CONSTITUTIONAL LAW PRELIMS - Sovereignty: The supreme and

uncontrollable power inherent in a state

I. PHILIPPINE CONSTITUTION
by which state is governed
- Constitution: The written instrument
enacted by direct action of the people by Constitutional Supremacy: All other laws of the
which the fundamental powers of the country must be based on the articles and
government are established, limited and provisions of the Constitution. Laws that are
defined inconsistent with it are struck down by the
Supreme Court. It is the duty of every elected and
Supremacy of the Constitution
appointed government official to obey and
- The constitution is the basic and enforce the Constitution
paramount law to which all other laws
Functions of Judicial Review
must conform and to which all persons,
including the highest officials of the land, - Legitimizing
must defer - Checks and Balances
- Symbolic & Instructional
The State: A community of persons, more or less
numerous, permanently occupying a fixed Capacity to Sue:
territory, and possessed of an independent
- Natural Persons
government organized for political ends to which
- Judicial
the great body of inhabitants render habitual
 The concept of intergenerational
obedience
responsibility hinges on the right of the
- Police Power, Power of Eminent Domain present generation to sue in its behalf and
& Power of Taxation in behalf of the succeeding generations
for the protection of the environment.
Elements of State:
Provisions of the rights provided by UNCLOS
- People: Must be numerous to be self-
sufficing and to defend themselves, and - Maritime Zones: Internal Waters, Territorial
small enough to be easily administered Seas (12 NM), Contiguous Zone (24 NM),
- Territory: Exclusive Economic Zone (200 NM)
ARTICLE I: National Territory - Internal Waters: Around, connecting, In-
The national territory comprises the Philippine archipelago, between islands; Capable of navigation; Has a
with all the islands and waters embraced therein, and all character of permanence
other territories over which the Philippines has sovereignty
or jurisdiction, consisting of its terrestrial, fluvial, and aerial 1. Right of Innocent Passage: A ship's right to
domains, including its territorial sea, the seabed, the subsoil, enter and pass through a coastal state's territorial
the insular shelves, and other submarine areas. The waters waters so long as it is not prejudicial to the peace,
around, between, and connecting the islands of the
good order or security of the coastal state.
archipelago, regardless of their breadth and dimensions,
form part of the internal waters of the Philippines.
2. Freedom of Overflight
- Government: The agency or 3. Freedom of Navigation: Ships flying the flag
instrumentality through which the will of of any sovereign state shall not suffer interference
the state is formulated, expressed and from other states, apart from the exceptions
realized—Constituent & Ministrant provided for in international law.
o Doctrine of Parens Patriae:
State as the guardian of the rights
of the people
State Immunity (RA 3083) living testimonial of Philippine heritage like that
of Manila Hotel, which has become a part of our
- “The state may not be sued without national economy and patrimony, should be kept
consent” within the control of Filipinos.
- State immunity, or sovereign immunity
as it is often referred to, is a principle of
international law that has become part of
the national law of many states. It derives MANILA PRINCE HOTEL v GSIS, MANILA
from the theory of the sovereign equality HOTEL CORPORATION
of states, as a consequence of which one
state has no right to judge the actions of Facts: Adhering to the doctrine of constitutional
another by the standards of its national supremacy, the subject constitutional provision
law. It protects an entity in two ways: by is, as it should be, impliedly written in the bidding
conferring immunity from adjudication rules issued by respondent GSIS, lest the bidding
(also known as immunity from suit) and rules be nullified for being violative of the
by conferring immunity from Constitution.
enforcement and execution.
- May be waived
- Strict/Absolute & Restrictive Facts:

Diplomatic Immunity GSIS, pursuant to the privatization program of

the Philippine Government decided to sell
- a principle of international law that limits through public bidding issued and outstanding
the degree to which foreign government shares of respondent Manila Hotel Corporation
and international organization officials (MHC). Two bidders participated: Manila Prince
and employees are subject to the Hotel Corporation, a Filipino corporation, which
authority of police officers and judges in offered to buy the shares at P41.58 per share, and
their country of assignment. Renong Berhad, a Malaysian firm, which bid for
Functions of the Government the same number of shares at P44.00 per share.

- Governmental Function: Courtesy of the Pending the declaration of Renong Berhard as the
government winning bidder/strategic partner and the
- Proprietary Function: Concept of execution of the necessary contracts, Manila
revenue Prince matched the bid price of P44.00 per share.
- Garnishment will affect the functions Perhaps apprehensive that GSIS has disregarded
the tender of the matching bid, Manila Prince
came to the Supreme Court on prohibition and
mandamus.
CASES:
FILIPINO FIRST POLICY
- FILIPINO First Policy is a rule under Article
Issue:
XII Section 9 of the 1987 Constitution, which
Whether GSIS is mandated to abide the dictates
heavily favors Filipino businessmen over foreign
investors with respect to the grant of rights, of the Constitution on National Economy and
privileges, and concessions covering the national Patrimony.
economy and patrimony. On February 3, 1997,
the Supreme Court (SC) decided the landmark
case of Manila Prince Hotel v. Government
Service Insurance System et. al (G.R. No. Ruling:
122156) and enlightened the people as to why a
YES. It should be stressed that while the rules be nullified for being violative of the
Malaysian firm offered the higher bid it is not yet Constitution.
the winning bidder. The bidding rules expressly
provide that the highest bidder shall only be
declared the winning bidder after it has negotiated Facts:
and executed the necessary contracts, and secured
the requisite approvals. Since the Filipino First DMCI Project Developers, Inc. acquired a lot in
Policy provision of the Constitution bestows the City of Manila. The said lot was earmarked
preference on qualified Filipinos the mere for the construction of Torre de Manila
tending of the highest bid is not an assurance that Condominium project. After having acquired all
the highest bidder will be declared the winning the necessary permits and documents, the DMCI-
bidder. Resultantly, respondents are not bound to PDI was ready to commence the intended project.
make the award yet, nor are they under obligation However, the City of Manila Council issued a
to enter into one with the highest bidder. For in resolution to temporarily suspend the Building
choosing the awardee, respondents are mandated Permit until such time that issues had been
to abide by the dictates of the 1987 Constitution cleared. Consultations after consultations had he
the provisions of which are presumed to be been initiated both by the City of Manila and
known to all the bidders and other interested DMCI-PDI. Finally, On Jan. 2014, the City
parties. Council of Manila, issued another resolution
ratifying and confirming all previously issued
Adhering to the doctrine of constitutional permits, licenses and approvals issued by the City
supremacy, the subject constitutional provision for Torre de Manila.
is, as it should be, impliedly written in the bidding
rules issued by respondent GSIS, lest the bidding Knights of Rizal, on the other hand, filed a
rules be nullified for being violative of the petition for injunction seeking TRO, and later a
Constitution. It is a basic principle in permanent injunction, against the construction of
constitutional law that all laws and contracts must the project. The KOR argued that the building, if
conform with the fundamental law of the land. completed, would be a sore to the view of the
Those which violate the Constitution lose their monument, an endangerment to the nation’s
reason for being. cultural heritage, and a construction borne out of
bad faith.
Certainly, the constitutional mandate itself is
reason enough not to award the block of shares
immediately to the foreign bidder Issue:
notwithstanding its submission of a higher, or
even the highest, bid. In fact, we cannot conceive Whether or not the court should issue a writ of
of a stronger reason than the constitutional mandamus against the City Officials to stop the
injunction itself. construction of Torre de Manila.

KNIGHTS OF RIZAL vs. DMCI HOMES, INC. Ruling:

G.R. No. 213948, April 25, 2017 NO. The SC ruled that there was no law
prohibiting the construction of the project. It was
Adhering to the doctrine of constitutional not even considered as contrary to morals,
supremacy, the subject constitutional provision customs and public order. The project was way
is, as it should be, impliedly written in the bidding well from the Park where the monument was
rules issued by respondent GSIS, lest the bidding located. The SC ruled further that a mandamus
did not lie against the City of Manila. It is Respondents, on the other hand, defended the
categorically clear that “a mandamus is issued new law as the country’s compliance with the
when there is a clear legal duty imposed upon the terms of UNCLOS. Respondents stressed that RA
office or the officer sought to be compelled to 9522 does not relinquish the country’s claim over
perform an act, and the party seeking mandamus Sabah.
has a clear legal right to the performance of such
act.” In the case at bar, such factors were
wanting. Nowhere was it found in the ordinance, Issue: Whether RA 9522 is unconstitutional.
or in any Law or rule that the construction of such
building outside the Rizal Park was prohibited if Ruling:
the building was within the background sightline NO. UNCLOS III has nothing to do with the
or vision of the Rizal Monument. Thus, the acquisition (or loss) of territory. It is a multilateral
petition was lacking of merit and, thus dismissed. treaty regulating, among others, sea-use rights
over maritime zones (i.e., the territorial waters
[12 nautical miles from the baselines], contiguous
UNCLOS III zone [24 nautical miles from the baselines],
exclusive economic zone [200 nautical miles
PROF. MERLIN M. MAGALLONA vs
from the baselines]), and continental shelves that
EDUARDO ERMITA
UNCLOS III delimits. UNCLOS III was the
G.R No. 187167, July 16, 2011, Carpio culmination of decades-long negotiations among
United Nations members to codify norms
RA 9522 is a Statutory Tool to Demarcate the
regulating the conduct of States in the world’s
Country’s Maritime Zones and Continental Shelf
oceans and submarine areas, recognizing coastal
Under UNCLOS III, not to Delineate Philippine
and archipelagic States graduated authority over
Territory.
a limited span of waters and submarine lands
along their coasts.

Facts: UNCLOS III and its ancillary baselines laws play

no role in the acquisition, enlargement or, as
R.A. 3046 was passed demarcating the maritime petitioners claim, diminution of territory. Under
baselines of the Philippines. After five decades, traditional international law typology, States
RA 9552 was passed, amending RA 3046 to acquire (or conversely, lose) territory through
comply with the terms of the United Nations occupation, accretion, cession and prescription,
Convention on the Law of the Sea (UNCLOS). not by executing multilateral treaties on the
The new law shortened one baseline, optimized regulations of sea-use rights or enacting statutes
the location of some basepoints around the to comply with the treatys terms to delimit
Philippine archipelago and classified adjacent maritime zones and continental shelves.
territories, namely, the Kalayaan Island Group Territorial claims to land features are outside
and the Scarborough Shoal, as regimes of islands UNCLOS III, and are instead governed by the
whose islands generate their own applicable rules on general international law.
maritime zones.
Petitioners assailed the constitutionality of the
new law on the ground that: it reduces the MOST REV. PEDRO D. ARIGO, ET. AL.
Philippine maritime territory, in violation of VS.SCOTT H. SWIFT, ET. AL.
Article 1 of the Constitution and it opens the
G.R. No. 206510, September 16, 2014,
country’s waters to maritime passage by all
VILLARAMA, JR., J.
vessels, thus undermining Philippine sovereignty.
Warships enjoy sovereign immunity from suit as
extensions of their flag State, Art. 31 of the
Ruling:
UNCLOS creates an exception to this rule in
cases where they fail to comply with the rules and YES. During the deliberations, Senior Associate
regulations of the coastal State regarding passage Justice Antonio T. Carpio took the position that
through the latter's internal waters and the the conduct of the US in this case, when its
territorial sea. warship entered a restricted area in violation of
R.A. No. 10067 and caused damage to the TRNP
reef system, brings the matter within the ambit of
Facts: Article 31 of the United Nations Convention on
the Law of the Sea (UNCLOS). He explained that
Under Republic Act (R.A.) No. 10067 otherwise
while historically, warships enjoy sovereign
known as the "Tubbataha Reefs Natural Park
immunity from suit as extensions of their flag
(TRNP) Act of 2009", a "no-take" policy was
State, Art. 31 of the UNCLOS creates an
created whereby entry into the waters of TRNP is
exception to this rule in cases where they fail to
strictly regulated and many human activities are
comply with the rules and regulations of the
prohibited and penalized or fined, including
coastal State regarding passage through the
fishing, gathering, destroying and disturbing the
latter's internal waters and the territorial sea.
resources within the TRNP. The USS Guardian
requested diplomatic clearance for the said vessel Non-membership in the UNCLOS does not mean
"to enter and exit the territorial waters of the that the US will disregard the rights of the
Philippines and to arrive at the port of Subic Bay Philippines as a Coastal State over its internal
for the purpose of routine ship replenishment, waters and territorial sea. We thus expect the US
maintenance, and crew liberty."However, the to bear "international responsibility" under Art.
ship ran aground on the northwest side of South 31 in connection with the USS Guardian
Shoal of the Tubbataha Reefs. grounding which adversely affected the
Tubbataha reefs. Under Article 197 of the
Petitioners cite the following violations
UNCLOS provides, “Cooperation on a global or
committed by US respondents under R.A. No.
regional basis: States shall cooperate on a global
10067: unauthorized entry; non-payment of
basis and, as appropriate, on a regional basis,
conservation fees; obstruction of law
directly or through competent international
enforcement officer; damages to the reef; and
organizations, in formulating and elaborating
destroying and disturbing resources.
international rules, standards and recommended
Furthermore, petitioners assail certain provisions
practices and procedures consistent with this
of the Visiting Forces Agreement (VFA) which
Convention, for the protection and preservation
they want this Court to nullify for being
of the marine environment, taking into account
unconstitutional. Consequently, the petitioners
characteristic regional features.”
filed a petition for a Temporary Environmental
Protection Order (TEPO) and/or a Writ of No Waiver of State Immunity in the VFA
Kalikasan.
As it is, the waiver of State immunity under the
VF A pertains only to criminal jurisdiction and
not to special civil actions such as the present
Issue:
petition for issuance of a writ of Kalikasan. In
Whether the Court has jurisdiction over the US fact, it can be inferred from Section 17, Rule 7 of
respondents who did not submit any pleading or the Rules that a criminal case against a person
manifestation in this case. charged with a violation of an environmental law
is to be filed separately.
In any case, it is our considered view that a ruling ADB and the Philippine Government regarding
on the application or non-application of criminal the Headquarters of the ADB (hereinafter
jurisdiction provisions of the VF A to US Agreement) in the country. As a result, MeTc
personnel who may be found responsible for the judge dismissed the two criminal cases. However,
grounding of the USS Guardian, would be RTC set aside the MeTC rulings and ordered the
premature and beyond the province of a petition latter court to enforce the warrant of arrest. Liang
for a writ of Kalikasan. We also find it elevated the case to the Supreme Court via a
unnecessary at this point to determine whether petition for review arguing that he is covered by
such waiver of State immunity is indeed absolute. immunity under the Agreement.
In the same vein, we cannot grant damages which
have resulted from the violation of environmental
laws. The Rules allows the recovery of damages, Issue:
including the collection of administrative fines
under R.A. No. 10067, in a separate civil suit or Whether Liang is covered by the immunity under
that deemed instituted with the criminal action the agreement.
charging the same violation of an environmental
law.
Ruling:
NO. Section 45 of the Agreement between the
STATE IMMUNITY ADB and the Philippine Government regarding
JEFFREY LIANG (HUEFENG), v. PEOPLE OF the Headquarters of the ADB provides that
THE PHILIPPINES Officers and staff of the Bank including for the
purpose of this Article experts and consultants
G.R. No. 125865, January 28, 2000, YNARES- performing missions for the Bank shall enjoy
SANTIAGO, J. immunity from legal process with respect to acts
performed by them in their official capacity
except when the Bank waives the immunity. The
It is well-settled principle of law that a public immunity mentioned therein is not absolute, but
official may be liable in his personal private subject to the exception that the acts was done in
capacity for whatever damage he may have "official capacity”. Slandering a person is not
caused by his act done with malice or in bad faith covered by the immunity agreement because
or beyond the scope of his authority or Philippines laws do not allow the commission of
jurisdiction. a crime, such as defamation, in the name of
official duty.

Facts:
ERNESTO CALLADO vs. INTERNATIONAL
Liang is an economist working with the Asian
RICE RESEARCH INSTITUTE (IRRI)
Development Bank (ADB). He was charged
before the MeTC of Mandaluyong City with two G.R. No. 106483 May 22, 1995/ ROMERO, J.:
counts of grave oral defamation for allegedly
uttering defamatory words against fellow ADB
worker Joyce Cabal. Thereafter, MeTC judge Facts:
received an "office of protocol" from the
Department of Foreign Affairs (DFA) stating that Ernesto Callado, petitioner, was employed as a
Liang is covered by immunity from legal process driver at the IRRI. One day while driving an IRRI
under Section 45 of the Agreement between the
vehicle on an official trip to the NAIA and back In this petition petitioner contends that the
to the IRRI, petitioner figured in an accident. immunity of the IRRI as an international
organization granted by Article 3 of Presidential
Petitioner was informed of the findings of a
Decree No. 1620 may not be invoked in the case
preliminary investigation conducted by the
at bench inasmuch as it waived the same by virtue
IRRI's Human Resource Development
of its Memorandum on "Guidelines on the
Department Manager. In view of the findings, he
handling of dismissed employees in relation to
was charged with:
P.D. 1620."
(1) Driving an institute vehicle while on official
duty under the influence of liquor;
Issue: Did the (IRRI) waive its immunity from
(2) Serious misconduct consisting of failure to
suit in this dispute which arose from an employer-
report to supervisors the failure of the vehicle to
employee relationship?
start because of a problem with the car battery,
and
(3) Gross and habitual neglect of duties. Held: No.
Petitioner submitted his answer and defenses to
the charges against him. However, IRRI issued a
P.D. No. 1620, Article 3 provides:
Notice of Termination to petitioner.
Art. 3. Immunity from Legal Process. The
Thereafter, petitioner filed a complaint before the
Institute shall enjoy immunity from any penal,
Labor Arbiter for illegal dismissal, illegal
civil and administrative proceedings, except
suspension and indemnity pay with moral and
insofar as that immunity has been expressly
exemplary damages and attorney's fees.
waived by the Director-General of the Institute or
IRRI wrote the Labor Arbiter to inform him that his authorized representatives.
the Institute enjoys immunity from legal process
The SC upholds the constitutionality of the
by virtue of Article 3 of Presidential Decree No.
aforequoted law. There is in this case "a
1620, 5 and that it invokes such diplomatic
categorical recognition by the Executive Branch
immunity and privileges as an international
of the Government that IRRI enjoys immunities
organization in the instant case filed by petitioner,
accorded to international organizations, which
not having waived the same.
determination has been held to be a political
While admitting IRRI's defense of immunity, the question conclusive upon the Courts in order not
Labor Arbiter, nonetheless, cited an Order issued to embarass a political department of
by the Institute to the effect that "in all cases of Government.
termination, respondent IRRI waives its
It is a recognized principle of international law
immunity," and, accordingly, considered the
and under our system of separation of powers that
defense of immunity no longer a legal obstacle in
diplomatic immunity is essentially a political
resolving the case.
question and courts should refuse to look beyond
The NLRC found merit in private respondent's a determination by the executive branch of the
appeal and, finding that IRRI did not waive its government, and where the plea of diplomatic
immunity, ordered the aforesaid decision of the immunity is recognized and affirmed by the
Labor Arbiter set aside and the complaint executive branch of the government as in the case
dismissed. at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate
suggestion by the principal law officer of the
government or other officer acting under his How is the Separation of Powers Doctrine
direction. violated?
- Encroachment by one branch over
another branch’s power
Delegation of Powers:
- Abrogation of constitutionally mandated
- Legislative (PEAR) duty
- Executive: Enforces/Implements laws
Checks and Balances
- Judiciary: Applies/Interprets laws
- Power of one branch to check on the acts
Separation of Powers
of another branch
- The Doctrine of Separation of Powers o Congressional Inquiry of
entails: first, the division of the powers of Congress in Aid of Legislation
the government into three, which are (Sec. 26, Art 6)
legislative, executive, and judicial; and o Veto Power of the President
second, the distribution of these powers o Judicial Reviews
to the three major branches of the
government, which are the Legislative
Department, Executive Department, and ARTICLE XVI: General Provisions
the Judicial Department.
SECTION 1. The flag of the Philippines shall be
- Separation of powers is said to be an
red, white, and blue, with a sun and three stars, as
attribute of republicanism, in that, among
consecrated and honored by the people and
other reasons, it seeks to prevent
recognized by law.
monopoly or concentration of power to
one person or group of persons, and SECTION 2. The Congress may, by law, adopt a
thereby forestalls dictatorship or new name for the country, a national anthem, or a
despotism. national seal, which shall all be truly reflective
and symbolic of the ideals, history, and traditions
Functions of Judicial Review
of the people. Such law shall take effect only
1. Legitimizing- Unconstitutional or not upon its ratification by the people in a national
2. Checking referendum.
3. Symbolic/Instructional Requisites:
SECTION 3. The State may not be sued without
a. Actual Controversy in inquiry
its consent.
b. Brought to court’s attention at
the earliest opportunity SECTION 4. The Armed Forces of the
c. The issues are the very lis mota Philippines shall be composed of a citizen armed
(Cause of Action) of the case force which shall undergo military training and
d. The case is capable of repetition serve, as may be provided by law. It shall keep a
yet evading reviews regular force necessary for the security of the
State.
Emergency Powers: (Sec 23(2), Art VI)
In times of war or other national emergency, the Congress SECTION 5. (1) All members of the armed forces
may, by law, authorize the President, for a limited period and shall take an oath or affirmation to uphold and
subject to such restrictions as it may prescribe, to exercise defend this Constitution.
powers necessary and proper to carry out a declared national
policy. Unless sooner withdrawn by resolution of the (2) The State shall strengthen the patriotic spirit
Congress, such powers shall cease upon the next and nationalist consciousness of the military, and
adjournment thereof.
respect for people’s rights in the performance of domain and, in appropriate cases, in the
their duty. utilization of natural resources.

(3) Professionalism in the armed forces and SECTION 8. The State shall, from time to time,
adequate remuneration and benefits of its review to upgrade the pensions and other benefits
members shall be a prime concern of the State. due to retirees of both the government and the
The armed forces shall be insulated from partisan private sectors.
politics.
SECTION 9. The State shall protect consumers
No member of the military shall engage directly from trade malpractices and from substandard or
or indirectly in any partisan political activity, hazardous products.
except to vote.
SECTION 10. The State shall provide the policy
(4) No member of the armed forces in the active environment for the full development of Filipino
service shall, at any time, be appointed or capability and the emergence of communication
designated in any capacity to a civilian position structures suitable to the needs and aspirations of
in the Government including government-owned the nation and the balanced flow of information
or controlled corporations or any of their into, out of, and across the country, in accordance
subsidiaries. with a policy that respects the freedom of speech
and of the press.
(5) Laws on retirement of military officers shall
not allow extension of their service. SECTION 11. (1) The ownership and
management of mass media shall be limited to
(6) The officers and men of the regular force of
citizens of the Philippines, or to corporations,
the armed forces shall be recruited
cooperatives or associations, wholly-owned and
proportionately from all provinces and cities as
managed by such citizens.
far as practicable.
The Congress shall regulate or prohibit
(7) The tour of duty of the Chief of Staff of the
monopolies in commercial mass media when the
armed forces shall not exceed three years.
public interest so requires. No combinations in
However, in times of war or other national
restraint of trade or unfair competition therein
emergency declared by the Congress, the
shall be allowed.
President may extend such tour of duty.
(2) The advertising industry is impressed with
SECTION 6. The State shall establish and
public interest, and shall be regulated by law for
maintain one police force, which shall be national
the protection of consumers and the promotion of
in scope and civilian in character, to be
the general welfare.
administered and controlled by a national police
commission. The authority of local executives Only Filipino citizens or corporations or
over the police units in their jurisdiction shall be associations at least seventy per centum of the
provided by law. capital of which is owned by such citizens shall
be allowed to engage in the advertising industry.
SECTION 7. The State shall provide immediate
and adequate care, benefits, and other forms of The participation of foreign investors in the
assistance to war veterans and veterans of governing body of entities in such industry shall
military campaigns, their surviving spouses and be limited to their proportionate share in the
orphans. Funds shall be provided therefor and due capital thereof, and all the executive and
consideration shall be given them in the managing officers of such entities must be
disposition of agricultural lands of the public citizens of the Philippines.
SECTION 12. The Congress may create a
consultative body to advise the President on FIRST ISSUE: UP’s funds, being government funds, are not
policies affecting indigenous cultural subject to garnishment.
communities, the majority of the members of
POLITICAL LAW: garnishment of public funds; suability
which shall come from such communities. vs. liability of the State

Despite its establishment as a body corporate, the UP

remains to be a “chartered institution” performing a
CASES: legitimate government function. Irrefragably, the UP is a
government instrumentality, performing the State’s
GARNISHMENT constitutional mandate of promoting quality and accessible
education. As a government instrumentality, the UP
UP v. Hon. Dizon administers special funds sourced from the fees and income
enumerated under Act No. 1870 and Section 1 of Executive
FACTS:
Order No. 714, and from the yearly appropriations, to
University of the Philippines (UP) entered into a General achieve the purposes laid down by Section 2 of Act 1870, as
Construction Agreement with respondent Stern Builders expanded in Republic Act No. 9500. All the funds going into
Corporation (Stern Builders) for the construction of its the possession of the UP, including any interest accruing
buildings in its Los Baños campus. UP was able to pay its from the deposit of such funds in any banking institution,
first and second billing. However, the third billing worth constitute a “special trust fund,” the disbursement of which
P273,729.47 was not paid due to its disallowance by the should always be aligned with the UP’s mission and purpose,
Commission on Audit (COA). Thus, Stern Builders sued the and should always be subject to auditing by the COA. The
UP to collect the unpaid balance. funds of the UP are government funds that are public in
character. They include the income accruing from the use of
On November 28, 2001, the RTC rendered its decision real property ceded to the UP that may be spent only for the
ordering UP to pay Stern Builders. Then on January 16, attainment of its institutional objectives.
2002, the RTC filed its motion for reconsideration. The RTC
denied the motion. The denial of the said motion was served The Constitution strictly mandated that “no money shall be
upon Atty. Felimon Nolasco (Atty. Nolasco) of the UPLB paid out of the Treasury except in pursuance of an
Legal Office on May 17, 2002. Notably, Atty. Nolasco was appropriation made by law.” The execution of the monetary
not the counsel of record of the UP but the OLS in Diliman, judgment against the UP was within the primary jurisdiction
Quezon City. of the COA. It was of no moment that a final and executory
decision already validated the claim against the UP. The
Thereafter, the UP filed a notice of appeal on June 3, 2002. settlement of the monetary claim was still subject to the
However, the RTC denied due course to the notice of appeal primary jurisdiction of the COA despite the final decision of
for having been filed out of time. On October 4, 2002, upon the RTC having already validated the claim.
motion of Stern Builders, the RTC issued the writ of
execution. GRANTED.

On appeal, both the CA and the High Court denied UP’s

petition. The denial became final and executory. Hence,
Stern Builders filed in the RTC their motions for execution Cudia v PMA
despite their previous motion having already been granted
and despite the writ of execution having already issued. On Mun. of Makati v. CA
June 11, 2003, the RTC granted another motion for
Facts: Petitioner Municipality of Makati expropriated a
execution filed on May 9, 2003 (although the RTC had
portion of land owned by private respondents, Admiral
already issued the writ of execution on October 4, 2002).
Finance Creditors Consortium, Inc. After proceedings, the
Consequently, the sheriff served notices of garnishment to
RTC of Makati determined the cost of the said land which
the UP’s depositary banks and the RTC ordered the release
the petitioner must pay to the private respondents amounting
of the funds.
to P5,291,666.00 minus the advanced payment of
Aggrieved, UP elevated the matter to the CA but the CA P338,160.00. It issued the corresponding writ of execution
sustained the RTC. Hence, this petition. accompanied with a writ of garnishment of funds of the
petitioner which was deposited in PNB. However, such order
ISSUES: Whether or not the UP’s funds can be validly was opposed by petitioner through a motion for
garnished? reconsideration, contending that its funds at the PNB could
neither be garnished nor levied upon execution, for to do so
HELD: The petition for review is meritorious. would result in the disbursement of public funds without the
proper appropriation required under the law, citing the case Philippine National Bank ceded its rights and interests over
of Republic of the Philippines v. Palacio.The RTC dismissed Bicolandia Sugar Development Corporation's loans to the
such motion, which was appealed to the Court of Appeals; government through Asset Privatization Trust.
the latter affirmed said dismissal and petitioner now filed this
petition for review. On November 18, 1988, Bicolandia Sugar Development
Corporation, with the conformity of Asset Privatization
Trust, entered into a Supervision and Financing
Agreement[13] with Philippine Sugar Corporation for the
Issue: Whether or not funds of the Municipality of Makati latter to operate and manage the mill until August 31, 1992.
are exempt from garnishment and levy upon execution.
Due to Bicolandia Sugar Development Corporation's
continued failure to pay its loan obligations, Asset
Privatization Trust filed a Petition for Extrajudicial
Held: It is petitioner's main contention that the orders of
Foreclosure of Bicolandia Sugar Development Corporation's
respondent RTC judge involved the net amount of
mortgaged properties on March 26, 1990. There being no
P4,965,506.45, wherein the funds garnished by respondent
other qualified bidder, Asset Privatization Trust was issued
sheriff are in excess of P99,743.94, which are public fund
a certificate of sale upon payment of P1,725,063,044.00.[
and thereby are exempted from execution without the proper
appropriation required under the law. There is merit in this Sometime in 1992, the Asset Privatization Trust, pursuant to
contention. In this jurisdiction, well-settled is the rule that its mandate to dispose of government properties for
public funds are not subject to levy and execution, unless privatization, decided to sell the assets and properties of
otherwise provided for by statute. Municipal revenues Bicolandia Sugar Development Corporation. On September
derived from taxes, licenses and market fees, and which are 1, 1992, it issued a Notice of Termination to Bicolandia
intended primarily and exclusively for the purpose of Sugar Development Corporation's employees, advising them
financing the governmental activities and functions of the that their services would be terminated within 30 days.
municipality, are exempt from execution. Absent a showing NASUCIP/BISUDECO Chapter received the Notice under
that the municipal council of Makati has passed an ordinance protest.
appropriating the said amount from its public funds
deposited in their PNB account, no levy under execution After the employees' dismissal from service, Bicolandia
may be validly effected. However, this court orders Sugar Development Corporation's assets and properties were
petitioner to pay for the said land which has been in their use sold to Bicol Agro-Industrial Producers Cooperative,
already. This Court will not condone petitioner's blatant Incorporated-Peñafrancia Sugar Mill.[19
refusal to settle its legal obligation arising from
expropriation of land they are already enjoying. The State's
power of eminent domain should be exercised within the
Issues:
bounds of fair play and justice.
As a result, several members of the NACUSIP/BISUDECO
Chapter[20] filed a Complaint dated April 24, 1996 charging
Asset Privatization Trust, Bicolandia Sugar Development
DOTC v. Spouses Abecina
Corporation, Philippine Sugar Corporation, and Bicol Agro-
REPUBLIC v. NLRC, GR No. 174747, 2016-03- Industrial Producers Cooperative, Incorporated-Peñafrancia
Sugar Mill with unfair labor practice, union busting, and
09 claims for labor standard benefits.

Second, whether Bicolandia Sugar Development

Facts: Corporation's closure could be considered serious business
losses that would exempt petitioner from payment of
Asset Privatization Trust was a government entity created separation benefit
under Proclamation No. 50 dated December 8, 1986 for the
purpose of conserving, provisionally managing, and
disposing of assets that have been identified for privatization Ruling:
or disposition. NACUSIP/BISUDECO Chapter is the
exclusive bargaining agent for the rank-and-file employees Petitioner proposes that even if it is found liable for
of Bicolandia Sugar Development Corporation, a separation benefits, it cannot be made to pay since
corporation engaged in milling and producing sugar. Bicolandia Sugar Development Corporation's closure was
due to serious business losses.An employer may terminate
Under Proclamation No. 50 employment to prevent business losses. Article 298[64] of
the Labor Code allows the termination of employees
provided that the employer pays the affected employees
separation pay of one month or at least one-half month for
every month of pay, whichever is higher.

The employer is exempted from having to pay separation pay

if the closure was due to serious business losses.[65] A
business suffers from serious business losses when it has
operated at a loss for such a period of time that its financial
standing is unlikely to improve in the future.

Bicolandia Sugar Development Corporation incurred heavy

loans from Philippine National Bank in the 1980s to cover
its losses. The Corporation's losses were substantial. When
Philippine National Bank transferred its interests over the
Corporation's loans to petitioner, it effectively transferred all
of the Corporation's assets. Petitioner eventually sold these
assets and properties to a private company, pursuant to its
mandate to dispose of government's non-performing assets.

Bicolandia Sugar Development Corporation's financial

standing when petitioner took over as its conservator clearly
showed that it was suffering from serious business losses and
would have been exempted from paying its terminated
employees their separation pay. This exemption, however,
only applies to employers. It does not apply to petitioner.

the exemption would still not apply if the employer

voluntarily assumes the obligation to pay terminated
employees, regardless of the employer's financial situation.