlessthe contrary is provided. But there are settled exceptions to this general rule, such as when thestatute is CURATIVE or REMEDIAL in nature or when it CREATES NEW RIGHTS.

. . . .















On the other hand, remedial or procedural laws, i.e., those statutes relating to remedies or modes ofprocedure, which do not create new or take away vested rights, but only operate in furtherance ofthe remedy or confirmation of such rights, ordinarily do not come within the legal meaning of aretrospective law, nor within the general rule against the retrospective operation of statutes.

Thus, procedural laws may operate retroactively as to pending proceedings even without express

provision to that effect. Accordingly, rules of procedure can apply to cases pending at the time oftheir enactment. In fact, statutes regulating the procedure of the courts will be applied on actionsundetermined at the time of their effectivity. Procedural laws are retrospective in that sense and tothat extent.85 (Emphasis supplied)

Remedial rights are those rights granted by remedial or procedural laws. These are rights that onlyoperate to further the rules of procedure or to confirm vested rights. As such, the retroactiveapplication of remedial rights will not adversely affect the vested rights of any person. Consideringthat the right to appeal is a right remedial in nature, we find that Section 4, paragraph (k), Rule I ofthe RACCS applies in this case. Petitioner, therefore, had the right to appeal the decision of the CivilService Commission that modified its original decision of dismissal.

Recent decisions implied the retroactive application of this rule. While the right of government partiesto appeal was not an issue, this court gave due course to the appeals filed by government agenciesbefore the promulgation of the Revised Rules on Administrative Cases in the Civil Service.

In Civil Service Commission v. Clave,86 the Government Service and Insurance System (GSIS) foundone of its employees, Aurora M. Clave, guilty of simple neglect of duty. The Civil ServiceCommission affirmed the GSIS’s findings. The Court of Appeals, however, while affirming the CivilService Commission, reduced the penalty. Both the GSIS and the Civil Service Commission weregiven standing to appeal the decision of the Court of Appeals.

In GSIS v. Chua,87 the GSIS dismissed Heidi R. Chua for grave misconduct, dishonesty, and conductprejudicial to the best interest of service. The Civil Service Commission affirmed the GSIS, but theCourt of Appeals, while affirming the findings of the Commission, modified the penalty to simplemisconduct. The GSIS was then allowed to bring an appeal of the modification of the penalty withthis court.

Thus, we now hold that the parties adversely affected by a decision in an administrative case whomay appeal shall include the disciplining authority whose decision dismissing the employee waseither overturned or modified by the Civil Service Commission.

The offense committed was less serious dishonesty, not simple dishonesty

Dishonesty has been defined "as the ‘disposition to lie, cheat, deceive, or defraud;untrustworthiness, lack of integrity’ . . . ."88 Since the utmost integrity is expected of public servants,its absence is not only frowned upon but punished severely.

Section 52, Rule IV of the URACCS provides:

Section 52. Classification of Offenses. – Administrative offenses with corresponding penalties areclassified into grave, less grave or light, depending on their gravity or depravity and effects on thegovernment service.

A. The following are grave offenses with their corresponding penalties:



















1. Dishonesty - 1st Offense – Dismissal

. . . .

In Remolona v. Civil Service Commission,89 this court explained the rationale for the severity of thepenalty:

It cannot be denied that dishonesty is considered a grave offense punishable by dismissal for thefirst offense under Section 23, Rule XIV of the Rules Implementing Book V of Executive Order No.292. And the rule is that dishonesty, in order to warrant dismissal, need not be committed in thecourse of the performance of duty by the person charged. The rationale for the rule is that if agovernment officer or employee is dishonest or is guilty of oppression or grave misconduct, even ifsaid defects of character are not connected with his office, they affect his right to continue in office.The Government cannot tolerate in its service a dishonest official, even if he performs his dutiescorrectly and well, because by reason of his government position, he is given more and ampleopportunity to commit acts of dishonesty against his fellow men, even against offices and entities ofthe government other than the office where he is employed; and by reason of his office, he enjoysand possesses a certain influence and power which renders the victims of his grave misconduct,

oppression and dishonesty less disposed and prepared to resist and to counteract his evil acts andactuations. The private life of an employee cannot be segregated from his public life. Dishonestyinevitably reflects on the fitness of the officer or employee to continue in office and the discipline andmorale of the service.90 (Emphasis supplied)

However, on April 4, 2006, the Civil Service Commission issued Resolution No. 06-0538 or theRules on the Administrative Offense of Dishonesty.

Resolution No. 06-0538 recognizes that dishonesty is a grave offense punishable by dismissal fromservice.91 It, however, also recognizes that "some acts of Dishonesty are not constitutive of anoffense so grave as to warrant the imposition of the penalty of dismissal from the service."92

Recognizing the attendant circumstances in the offense of dishonesty, the Civil Service Commissionissued parameters "in order to guide the disciplining authority in charging the proper offense"93 and toimpose the proper penalty.

The resolution classifies dishonesty in three gradations: (1) serious; (2) less serious; and (3) simple.Serious dishonesty is punishable by dismissal.94 Less serious dishonesty is punishable bysuspension for six months and one day to one year for the first offense and dismissal for the secondoffense.95 Simple dishonesty is punishable by suspension of one month and one day to six monthsfor the first offense, six months and one day to one year for the second offense, and dismissal forthe third offense.96

The medical certificate respondent submitted to support her application for sick leave was falsified.The question remains as to whether this act could be considered serious dishonesty, less serious

dishonesty, or simple dishonesty.

According to the Civil Service Commission’s finding in its resolution:

In the instant case, the prosecution was able to establish that the medical certificate submitted bySalvaña was spurious or not genuine as the physician-signatory therein, Dr. Blanco[,] testified thatshe did not examine/treat the appellant nor did she issue a medical certificate on May 15, 2006 sinceshe was on sick leave of absence on that particular day. Worthy [of] mention is that the appellantnever bothered to submit any evidence, documentary or otherwise, to rebut the testimony of Blanco.



































Thus, the Commission rules and so holds that the appellant is liable for Dishonesty but applying theaforementioned CSC Resolution No. 06-0538, her dishonest act would be classified only as SimpleDishonesty as the same did not cause damage or prejudice to the government and had no directrelation to or did not involve the duties and responsibilities of the appellant. The same is true with thefalsification she committed, where the information falsified was not related to heremployment.97 (Emphasis supplied)

In Cuerdo v. Commission on Audit,98 this court previously ruled that "it is the general policy of thisCourt to sustain the decisions of administrative authorities ‘not only on the basis of the doctrine ofseparation of powers but also for their presumed knowledge ability and even expertise in the lawsthey are entrusted to enforce.’"99 The same case also stated that:

. . . . we reaffirmed the oft-repeated rule that findings of administrative agencies are generallyaccorded not only respect but also finality when the decision and order . . . are not tainted withunfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. Thefindings off acts must be respected, so long as they are supported by substantial evidence even ifnot overwhelming or preponderant.100

Petitioner insists that respondent committed serious dishonesty when she submitted the falsifiedmedical certificate. Under Section 3 of Resolution No. 06-0538, serious dishonesty comprises thefollowing acts:

Section 3. Serious Dishonesty. – The presence of any one of the following attendant circumstancesin the commission of the dishonest act would constitute the offense of Serious Dishonesty:

a. The dishonest act causes serious damage and grave prejudice to the government.

b. The respondent gravely abused his authority in order to commit the dishonest act.

c. Where the respondent is an accountable officer, the dishonest act directly involves

property, accountable forms or money for which he is directly accountable and therespondent shows an intent to commit material gain, graft and corruption.

d. The dishonest act exhibits moral depravity on the part of the respondent.

e. The respondent employed fraud and/or falsification of official documents in thecommission of the dishonest act related to his/her employment.

f. The dishonest act was committed several times or in various occasions.

g. The dishonest act involves a Civil Service examination, irregularity or fake Civil Serviceeligibility such as, but not limited to, impersonation, cheating and use of crib sheets.

h. Other analogous circumstances. (Emphasis supplied)

Simple dishonesty, on the other hand, comprises the following offenses:

Section 5. The presence of any of the following attendant circumstances in the commission of thedishonest act would constitute the offense of Simple Dishonesty:

a. The dishonest act did not cause damage or prejudice to the government.



















b. The dishonest act had no direct relation to or does not involve the duties andresponsibilities of the respondent.

c. In falsification of any official document, where the information falsified is not related tohis/her employment.

d. That the dishonest act did not result in any gain or benefit to the offender.

e. Other analogous circumstances. (Emphasis supplied)

This court previously ruled that "[f]alsification of an official document, as an administrative offense, isknowingly making false statements in official or public documents."101 Respondent, in her defense,states that she merely relied on her Health Maintenance Organization’s (HMO) advice that it wasgoing to issue her a medical certificate after she had gone to the hospital complaining ofhypertension.102 She maintains that she did not know that her medical certificate was falsified. We donot find this defense credible.

Respondent knew that she was not examined by Dr. Blanco, the medical certificate’s signatory. She

knew that she would not be able to fully attest to the truthfulness of the information in the certificate.Despite this, she still submitted the certificate in support of her application for leave.

The Civil Service Commission, however, found that the medical certificate was falsified. Dr. Blancorepudiated the certificate. Respondent did not present any evidence to defend its validity. Herapplication for sick leave, therefore, should not have been granted since it was unaccompanied bythe proper documents. The Commission correctly found respondent guilty of dishonesty.

However, it would be wrong to classify this offense as simple dishonesty.

By law, all employees in the civil service are entitled to leave of absence for a certain number ofdays, with or without pay.103 Under Section 1, Rule XVI of the Omnibus Rules Implementing Book V

of the Administrative Code, government employees are entitled to 15 days of sick leave annuallywith full pay.

The grant of sick leave with pay is an exception to the principle of "no work, no pay," i.e., entitlementto compensation only upon actual service rendered. As such, applications for leave must be properlyfilled out and filed accordingly. Section 16, Rule XVI of the Omnibus Rules Implementing Book V ofthe Administrative Code provides the rules for an application for sick leave:

SECTION 16. All applications for sick leaves of absence for one full day or more shall be on theprescribed form and shall be filed immediately upon the employee's return from such leave. Notice ofabsence, however, should be sent to the immediate supervisor and/or to the office head. Applicationfor sick leave in excess of five days shall be accompanied by a proper medical certificate.

Respondent’s application for sick leave, if approved, would allow her to be absent from work withoutany deductions from her salary. Being a government employee, respondent would have received hersalaries coming from government funds.

Since her application for sick leave was supported by a false medical certificate, it would have beenimproperly filed, which made all of her absences during this period unauthorized. The receipt,therefore, of her salaries during this period would be tantamount to causing damage or prejudice tothe government since she would have received compensation she was not entitled to receive.















This act of causing damage or prejudice, however, cannot be classified as serious since theinformation falsified had no direct relation to her employment. Whether or not she was suffering fromhypertension is a matter that has no relation to the functions of her office.

Given these circumstances, the offense committed can be properly identified as less seriousdishonesty. Under Section 4 of Resolution No. 06-0538, less serious dishonesty is classified by the

following acts:

Section 4. The presence of any one of the following attendant circumstances in the commission ofthe dishonest act would constitute the offense of Less Serious Dishonesty:

a. The dishonest act caused damage and prejudice to the government which is not soserious as to qualify under the immediately preceding classification.

b. The respondent did not take advantage of his/her position in committing the dishonest act.

c. Other analogous circumstances. (Emphasis supplied)

We hold, therefore, that respondent Atty. Aurora A. Salvaña is guilty of less serious dishonesty.

A final note

The records showed that respondent tendered her irrevocable resignation on August 5, 2006.Petitioner’s acceptance of respondent’s resignation was not mentioned in any of the pleadings.However, the resolution by the Fact-finding Committee stated that "[o]n 16 August 2006, the Officeof the Administrator received the resignation."104 On the issue of whether respondent’s resignationmooted its proceedings, it concluded that:

[I]n the response of the Administrator to the letter of resignation filed by Respondent there was nounconditional acceptance of the same. In fact it was specified therein that her resignation is "without

prejudice to any appropriate action on any malfeasance or misfeasance committed during hertenure[."]There can [sic] be no other conclusion from the above that her resignation does not preventthe administration from proceeding with any charge/s appropriate under thecircumstances.105 (Emphasis in the original)

Resignation from public office, to be effective, requires the acceptance of the proper governmentauthority. In Republic v. Singun,106 this court stated:

Resignation implies an expression of the incumbent in some form, express or implied, of theintention to surrender, renounce, and relinquish the office and the acceptance by competent andlawful authority. To constitute a complete and operative resignation from public office, there must be:(a) an intention to relinquish a part of the term; (b) an act of relinquishment; and (c) an acceptance

by the proper authority.

. . . .

In our jurisdiction, acceptance is necessary for resignation of a public officer to be operative andeffective. Without acceptance, resignation is nothing and the officer remains in office. Resignation tobe effective must be accepted by competent authority, either in terms or by something tantamount toan acceptance, such as the appointment of the successor. A public officer cannot abandon his officebefore his resignation is accepted, otherwise the officer is subject to the penal provisions of Article















238 of the Revised Penal Code. The final or conclusive act of a resignation’s acceptance is thenotice of acceptance. The incumbent official would not be in a position to determine the acceptanceof his resignation unless he had been duly notified therefor .107 (Emphasis supplied)

If there was evidence to show that petitioner did not, in fact , accept respondent’s resignation, herresignation would have been ineffective. Respondent’s continued absence from her post would have

been deemed abandonment from her office, of which she could be criminally charged.

Although the response of Administrator Robles was not attached to the record, it can be concludedfrom the resolution of the Fact-finding Committee that he accepted the resignation, albeit with thequalification that it be "without prejudice to any appropriate action on any malfeasance ormisfeasance committed during her tenure."108

The qualified acceptance of Administrator Robles, however, did not affect the validity of respondent’sresignation. 1âwphi1Section 1, Rule XII of the Civil Service Commission Memorandum Circular No. 40,series of 1998, as amended by Civil Service Commission Memorandum Circular No. 15, series of1999, requires:

Sec. 1. Resignation. The following documents shall be submitted to the Commission for recordpurposes:

a. The voluntary written notice of the employee informing the appointing authority that he isrelinquishing his position and the efffectivity date of said resignation; and,

b. The acceptance of resignation in writing by the agency head or appointing authority whichshall indicate the date of effectivity of the resignation.

An officer or employee under investigation may be allowed to resign pending decision of his casewithout prejudice to the continuation of the proceedings until finally terminated.

The qualification placed by Administrator Robles on his acceptance does not make respondent’sresignation any less valid. The rules and regulations allow the acceptance of resignations while theadministrative case is pending provided that the proceedings will still continue.

We also note that the unauthorized absences were incurred after the issuance of Office Order No.119. Atrespondent’s refusal to comply, she was administratively charged, which prompted herresignation from office. If there were irregularities in the issuance of Office Order No. 119, whatrespondent should have done would be to occupy the new position and then file the properremedies. She should not have defied the orders of her superiors.

Because of her resignation on August 5, 2006, any modification as to the service of her suspensionbecame moot. Her permanent employment record, however, must reflect the modified penalty.Considering that she is also a member of the Bar, this court furnishes the Office of the Bar Confidantwith a copy of this decision to initiate the proper disciplinary action against respondent.

WHEREFORE, the petition is GRANTED. The decision dated November 11, 2009 of the Court of Appeals in CA-G.R. SP. No. 104225 and Resolution No. 071364 dated July 18, 2007 of the CivilService Commission is AFFIRMED with the MODIFICATION that respondent, Atty. Aurora A.Salvaña, is found guilty of Less Serious Dishonesty. The Civil Service Commission is DIRECTED toattach a copy of this decision to respondent's permanent employment record.











Let a copy of this decision be given to the Office of the Bar Confidant to initiate the properdisciplinary action against respondent Atty. Aurora A. Salvaña.

SO ORDERED.




Manila

EN BANC

G.R. No. L-15127 May 30, 1961

EMETERIO CUI, plaintiff-appellant,vs.ARELLANO UNIVERSITY, defendant-appellee.

G.A.S. Sipin, Jr., for plaintiff-appellant.E. Voltaire Garcia for defendant-appellee.

CONCEPCION, J .:

Appeal by plaintiff Emeterio Cui from a decision of the Court of First Instance of Manila, absolving

defendant Arellano University from plaintiff's complaint, with costs against the plaintiff, anddismissing defendant's counter claim, for insufficiency of proof thereon.

In the language of the decision appealed from:

The essential facts of this case are short and undisputed. As established by the agreementof facts Exhibits X and by the respective oral and documentary evidence introduced by theparties, it appears conclusive that plaintiff, before the school year 1948-1949 took uppreparatory law course in the defendant University. After finishing his preparatory law courseplaintiff enrolled in the College of Law of the defendant from the school year 1948-1949.Plaintiff finished his law studies in the defendant university up to and including the firstsemester of the fourth year. During all the school years in which plaintiff was studying law in

defendant law college, Francisco R. Capistrano, brother of the mother of plaintiff, was thedean of the College of Law and legal counsel of the defendant university. Plaintiff enrolled forthe last semester of his law studies in the defendant university but failed to pay his tuitionfees because his uncle Dean Francisco R. Capistrano having severed his connection withdefendant and having accepted the deanship and chancellorship of the College of Law of

Abad Santos University, plaintiff left the defendant's law college and enrolled for the lastsemester of his fourth year law in the college of law of the Abad Santos University graduatingfrom the college of law of the latter university. Plaintiff, during all the time he was studyinglaw in defendant university was awarded scholarship grants, for scholastic merit, so that hissemestral tuition fees were returned to him after the ends of semester and when hisscholarship grants were awarded to him. The whole amount of tuition fees paid by plaintiff todefendant and refunded to him by the latter from the first semester up to and including thefirst semester of his last year in the college of law or the fourth year, is in total P1,033.87.

After graduating in law from Abad Santos University he applied to take the bar examination.To secure permission to take the bar he needed the transcripts of his records in defendant

Arellano University. Plaintiff petitioned the latter to issue to him the needed transcripts. Thedefendant refused until after he had paid back the P1,033 87 which defendant refunded tohim as above stated. As he could not take the bar examination without those transcripts,plaintiff paid to defendant the said sum under protest. This is the sum which plaintiff seeks torecover from defendant in this case.



Before defendant awarded to plaintiff the scholarship grants as above stated, he was madeto sign the following contract covenant and agreement:

"In consideration of the scholarship granted to me by the University, I hereby waive my rightto transfer to another school without having refunded to the University (defendant) theequivalent of my scholarship cash.

(Sgd.) Emeterio Cui".

It is admitted that, on August 16, 1949, the Director of Private Schools issued Memorandum No. 38,series of 1949, on the subject of "Scholarship," addressed to "All heads of private schools, collegesand universities," reading:

1. School catalogs and prospectuses submitted to this, Bureau show that some schools offerfull or partial scholarships to deserving students — for excellence in scholarship or forleadership in extra-curricular activities. Such inducements to poor but gifted students shouldbe encouraged. But to stipulate the condition that such scholarships are good only if the

students concerned continue in the same school nullifies the principle of merit in the award ofthese scholarships.

2. When students are given full or partial scholarships, it is understood that suchscholarships are merited and earned. The amount in tuition and other fees corresponding tothese scholarships should not be subsequently charged to the recipient students when theydecide to quit school or to transfer to another institution. Scholarships should not be offeredmerely to attract and keep students in a school.

3. Several complaints have actually been received from students who have enjoyedscholarships, full or partial, to the effect that they could not transfer to other schools sincetheir credentials would not be released unless they would pay the fees corresponding to the

period of the scholarships. Where the Bureau believes that the right of the student to transferis being denied on this ground, it reserves the right to authorize such transfer.

that defendant herein received a copy of this memorandum; that plaintiff asked the Bureau of PrivateSchools to pass upon the issue on his right to secure the transcript of his record in defendantUniversity, without being required to refund the sum of P1,033.87; that the Bureau of Private Schoolsupheld the position taken by the plaintiff and so advised the defendant; and that, thisnotwithstanding, the latter refused to issue said transcript of records, unless said refund were made,and even recommended to said Bureau that it issue a written order directing the defendant torelease said transcript of record, "so that the case may be presented to the court for judicial action."

As above stated, plaintiff was, accordingly, constrained to pay, and did pay under protest, said sumof P1,033.87, in order that he could take the bar examination in 1953. Subsequently, he brought thisaction for the recovery of said amount, aside from P2,000 as moral damages, P500 as exemplary

damages, P2,000 as attorney's fees, and P500 as expenses of litigation.

In its answer, defendant reiterated the stand it took, vis-a-vis the Bureau of Private Schools, namely,that the provisions of its contract with plaintiff are valid and binding and that the memorandumabove-referred to is null and void. It, likewise, set up a counterclaim for P10,000.00 as damages,and P3,000 as attorney's fees.

The issue in this case is whether the above quoted provision of the contract between plaintiff and thedefendant, whereby the former waived his right to transfer to another school without refunding to the



latter the equivalent of his scholarships in cash, is valid or not. The lower court resolved this questionin the affirmative, upon the ground that the aforementioned memorandum of the Director of PrivateSchools is not a law; that the provisions thereof are advisory, not mandatory in nature; and that,although the contractual provision "may be unethical, yet it was more unethical for plaintiff to quitstudying with the defendant without good reasons and simply because he wanted to follow theexample of his uncle." Moreover, defendant maintains in its brief that the aforementioned

memorandum of the Director of Private Schools is null and void because said officer had noauthority to issue it, and because it had been neither approved by the corresponding departmenthead nor published in the official gazette.

We do not deem it necessary or advisable to consider as the lower court did, the question whetherplaintiff had sufficient reasons or not to transfer from defendant University to the Abad SantosUniversity. The nature of the issue before us, and its far reaching effects, transcend personalequations and demand a determination of the case from a high impersonal plane. Neither do wedeem it essential to pass upon the validity of said Memorandum No. 38, for, regardless of the same,we are of the opinion that the stipulation in question is contrary to public policy and, hence, null andvoid. The aforesaid memorandum merely incorporates a sound principle of public policy. As theDirector of Private Schools correctly pointed, out in his letter, Exhibit B, to the defendant,

There is one more point that merits refutation and that is whether or not the contract enteredinto between Cui and Arellano University on September 10, 1951 was void as against publicpolicy. In the case of Zeigel vs. Illinois Trust and Savings Bank, 245 Ill. 180, 19 Ann. Case127, the court said: 'In determining a public policy of the state, courts are limited to aconsideration of the Constitution, the judicial decisions, the statutes, and the practice ofgovernment officers.' It might take more than a government bureau or office to lay down orestablish a public policy, as alleged in your communication, but courts consider the practicesof government officials as one of the four factors in determining a public policy of the state. Ithas been consistently held in America that under the principles relating to the doctrine ofpublic policy, as applied to the law of contracts, courts of justice will not recognize or upholda transaction which its object, operation, or tendency is calculated to be prejudicial to thepublic welfare, to sound morality or to civic honesty (Ritter vs. Mutual Life Ins. Co., 169 U.S.

139; Heding vs. Gallaghere 64 L.R.A. 811; Veazy vs. Allen, 173 N.Y. 359). If ArellanoUniversity understood clearly the real essence of scholarships and the motives whichprompted this office to issue Memorandum No. 38, s. 1949, it should have not entered into acontract of waiver with Cui on September 10, 1951, which is a direct violation of ourMemorandum and an open challenge to the authority of the Director of Private Schoolsbecause the contract was repugnant to sound morality and civic honesty. And finally, inGabriel vs. Monte de Piedad, Off. Gazette Supp. Dec. 6, 1941, p. 67 we read: 'In order todeclare a contract void as against public policy, a court must find that the contract as toconsideration or the thing to be done, contravenes some established interest of society, oris inconsistent with sound policy and good morals or tends clearly to undermine the securityof individual rights. The policy enunciated in Memorandum No. 38, s. 1949 is soundpolicy. Scholarship are awarded in recognition of merit not to keep outstanding students inschool to bolster its prestige. In the understanding of that university scholarships award is a

business scheme designed to increase the business potential of an education institution.Thus conceived it is not only inconsistent with sound policy but also good morals. But what ismorals? Manresa has this definition. It is good customs; those generally accepted principlesof morality which have received some kind of social and practical confirmation. The practiceof awarding scholarships to attract students and keep them in school is not good customsnor has it received some kind of social and practical confirmation except in some privateinstitutions as in Arellano University. The University of the Philippines which implementsSection 5 of Article XIV of the Constitution with reference to the giving of free scholarships togifted children, does not require scholars to reimburse the corresponding value of the



scholarships if they transfer to other schools. So also with the leading colleges anduniversities of the United States after which our educational practices or policies arepatterned. In these institutions scholarships are granted not to attract and to keep brilliantstudents in school for their propaganda mine but to reward merit or help gifted students inwhom society has an established interest or a first lien. (Emphasis supplied.)

WHEREFORE, the decision appealed from is hereby reversed and another one shall be enteredsentencing the defendant to pay to the plaintiff the sum of P1,033.87, with interest thereon at thelegal rate from September 1, 1954, date of the institution of this case, as well as the costs, anddismissing defendant's counterclaim. It is so ordered.

Bengzon, C.J., Padilla, Labrador, Reyes, J.B.L., Barrera, Parades, Dizon, De Leon and Natividad,JJ., concur.Bautista Angelo, J., reserves his vote.




Manila

EN BANC

G.R. No. 79269 June 5, 1991

PEOPLE OF THE PHILIPPINES, petitioner,vs.HON. PROCORO J. DONATO, in his official capacity as Presiding Judge, Regional Trial Court,Branch XII, Manila; RODOLFO C. SALAS, alias Commander Bilog, respondents.

The Solicitor General for petitioner.Jose Suarez, Romeo Capulong, Efren Mercado and Movement of Attorneys for Brotherhood,Integrity, Nationalism, Inc. (MABINI) for Rodolfo Salas.

DAVIDE, JR., J.:

The People of the Philippines, through the Chief State Prosecutor of the Department of Justice, theCity Fiscal of Manila and the Judge Advocate General, filed the instant petition for certiorari andprohibition, with a prayer for restraining order/preliminary injunction, to set aside the order ofrespondent Judge dated July 7, 1987 granting bail to the accused Rodolfo Salas alias "CommanderBilog" in Criminal Case No. 86-48926 for Rebellion,1 and the subsequent Order dated July 30, 1987granting the motion for reconsideration of 16 July 1987 by increasing the bail bond from P30,000.00to P50,000.00 but denying petitioner's supplemental motion for reconsideration of July 17, 1987which asked the court to allow petitioner to present evidence in support of its prayer for a

reconsideration of the order of 7 July 1987.

The pivotal issues presented before Us are whether the right to bail may, under certaincircumstances, be denied to a person who is charged with an otherwise bailable offense, andwhether such right may be waived.

The following are the antecedents of this petition:

In the original Information2 filed on 2 October 1986 in Criminal Case No. 86-48926 of the RegionalTrial Court of Manila, later amended in an Amended Information3 which was filed on 24 October1986, private respondent Rodolfo Salas, alias "Commander Bilog", and his co-accused werecharged for the crime of rebellion under Article 134, in relation to Article 135, of the Revised Penal

Code allegedly committed as follows:

That in or about 1968 and for some time before said year and continuously thereafter untilthe present time, in the City of Manila and elsewhere in the Philippines, the Communist Partyof the Philippines, its military arm, the New People's Army, its mass infiltration network, theNational Democratic Front with its other subordinate organizations and fronts, have, underthe direction and control of said organizations' leaders, among whom are the aforenamedaccused, and with the aid, participation or support of members and followers whosewhereabouts and identities are still unknown, risen publicly and taken arms throughout the

http://www.lawphil.net/judjuris/juri1991/jun1991/gr_79269_1991.html#rnt1












country against the Government of the Republic of the Philippines for the purpose ofoverthrowing the present Government, the seat of which is in the City of Manila, or ofremoving from the allegiance to that government and its laws, the country's territory or part ofit;

That from 1970 to the present, the above-named accused in their capacities as leaders of

the aforenamed organizations, in conspiracy with, and in support of the cause of, theorganizations aforementioned, engaged themselves in war against the forces of thegovernment, destroying property or committing serious violence, and other acts in the pursuitof their unlawful purpose, such as . . .

(then follows the enumeration of specific acts committed before and after February 1986).

At the time the Information was filed the private respondent and his co-accused were in militarycustody following their arrest on 29 September 1986 at the Philippine General Hospital, Taft Ave.,Manila; he had earlier escaped from military detention and a cash reward of P250,000.00 wasoffered for hiscapture.4

A day after the filing of the original information, or on 3 October 1986, a petition for habeascorpus for private respondent and his co-accused was filed with this Cour t5 which, as shall hereafterbe discussed in detail, was dismissed in Our resolution of 16 October 1986 on the basis of theagreement of the parties under which herein private respondent "will remain in legal custody and willface trial before the court having custody over his person" and the warrants for the arrest of his co-accused are deemed recalled and they shall be immediately released but shall submit themselves tothe court having jurisdiction over their person.

On November 7, 1986 , private respondent filed with the court below a Motion to Quash theInformation alleging that: (a) the facts alleged do not constitute an offense; (b) the Court has no

jurisdiction over the offense charged; (c) the Court has no jurisdiction over the persons of thedefendants; and (d) the criminal action or liability has been extinguished,6 to which petitioner filed anOpposition7 citing , among other grounds, the fact that in the Joint Manifestation and Motion datedOctober 14, 1986, in G.R. No. 76009, private respondent categorically conceded that:

x x x x x x x x x

Par. 2 (B) — Petitioner Rodolfo Salas will remain in legal custody and face trial before thecourt having custody over his person.

In his Order of March 6, 1987,8 respondent Judge denied the motion to quash.

Instead of asking for a reconsideration of said Order, private respondent filed on 9 May 1987 apetition for bail,9which herein petitioner opposed in an Opposition filed on 27 May 1987 10 on the

ground that since rebellion became a capital offense under the provisions of P.D. Nos. 1996, 942and 1834, which amended Article 135 of the Revised Penal Code, by imposing the penaltyof reclusion perpetua to death on those who promote, maintain, or head a rebellion the accused isno longer entitled to bail as evidence of his guilt is strong.

On 5 June 1987 the President issued Executive Order No. 187 repealing, among others, P.D. Nos.1996, 942 and 1834 and restoring to full force and effect Article 135 of the Revised Penal Code as itexisted before the amendatory decrees. Thus, the original penalty for rebellion, prision mayor and afine not to exceed P20,000.00, was restored.





























Executive Order No. 187 was published in the Official Gazette in its June 15, 1987 issue (Vol. 83,No. 24) which was officially released for circulation on June 26, 1987.

In his Order of 7 July 198711 respondent Judge, taking into consideration Executive Order No. 187,granted private respondent's petition for bail, fixed the bail bond at P30,000.00 and imposed uponprivate respondent the additional condition that he shall report to the court once every two (2)

months within the first ten (10) days of every period thereof. In granting the petition respondentJudge stated:

. . . There is no more debate that with the effectivity of Executive Order No. 187, the offenseof rebellion, for which accused Rodolfo Salas is herein charged, is now punishable with thepenalty of prision mayor and a fine not exceeding P20,000.00, which makes it now bailablepursuant to Section 13, Article III, 1986 Constitution and Section 3, Rule 114, 1985 Rules ofCriminal Procedure. Unlike the old rule, bail is now a matter of right in non-capital offensesbefore final judgment. This is very evident upon a reading of Section 3, Rule 114,aforementioned, in relation to Section 21, same rule. In view, therefore, of the presentcircumstances in this case, said accused-applicant is now entitled to bail as a matter of rightinasmuch as the crime of rebellion ceased to be a capital offense.

As to the contention of herein petitioner that it would be dangerous to grant bail to privaterespondent considering his stature in the CPP-NPA hierarchy, whose ultimate and overriding goal isto wipe out all vestiges of our democracy and to replace it with their ideology, and that his releasewould allow his return to his organization to direct its armed struggle to topple the government beforewhose courts he invokes his constitutional right to bail, respondent Judge replied:

True, there now appears a clash between the accused's constitutional right to bail in a non-capital offense, which right is guaranteed in the Bill of Rights and, to quote again theprosecution, "the existence of the government that bestows the right, the paramount interestof the state." Suffice to state that the Bill of Rights, one of which is the right to bail, is a"declaration of the rights of the individual, civil, political and social and economic, guaranteedby the Constitution against impairment or intrusion by any form of governmental action.

Emphasis is placed on the dignity of man and the worth of individual. There is recognition ofcertain inherent and inalienable rights of the individual, which the government is prohibitedfrom violating" (Quisumbing-Fernando, Philippine Constitutional Law, 1984 Edition, p. 77).To this Court, in case of such conflict as now pictured by the prosecution, the same shouldbe resolved in favor of the individual who, in the eyes of the law, is alone in the assertion ofhis rights under the Bill of Rights as against the State. Anyway, the government is thatpowerful and strong, having the resources, manpower and the wherewithals to fight those"who oppose, threathen (sic ) and destroy a just and orderly society and its existing civil andpolitical institutions." The prosecution's fear may or may not be founded that the accusedmay later on jump bail and rejoin his comrades in the field to sow further disorders andanarchy against the duly constituted authorities. But, then, such a fear can not be a reason todeny him bail. For the law is very explicit that when it comes to bailable offenses an accusedis entitled as a matter of light to bail.Dura est lex sed lex .

In a motion to reconsider 12 the above order filed on 16 July 1987, petitioner asked the court toincrease the bail from P30,000.00 to P100,000.00 alleging therein that per Department of JusticeCircular No. 10 dated 3 July 1987, the bail for the, provisional release of an accused should be in anamount computed at P10,000.00 per year of imprisonment based on the medium penalty imposablefor the offense and explaining that it is recommending P100,000.00 because the private respondent"had in the past escaped from the custody of the military authorities and the offense for which he ischarged is not an ordinary crime, like murder, homicide or robbery, where after the commission, the










perpetrator has achieved his end" and that "the rebellious acts are not consummated until the well-organized plan to overthrow the government through armed struggle and replace it with an aliensystem based on a foreign ideology is attained."

On 17 July 1987, petitioner filed a supplemental motion for reconsideration 13 indirectly asking thecourt to deny bail to the private respondent and to allow it to present evidence in support thereof

considering the "inevitable probability that the accused will not comply with this main condition of hisbail –– to appear in court for trial," a conclusion it claims to be buttressed "by the following factswhich are widely known by the People of the Philippines and which this Honorable Court may have

judicial notice of:

1. The accused has evaded the authorities for thirteen years and was an escapee fromdetention when arrested;

2. He was not arrested at his residence as he had no known address;

3. He was using the false name "Manuel Mercado Castro" at the time of his arrest andpresented a Driver's License to substantiate his false identity;

4. The address he gave "Panamitan, Kawit, Cavite," turned out to be also a false address;

5. He and his companions were on board a private vehicle with a declared owner whoseidentity and address were also found to be false;

6. Pursuant to Ministry Order No. 1-A dated 11 January 1982 , a reward of P250,000.00 wasoffered and paid for his arrest,

which "clearly indicate that the accused does not entertain the slightest intention to appear in courtfor trial, if released." Petitioner further argues that the accused, who is the Chairman of theCommunist Party of the Philippines and head of its military arm, the NPA, together with his followers,

are now engaged in an open warfare and rebellion against this government and threatens theexistence of this very Court from which he now seeks provisional release," and that while he isentitled to bail as a matter of right in view of Executive Order No. 187 which restored the originalpenalty for rebellion under Article 135 of the Revised Penal Code, yet, when the interest of the Stateconflicts with that of an individual, that of the former prevails for "the right of the State of self-preservation is paramount to any of the rights of an individual enshrined in the Bill of Rights of theConstitution." Petitioner further invokes precedents in the United States of America holding "thatthere is no absolute constitutional barrier to detention of potentially dangerous resident alienspending deportation proceedings,14 and that an arrestee may be incarcerated until trial as hepresents a risk of flight;15 and sustaining a detention prior to trial of arrestee charged with seriousfelonies who are found after an adversary hearing to pose threat to the safety of individuals and tothe community which no condition of release can dispel.16

On 30 July 1987 respondent Judge handed down the Order 17 adverted to in the introductory portionof this decision the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing considerations, the Court finds the"supplemental" motion for reconsideration to be without merit and hereby denies it but findsthe first motion for reconsideration to be meritorious only insofar as the amount of bail isconcerned and hereby reconsiders its Order of July 7, 1987 only to increase the amount ofbail from P30,000.00 to P50,000.00, subject to the approval of this Court, and with theadditional condition that accused Rodolfo Salas shall report to the court once every two (2)






















months within the first ten (10) days of every period thereof (Almendras vs. Villaluz, et al., L-31665, August 6, 1975, 66 SCRA 58).

In denying the supplemental motion for reconsideration the respondent Judge took into account the"sudden turn-about" on the part of the petitioner in that a day earlier it filed a motion forreconsideration wherein it conceded the right of the private respondent to bail but merely asked to

increase the amount of bail; observed that it is only a reiteration of arguments in its opposition to thepetition for bail of 25 May 1987; asserted that the American precedents are not applicable since thecases involved deportation of aliens and, moreover, the U.S. Federal Constitution does not contain aproviso on the right of an accused to bail in bailable offenses, but only an injunction againstexcessive bail; and quoted the concurring opinion of the late Justice Pedro Tuason in the cases ofNava, et al. vs. Gatmaitan, L-4853, Hernandez vs. Montesa, L-4964 and Angeles vs. Abaya, L-5108,October 11, 1951, 90 Phil, 172.

Unable to agree with said Order, petitioner commenced this petition submitting therein the followingissues:

THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED WITH GRAVE

ABUSE OF DISCRETION AND IN EXCESS OF HIS JURISDICTION, AND IN TOTALDISREGARD OF THE PREVAILING REALITIES, WHEN HE DENIED PETITIONER'SSUPPLEMENTAL MOTION FOR RECONSIDERATION WITH PRAYER TO BE GIVEN THEOPPORTUNITY TO ADDUCE EVIDENCE IN SUPPORT OF ITS OPPOSITION TO THEGRANT OF BAIL TO THE RESPONDENT RODOLFO SALAS.

THE HONORABLE RESPONDENT JUDGE PROCORO J. DONATO ACTED WITH GRAVE ABUSE OF DISCRETION AND IN EXCESS OF HIS JURISDICTION WHEN HE GRANTEDBAIL TO THE RESPONDENT RODOLFO SALAS.

in support of which petitioner argues that private respondent is estopped from invoking his right tobail, having expressly waived it in G.R. No. 76009 when he agreed to "remain in legal custody andface trial before the court having custody of his person" in consideration of the recall of the warrantof arrest for his co-petitioners Josefina Cruz and Jose Concepcion; and the right to bail, even in non-capital offenses, is not absolute when there is prima facie evidence that the accused is a seriousthreat to the very existence of the State, in which case the prosecution must be allowed to presentevidence for the denial of bail. Consequently, respondent Judge acted with grave abuse of discretionwhen he did not allow petitioner to present all the evidence it may desire to support its prayer for thedenial of bail and when he declared that the State has forfeited its right to do so since during all thetime that the petition for bail was pending, it never manifested, much less hinted, its intention toadduce such evidence. And that even if release on bail may be allowed, respondent judge, in fixingthe amount of bail at P50,000.00 (originally P30,000.00 only), failed to take into account the lengthyrecord of private respondents' criminal background, the gravity of the pending charge, and thelikelihood of flight.18

In Our resolution of 11 August 198719 We required the respondents to comment on the petition andissued a Temporary Restraining Order ordering respondent Judge to cease and desist fromimplementing his order of 30 July 1987 granting bail to private respondent in the amount ofP50,000.00.

In his Comment filed on 27 August 1987,20 private respondent asks for the outright dismissal of thepetition and immediate lifting of the temporary restraining order on the following grounds:

I














RESPONDENT SALAS NEVER WAIVED HIS RIGHT TO BAIL; NEITHER IS HEESTOPPED FROM ASSERTING SAID RIGHT. ON THE CONTRARY IT IS PETITIONERWHO IS ESTOPPED FROM RAISING THE SAID ISSUE FOR THE FIRST TIME ON

APPEAL.

II

RESPONDENT SALAS ENJOYS NOT ONLY THE CONSTITUTIONAL RIGHT TO BEPRESUMED INNOCENT BUT ALSO THE RIGHT TO BAIL.

III

RESPONDENT SALAS IS NOT CHARGED WITH A CAPITAL OFFENSE (RECLUSIONPERPETUA), HENCE HE HAS THE RIGHT TO BAIL AS MANDATED BY THECONSTITUTION.

IV

THE ORDER OF JULY 30, 1987 DENYING PETITIONER OPPORTUNITY TO PRESENTEVIDENCE IS CORRECT. PETITIONER'S ALLEGED RIGHT TO PRESENT EVIDENCE ISNON-EXISTENT AND/OR HAD BEEN WAIVED.

V

THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER IN THIS CASE VIOLATESNOT ONLY RESPONDENT SALAS' RIGHT TO BAIL BUT ALSO HIS OTHERCONSTITUTIONAL RIGHT TO DUE PROCESS.

We required the petitioner to reply to the comment of private respondent.21 The reply was filed on 18September 1987.22

In Our resolution of 15 October 198723 We gave due course to the petition and required the parties tofile simultaneously their memoranda within twenty days from notice.

In their respective manifestations and motions dated 5 November 24 and 23 November198725 petitioner and private respondents asked to be excused from filing their Memoranda and thatthe petition and reply be considered as the Memorandum for petitioner and the Comment as theMemorandum for private respondent, which We granted in Our resolution of 19 November198726 and 1 December 1987,27 respectively.

In Our resolution of 14 September 1989 We required the Solicitor General to express his stand onthe issues raised in this petitions,28 which he complied with by filing his Manifestation on 30 May

199029

wherein he manifests that he supports the petition and submits that the Order of respondentJudge of July 7, July 17 and July 30, 1987 should be annulled and set aside asserting that privaterespondent had waived the light to bail in view of the agreement in G.R. No. 76009; that granting bailto him is accepting wide-eyed his undertaking which he is sure to break; in determining bail, theprimary consideration is to insure the attendance of the accused at the trial of the case against himwhich would be frustrated by the "almost certainty that respondent Salas will lump bail of whateveramount"; and application of the guidelines provided for in Section 10 of Rule 114, 1985 Rules onCriminal Procedure on the amount of bail dictates denial of bail to private respondent. The Solicitor



































General likewise maintains that the right of the petitioner to hearing on the application of privaterespondent for bail cannot be denied by respondent Judge.

And now on the issues presented in this case.

I.

Unquestionably, at the time the original and the amended Informations for rebellion and theapplication for bail were filed before the court below the penalty imposable for the offense for whichthe private respondent was charged was reclusion perpetua to death. During the pendency of theapplication for bail Executive Order No. 187 was issued by the President, by virtue of which thepenalty for rebellion as originally provided for in Article 135 of the Revised Penal Code was restored.The restored law was the governing law at the time the respondent court resolved the petition forbail.

We agree with the respondent court that bail cannot be denied to the private respondent for he ischarged with the crime of rebellion as defined in Article 134 of the Revised Penal Code to which isattached the penalty of prision mayor and a fine not exceeding P20,000.00.30 It is, therefore,

a bailable offense under Section 13 of Article III of the 1987 Constitution which provides thus:

Sec. 13. All persons, except those charged with offenses punishable by reclusion perpetua when evidence of guilt is strong, shall, before conviction, be bailable by sufficientsureties, or be released on recognizance as may be prescribed by law. The right to bail shallnot be impaired even when the privilege of the writ of habeas corpus is suspended.Excessive bail shall not be required.

Section 3, Rule 114 of the Rules of Court, as amended, also provides:

Bail, a matter of right : exception.— All persons in custody shall, before final conviction, beentitled to bail as a matter of right, except those charged with a capital offense or an offense

which, under the law at the time of its commission and at the time of the application for bail,is punishable by reclusion perpetua, when evidence of guilt is strong.

Therefore, before conviction bail is either a matter of right or of discretion. It is a matter of right whenthe offense charged is punishable by any penalty lower than reclusion perpetua.31 To that extent theright is absolute.32

And so, in a similar case for rebellion, People vs. Hernandez, et al., 99 Phil. 515, despite the factthat the accused was already convicted, although erroneously, by the trial court for the complexcrime of rebellion with multiple murders, arsons and robberies, and sentenced to life imprisonment,We granted bail in the amount of P30,000.00 during the pendency of his appeal from suchconviction. To the vigorous stand of the People that We must deny bail to the accused because thesecurity of the State so requires, and because the judgment of conviction appealed from indicates

that the evidence of guilt of Hernandez is strong, We held:

. . . Furthermore, individual freedom is too basic, too transcendental and vital in a republicanstate, like ours, to be derived upon mere general principles and abstract consideration ofpublic safety. Indeed, the preservation of liberty is such a major preoccupation of our politicalsystem that, not satisfied with guaranteeing its enjoyment in the very first paragraph ofsection (1) of the Bill of Rights, the framers of our Constitution devoted paragraphs (3), (4),(5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (17), (18), and (21) of said section (1) to theprotection of several aspects of freedom.















The 1987 Constitution strengthens further the right to bail by explicitly providing that it shall not beimpaired even when the privilege of the writ of habeas corpus is suspended. This overturns theCourt's ruling in Garcia-Padilla vs. Enrile, et al ., supra., to wit:

The suspension of the privilege of the writ of habeas corpus must, indeed, carry with it thesuspension of the right to bail, if the government's campaign to suppress the rebellion is to

be enhanced and rendered effective. If the right to bail may be demanded during thecontinuance of the rebellion, and those arrested, captured and detained in the course thereofwill be released, they would, without the least doubt, rejoin their comrades in the field thereby

jeopardizing the success of government efforts to bring to an end the invasion, rebellion orinsurrection.

Upon the other hand, if the offense charged is punishable by reclusion perpetua bail becomes amatter of discretion. It shall be denied if the evidence of guilt is strong. The court's discretion islimited to determining whether or not evidence of guilt is strong.33 But once it is determined that theevidence of guilt is not strong, bail also becomes a matter of right. In Teehankee vs. Director ofPrisons, supra., We held:

The provision on bail in our Constitution is patterned after similar provisions contained in theConstitution of the United States and that of many states of the Union. And it is said that:

The Constitution of the United States and the constitution of the many states providethat all persons shall be bailable by sufficient sureties, except for capital offenses,where the proof is evident or the presumption of guilt is great, and, under suchprovisions, bail is a matter of right which no court or judge can properly refuse, in allcases not embraced in the exceptions. Under such provisions bail is a matter of righteven in cases of capital offenses, unless the proof of guilt is evident or the

presumption thereof is great ! 34

Accordingly, the prosecution does not have the right to present evidence for the denial of bailin the instances where bail is a matter of right. However, in the cases where the grant of bailis discretionary, due process requires that the prosecution must be given an opportunity topresent, within a reasonable time, all the evidence that it may desire to introduce before thecourt should resolve the motion for bail.35

We agree, however, with petitioner that it was error for the respondent court to fix the bond atP30,000.00, then later at P50,000.00 without hearing the prosecution. The guidelines for thefixing of the amount of bail provided for in Section 10 of Rule 114 of the Rules of Court arenot matters left entirely to the discretion of the court. As We stated in People vs. Dacudao, etal., 170 SCRA, 489, 495:

Certain guidelines in the fixing of a bailbond call for the presentation of evidence andreasonable opportunity for the prosecution to refute it. Among them are the nature

and circumstances of the crime, character and reputation of the accused, the weightof the evidence against him, the probability of the accused appearing at the trial,whether or not the accused is a fugitive from justice, and whether or not the accusedis under bond in other case. . . .

In the instant case petitioner has sufficiently made out allegations which necessitate a grantof an opportunity to be heard for the purpose of determining the amount of bail, but not forthe denial thereof because aforesaid Section 10 of Rule 114 does not authorize any court todeny bail.















II.

It must, however, be stressed that under the present state of the law, rebellion is no longerpunishable by prision mayor and fine not exceeding P20,000.00. Republic Act No. 6968approved on 24 October 1990 and which took effect after publication in at least twonewspapers of general circulation, amended, among others, Article 135 of the Revised Penal

Code by increasing the penalty for rebellion such that, as amended, it now reads:

Article 135. Penalty for rebellion, insurrection or coup d'etat . ––– Any person whopromotes, maintains, or heads a rebellion or insurrection shall suffer the penaltyof reclusion perpetua.

Any person merely participating or executing the commands of others in a rebellionor insurrection shall suffer the penalty of reclusion perpetua.

x x x x x x x x x

This amendatory law cannot apply to the private respondent for acts allegedly committed

prior to its effectivity. It is not favorable to him. "Penal laws shall have a retroactive effectinsofar as they favor the person guilty of a felony, who is not a habitual criminal, as this termis defined in Rule 5 of Article 62 of this Code, although at the time of the publication of suchlaws a final sentence has been pronounced and the convict is serving the same.36

III.

We agree with Petitioner that private respondent has, however, waived his right to bail inG.R. No. 76009.

On 3 October 1986, or the day following the filing of the original information in Criminal CaseNo. 86-48926 with the trial court, a petition for habeas corpus for herein private respondent,

and his co-accused Josefina Cruz and Jose Concepcion, was filed with this Court by LuciaCruz, Aida Concepcion Paniza and Beatriz Salas against Juan Ponce Enrile, Gen. FidelRamos, Brig. Gen. Renato de Villa, Brig. Gen. Ramon Montaño, and Col. Saldajeno praying,among others, that the petition be given due course and a writ of habeas corpus be issuedrequiring respondents to produce the bodies of herein private respondent and his co-accused before the Court and explain by what authority they arrested and detained them.The following proceedings took place thereafter in said case:

1. In a resolution of 7 October 1986 We issued a writ of habeas corpus, requiredrespondents to make a return of the writ on or before the close of office hours on 13 Octoberand set the petition for hearing on 14 October 1986 at 10:00 o'clock in the morning.

2. On 13 October 1986 respondents, through the Office of the Solicitor General, filed aReturn To The Writ of Habeas Corpus alleging therein that private respondent and JosefinaCruz alias "Mrs. Mercado", and Jose Milo Concepcion alias "Eugene Zamora" wereapprehended by the military on September 29, 1986 in the evening at the Philippine GeneralHospital Compound at Taft Ave., Mangga being leaders or members of the Communist Partyof the Philippines, New People's Army and National Democratic Front, organizationsdedicated to the overthrow of the Government through violent means, and having actuallycommitted acts of rebellion under Article 134 of the Revised Penal Code, as amended. Aftertheir arrest they were forthwith charged with rebellion before Branch XII of the Regional TrialCourt, National Capital Region in Criminal Case No. 86-48926 and on 3 October warrants for







their arrest were issued and respondents continue to detain them because of the warrants ofarrest and the pendency of the criminal cases against them. Respondents further allege that,contrary to the allegation in the petition, herein private respondent was not a member of theNDF panel involved in peace negotiations with the Government; neither is he and hiscompanions Cruz and Concepcion covered by any, safe conduct pass issued by competentauthorities.

3. At the hearing on 14 October 1986 the parties informed the Court of certain agreementsreached between them. We issued a resolution reading as follows:

When this case was called for hearing this morning, Attorneys Romeo Capulong, Arno V. Sanidad, Efren H. Mercado, Edgardo Pamin-tuan, Casiano Sabile, RamonCura, and William Chua appeared for the petitioners with Atty. Capulong arguing forthe petitioners. Solicitor General Sedfrey Ordonez, Assistant Solicitor GeneralRomeo C. de la Cruz and Trial Attorney Josue E. Villanueva appeared for therespondents, with Solicitor General Ordoñez arguing for the respondents.

Petitioners' counsel, Atty. Romeo Capulong, manifested in open Court that in

conformity with the agreement reached with the government, the petition for habeascorpus will be withdrawn with detainee Rodolfo Salas to remain under custody,whereas his co-detainees Josefina Cruz and Jose Milo Concepcion will be releasedimmediately.

Solicitor General Sedfrey Ordoñez, also in open Court, confirmed the foregoingstatement made by petitioners' counsel regarding the withdrawal of the petitionfor habeas corpus, declaring that no objection will be interposed to the immediaterelease of detainees Josefina Cruz and Jose Milo Concepcion, and that no bond willbe required of them, but they will continue to face trial with their co-accused, RodolfoSalas; further, that they will not be rearrested on the basis of the warrants issued bythe trial court provided that they manifest in open Court their willingness to subjectthemselves to the jurisdiction of the Court and to appear in court when their presence

is required.

In addition, he stated that he is willing to confer with petitioners' counsel todayrelative to the compromise agreement that they have previously undertaken tosubmit.

Upon manifestation of petitioners' counsel, Atty. Romeo Capulong, that on his oathas member of the Bar, the detainees Josefina Cruz and Jose Milo Concepcion haveagreed to subject themselves to the jurisdiction of the trial court, the Court orderedtheir immediate release.

Thereafter, the Court approved the foregoing manifestations and statements and

required both parties to SUBMIT to the Court their compromise agreement by 4:00o'clock this afternoon. Teehankee, C.J ., is on official leave.

4. At 3:49 o'clock in the afternoon of 14 October 1986 the parties submitted a JointManifestation and Motion duly signed by Atty. Romeo Capulong, counsel for petitioners, andSolicitor General Sedfrey Ordoñez, Assistant Solicitor General Romeo C. de la Cruz andTrial Attorney Josue S. Villanueva, counsel for respondents, which reads as follows:



COME NOW petitioners and the respondents, assisted by their respective counsel,and to this Honorable Tribunal respectfully manifest:

1. That in the discussion between Romeo Capulong, petitioners' counsel, andSolicitor General Sedfrey A. Ordoñez on October 13, 1986 exploratory talks wereconducted to find out how the majesty of the law may be preserved and human

considerations may be called into play.

2. That in the conference both counsel agreed to the following terms of agreement:

a. The petition for habeas corpus will be withdrawn by petitioners andJosefina Cruz and Jose Milo Concepcion will be immediately released butshall appear at the trial of the criminal case for rebellion (People v. RodolfoSalas, et al., Criminal Case No. 4886 [should be 86-48926], Regional TrialCourt, National Capital Judicial Region) filed against them under theirpersonal recognizance.

b. Petitioner Rodolfo Salas will remain in legal custody and face trial before

the court having custody over his person.

c. The warrant of arrest for the persons of Josefina Cruz and Jose MiloConcepcion is hereby deemed recalled in view of formal manifestation beforethe Supreme Court that they will submit themselves to the court having

jurisdiction over their person.

3. That on October 14, the Solicitor General was able to obtain the conformity of theGovernment to the foregoing terms which were likewise accepted by petitioner (sic )and their counsel of record.

4. That the two counsel submitted their oral manifestation during the hearing on

October 14 and the present manifestation in compliance with the resolutionannounced in court this morning.

WHEREFORE, it is prayed that the petition for habeas corpus be dismissed.

5. On 16 October 1986 We issued the following resolution:

G.R. No. 76009 [In the Matter of the Petition for Habeas Corpus of Rodolfo Salas,Josefina Cruz and Jose Milo Concepcion, et al. v. Hon. Juan Ponce Enrile, Gen.Fidel V. Ramos, Brig. Gen. Renato de Villa, Brig. Gen. Ramon Montaño and Col.Virgilio Saldajeno] considering the Joint Manifestation and Motion dated October 14,1986 filed by Attorneys Romeo Capulong, Arno V. Sanidad, Efren H. Mercado andRicardo Fernandez, Jr. as counsel for petitioners and Solicitor General Sedfrey A.Ordonez and Assistant Solicitor General Romeo C. de la Cruz and Trial AttorneyJosue S. Villanueva as counsel for respondents which states that they have enteredinto an agreement whereby: [a] the petition for habeas corpus will be withdrawn bypetitioners, and Josefina Cruz and Jose Milo Concepcion will be immediatelyreleased but shall appear at the trial of the criminal case for rebellion [People vs.Rodolfo Salas, et al., Criminal Case No. 4886, Regional Trial Court, National CapitalJudicial Region, Branch XII, Manila], filed against them, on their personalrecognizance; [b] petitioner Rodolfo Salas will remain in legal custody and face trialbefore the court having custody over his person; and [c] the warrant of arrest for the



person of Josefina Cruz and Jose Milo Concepcion is hereby deemed recalled inview of the formal manifestation before this Court that they will submit themselves tothe court having jurisdiction over their person and in view of the said agreement, thepetition for habeas corpus be dismissed, the Court Resolved to DISMISS the petitionfor habeas corpus but subject to the condition that petitioners' lead counsel, Atty.Capulong, upon his oath as member of the Bar, shall abide by his commitment to

ensure the appearance of Josefina Cruz and Jose Milo Concepcion at the trial of thecriminal case for rebellion filed against them. Teehankee,C.J ., is on official leave.

It is the stand of the petitioner that private respondent, "in agreeing to remain in legal custody evenduring the pendency of the trial of his criminal case, [he] has expressly waived his right tobail."37 Upon the other hand, private respondent asserts that this claim is totally devoid of factual andlegal basis, for in their petition for habeas corpus they precisely questioned the legality of the arrestand the continued detention of Rodolfo Salas, Josefina Cruz and Jose Milo Concepcion, which wasnot resolved by this Court or by the compromise agreement of the parties but left open for furtherdetermination in another proceeding. Moreover, the matter of the right to bail was neither raised byeither party nor resolved by this Court, and the legal steps promptly taken by private respondentafter the agreement was reached, like the filing of the motion to quash on 7 November 1986 and thepetition for bail on 14 May 1987, were clear and positive assertions of his statutory and constitutionalrights to be granted not only provisional but final and permanent liberty. Finally, private respondentmaintains that the term "legal custody" as used in the Joint Manifestation and Motion simply meansthat private respondent agreed to continue to be in the custody of the law or in custodia legis andnothing else; it is not to be interpreted as waiver.

Interestingly, private respondent admits that:

"Custody" has been held to mean nothing less than actual imprisonment. It is also defined asthe detainer of a person by virtue of a lawful authority, or the "care and possession of a thingor person." (Bouviers Law Dictionary, Third Ed, Vol. I, pp. 741-742 citing Smith v. Com. 59Pa. 320 and Rolland v. Com. 82 Pa. 306)

He further admits that, in the light of Section 1 of Rule 114 of the Rules of Court and settled jurisprudence, the "constitutional right to bail is subject to the limitation that the person applying foradmission to bail should be in the custody of the law or otherwise deprived of his liberty."38

When the parties in G.R. No. 76009 stipulated that:

b. Petitioner Rodolfo Salas will remain in legal custody and face trial before the court havingcustody over his person.

they simply meant that Rodolfo Salas, herein respondent, will remain in actual physical custody ofthe court, or in actual confinement or detention, as distinguished from the stipulation concerning hisco-petitioners, who were to be released in view of the recall of the warrants of arrest against them;

they agreed, however, "to submit themselves to the court having jurisdiction over their persons."Note should be made of the deliberate care of the parties in making a fine distinction between legalcustody and court having custody over the person in respect to Rodolfo Salas and court having

jurisdiction over the persons of his co-accused. Such a fine distinction was precisely intended toemphasize the agreement that Rodolfo Salas will not be released, but should remain in custody. Hadthe parties intended otherwise, or had this been unclear to private respondent and his counsel, theyshould have insisted on the use of a clearer language. It must be remembered that at the time theparties orally manifested before this Court on 14 October 1986 the terms and conditions of theiragreement and prepared and signed the Joint Manifestation and Motion, a warrant of arrest had











already been issued by the trial court against private respondent and his co-accused. The stipulationthat only the warrants of arrest for Josefina Cruz and Jose Milo Concepcion shall be recalled andthat only they shall be released, further confirmed the agreement that herein petitioner shall remainin custody of the law, or detention or confinement.

In defining bail as:

. . . the security given for the release of a person in custody of the law , . . .

Section 1 of Rule 114 of the Revised Rules of Court admits no other meaning or interpretation forthe term "in custody of the law" than that as above indicated. The purpose of bail is to relieve anaccused from imprisonment until his conviction and yet secure his appearance at the trial .39 Itpresupposes that the person applying for it should be in the custody of the law or otherwise deprivedof liberty.40

Consequently, having agreed in G.R. No. 76009 to remain in legal custody, private respondent hadunequivocably waived his right to bail.

But, is such waiver valid?

Article 6 of the Civil Code expressly provides:

Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy,morals, or good customs, or prejudicial to a third person with a right recognized by law.

Waiver is defined as "a voluntary and intentional relinquishment or abandonment of a known existinglegal right, advantage, benefit, claim or privilege, which except for such waiver the party would haveenjoyed; the voluntary abandonment or surrender, by a capable person, of a right known by him toexist, with the intent that such right shall be surrendered and such person forever deprived of itsbenefit; or such conduct as warrants an inference of the relinquishment of such right; or the

intentional doing of an act inconsistent with claiming it."41

As to what rights and privileges may be waived, the authority is settled:

. . . the doctrine of waiver extends to rights and privileges of any character, and, since theword "waiver" covers every conceivable right, it is the general rule that a person may waiveany matter which affects his property, and any alienable right or privilege of which he is theowner or which belongs to him or to which he is legally entitled, whether secured by contract,conferred with statute, or guaranteed by constitution,provided such rights and privileges restin the individual, are intended for his sole benefit, do not infringe on the rights of others, andfurther provided the waiver of the right or privilege is not forbidden by law, and does notcontravene public policy; and the principle is recognized that everyone has a right to waive,and agree to waive, the advantage of a law or rule made solely for the benefit and protectionof the individual in his private capacity, if it can be dispensed with and relinquished withoutinfringing on any public right, and without detriment to the community at large. . . .

Although the general rule is that any right or privilege conferred by statute or guaranteed byconstitutionmay be waived, a waiver in derogation of a statutory right is not favored, and awaiver will be inoperative and void if it infringes on the rights of others, or would be againstpublic policy or morals and the public interest may be waived.















While it has been stated generally that all personal rights conferred by statuteand guaranteed by constitution may be waived, it has also been said that constitutionalprovisions intended to protect property may be waived, and even some of the constitutionalrights created to secure personal liberty are subjects of waiver .42

In Commonwealth vs. Petrillo,43 it was held:

Rights guaranteed to one accused of a crime fall naturally into two classes: (a) those inwhich the state, as well as the accused, is interested; and (b) those which are personal to theaccused, which are in the nature of personal privileges. Those of the first class cannot bewaived; those of the second may be.

It is "competent for a person to waive a right guaranteed by the Constitution, and to consent to actionwhich would be invalid if taken against his will."44

This Court has recognized waivers of constitutional rights such as, for example, the right againstunreasonable searches and seizures;45 the right to counsel and to remain silent;46 and the right to beheard.47

Even the 1987 Constitution expressly recognizes a waiver of rights guaranteed by its Bill ofRights.1âwphi1 Section 12(l) of Article III thereof on the right to remain silent and to have a competent andindependent counsel, preferably of his own choice states:

. . . These rights cannot be waived except in writing and in the presence of counsel.

This provision merely particularizes the form and manner of the waiver; it, nevertheless, clearlysuggests that the other rights may be waived in some other form or manner provided such waiverwill not offend Article 6 of the Civil Code.

We hereby rule that the right to bail is another of the constitutional rights which can be waived. It is a

right which is personal to the accused and whose waiver would not be contrary to law, public order,public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.

The respondent Judge then clearly acted with grave abuse of discretion in granting bail to the privaterespondent.

WHEREFORE, the Orders of respondent Judge of July 7, 1987 and July 30, 1987 in Criminal CaseNo. 86-48926 entitled People of the Philippines vs. Rodolfo C. Salas alias Commander Bilog/Henry,Josefina Cruz alias Mrs. Mercado, and Jose Milo Concepcion alias Eugene Zamora, for Rebellion,are hereby NULLIFIED and SET ASIDE.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,Bidin, Griño-Aquino, Medialdea and Regalado, JJ., concur.Sarmiento, J., took no part.




























Manila

EN BANC

G.R. No. L-24022 March 3, 1965

ILOILO PALAY AND CORN PLANTERS ASSOCIATION, INC., ET AL., petitioners,vs.HON. JOSE, Y. FELICIANO, ET AL., respondents.

Jose C. Zulueta and Ramon A. Gonzales for petitioners.Office of the Solicitor General for respondents.

BAUTISTA ANGELO, J.:

On December 26, 1964, Jose Y. Feliciano, Chairman and General Manager of the Rice and Corn

Administration, wrote the President of the Philippines urging the immediate importation of 595,400metric tons of rice, thru a government agency which the President may designate, pursuant to therecommendation of the National Economic Council as embodied in its Resolution No. 70, series of1964.

On December 27, 1964, the President submitted said letter to his cabinet for consideration and onDecember 28, 1964, the cabinet approved the needed importation. On January 4, 1965, thePresident designated the Rice and Corn Administration as the government agency authorized toundertake the importation pursuant to which Chairman Jose Y. Feliciano announced an invitation tobid for said importation and set the bidding for February 1, 1965.

Considering that said importation is contrary to Republic Act 3452 which prohibits the government

from importing rice and that there is no law appropriating funds to finance the same, the Iloilo Palayand Corn Planters Association, Inc., together with Ramon A. Gonzales, in his capacity as taxpayer,filed the instant petition before this Court seeking to restrain Jose Y. Feliciano, in his capacity asChairman and General Manager of the Rice and Corn Administration, from conducting the bidscheduled on the date abovementioned, and from doing any other act that may result in thecontemplated importation until further orders of this Court. For reasons that do not clearly appear,the Secretary of Foreign Affairs and the Auditor General were made co-respondents.

Pending decision on the merits, petitioners prayed for the issuance of a writ of preliminary injunction,which, in due course, this Court granted upon petitioners' filing a bond in the amount of P50,000.00.This bond having been filed, the writ was issued on February 10, 1965.

Respondents, in their answer do not dispute the essential allegations of the petition though theyadduced reasons which justify the importation sought to be made. They anchor the validity of theimportation on the provisions of Republic Act 2207 which, in their opinion, still stand.

It is petitioners' contention that the importation in question being undertaken by the government evenif there is a certification by the National Economic Council that there is a shortage in the local supplyof rice of such gravity as to constitute a national emergency, is illegal because the same is prohibitedby Republic Act 3452 which, in its Section 10, provides that the importation of rice and corn is only



left to private parties upon payment of the corresponding taxes. They claim that the Rice and Corn Administration, or any other government agency, is prohibited from doing so.

It is true that the section above adverted to leaves the importation of rice and corn exclusively toprivate parties thereby prohibiting from doing so the Rice and Corn Administration or any othergovernment agency, but from this it does not follow that at present there is no law which permits the

government to undertake the importation of rice into the Philippines. And this we say because, in ouropinion, the provision of Republic Act 2207 on the matter still stands. We refer to Section 2 of said

Act wherein, among other things, it provides that should there be an existing or imminent shortage inthe local supply of rice of such gravity as to constitute a national emergency, and this is certified bythe National Economic Council, the President of the Philippines may authorize such importation thruany government agency that he may designate. Here there is no dispute that the National EconomicCouncil has certified that there is such shortage present which, because of its gravity, constitutes anational emergency, and acting in pursuance thereof the President lost no time in authorizing, afterconsulting his cabinet, the General Manager of the Rice and Corn Administration to immediatelyundertake the needed importation in order to stave off the impending emergency. We find, therefore,no plausible reason why the disputed importation should be prevented as petitioners now desire.

The contention that Republic Act 2207 has already been repealed by Republic Act 3452 is untenablein the light of the divergent provisions obtaining in said two laws. Admittedly, Section 16 of Republic

Act 3452 contains a repealing clause which provides: "All laws or parts thereof inconsistent with theprovisions of this Act are hereby repealed or modified accordingly." The question may now be asked:what is the nature of this repealing clause ? It is certainly not an express repealing clause because itfails to identify or designate the Act or Acts that are intended to be repealed [ Sutherland, StatutoryConstruction, (1943) Vol. 1, p. 467]. Rather, it is a clause which predicates the intended repeal uponthe condition that a substantial conflict must be found in existing and prior Acts. Such being thecase, the presumption against implied repeals and the rule against strict construction regardingimplied repeals apply ex proprio vigore. Indeed, the legislature is presumed to know the existinglaws so that, if a repeal is intended, the proper step is to so express it [Continental Insurance Co. v.Simpson, 8 F (2d) 439; Weber v. Bailey, 151 Ore. 2188, 51 P (2d) 832; State v. Jackson, 120 W. Va.521, 199 S.E. 876]. The failure to add a specific repealing clause indicates that the intent was not to

repeal any existing law (Crawford, Construction of Statute, 1940 ed., p. 631), unless anirreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. Here there isno such inconsistency.

To begin with, the two laws, although with a common objective, refer to different methods applicableto different circumstances. Thus, the total banning of importation under normal conditions asprovided for in Republic Act 2207 is one step to achieve the rice and corn sufficiency program of the

Administration. The philosophy behind the banning is that any importation of rice during a period ofsufficiency or even of a minor shortage will unduly compete with the local producers and depress thelocal price which may discourage them from raising said crop. On the other hand, a price supportprogram and a partial ban of rice importation as embodied in Republic Act 3452 is another stepadopted to attend the sufficiency program. While the two laws are geared towards the same ultimateobjective, their methods of approach are different; one is by a total ban of rice importation and theother by a partial ban, the same being applicable only to the government during normal period.

There is another area where the two laws find a common point of reconciliation: the normalcy of thetime underlying both laws. Thus, with respect to the matter of importation Republic Act 2207 coversthree different situations: (1) when the local produce of rice is sufficient to supply local consumption;(2) when the local produce falls short of the supply but the shortage is not enough to constitute anational emergency; and (3) when the shortage, on the local supply of rice is of such gravity as toconstitute a national emergency. Under the first two situations, no importation is allowed whether by



the government or by the private sector. However, in the case of the third situation, the lawauthorizes importation, by the government.

Republic Act 3452, on the other hand, deals only with situations 1 and 2, but not with. Nowhere insaid law can we discern that it covers importation where the shortage in the local supply is of suchgravity as to constitute a national emergency. In short, Republic Act 3452 only authorizes

importation during normal times, but when there is a shortage in the local supply of such gravity asto constitute a national emergency, we have to turn to Republic Act 2207. These two laws therefore,are not inconsistent and so implied repeal does not ensue.

Our view that Republic Act 3452 merely contemplates importation during normal times is bolsteredby a consideration of the discussion that took place in Congress of House Bill No. 11511 which waspresented in answer to the request of the Chief Executive that he be given a standby power toimport rice in the Philippines. On this matter, we quote the following views of Senators Padilla and

Almendras:

SENATOR PADILLA: But under Republic Act No. 3452 them is a proviso in Sec. 10 thereof"that the Rice and Corn Administration or any government agency is hereby prohibited from

importing rice and corn."

SENATOR ALMENDRAS: That is under normal conditions.

SENATOR PADILLA: "Provided further", it says, "that the importation of rice, and corn is leftto private parties upon payment of the corresponding tax." So therefore, the position of theCommittee as expressed by the distinguished sponsor, is that Sec. 10 of Republic Act No.3452 is applicable under normal conditions.

SENATOR ALMENDRAS: "Yes". (Senate Debate, June 16, 1964).

Much stress is laid on the content of Section 12 of Republic Act 3452 which gives to the President

authority to declare a rice and corn emergency any time he deems necessary in the public interestand, during the emergency, to conduct raids, seizure and confiscation of rice and corn hoarded inany private warehouse or bodega subject to constitutional limitations, to support the claim that said

Act also bans importation on the part of the government even in case of an emergency. Thecontention is predicated on a misinterpretation of the import and meaning of said provision. Note thatthe section refers to an emergency where there is an artificial shortagebecause of the apparenthoarding undertaken by certain unscrupulous dealers or businessmen, and not to an actual seriousshortage of the commodity because, if the latter exists, there is really nothing to raid, seize orconfiscate, because the situation creates a real national emergency. Congress by no means couldhave intended under such a situation to deprive the government of its right to import to stave offhunger and starvation. Congress knows that such remedy is worthless as there is no rice to be foundin the Philippines. Seizure of rice is only of value in fighting hoarding and profiteering, but suchremedy cannot produce the rice needed to solve the emergency. If there is really insufficient rice

stocked in the private warehouses and bodegas such confiscatory step cannot remedy an actualemergency, in which case we have to turn to Republic Act 2207.

The two laws can therefore be construed as harmonious parts of the legislative expression of itspolicy to promote a rice and corn program. And if this can be done, as we have shown, it is the dutyof this Court to adopt such interpretation that would give effect to both laws. Conversely, in order toeffect a repeal by implication, the litter statute must be irreconcilably inconsistent and repugnant tothe prior existing law [United States v. Greathouse,. 166 U.S. 601, 41 L. Ed., 1130; In re PhoenixHotel Co., 13 F. Supp. 229; Hammond v. McDonald, 32 Cal. App. 187, 89 P (2d) 407; Sutherland,



Statutory Construction, supra, p. 462]. The old and the new laws must be absolutely incompatible(Compañia General de Tabacos v. Collector of Customs, 46 Phil. 8). A mere difference in the termsand provisions of the statutes is not sufficient to create a repugnancy between them. There must besuch a positive repugnancy between the provisions of the old and the new statutes that they cannotbe made to reconcile and stand together (Crawford, Construction of Statute, supra, p. 631). Theclearest case possible must first be made before the inference of implied repeal may be drawn

[Nagano v. McGrath, 187 F (2d) 759]. Inconsistency is never presumed.

Republic Act 3848 entitled "An Act Providing for the Importation of Rice During the Calendar YearNineteen Hundred Sixty-Four in the Event of Shortage in Local Supply" cannot be given anynullifying value, as it is pretended, simply because Section 6 thereof provides that "except asprovided in this Act, no other agency or instrumentality of the Government shall be allowed topurchase rice from abroad." The reason is that it is a mere temporary law effective only for a specificyear. As its title reads, it is merely an authority to import rice during the year 1964. The same,therefore, is now functus officio at least on the matter of importation.

Neither can petitioners successfully pretend that as Section 4 thereof provides that pendingprosecutions for any violation of Republic Acts 2207 and 3452 shall in no way be affected by said

Act 3848 the implication is that the aforesaid Acts have already been repealed. That provision ismerely a safeguard placed therein in order that the prosecutions already undertaken may not bedefeated with the enactment of Republic Act 3848 because the latter provides for penal provisionswhich call for lesser penalty. The intention is to except them from the rule that penal statutes can begiven retroactive effect if favorable to the accused.

To further bolster our view that Republic Act 2207 has not been impliedly repealed by Republic Act3452, we wish to briefly quote hereunder the views expressed by some senators during thediscussion of House Bill 11511 already mentioned above. It should be here repeated that said billwas presented to accede to the request of the President for a stand-by power to import in case ofemergency in view of the uncertainty of the law, but that during the discussion thereof it was stronglyasserted and apparently upheld that such request for authority was not necessary because Republic

Act 2207 was still in force. It is probably for this reason that said bill, after having been approved by

the Senate, was killed in the conference committee that considered it. These views, while notbinding, are of persuasive authority and throw light on the issue relative to the effectivity of Republic

Act 2207.

SENATOR LIWAG: ... Now Mr. Chairman, is it the sense of the Committee that in the case ofemergency, in case of an impending shortage, we can import rice under the provisions ofR.A. No. 2207?

SENATOR ALMENDRAS: Yes, that is what we mean, your Honor, in this paragraph (c),Section 2, page 2, that when we say "under the provisions of existing law," we are referringto R.A. No. 2207.

x x x x x x x x x

SENATOR PADILLA: I notice, Mr. Senator, that Section 2 paragraph (c) of the amendmentby substitution reads:

Importation of rice and/or corn should be resorted to only in cases of extreme and under theprovisions of existing law.



I suppose that the existing laws referred to are Republic Act No. 2207 and Republic Act No.3452. Does this section in the proposed bill by substitution recognize the continued existenceof the pertinent provisions of Republic Act No. 2207 and Republic Act No. 3452 on riceimportation ?

SENATOR ALMENDRAS: Yes, that is the reason, Your Honor, why we struck out the stand-

by power on the part of the President to import rice.

x x x x x x x x x

SENATOR ALMENDRAS: The position of your Committee, Your Honor, because of theexisting law — that is, Republic Act No. 3452 and Republic Act No. 2207 — that is thereason your Committee eliminated that stand-by power of the President to import rice.Because you know, Your Honor, what is the use of that stand-by power, inasmuch as underRepublic Act No. 3452 and Republic Act No. 2207 the President can designate anygovernment agency to import rice?

SENATOR PADILLA: Well, it is good to make that clear because in the decision of the

Supreme Court, as I said, there was no clear-cut holding as to the possible co-existence orimplied repeal between these two Acts.

SENATOR ALMENDRAS: Yes, Your Honor, but the gentleman from Nueva Ecija, SenatorLiwag, informed me that Republic Act No. 2207 has never been repealed.

SENATOR PADILLA: Well, I also concur with that view, but we want to make that clear ... .

SENATOR PADILLA: "Provided, further ," it says, "That the importation of rice and corn is leftto private parties upon payment of the corresponding taxes." So, therefore, the position ofthe Committee, as expressed by the distinguished sponsor is that Sec. 10 of Republic ActNo. 3452 is applicable under normal conditions.

SENATOR ALMENDRAS: Yes.

SENATOR PADILLA: So, both provisions of law are in existence.

SENATOR ALMENDRAS: Yes.

SENATOR PADILLA: One is not repealed by the other.

x x x x x x x x x

SENATOR TOLENTINO: Mr. President, there are two views already expressed on whether

Republic Act No. 2207 has been repealed by Republic Act No. 3452. One view sustains thetheory that there has been a repeal of Republic Act No. 2207 by Republic Act No. 3452insofar as rice importation is concerned. The other view is that there is no repeal. TheSupreme Court does not state clearly which side prevails. I take the view that the two lawscan be reconciled ... .

Now, Mr. President, reading those two provisions together, I maintain that they are not totallyrepugnant to each other, that it is possible for them to stand together except on certainpoints: First, is importation in case of a national emergency certified by the National



Economic Council permissible? By reading the two provisos together I would say yesbecause there is nothing in the proviso contained in Republic Act No. 3452 which would beinconsistent with importation during a shortage amounting to a national emergency.

Another circumstance that strengthens our view is that when said House Bill No. 11511 was finallyapproved by the Senate, it carried a clause which expressly repeals, among others, Republic Act

No. 2207 (Section 14), but which bill, as already said, was later killed in the conference committee.This attitude clearly reveals that Congress preferred to fall back on Republic Act 2207 with regard tofuture importations.

Anent the point raised relative to the lack of necessary appropriation to finance the importation inquestion, suffice it to state that under Republic Act 663 the National Rice and Corn Corporation isauthorized to borrow, raise and secure the money that may be necessary to carry out its objectives.We refer to Section 3 (e) of said Act which empowers said corporation to secure money and toencumber any property it has as a guaranty, and Republic Act No. 3452, which creates the Rice andCorn Administration, transferred its functions and powers to the latter, including the power to borrowmoney under Section 3(e). This provision gives the RCA enough power with which to finance theimportation in question.

WHEREFORE, petition is dismissed. The writ of preliminary injunction issued by this Court is herebydissolved. Costs against petitioners.

Paredes, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.



THIRD DIVISION

BENJAMIN G. TING,

Petitioner,

- versus -

CARMEN M. VELEZ-TING,

Respondent.

G.R. No. 166562

Present:

YNARES-SANTIAGO, J.,

Chairperson,

CARPIO MORALES,*

CHICO-NAZARIO,

NACHURA, and

PERALTA, JJ.

Promulgated:

March 31, 2009

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

DECISION

NACHURA, J .:

Before us is a petition for review on certiorari seeking to set aside the

November 17, 2003 Amended Decision[1] of the Court of Appeals (CA), and its

December 13, 2004 Resolution[2] in CA-G.R. CV No. 59903. The appellate court, in

its assailed decision and resolution, affirmed the January 9, 1998 Decision [3] of the

Regional Trial Court (RTC), Branch 23, Cebu City, declaring the marriage between

petitioner and respondent null and void ab initio pursuant to Article 36 of the Family

Code.[4]

The facts follow.

Petitioner Benjamin Ting (Benjamin) and respondent Carmen Velez-Ting

(Carmen) first met in 1972 while they were classmates in medical school.[5] They

fell in love, and they were wed on July 26, 1975 in Cebu City when respondent was

already pregnant with their first child.

http://sc.judiciary.gov.ph/jurisprudence/2009/march2009/166562.htm#_ftn1























At first, they resided at Benjamins family home in

Maguikay, Mandaue City.[6] When their second child was born, the couple decided

to move to Carmens family home in Cebu City.[7] In September 1975, Benjamin

passed the medical board examinations[8] and thereafter proceeded to take a

residency program to become a surgeon but shifted to anesthesiology after two years.By 1979, Benjamin completed the preceptorship program for the said field[9] and, in

1980, he began working for Velez Hospital, owned by Carmens family, as member

of its active staff ,[10] while Carmen worked as the hospitals Treasurer .[11]

The couple begot six (6) children, namely Dennis, born on December 9, 1975;

James Louis, born on August 25, 1977; Agnes Irene, born on April 5, 1981; Charles

Laurence, born on July 21, 1986; Myles Vincent, born on July 19, 1988; and Marie

Corinne, born on June 16, 1991.

[12]

On October 21, 1993, after being married for more than 18 years to petitioner

and while their youngest child was only two years old, Carmen filed a verified

petition before the RTC of Cebu City praying for the declaration of nullity of their

marriage based on Article 36 of the Family Code. She claimed that Benjamin

suffered from psychological incapacity even at the time of the celebration of their

marriage, which, however, only became manifest thereafter. [13]

In her complaint, Carmen stated that prior to their marriage, she was alreadyaware that Benjamin used to drink and gamble occasionally with his friends.[14] But

after they were married, petitioner continued to drink regularly and would go home

at about midnight or sometimes in the wee hours of the morning drunk and violent.

He would confront and insult respondent, physically assault her and force her to have

sex with him. There were also instances when Benjamin used his gun and shot the

gate of their house.[15] Because of his drinking habit, Benjamins job as

anesthesiologist was affected to the point that he often had to refuse to answer the

call of his fellow doctors and to pass the task to other anesthesiologists. Somesurgeons even stopped calling him for his services because they perceived petitioner

to be unreliable. Respondent tried to talk to her husband about the latters drinking

problem, but Benjamin refused to acknowledge the same.[16]

Carmen also complained that petitioner deliberately refused to give financial

support to their family and would even get angry at her whenever she asked for












































money for their children. Instead of providing support, Benjamin would spend his

money on drinking and gambling and would even buy expensive equipment for his

hobby.[17] He rarely stayed home[18] and even neglected his obligation to his

children.[19]

Aside from this, Benjamin also engaged in compulsive gambling.[20] He would

gamble two or three times a week and would borrow from his friends, brothers, or

from loan sharks whenever he had no money. Sometimes, Benjamin would pawn his

wifes own jewelry to finance his gambling.[21] There was also an instance when the

spouses had to sell their family car and even a portion of the lot Benjamin inherited

from his father just to be able to pay off his gambling debts .[22] Benjamin only

stopped going to the casinos in 1986 after he was banned therefrom for having

caused trouble, an act which he said he purposely committed so that he would be banned from the gambling establishments.[23]

In sum, Carmens allegations of Benjamins psychological incapacity consisted of the

following manifestations:

1. Benjamins alcoholism, which adversely affected his family relationship

and his profession;

2. Benjamins violent nature brought about by his excessive and regular

drinking;

3. His compulsive gambling habit, as a result of which Benjamin foundit necessary to sell the family car twice and the property he inherited

from his father in order to pay off his debts, because he no longer had

money to pay the same; and

4. Benjamins irresponsibility and immaturity as shown by his failure and

refusal to give regular financial support to his family.[24]

In his answer, Benjamin denied being psychologically incapacitated. He

maintained that he is a respectable person, as his peers would confirm. He said thathe is an active member of social and athletic clubs and would drink and gamble only

for social reasons and for leisure. He also denied being a violent person, except when

provoked by circumstances.[25] As for his alleged failure to support his family

financially, Benjamin claimed that it was Carmen herself who would collect his

professional fees from Velez Hospital when he was still serving there as practicing

anesthesiologist.[26] In his testimony, Benjamin also insisted that he gave his family










































financial support within his means whenever he could and would only get angry at

respondent for lavishly spending his hard-earned money on unnecessary

things.[27] He also pointed out that it was he who often comforted and took care of

their children, while Carmen played mahjong with her friends twice a week .[28]

During the trial, Carmens testimony regarding Benjamins drinking and

gambling habits and violent behavior was corroborated by Susana Wasawas, who

served as nanny to the spouses children from 1987 to 1992.[29] Wasawas stated that

she personally witnessed instances when Benjamin maltreated Carmen even in front

of their children.[30]

Carmen also presented as witness Dr. Pureza Trinidad-Oate, a

psychiatrist.

[31]

Instead of the usual personal interview, however, Dr. Oatesevaluation of Benjamin was limited to the transcript of stenographic notes taken

during Benjamins deposition because the latter had already gone to work as an

anesthesiologist in a hospital in South Africa. After reading the transcript of

stenographic notes, Dr. Oate concluded that Benjamins compulsive drinking,

compulsive gambling and physical abuse of respondent are clear indications that

petitioner suffers from a personality disorder .[32]

To refute Dr. Oates opinion, petitioner presented Dr. Renato D. Obra, a

psychiatrist and a consultant at the Department of PsychiatryinDon Vicente Sotto Memorial Medical Center, as his expert witness.[33] Dr. Obra

evaluated Benjamins psychological behavior based on the transcript of stenographic

notes, as well as the psychiatric evaluation report prepared by Dr. A.J.L. Pentz, a

psychiatrist from the University ofPretoria in South Africa, and his (Dr. Obras)

interview with Benjamins brothers.[34] Contrary to Dr. Oates findings, Dr. Obra

observed that there is nothing wrong with petitioners personality, considering the

latters good relationship with his fellow doctors and his good track record as

anesthesiologist.

[35]

On January 9, 1998, the lower court rendered its Decision[36] declaring the

marriage between petitioner and respondent null and void. The RTC gave credence

to Dr. Oates findings and the admissions made by Benjamin in the course of his

deposition, and found him to be psychologically incapacitated to comply with the

essential obligations of marriage. Specifically, the trial court found Benjamin an










































excessive drinker, a compulsive gambler, someone who prefers his extra-curricular

activities to his family, and a person with violent tendencies, which character traits

find root in a personality defect existing even before his marriage to Carmen. The

decretal portion of the decision reads:

WHEREFORE, all the foregoing considered, judgment is hereby

rendered declaring the marriage between plaintiff and defendant null and

voidab initio pursuant to Art. 36 of the Family Code. x x x

x x x x

SO ORDERED.[37]

Aggrieved, petitioner appealed to the CA. On October 19, 2000, the CA rendered a

Decision[38] reversing the trial courts ruling. It faulted the trial courts finding, stating

that no proof was adduced to support the conclusion that Benjamin was

psychologically incapacitated at the time he married Carmen since Dr. Oates

conclusion was based only on theories and not on established fact,[39] contrary to the

guidelines set forth in Santos v. Court of Appeals[40] and in Rep. of the Phils. v. Court

of Appeals and Molina.[41]

Because of this, Carmen filed a motion for reconsideration, arguing that

the Molina guidelines should not be applied to this case since the Molina decisionwas promulgated only on February 13, 1997, or more than five years after she had

filed her petition with the RTC.[42]She claimed that the Molina ruling could not be

made to apply retroactively, as it would run counter to the principle of stare

decisis. Initially, the CA denied the motion for reconsideration for having been filed

beyond the prescribed period. Respondent thereafter filed a manifestation explaining

compliance with the prescriptive period but the same was likewise denied for lack

of merit. Undaunted, respondent filed a petition for certiorar i[43] with this Court. In

a Resolution[44] dated March 5, 2003, this Court granted the petition and directed the

CA to resolve Carmens motion for reconsideration.[45] On review, the CA decided to

reconsider its previous ruling. Thus, on November 17, 2003, it issued an Amended

Decision[46] reversing its first ruling and sustaining the trial courts decision.[47]

A motion for reconsideration was filed, this time by Benjamin, but the same was

denied by the CA in its December 13, 2004 Resolution.[48]














































Hence, this petition.

For our resolution are the following issues:

I. Whether the CA violated the rule on stare decisis when it refusedto follow the guidelines set forth underthe Santos and Molina cases;

II. Whether the CA correctly ruled that the requirement of proof of psychological incapacity for the declaration of absolute nullity of

marriage based on Article 36 of the Family Code has been

liberalized; and

III. Whether the CAs decision declaring the marriage between

petitioner and respondent null and void [is] in accordance with lawand jurisprudence.

We find merit in the petition.

I . On the issue of stare decisis.

The principle of stare decisis enjoins adherence by lower courts to doctrinal

rules established by this Court in its final decisions. It is based on the principle that

once a question of law has been examined and decided, it should be deemed settled

and closed to further argument.[49] Basically, it is a bar to any attempt to relitigate

the same issues,[50] necessary for two simple reasons: economy and stability. In our

jurisdiction, the principle is entrenched in Article 8 of the Civil Code.[51]

This doctrine of adherence to precedents or stare decisis was applied by the

English courts and was later adopted by the United States. Associate Justice (now

Chief Justice) Reynato S. Punos discussion on the historical development of this

legal principle in his dissenting opinion in Lambino v. Commission on Elections[52]

isenlightening:

The latin phrase stare decisis et non quieta movere means stand by

the thing and do not disturb the calm. The doctrine started with the EnglishCourts. Blackstone observed that at the beginning of the 18th century, it

is an established rule to abide by former precedents where the same points


















come again in litigation. As the rule evolved, early limits to its application

were recognized: (1) it would not be followed if it were plainlyunreasonable; (2) where courts of equal authority developed conflicting

decisions; and, (3) the binding force of the decision was the actual

principle or principles necessary for the decision; not the words or

reasoning used to reach the decision.

The doctrine migrated to the United States. It was recognized by

the framers of the U.S. Constitution. According to Hamilton, strict rules

and precedents are necessary to prevent arbitrary discretion in the

courts. Madison agreed but stressed that x x x once the precedent ventures

into the realm of altering or repealing the law, it should be rejected. Prof.

Consovoy well noted that Hamilton and Madison disagree about the

countervailing policy considerations that would allow a judge to abandon

a precedent. He added that their ideas reveal a deep internal conflict between the concreteness required by the rule of law and the flexibility

demanded in error correction. It is this internal conflict that the Supreme

Court has attempted to deal with for over two centuries.

Indeed, two centuries of American case law will confirm Prof.

Consovoy's observation although stare decisis developed its own life intheUnited States. Two strains of stare decisis have been isolated by legal

scholars. The first, known as vertical stare decisis deals with the duty of

lower courts to apply the decisions of the higher courts to cases involving

the same facts. The second, known as horizontal stare decisis requiresthat high courts must follow its own precedents. Prof. Consovoy correctly

observes that vertical stare decisis has been viewed as an obligation, whilehorizontal stare decisis, has been viewed as a policy, imposing choice but

not a command. Indeed, stare decisis is not one of the precepts set in stone

in our Constitution.

It is also instructive to distinguish the two kinds of horizontal stare

decisis constitutional stare decisis and statutory stare

decisis.Constitutional stare decisis involves judicial interpretations of

the Constitution while statutory stare decisis involves interpretations ofstatutes. The distinction is important for courts enjoy more flexibility in

refusing to apply stare decisis in constitutional litigations. Justice

Brandeis' view on the binding effect of the doctrine in constitutional

litigations still holds sway today. In soothing prose, Brandeis stated: Stare

decisis is not . . . a universal and inexorable command. The rule of staredecisis is not inflexible. Whether it shall be followed or departed from, is



a question entirely within the discretion of the court, which is again called

upon to consider a question once decided. In the same vein, the venerableJustice Frankfurter opined: the ultimate touchstone of constitutionality is

the Constitution itself and not what we have said about it. In contrast, the

application of stare decisis on judicial interpretation of statutes is more

inflexible. As Justice Stevens explains: after a statute has been construed,either by this Court or by a consistent course of decision by other federal

judges and agencies, it acquires a meaning that should be as clear as if the

judicial gloss had been drafted by the Congress itself. This stance reflects

both respect for Congress' role and the need to preserve the courts' limited

resources.

In general, courts follow the stare decisis rule for an ensemble of

reasons, viz.: (1) it legitimizes judicial institutions; (2) it promotes judicial

economy; and, (3) it allows for predictability. Contrariwise, courts refuseto be bound by the stare decisis rule where (1) its application perpetuates

illegitimate and unconstitutional holdings; (2) it cannot accommodate

changing social and political understandings; (3) it leaves the power tooverturn bad constitutional law solely in the hands of Congress; and, (4)

activist judges can dictate the policy for future courts while judges that

respect stare decisis are stuck agreeing with them.

In its 200-year history, the U.S. Supreme Court has refused to

follow the stare decisis rule and reversed its decisions in 192 cases. The

most famous of these reversals is Brown v. Board of Education which junked Plessy v. Ferguson's separate but equal doctrine. Plessy upheld as

constitutional a state law requirement that races be segregated on publictransportation. In Brown, the U.S. Supreme Court, unanimously held that

separate . . . is inherently unequal. Thus, by freeing itself from the shackles

of stare decisis, the U.S. Supreme Court freed the colored Americans fromthe chains of inequality. In the Philippine setting, this Court has likewise

refused to be straitjacketed by the stare decisis rule in order to promote

public welfare. In La Bugal-B'laan Tribal Association, Inc. v. Ramos, we

reversed our original ruling that certain provisions of the Mining Law are

unconstitutional. Similarly, in Secretary of Justice v. Lantion, weoverturned our first ruling and held, on motion for reconsideration, that a

private respondent is bereft of the right to notice and hearing during the

evaluation stage of the extradition process.

An examination of decisions on stare decisis in major countries willshow that courts are agreed on the factors that should be considered before



overturning prior rulings. These are workability, reliance, intervening

developments in the law and changes in fact. In addition, courts put in the balance the following determinants: closeness of the voting, age of the

prior decision and its merits.

The leading case in deciding whether a court should followthe stare decisis rule in constitutional litigations is Planned Parenthood v.

Casey. It established a 4-pronged test. The court should (1) determine

whether the rule has proved to be intolerable simply in defying practical

workability; (2) consider whether the rule is subject to a kind of reliance

that would lend a special hardship to the consequences of overruling and

add inequity to the cost of repudiation; (3) determine whether related

principles of law have so far developed as to have the old rule no more

than a remnant of an abandoned doctrine; and, (4) find out whether facts

have so changed or come to be seen differently, as to have robbed the oldrule of significant application or justification.[53]

To be forthright, respondents argument that the doctrinal guidelines prescribed

in Santos and Molina should not be applied retroactively for being contrary to the

principle of stare decisis is no longer new. The same argument was also raised but

was struck down in Pesca v. Pesca ,[54] and again in Antonio v. Reyes.[55] In these

cases, we explained that the interpretation or construction of a law by courts

constitutes a part of the law as of the date the statute is enacted. It is only when a prior ruling of this Court is overruled, and a different view is adopted, that the new

doctrine may have to be applied prospectively in favor of parties who have relied on

the old doctrine and have acted in good faith, in accordance therewith under the

familiar rule of lex prospicit, non respicit .

I I . On liberalizing the requir ed proof for the declaration of null ity of marr iage

under Article 36.

Now, petitioner wants to know if we have abandoned the Molina doctrine.

We have not.

In Edward Kenneth Ngo Te v. Rowena Ong Gutierrez Yu-Te,[56] we declared

that, in hindsight, it may have been inappropriate for the Court to impose a rigid set



















of rules, as the one in Molina, in resolving all cases of psychological incapacity. We

said that instead of serving as a guideline, Molina unintentionally became a

straightjacket, forcing all cases involving psychological incapacity to fit into and be

bound by it, which is not only contrary to the intention of the law but unrealistic as

well because, with respect to psychological incapacity, no case can be considered ason all fours with another .[57]

By the very nature of cases involving the application of Article 36, it is logical and

understandable to give weight to the expert opinions furnished by psychologists

regarding the psychological temperament of parties in order to determine the root

cause, juridical antecedence, gravity and incurability of the psychological

incapacity. However, such opinions, while highly advisable, are not conditions sine

qua non in granting petitions for declaration of nullity of marriage.[58] At best, courts

must treat such opinions as decisive but not indispensable evidence in determiningthe merits of a given case. In fact, if the totality of evidence presented is enough to

sustain a finding of psychological incapacity, then actual medical or psychological

examination of the person concerned need not be resorted to.[59] The trial court, as in

any other given case presented before it, must always base its decision not solely on

the expert opinions furnished by the parties but also on the totality of evidence

adduced in the course of the proceedings.

It was for this reason that we found it necessary to emphasize in Ngo Te that

each case involving the application of Article 36 must be treated distinctly and judged not on the basis of a priori assumptions, predilections or generalizations but

according to its own attendant facts. Courts should interpret the provision on a case-

to-case basis, guided by experience, the findings of experts and researchers in

psychological disciplines, and by decisions of church tribunals.

Far from abandoning Molina, we simply suggested the relaxation of the

stringent requirements set forth therein, cognizant of the explanation given by the

Committee on the Revision of the Rules on the rationale of the Rule on Declarationof Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M.

No. 02-11-10-SC), viz.:

To require the petitioner to allege in the petition the particular root

cause of the psychological incapacity and to attach thereto the verifiedwritten report of an accredited psychologist or psychiatrist have proved to















be too expensive for the parties. They adversely affect access to justice o

poor litigants. It is also a fact that there are provinces where these expertsare not available. Thus, the Committee deemed it necessary to relax this

stringent requirement enunciated in the Molina Case. The need for the

examination of a party or parties by a psychiatrist or clinical psychologist

and the presentation of psychiatric experts shall now be determined by thecourt during the pre-trial conference.[60]

But where, as in this case, the parties had the full opportunity to present professional

and expert opinions of psychiatrists tracing the root cause, gravity and incurability

of a partys alleged psychological incapacity, then such expert opinion should be

presented and, accordingly, be weighed by the court in deciding whether to grant a

petition for nullity of marriage.

I I I . On peti tioners psychological i ncapacity.

Coming now to the main issue, we find the totality of evidence adduced by

respondent insufficient to prove that petitioner is psychologically unfit to discharge

the duties expected of him as a husband, and more particularly, that he suffered from

such psychological incapacity as of the date of the marriage eighteen (18) years ago.

Accordingly, we reverse the trial courts and the appellate courts rulings declaring

the marriage between petitioner and respondent null and void ab initio. The intendment of the law has been to confine the application of Article 36 to

the most serious cases of personality disorders clearly demonstrative of an utter

insensitivity or inability to give meaning and significance to the marriage.[61] The

psychological illness that must have afflicted a party at the inception of the marriage

should be a malady so grave and permanent as to deprive one of awareness of the

duties and responsibilities of the matrimonial bond he or she is about to assume. [62]

In this case, respondent failed to prove that petitioners defects were present at

the time of the celebration of their marriage. She merely cited that prior to their

marriage, she already knew that petitioner would occasionally drink and gamble with

his friends; but such statement, by itself, is insufficient to prove any pre-existing

psychological defect on the part of her husband. Neither did the evidence adduced

prove such defects to be incurable.














The evaluation of the two psychiatrists should have been the decisive evidence

in determining whether to declare the marriage between the parties null and void.

Sadly, however, we are not convinced that the opinions provided by these experts

strengthened respondents allegation of psychological incapacity. The two experts

provided diametrically contradicting psychological evaluations: Dr. Oate testifiedthat petitioners behavior is a positive indication of a personality disorder ,[63] while

Dr. Obra maintained that there is nothing wrong with petitioners personality.

Moreover, there appears to be greater weight in Dr. Obras opinion because, aside

from analyzing the transcript of Benjamins deposition similar to what Dr. Oate did,

Dr. Obra also took into consideration the psychological evaluation report furnished

by another psychiatrist in South Africa who personally examined Benjamin, as well

as his (Dr. Obras) personal interview with Benjamins brothers.[64] Logically,

therefore, the balance tilts in favor of Dr. Obras findings.

Lest it be misunderstood, we are not condoning petitioners drinking and

gambling problems, or his violent outbursts against his wife. There is no valid excuse

to justify such a behavior. Petitioner must remember that he owes love, respect, and

fidelity to his spouse as much as the latter owes the same to him. Unfortunately, this

court finds respondents testimony, as well as the totality of evidence presented by

the respondent, to be too inadequate to declare him psychologically unfit pursuant

to Article 36.

It should be remembered that the presumption is always in favor of the validity

of marriage. Semper praesumitur pro matrimonio.[65]In this case, the presumption

has not been amply rebutted and must, perforce, prevail.

WHEREFORE, premises considered, the petition for review

on certiorari is GRANTED. The November 17, 2003 Amended Decision and the

December 13, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 59903

are accordingly REVERSED and SET ASIDE.

SO ORDERED.

THIRD DIVISION















[G.R. No. 136921. April 17, 2001]

LORNA GUILLEN PESCA, petitioner, vs. ZOSIMO A. PESCA, respondent.

D E C I S I O NVITUG, J .:

Submitted for review is the decision of the Court of Appeals, promulgated on 27

May 1998, in C.A. G.R. CV. No. 52374, reversing the decision of the Regional TrialCourt (RTC) of Caloocan City, Branch 130, which has declared the marriage between

petitioner and respondent to be null and void ab initio on the ground of psychological

incapacity on the part of respondent.

Petitioner Lorna G. Pesca and respondent Zosimo A. Pesca first met sometime in

1975 while on board an inter-island vessel bound for Bacolod City. After a whirlwindcourtship, they got married on 03 March 1975. Initially, the young couple did not live

together as petitioner was still a student in college and respondent, a seaman, had to

leave the country on board an ocean-going vessel barely a month after the marriage. Six

months later, the young couple established their residence in Quezon City until theywere able to build their own house in Caloocan City where they finally resided. It was

blissful marriage for the couple during the two months of the year that they could stay

together when respondent was on vacation. The union begot four children, 19-year oldRuhem, 17-year old Rez, 11-year old Ryan, and 9-year old Richie.

It started in 1988, petitioner said, when she noticed that respondent surprisingly

showed signs of psychological incapacity to perform his marital covenant. His "truecolor" of being an emotionally immature and irresponsible husband became

apparent. He was cruel and violent. He was a habitual drinker, staying with friends daily

from 4:00 o'clock in the afternoon until 1:00 o'clock in the morning. When cautioned

to stop or, to at least, minimize his drinking, respondent would beat, slap and kick

her. At one time, he chased petitioner with a loaded shotgun and threatened to kill her

in the presence of the children. The children themselves were not spared from physical

violence.

Finally, on 19 November 1992, petitioner and her children left the conjugal abode

to live in the house of her sister in Quezon City as they could no longer bear his violentways. Two months later, petitioner decided to forgive respondent, and she returnedhome to give him a chance to change. But, to her dismay, things did not so turn out as

expected. Indeed, matters became worse.

On the morning of 22 March 1994, about eight oclock, respondent assaulted petitioner for about half an hour in the presence of the children. She was battered black

and blue. She submitted herself to medical examination at the Quezon City General



Hospital, which diagnosed her injuries as contusions and abrasions. Petitioner filed a

complaint with the barangay authorities, and a case was filed against respondent forslight physical injuries. He was convicted by the Metropolitan Trial Court of Caloocan

City and sentenced to eleven days of imprisonment.

This time, petitioner and her children left the conjugal home for good and stayedwith her sister. Eventually, they decided to rent an apartment. Petitioner sued

respondent before the Regional Trial Court for the declaration of nullity of their

marriage invoking psychological incapacity. Petitioner likewise sought the custody of

her minor children and prayed for support pendente lite.

Summons, together with a copy of the complaint, was served on respondent on 25

April 1994 by personal service by the sheriff. As respondent failed to file an answer or

to enter his appearance within the reglementary period, the trial court ordered the city prosecutor to look into a possible collusion between the parties. Prosecutor Rosa C.

Reyes, on 03 August 1994, submitted her report to the effect that she found no evidence

to establish that there was collusion between the parties.

On 11 January 1995, respondent belatedly filed, without leave of court, an answer,

and the same, although filed late, was admitted by the court. In his answer, respondent

admitted the fact of his marriage with petitioner and the birth of their children. He alsoconfirmed the veracity of Annex "A" of the complaint which listed the conjugal

property. Respondent vehemently denied, however, the allegation that he was

psychologically incapacitated.

On 15 November 1995, following hearings conducted by it, the trial court rendered

its decision declaring the marriage between petitioner and respondent to be null and

void ab initio on the basis of psychological incapacity on the part of respondent andordered the liquidation of the conjugal partnership.

Respondent appealed the above decision to the Court of Appeals, contending that

the trial court erred, particularly, in holding that there was legal basis to declare themarriage null and void and in denying his motion to reopen the case.

The Court of Appeals reversed the decision of the trial court and declared the

marriage between petitioner and respondent valid and subsisting. The appellate court

said:

"Definitely the appellee has not established the following: That the appellant showedsigns of mental incapacity as would cause him to be truly incognitive of the basic

marital covenant, as so provided for in Article 68 of the Family Code; that the

incapacity is grave, has preceded the marriage and is incurable; that his incapacity tomeet his marital responsibility is because of a psychological, not physical illness; that

the root cause of the incapacity has been identified medically or clinically, and has



been proven by an expert; and that the incapacity is permanent and incurable in

nature.

The burden of proof to show the nullity of marriage lies in the plaintiff and any doubtshould be resolved in favor of the existence and continuation of the marriage and

against its dissolution and nullity."[1]

Petitioner, in her plea to this Court, would have the decision of the Court of Appeals

reversed on the thesis that the doctrine enunciated in Santos vs. Court of

Appeals,[2] promulgated on 14 January 1995, as well as the guidelines set out in Republic

vs. Court of Appeals and Molina,[3] promulgated on 13 February 1997, should have no

retroactive application and, on the assumption that the Molina ruling could be applied

retroactively, the guidelines therein outlined should be taken to be merely advisory and

not mandatory in nature. In any case, petitioner argues, the application

of the Santos and Molina dicta should warrant only a remand of the case to the trial

court for further proceedings and not its dismissal.

Be that as it may, respondent submits, the appellate court did not err in its assailed

decision for there is absolutely no evidence that has been shown to prove psychological

incapacity on his part as the term has been so defined in Santos.

Indeed, there is no merit in the petition.

The term psychological incapacity, as a ground for the declaration of nullity of a

marriage under Article 36 of the Family Code, has been explained by the Court

in Santos and reiterated in Molina. The Court, in Santos, concluded:

"It should be obvious, looking at all the foregoing disquisitions, including, and mostimportantly, the deliberations of the Family Code Revision Committee itself, that the

use of the phrase `psychological incapacity under Article 36 of the Code has not been

meant to comprehend all such possible cases of psychoses as, likewise mentioned by

some ecclesiastical authorities, extremely low intelligence, immaturity, and like

circumstances (cited in Fr. Artemio Balumad's `Void and Voidable Marriages in the

Family Code and their Parallels in Canon Law, quoting form the Diagnostic Statistical

Manuel of Mental Disorder by the American Psychiatric Association; Edward

Hudson's `Handbook II for Marriage Nullity Cases). Article 36 of the Family Code

cannot be taken and construed independently of, but must stand in conjunction with,existing precepts in our law on marriage. Thus correlated, `psychological incapacity

should refer to no less than a mental (not physical) incapacity that causes a party to be

truly incognitive of the basic marital covenants that concomitantly must be assumedand discharged by the parties to the marriage which, as so expressed by Article 68 of

the Family Code, include their mutual obligations to live together, observe love,

respect and fidelity and render help and support. There is hardly any doubt that the

http://sc.judiciary.gov.ph/jurisprudence/2001/apr2001/136921.htm#_edn1













intendment of the law has been to confine the meaning of `psychological incapacity to

the most serious cases of personality disorders clearly demonstrative of an utterinsensitivity or inability to give meaning and significance to the marriage. This

psychologic condition must exist at the time the marriage is celebrated."

The "doctrine of stare decisis," ordained in Article 8 of the Civil Code, expressesthat judicial decisions applying or interpreting the law shall form part of the legalsystem of the Philippines. The rule follows the settled legal maxim legis interpretado

legis vim obtinet that the interpretation placed upon the written law by a competent

court has the force of law.[4] The interpretation or construction placed by the courts establishes the

contemporaneous legislative intent of the law. The latter as so interpreted and construed would thus constitute a part

of that law as of the date the statute is enacted. It is only when a prior ruling of this Court finds itself later overruled,

and a different view is adopted, that the new doctrine may have to be applied prospectively in favor of parties who

have relied on the old doctrine and have acted in good faith in accordance therewith[5] under the familiar rule of lex

prospicit, non respicit.

The phrase psychological incapacity, borrowed from Canon law, is an entirely

novel provision in our statute books, and, until the relatively recent enactment of theFamily Code, the concept has escaped jurisprudential attention. It is in Santos when, for

the first time, the Court has given life to the term. Molina, that followed, has

additionally provided procedural guidelines to assist the courts and the parties in tryingcases for annulment of marriages grounded on psychological incapacity.Molina has

strengthened, not overturned, Santos.

At all events, petitioner has utterly failed, both in her allegations in the complaint

and in her evidence, to make out a case of psychological incapacity on the part of

respondent, let alone at the time of solemnization of the contract, so as to warrant a

declaration of nullity of the marriage. Emotional immaturity and irresponsibility,invoked by her, cannot be equated with psychological incapacity.

h i i i d h i i i i l bl i l i i i d









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